Human Resource Planning

Presented by: Binod Ghimire

 Unit 3: Human Resource Planning (HRP) LH 5

 Concept, HRP process, Strategic planning and HR

planning, Need of human resource planning,
Human resource information system, Techniques
of forecasting HR demand and supply, Strategic
directions in human resource planning, HRP
practices in Nepalese organizations.

Presented by: Binod Ghimire

 Concept

• Human resource planning is the process of

forecasting, development, and controlling human
resource in an organization.
• According to Stone, “Human resource planning is
the process by which an organization attempts to
ensure that it has the right number of qualified
people in the right jobs at the right time.”
• According to Scott, "Human resource planning is the
process for ensuring that the human resource
requirements of an organization are identified and
plans are made for satisfying those requirements.”

Presented by: Binod Ghimire

 Characteristics of Human Resource
Planning(HRP)

a. Goal Directed (Achieving employees goals as well as overall

organizational goal)

b. Future-oriented ( Forecasting future work force)

c. Quantitative and qualitative(Estimating right
number of employees needed with right skills and
competencies at right time)
d. System Oriented (Determining future human
resources shortages and surpluses)
e. Time Horizon ( HRP can be short i.e one year or
long term i.e. five year or more)

Presented by: Binod Ghimire

 Importance of Human Resource Planning

a. Uncertainty Reduction
Globalization, New technology, Org. restructuring, and
workforce diversity produce uncertainties.
Matching demand and supply by determining future
shortage and surpluses of human resources.
b. Objective Focused
HR plans are linked to overall corporate plan. This
facilitates better coordination for objective achievement.
c. Environmental Adaptation
HR requirements are identified through Job analysis.
Evaluate competencies of current human resources and
updated regularly so as to adjust changing environmental
forces.

Presented by: Binod Ghimire

d. Acquisition of Human Resources
Facilitates recruitment and selection of employees. Also
supports succession planning.
e. Utilization of Human Resources
Right man is made responsible for right job to ensure their
productive utilization. Increase efficiency.
f. Control of Human Resources
HR planning sets standard according to which quality and
quantity of employees are controlled.

Presented by: Binod Ghimire

 HR Planning Process

Environmental
Analysis

Determining HR
objectives and Policies

Human Resource
Forecast

Action Plan

Control and
Evaluation

Presented by: Binod Ghimire

 A. Environmental Analysis
It refers to the systematic monitoring of the external forces influencing
the organization. The following forces are essential for HRP.
Economic factors, including general and regional conditions.
Technological changes
Demographic changes including age, composition and literacy,
Political and legislative issues, including laws and administrative
rulings
Social changes
By scanning the environment for changes that will affect an
organization, managers can anticipate their impact and make
adjustments early.

Presented by: Binod Ghimire

B. Determining HR objectives and policies
 HR plan is usually derived from the organizational
objectives. Specific requirements in terms of number
and characteristics of employees should be derived
from organizational objectives
 Once the organizational objectives are specified,
communicated and understood by all concerned, the
HR department must specify its objective and policy
with regard to HR utilization in the organization.

Presented by: Binod Ghimire

C. Human Resource Forecast
Once current human resources are analyzed and HR
objectives and policies are determined, the next step is
to demand and supply forecast.
It is to determine future requirement of number of
employees, skill required and the internal and external
supply.

Presented by: Binod Ghimire

 D. Action Plan
It is known as manpower planning implementation.
HR implementation requires converting an HR plan
into action.
A series of action are initiated as a part of HR plan
implementation such as recruitment, selection and
placement, socialization, training and development
etc.

Presented by: Binod Ghimire

E. Control and Evaluation
Monitoring and evaluation to ensure that HR planning
matches the HR objective and policies. HR manager develop
certain HR indicators in order to know the progress of HR
management.
Evaluation is also done with respect to employment cost
against the budget and wastage accrued so that corrective
action can be taken in future.
(continuous process, timely feedback)

Presented by: Binod Ghimire

 Human Resource Strategy

• Strategy sets the overall objectives for a company. It

also sets the parameters for the needed employees’
contribution or how people add value within a
company.
• A company's strategy is its plan for achieving a
competitive advantage over its rivals. It is long term
direction and scope of an organization.
• Human resource strategy is the broad action plan that
determines direction and scope of human resource
function. Different strategies require different
employee contributions to create competitive
advantage. There are two broad types of strategies that
any organization can choose.
 A. Low cost strategy and managing
employees

• A cost leadership strategy focuses on outperforming competing

firms within an industry by maintaining the ability to offer the
lowest costs for product or services.

