Human Resource Planning (HRP) notes

Human Resource Planning (HRP)

• Meaning of Human Resource Planning
• Importance of Human resource Planning
• Human Resource Planning process
• Techniques of forecasting Human Resource needs
• Challenges in human resource planning
• Emerging issues and trends in Human Resource planning

6.0 HUMAN RESOURCE PLANNING
LEARNING OBJECTIVE
By the of this topic, the trainee should be able to;
– Explain the importance of human resource planning
– Explain the factors considered in forecasting human resource requirements
– Describe the human resource planning process

Planning is a basic management function involving formulation of one or more plans to achieve optimum balance of needs or demands with the available resources. The planning process identifies the goals or objectives to be achieved, formulates strategies to achieve them, arranges or creates the means required, and implements, directs, and monitors all steps in their proper sequence. The planning processes of most organizations therefore define what will be accomplished within a given time frame, along with the numbers and types of resources that will be needed to achieve the defined business goals.

6.1 Importance of human Resource Planning
Meaning of human resource planning
Human Resource Planning is the process of systematically forecasting the future demand and supply for employees and the deployment of their skills within the strategic objectives of the organization. Human resources planning is a process that identifies current and future human resources needs for an organization to achieve its goals. It responds to the importance of business strategy and planning in order to ensure the availability and supply of people both in number and quality. Human resources planning serve as a link between human resources management and the overall strategic plan of an organization. The key points are;

• Identifying the organizational goals and competencies employees need to achieve those goals. Competency-based management supports the integration of human resources planning with business planning allowing organizations to assess the current human resource capacity based on employees’ current skills and abilities. These skills and abilities are measured against those needed to achieve the vision, mission and business goals of the organization. If the available people lack necessary competencies, the organization plans how it will develop them.

• Making a plan either to develop necessary competencies from within the organization, or hire new people who have them. Targeted human resource strategies, plans, and programs to address gaps in the organization’s workforce are designed, developed and implemented to close the gaps. Plans and programs can include: targeted hiring/staffing, employee learning and education, career development, succession management
• Continually evaluating the plans and strategies for fulfilling Human Resource needs. These strategies and programs are monitored and evaluated on a regular basis to ensure that they are moving the organization in the desired direction, including closing employee competency gaps. Corrections are then made as needed.

Human Resources planning can also be defined as the process of assessing an organization’s human resources needs in the light of organizational goals and changing condition and making plans to ensure that a competent, stable workforce is employed. The actual planning process will vary a great deal from organization to organization.

Importance of human resource planning
Human resource planning aims at fulfilling the objectives of manpower requirement. It helps to mobilize the recruited resources for the productive activities. The human resource planning is and important process aiming to link business strategy and its operation. The importance of human resource planning is as follows:
Future Manpower Needs
Human resource planning ensures that people are available to provide the continued smooth operation of an organization. It means, human resource planning is regarded as a tool to assure the future availability of manpower to carry on the organizational activities. It determines the future needs of manpower in terms of number and kind.
Coping with Change

Human resource planning is important to cope with the change associated with the external environmental factors. It helps assess the current human resources through HR inventory and adapts it to changing technological, political, socio-cultural, and economic forces. Changes in political environment may include new governments taking over, new laws being introduced government etc. economic changes may include changes in interest rates ,transport systems etc. while changes in social cultural environment may be inform of changes in customs, traditions, religion etc. technological changes may include changes in methods of production. A good Human Resource Planning must respond appropriately to the rapid changing in the society and must go beyond forecasting to all aspect of HR Management.
Recruitment of Talented Personnel
Another purpose of HR planning is to recruit and select the most capable personnel to fill job vacancies. It determines human resource needs, assesses the available HR inventory level and finally recruits the personnel needed to perform the job. It therefore helps the organization to tap efficiently talents which will help to integrate both the individual and organizational goal. This will consequently minimize some of the problem associated with low productivity absenteeism and labour turn over.
Development of Human Resources
Human resource planning identifies the skill requirements for various levels of jobs. Then it organizes various training and development campaigns to impart the required skill and ability in employees to perform the task efficiently and effectively.
Proper Utilization of Human Resources
Human resource planning measures that the organization acquires and utilizes the manpower effectively to achieve objectives. Human resource planning helps in assessing and recruiting skilled human resource. It focuses on the optimum utilization of human resource to minimize the overall cost of production.
Uncertainty Reduction
This is associated with reducing the impact of uncertainty which are brought sudden changes in processes and procedures of human resource management in the organization which may lead to a labour crisis.

