HUMAN RESOURCE PLANNING AND AUDITING

Human Resource Planning(HRP)

Forward looking functions

Assess Human Resource requirements in advance keeping the production schedule, market fluctuations, demand forecasts etc

Right number of qualified people into right job at the right time so that an organisation can meet its objectives.

Subjected to revision

Short term ( 2 Year)/ Long term (5 or more years)

Importance Of HRP

People bank Creating High Talented Personnel Foundation of personnel function Expand and contract Cut Cost Succession Planning Resistance to change

Factors affecting HRP

Type and strategy of organisation. Organisational growth cycle and planning Environmental uncertainties Type and quality of Information Nature of jobs being field Outsourcing.

Planning process1. Environmental Scanning

1. Economic2. Technological changes3. Demographic Changes4. Political Changes5. Social Concern

• Organisational objective and policies• Vacancies filled by promotion/ external recruitment.• Training and Development objectives• Job Enrichment• Creative and new jobs• Ensure continuous availability and flexible workforce.

3. HR Needs forecast• Estimating future quantity and quality of people require .Basis of forecast: Annual Budget, Long term corporate plans, activities of

different deptt.

4. HR supply Forecast

5. HR programming

6. HRP implementation

7. Control & Evaluation

8. Surplus1. Restricted hiring2. Reduce hours3. VRS, Lay off etc.

9. Shortage1. Recruitment and Selection2. Outsourcing

Target for next lecture

Case study : Toto Company

Tentative Lecture ScheduleLecture

No.

Topics to be covered Case studies

1.

2.

3.

4.

5.

Introduction to HRP

HRP as integral part of business planning, Forecasting

Supply of manpower and Integrated budget for manpower planning

System and analysis approach, Controlling manpower of manpower

HR Forum

Fueling the process.

Toto company

Tutorials

Case studie

Presentation by groups

HUMAN RESOURCE PLANNING AND AUDITING

Session 2Semester 3

Batch 2009-2010

Lecture Map

HRP as integrated part of business planning Setting man power standards Manpower forecasting for managerial staff,

technical staff, office staff, skilled and unskilled labour.

Role of HRP Professionals

Strategic role Formulating the strategies Managing relationship with managers

Administrative role Managing the organisational resources Employees welfare activities

Specialized role Collecting and analyzing data Designing and analyzing forecasting system Managing the career development

Ways to make HRP more effective Vertical integration Serve stakeholders Understand organisation thoroughly

Structure Management/ worker Mission Issues etc.

Understand demography Data Projection Profile

Measurable outcomes

Element of system & their integrationStakeholder

Interest______________

Stakeholder Management

Employee GroupGovt.

CommunityUnion

SituationalFactor

______________Work force

Business strategyLabour Mkt

Union Task technology

Laws and societal values

HRM Policies-----------

Employee InfluencesHR Flow

Reward SystemWork System

HRM Outcome-----------

CommitmentCompetenciesCongruency

Cost-effectiveness

Long – TermConsequences

------------Industrial wellbeing

Organisational Effectiveness

Societal Welbeing

Harvard Analytical Framework of HRM

HR & Business Planning Process

Strategic Planning-------------------------------------

1. Define corporate Philosophy2. Scan environmental conditions

3. Evaluate corporate strategy

Link Corporate and Staff Planning

Strategic____________

Long(5 Years)

Issue Analysis

Operational____________

Middle (1-5 Year)

Forecasting require

Budget____________

Annual

Action Plan

Sources of information Social

Census information,HR Journals, News, media, Social trends, Employment sections in papers

Demographics Census information, Local committees

Political and Legislative News, media, Labour Relations Commission, Parliament Proceedings.

Industrial and Technological Journals specific to each industry, Trade associations, Employers

associations.

Competitors Annual reports, Market research, News, MediaNetworking

Strategic Direction- HR Linkages Mission Determines business of

organisation Obj & Goals Setting Goals and Objective Strategies Determine how goals and

objectives will be attain Structure Determine what jobs need to

be done by whom People Matching Skills, Knowledge

and ability to required job

Levels of Planning

Strategic Level Capabilities required to meet organisation’s long term objectives

term objective

Location Level Best required location qualification & labour cost

Group behavior / Unit Level Capabilities of employees to meet Units objectives

Personal Level Specific requirement for specific job

HRP Model

Strategic Human Resource planning Designed to insure consistency between

organisation’s Strategic Planning process and HRP. Objectives of HR Planning are feasible HR programmes are designed around

organisational Objectives and strategies require in terms of human resource goals.

