Monday, August 20, 2007

Human Resourse Planning

Human Resourses Management is productive exploitation of manpower resources. This is also termed as ‘Manpower Management’. Manpower Management is choosing the proper type of people as and when required. It also takes into account the upgrading in existing people. Manpower Management starts with manpower planning. Every manager in an organization is a personnel man, dealing with people.

HR Planning for a business enterprise needs a conceptual outlay to enable business managers to identify, plan and implement planning for manpower. There is a need to appreciate basic definitions of planing as is understood and applied in commercial situations, the core strategy necessary for an organization to embark upon the journey of recruiting, the methods and practices adopted by organizations in a current scenario and the inherent constraints built into the planning process.


HR planning may be defined as an articulated business strategy based on current and future business forecast for the acquisition, utilization, development, and retention of an enterprise’s human resources. The strategy articulates the need as it exists today and the plan necessitates formulation of the goals and action plan for achievement of the people plan. The process facilitates hiring and retaining the right profile of people at varying jobs, positions, places and time frames depending on the organizational need.

While considerable strategic time, competence and managerial inputs has been dedicated to the planning of corporate economic resources, such as investment, technology, systems, manufacturing capabilities, research and development, new product development, customer management, planning for resource requirement has been denied its priority, particularly at the company level. At the global level, manpower research are periodically organized more to determine employment potential, state of the unemployment rate, type, kind, demographics, rather than to identify, indicate and suggest on how the manpower requirements of the various priority areas and nations at large should be met, both qualitatively and quantitatively.

HR planning being a relatively contemporary activity, is today an area of in depth study and research. Its importance and implications, given the critical need for funding micro and macro level growth a fast changing economy, have been realized at the corporate level in most countries of the world. At the macro level, however despite the realization of the advantages of HR planning, countries with well-established HR planning programs are still a relative minority, even among the large countries. The ability to predict, plan, search, resource and execute a well orchestrated HR Plan is still not a state of art activity. Needless to mention the growing population in several parts of the world make this job several times more complex.

However on balance there is little evidence to claim , that with the rising state of unemployment, several economies stagnating or into recession, increasing cost of labor and the substantial portion that it forms of the total running costs of a company, many more firms- large, medium and small- will be persuaded to go in for some of scientific HR planning.

Fundamentally the market has changed. It is world of the knowledge worker. The rise of the intellect has been imminent. HR Planning no longer can confine itself to the traditional sources for hiring and retaining. The skill of yesterday is neither available and nor are not being sought after by the new generation. The human resources of today see their roles having changed from that of a doer to that of a thinker and in most occasions’ thinker doer. Organizations in contrast have continued to nurture and retain a set of human resource who have become more redundant than ever before.


The purpose and goals of HR planning are mainly:

  1. To ensure optimum and effective use of human resources currently employed;

  2. To research and reconfigure new skill sets to cope with organizational needs given depleting relevant skills population

  3. To assess the employability of the human resource given changing skills and competencies

  4. To draw specific outlines of competencies as they differ from today

  5. To assess or forecast future skills requirement if organization’s overall objectives are to be achieved; and

  6. To identify control standards to ensure that necessary resources are identified, available as and when required.

  7. To fundamentally study the corporate strategy, the business mission and overall philosophy of recruiting VS systems, technology, outsourcing.

  8. Analyze the people market environment and its changes as it affects the firm Vis a Vis competition.

Corporate goals for attaching importance to HR planning and forecasting exercises are:

  1. to determine hiring pattern and specific action plans

  2. to anticipate redundancies

  3. to minimize downsizing, surpluses, early retirement;

  4. to plan for optimum training levels;

  5. to manage management development programs;

  6. new project forecasting and recruitment planning

  7. to cost the manpower in new project;

  8. to assist productivity bargaining; and

  9. to assess future accommodation requirements.

The basic process of HR Planning
  1. Analyze the environment of the organisation and its past operations

  2. Evaluate the environment for HR trends, patterns, educational changes, literacy levels, demographic transitions in people

  3. Evaluate education patterns, school pass out rates, professional courses capacity, market liberalization for international opportunities, availability of easy financing for college studies

  4. Evaluate any major shift in people relocation, geographic movements, natural calamity constraints

  5. Establish Corporate strategy, goals, objectives and action plans

  6. Link the corporate strategy to the HR strategy and mission

  7. Ensure connectivity of corporate plans to hr plans and targets

  8. Determine the Organisation Structure, process flows, design details

  9. Draw up a Demand Forecast for Manpower

  10. Conduct a HR Inventory both at the micro and macro levels

  11. Plan for an Attrition Process both desired and undesired

  12. Design HR policies for retention and career planning of high performers

  13. Integrate HR policies with changing aspirations of the employees and the potential population in the market place

  14. Draw up a supply Forecast for Manpower evaluating source, actual availability, possibility of attraction to the corporate

  15. Study whether Demand is greater or less than Supply

  16. Establish Manpower Objectives for short, medium and long term and keep a flexibility on the profile and employee fit with the corporate culture

  17. Start an Action program and make individuals and teams responsible for meeting the recruitment targets.

  18. Update the Manpower records and make system data friendly.










Evaluation of HR resources within the corporate & knowledge of availability in the mkt.

