Human Resource Planning:
Human Resource Planning is about estimating the future needs
of human resource and determining how organization will fill those needs or
positions. Human Resource Planning is
important because without it organization might end up recruiting too many or
too little labor which can affect organizational efficiency and hinder productivity.
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| Human Resource Planning by Tahir 2012 |
A lot of organizations do not plan
carefully and thus sometimes they have more labor as compare to what is needed
for example if organization is changing its processes from human labor to
machines than it means that demand for human labor will be decreased. Similarly
if organization is expanding its operations and do not plan effectively than it
can result in shortage of skilled labor which can effect such an expansion
strategy. Human Resource Planning also
provides useful input in management development and career management
activities.
HR Planning is divided in to two main processes; demand
forecasting and supply forecasting. Their details are as under.
Forecasting Demand for Human Resource
Forecasting demand for human resource means estimating the
number and type of people required in future. This future however includes both
short term and long term time horizon. This forecasting can be based on current
turnover rate, organization’s strategic decisions and broader external
environment. For example if organization is experiencing high turnover rate
than the number of people required in future will be higher. Similarly if organization
wants to start new operations or expand rapidly which can be through area or
product diversification, then it means organization need more people in future in
different geographical location and if organization wants to consolidate or
downsize some of its operations then it means organization might need existing
level or even less people in future. Finally if overall economy of a country or
global economy is booming than it means increase in business and revenues and
thus organization needs more human resource whereas if overall economy is
declining it means decrease in economic activity and thus fewer revenues and
less need for human resource.
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Forecasting Demand for Human Resource by Tahir 2012
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An example of how external environment affect
Human resource need of businesses is the Global recession of 2008. When
recession hit America and Europe during 2008, it resulted in decrease in
economic activity, which forced many businesses to shut down because they had
no sales or revenue to generate. Similarly many businesses forced to downsize
its workforce to overcome financial difficulties.
There are several tools or methods available to a Manager to
forecast demand. Some of these methods are as under.
1.
Trend Analysis:
Trend analysis as the name suggests is
about looking in to historical employment data such as number of people
required in particular division or department. By looking at past data, managers can
determine the level and number of people required in future. For example if a
particular organization which is operating in a stable environment required 500
to 550 employees in past five years’ time than it means in near future this
requirement will around 500 to 600. Trend analysis involves human judgment and
some level of intuitive calculations. It
works fine with small to medium size organizations or organizations with
limited number of activities and less unstable environment.
2.
Ratio Analysis:
Ratio analysis means analyzing the
relationship of more than one factor or variable. These factors can be sales to
people ratio or number of business unit to people ratio. For example if an
organization has ten stores and on average every store employs twenty five
employees, so if organization plans to open another two stores in next one year
time than it means organization needs another fifty employees(twenty five
employees for each store). Ratio
analysis is also suitable for small to medium size organization with operations
in a relatively stable environment.
3.
The Scatter Plot:
Scatter plot is a graphical representation
of relationship between two variables. It is similar to ratio analysis but the
difference between ratio analysis and scatter plot is that ratio analysis shows
relationship between variables in figures or in ratios while scatter plot shows
such relationship in chart or graphical form. By representing information on
graphical chart it is easier to understand and forecast in future.
4.
Computerized forecasting:
In practice most organization now a day’s use
computer aided forecasting and use Spreadsheet software such as MS Excel or
other specialized forecasting software.
Computer aided forecasting enable managers to calculate the human
requirement of future based on more than one variable or factor. Computerized forecasting enable planner to
make calculations which are more accurate and reliable mainly because of
freedom of using more than one variables and using advanced statistical
techniques.
Forecasting supply of Internal Human Resource
Once demand forecasting is been completed then the next
stage is to forecast supply i.e. the people who will fill those positions. Here it is worth to mention that organization
simply do not need the number of people (Hard Planning), it also need people who
have the right knowledge and skills (Soft Planning). For example if organization need hundred (100)
employees and there are hundred employees in organization but they do not have
right knowledge and skills than this organization can-not perform effectively.
However if organization needs hundred(100) employees but it only have eighty
(80) employees but these employees got right knowledge and skills than such
organization can grow and can manage its operations properly. The supply side
of forecasting includes both internal and external forecasting.
Internal forecasting means hiring from inside the
organization. Internal hiring results in a more developed and motivated
workforce with better career management activities. However the disadvantage of
internal hiring is that organization limits its ability to creativity and fresh
ideas. Normally internal forecasting is used to
assess who will replace whom. If for
particular positions organization have
no choice of selecting internal employees than organization can turn to outside
sources to fill those positions. Sometimes organizations deliberately fill
positions from outside source mainly to bring new ideas or new ways of doing
things in to the organization or to introduce diversity.
The internal forecasting of human resource can be through
following methods.
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| Forecasting Supply of Internal Human Resource by Tahir 2012
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1.
Human Judgment:
In small to medium organizations and
departments, managers or supervisors have understanding of who will replace
whom. Often this human judgment is based on an individual’s past performance,
his / her education, skills inventories, and type of training attended, language
skills, professional experiences and International exposure if any. Human judgment works well with medium level
managerial or supervisory level and some technical positions.
2.
Replacement charts:
Replacement charts are similar to
organization’s structure charts. They show a particular positions and potential
candidates who can replace or fill the particular position based on
individual’s previous knowledge, education and experience etc.
3.
Computer Databases:
Computer database are similar to
replacement charts. Big organizations have several hundred or even thousands of
different level of employees. These organizations normally maintain a computer
database, in which all the information related to an individual employee is
stored. This information include education, knowledge, skills, language ability,
interpersonal skills, experience of particular industry or sector, overall
experience, training attended, courses completed and so on.
This database enables managers to quickly
browse through employee’s individual profile and identify any potential
candidates who can be groomed for higher positions.
