Human Resources Planning Process
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Transcript of Human Resources Planning Process
Discussion on the process of human resource planning.
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HUMAN RESOURCES PLANNING PROCESS
Introduction
Like every other management function, an efficient human resources planning function is
fundamental to the effective implementation of the strategy of a work organization. The essence
of sound human resources planning is the incorporation of the various human resources
management functions into the philosophy of the organization regarding the manner in which its
employees are intended to be managed. The outcome of these efforts is a strong and proactive
human resources department, well co-ordinated human resources functions, fair and consistent
human resources services that are capable of making optimum contribution to the achievement of
the organization's strategic objectives (Amstrong, M. 2006)
What is Human Resources Planning?
Human resources planning (HRP) may be defined as the process of anticipating and making
provision for the movement of people into, within, and out of the organization. Its primary
purpose is to enable the work organization to maximize the utilization of its human resources by
ensuring that the right number of people, of the right abilities, are available to perform in
correspondingly right job positions at the right time.
Movements of people into, within and out of the organizations
(1) Into the Organization
Planning for the movements of people into the organization involves the forecasting of the
quantity and quality of needed employees from the labour market to fill vacant job positions in
the organization.
(2) Within the Organization
During their stay in the organization, employees make four kinds of movements, commonly
called intra-organizational movements. These movements include transfers from one
geographical location to another, re-categorization from one job to another, promotions, and
demotions. These decisions are made by the organization in order to maintain a stable match
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between its performance requirements and its employees' performance capabilities, and thus
ensure optimum deployment of its human resources.
(3) Out of the OrganizationIt is more normal for employees to leave organizations normal separations than it is for them to
join them. This is because of the uncertainty, which surrounds employee recruitment in
comparison with normal separations. Normal employee exit is easy to anticipate because the
work organization has information regarding the employees’ ages, and knows for sure, that one
day, the employees will leave their jobs. After all, organizations are designed to live longer than
their organizational members do.
Importance of Human Resources Planning
The importance of any management function can best be discussed from the point of view of the
advantages derived from its effective and efficient performance. Accordingly, a good and well
implemented human resources plan enables the organization to reap the following major
benefits:
It enables the organization to maximize the utilization of its human resources. Almost all the
time, the organization has the right numbers and quality of employees for its jobs, thus
eliminating idle labour power, and overwork of employees.
It enables a better achievement of the organization's objectives by ensuring that management
efforts are made in good time to avail the requisite labour power for the organization's
performance processes.
It enables the organization to economize on its recruitment function. An organization with
poor or without human resources planning wastes money hiring the wrong numbers or
quality of employees.
It enables the organization to organize successful exit plans for the advantages of the
employees and the organization. Work organizations with poor or without human resources
planning cannot put in place employee succession programmes that prepare younger staff to
take over from retiring staff; they cannot give retiring staff useful preparatory counseling;
they are also unable to make the right preparations to meet their financial obligations to
retiring employees.
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It increases the organization's information base to the advantage of the human resources
department and other departments. Such information forms a basis for correct decisions in
the implementation of core and non-core human resources programmes.
It enables the organization to make a more effective and efficient use of the labour market.
An organization with good human resources planning approaches the labour market at the
right time and knows what it is looking for in terms of quantities and quality.
It facilitates career or personal development. An organization with poor or without human
resources planning makes it difficult for its employees to make plans for their personal
development, because they cannot clearly identify clear career paths, career opportunities,
and conditions for their access.
Factors Influencing Human Resources Planning
Human resources planning is influenced by various internal and external factors:
Internal Factors
i) Organizational Objectives.The objectives of the organization are its goals. These can be general or overall objectives
Organizational objectives are also specific, particularly those that relate to key result areas.
