Human Resource Planning (HRP)

1. Human Resource Planning(HRP)

2. HRP: An Overview • HRP is a process of analyzing & identifying the need for & availability of human resources (HR) so that organization can meet its objectives

3. Defining HR Planning Strategy Oriented DEFINITION • “A strategy for the acquisition, utilization, improvement & retention of an organization’s human resources” • AIMS of HRP: • to ensure the optimum use of the people currently employed • to provide for the future staffing needs of the organization in terms of skills, number, & ages of people • HRP establish control: planner work as a “policeman” who checks whether staffing levels are optimum Process Oriented DEFINITION • HRP is as a continuous process of analyzing an organization’s HR needs under the changing conditions & developing the activities necessary to satisfy these needs like staffing, recruitment, selection, training, etc. • Process aimed at assisting management to determine how the organization should move from its current staffing position to its desired staffing position

4. Business Strategy & HRP

5. Business Strategy & HRP

6. Perspectives of HRP • MACRO HRP – • Assessing & forecasting demand for & availability of skills at national / global level • Predict the kinds of skills that will be required in future & compare these with what is / will be available in the country • Eg. • Gillette merger with P&G whereby decided to restructure & move from business units based on geographic regions to global business units based on product lines which resulted in redundancy of some employees (Relocation to Singapore & VRS for others) • MICRO HRP – • Process of forecasting demand for & supply of HR for specific organization • Eg. • Wipro (a software giant in India) raising wages / short-listing students in their 2nd yr. of college for future employment in India • Genpact (an IT solution company in India) launching an associate trainee program with Osmania University in India

7. JOB ANALYSIS

8. Terminology commonly used in JA literature • JOB – group of positions that have similar duties, tasks, & responsibilities • POSITION – set of duties & responsibilities performed by one person • A job is a general term, a position is more specific. • Eg. as my job, I am a teacher. But to be specific, my position is Elementary Gifted Specialist.Eg. someone might work at the grocery store as their job, but specifically, their position is produce assistant. • JOB FAMILY – group of 2 / more jobs that have similar duties / characteristics • TASK – separate, distinct & identifiable work activity • DUTY – several tasks that are performed by an individual

9. Terminology commonly used in JA literature • RESPONSIBILITIES – obligations to perform certain tasks & duties • DUTY**BEHAVIOR SHOWING A PROPER REGARD / SENSE OF OBLIGATION, JUSTICE MORALITY, OCCUPATION OR POSITION. • RESPONSIBILITY**OBLIGATION,TO DO WHAT IS ASK,IF YOU SAY YOUR GOING TO DO SOMEHTHING DO IT,TRUST,HONEST, TO CARE FOR ANOTHER WHEN ONE • JOB DESIGN – process to ensure that individuals have meaningful work & one that fits in effectively with other jobs • JOB DESCRIPTION – written summary of the content & context of the job, outlining the tasks, duties, & responsibilities of a job, as well as performance standards of each job • JOB SPECIFICATION – written statement of the KSA & other characteristics (human requirements) that are necessary for performing the job effectively & satisfactorily

10. Information obtained from JA • What is to be done? How is to be done? (CONTENT) • Under what conditions is the job to be done (CONTEXT) • What KSA & other characteristics are required to perform the job (HUMAN REQUIREMENTS)

11. Information obtained from JA • JOB CONTENT • Duties & responsibilities • Job demands • Machines, tools, & equipment • Performance standards • JOB CONTEXT • Physical, organizational & social context • Work conditions, & work schedule • HUMAN REQUIREMENTS • KSA, • Education, Experience & personal attributes (personality, interests, etc.)

12. Components of a JA • JOB DESCRIPTION • Statement of tasks, duties, responsibilities, & context of the job • JOB SPECIFICATION • KSA required to perform the job satisfactorily • JOB EVALUATION • Comparison of relative value of jobs in organization for making compensation decisions

13. Methods of collecting information for JA • Number of ways – may be used in combination or in isolation • METHODS: • Interviews • Questionnaires • Observations • Participant diary

14. JA Process • Determine purpose of JA • Review organization chart • OC shows the division of work in organization, how the job in question related to other jobs, how the job fits into the overall organization, who reports to whom, & whom the incumbent reports to • Select representative jobs for analysis • Analyze jobs using data gathering methods • Check information for accuracy • Write JD & JS for use in HR activities

15. Writing JDs • Job title & identification • Job summary • Relationships • Responsibilities & duties • Standards of performance & working conditions • Equipment & tools • Working conditions

16. HRP Process • HRP PROCESS: • Environmental scanning • Forecasting & analyzing demand for HR • Forecasting & analyzing supply of HR • Developing action plans to match HR demand & supply

