HR Planning Process

1. The Basic Elements of HR Planning Process

2. Forecast labor requirements

3. Human resource planning (HRP) is a process and set of activities undertaken to forecast an
organization’s labor demand (requirements) and internal labor supply (availabilities); to compare
these projections to determine employment gaps, and to develop action plans for addressing
these gaps.

4. The current workforce size (number of employees) is given for each job/category level.

1. Forecast labor availabilities

2. Requirements and availabilities are forecast for one year

3. The result for staffing and other plans hopefully will bring staffing into an orderly balance of
requirements and availabilities over the course of the planning period.

1. Determine gaps

2. Gap data serve as the basic input to action plan

3. Because the gap show both shortages and a surplus, and because the gaps vary in severity
relative to the current workforce; a specific action plan will probably have to be developed and
implemented for each job category/level.

1. Develop action plans

2. Action plan include staffing planning to arrive at desired staffing levels and staffing quality.

3. Specific action plan will have to be developed and implemented for each job/category level.

2. Initial Decisions

3. Strategic Planning
 4. It is always a good idea to have a close, reciprocal linkages between business strategy and HR
Plans.

 However, not all important business developments are captured in format business plans;
particularly if they occur rapidly or unexpectedly.

 Many organizations do HRP outside the formal planning cycle for critical groups of employees on
a regular basis.

1. The values and attitudes of managers; especially top managers, toward HR are also important to
HRP.

 A firm understanding of an organization’s internal environment is also important.

1. Planning Time Frame

2. How far into the future should the planning extend?

3. For plan-based HRP, the time frame will be the same as that of the business plan.

1. Job Categories and Levels

2. Structure of an internal labor market

3. The unit of HRP and analysis is composed of job categories and hierarchical levels among jobs.

1. Head Count (Current Workforce)

2. Exactly how does an organization count the number of people in its current workforce for
forecasting and planning purposes?

3. Sometimes it makes sense to simply count the number of employees on payroll at the start of
the planning period.

1. Roles and Responsibilities

2. HR Staff assumes responsibility for collecting, manipulating, and presenting the necessary data
to line management and for laying out alternative action plans (including staffing plans)
 3. Both line managers and staff specialists (usually from the HR Department) become involved in
HRP, so the roles and responsibilities of each must be determined as part of HRP.

3. Forecasting HR Requirements

4. Statistical Techniques

5. Ratio Analysis

 Examine historical ratios involving workforce size.

 Assume ratio will be true in future.

1. Regression Analysis

 Statistically identify historical predictors of workforce size.

 Only use equations with predictors found to be statistically significant.

 Trend Analysis

 Gather data on staffing levels over time and arrange in a spreadsheet with one column for
employment levels and another column for time.

 Predict trend in employee demand by fitting a line to trends in historical staffing levels over time
(this can be done by using regression or graphical methods in most spreadsheet programs).

1. Judgmental Techniques

Judgmental techniques represent human decision-making models that are used for forecasting HR
requirements. Unlike statistical techniques, judgmental techniques use a decision maker who collects
and weighs the information subjectively and then turns it into forecasts of HR requirements.

1. Top-down approach

 Top managers of the organization, organizational units, or functions rely on their knowledge of
business and organizational plans to predict what future head counts will be.

 At times, these projections may; be dictates rather than estimates – necessitated by strict
adherence to the business plan.

 
 1. Bottom-up approach

 Lower-level managers make initial estimates for their unit (e.g., department, office, or factory)
on the basis of what they have been told or presume are the business and organizational plans.

 These estimates are then consolidated and aggregated upward through successively higher
levels of management.

4. Forecasting HR Availabilities

5. Manager Judgment

6. Individual managers may use their judgment to make availability forecasts for their work units.

7. The manager must be very knowledgeable about both organizational business plans and
individual employee plans or preferences for staying in their current job versus moving to
another job.

1. Markov Analysis

2. Predict availabilities on the basis of historical patterns of job stability and movement among
employees.

3. To conduct Markov Analysis, managers must know all of the job stability, promotion, transfer,
demotion, and exit rates for an internal labor market before they can forecast future
availabilities.

1. Replacement and Succession Planning

Replacement and succession planning focus on identifying individual employees who will be considered
for promotion; along with thorough assessment of their current capabilities and deficiencies, coupled
with training and development plans to erase any deficiencies. Replacement planning come before
succession planning, and the organization may choose to stop at just replacement planning rather than
proceeding into the more complex succession planning.

1. Replacement Planning

 Replacement planning focuses on identifying individual employees who will be considered for
promotion and thoroughly assessing their current capabilities and deficiencies.
  The process of replacement planning has been greatly enhanced by human resources
information systems (HRIS).

1. Succession Planning

 Succession plans build on replacement plans and directly tie into leadership development.

 The intent is to ensure that candidates for promotion will have the specific KSAOs and general
competencies required for success in the new job.

5. Reconciliation and Gaps

6. Considerable action will have to be contemplated and undertaken to respond to the forecasting
results for the organizational unit.

7. Involves mixtures of external and internal staffing.