Human Resource Planning

Definition: The ongoing process of systematic planning to achieve optimum use of an organization's most valuable asset - its human resources. The objective of human resource (HR) planning is to ensure the best fit between employees and jobs, while avoiding manpower shortages or surpluses. The three key elements of the HR planning process are 1. Forecasting labor demand 2. Analyzing present labor supply 3. Balancing projected labor demand and supply. Objectives and Importance of Human Resource Planning: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Assessing manpower needs for future and making plans for recruitment and selection. Assessing skill requirement in the future. Determining training and development needs for the organization. Determining surplus and shortage of the staff and avoiding unnecessary detention or dismissal. Controlling wages and salary costs. Ensuring optimum use of HR. Helping organization to cope up with Technological advancements. Ensuring high labor productivity. Focus on Career planning of every employee. Taking care of succession planning. Ensure promotion of employees in systematic manner. It involves hiring, development and retention of HR.

Human Resource Planning Process: 1. The mission & vision of the organization: The organization should be clear about its mission & objectives. The manpower planning must be integrated with other business policies such as profitability, production, sales &development. Any change in the business objectives would certainly affect the manpower planning. The ultimate aim of manpower planning should be to relate future human resource to future enterprise need so as to maximize the future ROI. 2. SWOT Analysis: After organization has fixed the goals & objectives, the next step is the corporate assessment. The company now begins to analyze its goals, current strategies, external environment, strengths & weaknesses, opportunities &threat, to know whether they can be able to achieve with the current human resource. The SWOT ( Strengths, weakness, opportunities, & threats). The SWOT analysis will give the clear picture about the organization resources such as capital& worker it will also indicate departmental abilities such as training & development, marketing, accounting, research

and development & management information system. This SWOT analysis serves as the link between the organization goals & the way or direction in which the organization should go to meet its objectives.

3. Man power Forecasting: Forecasting of future manpower requirement is the most important part of manpower planning. It is done on the basis of production & sales budgets, workloads analysis, work force analysis, estimated absenteeism & turnover. The future manpower requirements should be forecasted quantitatively& qualitatively. There are several factors which need to be looked upon before forecasting. (a) Employment Trend: The manpower planning committee should compare & analyze the trend of last five year to forecast the manpower requirements. (b) Productivity: Manpower requirements are also influenced by improvement in productivity. The important three aspects are . Better utilization of existing manpower. . Improvement in technology. . Matching of skills with job requirement. (c) Absenteeism: Absenteeism is a situation when a person fails to come for work when he is scheduled to work. While estimating demand for manpower the prevailing rate of absenteeism in the organization should be considered. (d) Expansion & Growth: Expansion & growth plans of the organization should be carefully analyzed to judge their impact on manpower requirement in future. Forecasting Techniques: (a) Expert Forecasts: Demand is modified by retirements, terminations, resignations, deaths and leaves of absence. Past experiences make these occurrences quite predictable. (b) Trend analysis: HR needs can be estimated by examining past trends. Eg: 2001-02 Production of units: 5000 2002-03 No of workers : 100 2003-04 Ratios : 100: 5000 2003-04 Estimated Production: 8000 Number of workers required : 8000*100/5000=160 To proceed systematically HR generally follow three steps: a) Work Force Analysis: The average loss of manpower due to leave, retirement, death, transfer, discharge etc. during the last 5 years may be taken into account.

IN OUT Transfers in---------------------------------------------------------->Job Hopping Transfers out Retirement Recruits in------------------------------------------------------------>VRS Scheme Discharge or dismissal Terminations Promotions in--------------------------------------------------------->Resignations Retrenchment Attractions in other companies etc. Fig: Manpower flows in a company b) Work Load Analysis: The need for manpower is also determined on the basis of work-load analysis, wherein the company tries to calculate the number of persons required for various jobs with reference to a planned output-after giving weight age to factors such as absenteeism, idle time etc. E.g.: Planned output for the year Standard hours per piece Planned hours required Productive hours per person Number of workers required 10000 pieces 3 hours 30000 hours 1000 hours 30

