Process of Human Resource Planning (HRP)

The process of HRP usually followed in a large organization consists of the following steps:

Forecasting the demand for Human resources

Most firms estimate how many employees they require in future. The demand for human talent at various levels is primarily due to the following factors:

External challenges which arise from three important sources:

Economic developments: Liberalization- opening up of the banking sector, capital market reforms. The on line trading systems have created huge demand for finance professionals during 1990 -1995 in India. The late 90s saw the rise of manufacturing, FMCG, pharmaceuticals, auto components, healthcare and chemical industries in a steady manner. Consequently the demand for Engineering and Management graduates, Scientists and Healthcare professionals has picked up in recent times.

Political, legal, social, and technical changes: The demand for certain categories of employees and skills is also influenced by changes in political, legal and social structure in an economy. Like wise firms employing latest technology in construction, power, automobiles, software, etc have greatly enhanced the worth of technicians and engineers during the last couple of years. Technology however is a double edged weapon and hence its impact on HR plans is difficult to predict. For example computerization programs in Banks, Railways, Post and Telegraph Departments may reduce demand in one department (book keeping, for example) while increasing it in another (such as computer operations). High technology with all its attendant benefits may compel organizations to go lean and downsize workforce suddenly . Employment planning under such situations becomes complicated.

Competition: companies operating in fields where a large number of players are bent upon cutting each others throat (with a view to enhance their market shares) often reduce their workforce. Competition is beneficial to customers but suicidal for companies operating on thin margins. Such companies have to necessarily go lean by reducing their workforce. On the other hand, companies that are doing well and progressing smoothly will always look for people with critical skills.

Organizational decisions: The organization strategic plan, sales and production forecasts and new ventures must all be taken into account in employment planning. If Britania Industries Ltd expects higher demand for biscuits and bread, long term HR plan must take this into consideration. Likewise if it tries to venture into other lucrative fields such as milk based products couple of years should be looked into carefully.

Workforce factors: Demand is modified by retirements, termination, resignations, deaths, and leave of absence. Past experience however, makes the rate of occurrence of these actions by employees fairly predictable.

Forecasting techniques: The manpower forecasting techniques commonly employed by modern organizations are given below:

1) Expert forecasts: In this method, managers estimate future human resource requirements using their experiences and judgments to good effect
2) Trend analysis: HR needs can be estimated by examining past trends, Past rates of change can be projected into the future or employment growth can be estimated by its relationships with a particular index.

Trend analysis (An example)

2001-02 Production of Units; 5000

2002-03 No of workers 100

Ratio 100: 5000

2003-04: Estimated Production 8,000

No of workers required 800 x 100/5000 = 160

If supervisors have a span of 20 workers, 8 supervisors are also needed in 2003-04.

Other methods: Several mathematical models, with aid of computer are also used to forecast HR needs e.g. regression, optimization models budget and planning analysis.

Workforce analysis: The average loss of manpower due to leave, retirement, death, transfer discharge etc. during the last 5 years may be taken to account. The rate of absenteeism and labor turnover should also be taken into account. The nature of competition say from foreign banks, other non banking financial institutions may also be considered here to find out the actual requirements in a year.

Source: HRM VSP