Unit 2 Human Resource Planning
Employee Resourcing – LLC 4124
UNIT 2 HUMAN RESOURCE PLANNING
Unit Structure
2.0Overview
2.1Learning Outcomes
2.2Introduction
2.3Definition of Human Resource Planning
2.4The Process of Human Resource Planning
2.5Aims of Human Resource Planning
2.6Forecasting Human Resource Requirement
2.6.1Demand Forecasting
2.6.2Supply Forecasting
2.6.3Analysis
2.6.4Action Plan
2.7Cost
2.8Human Resource Forecasting Techniques
2.8.1Zero Based Forecasting
2.8.2Bottom Up approach
2.8.3Use of Mathematical Models
2.8.4Simulation
2.9Adapting Traditional Human Resource Planning
2.9.1Contingency Planning
2.9.2Succession Planning
2.9.3Skills Planning
2.9.4Soft Human Resource Planning
2.10Summary
2.0OVERVIEW
This Unit will give you an insight of the concepts of Human Resource Planning. The aims, process and forecasting techniques will be explained.
2.1LEARNING OUTCOMES
By the end of this Unit, you should be able to do the following:
1.Explain the concept of Human Resource Planning.
2.Critically discuss the process of Human Resource Planning.
3.State the aims of Human Resource Planning.
4.Explain the forecasting of Human Resource.
5.Describe the Human Resource Forecasting Techniques.
2.2INTRODUCTION
Organisations are presently operating in a rapidly changing and turbulent environment and managers have to optimise the use of the available employees in order to be competitive. Human Resource Planning(HRP) attempts to reconcile an organisation’s need for human resources with the available supply of labour. HRP also results in matching people to the job, that is, the right people doing the right thing.HRP can help management in making decisions in areas as hereunder:
- Recruitment.
- Avoidance of redundancies.
- Training of staff.
- Management development.
- Estimates of costs.
HRP needs continuous re-adjustment because the goals and objectives of an organisation are not stable due to uncertainties in the environment. Also, many independent variables are involved namely, consumer demand, new legislations, population changes, competition from rival firms and foreign competition.
2.3DEFINITION OF HUMAN RESOURCE PLANNING
Human Resource Planning refers to an attempt to estimate the numbers and kinds of employees the organisation will need in the future in order to realise its strategic goals and the extent to which the demand is likely to be met.
According to Snell and Bohlander (2007:48), Human Resource Planning is “the process of anticipating and providing for the movement of people into, within and out of an organisation”.
Nel et al (2008:216) maintains that HR Planning “ensures that a predetermined amount of employees with appropriate skills, knowledge and abilities are available at a specified time in the future ... HR planning therefore systematically identifies what is needed to be able to guarantee their availability”.
2.4THE PROCESS OF HUMAN RESOURCE PLANNING
Organisations engage in the process of Human Resource Planning (HRP) to determine the demand and supply of human resources so as to gain or maintain. In short, HRP is the process of identifying the HR needs and the ways of meeting those needs.
It is important to note that needs are unlimited and scarce, therefore, the planning process is very much concerned with prioritising the needs.
Figure 1: The Human Resource Planning Process
As we have seen above, the Human Resource Plan will depend on certain factors namely;
The Strategic Planning
Strategic planning refers to the process of determining the overall organisational purposes and objectives and how these can be achieved through Human Resource Planning, which is the process of systematically reviewing human resource requirements to ensure that the required number of employees, with the required skills are available in the organisation.
Comparing requirement and availability
This phase of the HR planning process involves matching the forecasted Human Resource (in terms of future requirements) with the existing HR (the available employees).
Determining the surplus or shortage of employees
Once the assessment has been made, there is a need to determine whether the organisation has a shortage or surplus of employees or the demand is just equal to the supply.
In case of a surplus in the number of employees, appropriate action should be taken, namely; restricted hiring/recruitment, reduced hours, early retirement, layoffs.
In case of a shortage of employees, there is need to go for a proper recruitment and selection process, obtain the right quantity and quality of new employees.
