What is Human Resource Planning?
Human resource planning as that strategy the acquisition, utilization, improvement and preservation of an enterprise‘s human resource. It relates to establishing the number of personnel required and developing sources of human resource.
Table of Content
- 1 What is Human Resource Planning?
- 2 Definition
- 3 Staffing
- 4 Importance and Need for Proper Staffing
- 5 Personal Research and Information System
- 6 Wages and salary Administration
- 7 Objectives of HRM
- 8 Importance of HRM
- 9 The Changing Role of HR Management
- 10 Need for HR Planning
- 11 Significance of HR Planning
- 12 Process of HR Planning
- 13 Control and Review Mechanism
- 14 Strategies for Human Resource Planners
- 15 Advantages of HR Planning programs
- 15.1 Improvement of Labour Productivity
- 15.2 Recruitment of Qualified Human Resources
- 15.3 Adjusting With the Rapid Technological Change
- 15.4 Reducing Labour
- 15.5 Control over Recruitment and Training Cost
- 15.6 Mobility of Labour
- 15.7 It can Facilitate Expansion Programmes
- 15.8 To Treat the Manpower like Real Corporate Assets
- 16 Limitations of HR Planning
- 17 FAQ
The basic purpose of conducting Human Resource Planning is to have an accurate estimate of the number of employees required with the matching skills to meet the organisational goals. It is a database where one can easily identify the existing skills and matching positions held.
Staffing is process of hiring best people for the organization and allotting a specific work based on their skill to perform it. It covers procurement, development. Compensation, integration and maintenance of people in the organization to achieve individual, organizational and social goals.
Staffing is just a part of the HRM process and plays an important role. Staffing involves a set of activities aimed at attracting and selecting individuals for positions in a way that will facilitate the achievement of organisational goals.
The two basic steps of staffing are recruitment and selection. The staffing process is a systematic attempt to implement the human resource plan by recruiting, evaluating and selecting qualified candidates for job positions in the organisation.
Importance and Need for Proper Staffing
There are numerous advantages of proper and efficient staffing. Given below are some of them –
- It helps in discovering talented and competent workers and developing them to move up the corporate ladder.
- It ensures greater production by putting the right man in the right job.
- It helps in avoiding a sudden disruption of an enterprises‘ production run by indicating shortages of personnel, if any, in advance.
- It helps to prevent under-utilisation of personnel because of over-manning and the result of high labour cost and low profit margins.
- It provides information to management for the internal succession of managerial personnel in the event of an unanticipated occurrence.
In smaller companies, proper staffing is critical. If a company is overstaffed, is it because employees do not know what is expected of them? A better guess would be that the company has but a basic understanding of what it takes to perform the responsibilities of the job. Most small companies staff when the work is perceived to be too much for the principals to accomplish by themselves, and that is when panic staffing takes place.
Unfortunately, after staffing has taken place there is a tendency to overstaff in many organisations. Then, as the company prospers, there is a tendency to add some additional staff as backup. Then, some organisations even go so far as to become involved in empire building.
A simple way of determining job description is as follows –
- Administration determined the necessary responsibilities and specifications to do many jobs. Then we asked employees to complete their own job descriptions while supervisors filled out the same form.
- Next, the supervisor and employee met to determine what the real function and responsibilities of the job were. Corrections were made in basic responsibilities to fulfil the function (i.e., why did the job exist?).
- Third, the goals were set on an annual and quarterly (monthly, if necessary) basis. These objectives were tracked by me, if not by the supervisor. Taking into consideration the unpredictable, erratic market and variables, which cropped up rather suddenly, reaching objectives had a great deal to do with performance evaluation and, hence, increases in pay.
- Reports were made to the HR Department, as well as the supervising department. The reports had a great deal to do with whether or not a requisition for increase in staff was accepted or rejected.
Job descriptions tell a company what needs to be done, as well as allowing a company to obtain accurate market value for the position. Job specifications state the skills necessary to do the job. Goals set priorities. In addition, the entire process should allow the employer to maintain an adequate staff to accomplish the tasks at hand, thereby reducing costs inherent in employment.
