Human resource management has begun to play an important role in the organization’s overall strategic development. Currently, HR strategies are aligned with the organization’s overall business strategy. HR strategy should serve the organization’s interests by translating the firm’s goals and objectives into a consistent, integrated, and complementary set of programs and policies for people management.
HRP – Human Resource Planning – is the first component of human resource strategy. HRP is the foundation for all other HR activities such as employee hiring, training and development, remuneration, appraisal, and labor relations. HR planning is critical in a wide range of industries and businesses. No matter whether it’s domestic or international hrm, HR planning influences what employers do when recruiting, selecting, and retaining employees, and these actions, in turn, influence organizational results and success. The challenges posed by changing economic conditions in recent years demonstrate the importance of HR workforce planning.
Staffing is an HR activity that is both strategic and operational in nature. HR planning influences what employers do when recruiting, selecting, and retaining employees, and these actions, in turn, influence organizational results and success. Different organizations have different definitions of what human resource planning entails. For some businesses, human resource planning equates to management development. It entails assisting executives in making better decisions, communicating more effectively, and learning more about the company. The goal of HRP is to better prepare managers for the challenges of the present and future.
- Meaning of Human Resource Planning
- Nature of Human Resource Planning
- Features Of Human Resource Planning:
- Objectives of Human Resource Planning
- Need for and Importance of HRP:
- Process of Human Resource Planning
- Factors Affecting HRP
- Barriers To Human Resource Planning
Meaning of Human Resource Planning
“HRP is the process by which management determines how the organization should move from its current manpower position to desired manpower position. Through planning, management strives to have the right time, doing things that result in both the organization and individual receiving maximum long-run benefits”.-Vetter
“HRP is concerned with two things: Planning of manpower requirements and Planning of Manpower supplies”.-Gordon McBeath
“HRP is a process of determining and assuming that the organization will have an adequate number of qualified persons, available at proper times, performing jobs which meet the needs of the enterprise and which provides satisfaction for the individuals involved”-Beach
Simply put, human resource planning (HRP) is the process of forecasting an organization’s future demand for and supply of the right type of people in the right number. In other words, human resource planning is the process of determining manpower requirements and developing plans to meet those requirements.
Human Resource Planning is a Four-Phase Process.
The first phase entails data collection and analysis via manpower inventories and forecasts.
The second stage entails developing manpower objectives and policies and obtaining top management approval for them.
The third phase entails developing and implementing plans and promotions to help the organization meet its manpower goals.
The fourth phase is concerned with the management and evaluation of manpower plans in order to facilitate progress for both the organization and the individual. The long-run perspective implies that gains in the short run may be sacrificed for future reasons.
The planning process enables the organization to identify its manpower requirements and potential manpower issues that require immediate action. As a result, performance improves in terms of effectiveness and efficiency.
Nature of Human Resource Planning
Human resource planning is the process of analyzing and identifying the availability and need for human resources in order for an organization to meet its goals. The goal of human resource planning is to ensure that the organization has the appropriate number of human resources, with the appropriate capabilities, at the appropriate times and in the appropriate locations. In HR planning, an organization must consider the availability and assignment of people to jobs over long time periods, not just the next month or year.
Human resource planning is a subsystem of overall organizational planning. Employees may be transferred to other jobs within the organization, laid off or otherwise reduced in number, current employees developed, and/or the number of employees in certain areas increased. Consider the current employees’ knowledge, skills, and abilities, as well as the expected vacancies due to retirements, promotions, transfers, and discharges. To accomplish this, HR professionals must collaborate with executives and managers.
Features Of Human Resource Planning:
The following features of human resource planning can be derived from the study of various definitions:
Well Defined Objectives:
Human resource planning objectives may be derived from the enterprise’s strategic and operational planning objectives. Human resource requirements are determined by the company’s objectives. Human resource planning also has its own set of goals, such as developing human resources, updating technical expertise, career planning for individual executives and employees, and ensuring better employee commitment, among others.