Basic Human Resource Planning Model

Organisational Objectives

Human Resource Programme

Feasibility AnalysisHR Requirement1

132

4

5

Link 1 & 5: SHRP: HR Objectives are linked to organisational objectives

Example Open NewPrdt line

Open new factory and distribution

system

Develop new ObjectivesAnd Plan

Developing newstaff for new Installation

Prdtn WorkerSupervisor

Technical StaffOther managers

Recruit Skilled Workers

Develop technical trang prg

Recruiting and trng

FeasibleTransfer infeasible

because of managers with

right skills

2

Recruit Managers from outside

Too costly to hire from outside

31

4

3

5

Link 1: Determine Demand ( labour requirement) How many people are working and in what

jobs to implement organisational strategies and attain organisational goals.

Involve forecasting HR needs based on organisational objectives

Involve consideration of alternative ways of organizing jobs (Job design, organisational design or staffing jobs) Example : Peak production

Link 2: Determine HR Supply (availability) Choose HRM programmes (supply) Involves forecasting or predicting effect of

various HR programmes through various job classification.

Determine how well existing programme is doing , then forecast additional programme or combine the programmes.

Needs to know various HR programmes and their combinations.

Link 3 & 4: Determine Feasibility Capable of being done

Requires knowledge of programmes Synchronization of programmes with business

environment Do the benefits outweigh the costs???

Difficulty in quantifying cost & benefits.

Link 5: Revise organisational objectives and strategies. If no feasible programme is devised,

organisation should revise the strategic plans.

Practical shortcomings of HRP Model Oversimplification Less rational May omit one step because of:

Lack of knowledge Incorrect assumptions Poor strategic planning Resistance to change

ANALYSIS OF THE WORKFORCE

INVENTORIES OF THE EXISTING WORKFORCE

SUCCESSION PLANS-to determine the type and calibre of managers available to succeed senior or middle managers who retire or leave

MOVEMENT OF EMPLOYEES-promotions and transfers

USE OF STAFF-overtime working, Absenteeism, ineffective or wasted time or efficiency in the use of labour

LABOUR TURNOVER-an analysis of the rates at which staff are leaving employment 7 of trends of such turnover

COSTS-to know at which point recruitment becomes most cost-effective than increased overtime working.

Forecasting of Human Resources

Forecasting Demand for Employees Consider the firm’s strategic plan’s likely impact on the

demand for the firm’s products or services.

Assumptions on which the forecast is predicated should be written down and revisited when conditions change.

Unit forecasting (bottom-up planning) involves “point of contact” estimation of the future demand for employees.

Top-down forecasting involves senior managers allocating a fixed payroll budget across the organizational hierarchy.

Time Scale of HRP forecastTime - Frame

Requirement basis

Manpower Availability

Possible action plan to meet requirement

Less than a year

Annual budget

(Operational Plans)

Existing +

Contractual

Contractors, Overtime, retirement on contractual basis, restructuring and layoffs

1- 2 Years Forecasted budgets

(business Plans)

Current – projected attrition

Transfers, Promotion, recruitment, restructuring, redundancy, Trg & Devpt

2- 5 Years Long term plans Projected

(includes Trainees)

Succession plans, recruitment, restructuring, redundancy, Trg & Devpt

More than 5 Years

Perspective plans Labour mkt, education system

Succession Plans, MDP, OD, redeployment, job restructuring

Forecasting Demand for Employees Budgeting Statistical Techniques

Trend analysis Regression Probability models

Qualitative Techniques Ask the experts / Delphi Technique

Needs are then compared to current workforce to identify gaps and decide staffing actions.

Take into account: Productivity and FTE employees Scheduling and shifts High volume / traffic times

Statistical methods for forecasting manpower

Quantitative techniques Workload analysis Time series analysis Exponential smoothing Analysis of productivity and other ratios Managerial judgment

Qualitative techniques Delphi technique Nominal group technique

Workload analysis

Classification of work Forecasting the no. of Job Converting projected jobs in man-hour Converting man-hour requirement into

manpower requirement.Tutorial 1

Planned operation during year 2008 = 2,00,000 unitsStandard man-hour needed to perform each unit in 2008= 0.25

Working ability of employee = 4%Calculate manpower needed for year 2008.

Ans: 25 person

Tutorial 2 : Workload analysisJob

catagoryHrs. Per job

Year forecast

2002

Year forecast

2003

Year forecast

2004

Year forecast

2005

Related to meter

0.75 15 13 11 8

Related to installation

2.50 85 95 110 125

Related to maintenance

1.50 27 35 41 45

Related to emergency calls

1.10 10 8 6 4

Assumptions:1. 20% fatigue allowance2. 20% leave reserve

Time series analysis

Components Trend Cyclic variation Seasonality Random fluctuations

Trend Analysis

Study of firms’s past employment needs over a period of years to predict future needs.