Personal Research and Information System
The term research means a systematic and goal-oriented investigation of facts that seeks to establish a relationship between two or more phenomena. Research can lead to an increased understanding of an improvement in HRM practices.
Managers make decisions and solve problems. To make decisions about personnel and to solve human resource problems, managers gather -data and draw conclusions from these data. Research can lead to an increased understanding of an improvement in HRM practices.
In fact, engaging in some type of research into what is happening in the HRM discipline can be viewed as necessary for one‘s survival as a manager over the long term.
Research can additionally help managers answer questions about the success of programmes such as those for training and development for which they may bear responsibility. Human Resources Information Systems (HRIS) is an integration of HRM and Information Systems (IS).
HRIS or Human resource Information system helps HR managers perform HR functions in a more effective and systematic way using technology. It is the system used to acquire, store, manipulate, analyze, retrieve and distribute pertinent information regarding an organisation‘s human resources.
A human resource information system (HRIS) is a system used to acquire, store, manipulate, analyze, retrieve, and distribute pertinent information about an organisation‘s human resources (Tannenbaum, 1990). The HRIS system is usually a part of the organisation‘s larger management information system (MIS) which would include accounting, production, and marketing functions, to name just a few.
A Human Resource Information System (HRIS) is a software application that manages HR-related tasks and information within an organization.
- Applications of HRIS – HRIS can be applied in the areas of HRM such as HR planning, Succession planning ,Work force planning, staffing, applicant recruitment and tracking Employee data base development, performance management, learning and development, compensation and benefits, pay roll, etc.
- HRIS Benefits – The benefits of HRIS are faster information process, greater information accuracy, improved planning and program development, and enhanced employee communications.
- Barriers to the Success of an HRIS – Factors considered as barriers to the HRIS are lack of management commitment, satisfaction with the status quo, poorly done needs analysis, failure to include key people, lack of communication and bad timing.
Although almost all HR managers understand the importance of HRIS, the general perception is that the organisation can do without its implantation. Hence, only large companies have started using HRIS to complement its HR activities. However, HRIS would be very critical for organisations in the near future. This is because of a number of reasons such as large amount of data and information to be processed.
Project based work environment, employee empowerment, increase of knowledge workers & associated information and learning organisation. The primary reason for delay in HRIS implementation in organisations is the fear psychosis created by ―technology‖ and ―IT‖ in the minds of senior management. They may not be very tech savvy and fear being left out.
However, trends are changing for the better as more and more organisations realize the importance of IT and technology. Major HRIS providers are concentrating on the small and middle range organisations as well as large organisations for their products. They are also coming up with very specific software modules, which would cater to any of their HR needs. SAP and People soft provide HR modules within their business intelligence software. Hence, HRIS would soon be an integral part of HR activities in all organisation.
Wages and salary Administration
Wages and salaries, the payment received for performing work, is a major component of the compensation and reward process, which is aimed at reimbursing employees for their work and motivating them to perform to the best of their abilities.
In addition to pay, most employees receive benefits such as ESI, leave travel concession, and they receive non-financial rewards such as security, recognition and privileges.
Determining wage and salary payments is one of the most critical aspects of human resource management because –
- The organisation‘s reward system has a profound effect on the recruitment, satisfaction and motivation of employees.
- Wages and salaries represent a considerable cost to the employer.
A carefully designed wage and salary programme that is administered according to sound policies and consistently applied rules is essential if human resources are to be used effectively to achieve organisational objectives.
Overview of Salary Administration
In accordance with the compensation philosophy, the support staff and administrative staff salary programs are reviewed regularly to assure that they remain competitive with the appropriate labour market. The office of Human Resources reviews the salary structure annually to determine how inflation and the influence of the various labour markets have influenced salaries.
Input from department heads concerning the competitive environment of specific professions is solicited. Information about other organisations is gathered through salary surveys. Decisions to revise a salary structure are based on external market conditions and the College‘s operating circumstances.
