Human Resource Management

By Dr. Debashish Sengupta

Human Resource Planning

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CHAPTE
R

Human Resource Management

Key Terms

Human Resource Function

Markov Analysis
Supply Forecasting
International labor Organization
(ILO)
Qualitative Methods
The Macro Environmental Factors

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Human Resource Function

In leading firms today, the role of the human resource
function is growing with the realization that people and
their costs are critical to organizational success. If the
planning and development of human resources is
guided by strategic plans, shaped by organizational
needs, and closely integrated with both shortterm and
long-range company objectives, the importance of the
human resource function to corporate success will be
demonstrable, and recognized by top management
(Manzini, Gridley).

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Management must be able to guarantee that the

organization will have the right number and the
right kind of people at the right place and time
(Alpander, 1980). Acute social and economic
strains are liable to occur whenever plans do not
pay enough attention to the need for jobs, and
popular support, which is so necessary in carrying
out a plan, is not
forthcoming as a result
(Mouly). Human Resource Planning has been
defined as the management process of analyzing
an organizations human resource needs under
changing conditions and developing the activities
necessary to satisfy these needs (Walker, 1980).

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Planning for the corporation so as to have the right

numbers of people at the right time, at the right place
and with the right skills. It is a simple definition, but
not so simple to put into practice as many human
resource and business planners know (Burack, 1985).
Viewed broadly, human resource planning can be
defined as the function that coordinates the
identification of the organizations future human
resource requirements, oversees the development of
plans and programs to fulfill those requirements, and
evaluates the results (Hestwood, 1984).

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Human Resource
Planning
Human Resource Planning is much broader and
more profound than its predecessor, manpower
planning. First, a human resource plan includes all
employees. Second, it must encompass
consideration of both casual and end-result variables
that describe and define the state of an organizations
human resources. The casual variable consists of
factors over which management has control. The
end-result variable consists of the effects of these
factors on people, which lead to the achievement of
organization goals (Lopez, 1981).
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Planning for the right numbers at the right place and time
will continue to be important; however, human resource
planning will become more concerned with training
potential job applicants, attracting them, and managing a
workforce that is highly diverse in terms of backgrounds,
needs, sex, age, country of origin and values (Schuler).
Human resource planning is directly tied to strategic
business planning. Strategic business plans define steps
that the organization will take to meet the demands of the
future. Human resource plans assure that the right number
and the right kind of people become available at the right
time and place so that organizational needs can be met
(Alpander, 1980).
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Key Elements of HR Planning

A good human resource plan shall be derived from
the strategic plan of organization. There are three key
elements of human resource planning:
Forecasting labor demand.
Forecasting labor supply (both external and internal).
Analyzing the gap and developing HRP programs to

fill these gaps.

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Implications of HR Planning on Organisation

Human Resource Planning programs have
primarily three implications on any organization
a. Cost implications
b. Talent implications
c. Organizational Readiness

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Factors Affecting Human Resource Planning

Multiple factors affect human resource planning of a

company. Broadly these factors can be grouped
under three heads:
1. The macro environmental factors,
2. The micro environmental (industry specific)
factors, and
3. Company specific factors.

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The Macro Environmental Factors

The

macro environmental factors could have

impact in the way a company does its human
resource planning.

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The Micro (Industry Specific ) Factors

The Micro (Industry specific) factors affecting
human resource planning of a company could be
identified as primarily four
a.
b.
c.
d.

Industry growth
Industry attractiveness
Technology
Competitive climate

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Factors Affecting HR planning

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Industry Size of the Automobile

And Auto Components Sector

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Industry Size of the Electronics & IT

Hardware Sector

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Industry Size of the Building, Construction

Industry & Real Estate Services Sector

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Exports of Leather and Leather Products

from India (US $million)

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Industry Growth & Size of

Organized Retail

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Insurance Segment- Growth in insurance

premium (2002-2008)

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The Company Specific Factors

The company-specific factors affecting the Human
Resource Planing of a Company include:
a.
b.
C.

Strategy
Human Resource Inventory
Human Resource Mobility

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Demand Forecasting
Workforce demand forecasting is done by companies
and they employ different methods ranging from
qualitative to quantitative methods. The choice of
method generally depends upon the size and
complexity of the firm. Smaller firms usually have
more informal form of human resource planning and
hence many times rely on more qualitative methods.
Whereas, larger firms usually having multiple
departments, levels and higher mobility of workforce
both within and outside the firm, generally use more
quantitative methods.

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Manpower Requirement (Auto &

Auto Components Industry)

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Manpower Requirement
(Electronics & IT Hardware Industry)

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Manpower Requirement
(IT & ITES Industry)

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Manpower Requirement
(Gems & Jewellery Industry)

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Manpower Requirement (Building,

Construction Industry & Real Estate Service)

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Manpower Requirement
(Leather & Leather Goods Industry)

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Manpower Requirement (Banking,

Financial Services &Insurance Industry)

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Manpower Requirement
(Textile & Clothing Industry)

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Manpower Requirement
(Organized Retail Industry)

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Demand & Gap Analysis of Human

Resource in 9 Selected Industries

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A.

Qualitative Methods
a. Judgemental Methods: Employee and
anagerial judgement are used to forecast the
demand of labour. The approach could differ from
choosing to employ only managerial judgment (more
of a top to down driven forecasting) to something
like using a combination of employee
and
managerial judgement (more of a down-up driven
approach).
b. Delphi Technique: The Delphi technique
employs the judgement of the experts. Generally a
panel of experts is chosen. They are then polled for
their forecasts. The average of
such forecasts is
then taken as the demand of workforce in that firm.

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B. Quantitative Methods
Qualitative methods have their own limitations and
hence reliance is more on more hard-data driven
forecasts. Two commonly used quantitative
techniques are:
a. Trend Analysis: In trend analysis first a business
factor relevant to human
resource
needs is
chosen, for example sales, production etc. After this
a historical trend of the business factor in relation
to number of employees is plotted.

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 b. Workload Analysis: In workload analysis, after

considering the workload, the planned man-hours are

calculated. Then the productive hours per worker is
estimated. The total planned-man-hours is divided by
the productive hours per worker to forecast the
demand of workers.

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Supply Forecasting
The internal supply forecast essentially draws upon
the number of outflows and number of inflows of
human resources. Such outflows & inflows have to
mapped for individual jobs. The most commonly
supply of labor is Markov Analysis.

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Markov Analysis
Markov Analysis, also known transition probability
matrix or renewal/ replacement analysis is a very
useful way to forecast the internal supply of labor. No
workforce is ever static. Employees are hired, they
retire, they are promoted, they resign or are
terminated etc. Markov Analysis attempts to project
how the current workforce of a firm would look like if
the current process of mobility continues.

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