Ensure strategy – structure interface

Predict losses of current manpower at the close of forecast period. Preempt change in knowledge gaps.

Evaluate HR requirements by the end of forecast period. Make provision for unplanned environment changes.

Planning to bridge the gap between known HR resources and those required by the end of forecast period

Outside Personnel External Wastage Output or Manpower

Resources records labour mkt productivity utilisation Recruitment

Influences Training

Requirements changes * Qual Rationalisation

Existing vacancies in process * Numb Wages

* Timi Career Planning



It is possible to distinguish 4 main stage in planning

Stage 1: Evaluation of HR resources within the corporate and knowledge of availability in the market

Stage 2: Estimation of the proportion of currently employed manpower resources who are still likely to be with the firm by the forecast date. Predict losses of current manpower at the close of forecast period

Stage 3: Assessment of forecast of labor requirements during and by the end of the forecast period, to achieve the company’s objectives goal.

Stage 4: Measures to ensure that the necessary human resources are available as and when required e.g. a HR PLAN

Planning Process Tasks and Activities

The tasks and activities involved in the planning process
The HR planning involves:

  1. Estimating how many of the existing labor and management force in different occupations or grades, levels, positions will leave the company or their present job during the forecast period,

  2. Reconstructing the organization structure, planning for needs and surpluses and ensuring fat remains away.

  3. And how many will have been trained, retrained, job rotated, jobs redesigned, jobs abolished, created to manage the HR people status to replace exits;

  4. Articulate overall objectives and goals for a specified period ahead (e.g. In terms of sales in rupees, output of certain products and services, proportion of the national market, etc.);

  5. Converting these objectives to manpower (or man/hour man/day) requirements, taking account of changes in processes, value engineering, productivity enhancements, production methods, product-mix etc.

  6. Recognizing the opportunities for improving manpower utilization, deployment effective usage.

  7. Assessing the possibilities of recruitment extra men (and women) to make good losses from wastage, and to meet additional demands;

  8. Determine where and when critical manpower shortages are likely to arise; and

  9. Deciding how those shortages can best be overcome, or how the company should adjust to them.


HR planning is a ‘management tool’ in forecasting and predicting HR needs of a corporate entity, controlling labor costs, and is vital to the future profitability of the company. Forecasts do not have to be entirely revealing and correct. A scientific basis for forecast would make substantive improvement over the current scenario. Competitiveness of a firm will obviously be affected both by shortage of manpower, labor or surplus of labor. Unfilled vacancies, particularly in key positions adversely affect efficiency and productive schedules. An important advantage is that an enterprise can discover, at an early stage, critical points in the labor force, so that remedial action can be taken well in time. The critical points are highlighted – such as shortages most likely to occur, inefficient use of labor, critical positions, potential trouble spots, etc. It helps the management in devising clear and comprehensive employment policies or reviewing existing policies, so as to make the most effective use of its manpower resources.


There are a number of more specific reasons for resorting to HR planning exercises at the level of the undertaking, reasons that can make the exercise essential. These are:

  1. To establish the best cost balance between plant and manpower utilization.

  2. To determine recruitment, level wise and occupation wise

  3. Ensure that we do not inherit surplus manpower hired on account of an incompetent CEO.

  4. To ensure that people do not substitute systems and process

  5. To anticipate redundancies and avoid unnecessary dismissals or aspirations

  6. To decide optimum training levels.

  7. To decide on worker training courses

  8. To provide a basis for management development programs

Importance of manpower Planning:

Planning is nothing but using the available assets for the effective implementation of the production plans. After the preparing the plans, people are grouped together to achieve organizational objectives.

Planning is concerned with coordinating, motivating and controlling of the various activities within the organization. Time required for acquiring the material, capital and machinery should be taken into account. Manager has to reasonably predict future events and plan out the production.

The basic purpose of the management is to increase the production, so that the profit margin can be increased. Manager has to guess the future business and to take timely and correct decisions in respect of company objectives, policies and cost performances. The plans need to be supported by all the members of the organization. Planning is making a decision in advance what is to be done. It is the willpower of course of action to achieve the desired results. It is a kind of future picture where events are sketched. It can be defined as a mental process requiring the use of intellectual faculty, imagination, foresight and sound judgment.

It involves problem solving and decision making. Management has to prepare for short term strategy and measure the achievements, while the long term plans are prepared to develop the better and new products, services, expansion to keep the interest of the owners.