- Market Competitiveness―Benchmark‖ jobs are those that have a comparable job in the labour market with reliable survey data. These jobs form the anchor of the salary structure, and are identified based on individual department and institutional survey data. Human Resources reviews selected jobs annually. Those jobs that do not have comparable jobs in the labour market are slotted in relationship to benchmark jobs based on similar functions and responsibilities.
- Internal Equity-Salaries are also compared with one another within and across departments to ensure equity based on the similarities in scope of responsibility, experience, and where appropriate, performance.
- Internal Job Evaluation– The foundation for job evaluation is the information about specific job duties and responsibilities gathered via the Position Description Questionnaire. Jobs are evaluated though a process of comparing compensable factors such as, problem-solving, decision-making, education, experience, skills and knowledge, responsibility for results, supervision, the nature of relationships, and working conditions. Job evaluations reflect the components of the job, not individual performance.
- Placement within Ranges -The criterion to set salaries is the same for internal hires and for those hired from outside of the College. An individual‘s placement within the salary range is based on that individual‘s education, related experience and skills.
- Starting Rates of Pay – Consistent with the College‘s compensation philosophy, salary ranges for administrative and support staff jobs offer the flexibility for hiring new employees at competitive rates based on the experience and qualifications the candidate brings to the job.
- Promotions – A promotion is a move from a job in one salary band or job group to a higher one, and is normally recognized by an increase in salary.When an employee is promoted, his or her salary will be raised to at least the minimum of the new range.
- Transfers – A lateral transfer is a move to a position within the same salary band or job group. There is generally no salary increase for a transfer. In the event an employee transfers into a position with a lower range, a reduction in pay will be made based on the responsibilities of the job.
Objectives of HRM
The objectives of HRM are drawn from and to add up the challenge to accomplish the organisational objectives. The key objective of Human Resource Management (HRM) is to safeguard the stream of supply of skilled and enthusiastic human resources for an enterprise.
The other objectives of HRM are to meet the desires, goals; ethics and dignity of each and every employee, with an outstanding anxiety for the socio-economic problems of the society and the nation. The objectives of HRM can be categorized into four.
The societal objectives are socially and ethically answerable for the requirements and intricacy of the society. So HRM may help the organisations to bestow ethically and socially according to the needs and challenges emerging in the society.
So if an organisation does not use its resources for the benefit of the society or act in an unethical way, the society may restrict the smooth functioning of the organisation.
The organisational objectives accept the function of human resource management in organisational effectiveness. Basically the HR department is out there to serve the rest of the departments of the organisation.
Functional objectives try to sustain the department‘s role at a level appropriate for the organisation‘s necessities. The need for Human resources is formulated accordingly to go with the organisation‘s demands.
Personal objectives facilitate employees in achieving their personal goals. Personal objectives of workers should be preserved, maintained and motivated. Or else, employee‘s performance and satisfaction will narrow up resulting in a rise in the employee turnover.
Importance of HRM
The major purpose of HRM is to increase and develop the productive output of employees in the organisation in more ethical, social, and managerially accountable manner. This purpose materialized from the studies in industrial relations, personnel administration, industrial psychology and personal management. To achieve competitive advantages the organisations face three main competitive challenges. These are Challenge to sustainability, Global Challenge and Technology challenge.
- Challenge of sustainability is capability to deal with the continuously varying business environment.
- Global challenge is the challenge from a foreign competitor in the organisations domestic market and the organisation has to equip itself to defend this threat.
- Technology challenge compels the employees in an organisation to adapt to new advanced technology to make them competitive.
With aid of HRM organisations can overcome these challenges. All aspects of human resources management including how organisation manages the human resource environment; acquiring , preparing, assessment, development and the compensating of human resources along with the highly competitive new role of human resources management can help the organisations to meet their competitive challenges and add value to their business.
The Changing Role of HR Management
Human resources management plays an important role for organisations to manage employee‘s employment effectiveness by motivating them to reach a stage of high productivity and to achieve the organisation goals and objectives.