Determining Human Resource Needs:
A human resource plan must incorporate the human resource needs of the enterprise. The thinking will have to be done long in advance so that the people are available when they are needed. A company will also need to go through the hiring, selection, and training processes for this reason.
Keeping Manpower Inventory:
It includes a list of the organization’s current manpower. The executive should be aware of the people who will be available to him in the near future to take on greater responsibilities.
Adjusting Demand and Supply:
Manpower needs have to be planned well in advance as suitable persons are available in the future. If adequate people are not available in the future, attempts should be made to begin the recruiting process as soon as possible. Personnel demand and supply should be arranged beforehand.
Creating Proper Work Environment:
Human resource planning ensures that working conditions are created in addition to estimating and employing personnel. Employees should enjoy working for the company and receive proper job satisfaction
Objectives of Human Resource Planning
HRP is a component of the business planning process. This is the activity that aims to coordinate the requirements for different types of employers’ availability. Forecasting (future requirements), inventorying (current strength), anticipating (comparison of current and future requirements), and planning are the main activities (necessary program to meet the requirements)
HR forecasts are in charge of estimating the number of people and jobs required by an organization in order to achieve its goals and carry out its plans in the most efficient and effective way possible.
HR requirements are determined by subtracting HR supplies, or the number of available employees, from expected HR demands, or the number of people needed to achieve a desired level of outcome. HR’s goal is to match the right people to the right jobs and to make the best use of existing human resources.
The objectives of human resource planning can be summed up as follows:
Forecasting Human Resource Requirements:
HRP is critical for determining an organization’s future HR needs. It is extremely difficult to provide the right kind of people at the right time without this plan.
Effective Change Management:
To deal with changes in the various aspects that affect the organization, proper planning is required. These changes necessitate the organization’s continued allocation and reallocation of resources, as well as the effective use of human resources.
Realizing Organizational Goals:
Organizational HR planning is critical in order to meet expansion and other organizational activities.
HRP provides feedback in the form of employee data that can be used to make decisions about promotional opportunities available to the organization.
The database will provide useful information for identifying human resource surpluses and deficits. HRP’s goal is to maintain and improve the organization’s capacity to achieve its objectives by devising appropriate strategies that maximize HR’s contribution.
Need for and Importance of HRP:
The need for human resource planning in an organization is realized for the following reasons:
- Despite rising unemployment, there is a scarcity of human resources with the necessary skills, qualifications, and abilities to continue working. As a result, human resource planning is required.
- Large numbers of employees, who retire, die, leave organizations, or become incapacitated because of physical or mental ailments, need to be replaced by the new employees. Human resource planning ensures a smooth supply of workers without interruption.
- Human resource planning is also necessary in the face of an unavoidable and even beneficial increase in workforce turnover. Factors that contribute to workforce turnover in organizations include voluntary resignations, discharges, marriages, promotions, and seasonal fluctuations in business. Many organizations experience a constant ebb and flow in their workforce as a result of this.
- Technological advancements and globalization bring in a shift in product and service distribution methods, as well as management strategies. These modifications may need a shift in employee competencies as well as reduction in the number of workers required. Human resource planning helps firms to adapt to such changes.
- Human resource planning is also required to meet the needs of an organization’s expansion and diversification programs.
- Human resource planning is also required in order to identify areas with excess personnel or areas with a shortage of personnel. The surplus personnel can then be redeployed in other areas of an organization. In the event of a personnel shortage, it can be compensated for by downsizing the workforce. Human resource planning is important to an organization because it benefits it in a variety of ways.
The important ones are mentioned below:
- Human resource planning meets the organization’s need for the right type of people in the right number at the right times.
- Human resource planning maximizes the use of human resources while significantly lowering labor costs by maintaining a balance between the demand for and supply of human resources.
- Through human resource planning, careful consideration of likely future events may lead to the discovery of better methods for managing human resources. As a result, avoidable pitfalls may be avoided.
