UNIVERSITY OF DELHI / SCHOOL OF OPEN LEARNING
B.Com. (Programme) / B.Com. (Hons.)
HUMAN RESOURCE MANAGEMENT
N.O.T.E.S
UNIT -2
LESSON 1: HUMAN RESOURCE PLANNING
INTRODUCTION :
- The success of an organization relies on its human resources.
- Procuring the right quantity and quality of personnel is essential for long-term success.
- Human resource planning or manpower planning is necessary to determine the required number and quality of people in an organization.
- Human resource management starts with manpower planning.
- HRM ensures that the right individuals are selected for the right jobs.
- Effective planning and management of human resources contribute to organizational success.
CONCEPT OF HUMAN RESOURCE PLANNING :
Importance of Human Resource Planning:
- Human resources as a crucial corporate asset
- Impact of effective utilization on company performance
- Need for a human resource plan to meet organizational objectives
Characteristics of Human Resource Planning:
a) Future Oriented:
- Forecasting manpower needs
- Making provisions to meet future requirements
b) Continuous Process:
- Dynamic nature of demand and supply of human resources
- Subject to review and revision based on organizational needs and changing environment
c) Integration with Corporate Planning:
- Human resource planning as an integral part of corporate planning
- Alignment of manpower plans with organizational goals
d) Optimum Utilization of Resources:
- Maximizing return on investment in human resources
- Relating future human resources to the organization's needs
e) Systematic Approach:
- Input of information on the demand and supply of human resources
- Transformation process to identify gaps and formulate strategies
f) Long and Short-term Planning:
- Long-term plans based on e economic, labor market, and production trends
- Short-term plans for existing job fulfillment
g) Quantitative and Qualitative Aspects:
- Balancing the right number and talent of employees
- Considering both quantitative and qualitative requirements
h) Management Responsibility:
- Human resource planning is the primary responsibility of management
- Ensuring effective utilization of organizational human resources
i) Study of Manpower:
- Analysis of the manpower environment and its influence on demand and supply
- Study of manpower utilization
j) Two-Phased Process:
- Calculation of demand and supply of human resources
- Achieving equilibrium between the two
- Recognition of manpower as an appreciating asset requiring time for development
Objectives of Human Resource Planning:
- Optimize existing human resources
- Forecast future HR requirements
- Provide control measures for the availability of HR
- Link HR planning with organizational planning
- Assess surplus and shortage of HR
- Anticipate technology's impact on jobs and HR
- Determine recruitment and training levels
- Estimate cost of HR and employee housing needs
- Facilitate productivity bargaining
- Support management development programs.
Need for and Importance of Human Resource Planning:
I. Ensures selection and training of adequate and qualified employees.
II. Identifies and fills gaps in existing manpower.
III. Provides for the replacement of retiring or resigning employees.
IV. Facilitates organizational expansion and diversification.
V. Creates awareness about the effective utilization of human resources.
VI. Supports adaptation to technological progress through retraining and recruitment.
VII. Anticipates and addresses areas of surplus manpower.
VIII. Helps in budgeting and controlling human resource costs.
IX. Enables career succession planning and internal promotions.
X. Assists in planning physical facilities for employees.
XI. Facilitates educational reforms, talent mobility, and employment generation at the national level.
Reasons for Focus on Human Resource Planning:
1. Employment Situation: Increasing educated unemployment and shortage of skilled manpower.
2. Technological Changes: Rapid changes in technology necessitate recruitment, retraining, and redeployment of personnel.
3. Organizational Change: Growing firms and turbulent business env require new HR strategies.
4. Demographic Changes: Shifts in workforce profile impact HR planning.
5. Shortage of Skills: Complex organizations require specialized skills that are scarce.
6. Legislative Controls: Legal regulations necessitate proactive HR planning.
7. Pressure Groups: Trade unions, politicians, and displaced persons exert pressure on HR decisions.
8. Lead Time: The longer time required for the selection and training of employees for new jobs and technology.
9. Hiring Costs: Increasing recruitment and training costs emphasize planned retention through HR planning.
Process of Human Resource Planning :
1. Analyzing Organizational Plans:
- Review the company's objectives and strategic plans.
