Unit 2

Human Resource: Strategic Planning

Contents
• Concept of HR planning
• 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.
Concept of Human Resource Planning

• The process of how the HR practices will be conducted so that organizational goal
will have achieved, focuses more on determining the human resources
requirement is called human resource planning.
• “The process of determining an organization’s human resource needs is HRP.” –
David A. DeCenzo and Stephen P. Robbins
• “The process of deciding what positions the firm will have to fill, and how to fill
them.” – Garry Dessler
• Human resource planning is to identify the human resource requirement in terms
of number, skills, and occupation groups, to meet increasing demands, either due
to business expansion or other reasons.
Nature of Human Resource Planning
• Future Oriented
• Continuous process
• Integral part of organisational strategy
• Integral part of human resource management system
• Optimum utilization of Human resource
• Determination of human resources
• Focus to qualitative and quantitative aspect
• Long term and Short term orientation
Need of Human Resource Planning

• Personnel need assess; how many and when

• Foundation for strategic and human resource management function
planning; all the HRM function are based on it
• Developing highly talented manpower Inventory
• Help in expansion and diversification strategies
• Investment in human resource standpoint
• Dealing with Change
• Managing employee turnover
• International expansion strategies
HRP Process
Organizations should carry out human resource planning so as to meet business objectives and
gain an advantage over competitors
Organizational analysis
• It is the first step that that analyze the mission, vision and objectives of the entire organization
and to identify current HR inventory ( position).
Forecasting
• After assessing the position of current HR and their talent, HR Demand forecasting and HR
Supply forecasting is conducted.
• HR supply forecasting involves the forecasting internal supply and external supply and
forecasting demand estimates the quantity and quality of HR requirement of the organization.
Goal setting and strategic planning
• Here, strategy and programs are prepared to meet balance between HR demand and its supply.
• The HR strategy, depending on organizational strategy, is different as the condition either
surplus or shortage. While surplus position, organization should flow de-recruitment strategy
and recruitment strategy in inverse or shortage situation.
Program implementation and evaluation.
Conti..
Strategic Planning and HR Planning
• Human resource planning is not carried out in a vacuum. Planning for human
resources must start at the top when the major objectives of the organization are set.
• Strategic planning is an organization’s process of defining its strategy, or direction, and
making decisions on allocating its resources to pursue this strategy.
• Strategic planning is logical process of determining how to pursue the organization's
long-term goals with the resources expected to be available and to enhance the
efficiency and organizational productivity.
• Strategic planning became prominent in corporations during the 1960s and remains an
important aspect of strategic management.
• On the other hand, human resource planning is a process of diagnosis and forecasting
demand and supply of the human resource in the organization.
Strategic Planning Process; (Decam)
.
Defining Mission Statement

Environmental Analysis

Create Strategic Option

Assessing Strategic Option

Make a Strategic Choice/decision

Strategic Planning and HR Planning
Operational Planning
Business
Strategic Planning Long Middle Range Budgeting: Annual
Planning
Process Range Perspective Perspective Perspective
Planned Programs Budgets unit, individual
Corporate philosophy Resources Required Performance goals
Environment scan Organizational stragtegies Program scheduling &
Strengths & constraints Plans for entry into new Assignment;
Objective & goal strategies Businesses: Monitoring * control of
Acquisitions results
Diverstituries

HR
Planning Forecasting Action Plans
Issues Analysis
Process Requirements Staffing authorizations
Staffing levels Recruitment
Business Needs
Staffing mix (Qualitative) Promotion and Transfers
External factors
Internal supply analysis Organization and Job design Organizational changes
Mgt Implication Available/Projected resources Training and development
Net requirement Compensation and Benefits
Labour relations
Strategic Planning and HR Planning
External
Environment