Specific objectives for key result areas are objectives related to areas in which performance
determines the success of the organization. The processes of achieving organizational
objectives, whether general or specific necessarily involve people.
ii) The nature of tasksThe nature of work influences human resources planning.
iii) Leadership StyleThe style of a leader or supervisor, i.e. his or her experience, how he or she guides and
handles the employees determines how many employees will be necessary to execute the
work, as well as how often these employees will have to be replaced.
iv) Work groupsWork group dynamics influence human resources planning. For instance, the transfer of
individual members of a group requires that the dynamics of his or her work group be
taken into consideration. Also, the mutual interaction of work groups must be taken into
consideration.
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Eternal Factors
i) Government PoliciesGovernment policies may stipulate requirements or regulations which, for example
require that only employees with particular specialized qualifications are allowed to carry
out certain functions. For example, after the NBAA Act in 1973, it became illegal in
Tanzania, to recruit a person as an accountant unless they possessed recognized
accounting qualifications and were registered with NBAA.
ii) Economic Conditions
Economic conditions can exercise an important influence on planning for employment.
For example, in an economic slump the economy becomes less active and constrains
employment.
iii) Labour Market Conditions
The labour market generally keeps changing and at any given time, has particular
conditions for each occupation or profession. For instance in Tanzania, during the 1970s
and 1980s the labour market demanded lots of accounting staff as a result of strict
conditions laid down by the National Board for Accountants and Auditors (NBAA). But
during the 1990s and 2000s the labour market demanded less accounting staff and lots of
qualified human resources management staff probably as a result of economic
liberalization policies. In practice, the human resources plans of most work organizations
during the above-mentioned periods contained needs for recruiting the relevant
professional staff categories.
iv) Trade Unions
Trade unions can set certain requirements with regard to number and type of employees
for specific tasks.
v) Changes in Technology
Advancement in technology e.g. in information technology, calls for recruitment of
qualified IT experts but also displaces employees who used to perform given manual
tasks. For example, the advent of computer word processing skills calls for IT trained
personnel but also pauses a threat to “typewriter” secretaries.
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The Process of Human Resources Planning
The human resources department must play a visible and major role in the human resources
planning process. Human resource department maintains the organization's human resources
information base, and is located at the centre of the information network related to the labour
market conditions. The human resources department should utilize its position and information
base to manage the human resources planning process effectively. A typical HRP process
consists of six basic steps as listed below:
(i) Choice of HRP period.
(ii) Determining the impact of the organization’s objectives on specific organizational units.
(iii) Determining the total number of employees required to achieve the organization’s and
unit’s objectives. i.e. the total and unit demand for human resources in terms of quantity.
(iv) Defining the performance capabilities of needed employees i.e. the demand for human
resources in terms of quality or the educational and skill qualifications as well as the
experience, which the needed employees should possess.
(v) Determining the net or additional human resources requirements in the light of the
organization’s current human resources.
(vi) Developing action plans to meet the net human resources needs.
Six steps in the Human Resources Planning Process
The description of the human resources planning process
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ChooseHRPperiod
Define theperformancecapabilitiesof neededemployees
Determineadditionalhumanresourcesrequirements
Developactionplans tomeet nethumanresourcesneeds
Determine totalnumber ofemployees needed
Determineimpact oforganisational objectivesonobjectivesof units
i) Choice of Planning Period
The first step in a HRP process is to choose the planning period to which the plan should relate.
Normally HR plans are done over three planning periods: short, medium, and long term, which
are done over one year, one to five years, and over five years respectively. The most commonly
used planning period is short term, which is also easier to manage, due to the greater degree of
certainty, which the period affords. Short term human resources planning is a routine task that is
usually compiled within the last few months of the year of operations for the ensuing year.