- Determine the future organizational structure and job design.
- Assess any potential changes in the structure that may impact human resource requirements.
2. Forecasting Demand for Human Resources:
- Anticipate the future need for human resources based on the company's plans.
- Consider factors like production and sales budgets, job contents, and technology.
- Use various techniques to estimate future requirements:
- Managerial Judgement: Experienced managers estimate manpower needs of to be based on their knowledge of their expected workload.
- Work-study Method: Analyze work through time and motion study to determine standard time per unit and calculate e required workforce.
- Ratio-Trend Analysis: Calculate ratios based on past data and apply them to future projections to estimate workforce needs.
- Mathematical Models: Develop mathematical formulas to express the relationship between variables and estimate human resource requirements.
3. Forecasting Supply of Human Resources:
- Evaluate internal and external sources of human resources.
- Assess the internal supply by reviewing policies related to promotions, transfers, and training.
- Conduct a human resource inventory, including headcounts, job family inventory, age inventory, and skill inventory.
4. Estimating Manpower Gaps:
- Compare the forecasted demand and supply of human resources.
- Identify any deficits or surpluses in the workforce.
- Consider the quantity and quality of internal resources and potential losses due to turnover or other factors.
5. Action Planning:
- Develop plans to address the identified manpower gaps.
- For surplus manpower, consider redeployment, voluntary exit programs, or retrenchment.
- For deficits, plan for recruitment, selection, training, and promotion to meet future needs.
- Take into account the external factors that may influence manpower objectives.
6. Monitoring and Control:
- Regularly review and regulate the human resource structure and system.
- Use zero-base budgeting to justify action plans and monitor progress.
- Update manpower inventory and modify plans as needed based on changes in the environment.
- Monitor utilization of manpower, efficiency, morale, and job satisfaction.
- Conduct exit interviews and analyze the pay-back period for new employees.
Example for Forecasting Demand:
- Suppose a company plans to produce 50,000 units next year, with a standard time of 2 hours per unit.
- Using the work-study method, the total required hours would be 50,000 x 2 = 100,000 hours.
- If each worker works 2,000 productive hours per year, the number of workers required would be 100,000 / 2,000 = 50.
- Assuming a span of control of 10, the company would need 5 supervisors (50 / 10).
Example for Ratio-Trend Analysis:
- In the previous year, the company produced 50,000 units with 50 workers, resulting in a ratio of 5:50,000 or 1:1,000.
- If the estimated production for the next year is 60,000 units, the projected number of workers required would be 60,000 x 1/1,000 = 60.
- Following the same ratio, the number of supervisors required would be 60 x 1/10 = 6.
By following these steps, organizations can effectively plan their human resources to meet future demands and align their workforce with their strategic goals. Monitoring and control ensure that the plans are regularly reviewed and adjusted to address any environmental or organization changes.
HERE IS A SIMPLE EXAMPLE FOR YOU TO UNDERSTAND BETTER :
Imagine you have a toy factory and want to ensure you have enough workers to build all the toys.
Step 1: Analyzing Organizational Plans
- We start by looking at the plans for our toy factory. We want to know how many toys we need to make and if any changes are happening in the factory.
Example: If we plan to make 100 teddy bears next year and we are getting new machines, we might need more workers to operate them.
Step 2: Forecasting Demand for Human Resources
- Now, we think about how many workers we will need based on our plans. We consider things like how many toys we want to make, how long it takes to make each toy, and if we have new technology to help us.
Example: If it takes 2 hours to make one teddy bear, and we want to make 100 teddy bears, we will need workers to work for 2 hours each.
Let's explain the techniques used to estimate future requirements in a toy factory simply:
1. Managerial Judgement: This means that experienced managers use their knowledge and experience to guess how many workers they will need based on how much work they expect to have. For example, the manager of our toy factory, who has been making toys for many years, can estimate that if we plan to make 100 teddy bears, we will need around 10 workers to help us.
2. Work-study Method: This method involves studying how long it takes to do a certain task and using that information to figure out how many workers are needed to complete a specific amount of work. For example, the manager can observe how long it takes for one worker to make a teddy bear by carefully watching their movements. If it takes 2 hours for one worker to make one teddy bear, and we want to make 100 teddy bears, we will need 20 workers to finish the job on time.