c) Job Analysis: Job analysis helps finding out the abilities or skills required to do the job efficiently. It means a detailed study of jobs to identify the qualifications and experience required for them. 4. Manpower Plan: After forecasting about the right type & number of people required the next phase is to plan, how the organization can obtain these people. Programs & strategies need to developed for recruitment, selection, training, internal transfers, promotions &appraisal so that the future manpower requirement can be met. Development plans are designed to ensure a continuing supply of trained people to take over jobs as they fall vacant either by promotion or recruitment or through training. In this way, shortages or redundancies can be avoided in the long run. Preparing Manpower Inventory is a very important step for the plan to be implemented successfully.

Man Power Inventory: It is the records of staff in a commercial organization. It helps to find out the size and the quality of the employees presently in the organization at various positions. Every organization will have two major sources of supply of manpower: External and Internal. a) Internal Labor Supply: 1. Staffing Table: It shows the number of employees in each job. It tries to classify employees on the basis of age, sex, position, category, experience, qualification, skills etc. A study of the table indicates if the current employees are properly utilized or not.

2. Markov Analysis: It uses the historical data of promotions, transfers, and turnover to estimate the future availabilities in the workforce. Based on the past probabilities one can estimate the number of employees who will be in various positions with the organization in future.

2003-2004 Store Managers (n=15)

Store Managers
80%

Asst. Store manager

Section Head

Dept. Heds

Sales Executive

Exit

20%

12 Asst. Store Manager (n=36)

11% 83% 6%

4 Section Heads (n=94)

30

11%

66%

8%

15%

11

63

14

Departmental Heads (n=288)

10%

72 %

2%

16%

29

207

46

Sales Executives (n=1440)

6%

74%

20%

86

1066

288

Forecasted Supply

16

41

92

301

1072

353

3. Skills Inventory: It is anss assessment of the knowledge, skills, abilities, experiences and career aspirations of each of the current employees. It should be updated atleast every two years.

4. Replacement Chart: It shows the profile job holders department wise and offers a snapshot of who will replace whom if there is a job opening.

b) External Labor Supply: When the organization grows rapidly and diversifies into newer areas of operations (merchant banking, capital market operations, mutual funds etc. in the case of a bank) or when it is not able to find the people internally to fill the vacancies it has to look into outside sources. To the extent an organization is able to anticipate its outside recruitment needs and looks into the possible sources of supply keeping the market trends in mind, its problems in finding the right personnel with appropriate skills at the required time would become easier. Important Barometers of Labor supply: 1) Net migration into and out of the area. 2) Education levels of workforce 3) Demographic changes in population. 4) Technological developments and shifts 5) Population Mobility 6) Demand for specific skills 7) National regional unemployment rates 8) Actions of competing employers 9) Government policies, regulations, pressures. 10) Economic Forecasts for the next few years. 11) The attractiveness of an area. 12) The attractiveness of an industry in a particular place. Determining Manpower gaps: The existing number of personnel and their skills (from human resources inventory) are compared with the forecasted manpower needs ( demand forecasting) to determine the quantitative and qualitative gaps in the workforce. A reconciliation of demand and supply forecasts will give us the number of people to be recruited or made redundant as the case may be. This forms the basis for preparing the HR plan . Below Exhibit shows how demand and supply forecasts can be related over a period of three years. 5. Determining Human Resources Requirements:

1) Number required at the beginning of the year 2) Changes to requirements forecast during the year DEMAND