- To a large extent, manpower shortages and surpluses can be avoided.
- Human resource planning assists organizations in developing and implementing training and succession plans for employees and managers. As a result, it allows for an internal succession of employees to higher positions through promotions.
- It also provides multiple gains to the employees by way of promotions, increases in emoluments and other perquisites, and fringe benefits.
- Some of the problems associated with change management can be anticipated and their consequences mitigated. Consultations with affected groups and individuals can begin early in the change process. This may help to reduce resistance to change.
- Human resource planning requires management to continuously assess the strengths and weaknesses of its employees and personnel policies and, as a result, take corrective measures to improve the situation.
- Duplication of efforts and conflict among efforts can be avoided through human resource planning on the one hand, and coordination of workers’ efforts can be improved on the other.
- Last but not least, with the increase in skill, knowledge, potentialities, productivity, and job satisfaction, an organization becomes the main beneficiary. Organizations are benefitted in terms of increase in prosperity/production, growth, development, profit, and, thus, an edge over their competitors in the market.
Process of Human Resource Planning
Forecasting personnel needs, assessing personnel supply, and matching demand-supply factors through personnel-related programs are all part of the human resource planning strategies. The process human resource planning follows is influenced by the overall organizational goals and the business environment.
It refers to the systematic monitoring of the organization’s external forces of influence. The forces listed below are necessary for effective HRP:
- Technological advancements.
- Economic factors, such as national and regional economic circumstances.
- Demographic changes, such as age, gender composition, and literacy.
- Political and legislature related issues, such as laws and administrative judgments
- Child care, educational facilities, and priorities are all examples of social concerns.
- Managers can anticipate the impact of changes in the environment and make early adjustments by scanning the environment for changes that will affect their organization.
Organizational Objectives And Policies:
Typically, the HR plan is formed from the organization’s goals.
To identify precise staff requirements in terms of quantity and qualities, organizational objectives should be applied.
The HR department must specify its goal for HR utilization in the organization once the organizational objectives have been defined, communicated, and understood by all parties involved
HR Demand Forecast:
The process of estimating the future quantity and quality of people required to meet the organization’s future needs is known as demand forecasting. In human resource planning, forecasting is an intermediary step. When translated into activity, the annual budget and long-term corporate plan serve as the foundation for HR forecasting.
For Example: In the case of a manufacturing firm, the sales budget will serve as the foundation for a production plan that specifies the number and type of products that will be produced during each period. This will serve as the foundation for the organization’s decision on the number of hours each skilled worker should work. The quality and quantity of personnel required for the task can be determined once the number of hours required is known.
Internal and external factors influence demand forecasting: external factors include competition, the economy, laws and regulatory bodies, technological changes, and social factors, whereas internal factors include budget constraints, production levels, new products and services, organizational structure, and employee separations.
Demand forecasting is vital because it allows an organization to
- quantify the jobs required to produce a given number of goods.
- figure out what kind of staffing mix will be needed in the future,
- assess appropriate levels in various parts of the organization in order to avoid unnecessary costs, and
- avoid personnel shortages where and when they are needed by the organization.
- keep track of whether or not legal requirements for job reservations are being followed.
For demand forecasting, the organization employs techniques such as managerial judgment, ratio-trend analysis, regression analysis, work-study techniques, and Delphi techniques.
HR Supply Forecast:
The HR department’s ability to procure the required number of workers is determined by the supply forecast. After accounting for absenteeism, internal movements and promotions, wastage and changes in hours, and other work conditions, the supply forecast determines the number of people likely to be available from within and outside an organization.
A supply forecast is required because it
- Assists in quantifying the number of people and positions that will be available in the future to assist the organization in realizing its plans and achieving its goals.
- Assists in the clarification of future staffing combinations
- It evaluates current staffing in various parts of the organization.
- It will allow the organization to avoid human resource shortages when and where they are most needed.
