Concept of Human Resource Planning

Concept of Human Resource Planning has been defined as the process by which
management determines how as organisation should move from its current manpower
position to its desired manpower position. Through it management strives to have the
right number and right kind of people at the right places, at right time, doing things
which result in both the organisation, and the individual receiving maximum long-range
benefit.. Human Resource Planning is the strategy for the acquisition, utilization,
improvement and preservation of an organisations human resources. It is aimed at
coordinating the requirements for and the availability of different types of employees.
According to Beach, Human Resource Planning is a process of determining and
assuming that th organisation will have as adequate number of qualified persons,
available at the proper times, performing jobs which meet the needs of the enterprise and
which provide satisfaction for the individuals involved. To sum up Human Resource
Planning is the process of determining manpower needs and formulating plans to meet
these needs.
An analysis above definition reveals the following characteristics of Human Resource
Planning.
i. Human Resource Planning is forward looking or future oriented.
ii. it is an on going process.
iii. Human Resource Planning is a system approach to human resources.
iv. Human Resource Plans can be short term and long term. Long range plans are
prepared for a period of five years or more on the basis of trends in the economy, labour
market and production. Short term manpower plans cover time period ranging from 1
year to less than 5 years. These are fixed on the basis of present requirement of the
organisation and short term planning.
v. manpower planning involves study of the manpower environment which influences
the demand for manpower and its supply. It also involves study of manpower utilization.

Objectives of Human Resource Planning

The ultimate purpose of manpower planning is to relate future human resources to future
enterprise needs so as to maximize the future return on investment in human resource.
The main objectives of Human Resource Planning are as follows
1. To ensure optimum use of existing human resources.
2. To forecast future requirement of Human Resources.
3. To provide control measures to ensure that necessary human resources are
available.
4. To link Human Resource Planning with organizational planning.
5. To assess the surplus and shortage of human resources.
6. To determine the level of recruitment and training.
7. To ensure the cost of Human Resources and housing needs of employees.
8. To facilitate the productivity bargaining.
9. To meet the needs of expansion and diversification programmes.

Need and importance of Human Resource Planning

The importance of Human Resource Planning can be illustrate in the following points:
1. Uncertainty reduction: Human Resource Planning reduces the impact of uncertainty
by predetermining future human resource requirements. It matches demand and
supply forecast to determine future shortage and surplus of HR in terms of quality,
quantity and skill requirement.
2. Identifying gaps and taking suitable measures: Human Resource Planning identifies
the gap in existing manpower in terms of their quality and talent. Suitable training
and other steps can be taken in time to fill these gaps. Existing manpower can be
developed to fill the vacancies.
3. Effective utilization of Human Resources: Human Resource Planning creats
awareness about the effective utilization of human resources through the
organisation. It helps to reduce the manpower wastage. It also helps in judging the
effectiveness of human resource policies and programmes of management.
4. Control of Human resources: Human Resource Planning sets standards for
controlling the quality and quantity of employees . This facilitates control of
human resource costs as well. In fact, human resource control is not a possible
with our human resource planning
5. Development of Human Resource: Human Resource Planning anticipates skills
requirement for various levels of human resource. This provides adequate lead
time for planning of training and development programmes. Investment in human
resources
6. Environmental Adaptation: Existing human resources can be adapted to changing
technological, political, legal, economic, social and cultural forces through HR
planning by assessing job requirement through job analysis.
7. Budgetary Process: Human Resource Planning is useful in anticipating the cost of
human resources which facilitates the budgetary process. It also helps in
controlling human resource costs through effective utilization. Through proper
management planning, management can avoid both shortage and surplus of
manpower and thereby control labour costs.
8. National Importance: At the national; level, human resource planning facilitates
educational reforms, geographical mobility of talent and employment generation.

