Table of Content

1. Introduction to Human Resource Planning

2. Definition of Human Resource Planning
3. Objectives of Human Resource Planning
4. Need and Importance of Human Resource Planning
5. Factors/ Determinants Affecting Human Resource Planning
6. Human Resource Planning at Different Levels
7. Integrated Strategic Planning and HR
8. Process of Human Resource Planning
9. Strategies for HR Planners
10. Benefits of HR Planning
11. Limitations of HR Planning
12. Guidelines for Making HRP Effective
13. Conclusion
14. References

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Introduction: Human Resource Planning

Human Resource Planning (HRP) is the process of forecasting the future human resource
requirements of the organization and determining as to how the existing human resource capacity
of the organization can be utilized to fulfill these requirements. It, thus, focuses on the basic
economic concept of demand and supply in context to the human resource capacity of the
organization.
It is the HRP process which helps the management of the organization in meeting the future
demand of human resource in the organization with the supply of the appropriate people in
appropriate numbers at the appropriate time and place. Further, it is only after proper analysis of
the HR requirements can the process of recruitment and selection be initiated by the
management. Also, HRP is essential in successfully achieving the strategies and objectives of
organization. In fact, with the element of strategies and long term objectives of the organization
being widely associated with human resource planning these days, HR Planning has now became
Strategic HR Planning.

Human resources planning allow companies to plan ahead so they can maintain a steady supply
of skilled employees. That's why it is also referred to as workforce planning. The process is also
used to help companies evaluate their needs and to plan ahead to meet those needs.

Human resource planning needs to be flexible enough to meet short-term staffing challenges

while adapting to changing conditions in the business environment over the longer term. HRP
starts by assessing and auditing the current capacity of human resources.

The challenges to HRP include forces that are always changing such as employees getting sick,
getting promoted or going on vacation. HRP ensures there is the best fit between workers and
jobs, avoiding shortages and surpluses in the employee pool.

To satisfy their objectives, HR managers have to make plans to do the following:

 Find and attract skilled employees.

 Select, train, and reward the best candidates.

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  Cope with absences and deal with conflicts.
 Promote employees or let some of them go.

Investing in HRP is one of the most important decisions a company can make. After all, a
company is only as good as its employees. If it has the best employees and the best practices in
place, it can mean the difference between sluggishness and productivity and can lead to
profitability

Hence, it is essential for an organization to take steps for effective utilization of these resources.
In the various stages in the growth of an organization, effective planning of human resources
plays a key role. When organizations contemplate diversification or expansion, or when
employees have to be promoted, human resource planning plays an important role. Further, the
organizational plans, goals, and strategies also require effective human resource planning.
Human resource planning is the most important managerial function of an organization. It
ensures three main things:
 It ensures adequate supply of human resources.
 It ensures proper quality of human resources.
 It ensures effective utilization of human resources.

Definition of Human Resource Planning

According to Edwin B. Geisler Manpower planning is, “the process by which a firm ensures that
it has the right number of people and the right kind of people, at the right places, at the right
time, doing things for which they are economically mast useful”.

Human Resource Planning or Manpower Planning (HRP) is the process of systematically

reviewing HR requirements to ensure that the required number of employees with the required
skills is available when they are needed. Getting the right number of qualified people into the
right job is the crux of the problem here.
In actual practice, this is not easy. Due to constant changes in labor market conditions, qualified
people possessing relevant qualifications are not readily available. The organization needs to go

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that extra mile, dig up every source of information and exploit every opportunity that comes its
way in order to identify talent.

HRP is simply not a process of matching the supply of people (existing employees and those to
be hired or searched for) with openings the organization expects over a given timeframe. It goes
a step further in order to reach out to right kind of people at right time, spending time, resources
and energies. Without careful planning, advance thinking and prompt actions, it is next to
impossible to get competent and talented people into the organization.

Human resource planning is the responsibility of both the line and the staff manager. The line
manager is responsible for estimating manpower requirements. For this purpose, he provides the
necessary information on the basis of the estimates of the operating levels. The staff manager
provides the supplementary information in the form of records and estimates.

HRP is also known by other names such as ‘Manpower Planning’, ‘Employment Planning’,
‘Labor Planning’, ‘Personnel Planning’, etc. HRP is a sub-system in the total organizational
planning. In other words, HRP is derived from the organizational planning just like production
planning, sales planning, material planning, etc.

Objectives of Human Resource Planning

The following are the objectives of human resource planning:

 Assessing manpower needs for future and making plans for recruitment and selection.
 Assessing skill requirement in future for the organization.
 Determining training and the development needs of the organization.
 Anticipating surplus or shortage of staff and avoiding unnecessary detentions or
dismissals.
 Controlling wage and salary costs.
 Ensuring optimum use of human resources in the organization.
 Helping the organization to cope with the technological development and modernization.

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  Ensuring career planning of every employee of the organization and making succession
programmers.
 Ensuring higher labor productivity

Need and Importance of Human Resource Planning

Human resource planning is needed for foreseeing the human resource requirements of an
organization and supply of human resources. Its need can be assessed from the following points:

 Assessing Needs: Human resource planning is also required to determine whether there
is any shortage or surplus of persons in the organization. If there are fewer people than
required, it will adversely affect the work. On the other hand, if more persons are
employed than the requirement, then it will increase labor cost, etc. Human resource
planning ensures the employment of proper workforce.
 Replacement of Persons: A large number of persons are to be replaced in the
organization because of retirement, old age, death, etc. There will be a need to prepare
persons for taking up new position in such contingencies.
 Expansion Plans: Whenever there is a plan to expand or diversify the concern then more
persons will be required to take up new positions. Human resource planning is essential
under these situations.
 Labor Turnover: There is always labor turnover in every organization. The degree of
labor turnover may vary from concern to concern but it cannot be eliminated altogether.
There will be a need to recruit new persons to take up the positions of those who have left
the organization. If the concern is able to forecast turnover rate precisely, then advance
efforts are made to recruit and train persons so that work does not suffer for want of
workers.
 Technological Changes: The business is working under changing technological
environment. There may be a need to give fresh training to personnel. In addition, there
may also be a need to infuse fresh blood into the organization. Human resource planning
will help in meeting the new demands of the organization.

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Factors Affecting Human Resource Planning

There are several factors that affect HRP. These factors or determinants can be classified into
external factors and internal factors.

External Factors:
 Government Policies – Policies of the government like labor policy, industrial relations
policy, policy towards reserving certain jobs for different communities and sons-of the
soil, etc. affect the HRP.
 Level of Economic Development – Level of economic development determines the level
of HRD in the country and thereby the supply of human resources in the future in the
country.

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  Business Environment – External business environmental factors influence the volume
and mix of production and thereby the future demand for human resources.
 Level of Technology – Level of technology determines the kind of human resources
required.
 International Factors – International factors like the demand for resources and supply of
human resources in various countries.
 Outsourcing – Availability of outsourcing facilities with required skills and knowledge
of people reduces the dependency on HRP and vice-versa.

Internal Factors:
 Company policies and strategies – Company policies and strategies relating to
expansion, diversification, alliances, etc. determines the human resource demand in terms
of quality and quantity.
 Human resource policies – Human resources policies of the company regarding quality
of human resource, compensation level, quality of work-life, etc., influences human
resource plan.
 Job analysis – Fundamentally, human resource plan is based on job analysis. Job
description and job specification determines the kind of employees required.
 Time horizons – Companies with stable competitive environment can plan for the long
run whereas the firms with unstable competitive environment can plan for only short-
term range.
 Type and quality of information – Any planning process needs qualitative and accurate
information. This is more so with human resource plan; strategic, organizational and
specific information.
 Company’s production operations policy – Company’s policy regarding how much to
produce and how much to buy from outside to prepare a final product influence the
number and kind of people required.
 Trade unions – Influence of trade unions regarding number of working hours per week,
recruitment sources, etc., affect the HRP.

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Human Resource Planning at Different Levels

Different institutions make HRP at different levels for their own purposes, of which national
level, industry level, unit level, departmental level and job level are important.

i. National level – Generally, government at the centre plan for human resources at the national
level. It forecasts the demand for and supply of human resource, for the entire nation.
ii. Sector level – Manpower requirements for a particular sector like agricultural sector,
industrial sector or tertiary sector are projected based on the government policy, projected
output/operations, etc.
iii. Industry level – Manpower needs of a particular industry like cement, textiles, chemical are
predicted taking into account the output/operational level of that particular industry.
iv. Unit level – This covers the estimation of human resource needs of an organization or
company based on its corporate/business plan.
v. Departmental level – This covers the manpower needs of a particular department in a
company.
vi. Job level – Manpower needs of a particular job family within department like Mechanical
Engineer is forecast at this level.
vii. Information technology – The impact of information technology on business activities,
human resource requirement and human resource plan is significant. It requires multi skilled
experts, preferably less in number.

Integrated Strategic Planning and HR

Human resource planning like production planning, financial planning and marketing planning,
should be a unified, comprehensive and integrated part of the total corporation. Human resource
manager provides inputs like key HR areas, HR environmental constraints and internal HR
capabilities and HR capability constraints to the corporate strategists. The corporate strategists in
turn communicate their needs and constraints to the HR manager. The corporate strategic plan
and HR plan thus incorporates both HR and other functional plans.

Integrated strategic planning involves four steps.

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Corporate strategic planning involves four time spans.

(i) Long period (5 or more years): Strategic plans that establish company’s vision,
mission and major long-range objectives. The time span for strategic plans is usually
considered to be five or more years.
(ii) Intermediate period (3 years): Intermediate-range plans cover about a three-year
period. These are more specific plans in support of strategic plan.
(iii) Operation period (1 year): Operating plans cover about one year. Plans are prepared
month-by-month in sufficient detail for profit, human resources, budget and cost
control.
(iv) Short period (day-to-day or week-by-week): Activity plans are the day-to-day and
week by-week plans. These plans may not be documented. Table presents the link
between strategic plan and human resource plan.

Hence, the strategic plan vs. HR plan can be at four levels:

(i) Corporate-level plan: Top management formulates corporate-level plan based on

corporate philosophy, policy, vision and mission. The HRM role is to raise the broad

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 and policy issues relating to human resources. The HR issues are related to
employment policy, HRD policies, remuneration policies, etc. The HR department
prepares HR strategies, objectives and policies consistent with company’s strategy.
(ii) Intermediate-level plan: Large-scale and diversified companies organize Strategic
Business Units (SBUs) for the related activities. SBUs prepare intermediate plans and
implement them. HR managers prepare specific plans for acquiring future managers,
key personnel and total number of employees in support of company requirements
over the next three years.
(iii) Operations plan: Operations plans are prepared at the lowest business profit centre
level. These plans are supported by the HR plans relating to recruitment of skilled
personnel, developing compensation structure, designing new jobs, developing,
leadership, improving work life, etc.
(iv) Short-term activities plan: Day-to-day business plans are formulated by the lowest
level strategists. Day-to-day HR plans relating to handling employee benefits,
grievances, disciplinary cases, accident reports, etc. are formulated by the HR
managers.

Process of Human Resource Planning

The Human Resource Planning is a process of forecasting the organization’s demand for and
supply of manpower needs in the near future. It is a task that identifies present and future human
resources need for a company to achieve their goals. It attempts to provide sufficient manpower
required to perform organizational activities. HR planning is a continuous process which starts
with the identification of HR objectives, move through analysis of manpower resources and ends
at appraisal of HR planning.

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1. Determining the Objectives of Human Resource Planning: The foremost step in every
process is the determination of the objectives for which the process is to be carried on. The
objective for which the manpower planning is to be done should be defined precisely, so as to
ensure that a right number of people for the right kind of job are selected.

The objectives can vary across the several departments in the organization such as the personnel
demand may differ in marketing, finance, production, HR department, based on their roles or
functions.

2. Analyzing Current Manpower Inventory: The next step is to analyze the current

manpower supply in the organization through the stored information about the employees in
terms of their experience, proficiency, skills, etc. required to perform a particular job.

Also, the future vacancies can be estimated, so as to plan for the manpower from both the
internal (within the current employees) and the external (hiring candidates from outside) sources.
Thus, it is to be ensured that reservoir of talent is maintained to meet any vacancy arising in the
near future.

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3. Forecasting Demand and Supply of Human Resources: Once the inventory of talented
manpower is maintained; the next step is to match the demand for the manpower arising in the
future with the supply or available resources with the organization.

Here, the required skills of personnel for a particular job are matched with the job description
and specification.

4. Analyzing the Manpower Gaps: After forecasting the demand and supply, the
manpower gaps can be easily evaluated. In case the demand is more than the supply of human
resources, that means there is a deficit, and thus, new candidates are to be hired.

Whereas, if the Demand is less than supply, there arises a surplus in the human resources, and
hence, the employees have to be removed either in the form of termination, retirement, layoff,
transfer, etc.

5. Employment Plan/Action Plan: Once the manpower gaps are evaluated, the action plan
is to be formulated accordingly. In a case of a deficit, the firm may go either for recruitment,
training, interdepartmental transfer plans whereas in the case of a surplus, the voluntary
retirement schemes, redeployment, transfer, layoff, could be followed.
6. Training and Development: The training is not only for the new joinees but also for the
existing employees who are required to update their skills from time to time.

After the employment plan, the training programmes are conducted to equip the new employees
as well as the old ones with the requisite skills to be performed on a particular job.

7. Appraisal of Manpower Planning: Finally, the effectiveness of the manpower planning

process is to be evaluated. Here the human resource plan is compared with its actual
implementation to ensure the availability of a number of employees for several jobs.

At this stage, the firm has to decide the success of the plan and control the deficiencies, if any.

Thus, human resource planning is a continuous process that begins with the objectives of Human
Resource planning and ends with the appraisal or feedback and control of the planning process.

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Strategies for HR Planners

The objective of manpower planning is to help the organization to achieve its goal. For this
purpose, the manpower planners have to develop some strategies. Stainer has suggested nine
strategies for the benefit of manpower planners:

 They should collect, maintain and interpret relevant information regarding human
resources.
 They should periodically report manpower objectives, requirements and existing
employment and allied features of manpower.
 They should develop procedures and techniques to determine the requirements of
different types of manpower over a period of time from the standpoint of organization’s
goals.
 They should develop measures of manpower utilization as component of forecasts of
manpower requirement along with independent validation.
 They should employ suitable techniques leading to effective allocation of work with a
view to improving manpower utilization.
 They should conduct research to determine factors hampering the contribution of
individuals and groups to the organization with a view to modifying or removing these
handicaps.
 They should develop and employ methods of economic assessment of human resources
reflecting its features as income generator and cost and accordingly improving the quality
of decisions affecting the manpower

Benefits of HR Planning

Human Resource Planning (HRP) anticipates not only the required kind and number of
employees but also determines the action plan for all the functions of personnel management.
The major benefits of human resource planning are:
 It checks the corporate plan of the organization.
 HRP offsets uncertainties and changes to the maximum extent possible and enables the
organization to have right men at right time and in right place.