• Given their focus on efficiencies and cost reduction, companies

with a cost leadership strategy tend to design jobs in a way that
maximizes predictable employee outcomes.

• It focuses on ensuring acceptable job performance by hiring

individuals with the basic skills needed for these jobs, training
employees to efficiently carry out their responsibilities.

• HR pays employees according to the job performance. It

evaluates employees based on adherence to established job
expectation.
B. Differentiation strategy and managing
employees

A differentiation strategy emphasizes achieving

competitive advantage over competing firms by
providing something unique for which customers are
willing to pay.
A differentiation strategy requires employees to perform
jobs geared towards particular objective, such as
creativity or customer service.
Employees need to possess specific skills related to the
source of differentiation and need to engage in
behaviors that help set the company apart from its
competitors.
 Approaches to Human Resource Planning

• HR planning is the process of analyzing and identifying the

need for and availability of human resources so that the
organization can meet its objectives. The approaches to
human resource planning are;
Top down approach ( Quantitative approach)
• It is hard approach to HRP as it considers quantitative aspect
of HR planning. It is handled by management. It is traditional
in nature. The main objective is to identify human resource
shortages and surpluses and manage them. This approach
considers:
 HR information system and HR inventory.
 Demand forecasting technique by the use of
statistical and mathematical technique.
 Work study technique
Bottom up approach ( Qualitative approach)
• It is soft approach to HRP as it considers qualitative aspect of HR
planning. It is employee driven. It is traditional in nature. The main
objective is to match organizational needs with employees need.
There is the provision of employee training and development. This
approach considers;
 Employees’ safety and welfare.
 Motivational techniques to increase productivity.
 Employee training and development.
 Work flexibility
 Career planning and development of employees
 Compensation and incentive schemes
 Organizational justice
 Special right to focus groups such as minority, women,
disadvantaged persons.
Mixed approach
• It is participative approach to HRP as it combines both quantitative
and qualitative approach of human resource planning. Top
managers and human resource managers jointly participate on the
formulation of human resource planning. This approach considers:
 Corporate objectives and strategies of organization are the
basis of formulation of human resource planning.
 Human resource manager provide suggestion, guidance
and information to the top level manager.
 Both quantitative and qualitative approach of human
resource planning are considered.
 Both line manger and HR managers’ involvement in
formulation of HR planning contribute high productivity
for the organization.
 Relationship between HRP and Strategic
Planning

Strategic plan is the corporate level plan which defines overall

mission of the organization. HR need is also defined by the
strategic plan of organization. The relationship between human
resource planning and strategic planning can be shown as follows:

• Follower Relationship: HR plan is not distinct subject matter from

corporate strategic plan. It is based on the overall objective and
strategies of the organization. If the organization has a plan for
growth then organization need to hire additional employees.

On the other hand, if the organization is going for mergers and

acquisition, then organization need to plan for layoffs, as mergers
can create, duplicate or overlap positions that can be handled more
efficiently with fewer employees.
• Partner Relationship: HR plan is crucial while
developing corporate strategic plan. Implication of
human resources is considered in the formulation of
the corporate plan. It ensures that HRM issues are
properly valued while formulating corporate plan.

Modern business organizations pay more attention on

this issue to ensure effective utilization of human
resources. This helps to match between organizational
objectives and HRM objectives.

• The impact of business (strategic) planning on human

resource planning is presented as below ( Cascio, 1992)
 Assessing Current Human Resources
(Major HRP Activities)

 Following analysis are necessary to assess

current human resources.
A. Human Resource Inventory
B. Human Resource Information
System(HRIS)
C. Succession Planning
Presented by: Binod Ghimire
 A. Human Resource Inventory(Skill Inventory)

 It consists of up-to-date information about the

qualification and experiences of selected categories
or all of the employees. Information includes;
personal data, educational qualification, training,
history of employment, results of performance
appraisal and career goal. It is based on HRIS.
 This information facilitates the assessment of the
current skilled workforce which is useful at the time
of promotion, management, succession, planning,
reporting etc.

Presented by: Binod Ghimire

 Benefits of Human Resource Inventory

 Support management to evaluate what skills are

currently available in the organization.
 Useful for planning the selection, training,
promotion and transfer of employees.
 Can be used as a decision making tool for effective
utilization of existing human resources.
 Provides information regarding skill deficiency of
employees.
 Supports coordination and control regarding human
resources.
Presented by: Binod Ghimire
 Management Inventory

 It consists of information about managerial human resources

currently employed in the organization. It includes: Personal
data, skills data, position data, compensation data, performance
data.
 Benefits
 Facilitates succession planning
 Helps to assess managerial skill required to cover future activity.
 Helps to identify management development needed to update
managers.
 Provides information about managers turnover that helps to
develop strategy to retain quality managers.

Presented by: Binod Ghimire

 B. Human Resource Information System(HRIS)

 HRIS refers to the system of gathering, classifying,

and effective management of human resources
information in an organization.
 HRIS serves as a systematic databank where
information on all employees and their job is stored;
it can be updated and retrieved as and when needed.
 HRIS is established and used with the help of
computer based information technology.

Presented by: Binod Ghimire

 Uses of HR information system

 HR inventory development- HRIS serves as the database for

developing human resource inventory. This inventory
provides data about the skills of human resources working in
the organization.
 HR forecast- HRIS is useful for forecasting future human
resource demand and supply.
 HR development- HRIS data can be used for identifying
employees for training, development, promotion and transfer.
It is useful for succession planning.
 Job analysis- HRIS helps to gain understanding of what task
necessitate, and the type of individuals who should be hired to
perform that task.

Presented by: Binod Ghimire

 C. Succession Planning

 Widely known as succession planning or management

succession, it ensures that the organization has
individuals ready to move into positions of higher
responsibility.
 This is special type of planning used to forecast
potential managers for future promotion in the higher
management level.
 Expert committee select pool of candidates and
provide special training and development assignment.
Potential and highly deserving candidates will be
promoted to the higher managerial post.
Presented by: Binod Ghimire
 Benefits of Succession planning

 Continuity- HR crisis is avoided. Encourage hiring

from within the organization.
 Career planning- Employees career need is addressed.
 Development- Managerial shortage and skill
deficiencies are predetermined. Plans are prepared to
develop managers internally to accept greater
responsibilities.
 Talent management- Qualified people are
systematically placed in the right job. It facilitates
career planning and development of an individual
employee.
Presented by: Binod Ghimire
 Demand Forecasting

 Demand forecasting is the process of estimating the

future quantity and quality of people required to
meet the future needs of the organization.
 Demand forecasting is influenced by both internal
factors and external factors: external factors include-
competition, economic climate, laws and regulatory
bodies, changes in technology and social factors
whereas internal factors are budget constraints,
production level, new products and services,
organizational structure and employee separations.

Presented by: Binod Ghimire

 Benefits of demand forecast

 Quantify the jobs, necessary for producing a given

number of goods.
 To determine the nature of staff mix required in the
future.
 To assess appropriate levels in different parts of
organization so as to avoid unnecessary costs to the
organization.
 To prevent shortages of personnel where and when,
they are needed by the organization.
 To monitor compliances with legal requirements with
regard to reservation of jobs.
Presented by: Binod Ghimire
 Supply forecasting

 Supply forecast determines whether the HR

department will be able to procure the required
number of workers.
 Supply forecast measures the number of people
likely to be available from within and outside an
organization.

Presented by: Binod Ghimire

 Benefits of supply forecast

 Helps to quantify the number of people and positions

expected to be available in future to help the
organization realize its plans and meet its objectives
 Helps to clarify the staff mixes that will arise in future
 It assesses existing staffing in different parts of the
organization.
 It will enable the organization to prevent shortage of
people where and when they are most needed.
 It also helps to monitor future compliance with legal
requirements of job reservations.