Business environment is changing day by day and so is HR environment. The changing environment of HRM includes work force diversity, economic and technological change, globalization, organisational restructuring, changes in the nature of jobs and work and so on.
- Work Force Diversity -The global workforce is to be more diverse as increasing number of women coming forward to take up jobs due to a combination of factors like women‘s liberation, economic needs, greater equality of sexes, education and so on. It has been necessitating the execution of more flexible work scheduling, child care facilities, maternity leaves, etc. Further, creating unanimity from a diverse work force has also become a challenge for HR manager.
- Economic and Technological Change -Several economic and technological changes have occurred that have changed employment and occupational pattern. Every modern organisation have become the technology-driven organisations, men are being replaced by machinery. Manufacturing advances will reduce many blue-collar jobs, to replace them with less but more highly skilled jobs.
- Globalization -There has been a growing tendency among business firms to extend their sales or manufacturing to new markets aboard. Globalization increases competition in the international business. Globalization has given genesis to the multinational corporations (MNCs). The MNCs are characterised by their cultural diversities, intensified competition, and variations in business practices which have posed major challenges for HRM in the next few years.
- Organisational Restructuring -Organisational restructuring is used to make the organisation competitive. From this point of view, mergers and acquisitions of firms have become common forms of restructuring to ensure organisational competitiveness. As a part of the organisational changes, many organisations have ―right sized‖ themselves by various ways like eliminating layers of managers, closing facilities, merging with other organisations, or out placing workers. There has been a practice to flatten organisations by removing several layers of management and to improve productivity, quality, and service while also reducing costs.
- Changing Nature of Work -Along with changes in technology and globalization, the nature of jobs and work has also changed. There is also a trend toward increased use of temporary or part-time workers in organisations. The typical business will be knowledge-based, an organisation composed largely of specialists who direct and discipline their own performance. As a result, the organisations are giving and will give growing emphasis on their human capital i.e., the knowledge, education, training, skills, and expertise of employees, the expense of physical capital like equipment, machinery and physical plants.
As such, the HR environment has changed. The challenge posed by changed environment is fostering intellectuals or human capital needs managing these differently than those of previous generation.
Need for HR Planning
Human resources planning in the present scenario has a number of timely issues that the leaders distinguish as objectives, that will perk up the workforce. To summarize following are the points which explains the need of HRP.
- Forecasting Human resource requirement – HRP is essential to determine the future human resource needs in an organisation. In the absence of such a plan, it would be difficult to have the services of the right kind of people at the right time.
- Effective Management of change – Planning is required to cope up with the changes in the market conditions, technology products and government regulations in an effective way. These changes call for continuous allocation and reallocation of skills and in the absence of planning there might be under utilization of human resource.
- Realizing organisational goals – In order to meet the need of organisation and its goals like expansion, effective planning is required.
- Promoting/repositioning employees – The database of HRP provides comprehensive skill repertoire, which helps the organisation to take decision in terms of promotion, demotion, transfer, etc. of employees.
- Effective utilization of human resource – The database helps to identify the underutilized or surplus human resource.
Significance of HR Planning
From the above, it is clear that any failure in HR planning will be a limiting factor in achieving the objectives of the organisation. If the number of persons in an organisation is less than the number of persons required, then, there will be disruptions in the work, production will be hampered and the pace of production will be slow and employees will be burdened with more work.
If there is surplus manpower in the organisation, there will be unnecessary financial burden on it in the form of a large pay bill if employees are retained in the organisation or if they are laid off, the compensation will have to be paid to the retrenched employees. Therefore, it is necessary to have adequate number of persons in an organisation to attain its objectives.
Human resource management is the strategic approach to control and manage the working of any business organisation effectively. To begin with, human resource functions the first step is to do human resource planning that includes the decisions regarding the workforce to be employed, their functions and wages to be paid.
However, before learning about human resource planning, it is necessary to understand the meaning and significance of human resource. Human resource is the manpower employed in or for an organisation. These people are directly responsible for the productivity of the business enterprise.
There are several factors that are responsible for the growing importance of human resource planning such as the growing competition in the business market. Daily some new strategy or innovation is introduced to enhance the profit of the business organisation.