Medium and long-term plans are more complicated and more demanding processes due to the
enormous amounts of assumptions about the future period.
ii) Determine Impact of Organizational Objectives
Human resources plan must be based on the organization’s strategic plans. In practice, this
means that the objectives of the human resources plan must be derived from the organization’s
objectives. The organization’s objectives are statements of what it intends to achieve or its
expected results, that are designed to give the organization and its members direction and
purpose.
iii) Define HR Performance Capabilities
After establishing organizational, departmental, and sectional objectives, the line managers
should determine the performance capabilities i.e. knowledge, skills, experience required to meet
their respective objectives. The key here is not to look at the performance capabilities of present
employees but to objectively define the performance capabilities required to meet the objectives
of each organizational level.
iv) Determining Total HR
After establishing the performance capabilities required to achieve an established objective, line
managers should determine the total number of employees needed. In practice, a review of
current job descriptions will indicate if the current number of employees can absorb the
additional tasks or if additional staff needs to be recruited.
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v) Determining Net HR Demand
Once line managers have determined the total quality and numbers of employees required, he or
she should analyze these data in order to determine additional (net) staff requirements. This
process involves a thorough analysis of present employees against expected changes.
vi) Developing Action Plans
Once the net human resources requirements have been determined, line managers develop action
plans for achieving the established objective. If the net requirements indicate a need for
additions, plans must be made to recruit, orient, and or train the required staff
The Human Resources Planning ProcessThe human resources planning process has two main constituent steps: needs forecasting, and
programme planning.
(1) Needs ForecastingThis stage comprises the process of predicting the organization's future demand for human
resources. The organization's future demand for human resources, makes use of the department's
information base, and is arrived from three analyses: analysis of the external environmental
constraints, analysis of human resources demand, and the analysis of human resources supply.
(a) External Environmental ConstraintsThis step involves analyzing the technological economic, social, political, legal, and demographic elements to assess their impact on the organization's future human resources demand. Let us take a closer look at these elements.
(b) Human Resources Demand Forecasting Demand forecasting is the process of estimating the future numbers of
people required and the likely skills and competences they will need. The
ideal basis of the forecast is an annual budget and longer term business
plan, translated into activity levels for each function and department, or
decisions on ‘downsizing’.
(c) Human Resource Supply Forecasting Supply forecasting measures the number of people likely to be available
from within and outside the organization, having allowed for attrition (labour
wastage and retirements), absenteeism, internal movements and
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promotions, and changes in hours and other conditions of work. The forecast
will be based on:
Internal variable to be considered:
(i) The organization’s strategic plan for adding or closing facilities.
(ii) The organization’s plan to add or drop product or service lines.
(iii) Attrition during the period.
(i) Effects of the employee training and development programme.
The external variables to be considered include:
(i) Immigration in and out of the area.
(ii) People graduating from schools, colleges, and professional associations.
(iii) Changing work force composition and patterns.
(iv) Technological developments and shifts.
(v) Behaviour of competing employers.
(vi) Government laws and regulations.
(vii) The security situation surrounding the country e.g. is war imminent?
(2) Programme Planning
Programme planning is done after the future human resources needs have been determined.
According to Walker, programme planning involves the planning of performance management,
and career management.
(a) Performance Management
Performance management includes the planning of broad organizational matters such as
performance standards, quality of work life, and core human resources management
programmes.
(b) Career ManagementCareer management involves planning of recruitment policies and systems, i.e. recruitment,
selection, training, and management succession.
Factors which determine Demand for Human Resources
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In most work organizations the human resources planning function attaches greater emphasis to
estimating human resource demand than supply. In this section we will examine the factors
which influence the demand for human resources in a work organization.
(1) Strategic PlansThe organization's strategic plan shows the long-term objectives of the organization, such as the
forecast growth rate, markets, new products, and technological acquisition. These objectives
point to the number and types of employees that will be needed to enable the organization to
achieve its objectives in the future.
(2) BudgetsThe organization's strategic plan also shows the short-term objectives of the organization, i.e. objectives, which the organization intends to achieve in the coming year. In effect this is a gradual operationalization of the organization's long-term objectives. These objectives are operationalized in the form of budgets.
Budget increases reflect increased financial ability to carry out the planned activities of the organization. If these activities call for recruitment, then the budget increase is a green light for recruiting. A budget cut conveys the opposite message.