Presented by: Binod Ghimire

 Techniques of HR demand forecasting

Presented by: Binod Ghimire

 Techniques of HR Supply forecasting

Presented by: Binod Ghimire

 Managing Human Resource Surplus

 HR surplus refers overstaffing that means having

more number of employees than required. Following
methods can be applied for managing HR surplus.
1. Expansion of current activities
2. Creation of new activities
3. Early retirement
4. Termination
5. Outplacement ( assisting recently terminated
employees for searching employment opportunities)

Presented by: Binod Ghimire

 Talent management

Talent refers to special ability that can make a difference to

organizational performance. Talent management is essential part of
manager for acquiring competitive advantages and to develop highest
level of potential. Talent can be managed by:
 Assigning new challenging jobs to those employees who can
demonstrate innovation or talent.
 Increasing the scope of current jobs that allow use of talent.
 Rewarding employees who use talent to improve performance in terms
of goal achievement.
 Promoting talent management environment throughout the
organization.
 Preparing succession planning on the basis of individual’s talent.

Presented by: Binod Ghimire

 Strategic direction in human resource planning

 HR planning is the process of systematic review of

HR requirement in the organization.
 As an integrated part of strategic mgmt, it is also
understood as strategic manpower planning of the
organization.
 Strategic direction of HR planning is to focus for
achieving vision, mission, objectives and strategies of
the organization.

Presented by: Binod Ghimire

 Vision: big picture or roadmap of an organization
achieving in long run.
 Mission: explains the reasons of the existence of the
organization. Brief description about the
fundamental purpose of the organization.
 Objectives: It involves goals that an organization
expects to achieve within specified time.
 Strategies: It involves comprehensive master plan
stating how the organization will achieve its mission
and objectives.

Presented by: Binod Ghimire

HRP practices in Nepalese Organizations

 Human Resource Planning: Most of the organization lacks human resource

planning. Even if it is made, it is least concerned with developing human
competencies and potential for growth of employees.
 Focus: In Nepal, HRM is not considered important subject matter. Its focus is
on achieving organizational goals without much regard to personal goals of
employees. People are not considered as a source of competitive advantage and
important assets.
 Attitude of top management: The attitudes of top management are not
favorable towards HRM. Human resources are viewed as a cost rather than
assets by management. Multiplicity of unions, union challenges,
politicalization of unions and negative attitude of management towards labor
unions pose problem in human resource management. There is lack of mutual
trust between labor and management.
 Short Term Horizon: HRM is short range oriented generally one year
horizon. Strategic human resource planning is lacking. There is no relationship
between strategic and human resource planning.

Presented by: Binod Ghimire

 Strategic Role: HRM has not assumed a strategic role in Nepalese
management. It lacks clear cut vision, mission and goals. HR aspects are not
considered in policy and plan formulation. Line managers do not feel
ownership for HRM. HRM is only considered as a means to deal with labor
grievance and indiscipline.
 Legal framework: Law, rules and regulations are not up-to date. It does not
fulfill current need. All the stakeholders are not addressed in the legal
framework. It has remained weak and largely welfare oriented to employees.
 Human resource development: Human resource development has
remained an area of low priority. It is least concerned with future potential
development of employees. This has retarded professionalism in HRM.
Performance based HRM practices are lacking.
 Demand and Supply forecast: Nepalese business organization lack proper
demand and supply forecast. Right number and skills of people are not
forecasted. Similarly, Nepalese organization lack proper supply forecast of
human resources inside and outside sources. There is no proper plan for
promotion and transfer of employees.
Presented by: Binod Ghimire
 Assignment

1. How do the HR planning responsibilities of HR

specialists differ from those of managers?
2.Assume you have to develop an HR plan for a local
bank. What specific external factors would be
important for you to consider? Why?
OR,
Assume that as a result of HR planning, a hospital
identifies a shortage of physical therapists but a
surplus of administrative workers. Discuss what
actions might be taken to address these problems
and why they must be approached carefully.
Presented by: Binod Ghimire