Process of HR Planning
The HR planning has gained momentum and importance considering the expansion of business, adoption of complex technology and professional management techniques. HRP consists of the following stages: Analysing organisational plans and deciding objectives, Analysing factors for manpower requirements, Determination of gaps in Human resource and Developing human resource plans.
Analysing Organisational Plans and Deciding Objectives
The business plan would be a blueprint of desired objectives. This objective stated in economic terms, would incorporate the growth rate of the company, diversification plans, market opportunities and government policies. Therefore, human resource planning should meet two requirements.
- It should be directly related to the essential nature of the organisation.
- The changes in the selected factors should be proportional to changes in the human resources required in the organisation.
In a small organisation, a human resource plan could be formulated to cover the whole organisation. However, in a large organisation, size may necessitate human resource planning by separate departments.
Analysing Factors for Manpower Requirements
The existing job design and analysis may thoroughly be reviewed keeping in view the future capabilities, knowledge and skills of present employees. The job generally should be designed and analysed reflecting the future human resources and based on future organisational plans. The factor for manpower requirements can be analysed by two ways –
- Demand forecasting – Demand forecasting is the process of estimating the future requirements of manpower, by function and by level of skills. It has been observed that demand assessment for operative personnel is not a problem but projections regarding supervisory and managerial levels are difficult. Demand forecasting must consider several Internal and External Factors.
- Internal factors – Organisational Budget constraints, production levels, introduction of new product and services, organisational structure, employee separation, etc.
- External factors – Competition, economic climate, laws and regulatory bodies, change in technology, and social factors.
- Supply forecasting – It determines whether the HR department will be able to procure the required number of human resource. It measures the number of people likely to be available from within and outside the organisation. The supply forecasting is done by i) Internal supply forecast ii) external supply forecast.
Determining Human resource gaps
The existing number of personnel and their skills are compared with the forecasted human resource needs to determine the qualitative and quantitative gaps in the workforce. Reconciliation of demand and supply forecast will give the number of people to be recruited or made redundant as the case might be.
Developing a Human Resource Plan
Once the demand and supply forecast of human resource is undertaken a series of action plans are undertaken to fill the gap of surplus or deficit of human resource.
Some of the action plans are –
- Recruitment and selection
- Training and development
- Retention plan
Control and Review Mechanism
Human resource planning requires considerable amount of financial resources, besides time and staff. Small firms may not go for it but large organisations prefer human resource planning as a means of achieving greater effectiveness and long-term objectives. J. W. Walker is of the opinion that, ―In making a projection of manpower requirements, selecting the predictor ,the business factor to which manpower needs will be related ; is the critical first step.
Selecting the right predictor in relation to the business is a difficult process. To be useful, the predictor should meet two requirements; first, it should be directly related to the essential nature of the business so that business planning is done in terms of the factor. The second requirement is that changes in the selected factor be proportional to changes in the manpower required in the business‖. Hence, the human resources structure and system must be taken into control and examined with a view of keeping them in line with the plan.
Strategies for Human Resource Planners
he objective of manpower planning is to help the organisation to achieve its goal. For this purpose, the manpower planners have to develop some strategies. Steiner has 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, 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 organisation‘s goals.
- They should develop measures of manpower utilisation 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 improve manpower utilisation.
- They should conduct research to determine factors hampering the contribution of individuals and groups of the organisation with a view to modifying or removing these hurdles.
- 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.
- They should evaluate the procurement, promotion and retention of the effective human resources.
- They should analyse the dynamic process of recruitment, promotion and loss to the organisation and control these processes with a view of maximising individual and group performance without involving high cost.
Advantages of HR Planning programs
As manpower planning is concerned with the optimum use of human resources, it can be of great benefit to the organisation, in particular and to the nation in general.
At the national level, it would be concerned with factors like population, economic development, educational facilities and labour mobility. At the level of the organisation, it is concerned with requirements, sources of availability, the welfare of human resources etc.