Technological
Business strategy

Business HR issues

HR Strategy
strategic human resource planning
HRP
Activities is to ensure that the workforce is
Economic
Social
aligned with the business
objectives.
Legal
Human Resource Information System (HRIS)
• Human resource information system (HRIS) is a database,
which contains data regarding employees of company or
human resource activities.
• An HR information system (HRIS) is a computer-based
information system for managing the administration of HR
processes and procedures. -Michael Armstrong
• A computer system used to acquire, store, manipulate,
analyze, (Asmard) retrieve, and distribute information
related to an organization’s human resources.
– Raymond A. Noe
• It is fact that effective human resource management is
possible only when the meaningful information is available.
To assure and ensure such information HRIS is crucial.
• It is useful for all processes that you want to track and from
which you hope to gather useful and purposeful data.
Conti..
• The information that we can collect in
this area from HRIS are:
• Promotions, transfers, hiring, and
termination rates: It tracks data to analyze
and make decisions about workforce
planning and employment needs.
• Analysis and definition of work: It allows
employees in geographically dispersed
locations to work together.
• Recruitment and selection: It has the
ability to support processes by creating
tools that are more agile and enable online
work.
• Skill, performance, compensation, reward
related information
HR Demand Forecasting Techniques

• Ratio analysis [based on actual ratio and predicts future ratio; e.g. 1 sales person equal
to 500000 sales, extra 5 sales person is needed to generate extra 2.5 million sales.]
• Trend analysis [studying variations over the last few years trends to visualize; if the past
trend is increasing, needs to recruit new employee]
• Scatter plot [graphical analysis showing association; e.g. relationship between no of beds
and no of nurses for hospital ]
• Managerial judgment [discussion of managers; top down, bottom-up, mixed
approaches ]
• Regression analysis [statistical based technique that forecasts the relationship;
regression line: y = a + bx ]
• Work study techniques [analyzing operation time and worker required for the work]
• Delphi techniques [experts are involved to forecast the human resource requirement]
• Flow models [forecasters focus to time horizon, establish categories to which employees
can be assigned, annual movements of employees like death or disability, absences,
resignations and retirements.]
HR Supply Forecasting Techniques
Internal Supply Forecasting (SPPoM)
Skill inventories
• list of employee’s qualification, experience, skills,
abilities, and job tenure; human capital
Personnel replacement charts
• HR records showing present performance and
promotional potentials of candidates for the most
important positions that can be considered for the
positions]
• performance: outstanding, satisfactory or need
improvement
• Promotional potentials: ready now, needs further
training or questionable
Position replacement card
• focus to position and search for candidate
Techniques of Forecasting HR Demand and Supply
Markov analysis
• predict internal employee movement from one year to another by identifying
percentages of employees who remain in their jobs, get promoted or demoted,
transfer, and exit out of the organization
• HR Supply Forecasting Techniques
• External Supply Forecasting
• Predictive external labour force analysis [industry-to-industry and
geographical context; external labour force relies on labour market
estimates based on regional and global economic, environmental, and
demographic changes]

• Management judgment
• Statistical Analysis
Strategic Directions in Human Resource Planning

Demand for
labor
Outcomes
Assess current Demand exceeds Recruitment
Define Establish human resources Compare demand supply
organization corporate goals HRMS: and supply of
mission and objectives job analysis human resources Supply exceeds Decruitment
demand

Supply of
human resources
Strategies of Managing Human Resources Surplus (WEAR)
Workforce downsizing
• Downsizing refers to the process of reducing the size of workforce by terminating
the employment of employees. It is also referred as layoff. Downsizing is common
in a recessionary situation where downsizing helps to cut costs.
Attrition and hiring freezes
• Attrition, in Human Resource terminology, refers to the phenomenon of the
employees leaving the company. Attrition in a company is usually measured with
a metric called attrition rate, which simply measures the no of employees moving
out of the company (voluntary resigning or laid off by the company). Attrition
Rate is also referred as churn rate or turnover.
• Early retirement; golden handshake
• Reduce work hours
Strategies of Managing Human Resources Shortage (ROUCAA)

• Use overtime
• Check turnover
• Outsourcing
• Alternative work arrangement; flexible hour
• Add contingent workers
• Re-employment of recent retirees
HRP Practices in Nepalese Organizations

• Focus on administrative model of HR planning

• Lack of human resource information system
• Lack of data driven forecasting
• Lack of alignment of shortage and surplus human resource