Process of Human Resource Planning

The major stages involved in Human Resource Planning are given below:
1. Analysing Organisational Plans: First of all, the objectives and strategic plans of the
company are analysed. Plans concerning technology, production, marketing,
finance, expansion and diversification give an idea about the volume of future
work activity. Each plan can further be analysed into sub plan and detailed
programmes. It is also necessary to decide the time horizon for which human
resource pal are to be analysed.. A companys plans are based on economic
forecast, companys sales and expansion forecast, and the labour market forecast.
2. Forecast Demand for Human Resource: On the basis of corporate and functional
plans, and future activity levels, the future activity level, the future needs for
human resources in the organisation are anticipated. The number of HR for given
level of operation depends upon the production level and technology, process,
make or buy decisions and job contents, behaviour patterns and control systems. It
is necessary to make up projections for new positions to be created and the
vacancies arising in current manpower. Job analysis and forecasts of future
activity levels help in Human Resource forecast.

Techniques employed in demand forecasting are as follows:

a) Managerial Judgment: Under this method experienced managers estimate the
manpower requirements for their respective department on the basis of their
knowledge of expected future workload and employee efficiency. These
departmental estimates are then aggregated and approved by top management.
This is very simple and time saving methods. But it is quite subjective and is
therefore suitable only for small firms. The estimates based on experience helps in
judging the influence of informal group norms on manpower needs.
b) Work-study Method: In this method, time and motion study are used to analyse and
measure the work being done. With the help of such studies standard time required
per unit of work is decided. The following examples illustrate this method:
Example:
Planned output for next year: 50000 units.
Standard hours per unit 2
Planned hours required 50000 X 2 = 1, 00,000
Productive hours per worker in the year 2000
No. of worker required = 1, 00,000/2,000 = 50
If the span of control is ten, five (50/10) supervisor will be required to supervise the
work..
Work study method is more appropriate for repetitive and manual jobs when it is
possible to measure work and set standards.
c) Ration- Trend analysis: Under this method ratios are calculated on the basis of
past data. Future ratios are calculated on the basis of time series analysis.
Projections are mathematical extensions of past data into a future time period. On
the basis of established ratios, the demand for human resources is estimated. The
following example illustrates this method.
Example:
Production level in 2000/01
50000 units
No. of workers in 2000/01
50
Ratio
50:50000 or 1:1000
No. of supervisor in 2000/01
5

Ratio
5:50 or 1:10
Estimated production in 2001/02 60000 units
No. of workers required in 2001/0260000 X 1/1000 = 60
No. of supervisors required in 2001/02
60 x 1/10 = 6
If changes in physical stamina, mental ability, values of employees and technology
are expected for the planned year, where estimated should be revised accordingly.
d) Mathematical model: A mathematical model expresses the relationship between
independent variable s ( e.g. investment, production, sales, etc) dependent variable
( e.g. number of employees required).
In other word, various factors influencing manpower needs are expressed in the
form of formula. Several types of model e.g. regression, optimization models,
probability can be used. These are complex and appropriate only for large
organisations.
While estimating demand for manpower, the prevailing rate of absenteeism in the
company should be considered. In case the rate of absenteeism is considered unduly
high, steps should be taken to reduce it.
3. Forecasting Supply of Human Resources: Every organisation has two sources of
human supply internal and external. Internally human resources can be obtained
for certain posts through promotions and transfer. Human resources flow in and out
of the organisation due to several reasons. In order to judge the inside supply of
human resources in future, human resources inventory or human resource audit is
necessary. This contains data about the current or present human resources. Its main
components are as follows:
a) Head counts i.e total number of employee employed department wise, skill
wise, designation wise, payroll wise, sex wise etc.
b) Job family Inventory i.e number of employees in each job e.g. clerk, cashiers
etc.
c) Age inventory- i.e. age wise classification of employees.
d) Skill inventory i.e. education wise, skill wise, experience wise, past performance
wise etc
Detailed bio data of every employee provides the foundation for a programme of
individual development. Once the present resources are assessed the changes likely
to occur therein can be estimated. Potential losses of human resources can arise in
the form of resignation, discharge, death, layoff, terminations, promotions,
demotions, ill health etc. Similarly additions to human resources may occur in the
form of new recruits, promotions, demotions, transfer, acquisition of new employees
etc. The effects of [potential loss and additions can be calculated on the basis of
experience s follows:
Future internal supply of human resources =
present inventory of human
resources
Add potential Addition
Less potential losses.
Thus future manpower needs of an organisation depend on the number of employees
required due to loss of current manpower and the additional staff needed due to

