Human Resource Planning: Need and Importance, Characteristic/Features ?

Human resource planning consists of different steps in sequential order. It starts with identification of future demand and ends at preparation of action plan. As it is continuous process, it follows with the regular feedback in planning process. Human resource planning process consists of following steps:

Assessing current Human Resource:

This is the first step in HR planning process. In this step, current jobs being done and people doing these jobs are analyzed. After the analysis of current human resources skills, experience, ability and expertise of the available resources will be known. This is done on the basis of human resource inventory, human resource information system and job analysis. Business scenario can be analyzed with PEST analysis and organizational strength in terms of skills and experience are analyzed with SWOT analysis. This analysis provides information regarding the internal supply of human skills and additional skills to be hired from external labor market.

Forecasting human resource demand:

Human resource planning mainly concerns with the determination of number of employees, their skills and qualifications requirement. So, HR planning, in second step, determines future demand of the employees. External environmental forces, organizational objectives, business plan, succession plan, work force factors are seriously considered before forecasting human resource demand. If more human resources, additional skills, qualification and expertise is expected in future than those available in the organization, the situation is the human resource demand. This means if internal supply of employees with desired skills and expertise in right number is limited or insufficient, then human resource demand is made. Human resource planning should identify demand for right number of employees with right qualification and skills at right time.

Forecasting human resource supply:

After finding actual searched. It involves finding sources inside and outside the organization. Human resource can be obtained internally from different departments through job rotation, transfer and promotion. They can be obtained through external environment from educational institutions, other competing organization and labor market. Internal supply of human resource is less risky than external source because management already knows their strengths and weakness. Internal supply becomes the source of motivation but it provides the limited chance of getting more appropriate skills.

Matching demand and supply forecasts:

In this step, possible candid

s from different source will be searched to fulfill the positions available in organization. Right person will be searched at the right job from several possible candidates. Job description and job specification are compared with individual skills and competencies. More precisely, in this step, skills required and sills available will be compared in order to decide whether the source and candidate fulfill the demand or not.

Preparation of action plans:

Finally, action plans are prepared to deal with shortage and surplus of human resources. The action plan includes time bound specific activities for implementation. For this, human resource management prepares plan for recruitment and selection, training and development personal growth and career advancement of employees, reward and compensation system, promotion and transfer of employee, etc.

Assessing Current Human Resource:

Assessing the current human resource is the task of analyzing strengths and weakness of employees currently working in the organization. Human resource planning determines the human resource demand and supply in the organization. