1.

Human Resource Planning

Like corporate and strategic management, human resource management has a role to play in the
continuity and longevity of the organization. It does this by ensuring that the company’s
corporate functions (such as marketing, production, etc.) are staffed – and that these staff is able
to contribute to corporate success. HRM facilitates this by systematic human resource planning.
Human resource planning (HRP) has been defined as a technique to facilitate the acquisition,
utilization, development and retention of a company’s human resources. These resources are
considered by some to be the organization’s most valuable asset and, therefore, need to be deal
with the maximum efficiency and effectiveness.

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.

HRP is a forward looking function and an organizational tool to recognize skill and competency
gaps and then develop plans for development of lacking skills and competencies in human
resources to stay competitive. HRP is influenced by technological changes and other global
business pressures. HRP ensures benefits to the organizations by creating a pool of talent,
preparing people for future cost cutting and succession planning besides creating a back-up plan
in case of diversification and growth.

Human resource planning, or HRP, is the ongoing, continuous process of systematic planning to
achieve optimum use of an organization's most valuable asset — its human resources. The
objective of human resource planning is to ensure the best fit between employees and jobs while
avoiding manpower shortages or surpluses. The four key steps of the human resources planning
process are analyzing present labor supply, forecasting labor demand, balancing projected labor
demand with supply and supporting organizational goals.
In other words, Human Resource Planning is responsible for arranging the right people for the
right job from all the available sources. And not only this, it also anticipates the vacancy arising
due to the promotion, transfer, retirement, termination, of an employee and thus, plans for the
manpower accordingly.

HRP is the process by which an organization ensures that it has the right number and
types of people at the right place, at the right time, capable of effectively and efficiently
completing those tasks that will help the organization achieve its overall objectives. HRP is
the process of determining manpower requirements and the means of meeting those
requirements in order to carry out the integrated plan of the organization. Through
planning management makes a balance between demand and supply of right number and
types of people at the right place.

Immediate filling of vacancies reduces the idle time caused due to an employee turnover, and
hence the functioning of the business process remains unaffected.

This planning is generally done to enable an organization to move from the current manpower
position to the desired manpower position. The human resource planning begins with the
enterprise’s estimation for the manpower requirement and then sources are found from where
this need can be fulfilled.

The Human Resource Planning should not focus only on filling the vacant positions, but should
emphasize on hiring the right person for the right job. It also focuses on developing the skills of
an existing employee through an interactive training program, with the intention to make them
well equipped with the skills required in the future, for the attainment of the organization’s
objectives.

2. BREAKING DOWN 'Human Resource Planning - HRP'

The human resources plan needs to be flexible enough to meet short-term staffing challenges
while adapting to changing conditions in the business environment over the longer term. Human
resource planning starts by assessing and auditing the current capacity of human resources.
Analyzing Present Conditions

The first step of human resource planning is to identify the company's strengths and weaknesses
in the current labor pool. This is when a company performs a comprehensive audit of the skills,
demographics, qualifications, experience and compensation of every worker. HR then has to
determine if these statistics fit in line with the company's goals. Does the firm need to hire more
staff to compete in a future marketplace, or are more automated tools necessary to capture more
market share from competitors? Is the status quo acceptable, or should the company reorganize
its staff so that it can make more money?

Forecasting Demand

HR forecasts demand based on the strategic goals of the company. HR managers may examine
market trends, industry analyses and technological improvements to try to come up with ways to
meet the company's goals. Forecasting possible retirements is also one major facet that needs to
be considered when businesses assess future staffing levels. Do retired employees need to be
replaced, or can new technology do the job? Does a company need more full-time workers, part-
time help or outsourced labor?

Striking a Balance

The next step involves striking a balance between supply and demand. At this point, HR creates
a gap analysis that lays out specific needs to narrow the supply of the company's labor versus
future demand. Should employees learn new skills in the future? Does the company need more
managers? Do all employees play to their strengths in their current roles?

Integrating the Plan

The answers to these questions let HR determine how to proceed, which is the final phase of the
human resources planning process. HR must now take practical steps to integrate its plan with
the rest of the company. The department needs a budget, the ability to implement the plan and a
collaborative effort with all departments to make the plan happen.
The overall goal of HR planning is to have the optimal amount of staff to make the most money
for the company. Because the goals and strategies of the company change over time, human
resource planning is a regular occurrence.

Role of Human Resource Planning

The prime role of HRP is to ensure that an organization has the right quantity and quality of
employees doing the right things in the right place at the right time and at the right cost to the
organization.
In achieving this, HRP has a number of more specific roles, as follows:

 To determine and facilitate the levels and types of recruitment that may be required

 To assess current levels and attributes of staffing and determine whether reductions are
necessary (redundancy)

 To assess whether redeployment can be used as an alternative to downsizing

 To identify the need for training and development

 To assess current employment costs in relation to other organizational costs (wage costs
account for over 60% of an organization’s expenses)

HRP plays a vital role in the formulation of strategy within the organization. An organization
cannot function without people; thus the human resource planning activities become all the more
important because they forecast how many employees are required to carry out the
organization’s activities and help it to meet customer demand for its products or services. HR
directors are usually members of the board and, as such, they have a specific role to play in the
formulation of HR objectives, policies, procedures, plans and strategy. These highlight the type
of plans that contribute to the overall corporate and strategic plan and, along with the finance
plan, operational plan; marketing plan, etc, help in the formulation of the overall corporate and
strategic plan.

Strategic Human Resource Management and Human Resource Planning

Effective HR planning considers both the internal and external environmental influences of an
organization, its objectives, culture, structure and HRM. This is because HR planning must
reflect the environmental trends and issues that affect an organization’s management of its
human resources. This includes consideration of globalization, growth of Internet use, the
economy, women in the work force, demographic changes, the actualization of the work force,
employee literacy, skill shortages, acquisitions, mergers and divestures, deregulation, flexible
work schedules, telecommuting, outsourcing, quality of life expectations, pollution, income tax
levels and union attitudes

Hard and Soft HRP

Just as HRM has its hard and soft side so, too, does HRP. According to Torrington and Hall
(1991) soft HRP involves the assessment of four categories or areas:

 Defining where the company is now

 Defining where it wants to be in the future

 Analyzing its external environment, influences and trends (over which it has no control)

 Formulating plans to implement necessary changes

These four categories are important stages in the strategic planning process. Soft HRP is
concerned with the formulation of the mission, goals, objectives and strategy of the organization
and how variables such as growth, product, life cycle, competitive advantage and HR
development will impact on its human resources.

A distinction can be made between ‘hard’ and ‘soft’ human resource planning.
Hard HRP based on quantitative analysis to ensure that the right number of the right sort of
people is available when needed. The latter, as described by Marchington and Wilkinson (1996),
‘is more explicitly focused on creating and shaping the culture of the organization so that there is
a clear integration between corporate goals and employee values, beliefs and behaviours’. But as
they point out, the soft version becomes virtually synonymous with the whole area of human
resource management

Hard HRP concerns the determination of the type of activities the HR department will need to
carry out in order to ascertain the appropriate level of human resources; whether its current level
is sufficient; whether there is a deficiency in one department over another, etc. Again according
to Torrington and Hall, hard HRP activities include:

Forecasting: The number of employees that will be required in the future to support the demand
for the organization’s products and services. This forecasting also includes assessment of the
internal and external supply of human resources.

Analysis: Of how current employees are being utilized throughout the organization and how this
impacts on demand.

Monitoring and review: Reconciling HR plans with actual practice and facilitating amendments
to plans as necessary.

Human Resource Planning Process or Steps of HR Planning

Human resource planning is a process through which the company anticipates future business
and environmental forces. Human resources planning assess the manpower requirement for
future period of time. It attempts to provide sufficient manpower required to perform
organizational activities. HR planning is a continuous process which starts with identification of
HR objectives, move through analysis of manpower resources and ends at appraisal of HR
planning. Following are the major steps involved in human resource planning:

Step 1: Assess your current human resource capacity

Start by looking at your current human resources state of play. This will involve analyzing the
HR strength of your organization across factors including employee numbers, skills,
qualifications, experience, age, contracts, performance ratings, titles, and compensations. During
this phase, it’s a good idea to gather insight from your managers who can provide real-world
feedback on the human resource issues they face, as well as areas in which they think changes
are necessary.