Advantages of manpower planning:

Manpower planning ensures optimum use of available human resources.
1. It is useful both for organization and nation.
2. It generates facilities to educate people in the organization.
3. It brings about fast economic developments.
4. It boosts the geographical mobility of labor.
5. It provides smooth working even after expansion of the organization.
6. It opens possibility for workers for future promotions, thus providing incentive.
7. It creates healthy atmosphere of encouragement and motivation in the
8. Training becomes effective.
9. It provides help for career development of the employees.

Factors which affect the efficiency of labor:

Inheritance: Persons from good collection are bound to work professionally. The quality and rate of physical as well as mental development, which is dissimilar in case of different individuals is the result of genetic differences.

Climate: Climatic location has a definite effect on the efficiency of the workers.

Health of worker: worker’s physical condition plays a very important part in performing the work. Good health means the sound mind, in the sound body.

General and technical education: education provides a definite impact n the working ability and efficiency of the worker.

Personal qualities: persons with dissimilar personal qualities bound to have definite differences in their behaviour and methods of working. The personal qualities influence the quality of work.

Wages: proper wages guarantees certain reasons in standard of living, such as cheerfulness, discipline etc. and keep workers satisfy. This provides incentive to work.

Hours of work: long and tiring hours of work exercise have bad effect on the competence of the workers.

Downsizing of manpower:

Downsizing of manpower gives the correct picture about the number of people to be employed to complete given task in the predetermined period. It is used for achieving fundamental growth in the concern. It can work out the correct price by the resource building or capacity building. It aims at correct place, correct man on a correct job.
Thus manpower planning is must to make the optimum utilization of the greatest resource available i.e. manpower for the success of any organization.


HR planning must be recognized as an integral part of overall business planning. Hr planning should be lead by the CEO as his core responsibility. The manpower planner needs to know the company’s objectives in terms of sales, marketing and growth. Top management backing and involvement for manpower planning is essential and should receive its rightful place hierarchically.. The HR planning responsibility should be developed in consultation with line managers and their representatives. The forecast period should be prepared by skill levels rather than by aggregates of workers. Both the forecasting techniques, and the forecasts themselves, need to be constantly revised and improved in the light of experience.


Human resource is a key economic resource, and a scare one. It therefore demands the same attention a company gives to planning sales, investment or profits. It is this fact that has led to the development of manpower planning among an increasing number of business organizations. For the company, the returns from manpower planning can be measured in term of higher efficiency and productivity as a result of better utilization of its manpower resources and the elimination of waste in recruitment, training and other personnel schemes. The benefits to the individual employee and the country are not less important.

It is clear that a company cannot hope to forecast accurately its future manpower requirements unless these are related to future production and sales levels. The best results, therefore are achieved when a company has integrated HR planning with overall planning team is basically two fold: to interpret the forecasts for production and sales interns and manpower constraints on account of company policy for the future.

Four points need to be emphasized above the forecasting methods discussed in this note.

  1. No Corporate can realistically accept evidence resulting from mechanical forecasting methods without a superimposing view on the macro economic environment.

  2. The possibility of judgement done by individuals or groups performing the research is high and there is always room for the subjective/objective or intuitive assessment that the experienced manager can provide, only if needed.

  3. In HR forecasting as in any other form of forecasting it is essential to recognize the wide margin of possible error, and therefore, preferable to think more in terms of a range of possible levels of demand for manpower, than of a single ‘correct’ estimate. The estimates need to be correlated to assumptions that are valid and proven. Futuristic assumptions need careful thought and research/ analysis.

  4. Though the different analytical methods are presented as though they were alternatives, in practice a single company may wish to use two or more of them in different circumstances, as a check on one another. Finally it is abundantly evident that everything depends on the accuracy of the sales and output forecasts and the soundness of the calculations of turnover and wastage. The first task of a company must, therefore, be to ensure that the estimate are as reliable as possible.

Finally HR planning is continuous, ongoing process; and companies that treat it as a five-year burdensome task will be deeply disappointed. In fact it is preferable that they do start this task as it may turn into a ritual. Even the most carefully calculated forecasts are liable to be overtaken by unforeseeable changes. A system of assorting plans to these changes with as little delay as possible, is an essential part of manpower planning. Indeed one might say that it is the essential characteristic of a well-managed enterprise. HR planning is a recruitment start up. HR planning is not the job of Human Resources Management (Personnel) people. It is the job of the CEO. Wherever the CEO has relinquished his responsibility and delegated HR hiring and structuring the organizations have lived to tell a tale. Corporate who seek the best minds to remain competitive need to plan for their hiring and thereafter their retention need to get their act together now. Absence of HR planning would mean an absence of a leader at a point in time now known now, definitely in the near future.

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