(3) Production ForecastA planned increase in production, suggests a planned increase in human resource demand. A planned decrease in production suggests either an employment freeze or layoff. The thrust here is to consider the increase or decrease in terms of not only numbers but also skills levels as well.
(4) Sales ForecastA planned increase in sales suggests an increase in the human resources required to realise the forecast. A planned increase in sales suggests an increase in profits and thus the organization’s increased ability to carry out the recruitment drive. A planned decrease in sales suggests a hiring freeze or layoff.
(5) New ProjectsIf an organization introduces a new project it definitely hires new people for the project. Even where existing staff are placed with the new project, hiring must still be done to fill their positions. Sometimes the project is a result of either a take-over or merger of existing projects. In this case, the planners redesign the jobs, reassess the human resources requirements of the new project, and very often hire new employees apart from laying off those surplus to the needs of the project.
(6) RetirementRetirement is a systematic separation of older workers from an organization. Retirement is a
normal and natural organizational phenomenon. Retirement should be planned in order to ensure
continuity of the performance of the organization. In an organization, which has good human
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resources planning, employee retirement entails recruitment. Retirement should not be a difficult
problem to human resources planners because it is a separation method, which can be anticipated
with accuracy.
(7) ResignationResigning means a voluntary separation of an employee from the organization. Resignations are
an unplanned reduction of the work force and as such necessitate hurried transfers or hiring of
new employees. Resignations pause a more difficult problem to human resources planners
because of the uncertainty attached to them. Resignations can be avoided through such
programmes as motivation, improvement of quality of work life, and job satisfaction.
(8) TerminationTermination is another method of separation, which is caused by the decision of the employer.
Terminations usually necessitate hiring. Terminations disturb human resources plans because
usually, they amount to the employer's response to unforeseen events such as disciplinary
problems.
(9) Death
The death of an employee is as uncertain as resignation or even termination. It necessitates hiring.
(10) Leave of Absence
The failure of a crucial employee to report for work can seriously impair the functioning of the
organization. It creates immediate and urgent demand, which must be filled to ensure continuity.
Also included under leave of absence are sabbatical and maternity leaves.
(11) Technological ChangesChanges in technology are difficult to predict, and their impacts are difficult to assess. Most
technological innovations cause the fear of replacing employment. The computer for instance
was expected to replace many employees. These fears have however, proved to be untrue,
because the computer industry has turned out to be the fastest growing industry that is employing
very many people today. The problem caused to planners by complicated technology is that it
tends to reduce employment in one category and to increase it in another, resulting either in zero
effect or net increase.
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(12) Competition
Competition causes either an increase or a decrease in business, and thus necessitates an increase
or decrease in the demand for human resources.
Supply of Human Resources
After projecting the future demand for human resources, the human resources department
proceeds to fill the job openings after the approval of the projections. There are two possible
sources of supply for the candidates: inside, and outside the organization.
The internal supply comprises the current employees of the organization. In order to get them to
fill vacant positions, current employees may be moved from their current job positions by
promoting, demoting, or transferring them to fill the vacant job positions. This task is easy
because it lies mainly within the decision prerogatives of management to effect it.
The external supply consists of people who do not currently work for the organization. In order
to get them to fill vacant job positions in the organization, these people will have to be induced
to leave the employ of their current organization. This is a more difficult task than dealing with
current employees. The candidates are new to the work organization and thus must be processed
through a lengthy and costly process. This process will be discussed in chapter six.
(1) Estimates of internal supply
The estimate of the internal supply of human resources requires knowledge of the number, and
job categories of current employees in the organization. In addition to the numbers and job
categories, the planners should audit the current work force to determine the capabilities of the
employees. This information allows the planners to determine which job openings current
employees can fill. This information is recorded on a replacement chart. It is important to find
out which employees, among the current employees, can fill vacant job positions every time they
occur, because of the motivational and retentionist value of giving the current employees priority
over outside candidates.