The assessment of HR begins with environmental analysis, under which the external (PEST) and
internal (objectives, resources and structure) are analyzed to assess the currently available HR
inventory level. After the analysis of external and internal forces of the organization, it will be
easier for HR manager to find out the internal strengths as well as weakness of the organization
in one hand and opportunities and threats on the other. Moreover, it includes an inventory of the
workers and skills already available within the organization and a comprehensive job analysis.

Step 2: Forecast future HR requirements (Demand Forecasting)

You will then need to look at the future HR needs of your organization and how human
resources will be applied to meet these organizational goals. HR managers will typically look at
the market or sectoral trends, new technologies that could automate certain processes, as well as
industry analysis in order to gauge future requirements. Of course, there are a number of factors
affecting human resource planning such as natural employee attrition, layoffs, likely vacancies,
retirements, promotions and end of contract terms. Above all of this, you will need to understand
the goals of the organization: are you entering a new market, launching new products or services,
expanding into new areas. Forecasting HR demand is a complex task based on several dynamics.
Being informed and having a seat, or at least an ear, at boardroom level is essential if you are to
make accurate HR projections.
HR forecasting is the process of estimating demand for and supply of HR in an organization.
Demand forecasting is a process of determining future needs for HR in terms of quantity and
quality. It is done to meet the future personnel requirements of the organization to achieve the
desired level of output. Future human resource need can be estimated with the help of the
organization's current human resource situation and analysis of organizational plans and
procedures. It will be necessary to perform a year-by-year analysis for every significant level and
type.

Step 3: Identify HR gaps (Supply Forecasting)

An effective human resource plan walks the fine line between supply and demand. By assessing
the current HR capacity and projecting future requirements you should have a clear picture of
any gaps that exist. Using your HR forecast you can better judge if there will be a skills gap, for
example.

Supply is another side of human resource assessment. It is concerned with the estimation of
supply of manpower given the analysis of current resource and future availability of human
resource in the organization. It estimates the future sources of HR that are likely to be available
from within an outside the organization. Internal source includes promotion, transfer, job
enlargement and enrichment, whereas external source includes recruitment of fresh candidates
who are capable of performing well in the organization.

Step 4: Matching Demand and Supply

It is another step of human resource planning. It is concerned with bringing the forecast of future
demand and supply of HR. The matching process refers to bring demand and supply in an
equilibrium position so that shortages and over staffing position will be solved. In case of
shortages an organization has to hire more required number of employees. Conversely, in the
case of over staffing it has to reduce the level of existing employment. Hence, it is concluded
that this matching process gives knowledge about requirements and sources of HR.

Step 5: Action Plan

It is the last phase of human resource planning which is concerned with surplus and shortages of
human resource. Under it, the HR plan is executed through the designation of different HR
activities. The major activities which are required to execute the HR plan are recruitment,
selection, placement, training and development, socialization etc. Finally, this step is followed by
control and evaluation of performance of HR to check whether the HR planning matches the HR
objectives and policies. This action plan should be updated according to change in time and
conditions.

After assessing current human resources capacity, projected future HR demands and identified
the gaps, the final step is to integrate human resources plan with organizational strategy. On a
practical level, you will need a dedicated budget for human resources recruiting, training or
redundancies, and you will also need management buy-in across the business. You will need
cooperation and the necessary finances in order to implement the plan and a collaborative
approach from all departments to put it into practice.

Limitations of Human Resource Planning

The Human Resource Planning is concerned with maintaining and recruiting the human
resources with the requisite quantity and the quality, to fulfill the demand and supply arising in
the near future.

In spite of its benefit of keeping the organization’s manpower position balanced, there are a few
limitations of Human Resource Planning, which are discussed below.

 The future is uncertain. There are several external factors viz. Technological, political,
cultural, etc. that affects the employment opportunities. Therefore, the management can
consider the human resource planning as a guiding factor and can not rely completely on
it.

 With the surplus manpower, the companies try to remove this imbalance using
termination, layoff, removal of the existing employees. This could create a sense of
insecurity among them, and that would result in the loss of their faith in the company.
  The human resource planning is time-consuming since it collects the complete
information regarding the personnel requirements of each department and then finds the
suitable sources to satisfy the needs.

 The human resource planning is an expensive process. All the activities carried out from
the time the manpower need arises till the final placement of employees, consumes lot of
time and is very expensive.

Thus, the firm must carry out the human resource planning cautiously since it is accorded with
several limitations that can adversely affect the overall functioning of the firm.