3. Ratio-Trend Analysis: This technique involves looking at past data and using it to predict future needs. For example, The manager can look at data from previous years and see that for every 10 teddy bears made, they needed 1 worker. If we want to make 100 teddy bears, we can estimate that we will need 10 workers based on this ratio.
4. Mathematical Models: In this approach, managers create mathematical formulas or equations to estimate the number of workers needed based on different factors. For example, the manager can create a formula that takes into account the number of toys to be made, the time it takes to make each toy and the available working hours. By plugging in the values, the formula can calculate how many workers are required.
Step 3: Forecasting Supply of Human Resources
- We look at the workers we already have in the factory and see if we need to hire more. We also see if any workers might leave the factory soon.
Example: If we have 50 workers already, but some might leave, we need to know how many workers we have available to make the toys.
Step 4: Estimating Manpower Gaps
- We compare how many workers we need (from Step 2) with how many workers we have (from Step 3). If we don't have enough workers, it's a gap that we need to fill. If we have too many workers, it's a surplus.
Example: If we need 100 workers to make all the teddy bears, but we only have 50, we have a gap of 50 workers that we need to hire.
Step 5: Action Planning
- We make plans to fill the gaps. If we need more workers, we can advertise job openings, interview candidates, and hire new workers. If we have too many workers, we might ask some workers if they want to leave or move to a different job.
Example: We can put up signs saying "We're Hiring" and interview people who want to work in our toy factory.
Step 6: Monitoring and Control
- We keep an eye on things to make sure everything is going well. We check if we have enough workers if they are happy, and if they are doing a good job. We also make changes if we need to.
Example: We talk to the workers to see if they are happy making teddy bears, and if they need any help or training.
So, human resource planning is like making a plan to have the right number of workers to do a job. Just like when we play with our toys, we need to make sure we have all the toys we want and enough people to help us make them.
IN-TEXT QUESTIONS
1. _________________is a forward-looking function. It tries to assess human resource requirements in advance keeping the production schedules, market fluctuations, demand forecasts, etc., in the background.
2. Forecasting Demand for Human Resources is the first step of the human resource planning process. True / False
3. Under this method, ratios are calculated fu data. Which method is being talked about?
a) Ratio- Trend Analysis b) Work-study Method
c) Headcount d) Wider talent pool
4. The basic purpose of human resource planning is to make optimum utilization of an organization's current and future human resources. True/ False
5. Every organization has two sources of supply of human resources- internal and external. True/ False.
ANSWERS :
1. Human resource planning
2. False. Forecasting Demand for Human Resources is not the first step; it is the second step of the human resource planning process.
3. a) Ratio-Trend Analysis
4. True. The basic purpose of human resource planning is indeed to make optimal use of an organization's current and future human resources.
5. True. Every organization has two sources of supply of human resources: internal (from within the organization) and external (from outside the organization).
ASPECTS OF MANPOWER PLANNING :
Quantitative Aspect:
1. Workload Analysis:
- Estimate departmental workload based on sales forecasts, work schedules, etc.
- Convert workload into manpower requirements using work-study techniques.
2. Workforce Analysis:
- Account for absenteeism and turnover when estimating the availability of the current workforce.
- Analyze past behavior, performance, and retirement dates of employees to estimate workforce loss.
Qualitative Aspect - Skills Analysis:
1. Job Analysis:
- Analyze job duties and responsibilities to determine job requirements.
2. Job Description:
- Detail the contents of a job.
3. Job Specification:
- Specify the qualifications, skills, and experience required for the job.
The Objective of Human Resource Planning:
- Ensure smooth workflow and a constant flow of the workforce.
- Optimize utilization of current and future human resources.
PROBLEMS IN HUMAN RESOURCES:
1. Inaccuracy:
- Forecasting the demand and supply of human resources is not 100% accurate.
- Aggregated departmental forecasts without critical review can lead to inaccuracy.
2. Employees Resistance:
- Employees and trade unions may resist human resource planning.
- Belief that unemployment will provide a readily available workforce.
- Perceived increase in workload and regulation through productivity bargaining.
