Concept of HRP (Human Resource Planning)
In simple words, HRP is a process of sticking balance between human resources required and acquired in an organization. In other words, HRP is a process by which an organization determines how it should acquire its desired manpower to achieve the organizational goal. Thus, HRP helps an organization to have right number and kind of people at the right place and right number times to successfully achieve its overall objectives. The quality of an organization is, to large degree, considered merely the summation of the quality of people its hires and keeps. Therefore, before actually selecting the right people for right jobs, it becomes a pre-requisite to decide n the quantity and quality of people required in the organization. This is done through human resource planning.
The various activities involved in the process of human resource planning are now discussed one by one.
1. Analyzing organization plans and objectives: The process of human resource planning begins with analyzing the overall plans and objectives of organization. The reason being the human resource plans stem from business plans. Analysis of business plans into sub-sectional and functional plans such as technology, production, finance, marketing, expansion and diversification provides for assessing the human resource requirements for each activity in each section and department.
Similarly, the analysis of organizational objectives also provides for human resources required by an organization. For example, if the objective of the organization is rapid growth and expansion, it would require more human resources for its all functional areas. Thus, it is evident that the human resource planning needs to be made in accordance to the overall organizational plans and objectives.
2. Analyzing Objectives of Human Resource Planning: The main purpose of human resource planning is matching employee’s abilities to enterprise requirements, with an emphasis on future instead of present arrangements. According to Sikula, “the ultimate mission or purpose of human resource planning is to relate future human resources to future enterprise need so as to maximize the future human resources to future resources.” For this, managers need to have the objectives of human resource planning with regard to the utilization of human resources in the organization. While developing specific objectives of human resource planning, questions need to be addressed like:
Forecasting demand for human resources is good for several reasons because it can help: (i) quantify the number of jobs required at a given time for producing a given number of goods, offering a given amount of services. (ii) ascertain in staff-mix needed at different points of time in the future and (iii) ensure adequate availability of people with varying qualifications and skills as and when required in the organization,.
How to forecast requirement for human resources in the future? There are various techniques varying from simple to sophisticated ones employed in human resource forecasting. These include:
a) Management Judgment: This technique is very simple and time-saving. Under this technique, either a “bottom-up” or a “top-down” approach is employed for forecasting future human resource requirement of an organization. In case of bottom-up approach, line managers prepare departmental requirements for human resource and submit it to the top managers for their review and consideration. In the “top-down” approach, the top managers prepare the departmental forecasts which are reviewed with the departmental heads or managers. However, neither of these approaches is accurate. Forecasts based on these approaches suffer from subjectivity. This technique is suitable only for small firms or in those organizations where sufficient data-base is not readily available.
b) Work-Study Method: This method can be used when it is possible to measure work and set standards and where job methods do not change frequently. In this method, as used by Fredrick Winslow Taylor in his ‘Scientific Management’, time and motion study is used to ascertain standard time for doing a standard work. Based on this, the number of workers required to do standard work is worked out.
c) Ratio-Trend Analysis: This is one of the quickest forecasting techniques. Under this method, forecasting for future human resource requirements is made on the basis of time series data. In other words, this technique involves studying past ratios (e.g. Total output number of workers, total sales volume/ number of sales persons, direct workers, is made for indirect workers) and based on these, forecasting is made for future ratios. While calculating future ratios, allowances can be made for expected changes in organization, methods and jobs. The demand for human resources is calculated on the basis of established ratios between two variables.
d) Delphi Technique: Delphi technique is named after the ancient Greek oracle at the city of Delphi. This is one of the judgmental methods of forecasting human resource needs. It is a more complex and time-consuming technique which does not allow group members to meet face-to-face. Therefore, it does not require the physical presence of the group members.
Process of HRP
How to have the right number of people with right skills at right imes? The process of human resource planning helps in this regard. The human resource planning process consists of activities relating to future demand for and supply of manpower and matching the two in the context of overall organizational plans and objectives.The various activities involved in the process of human resource planning are now discussed one by one.
1. Analyzing organization plans and objectives: The process of human resource planning begins with analyzing the overall plans and objectives of organization. The reason being the human resource plans stem from business plans. Analysis of business plans into sub-sectional and functional plans such as technology, production, finance, marketing, expansion and diversification provides for assessing the human resource requirements for each activity in each section and department.
Similarly, the analysis of organizational objectives also provides for human resources required by an organization. For example, if the objective of the organization is rapid growth and expansion, it would require more human resources for its all functional areas. Thus, it is evident that the human resource planning needs to be made in accordance to the overall organizational plans and objectives.
2. Analyzing Objectives of Human Resource Planning: The main purpose of human resource planning is matching employee’s abilities to enterprise requirements, with an emphasis on future instead of present arrangements. According to Sikula, “the ultimate mission or purpose of human resource planning is to relate future human resources to future enterprise need so as to maximize the future human resources to future resources.” For this, managers need to have the objectives of human resource planning with regard to the utilization of human resources in the organization. While developing specific objectives of human resource planning, questions need to be addressed like:
- Whether the vacancies, as and when these arise, will be filled in by promotion, transfer from external sources?
