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1. More effective and efficient use of people at work: Employment planning should precede all
other personnel activities. How could you schedule recruiting if you did not know how many
people you needed? How could you select effectively if you do not know the kinds of persons
needed for job openings? How large an orientation program should you schedule? When?
How large a training program should you schedule, and when and on what topics? Careful
analysis of all personnel activities shows that their effectiveness and efficiency depend on
employment planning.
2. More effective employee development and greater employee satisfaction: Employees who
work for enterprises that use good employment planning systems have a better chance to
participate in planning their own careers and to share in training and development
experiences. Thus they are likely to feel their talents are important to the employer, and they
have a better chance to use their talents in the kinds of job that use these talents. This often
leads to greater employee satisfaction and its consequences, such as lower absenteeism, lower
turnover, fewer accidents, and higher quality of work.
3. More effective Equal Employment Opportunity (EEO) planning: All governments have
increased their demands for equal employment opportunity. To complete the government
reports and satisfactorily respond to EEO demands, enterprises must develop personnel
information systems and use them to formally plan their employment distribution. Effective
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employment planning assures that other personnel processes will be built on a good
foundation, one that averts shortages of skills by producing:
• Recruitment plans.
• The identification of training needs.
• Management development: in order to avoid bottlenecks of trained but disgruntled
management who see no future position in the hierarchy.
• Industrial relations plans: often seeking to change the quantity and quality of
employees will require careful IR planning if an organization is to avoid
industrial unrest.
Importance / Benefits of Human Resource Planning
Human resource planning is both a process and a plan (Ivancevich, 2001). It is how organization
assesses the future supply of and demand for human resources. Human resource planning allows the
organization to get the following benefits:
1. Gap elimination: Human resource planning is a mechanism to eliminate any gap that may exist
between supply and demand for manpower. It estimates the need for human resources in different
positions within the organisation and the existing position of human resources available within the
organisation from whom needs can be met up. Then, plan is made to fill up the gap from external
sources.
2. Integration with organizational strategies: Human resource planning has to be integrated with
the organizational strategies as human resource must ‘fit’ strategically with the mission of the
organization. It must also be integrated with human resource strategies of the organisation. This
integration is done by the human resource planning with systematic thinking and arrangements.
3. Matching with future: Planning is made for future work. Human resource planning is made to
match human resource activities and future organizational objectives efficiently. This matching will
align the human resource management with the future situations to generate the best performance
and to sustain in the competitive environment.
4. Economy hiring: Hiring of human resources is costly. If we know future needs of different types
of human resource well ahead of time, then we could hire them at low cost and hazards. We know
that anything is hurried, that is buried. So, we can achieve economy in hiring new workers/employees
through planning.
5. Expands the HR information base: Human resource planning collects internal and external
information to project future demands for and supply of human resources. A well founded data base
is developed through the process of human resource planning. This will assist other human resource
activities and other organizational units to make their plans and to take actions.
6. Coordination of programs: Human resource planning coordinates different departmental needs
of human resources and compliance with various legal and voluntary action programs such as
affirmative action plans and hiring needs. It keeps contact with different sections/departments of the
organisation, gets their requisition for workforce, gives them feedback, and maintains organisation-
wide coordination network to ensue uninterrupted supply of required human resources on time.
7. Ensures more effective and efficient use of human resource (HR): Human resource planning
ensures on-time supply of required workforce to the various sections/departments of the organisaiton.
It makes sure that right persons with right qualifications and talents are sent to the right positions.
This optimizes the use of human resources efficiently and effectively.
8. Satisfaction of workforce: Human resource planning ensures getting right persons on time and
placing them in their appropriate positions where they would get maximum possible satisfaction in
jobs. Thus, it brings about more satisfied and better developed employees.
9. Ensure equal opportunity: Human resource planning takes into account all factors, internal and
external, to make plan for resourcing organizational positions with qualified workforce. It maintains
legal and voluntary requirements to ensure equal opportunity to all prospective candidates without
any discrimination to anybody on the count of caste, colour, religion, ethnicity, nationality, language
and other unrelated criteria.
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Factors Affecting Manpower Planning:
HRP is influenced by several considerations. The more important of them are:
(a) Type and strategy of organization
(b) Environmental uncertainties
(c) Time horizons
(d) Type and quality of forecasting information
(e) Nature of jobs being filled and
The strategic plan of the organization defines the organization’s human resource
needs. For example, a strategy of internal growth means that additional employees
must be hired. Acquisitions or layoffs, since mergers tend to create duplicate or
overlapping positions that can be handled more efficiently with fewer employees.
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(e) Nature of Jobs being Filled:
Personnel planners must consider the nature of jobs being filled in the organization.
Job vacancies arise because of separations, promotions and expansion strategies.
It is easy to employ shop-floor workers but a lot of sourcing is necessary for hiring
managerial personnel. It is, therefore, necessary for the personnel department to
anticipate vacancies, as far in advance as possible, to provide sufficient lead time to
ensure that suitable candidates are recruited.
HR Planning Method:
The four methods generally used to determine the requirements of personnel are:
(i) annual estimate of vacancies;
(ii) long-range estimates of vacancies;
(iii) fixed minimum man specification requirements,
(iv) specific position estimations.
Annually the top management team and the directors must examine their organization
structure and its adequacy for the assigned functions as well as its adaptability for changes
anticipated in the near future. This analysis or audit includes a review of the current vacancies
and probable future changes in the organization’s personnel.