Initial estimate of future staffing need Scatter diagram

Tutorial : HRP of an hospitalNo.of beds : 200, 300, 400, 500, 600, 700, 800, 900No. of nurses

require: 240 260 470 500 620 660 820 860

Trend Analysis of HR Demand

1997 $2,351 14.33 164

1998 $2,613 11.12 235

1999 $2,935 8.34 352

2000 $3,306 10.02 330

2001 $3,613 11.12 325

2002 $3,748 11.12 337

2003 $3,880 12.52 310

2004* $4,095 12.52 327

2005* $4,283 12.52 342

2006* $4,446 12.52 355

BUSINESS LABOR = HUMAN RESOURCES

FACTOR PRODUCTIVITY DEMANDYEAR (SALES IN THOUSANDS) (SALES/EMPLOYEE) (NUMBER OF EMPLOYEES)

*Projected figures

Moving average method

TutorialGodrej has following

manpower data form their health care division for past 6 years.

Forecast their manpower for year 2006, using 6 period and 4 period moving average method

Year Manpower level (in Nos.)

2001

2002

2003

2004

2005

2006

500

600

800

1000

1100

1300

Exponential Smoothing Weighted factor (α) is used to avoid random

errors Fm =Ft- α(At-1-Ft-1)

Fm = Forecasted Manpower

Ft = Forecasted Demand for previous period α = Smoothing constant At-1 = Actual manpower required for the

previous yearTutorial:Forecasted manpower requirement for an organisation was 500, while their actual requirement was 480. Considering the alpha value of 0.4, Compute the manpower requirement for the current period

Ratio Analysis Productivity ratio

Average number of unit produced per direct labor employee per year.

Staffing ratio Number of individual required in other jobs.

Tutorial: CafeteriaAssumptions: 1) Guest /day = 200 2)Guest/table = 3

3) Hours/day = 15 4)Drink/guest = 25) Indirect tasks

Breaks =5 %Administration = 10 %Miscellaneous = 20 %

Judgmental methods Suitable

Quantitative methods Small organizations without database State of transition.

Methods

Bottom-up / unit forecasting Each unit/ branch estimates own need Combine overall needs (current and estimated)

Top-bottom forecasting Experiences of top management and executives

Delphi Technique Achieve group consensus for forecast Steps

1. develop questionnaire2. Complilation of views3. Return to expert with another questionnaire4. Repeat until one consensus is achieved.

Supply of Human Resources

What is Supply forecasting?Measures the number of people likely to be available form

within and outside the organisation , after making allowance for absenteeism internal movements and promotions, wastage and changes in hour and other conditions of work.

Reasons for supply forecasting: Estimates no. of people and positions in future for plan

execution Clarify staff mix Assess existing staff level Prevents shortage of personnel Monitor expected future compliances with legal

requirement.

Forecasting Internal Labor SupplyStaffing Tables

Graphic representations of the number of employees currently occupying certain jobs and future (monthly or yearly) employment requirements.

Markov Analysis A method for tracking the pattern of employee

promotions up through and organization.

Markov Analysis for a Retail Company

Forecasting Internal Labor SupplySkill Inventories

Databases of employee KSA’s, education, and used to match job openings with employee backgrounds.

Succession Planning The process of identifying, developing, and tracking key

individuals for executive positions. Listings of current jobholders and persons who are potential

replacements if an opening occurs.

Succession Planning

Forecasting External Labor Supply1. The external labour market

2. Demographic change

3. Labour immobility

4. Early retirement

5. Changing employment patterns (e.g robotics in car manufacture, computer aided design/manufacture,JIT, e-commerce)

6. Changing patterns of work (e.g part-time workers, flexible workforce etc)

Planning Human Resources

Programmes

• Staff/skill shortagespromoting existing staff, Redeployment of staff, traininggetting more from existing staff, Job designExternal recruitment

• Staff surplusesstopping recruitmentNatural wastage, transfer, early retirements, Reducing overtimeShort-time working, redundancy, reducing subcontracted work

• Managerial succession planning• Career planning• Organisation and structure plans• Performance planning

IMPLEMENTATION OF THE PLANACQUISITION STRATEGIES:

Which define how the resources required to meet forecast needs will be obtained

RETANTION STRATEGIES: Which indicate how the organisation intends to keep the people it wants.

DEVELOPMENT STRATEGIES:Training and development programmes

UTILISATION STRATEGIES: which indicate intentions to improve productivity and cost-effectiveness.

FLEXIBILITY STRATEGIES: ` How the organisation can develop more flexible work arrangements.DOWNSIZING STRATEGIES:

Which define what needs to be done to reduce the numbers employed

Staffing Actions Recruiting new employees Developing existing employees Retaining key employees Restructuring or redeployment Outsourcing functions Using contingent employees Reassigning shifts