Importance of Human Resource Planning

Human resource planning is the responsibility of all managers. It focuses on the

demand and supply of labour and involves the acquisition, development and
departure of people. This is recognised as a vital HR function as the success of an
organisation depends on its employees. The purpose of HR planning is to ensure
that a predetermined number of persons with the correct skills are available at a
specified time in the future. Thus, HR planning systematically identifies what must
be done to guarantee the availability of the human resources needed by an
organisation to meet its strategic business objectives. To achieve this HR planning
cannot be undertaken in isolation. It must be linked to the organisations overall
business strategy, and concentrate on the organisations long-range human resource
requirements. Cooperation between the HR function and line management is
necessary for success. It allows the HR manager to anticipate and influence the
future HR requirements of the organisation. Effective HR planning ensures a more
effective and efficient use of human resources; more satisfied and better developed
employees; more effective equal employment opportunity (EEO) and affirmative
action (AA) planning; and reduced financial and legal costs.

Strategic human resource management and human resource planning

Effective HR planning considers both the internal and external environmental

influences of an organisation, its objectives, culture, structure and HRM. This is
because HR planning must reflect the environmental trends and issues that affect
an organisations management of its human resources. This includes consideration
of globalisation, growth of Internet use, the economy, women in the work force,
demographic changes, the casualisation of the work force, employee literacy, skill
shortages, acquisitions, mergers and divestures, deregulation, flexible work
schedules, telecommuting, outsourcing, quality of life expectations, pollution,
income tax levels and union attitudes.

Approaches to Human Resource Planning

To forecast the organisations future HR requirements and determine from where

they will be obtained. Three sets of forecasts are required:
 a forecast of the demand for human resources a forecast of the supply of
external human resources

a forecast of the supply of human resources available within the organisation

Two approaches used in forecasting the demand for human resources are
quantitative and qualitative.

The quantitative approach: The quantitative approach to HR planning uses

statistical and mathematical techniques. The focus of this approach is on
forecasting HR shortages, surpluses and career blockages; its aim is to reconcile
the supply and demand for human resources given the organisations objectives.
Quantitative forecasting includes trend projection, econometric modelling and
multiple predictive techniques. The qualitative approach:

The qualitative approach to HR planning uses expert opinion (usually a line

manager) to predict the future (for example, the marketing manager will be asked
to estimate the future personnel requirements for the marketing department). The
focus is on evaluations of employee performance and promotability as well as
management and career development. Qualitative forecasting includes Delphi
Technique and Nominal Group technique.

Forecasting human resource availability The next step in human resource

planning involves forecasting human resource availability. This involves an
examination of the internal and external labour supply. Present employees who can
be promoted, transferred, demoted or developed make up the internal supply. The
external supply consists of people who do not currently work for the organisation.
Forecasting the supply of internal human resources: Techniques for forecasting the
internal supply of personnel include turnover analysis, skill inventories,
replacement charts, Markov analysis and succession planning

. Factors affecting the external supply of human resources: Not all vacancies
can be filled from within the organisation. Consequently, the organisation must tap
into the external labour market (local, regional, interstate or international). Thus,
the HR manager needs to be alert to demographic changes. Changes occurring in
the external labour market are the aging of the workforce, the increases in female
participation rates, increases in school retention rates, changes in the rate of
immigration, casualisation of the work force, outsourcing, and international
employees. Requirements for effective HR planning Given that the success of an
organisation ultimately depends on how well its human resources are managed, HR
planning will continue to grow in importance. Successful HR planning requires the
HR manager to ensure that:

HR personnel understand the HR planning process

top management is supportive the organisation does not start with an overly
complex system

the communications between HR personnel and line management are healthy

the HR plan is integrated with the organisations strategic business plan

there is a balance between the quantitative and qualitative approaches to HR

planning.