Assignment

On

“ “HUMAN RESOURCE PLANNING AND FORECASTING”

MASTERS OF BUSINESS ADMINISTRATION

Session 2019-2020

Submitted to: Submitted by:

Dr. Sandeep Kumar Himani Kataria
Assistant Professor MBA 1st Year
Department of Management Roll No.- 190116
Studies,
PIET

PANIPAT INSTITUTE OF ENGINEERING

& TECHNOLOGY, SAMALKHA

AFFILIATED TO KURUKSHETRA UNIVERSITY, KURUKSHETRA

HUMAN RESOURCE PLANNING:

CONCEPT:
Human resources are the most important assets of any organisation. The success or failure,
growth and development of the organisation depend on human resources. The organisation must
therefore acquire knowledgeable, skillful, trained, talented and potential human resources to
attain and accomplish the organisational objectives. A great care needs to be taken in their
acquisition. The human resource planning provides necessary direction in this regard to the
human resource management in the light of overall organisational objectives.
The organisational objectives determine the required number, type and kind of human resources
and for their acquisition the process of human resource planning begins. The human resource
planning bridges the gap between the organisational plans and human resource management. It is
a conscious determination of direction and composition of human resources of the organisation.
The Human resource planning provides the necessary groundwork and set the stage ready for
manpower procurement to fill up various positions in the organisation.

The human resource planning must be in tune with the human resource policy of the
organisation. Human resources are the most valuable intellectual assets; hence their planning
should be done carefully. Organisations used to neglect people as they cannot establish
ownership over them like in case of other resources. Now it has been realized that neglecting
human resources may cost heavily to the organisation. Human resource planning help in tracing
a route, finding a way for acquiring human resources.

MEANING AND NATURE:

Human resource planning determines the movement of the organisation from the present human
resource position to the anticipated one. It is a process which determines and assures the required
number and kind of people at proper time and at proper places to accomplish the organisational
objectives.
According to Dale. S. Beach human resource planning is, “a process of determining and assuring
that the organisation will have an adequate number of qualified persons, available at proper
times, performing jobs which meet the needs of the enterprise and which provide satisfaction for
the individuals involved.”

The human resource planning is a continuous process of searching the right kind and number of
people at right time and at right places, to perform in the organisation bringing benefits to the
enterprise and individuals. The human resource planning should be in tune with the overall
planning of the organisation.

The long-term human resource planning has broader aim in sight hence concentrates on their
acquisitions, training and development, health, welfare and safety, determining wages, salaries,
bonuses and other fringe benefits, maintaining human resources information system,
performance evaluation, career planning, managing stress counselling etc. The human resource
development requires long term planning. This will ensure organisation’s development and
growth. Each organisation has to pass through various stages of growth. Human resource
planning adopted by the organisation differs according to the different stages.

The human resource planning is taking stock of current human resource inventory and
forecasting the need for future. The human resource information system can play a supportive
role in decision-making in this regard. This makes easier for the managers to make decisions
regarding recruitment, promotion, transfer, training and wage fixing.

Human resource planning is the decision making process regarding procurement, development,
compensation, information, welfare, appraisal and safety of human resources. It is a process of
visualizing the organisational plans and objectives into a reality by providing quantitative and
qualitative human resource requirements through their proper utilization.

The overall organisational plan is integrated with human resource plan. Human resource
determines and sets the goals for performing human resource functions of acquisition,
development, compensation, promotion, transfer, retention, termination, retirement, welfare,
safety to facilitate accomplishment of corporate objectives.
OBJECTIVES:

 To ensure proper utilization of human resources.

 To check the development of the employees for the achievement of the organization goal.
 To ensure proper human resource policies.
 To provide proper control measures whenever required.

SCOPE:

 To make the list of current manpower.

 To check how much current manpower is being utilized.
 To find out how much manpower is required.
 To make manpower procurement plans.
 To make the training programmes.

NEED:

The need of HRP may arise because of the following reasons:

 In India, unemployment is a grave concern. Scarcity of manpower and that too with the
required skill sets and competence, has given rise for need of Human Resource Planning.
 It comes handy for smooth and continuous supply of workers when a huge number of
employees is retiring, or leaving the company or maybe they are incapable of working due
to psychological or physical ailments.
 There is a need for Human Resource Planning when there is an increase in employee
turnover, which is obvious. Some examples of this turnover are promotions, marriages, end
of contract, etc.
 Technological changes lead to a chain of changes in the organization, right from skill sets
product methods and administration techniques. These changes lead to an overall change in
the number of employees required and with entirely different skill set. It is here that the
Human Resource Planning helps the organization deal with the necessary changes.
  Human Resource Planning is required to meet the requirements of diversification and growth
of a company.
 There is a need for Human Resource Planning in downsizing the resources when there is a
shortage of manpower. Similarly, in case of excess resources, it helps in redeploying them
in other projects of the company.