anticipated expansion of the organisation. After estimating the future internal supply
of human resources, the external sources of supply are analysed.
4) Estimating manpower gap: Net human resource requirement or manpower gap can
be identified by comparing demand forecast and supply forecast. Such comparison
will reveal either deficit or surplus of human resources in future. Deficit suggest the
number of person to be recruited from outside whereas surplus implies redundant to
be redeployed or terminated. Similarly gap may occur in terms of skill, education,
qualification, aptitude. Employees estimated to be deficient can be trained whereas
employees with higher skills may be given more enriched jobs.
5) Action Planning : Once the manpower gaps are identified , plans are prepared to
bridge these gaps. Plans to meet the surplus manpower may be redeployed in other
dept or may be persuaded for voluntarily quit the job through golden handshake.
Deficit can be met through recruitment, selection, transfer, promotion and training
and development plans.
6)Monitoring and control: Once the action plans are implemented, the human resource
structure and system needs to be reviewed and regulated. An organisation operating
on a five year planning cycle may record human resource level in such a way that it
is easy to monitor progress and hold managers responsible.
Problems or barriers of Human Resource Planning
The main barriers in the process of Human Resource Planning are as follows:
1. Inaccuracy: Human Resource Planning involves forecasting the demand for and
supply of human resources. Therefore, it cannot be a cent percent accurate
process. Longer the time horizon, greater the possibility of inaccuracy. Inaccuracy
increases when departmental forecasts are merely aggregate without critical
review.
2. Employee Resistance: Employees and trade union feel that due to widespread
unemployment people will be available for jobs as and when required. Moreover
they feel that Human Resource Planning increases their workload and regulates
them through productivity bargaining. Employer may also resist Human Resource
Planning feeling that it increases the cost of manpower.
3. Uncertainty Labour absenteeism, labour turnover, seasonal employment,
technological changes and market fluctuations are the uncertainties which serve as
constraints to Human Resource Planning. It is risky to depend upon general
estimates of manpower in the face of rapid changes in environment.
4. Inefficient Information System: In most of the Nepalese industries Human
Resource Information system has not been fully developed. In the absence of
reliable data it is not possible to develop effective human resource plans.

5. Lack of top management support:: In the absence of support and commitment

from the top human resource expert find it difficult to obtain vital inputs.
Successful Human Resource Planning flourishes slowly and gradually. In some
cases sophisticated technologies are forcefully introduced just because competitor
has adopted them. These may not yield fruits unless matched with the needs and
environment of the particular enterprise.
6. Time and Expense: Manpower planning is a time consuming and expense exercise.
A good deal of time and cost are involved in data collection and forecasting.
7. Unbalanced Focus: In some companies, Human Resource Planning is used as a
numbers game. There is too much focus on the quantitative aspect to ensure the
flow of people in and out of the organisation. Such an exclusive focus overlooks
the more important dimension, i.e. the quality of human resources. Career
planning and development, skill level, morale etc are likely to suffer due to such
unbalanced approach to Human Resource Planning.

HUMAN RESOURCE PLANNING IN NEPAL

1. Poor tradition of Human Resource Planning:
Nepal has a poor tradition of Human Resource Planning. The guess and hunch in
Human Resource Planning exist. The education system is not friendly to the needs
of labour market. The country lacks comprehensive human resource surveys.
Nepalese managers regard Human Resource Planning as an area of low priority.
Because of this, Nepalese organisations lack right numbers and kinds of people at
the right time and at right places. Their human resource capabilities remain
questionable. Overstaffing is common. Most organisation lack system for Human
Resource Planning. Human Resource Planning techniques are poorly understood.
Human Resource Planning in not linked with overall corporate plans.
2. Lack of Assessment of current HR:
Most Nepalese organisations lack up to date human resource inventory which
describes the skills currently available. They also lack effective Human Resource
Information database.
Effective job analysis is also lacking in Nepalese organisations to lay down proper
job description and specifications. This has constrained proper assessment of current
human resources.
3. Missing Demand and Supply Forecast:
Nepalese organisations lack proper demand and supply forecasting in terms of
skills and people required.
Even the government has stopped making manpower demand forecasts for its
development planning for the last ten years.
Promotions and transfer are not planned in advance.