17. Environmental Scanning • Systematic process of studying & monitoring the external environment of the organization in order to pinpoint opportunities & threats • Involves long range analysis of employment • Factors include economic factors, competitive trends, technological changes, socio-cultural changes, politico-legal considerations, labour force composition & supply, & demographic trends

18. Environmental Scanning • Eg., competitive pressures are likely to increase resulting in enhanced productivity requirements & HRP objective may be ‘to increase employee productivity by 5% in 2 yrs.’ which will require the firm to determine current employee productivity (output / employees) • Attempts to answer 2 questions: • Which jobs need to be filled (or vacated) during the next 12 months? • How & where will we get people to fill (or vacate) these jobs? • Demand & supply of labour in loose & tight labour market • Major impact of the shortage of skilled workforce (tight labour market) in India has been on staff cost (increased by 35% in 2005) • Fast growing sectors like retail, ITeS, telecom are new & do not have historical talent to bank on & hence they are hiring from other sectors with skill sets that are relevant to their industries

19. Forecasting HR Demand • FORECASTING ‘makes use of information from the past & present to identify expected future conditions’. • Forecasts are not perfectly accurate & as the planning scope becomes shorter the accuracy of forecasts increases • HR demand forecasts may be internal / external

20. Qualitative Methods of Demand Forecasting

21. Quantitative Methods of Demand Forecasting

22. Quantitative Methods of Demand Forecasting

23. Causes of Demand EXTERNAL CHALLENGES: • Economic developments – noticeable effect but are difficult to estimate (Inflation, unemployment, & changing workforce patterns) • Social, political & legal challenges – easier to predict, but their implications are not very clear (Implication of abolishing mandatory retirement age in US may not be known until a generation has lived without “65 & out” tradition) • Technology changes – difficult to predict & assess but may radically alter strategic & HR plans (PC would cause mass unemployment vis-à-vis IT field as a large one employing millions of people directly / indirectly – complicates HR, because it tends to reduce employment in one dept. while increasing it in another)

24. Causes of Demand ORGANIZATIONAL DECISIONS: • As orgs. respond to changes in their environment, decisions are made to modify the strategic plan, which commits firm to long-range objectives – growth rates & new products, markets / services & these objectives dictate number & types of employees needed in future • To achieve long-term objectives, HR specialists must develop long-range HR plans that accommodate strategic plan • In short run, planners find strategic plans become operational in form of budgets • Sales & production forecasts are less exact than budgets but may provide even quicker notice of short-run changes in demand for HR • New venturesmeans changing HR demands – when a new venture is begun internally from scratch, lead time may allow planners to develop short-run & long-run employment plans – merging HR group with Corporate Planning staff

25. Causes of Demand WORKFORCE FACTORS (ATTRITION): • Demand is modified by employee actions such as • retirements, • resignations, • terminations, • death, & • leaves of absence • Analysis Technique – Markov Analysis of Attrition Rates

26. Forecasting Techniques Trend Projection Forecasts: • Quickest forecasting techniques • Two simplest methods – • Extrapolation: involves extending past rates of change into future (if an avg of 20 production workers was hired each month for past 2 yrs, extrapolating that trend into future means that 240 production workers will be added during upcoming yr.) • Indexation: a method of estimating future employment needs by matching employment growth with an index, such as ratio of production employees to sales (eg., for each million $ increase in sales, production deptt. requires 10 new assemblers) • Both are crude approximations in short run because they assume that causes of demand remain constant which is seldom the case – making it very inaccurate for long-range HR projections

27. Methods of Demand Estimation TREND ANALYSIS & PROJECTION • Study of firm’s past employment needs over a period of yrs. to predict future needs • Appropriate business factor that relates significantly to employment levels differs across industries (University – student enrollment, Sales firm – sales volume, Manufacturing firm – total units produced) • Steps: • Determine & identify a business factor that relates to the number & type of people employed • Identify historical trend of the relationship between this business factor & the number of people employed • Determine the ratio of employees to the business factor, that is, the average output per individual employee per year – labour productivity • Determine the labour productivity ratio for the past 5 yrs at least & calculate the average annual rate of change in productivity • Calculate the human resource demand by dividing the business factor by the productivity ratio • Project human resource demand for the target year.