IMPORTANCE:

After the need for HRP, it is apt to discuss the importance of it. A few are mentioned below.

 It gives the company the right kind of workforce at the right time frame and in right
figures.
 In striking a balance between demand-for and supply-of resources, HRP helps in the
optimum usage of resources and also in reducing the labor cost.
 Cautiously forecasting the future helps to supervise manpower in a better way, thus
pitfalls can be avoided.
 It helps the organization to develop a succession plan for all its employees. In this way, it
creates a way for internal promotions.
 It compels the organization to evaluate the weaknesses and strengths of personnel thereby
making the management to take remedial measures.
 The organization as a whole is benefited when it comes to increase in productivity, profit,
skills, etc., thus giving an edge over its competitors.

FACTORS AFFECTING HUMAN RESOURCE PLANNING:

Human Resource Planning (HRP) is influenced by several considerations. The more important of

them are:
(i) type and strategy of organization, (ii) organizational growth cycles and planning, (iii)
environmental uncertainties, (iv) time horizons, (v) type and quality of forecasting information,
(vi) labor market.

1. TYPE AND STRATEGY OF ORGANIZATION:

The type of organization is an important consideration because it determines the production

processes involved, number and type of staff needed, and the supervisory and managerial
personnel required. Manufacturing organizations are more complex in this respect than those that
render services.

The strategic plan of the organization defines the organization’s HR needs. For example, a
strategy of organic growth means that additional employees must be hired. Acquisitions or
mergers, on the other hand, probably mean that the organization will need to plan for layoffs,
since mergers tend to create, duplicate or overlapping positions that can be handled more
efficiently with fewer employees.

Primarily, the organization decides either to be proactive or reactive in human resource planning.
It can either decide to carefully anticipate the needs and systematically plan them to fill them far
in advance, or it can simply react to needs as they arise. Of course, careful planning to fill HR
needs better helps ensure that the organization obtains the right number of HR people with
proper skills and competencies when they are needed.

Similarly, the organization must determine the breadth of the plan. Essentially, the organization
can choose a narrow focus by planning in only one or two HR areas, such as recruitment or
selection, or it can choose a broad focus by planning in all areas including training, remuneration
and so on.

The organization must also decide upon the formality of the plan. It can decide to have an
informal plan that lies mostly in the minds of the managers and personnel staff. Alternatively, the
organization can have a formalized plan which is clearly spell out in writing, backed by
documentation and data.
Finally, the organization must make a decision on flexibility- the ability of the HR plan to
anticipate and deal with contingencies. No organization likes high levels of uncertainty.
Organizations seek to reduce uncertainty by planning, which includes forecasting and predicting
possible future conditions and events. Human resource planning can contain many contingencies,
which reflect different scenarios thereby assuring that the plan is flexible and adaptable.

2. ORGANIZATIONAL GROWTH CYCLES AND PLANNING:

The stage of an organization’s growth can have considerable influence on human resource
planning. Small organizations in the embryonic stage may not have personnel planning.

Need for planning is felt when the organization enters the growth stage. HR forecasting becomes
essential. Internal development of people also begins to receive attention in order to keep up with
the growth.

A mature organization experiences less flexibility and variability. Growth slows down. The
workforce becomes old as few younger people are hired. Planning becomes more fonnalised and
less flexible and innovative. Issues like retirement and possible retrenchment dominate planning.

Finally, in the declining stage, human resource planning takes a different focus. Planning is done
for layoff, retrenchment and retirement. Since decisions are often made after serious financial
and sales shocks are experienced by the organization, planning is often reactive in nature.

3. ENVIRONMENTAL UNCERTAINTIES:

HR managers rarely have the privilege of operating in a stable and predictable environment.
Political, social and economic changes affect all organizations. Personnel planners deal with
environmental uncertainties by carefully formulating recruitment, selection, and training and
development policies and programmes. Balancing mechanisms are built into the HRM
programme through succession planning, promotion channels, layoffs, flexitime, job sharing,
retirement, VRS and other personnel related arrangements.