The human resources audits, and replacement charts derived from the above-described exercise,
are important additions to the human resources information base. It gives the human resources
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an updated knowledge of the organization's work force, and a basis for performing the other
functions e.g. training and development, and career planning, more effectively. Due to their
importance of career development, and human resources audit, we have devoted separate
chapters for them each in chapter eight and twelve, respectively.
(2) Estimates of external supply
Not all vacant job positions can find suitable candidates from current employees. Sometimes
there is simply no suitably qualified current employee to fill the vacant position. Some jobs for
instance, are direct entry jobs, meaning that they are to be filled by candidates entering directly
from training institutions. Another restriction is that employees with the right skills may be
available, but the organization cannot spare them for the new jobs. It is theoretical to expect the
organization to release every employee for the new jobs simply because they are qualified for
them and they would mean promotion for them. In both the above cases, it becomes necessary
for the organization to look outside for a suitable candidate.
Finding new employees from the external market is not an easy task. Very much depends on the
condition of the labour market and on the skills of the human resources department. Even when
unemployment rates are high, many needed skills may still be difficult to find.
Methods of Human Resources Forecasting An organization’s future human resources needs can be forecasted using a variety of methods.
Some methods are simple and some are complex and demanding, but basically the methods used
in most organizations to forecast human resources needs, can be either judgmental, or
mathematical. Judgmental methods which use either managerial estimates or the Delphi
technique, call on managers to make subjective estimates of future staffing needs based primarily
on past experience.
i) Managerial estimates
Managerial estimates are basically judgmental methods of forecasting that call on managers to
make estimates of future staffing needs. There are three approaches of making managerial
estimates. First these estimates can be made by top level managers and be passed down to lower
level managers. Secondly, these estimates can be made by supervisory level managers and be
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passed up to top level managers for consideration and further revision after some explanation.
Thirdly, the estimates can be conceived through a participatory process involving top level and
lower level managers.
ii) Delphi Technique
With the Delphi technique, each member of a panel of experts makes an independent estimate of
what the future demand of human resources needs will be, along a set of underlying assumptions.
An intermediary then presents each expert’s forecast and assumptions to others and allows the
experts to revise their positions as desired. This process continues until some consensus or
composite estimate emerges.
(a) Mathematical MethodsMathematical methods of forecasting human resources needs include various statistical and
modeling methods. Statistical methods use historical data to project future staffing demand. On
the other hand, modeling methods provide a simplified abstraction of staffing demands
throughout the organization. The manipulation of input data allows the HRM ramifications for
different demand scenarios to be tested. With increasing development of user-friendly
computers, mathematical methods are being more frequently used to forecast staffing needs than
judgmental methods.
(1) Time Series Analysis
Under time series analysis, past staffing levels (instead of workload indicators) are used to
project future staff requirements. Past staffing levels are analyzed to isolate seasonal and
cyclical variations, long-term trends and random movements. Long-term trends are then
extrapolated or projected using a moving average, exponential smoothing, or regression
technique.
(2) Regression/correlation models
Regression models are most appropriate where the level of required manpower is dependent on
such factors as production, sales, and unit costs. There is a general relationship between the
products produced by using a given technology, with the capital and labour used in the process.
Thus the optimal number of employees required in a production process, can in some way be
derived from the demand of the produced goods. The problem here, is to formulate the empirical
relationship between the inputs and outputs.
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(3) Stochastic Models
Stochastic models are most commonly used by organizations such as government contractors, and consulting organizations in which the demand for human resources is derived from many projects. The issues used to determine human resources requirements here are three: (i) The varying probabilities of securing each contract.
(ii) Uncertainties about the pending project start-up date.(iii) Uncertainties of the required manpower over the life cycle of the project.
(4) Productivity Ratios
Here historical data are used to examine past levels of productivity index.
(5) Personnel Ratios
Past personnel data are examined to determine historical relationships among the number of employees in various jobs or job categories. Regression analysis or productivity ratios are then used to project either total or key group staff requirements. Personnel ratios are then used to allocate total requirements to various job categories or to estimate requirements for non-key groups.