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  It provides scope for advancement and development of employees through training,
development, etc.
 It helps to anticipate the cost of salary enhancement, better benefits, etc.
 It helps to anticipate the cost of salary, benefits and all the cost of human resources
facilitating the formulation of budgets in an organization.
 To foresee the need for redundancy and plan to check it or to provide alternative
employment in consultation with trade unions, other organizations and government
through remodeling organizational, industrial and economic plans.
 To foresee the changes in values, aptitude and attitude of human resources and to change
the techniques of interpersonal, management, etc.
 To plan for physical facilities, working conditions and the volume of fringe benefits like
canteen, schools, hospitals, conveyance, child care centers, quarters, company stores, etc.
 It gives an idea of type of tests to be used and interview techniques in selection based on
the level of skills, qualifications, intelligence, values, etc., of future human resource.
 It causes the development of various sources of human resources to meet the
organizational needs.
 It helps to take steps to improve human resource contributions in the form of increased
productivity, sales, turnover, etc.
 It facilitates the control of all the functions, operations, contribution and cost of human
resources.

Limitations of HR Planning

Manpower planning is not always successful the main problems are described below:

Human resource planning can be defined as the process of identifying the number of people required by
an organization in terms of quantity and quality. All human resource management activities start with
human resource planning. So we can say that human resource planning is the principle/primary activity of
human resource management. Although HRP is a very advantageous method it has some limitations
which can be explained as follows

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1. The future is uncertain: The future in any country is uncertain i.e. there are political, cultural,
technological changes taking place every day. This effects the employment situation. Accordingly the
company may have to appoint or remove people. Therefore HRP can only be a guiding factor. We cannot
rely too much on it and do every action according to it.

2. Conservative attitude of top management: Much top management adopts a conservative attitude and
is not ready to make changes. The process of HRP involves either appointing. Therefore it becomes very
difficult to implement HRP in organization because top management does not support the decisions of
other department.

3. Problem of surplus staff: HRP gives a clear out solution for excess staff i.e. Termination, layoff,
VRS, However when certain employees are removed from company it mostly affects the psyche of the
existing employee, and they start feeling insecure, stressed out and do not believe in the company. This is
a limitation of HRP. it does not provide alternative solution like re-training so that employee need not be
removed from the company.

4. Time consuming activity: HRP collects information from all departments, regarding demand and
supply of personnel. This information is collected in detail and each and every job is considered.
Therefore the activity takes up a lot of time.

5. Expensive process: The solution provided by process of HRP incurs expense. E.g. VRS, overtime, etc.
company has to spend a lot of money in carrying out the activity. Hence we can say the process is
expensive.

Guidelines for Making HRP Effective

Some of the suggestions for making HR planning effective are as given below:

 Integration with Organizational Plans. Human resource planning must be balanced

with organizational plans. It must be based on the organizational objectives and plans.
This requires development of good communication channels between organization
planners and the human resource planners.
 Period of HR Planning. Period of the planning should be appropriate to the needs and
circumstances of the enterprise in question. The size and structure of the enterprise as
well as the anticipated changes must be taken into consideration.
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  Proper Organization. To be effective, the planning function should be properly
organized. If possible, within the human resource department. A separate cell or
committee should be constituted to provide adequate focus and to coordinate planning
work at various levels.
 Support of Top Management. To be effective in the long run, manpower planning must
have the full support of the top management. The support from top management is
essential to ensure the necessary resources, cooperation and support for the success of the
planning.
 Involvement of Operating Executives. Human resource planning is not a function of
manpower planners only. To be effective, it requires active participation and coordinated
efforts on the part of operating executives. Such participation will help to improve
understanding of the process and thereby reduce resistance.
 Efficient and Reliable Information System. To facilitate human resource planning, an
adequate database must be developed for human resources.
 Balanced Approach. The human resource experts should give equal importance to both
quantitative and qualitative aspects of manpower. Instead of matching existing people
with existing job, stress should be laid on filling future vacancies with right people.
Promotion should also be considered carefully. Career planning and development, skill
levels, morale, etc. should be given due importance by the planners

Conclusion
An effective HR plan should be able to attract highly qualified employees and retain the talented
current employees in order to give the business a competitive edge over its rivals. The HR
manager should consider proper analysis of the recruitment and selection plan, should design an
effective training and development plan that could improve on the quality of employee’s
performance, an attractive compensation package that would win employees, should consider the
legal issues, and be able to create an elaborate performance appraisal system.

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