Advantages of human resource planning
Human resource planning takes a proactive approach to meeting the company’s needs, an advantage to the organization. With a proactive approach, the company anticipates future needs, evaluates the company’s current workforce and determines what actions to take to prepare for the future. The human resource department enjoys the ability to consider all aspects and the potential implications of different actions before acting. Organizations without human resource planning react to employee needs without allowing enough time to consider all the options. Another advantage of human resource planning involves employee development. As the human resource department identifies potential employees to move into future management positions, it can implement actions that will develop those employees’ management skills. Human resource planning allows the company to review performance appraisals to see what skills an employee lacks and provide training opportunities to that employee.

An organization that does not plan may have labour shortages or may be forced to lay-off employees when there is a surplus. It may also suffer from management succession crises when some managers retire or resign from their positions. Hence HR planning helps an organization avoid such labour crisis. Another advantage of HR planning is that it enables an organization to achieve pre- determined corporate objectives in an ever changing business environment. This is because HR planning assists management to make appropriate HR decisions and efficiently and effectively utilizes the available human resources.

Disadvantages of human resource planning
Human resource planning suffers from the following limitations:

1. human resource planning relates to the current cultural thinking of the employees. Many employees work in the same manner they were originally trained. These employees learn to perform their work efficiently and take pride in their ability. When human resource management decides to take a new approach and implement human resource planning, these employees feel threatened and resist because they fear that their current skills may not transfer to the new processes and the employee would need to learn a new system.
2. Reliable data and information about the economy, trends in human resources, industries, and labor market are not easily available and there are inadequacies of information system which is a disadvantage to the organization. Some plans are also made using unreliable records or poorly kept employee records which may make them irrelevant.
3. It is very difficult to ascertain the future manpower requirements of an organization, as the future is always uncertain. As such the predictions are bound to go wrong.
4. Human Resource Planning is more relevant in countries that face scarcity of human resource. In a country, Human Resource Planning is of little assistance since manpower is available in abundance.
5. Human Resource planning is a time-consuming and costly process. The recruitment and selection process is time-consuming and requires the services of experts. This can all add to the cost.
6. Human Resource Planning is beneficial in organizations that adopt a professional approach and at the same time are conscious about the changing environment. Traditional business houses often adopt very indifferent approaches towards environmental changes. This limits the scope of Human Resource Planning.
7. Human Resource Planning are beneficial where adequate skilled manpower is available. In cases where skilled manpower is not easily available, Human Resource Planning serves no purpose.
8. Human Resource Planning is also made difficult in organizations that have a very high labour turnover. In such organizations, estimating the manpower requirements is a Herculean task. While predicting the retirement is easier, it is difficult to determine voluntary quits, prolonged illness and death. This restricts the scope of Human Resource Planning.

6.2 Factors Considered In Forecasting Human Resource Requirements
The most carefully laid human resource plans can be affected internal and external change anytime, so forecasting and flexibility are essential for effective planning and adapting as required. In order to do this, HR managers must be aware of what’s going on within the company, the industry and the wider market in relation to the factors that influence change.

