External Labor Supply

When the organization grows rapidly and diversifies into newer areas of operations (merchant banking, capital market operations, mutual funds etc. in the case of a bank) or when it is not able to find the people internally to fill the vacancies it has to look into outside sources. To the extent an organization is able to anticipate its outside recruitment needs and looks into the possible sources of supply keeping the market trends in mind, its problems in finding the right personnel with appropriate skills at the required time would become easier.

Important Barometers of Labor supply:

1) Net migration into and out of the area.
2) Education levels of workforce
3) Demographic changes in population.
4) Technological developments and shifts
5) Population Mobility
6) Demand for specific skills
7) National regional unemployment rates
8) Actions of competing employers
9) Government policies, regulations, pressures.
10) Economic Forecasts for the next few years.
11) The attractiveness of an area.
12) The attractiveness of an industry in a particular place.

Determining Manpower gaps:

The existing number of personnel and their skills (from human resources inventory) are compared with the forecasted manpower needs ( demand forecasting) to determine the quantitative and qualitative gaps in the workforce. A reconciliation of demand and supply forecasts will give us the number of people to be recruited or made redundant as the case may be. This forms the basis for preparing the HR plan . Below Exhibit shows how demand and supply forecasts can be related over a period of three years.

Determining Human Resources Requirements:

1) Number required at the beginning of the year
2) Changes to requirements forecast during the year – DEMAND
3) Total requirements at the end of the year (1+2)
4) Number available at the beginning of the year
5) Additions (transfers, promotion) – SUPPLY
6) Separations (retirement, wastage, promotions out and other losses).
7) Total available at the end of years ( 4+ 5+ 6)
8) Deficit or surplus ( 3 -7)
9) Losses of those recruited during the year-Reconciliation of the above manpower needed.
10) Additional numbers needed during the year (8+9)

Formulating HR plans

Organizations operate in a changing environment. Consequently Human resources requirements also change continually. Changes in product mix, union agreements, competitive actions are some of the important things that need special attention. The human resource requirements identified along the procedure outlined in the above box need to be translated into concrete HR plans backed up by detailed policies programs and strategies (for recruitment, selection., training, promotion, retirement, replacement etc)

Recruitment plans: Will indicate the number and type of people required and whom they are needed for, special plans to recruit right people and how they are to be dealt with via the recruitment program.

Redeployment plan: Will indicate the programs for transferring or retraining existing employees for new jobs.

Redundancy plan: Will indicate who is redundant when and where the plans for retraining where this is possible and plans for golden handshake retrenchment lay off etc.

Training plan: Will indicate the number of trainees or apprentices required and the programs for recruiting; of training them, existing staff requiring training or refraining new courses to be developed or changes to be effected in existing courses

Productivity plan: Will indicate reasons for employees productivity or reducing employee costs through work simplification studies, mechanization productivity, bargaining incentives and profit sharing schemes , job redesign etc.

Retention plan: will indicate reasons for employee turnover and show strategies to avoid wastage through compensation policies , changes in work requirements and improvement in working conditions.

Control points: The entire manpower plan to be subjected to close monitoring from time to time . Control points be set up to find out deficiencies periodic updating of manpower inventory in the light of changing circumstances be undertaken to remove deficiencies and develop future plans.

Source: HRM

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