Human resource planning is deciding in advance the future requirements of human resource in organization

Human resource planning is deciding in advance the future requirements of human resource in organization

A line manager has to decide or recommend how many people and what skills they need now and at least in the short-term future. This is the process of human resource planning. If there is a personnel function it may provide the manager with data on such things as the availability of people from the labour market, the output of trainee schemes and employee turnover rates. It may even in some large organizations use computer models to make projections. But only the manger knows what he or she is doing now and will be doing the future and it is those activity levels that form the basis of human resource plans. Human resource planning aims to match human resources to meet the business need expressed in activity levels. Plans are often long-term (i.e. one year head or more) but may look at shorter-term needs as well, planning for people is concerned with
  • Getting and keeping the number and quality of staff one need
  • Identifying skill requirements and how to satisfy them
  • Dealing with surpluses and deficits of employees
  • Improving the utilization of employees.

Determining Human Resource Requirements

Human resource requirements are determined by relating the supply to the demand forecasts and identifying deficits or surpluses of human resource that will exist in the future. Table 1 shows how demand and supply forecasts can be scheduled over a period of five years. The reconciliation of demand and supply forecast give us the number of people to be recruited or made redundant as the case may be. This forms the basis for the action programme in HRP.

Human Resource Requirement
Demand forecasting: Decisions on the number of people the company need are based on demand and supply forecasts. Demand forecasting is the process of estimating the future number of people required and the skills and competencies they will need. The basis for the forecast will be present and projected activity levels in such terms as outputs or the number of items to be processed. Forecast activity levels are usually derived from the business plan and the related functional or departmental plan and budget. For example, in a manufacturing company the sales budget is translated into manufacturing plans, giving the number or types of product to be made in each period. For this information, the number of hours to be worked by each category of employee to meet the budget for each policy is computed.

1. Managerial judgment: This is the most typical method. It simply required you to sit down, think about future workloads, and decide how many people you need. Experienced managers can do this quite well but it often involves a lot of guesswork. It usually only works in the short-term and this may not present too much of a problem if increases in level of work can easily be dealt with by recruitment. Overtime, sub-contracting or outsourcing. Unforeseen decreases in activity levels may create more problems. It may not be so easy or desirable to make people redundant, lay them off or reduce their working hours. It may even be difficult to get out of a sub-contract quickly. That is why you have constantly to attempt to forecast requirements as for ahead as you can see by monitoring trends, finding out how business plans are progressing, checking on sales forecasts and results and so on. You cannot rely entirely on your own resources to plan ahead. You must get data from other people.

2. Ratio-trend analysis: Ratio trend analysis is carried out by studying past ratios. For example, the number of direct (production) workers and indirect (support) workers in a manufacturing unit. Forecast activity levels can then gives you a good idea of how many direct workers you will need (so many people to make so many bags) and the ratio of indirect to directs will tell you how many support workers you are likely to need.

3. Work study techniques: Work-study techniques can be used when it is possible to apply work measurement to calculate how long operations should take and the number of planned hours, and therefore people required. In a manufacturing company the starting point is the production budget set out as the volume of saleable products for the plant as or whole and the output volumes for each department. If standard hours for units of output have been determined by work measurement, the budgets of productive (planned hours for the year) are then compiled by multiplying standard hours per unit of output by the planned output in units. This is decided by the number of actual working hours for an individual worker, having allowed for absenteeism and forecast idle or down time to show the number of operators required. The following are a simplified example of this process.

Planned output for year                        : 2000 units standard hours
Standard hours per unit                        : 5 hours
Planned hours for year                         : 100, 000 hours
Net productive hours per person year: 2000 hours
Number of direct workers required     : 50 hours
(Planned hours divided by productive hours per person)


Work-study techniques for direct workers can be combined with ratio trend analysis to calculate the number of indirect workers needed.

4. Forecasting skill requirements: Forecasting of skill requirements that from an analysis of the current range of skills required and the analyze the impact of forecast product-market developments, the acquisition of new or different types of business, projected changes in work methods and the effect of the new technology. The latter would include information technology, computerized production methods such as manufacturing requirements planning (MRP/ or some form of automation or robotics). Skill forecasts are largely a matter of judgment based on experience and a thorough analysis of likely trends in the type of work to be carried out and working methods.

5. Regression Models: Regression analysis is used to measure the relationship between one or more independent variables to explain a dependent variable. In HRP regression analysis can be used to correlate personnel requirements with output, revenue etc. as in trend-ratio and time-series analysis. The analysis is based more on historical patterns. The real value of regression analysis in HRP is in generating alternative scenarios in personnel needs. It is important to bear in mind that the relationships are not always liner and the purpose of the analysis is not present the management with precise quantitative forecasts.

6. Supply forecasting estimate: Supply forecasting estimates the number of people likely to be available from within and outside the organization (i.e. what are sometimes called the internal and external labour market). The supply analysis ever
  • Existing people available-how many have you got and what skills do they posses? 
  • Potential losses to existing resource through employee wastage-what are the present and forecast employee turnover figures? 
  • Effect of absenteeism-what is the present rate and what it will be in the future? 
  • Sources of supply from within the organization – who have we got now with the right skills? Who are going to be available in the future, and when? 
  • Sources of supply from outside the organization-what are the chances of being able to recruit the sort of people we need? 
  • Defining sources of future supply and reaching satisfactory conclusions on availability may be difficult. It depends in a number of factors out of one’s control. 
  • Demand and supply forecasts indicate the extent to which there are likely to be surpluses or deficits of people.

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