- It also aids in future compliance with legal job reservation requirements.
The existing human resources, internal sources of supply, and external sources of supply are all part of the supply analysis.
Once a company’s personnel demand and supply have been forecasted, the demand and supply must be balanced in order for vacancies to be filled by the right people at the right time.
HR Plan Implementation:
HR implementation entails putting an HR strategy into action. As part of the HR plan implementation, a series of actions are taken. When programs like recruitment, selection, placement, training and development, retraining and redeployment, retention plans, and succession plans are combined, they make up the HR plan’s implementation section.
Control And Evaluation:
The final phase of the HRP process is control and evaluation. Budgets, targets, and standards are all included in every HR plan. The organization’s progress will be assessed and tracked against the plan.
During this final phase, the organization will assess the number of people employed in comparison to the established (both those in post and those in pipeline) and the number of people recruited in comparison to the recruitment targets. In addition, the cost of employment is compared to the budget, as well as the amount of waste that has accrued, so that corrective action can be taken in the future.
Factors Affecting HRP
Several factors have an impact on HRP. (1) organizational type and strategy (2) organizational growth cycles and planning (3) environmental uncertainties (4) time horizons (5) type and quality of forecasting information (6) nature of jobs being filled and (7) offloading the work are the most important factors that affect HRP.
Organizational Type And Strategy:
The production processes involved, the number and type of staff required, and the supervisory and managerial personnel required are all determined by the type of organization. HR requirements are also determined by the organization’s strategic plan. If the company wants to grow organically, it will need to hire more people. On the other hand, if the company plans to merge or acquire another company, it must plan for layoffs because mergers can create, duplicate, or overlap positions that can be handled more efficiently with fewer people.
In HRP, the organization must first decide whether to be reactive or proactive. Organizations can either anticipate needs and plan systematically to meet them in advance (proactive) or simply react to them as they arise (reactive) (reactive). Similarly, the company must determine the scope of the HR strategy.
Organizations can choose to focus on one or two HR areas, such as recruitment and selection, or they can take a broad approach and plan for all areas, including training and remuneration.
The formality of an HR plan is also determined by the nature of the plan. It can choose between an informal plan that is mostly in the heads of managers and personnel staff and a formal plan that is properly documented in writing.
The flexibility that is practiced in the organization also influences the nature of the HR plan. Contingencies should be anticipated and dealt with in the HR plan. HRP is framed in such a way that it can include a variety of contingencies that reflect various scenarios, ensuring that the plan is flexible and adaptable.
Organizational Growth Cycles And Planning:
From their inception, all organizations go through various stages of development. HRP’s nature and scope are determined by an organization’s stage of development. Small businesses in their early stages of development may not have well-defined personnel plans. However, as the company grows, it realizes the need to plan its human resources. At this point, the organization focuses on employee development. However, as the organization matures, it experiences less flexibility and variability, resulting in a slow rate of growth. HR planning becomes more formalized, less flexible, and less innovative, as issues such as retirement and possible retrenchment take center stage.
During the organization’s declining stage, HRP shifts its focus to planning layoffs, retrenchments, and retirements. In a declining situation, planning is always reactive in nature in response to the company’s financial and sales difficulties.
All organizations are affected by political, social, and economic changes, and the fluctuations that occur in these environments have a significant impact on organizations. Personnel planners deal with such uncertainties by carefully crafting policies and programs for recruitment, selection, training, and development. Careful succession planning, promotion channels, layoffs, flexi-time, job sharing, retirement, VRS, and other personnel-related arrangements are used to achieve organizational balance.
HR plans can be either short-term or long-term in nature. Short-term plans are those that last six months to a year, while long-term plans are those that last three to twenty years. The length of the time period is determined by the level of uncertainty in the organization’s environment. The shorter the plan time horizon, the greater the uncertainty, and vice versa.