3) Total requirements at the end of the year (1+2) 4) Number available at the beginning of the year 5) Additions (transfers, promotion) SUPPLY 6) Separations (retirement, wastage, promotions out and other losses). 7) Total available at the end of years ( 4+ 5+ 6) 8) Deficit or surplus ( 3 -7) 9) Losses of those recruited during the year-Reconciliation of the above manpower needed. 10) Additional numbers needed during the year (8+9) 6. Formulating HR plans: Organizations operate in a changing environment. Consequently Human resources requirements also change continually. Changes in product mix, union agreements, competitive actions are some of the important things that need special attention. The human resource requirements identified along the procedure outlined in the above box need to be translated into concrete HR plans backed up by detailed policies programs and strategies (for recruitment, selection., training, promotion, retirement, replacement etc) 1. Recruitment plans: Will indicate the number and type of people required and whom they are needed for, special plans to recruit right people and how they are to be dealt with via the recruitment program. 2. Redeployment plan: Will indicate the programs for transferring or retraining existing employees for new jobs. 3.Redundancy plan: Will indicate who is redundant when and where the plans for retraining where this is possible and plans for golden handshake retrenchment lay off etc. 4. Training plan: Will indicate the number of trainees or apprentices required and the programs for recruiting; of training them, existing staff requiring training or refraining new courses to be developed or changes to be effected in existing courses 5. Productivity plan: Will indicate reasons for employees productivity or reducing employee costs through work simplification studies, mechanization productivity, bargaining incentives and profit sharing schemes , job redesign etc. 6. Retention plan: will indicate reasons for employee turnover and show strategies to avoid wastage through compensation policies , changes in work requirements and improvement in working conditions. 7. Control points: The entire manpower plan to be subjected to close monitoring from time to time . Control points be set up to find out deficiencies periodic updating of manpower inventory in the light of changing circumstances be undertaken to remove deficiencies and develop future plans.

Effectiveness of Human resource Planning: 1. Objectives: The Hr plan should fit with the overall objectives of the organisation. 2. Top Management support: To meet the changing needs of the organisation, there should be support of the Top Management. 3. Employee skills Inventory: Upto date employee skill inventory should be maintained by the org. Tis can be done with in the form of Markov Analysis, skill inventory table etc. 4. HRIS: Implement computer technology to maintain Human skill inventory. 5. Coordination: Procurement, promotion and retention plans must be integrated properly.

RECRUITMENT Recruitment: According to Edwin B. Flippo, Recruitment is the process of searching the candidates for employment and stimulating them to apply for jobs in the organisation. Recruitment is the activity that links the employers and the job seekers. A few definitions of recruitment are: # A process of finding and attracting capable applicants for employment. The process begins when new recruits are sought and ends when their applications are submitted. The result is a pool of applications from which new employees are selected. # It is the process to discover sources of manpower to meet the requirement of staffing schedule and to employ effective measures for attracting that manpower in adequate numbers to facilitate effective selection of an efficient working force.

Charachteristics of Recruitment: 1. Recruitment of candidates is the function preceding the selection. 2. It helps create a pool of prospective employees for the organisation so that the management can select the right candidate for the right job from this pool. 3. The main objective of the recruitment process is to expedite the selection process. 4. Recruitment is a continuous process whereby the firm attempts to develop a pool of qualified applicants for the future human resources needs even though specific vacancies do not exist. 5. Usually, the recruitment process starts when a manger initiates an employee requisition for a specific vacancy or an anticipated vacancy.

RECRUITMENT NEEDS ARE OF THREE TYPES # PLANNED i.e. the needs arising from changes in organization and retirement policy. # ANTICIPATED Anticipated needs are those movements in personnel, which an organization can predict by studying trends in internal and external environment. # UNEXPECTED Resignation, deaths, accidents, illness give rise to unexpected needs.