28. Methods of Demand Estimation SIMPLE LONG-RANGE TREND ANALYSIS • Extrapolates the volume of current business activity for the years for which the forecast is being made • Since there is a correlation between volume of business activity & employment level, linear extrapolation would also indicate HR demand by job & skill category

29. Methods of Demand Estimation RATIO ANALYSIS • RATIO between output & manpower deployed to achieve that output is established at a given point of time • Eg., revenue per employee, sales vol. per salesperson, service contract per engineer, units produced per employee, etc., • Historical ratio between: • Some causal factor (sales volume) • No. of employees required (number of salesperson)

30. Methods of Demand Estimation REGRESSION ANALYSIS • Drawing a statistical comparison of past relationship among variables • Statistical relationship between no. of patients (business factor) & employment level of nurses in a nursing home may be useful in forecasting the no. of employees that will be needed if the no. of patients increases by say 20%

31. Methods of Demand Estimation LINEAR REGRESSION ANALYSIS • Relationship between two variables which is directly & precisely proportional • Production output & manpower are the two variables & the relationship between these two is plotted on a graph by drawing a “line of best fit” • Analysis aims at providing a measure of the extent to which changes in the values of two variables are correlated with one another x X x x a x x x x Manpower b Y Production level

32. Methods of Demand Estimation MARKOV ANALYSIS • Shows the percentage (& actual no.) of employee who remain in each job from one yr. to the next, as also the proportion of those who are promoted or transferred or who exit the organization • Internal mobility among different job classifications can be forecast based upon past movement patterns – past patterns of employee movements (transitions) used to project future patterns • Pattern is used to establish transitional probabilities & to develop a transition matrix • Transitional probabilities: • Indicate what will happen to the initial staffing levels in each job category / probability that employee from one job category will move into another job category • Determine the forecasted employee levels at the end of the yr

33. Forecasting & Analyzing HR Supply • Internal supply forecasts relate to conditions inside the org. such as age distribution of workforce, terminations, retirements, etc. • External supply forecasts relate to external labour market conditions & estimates of supply of labour to be available to the firm in the future in different categories

34. Methods of Forecasting External HR Supply INTERRELATED FACTORS THAT MUST BE CONSIDERED IN PROJECTING EXTERNAL HR SUPPLY • Government estimates of population available for work • Net migration into and out of the area • Numbers entering the workplace • Numbers leaving the workplace • Numbers graduating from schools / colleges • Changing workforce composition • Technological shifts • Industrial shifts • Trends in the industry (actions of competing employers) • Economic forecasts • Government regulations & pressures such as job reservations for certain groups

35. Methods of Forecasting Internal HR Supply HR INVENTORY • Obtains & stores information about each employee of the org. in a manner that is easily accessible because it is necessary for HRP • Employee information stored in the inventory relates to KSA, experience, & career aspirations of the present workforce of the firm • Contents of HR Inventory • Personal identification information • Biographical information • Educational achievements • Employment history • Information about present job • Present skills, abilities, & competencies • Future focused data • Specific actions (like training needed for achieving career goals)

36. Methods of Forecasting Internal HR Supply HR INVENTORY • 2 types – • Skills inventory: describes the skills & knowledge of non-managerial employees & is used primarily for making placement & promotion decisions • Management inventory: contains the same information as in skills inventory, but only for managerial employees which describes the work history, strengths, weaknesses, promotion potential, career goals

37. Methods of Forecasting Internal HR Supply HR INVENTORY • Can be used to develop employee replacement charts • Replacement charts – lists current jobholders & identifies possible replacements should there be a vacancy for reasons such as resignations, transfers, promotions, etc. • Replacement charts include the following information on possible replacements like current job performance, potential for promotion, training experience required by replacement to be ready for the key position • Chart also details ‘when’ a replacement is needed for a ‘job’ – short term forecasts in nature

38. Methods of Forecasting Internal HR Supply SUCCESSION ANALYSIS & PLANNING • A systematic & deliberate process of identifying, developing & tracking key individuals within the firm to prepare them for assuming senior & top-level positions in future. • Eg., SAIL poaching from global players & preparing a ‘defence system’ wherein 2nd & 3rd line of command is being prepared; IBM, ExxonMobil, GE, etc., have already hired its CEO for 2010 • Eg., Godrej, Marico (fly. owned business) in India have ‘drop dead’ succession plan which keeps the wheel moving where a promoter of the fly-owned firm may always be around to guide the company

39. Methods of Forecasting Internal HR Supply LABOUR WASTAGE ANALYSIS • Traditionally LW is measured by the employee turnover index (% wastage index) • (No. of empls leave in mth / avg. empls) x 100 • Turnover classified into: • Avoidable separations (resignations & dismissal) • Unavoidable separations (retirement, death, & marriage) • Turnover rate = [(S-US) / M] x 100

40. Methods of Forecasting Internal HR Supply ABSENTEEISM RATE No. of man-days lost due to absence from work during the period AR = --------------------------------------- x 100 Avg. number of Total number empls. during this pd. of days

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