The Internal and External Environment
Conditions in the internal and external environment can change quickly and, hence, the human resource planning process must be continuous. Changing conditions may affect the entire organisation thereby requiring extensive modification of forecasts. HR planning enables managers to anticipate and prepare for changing conditions and also allows flexibility in the area of human resource management.
Activity 1
(i) Explain your understanding of Human Resource Planning.
(ii)What factors would you like to take into consideration while devising the HR plan in your organisation?
2.5AIMS OF HUMAN RESOURCE PLANNING
Planning of Human Resources is very important as it enables the optimum use of the most valuable asset of an organisation in the attainment of its objectives and goals. The aims of HR planning has been summarised below:-
- Attract and retain the right quantity and quality of employees (in term of qualification, knowledge, skills, expertise and attitude).
- Optimising the use of the available HR (matching people with the job and adopting flexible systems of work).
- Anticipation of potential problems of surpluses or deficits of employees (e.g., the world economic recession).
- Develop a well trained and flexible workforce, making employees become multi-skilled and multifunctional. Thus, the organisation has a greater ability to adapt to the fast and constantly changing environment. It enhances the use of key skills within the organisation thus reducing the dependence on external recruitment and formulating retention HR development strategies.
2.6FORECASTING HUMAN RESOURCE REQUIREMENTS
2.6.1Demand Forecasting
Demand forecasting is an estimate of the numbers and kinds of employees the organisation will at future dates in order to realise its stated objectives.
2.6.2Supply Forecasting
The determination of whether a firm will be able to secure employees with the necessary skills, and from what sources.
Before starting a new business, management study the demand side of human resources. It is equally important to study the supply side of HR as well, specially when very skilled workers are needed for the job.
Supply forecasting measures the quantity and quality of employees likely to be available inside and outside the organisation after allowing for labour wastage, retirement, absenteeism, promotion and internal transfer.
2.6.3Analysis
The demand and supply forecasts are analysed to identify and surpluses or deficits. This analysis which provides the basis for recruitment, retention and, if unavoidable, downsizing plans, may be done by using specialised software.
2.6.4Action Plan
Plans are prepared to deal with forecasts so as to improve productivity and performance whilst at the same time staying within the HR budget set. Plans often have to be short term and flexible because of the difficulty in making firm prediction about human resource requirements in a rapidly changing environment.
Activity 2
(i) Describe how Human Resource Planning is carried out in your organisation.
(ii) You are the HR Manager of your organisation. Explain why you think HRP is important and describe its applicability.
2.7COST
When recruiting people, several costs need to be borne by the organisation, specially in the event of large group intake (e.g. in the health sector, police and prison department). Such costs have to be considered when planning for Human Resources and are summarised hereunder:
1Recruitment Costs
Advertisement cost(press/radio/Tv)
Recruitment Agency
Administrative cost
Selection
2.Remuneration Costs
Pay package(salary)
Allowances
Transportation cost
3.Training Costs
Induction of new employees(familiarisation with new environment)
Expenses for trainers(food, allowances, training aids)
Expenses for trainees(food, training materials)
Infrastructure
Administrative cost
4Learning Costs
Loss of production level
Loss of HR(if employee is not replaced)
5Uniforms & other specialised kits
Set of complete uniforms(military, police, prison department.....)
Specialised kits
6Support Costs
Sports infrastructure
Medical and health care
Canteen facilities
Library facilities
Activity 3
(i) Explain the costs which have to be borne by your organisation when recruiting new employees.
(ii) What are the strategies for:
(a) Reducing an expected labour surplus.
(b) Avoiding an expected labour shortage.
2.8HUMAN RESOURCE FORECASTING TECHNIQUES
HR planning is based on forecasting the needs of the organisation in terms of Human Resource requirements. Several forecasting techniques are currently used by HR professionals and are listed below;
a.Zero Based Forecasting
b.Bottom up Approach
c.Use of Mathematical models
d.Simulation
Let’s now explain each of the above techniques.
2.8.1Zero Based Forecasting
-This technique uses the organisation’s current level of employment as the starting point to determine future staffing needs. For example, if an employee retires, is fired or leaves the firm for any reason, the position is not automatically filled. An analysis is done to see if the job needs to be filled.