4. TIME HORIZONS:

Yet another major factor affecting personnel planning is the time horizon. A plan cannot be for
too long on a time horizon as the operating environment itself may undergo charges. On one
hand, there are short-term plans spanning six months to one year. On the other hand, there are
long-term plans -which spread over three to twenty years. The exact time span, however,
depends on the degree of uncertainty prevailing in an organization’s environment.

Plans for companies operating in an unstable environment, computers for example, must be for a
short period. Plans for others where environment is fairly stable, for example a university plan,
may be long-term. In general, the greater the uncertainty, the shorter the plan’s time horizon and
vice-versa.

5. TYPE AND QUALITY OF INFORMATION:

The information used to forecast personnel needs originates from a multitude of sources. A
major issue in personnel planning is the type of information which should be used in making
forecasts.

Closely related to the type of information is the quality of data used. The quality and accuracy of
information depend upon the clarity with which the organizational decision makers have defined
their strategy, organizational structure, budgets, production schedules and so forth. In addition,
the HR department must maintain well-developed job-analysis information and HR information
systems (HRIS) that provide accurate and timely data. Generally speaking, organizations
operating in stable environments are in a better position to obtain comprehensive, timely and
accurate information because of longer planning horizons, clearer definition of strategy and
objectives, and fewer disruptions.
6. LABOR MARKET:

Labor market comprises people with skills and abilities that can be tapped as and when the need
arises. Thanks to the mushrooming of educational, professional and technical institutions
adequately trained human resource is always available on the market. Nevertheless, shortages do
occur. For example, the Confederation of Indian Industry (CII) estimates that by 2015, India will
be requiring 30 million additional skilled workers in sectors such as health care, banking and
financial services, retail, auto and construction. It is doubtful whether so many skilled workers
would be available in the country.

HUMAN RESOURCE FORECASTING

Human Resource is undoubtedly an important part of any organization. Hence, every organization
must have the right number of the workforce at the right place and that too at the right time. In order
to efficiently plan the workforce, the proper needs of human resource are very necessary.

For this, the company must go for Human Resource Forecasting. In this article, we will look at the
various techniques of the Human Resource Forecasting.

TECHNIQUES:

1. MANAGERIAL JUDGEMENT:

Under this method, firstly experienced managers estimate the manpower requirements for their
respective departments. This is done on the basis of their knowledge of expected future workload
and employee efficiency. At last, the top management then aggregates and approves the
departmental estimates. This is a very easy and time-saving method.

But it is quite subjective and is, therefore, suitable only for small firms. The assistance of work
study, O&M, and human resource experts can refine the estimates based on experience. This
method helps in judging the informal group norms on Human Resource Forecasting.
2.WORK- STUDY METHOD:

This method uses time and motion study to analyze and measure work. Such studies help the
managers to decide the standard time for per unit work. If the span of control is ten, five (50/10)
supervisor will supervise the work. When it is possible to measure work and set standards, the
work-study method is more suitable for repetitive and manual jobs. Job method should not change
frequently.

3. RATIO- TRENDS ANALYSIS:

This method helps to calculate the ratios on the basis of past data. Firstly, it calculates the future
ratios on the basis of the time series analysis/extrapolation, after making allowances for the changes
in the organization, method, and jobs, if any.

Extrapolation is mathematical extensions of past data into the future time period. Moving
averages and exponential smoothing can help for projections. The company estimates the demand
for human resources on the basis of ratios.

4. MATHEMATICAL MODELS:

A mathematical model shows the relationship between independent variables and the dependent
variables. These models express various factors influencing manpower needs in the form of a
formula.

There are several types of models, e.g., regression, optimization models, probabilistic models, etc.
These are complex and suitable only for large organizations.
Future demand for human resources depends on several factors, some of which are given below:
(a) EMPLOYMENT TRENDS:

By comparing and analyzing the staff during the past five years, the company can judge it’s trends
in the manpower.

(b) REPLACEMENT NEEDS:

These depend on firstly retirement, and then on death, resignation, and termination of
employees. Its assessment is on the basis of past experience and retirement situation in the future.

(c) PRODUCTIVITY:

Improvements in productivity effects manpower needs. better utilization of existing manpower is

one method of securing gains in productivity. Automation and computerization is another method of
productivity improvement. It will affect both the quantity and quality of manpower. Matching of
skills with job requirements is the third method. Hence, Job analysis techniques are helpful in such a
matching.