Type And Quality Of Forecasting Information:
The data used to forecast personnel requirements comes from a variety of places. The type of information and quality of data available to personnel planners determines the forecast to a large extent. The clarity with which organizational decision-makers have defined their strategy, structure, budgets, production schedule, and so on determines the quality and accuracy of information.
Nature Of Jobs Being Filled:
Personnel planners must exercise extreme caution when it comes to the nature of the positions being filled within the organization. Employees at lower levels who require only a few skills can be hired quickly, but hiring employees for higher positions requires a great deal of discretion. Organizations must anticipate vacancies as far ahead as possible in order to have enough time to find suitable candidates.
Outsourcing The Work:
Several organizations use subcontracting to outsource a portion of their work to third parties. Outsourcing is a common practice in both the public and private sectors. Many businesses have excess labor and, rather than hiring more employees, opt for outsourcing. Outsourcing is typically used for non-critical tasks. HRP is determined by outsourcing non-critical activities through subcontracting.
Requisites for Successful HRP
- Human resource planning must be recognized as an essential component of corporate planning.
- Top management’s support is crucial.
- In order to have coordination between different levels of management, there should be some centralization of HRP responsibilities.
- The records of the organization must be complete, up to date, and easily accessible.
- The HR planning techniques used should be those that are best suited to the data available and the level of accuracy required.
- In the light of experience, data collection, analysis, planning techniques, and the plan itself must all be constantly revised and improved.
Barriers To Human Resource Planning
When creating an HRP, Human Resource Planners face numerous challenges. The following are the major barriers:
1) HR professionals are thought to be experts in dealing with personnel issues but not in business management. When HR practitioners devise and formulate a personnel plan that is integrated with an organizational plan, the overall strategic plan of the organization may become ineffective.
2) HR data is frequently incompatible with other data used in strategy development. Financial forecasting has long dominated strategic planning efforts, often to the exclusion of other types of data. HRP takes a back seat to financial forecasting.
4) There may be a conflict between short-term and long-term HR requirements. For example, there may be a conflict between the need to complete work on time and longer-term goals, such as preparing people to take on more responsibilities. Many executives believe that their HR needs can be met right away because skills are readily available on the market, as long as wages and salaries are competitive. As a result, long-term plans are unnecessary; only short-term planning is required.
5) The quantitative and qualitative approaches to HRP are incompatible. HRP is viewed by some as a number game used to track the flow of people throughout the department. Others take a more qualitative approach, focusing on individual employee issues like promotion and advancement. When the quantitative and qualitative approaches are balanced, the best results can be achieved.
6) HRP is rendered ineffective due to the lack of involvement of operating managers. HRP is not solely a function of the human resources department. A coordinated effort from operating managers and HR personnel is required for successful planning.
Human resource planning is now considered as the method through which management grasps the ill-defined and difficult-to-solve human resource challenges that a business faces.
Human resource planning is the process of determining the human resources that a company will need to fulfill its objectives.
Human resource planning considers larger problems about how people are hired and developed in order to increase company effectiveness.
Human Resource Planning(HRP) is a decision-making process that involves tasks such as identifying and acquiring the correct amount of people with the relevant capabilities, motivating them to achieve high performance, and developing interactive relationships between business objectives while cultivating workplace inclusivity simultaneously.
HRP specifies needs both qualitatively and quantitatively. A precise personnel strategy is a pipe dream. Many managers make the mistake of focusing on the organization’s short-term replacement needs.
If a human resource plan is to be effective, it must be developed from the organization’s long-term objectives and strategies. The various approaches to human resource planning will affect a number of major issues and trends in today’s work plan that will further affect organizations and employees as follows:
(1) Examine external and internal issues,
(2) Determining future organizational capabilities,
(3) Determining future organizational needs, and
(4) Implementing human resources programs to address anticipated problems.
Although change occurs at a very quick pace in the workplace, it is critical for both businesses and individuals to stay updated with HR trends regularly, monitor issues and occurrences, and analyze their possible consequences.