-The same procedure is used for human resource planning as for zero-based budgeting whereby each budget must be justified each year.
-Equal concern is shown for creating new positions when they appear to be needed.
-The key to this technique is a thorough analysis of the needs.
2.8.2Bottom Up Approach
-In this approach, each successive level in the organisation, starting at the bottom, forecasts its requirements.
-It provides an aggregate forecast of employees needed.
-It is based on the reasoning that head of each unit/level is more aware of HR requirement.
Managers should periodically review their HR needs thus allowing the HR department to consider all available options.
2.8.3Use of Mathematical Models
This model uses mathematical models (i.e, past employment levels) to predict future employment levels. For example, one of the most useful predictors of employment levels is sales volume.
Using this approach, managers can approximate the number of employees required at different sales level.
2.8.4Simulation
-The simulation is a technique for experimenting with a real world simulation with a mathematical model that represents the actual situation.
-It uses a mathematical logic to predict what will occur.
-It allows HR managers to gain a considerable knowledge of a particular problem before making a decision.
-It permits managers ask many “what if” questions.
Activity 4
(i) What are the factors you would consider when forecasting the future HR needs of your organisation.
(ii) Which forecasting techniques is more appropriate for your organisation? Give reasons.
2.9ADAPTING TRADITIONAL HUMAN RESOURCE PLANNING
The traditional approach to HR planning has a great deal less relevance for employers that are small players in their industries, operating in a fast changing technological field.
An adaptation of the principles underlying HR planning together with developments of newer techniques and approaches is needed. Many of these are also relevant for larger and more stable organisations, where they can be used in addition to the longer established HR planning techniques.
Four adaptations will be described as hereunder:
(i)Contingency planning
(ii)Succession planning
(iii)Skills planning
(iv)Soft human resource planning
The first two adaptations (Contingency and Succession planning) aim to focus on specific organisational developments or groups of employees. In the last two , the nature of the forecasting operation moves from focusing simply on “the right people in the right jobs, at the right time’.
2.9.1Contingency Planning
Contingency planning involves planning possible responses to a variety of potential environmental developments as opposed to HR planning process in which a single plan is developed and adapted to the environment changes. The purpose of contingency planning in the HR field is thus the provision of information on which decisions are made about the future direction the organisation will take.
2.9.2Succession Planning
Another adaptation of the principles of traditional HR planning is the development, mostly in large organisations, of a succession planning function. Succession planners are mainly interested in ensuring that their employer has enough individuals with the right abilities, skills and experience to promote into key senior jobs as they become vacant. According to Jackson and Schuler(1990:171) succession planning differs from traditional HR planning in that “the prediction task changes from one of estimating the percentage of a pool of employees who are likely to be with the company X years into the future, to one of estimating the probability that a few particular individuals will be in the company X years into the future”. In other words, the planning process covers a selected group of high calibre employees. Succession planning is most common in organisations with a huge hierarchical structure (as in the military or police) in which individuals develop careers by moving upwards and sideways over a number of years as they acquire the necessary knowledge of the job, skills and experience.
2.9.3Skills Planning
Skills planning involves predicting what competences will be required for the next one to five years. This approach acknowledges as products markets have become increasingly turbulent, new form of employment have developed to meet the need for labour flexibility on the part of employers. Skill-based plans thus incorporate the possibility that skill needs will be met either wholly or partially by employing short term employees, outside contractors and consultants and permanent members of staff.
2.9.4Soft Human Resource Planning
Like skills planning, soft HR planning accepts that in the current environment, organisations need more that the right people in the right place and at the right time inorder to be successful. These people need to have the right set of attitude in order to create a successful organisational culture.
Activity 5
(i) Discuss the applicability of Contingency and Succession planning in your organisation.
(ii) Explain the relevance of skill planning in your organisation.
2.10 SUMMARY
This Unit has described how the human resource planning is an important process in determining the demand and supply of employees of an organisation. The aim, forecasting requirement and techniques have also been explained.
Unit 21