Nepalese market is supply- driven. Even the professional and skilled technicians
are suffering from unemployment.

3. Mismatch of Demand and Supply:

Nepalese organisations do not give proper attention to matching demand and
supply forecasts to determine future shortage and surpluses.
Succession planning is not done by Nepalese managers. They fear that the person
being developed for succession may oust from their job.
4. Short Term Horizon:
Human Resource Planning in Nepal has generally a 1 year horizon. Strategic
planning is lacking. Human resource planning is not regarded as a part of strategic
planning.
5. Overstaffing in Govt and Public Enterprises:
Most govt agencies and public enterprises in Nepal suffer from overstaffing. The
number one priority of Nepalese politicians is to provide employment to their
political workers. Human Resource Planning is utterly neglected by politicallyappointed manager of public enterprises.
Overstaffing has made Human Resource Planning irrelevant in govt and public
enterprises. Such organisation can function more effectively by cutting half of
their employee strength.
6. Private Sector Lackluster:
The family owned and managed private sector organisations do not bother much
about Human Resource Planning. They prefer to hire their relatives, friends and
near and dear. Even the big houses in private sector lack proper human resource
planning. Advertisement-hocism prevails.
7. Future Perspective:
The global organisations in banking, hospitality and manufacturing sector in
Nepal do prepare systematic Human Resource Plans. They also implement them.
This will definitely have a positive impact fo Human Resource Planning in
Nepalese Organisation in coming years.
The Human Resource Planning function in Nepalese organisations needs
strengthening. The present tendency of dumping unwanted employee in the
planning division should give way to the posting of competent professionals. HR
planning cells need to be set up in medium and large sized organisation. Top
management should fully support Human Resource Planning

Demonstration feedback

Rate yourself
Please use the following scale to indicate how often you feel that you demonstrate the
behaviour consistent with the statements in the questionnaire:
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Commercial Awareness
n/a

1
2
Very
rarely

1
2
Very
rarely

Nearly always

Recognises financial and marketing implications of decisions

and actions
Alert to business opportunities
Gathers and uses economic, market and financial
information as part of decision making
Actively seeks to understand competitors' actions
Assesses and evaluates own work in commercial terms

Leadership
n/a

Nearly always

Establishes challenging goals with others and gives feedback

and recognition
Creates a motivating environment to achieve goals
Active in developing others, including appropriate delegation
of responsibilities
Gets the best out of individuals and teams
Creates a viable strategy for own area and secures the
commitment of their team

Creativity and Innovation

n/a

Very
rarely

Nearly always

Generates novel solutions

Integrates new and old ideas to establish strategies for
change
Actively seeks better ways of doing things and improving
business performance
Produces a wide range of ideas in response to problems or
opportunities
Prepared to experiment and take calculated risks

Flexibility
n/a

1
2
Very
rarely

Nearly always

Maintains effectiveness in varying and ambiguous situations

Reacts positively to change - welcomes new challenges and a
fast changing environment
Learns from experience, is prepared to change own views or
approach in the light of new information
Adapts own behaviour to suit new circumstances
Able to cope with the pressures of changing demands and
circumstances

Additional feedback
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you may choose to use these boxes to make any comments for yourself - these comments will
appear in the boxes exactly as you type them.
Is there anything this person should start doing, or do more of?

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Is there anything this person does at the moment that they should especially continue doing?

Steps in Succession Planning

1. Analysis of demand of the managers and professionals by company levels, functions and
skill.
2. Audit of existing executives and projection of likely future supply from internal and
external sources.
3. Planning of individual career paths based on objective estimates of future needs and
drawing on reliable performance appraisals and assessments of future needs.
4. Career counseling undertaken in the context of a realistic understanding of the future
needs of the firm, as well as those of the individual.
5. Accelerated promotions, with development targeted against the future needs of the
business.
6. Performance related training and development to prepare individuals for future roles as
well as current responsibilities
7. Planned strategic recruitment not only to fill short-term needs but also to provide people
for development to meet future needs
8. The actual activities by which openings are filled.

Source : Peter Walum