(6) Extrapolation.
Extrapolation is a method of estimating future employment needs by extending past rates of change into the future. For instance, if an average of 5 salesmen were hired per month in the past two years, after extrapolating this trend, 5x12 or 60 salesmen will be needed in the coming year.
(7) Succession Analysis
This method, which is widely used, relies upon replacement charts. Replacement charts are in effect succession plans developed to identify potential human resources changes, identify back up candidates to understudy them, and consider attrition for each department. Succession analysis is more elaborately discussed in the following section.
Problems Facing Human Resources PlanningThe following are the main problems facing the implementation of human resources plans in
Tanzanian work organizations. They are derived from findings from interviews conducted by
the author with managers of Tanzanian public work organizations.
(1) Insufficient top management support.Like many other human resources programmes, human resources planning needs the support of
top managers to be able to play its role without its practitioners being accused of interruption.
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Unfortunately in many work organizations top management teams formulate the organization's
strategic plan without a sufficient blend of human resources planning ideas. Also, during the
implementation of the plan, because of insufficient top management support, one sees
insufficient human resources involvement.
(2) Insufficient funds.In some organizations the human resources planning function is appropriately incorporated in the
organization's planning process, though unfortunately, the human resources department is not
allocated enough funds to carry out the plans as desired. The usual excuse for cutting back on
budgets for human resources planning is that with general shortage of funds, the corporate
planning function can adequately cater for human resources planning as well.
(3) Shortage of experts.There is a general shortage of human resources practitioners who have specialized in human
resources planning, in many African countries. In these organizations, this problem is
compounded by the problem of recruiting people who are not trained in human resources
management to perform specialized jobs in human resources departments. Where the employees
in a human resources department are graduates in sociology, mathematics, law, or political
science, they are unlikely to be of use in a highly specialized field of human resources
management, like human resources planning.
(4) Inactive human resources departmentAs we noted in chapter one, the human resources occupation in many African work
organizations has not been accorded sufficient professional status. Many organizations have not
fully appreciated the pivotal role of human resources to the effectiveness and survival of their
organizations. We discussed also in chapter one that the human resources department in the
organization should play a co-ordinating, advisory role to the other departments and ordinary
employees on all human resources affairs. Such a role is difficult to play in a work environment
that doubts the professional status of the human resources practitioners to start with. Some
human resources departments however, increase these problems by being inadequately
aggressive, proactive, and involved in their roles, particularly human resources planning.
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(5) Poor Information baseAccurate human resources planning must be based on accurate and up to date data. Most
African work organizations do not maintain accurate and up to date information about their
human resources. This is a major weakness of their planning function.
(6) The Method trap.
As HRP continues to become more and more popular, new and sophisticated methods have been
developed. Several of these were discussed earlier in this chapter. While many are definitely
useful, there is sometimes a tendency to adopt one or more of some methods not for what they
can offer, but rather because “every company around is using them”. Human resources staff
should avoid becoming enamoured of a method merely because it is popularly used.
(7) Integration with organizational plans.
As we have underscored at the beginning of the chapter, human resources plans must be derived
from the broader organizational plans. Human resources plans should form an important part of
the organization’s plans. The organization’s planners should thus work in close co-operation
with human resources staff.
(8) Poor involvement of line managers.
Strictly speaking, HRP is not a human resources department function. Successful HRP requires
the co-ordinated effort of line managers and human resources staff, where the latter’s plans
depend on the other plans of the line managers.
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REFERENCE
Armstrong, M (2006), Human Resource Management Practice, 10th Edition, Kogan Page Limited, London.
Morgen Witzel (2004), Management The Basics, 1st Edition New York USA.
Sparrow, P et al (2002), Globalizing Human Resource, Manchester University, UK.
Kondalkar, V.G, (2007), Organizational Behavior, New Age International Publisher, New Delhi India.
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