Internal factors to consider in human resource planning
An organization’s internal policies, however, directly impact how it staffs its workforce and are controllable. Human resources planning consider these internal factors to ensure that the business gets the most talented employees at the right time. Aligning planning decisions with strategic goals helps the company maintain productivity. The internal factors that influence HR planning include;
a) Mission
A company’s mission summarizes its purpose, values and vision. The business sets a definitive direction establishing clear goals and objectives. Then, when the HR department goes to fill staff positions, it can recruit, interview and hire individuals who possess similar values. For example, a company that wants to adopt sustainable business practices to protect the environment should seek individuals with similar interests.
b) Culture
Organizational culture defines how employees interact with each other. Small businesses with one location usually expect personnel to work in the office. Larger companies may permit employees to work at home. Therefore, new employees at this bigger business must be comfortable attending virtual meetings and dealing with co-workers over the telephone. In general, human resources planning needs to take into account the amount of flexibility in terms of hours, dress code and formality tolerated the company. Additionally, it ensures staff coverage during all working hours defined company operational policies. For example, if the company promises customer support 24 hours a day, human resources planning anticipates scheduling workers throughout the day.
c) Structure
Organizational structure impacts human resources planning. Functional, divisional or matrix structures require different staffing. In a functional structure, employees perform specialized tasks. In a divisional structure, each department has representation from each required function, such as sales, marketing, development and support. In a matrix structure, an employee reports to two different bosses, one represents her function and the other managing the division. In each case, effective HR planning ensures positions get filled to ensure productivity and adhere to company, local, state and federal regulations for safety and security.

d) Funding
HR planning must occur within the budget allowed to maximize profitability. Seasonal demands for additional staff may impact hiring plans, so a business needs to anticipate this. The need for specialized skills may also impact planning. To meet short-term needs, companies may outsource non-core activities. Meeting long-term needs typically involves offering training and development opportunities to the workforce. Additionally, to maximize productivity, morale and loyalty, employers can plan events. If a business lacks the financial resources to offer comprehensive HR programs, it can provide lists of free resources related to professional development, workforce wellness and team-building. Adjusting to funding levels may make human resources plan challenging for a small business.

External factors affecting human resource planning

a) Political
From a shift in local public opinion to a change in government or even a new industrial world superpower entering the market, politics influence how much funding is available, how much tax must be paid, minimum wage rates, how markets are controlled and the quality and quantity of staff available for hire. When planning ahead, you need to consider likely changes to markets, budgets and availability of suitable applicants as a result of recent or anticipated political influences. For example, if a change of government is possible in the coming year, understand the new administration’s priorities in relation to markets, industries and businesses.
b) Economic
How much money is available for salaries, training and equipment is the most immediate concern in human resource planning. However, external economics plays an equally critical role. For example, people don’t have as much money to spend in an economic downturn and tend to be much more selective in what they buy or services they use. This means some industries, such as those producing luxury items or non-essential services, sell less and may even have to lay off some staff. This, in turn, makes the local economy even more difficult. Building economic factors into the human resources plan helps to predict how many employees you will need and you can pay.
c) Social
Several social factors may influence your HR planning, but you need to take into account equalities and diversity in particular. Where there is a clear discrepancy of one social group, it’s a good idea to build in ways of opening up new opportunities. For example, if there are few women people in your company compared to numbers in the wider community, determine why this is the case and what can be done to redress the balance.
d) Technological
New technology brings new skills requirements, so companies always need to be aware of proficiencies and training needs when planning human resources. New products and services also may require recruiting highly skilled employees or training existing employees to meet the need. It is therefore important to make sure HR managers are aware of new equipment or knowledge be needed so they can build the required skills, and most likely salary enhancements, into the plan.
e) Legal
Employment law is the most significant sector of the legal system that affects human resource planning, and it changes all the time. In most cases, there is plenty to time to implement changes to policy, as the law can take a while to take effect Employment law changes must be reflected in company policy and implemented on the ground supervisors and managers, so it is good to incorporate another training need into the human resources plan.
f) Environmental
Environmental factors might include where a business is located in relation to finding sufficient appropriate staff or changes to the environment that mean a need for more or fewer employees. A simple example of environmental factors affecting human resource planning is the consideration of how employees get to work safely during night shifts in an area with high crime rates which may require an inclusion of employee transport arrangements for those in night shift.
6.3 HR Planning Process