Importance and Objectives of Recruitment: # Attract and encourage more and more candidates to apply in the organisation. # Create a talent pool of candidates to enable the selection of best candidates for the organisation. # Determine present and future requirements of the organization in conjunction with its personnel planning and job analysis activities. # Recruitment is the process which links the employers with the employees. # Increase the pool of job candidates at minimum cost. # Help increase the success rate of selection process by decreasing number of visibly under qualified or overqualified job applicants.s # Help reduce the probability that job applicants once recruited and selected will leave the organization only after a short period of time. # Meet the organizations legal and social obligations regarding the composition of its workforce. # Begin identifying and preparing potential job applicants who will be appropriate candidates. # Increase organization and individual effectiveness of various recruiting techniques and sources for all types of job applicants. Recruitment Process: The recruitment and selection is the major function of the human resource department and recruitment process is the first step towards creating the competitive strength and the strategic advantage for the organisations. Recruitment process involves a systematic procedure from sourcing the candidates to arranging and conducting the interviews and requires many resources and time. A general recruitment process is as follows: *Identifying the vacancy: The recruitment process begins with the human resource department receiving requisitions for recruitment from any department of the company. These contain: Posts to be filled Number of persons Duties to be performed Qualifications required

* Preparing the job description and person specification. * Locating and developing the sources of required number and type of employees (Advertising etc). * Short-listing and identifying the prospective employee with required characteristics. * Arranging the interviews with the selected candidates. * Conducting the interview and decision making Recruitment Process:

1. Identify vacancy 2. Prepare job description and person specification 3. Advertising the vacancy 4. Managing the response 5. Short-listing 6. Arrange interviews

7. Conducting interview and decision making

The recruitment process is immediately followed by the selection process i.e. the final interviews and the decision making, conveying the decision and the appointment formalities. SOURCES OF RECRUITMENT

INTERNAL SOURCES: 1. TRANSFERS The employees are transferred from one department to another according to their efficiency and experience. 2. PROMOTIONS The employees are promoted from one department to another with more benefits and greater responsibility based on efficiency and experience. 3. Others are Upgrading and Demotion of present employees according to their performance. 4. Retired and Retrenched employees may also be recruited once again in case of shortage of qualified personnel or increase in load of work. Recruitment of such people save time and costs of the

organisations as the people are already aware of the organizational culture and the policies and procedures. 5. The dependents and relatives of Deceased employees and Disabled employees are also done by many companies so that the members of the family do not become dependent on the mercy of others. EXTERNAL SOURCES: 1. PRESS ADVERTISEMENTS Advertisements of the vacancy in newspapers and journals are a widely used source of recruitment. The main advantage of this method is that it has a wide reach. 2. EDUCATIONAL INSTITUTES Various management institutes, engineering colleges, medical Colleges etc. are a good source of recruiting well qualified executives, engineers, medical staff etc. They provide facilities for campus interviews and placements. This source is known as Campus Recruitment. 3. PLACEMENT AGENCIES Several private consultancy firms perform recruitment functions on behalf of client companies by charging a fee. These agencies are particularly suitable for recruitment of executives and specialists. It is also known as RPO (Recruitment Process Outsourcing) 5. EMPLOYMENT EXCHANGES Government establishes public employment exchanges throughout the country. These exchanges provide job information to job seekers and help employers in identifying suitable candidates. 5. LABOUR CONTRACTORS Manual workers can be recruited through contractors who maintain close contacts with the sources of such workers. This source is used to recruit labor for construction jobs. 6. UNSOLICITED APPLICANTS Many job seekers visit the office of well-known companies on their own. Such callers are considered nuisance to the daily work routine of the enterprise. But can help in creating the talent pool or the database of the probable candidates for the organisation. 7. EMPLOYEE REFERRALS / RECOMMENDATIONS Many organisations have structured system where the current employees of the organisation can refer their friends and relatives for some position in their organisation. Also, the office bearers of trade unions are often aware of the suitability of candidates. Management can inquire these leaders for

suitable jobs. In some organizations these are formal agreements to give priority in recruitment to the candidates recommended by the trade union. ss 8. RECRUITMENT AT FACTORY GATE Unskilled workers may be recruited at the factory gate these may be employed whenever a permanent worker is absent. More efficient among these may be recruited to fill permanent vacancies.

Challenges and Constraints of recruitment:

INTERNAL FACTORS/CONSTRINTS: 1. RECRUITMENT POLICY The recruitment policy of an organisation specifies the objectives of recruitment and provides a framework for implementation of recruitment programme. It may involve organizational system to be developed for implementing recruitment programmes and procedures by filling up vacancies with best qualified people. FACTORS AFFECTING RECRUITMENT POLICY Organizational objectives Personnel policies of the organization and its competitors. Government policies on reservations. Preferred sources of recruitment.