Steps of HR Planning:
The need to anticipate and provide for future manpower requirements has made manpower
planning a vital function today in the area of staffing or the personnel function. In large
organizations, where a personnel department exists, this function is naturally performed by
such department as a staff function. Systematic manpower planning has not yet become really
popular even in advanced countries such as USA and UK, being practised there only by a few
huge companies in large-scale industries such as petroleum and chemicals.
Manpower planning can basically be done by observing the following three steps:
Determine the period for forecasting requirements of manpower in the future (i.e.,
requirements at the end of the first year, second year, third year, fourth year, fifth year,
etc.) and forecast the manpower required at the end of such period.
From the number available at the commencement of the period, deduct the expected
wastage through deaths, resignations, retirements and discharges. This would give the
manpower available from existing staff at the end of the period concerned. A
comparison of the figures arrived at the in steps first and second, would indicate
shortages or surpluses in manpower requirements.
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(a) In case of shortages, decide how such shortages are to be met (i.e., whether
through fresh recruitment and/or promotions from within) and whether any
training or developmental facilities would be required for this purpose.
(b) If surpluses are anticipated, decide how these surpluses will be dealt with like
through early retirements, discharges, or lay offs.
HR FORECASTING
What is certain is the uncertainty of the future. As time passes, the working environment changes
internally as well as externally. Internal changes in the organizational environment include product
mix and capacity utilization, acquisition and mergers, and union-management relations among many
other areas. Changes in the external environment include government regulations, consumerism, and
literacy and competence levels of employees, among a host of other factors. HR plans depend heavily
on forecasts, expectations, and anticipation of future events, to which the requirements of staffing in
terms of quality and quantity are directly linked.
Considerable elements of forecasting Demand for Employees
The first element of a HR planning system is an effective employee forecasting system that takes into
account the following factors:
• Time Horizon: The longer the period, the greater the uncertainty. On the contrary, too short a
period is not sufficient for preparation of the people to be recruited. In addition, the techniques for
forecasting events in the longer period are different from those for a shorter duration. Some
organisations have separate plans for different periods (short-range plans, medium-range plans and
long-range plans).
• Economic factors: As business is an economic activity, forecasts must consider economic aspects
like per capita income, employees’ expectations of wages and salaries, cost and price of raw
materials, inflation rate, etc. Fiscal policies and liberalisation of trade will also influence future
requirements.
• Social factors: Here, we consider the expectations of existing and potential employees on wages,
working condition and government regulations and future trends in political influences and public
opinions.
• Demographic factors: Decisively influential uponn future requirements, these include availability
of youth, training facilities, women in the active labour force, sex ratio, facilities for professional
education, income level, education/ literacy, etc.
• Competition: Competitors’ strategies including advertising, quality of product, pricing, and
distribution. Influence future staffing in a variety of ways. For example, if we can only preserve our
market share by improving the quality of our product, we may have to employ competent R & D
engineers to tackle the product design.
• Technological factors: Technology has to be state of the art if a company is to survive the
competition. Technology, both in terms of quality and extent to which it is used, will determine the
capital and labour force requirements. Given that our future staffing needs obviously depend on
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expected trends in technology, ‘technology forecasting’ has become a specialist field in modern
management.
• Growth and expansion of business: Future growth and expansion plans will affect future staffing
requirements. Growth is possible through: Product diversification. Increased capacity of production.
• Expansion plans are executed through: Merger, Acquisition, Joint venture participation,
Formation of horizontal and vertical integration, Establishment of national and international value
chains. All these activities require additional staffing with right qualities in the right numbers at the
right times.
• Management philosophy/Leadership: Top management ultimately decides what levels of staffing
are required. The philosophy of the top management will largely determine the policies that inform
decisions on future staffing needs.
• Innovative management: As competition increases with globalisation and liberalisation of trade,
management needs to be innovative to stay afloat and sustain competitive advantage.
Factors to Consider in Forecasting the Demand and Supply of Human Resources
Forecast Expected growth of the organisation
Demand
Budget constraints
Turnover due to resignations, termination, transfers, retirement, and death
Introduction of new technology
Minority-hiring goals
Forecast Number of employees willing and able to be trained
Supply
Promotable employees
Availability of required talent in local, regional, and national labor
markets.
Competition for talent within the industry and in general
Demographic trends (such as movement of families from one part of the
country to another)
Enrolment trends in government training programs, trade schools, colleges
and universities.
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Formulation of a Staffing Strategy
To satisfy future requirements, two sets of options are open to management. First, management can
rely on current employees or hire new ones. Second, employees can be trained or not trained. When
these two sets of options are combined, four staffing strategies emerge:
(1) do not train current employees,
(2) train current employees,
(3) hire but do not train outsiders, and
(4) hire and train outsiders.
Most often in today's larger organisations, all four staffing strategies are used simultaneously
according to circumstances.
2. Trend-Projection Technique
This is a top-down technique that may be more familiar to you, as it involves developing a forecast
based on a past relationship between a factor related to employment and employment itself. For
example, in many businesses, employment needs are related to sales levels. The personnel planner
then can develop a table or graph showing past relationships between these two factors and estimate
required staffing levels based on sales forecasts.
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• Persons with a physical or mental disability: Part-time work is often more suited for handicapped
and disabled persons. In some specific disabilities, only part-time work enables individuals to work
without aggravating their disabilities. While most part-time work is in the service industries, there
are also numerous opportunities in the retail and wholesale trades and in manufacturing.
In a great number of circumstances, there are many advantages in part-time work for employees,
such as flexibility in scheduling, ability to spend more time with their families, additional
compensation and stabilisation of employment.
However, for employers, there are also certain disadvantages, such as part-time work requiring.
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