Human resource planning is a systematic analysis of HR needs to ensure the availability of the correct number of employees with the necessary skills at the right time. It involves several steps which are forecasting, assessing the inventory, estimating future demand and supply of labour, matching demand and supply as well as implementation, monitoring and control as discussed below.
a)Forecasting
HR Planning requires that we gather data on the Organizational goals objectives. One should understand where the Organization wants to go and how it wants to get to that point. The needs of the employees are derived from the corporate objectives of the Organization. They range from shorter and medium term objectives and their conversion into action. Therefore, the HR Plan should have a mechanism to express planned Company strategies into planned results and budgets so that these can be converted in terms of numbers and skills required.
Assessing Human Resources (Inventory)
After knowing what human resources are required in the Organization, the next step is to take stock of the current employees in the Organization. The HR inventory should not only relate to data concerning numbers, ages, and locations, but also an analysis of individuals and skills. Skills inventory provides valid information on professional and technical skills and other qualifications provided in the firm. It reveals what skills are immediately available when compared to the forecasted HR requirements.
The HR inventory analysis entails; Skill inventory, or keeping track of the number of employees, and the age, locations, qualifications, and skills of each employee to determine the specific role each employee would fill in the short term and long term ,Forecasting resignations and recruitment and understanding their impact on the skill inventory levels and Forecasting leaves, transfers, dismissals, sabbaticals, prolonged illness, and deaths of employees and their impact on inventory levels. The ways to forecast the internal supply of human resources include methods such as Markov analysis, transitional matrices, replacement schedules, succession planning, and the like.
Estimation of demand and supply of labour
HR forecasting is the process of estimating demand for and supply of HR in an organization. Demand forecasting is a process of determining future needs for HR in terms of quantity and quality. It is done to meet the future personnel requirements of the organization to achieve the desired level of output. Future human resource needs can be estimated with the help of the organization’s current human resource situation and analysis of organizational plans and procedures. It will be necessary to perform a year-by-year analysis for every significant level and type. Supply is another side of human resource assessment. It is concerned with the estimation of supply of manpower given the analysis of current resource and future availability of human resource in the organization. It estimates the future sources of HR that are likely to be available from within and outside the organization. Internal source includes promotion, transfer, job enlargement and enrichment, whereas external source includes recruitment of fresh candidates who are capable of performing well in the organization.
Matching Demand and Supply
The next step in HR Planning is developing action plans to bridge the gap between forecast and supply. . It is concerned with bringing the forecast of future demand and supply of HR. The matching process refers to bring demand and supply in an equilibrium position so that shortages and over staffing position will be solved. The various alternatives include to achieve this equilibrium is include developing strategies to recruit new employees, Retrenchment or downsizing strategy to shed excess workforce, Training and Development plans to right-size the workforce, Career Planning and

Succession Planning to identify key personnel and making Changes in work regulations such as timings, overtime policy and the like. The basic considerations when undertaking the planning process is compliance and impact of labor legislation. Laws that govern overtime and retrenchment for instance can have a significant impact on the strategy adopted. The other consideration is the availability of resources such as financial, physical, and technical for implementation of the plans. Once approved, such plans become part of the company’s strategic objectives. Strategic HR Planning entails aligning such HR Plans with the overall strategic goals of the organization.
Action Plan
The HR plan is then executed through the designation of different HR activities. The major activities which are required to execute the HR plan are recruitment, selection, placement, training and development, socialization etc. Finally, this step is followed control and evaluation of performance of HR to check whether the HR planning matches the HR objectives and policies. This action plan should be updated according to change in time and conditions.
f)Monitoring and Control.
This is the last stage of HR planning in the Organization. Once the programme has been accepted and implementation launched, it has to be controlled. HR department has to make a follow up to see what is happening in terms of the available resources. This ensures implementation proceeds in accordance with the plan and taking timely course corrections. Since the external and internal environment of an enterprise always remains in a state of flux and a good HR Plan incorporates mechanisms to make timely revisions in accordance with such changes.
6.4 Review questions
1. State and explain the importance of human resource planning
2. State five disadvantages of human resource planning
3. Discuss the internal factors influencing human resource planning
4. Describe the process of human resource planning
5. Explain the meaning of human resource planning