 Need of the organization. Recruitment costs and financial implications. 2. HUMAN RESOURCE PLANNING Effective human resource planning helps in determining the gaps present in the existing manpower of the organization. It also helps in determining the number of employees to be recruited and what qualification they must possess. 3. SIZE OF THE FIRM The size of the firm is an important factor in recruitment process. If the organization is planning to increase its operations and expand its business, it will think of hiring more personnel, which will handle its operations. 4. COST Recruitment incur cost to the employer, therefore, organizations try to employ that source of recruitment which will bear a lower cost of recruitment to the organization for each candidate. 5. GROWTH AND EXPANSION Organization will employ or think of employing more personnel if it is expanding its operations. EXTERNAL FACTORS/CONSTRAINTS: 1. SUPPLY AND DEMAND The availability of manpower both within and outside the organization is an important determinant in the recruitment process. If the company has a demand for more professionals and there is limited supply in the market for the professionals demanded by the company, then the company will have to depend upon internal sources by providing them special training and development programs. 2. LABOUR MARKET Employment conditions in the community where the organization is located will influence the recruiting efforts of the organization. If there is surplus of manpower at the time of recruitment, even informal attempts at the time of recruiting like notice boards display of the requisition or announcement in the meeting etc will attract more than enough applicants. 3. IMAGE / GOODWILL Image of the employer can work as a potential constraint for recruitment. An organization with positive image and goodwill as an employer finds it easier to attract and retain employees than an organization with negative image. Image of a company is based on what organization does and affected

by industry. For example finance was taken up by fresher MBAs when many finance companies were coming up. 4. POLITICAL-SOCIAL- LEGAL ENVIRONMENT Various government regulations prohibiting discrimination in hiring and employment have direct impact on recruitment practices. For example, Government of India has introduced legislation for reservation in employment for scheduled castes, scheduled tribes, physically handicapped etc. Also, trade unions play important role in recruitment. This restricts management freedom to select those individuals who it believes would be the best performers. If the candidate cant meet criteria stipulated by the union but union regulations can restrict recruitment sources. 5. UNEMPLOYMENT RATE One of the factors that influence the availability of applicants is the growth of the economy (whether economy is growing or not and its rate). When the company is not creating new jobs, there is often oversupply of qualified labor which in turn leads to unemployment. 6. COMPETITORS The recruitment policies of the competitors also affect the recruitment function of the organisations. To face the competition, many a times the organisations have to change their recruitment policies according to the policies being followed by the competitors. Recent Trends In Recruitment: The following trends are being seen in recruitment: # OUTSOURCING In India, the HR processes are being outsourced from more than a decade now. A company may draw required personnel from outsourcing firms. The outsourcing firms help the organisation by the initial screening of the candidates according to the needs of the organisation and creating a suitable pool of talent for the final selection by the organisation. Outsourcing firms develop their human resource pool by employing people for them and make available personnel to various companies as per their needs. In turn, the outsourcing firms or the intermediaries charge the organisations for their services. Advantages of outsourcing are: 1. Company need not plan for human resources much in advance. 2. Value creation, operational flexibility and competitive advantage 3. Turning the management's focus to strategic level processes of HRM 4. Company is free from salary negotiations, weeding the unsuitable resumes/candidates.