3. Uncertainties:
- Labour absenteeism, turnover, seasonal employment, and market fluctuations pose constraints.
- Rapid environmental changes make relying on general manpower estimates risky.
4. Inefficient Information System:
- Lack of fully developed human resource information systems in many industries.
- The absence of reliable data hinders effective human resource planning.
5. Lack of Top Management Support:
- Lack of support and commitment from top management hampers the planning process.
- Vital inputs may be difficult to obtain without top management involvement.
6. Time and Expense:
- Manpower planning is time-consuming and expensive.
- Data collection and forecasting processes require significant time and cost.
7. Unbalanced Focus:
- Some companies overly prioritize the quantitative aspect of planning.
- Exclusive focus on the flow of people overlooks the importance of human resource quality.
- Neglect of career planning, development, skill levels, and morale.
GUIDELINES FOR EFFECTIVE HUMAN RESOURCE PLANNING :
Steps to Improve Human Resource Planning Effectiveness
1. Tailormade Approach:
Align human resource plans with corporate plans
- Fit methods and techniques with organizational objectives, strategies, and environment
- Ensure compatibility between human resource planning and overall organizational goals.
For example, if a restaurant wants to focus on customer service, the HR plan can include training programs to improve communication and hospitality skills for the staff.
2. Appropriate Time Horizon:
Consider the suitable planning period
- Reflect the needs and circumstances of the enterprise
- Account for enterprise size, structure, and changing aspirations of employees
For example, Think of planning a weekly menu for your family. Consider the right planning period based on your family's needs and schedule. For instance, if you have busy weekdays, plan meals that can be prepared quickly.
3. Adequate Organization:
Properly organize the human resource planning function
- Establish a dedicated cell, section, or committee within the HR department
- Provide focus and coordination for planning efforts at various levels
For example, Imagine organizing your daily tasks using a to-do list. Create a dedicated HR planning team or designate one person to coordinate and ensure all HR activities, such as recruitment and training, are organized and executed smoothly.
4. Top Management Support:
Secure support and commitment from top management
- Obtain endorsement before initiating the planning process
- Ensure alignment with budgetary constraints for effective implementation
For example, Picture seeking approval from your boss before starting a new project. Secure support and commitment from top management before implementing HR plans. This ensures alignment with the company's vision and resources.
5. Participation:
Foster active involvement and coordination
- Encourage participation of operating executives
- Improve understanding and reduce resistance to the planning process
For example, hold team meetings to gather feedback and ideas on improving employee engagement initiatives
6. Information System:
Develop an adequate human resource database
- Establish a robust information system for human resources
- Facilitate data-driven decision-making and effective planning
For example, Imagine using a digital calendar to keep track of appointments. Develop a user-friendly HR database or system to store and access employee information efficiently. This helps in managing employee data and making informed HR decisions.
7. Balanced Focus:
Emphasize both quantity and quality of human resource
- Strive to fill future vacancies with suitable candidates
- Consider upward mobility of existing staff
- Evaluate labor turnover based on length of service, not just aggregate numbers
For example, allocate resources to recruit new employees while also investing in training and development programs for existing staff.
IN-TEXT QUESTIONS
6. __________________is the total number of people employed, department-wise skill-wise, designations-wise, payroll-wise, sex-wise, etc.
7. Net human resource requirements or manpower gaps can be identified by comparing demand forecasts and supply forecasts. True / False
8. Under this analysis, the total workload of each department is estimated based on sales forecasts, work schedules, growth rates, expansion plans, etc. Which aspect of workforce analysis is being talked about?
a) Work Force Analysis b) Workload Analysis
c) Skills Analysis d) None of the above
9. Conducting human resource planning is the task of top management only. True/ False
10. Which of the following can be identified as problems in human resource planning?
ANSWERS:
6. Headcount
7. True
8. b) Workload Analysis
9. False
10. Some problems in human resource planning can include:
- Inaccuracy in forecasting demand and supply
- Resistance from employees and trade unions
- Uncertainties such as labor absenteeism, turnover, and market fluctuations
- Inefficient information systems
- Lack of top management support
- Time-consuming and expensive nature of the planning process
- Unbalanced focus on quantity over quality of human resources.
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