- What will be the selection procedure?
- How will provisions be made for training and development of employees?
- How to restructure job positions, i.e., how to abolish the old or boring jobs and replace by the challenging ones?
- How to downsize the organization in the light of changing business and industrial environment?
Forecasting demand for human resources is good for several reasons because it can help: (i) quantify the number of jobs required at a given time for producing a given number of goods, offering a given amount of services. (ii) ascertain in staff-mix needed at different points of time in the future and (iii) ensure adequate availability of people with varying qualifications and skills as and when required in the organization,.
How to forecast requirement for human resources in the future? There are various techniques varying from simple to sophisticated ones employed in human resource forecasting. These include:
a) Management Judgment: This technique is very simple and time-saving. Under this technique, either a “bottom-up” or a “top-down” approach is employed for forecasting future human resource requirement of an organization. In case of bottom-up approach, line managers prepare departmental requirements for human resource and submit it to the top managers for their review and consideration. In the “top-down” approach, the top managers prepare the departmental forecasts which are reviewed with the departmental heads or managers. However, neither of these approaches is accurate. Forecasts based on these approaches suffer from subjectivity. This technique is suitable only for small firms or in those organizations where sufficient data-base is not readily available.
b) Work-Study Method: This method can be used when it is possible to measure work and set standards and where job methods do not change frequently. In this method, as used by Fredrick Winslow Taylor in his ‘Scientific Management’, time and motion study is used to ascertain standard time for doing a standard work. Based on this, the number of workers required to do standard work is worked out.
c) Ratio-Trend Analysis: This is one of the quickest forecasting techniques. Under this method, forecasting for future human resource requirements is made on the basis of time series data. In other words, this technique involves studying past ratios (e.g. Total output number of workers, total sales volume/ number of sales persons, direct workers, is made for indirect workers) and based on these, forecasting is made for future ratios. While calculating future ratios, allowances can be made for expected changes in organization, methods and jobs. The demand for human resources is calculated on the basis of established ratios between two variables.
d) Delphi Technique: Delphi technique is named after the ancient Greek oracle at the city of Delphi. This is one of the judgmental methods of forecasting human resource needs. It is a more complex and time-consuming technique which does not allow group members to meet face-to-face. Therefore, it does not require the physical presence of the group members.
- The members are asked to provide their estimates of human resource requirements through a series of carefully designed questionnaires.
- Each member anonymously and independently completes the first questionnaire.
- Results of the first questionnaire are compiled at a central location, transcribed and copied.
- Each member receives the copy of the result.
- After viewing the results, members are again asked to review their estimates. The initial results typically trigger new estimates or cause changes in the original position.
- Steps 4 and 5 are repeated as often as necessary until a consensus is reached.
- Flow Models: Among the flow models, the simplest one is called the Markov model. This model involves the following:
- Determination of time period that will be covered under forecast.
- Establishment of employee’s categories also called states. There should not be overlapping among the various categories.
- Enumeration of annual flows among various categories or states for several time periods.
- Estimation of probability of flows or movements from one categories to another based on past trends in this regard.
f. Mathematical Models: Mathematical models express relationship between independent variables, (e.g. production, sales, etc.) and dependent variable (e.g. number of workers required).
4. Forecasting Supply of Human Resources: Having forecast human resource demand, the next task involved in human resource planning is to forecast human resource supply. Forecast of human resource supply gives the quantity and quality of people available from internal and external sources of manpower supply, after making due allowances for absenteeism, transfers, promotions, changes in the work hours, and other conditions of works.
Forecasting of human resources begins with the current human resource inventory, also called human resource audit. In brief, human resource inventory contains information about present human resources in the organization. It reveals what is available in the stock of manpower and what can be expected in future. Thus, it can indicate whether the supply of human resources is less than its demand or more than its demand. Whatever be the situation, the same will be made good accordingly.
5. Matching Demand and Supply: Once demand for and supply of human resources of an organization is forecast, the two need to be reconciled. Such reconciliation will reveal either shortage or surplus of human resources in future. Accordingly, action plans will be prepared to meet the situation, i.e., to strike a balance between the two. In the case of shortage of human resources, this will be met through recruitment, transfer, promotion, training and development, retention, etc. On the contrary, in case of surplus human resources, it can be made good through schemes like redeployment, retrenchment, voluntary retirement scheme (VRS) through golden handshake, etc. will be recommended and implemented. Yes, downsizing should be done in consultation with the employees union. This will help avoid employees’ resistance for change in job.
6. Monitoring and Control: the sixth and final step involved in human resource planning is monitoring and control. Once the action plans are implemented, these need to be reviewed, regulated and monitored against the set standards. Monitoring of action plans and programmes help reveal deficiencies, if any. Corrective measures help remove deficiency and, thus, control the implementation of action plans formulated earlier need to be modified in the light of changing needs of organization in the changed environment.
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