5. Company can save a lot of its resources and time * POACHING/RAIDING Buying talent (rather than developing it) is the latest mantra being followed by the organisations today. Poaching means employing a competent and experienced person already working with another reputed company in the same or different industry; the organisation might be a competitor in the industry. A company can attract talent from another firm by offering attractive pay packages and other terms and conditions, better than the current employer of the candidate. But it is seen as an unethical practice and not openly talked about. Indian software and the retail sector are the sectors facing the most severe brunt of poaching today. It has become a challenge for human resource managers to face and tackle poaching, as it weakens the competitive strength of the firm. * E-RECRUITMENT Many big organizations use Internet as a source of recruitment. E- Recruitment is the use of technology to assist the recruitment process. They advertise job vacancies through worldwide web. The job seekers send their applications or curriculum vitae i.e. CV through e mail using the Internet. Alternatively job seekers place their CVs in worldwide web, which can be drawn by prospective employees depending upon their requirements. Advantages of recruitment are: o Low cost. o No intermediaries o Reduction in time for recruitment. o Recruitment of right type of people. o Efficiency of recruitment process. E Recruitment: The buzzword and the latest trends in recruitment is the E-Recruitment. Also known as Online recruitment, it is the use of technology or the web based tools to assist the recruitment process. The tool can be either a job website like naukri.com, the organizations corporate web site or its own intranet. Many big and small organizations are using Internet as a source of recruitment. They advertise job vacancies through worldwide web. The job seekers send their applications or curriculum vitae (CV) through an e-mail using the Internet. Alternatively job seekers place their CVs in worldwide web, which can be drawn by prospective employees depending upon their requirements.

The internet penetration in India is increasing and has tremendous potential. According to a study by NASSCOM Jobs is among the top reasons why new users will come on to the internet, besides email. There are more than 18 million resumes floating online across the world. The two kinds of e- recruitment that an organization can use is # Job portals i.e. posting the position with the job description and the job specification on the job portal and also searching for the suitable resumes posted on the site corresponding to the opening in the organization. # Creating a complete online recruitment/application section in the companys own website. Companies have added an application system to its website, where the passive job seekers can submit their resumes into the database of the organization for consideration in future, as and when the roles become available. Resume Scanners: Resume scanner is one major benefit provided by the job portals to the organizations. It enables the employees to screen and filter the resumes through pre-defined criterias and requirements (skills, qualifications, experience, payroll etc.) of the job. Job sites provide a 24*7 access to the database of the resumes to the employees facilitating the just-intime hiring by the organizations. Also, the jobs can be posted on the site almost immediately and is also cheaper than advertising in the employment newspapers. Sometimes companies can get valuable references through the passers-by applicants. Online recruitment helps the organizations to automate the recruitment process, save their time and costs on recruitments.

Online recruitment techniques * Giving a detailed job description and job specifications in the job postings to attract candidates with the right skill sets and qualifications at the first stage. * E-recruitment should be incorporated into the overall recruitment strategy of the organisation. * A well defined and structured applicant tracking system should be integrated and the system should have a back-end support. * Along with the back-office support a comprehensive website to receive and process job applications (through direct or online advertising) should be developed.

ADVANTAGES AND DISADVANTAGES OF E RECRUITMENT: There are many benefits both to the employers and the job seekers but the e-recruitment is not free from a few shortcomings. Some of the advantages and the disadvantages of e- recruitment are as follows:

Advantages of E-Recruitment are: # Lower costs to the organization. Also, posting jobs online is cheaper than advertising in the newspapers. # No intermediaries. # Reduction in the time for recruitment (over 65 percent of the hiring time). # Facilitates the recruitment of right type of people with the required skills. # Improved efficiency of recruitment process. # Gives a 24*7 access to an online collection of resumes. # Online recruitment helps the organizations to weed out the unqualified candidates in an automated way. # Recruitment websites also provide valuable data and information regarding the compensation offered by the competitors etc. which helps the HR managers to take various HR decisions like promotions, salary trends in industry etc

Disadvantages of E-Recruitment Apart from the various benefits, e-recruitment has its own share of shortcomings and disadvantages. Some of them are: * Screening and checking the skill mapping and authenticity of millions of resumes is a problem and time consuming exercise for organizations. * There is low Internet penetration and no access and lack of awareness of internet in many locations across India. * Organizations cannot be dependant solely and totally on the online recruitment methods. * In India, the employers and the employees still prefer a face-to-face interaction rather than sending emails.