The various advantages of human resource planning are discussed below –
- Improvement of Labour Productivity
- Recruitment of Qualified Human Resources
- Adjusting With the Rapid Technological Change
- Reducing Labour
- Control over Recruitment and Training Cost
- Mobility of Labour
- It can Facilitate Expansion Programmes
- To Treat the Manpower like Real Corporate Assets
Improvement of Labour Productivity
Manpower or human resources as a factor of production differ from other factors of production. In other words, just as satisfied workers can be productive, dissatisfied workers can be destructive. Therefore, through proper human resource planning we can improve the morale of the labour and improve labour productivity.
Recruitment of Qualified Human Resources
Talented and skilled labour has become a scarce resource especially in developing countries. Therefore, for the long run survival of the firm, it is essential to recruit the best labour force through proper manpower planning.
Adjusting With the Rapid Technological Change
With the change in technology, the job and job requirements are also changing. Therefore, it is necessary to forecast and meet the changing manpower, which can withstand the challenges of the technological revolution. This can be done only through effective manpower planning.
Turnover, the labour turnover refers to the mobility of labour out of the organisation due to various factors such as dissatisfaction, retirement, death etc. Due to labour turnover, a firm will be losing experienced and skilled labour force. This loss can be minimised only through efficient manpower planning.
Control over Recruitment and Training Cost
Highly skilled personnel are in short supply and it is very costly to hire, train and maintain them. A company has to incur heavy costs in processing the applications, conducting written tests, interviews, etc. and in the process of providing adequate training facilities. In consideration of these costs, it is essential to plan carefully in relation to the manpower so as to reduce the recruitment and training cost.
Mobility of Labour
Today, it is very difficult to maintain the qualified personnel in an organisation, as they will be moving from one job to another in search of better prospects. In a free society, human beings enjoy unrestricted mobility from one part of the country to the other. Therefore, in order to reduce the loss of experienced and skilled labour, every organisation must have a sound system of manpower planning.
It can Facilitate Expansion Programmes
In these days of rapid industrial development, every company goes for expansion of its activities. As a result of the increasing company size, the demand for human resources also increases. This necessitates proper manpower planning so as to ensure the continued supply of the required manpower for the firms‘ activities.
To Treat the Manpower like Real Corporate Assets
Today it is being increasingly felt by the practicing managers and psychologists that men in an organisation must be treated like the most significant assets.
The productivity of a company can be improved only through manpower planning, recognizing the significance of the human factor in business. Proper manpower planning considers the fact that satisfied workers can contribute a lot to the overall profitability of the firm through improved productivity.
Limitations of HR Planning
The main problems in the process of human resource planning are as follows-
Human resource planning involves forecasting the demand for and supply of human resources. Projecting manpower needs over a period of time is risky. It is not possible to track the current and future trends correctly and convert the same into meaningful action guidelines. Longer the time horizon, greater is the possibility of inaccuracy. Inaccuracy increases when departmental forecasts are merely aggregated without critical review.
Factors such as absenteeism, labour turnover, seasonal trends in demand, competitive pressures, technological changes and a host of other factors may turn the rest of manpower plans into fashionable, decorative pieces.
Technological changes and market fluctuations are uncertainties, which serve as constraints to human resource planning. It is risky to depend upon general estimates of manpower in the face of rapid changes in environment.
Lack of support
Planning is generally undertaken to improve overall efficiency. In the name of cost cutting, this may ultimately help management weed out unwanted labour at various levels. The few efficient ones that survive such frequent onslaughts complain about increased workload.
Support from management is equally missing. They are unwilling to commit funds for building an appropriate human resource information system. The time and effort involved with no tangible, immediate gains often force them to look the other way‘.
Successful human resource planning nourishes slowly and gradually. In some cases, sophisticated technologies are forcefully introduced just because competitors have adopted them. These may not yield fruits unless matched with the needs and environment of the particular enterprise.
What is Human Resource Planning?
Human resource planning as that strategy the acquisition, utilization, improvement and preservation of an enterprise‘s human resource. It relates to establishing the number of personnel required and developing sources of human resource.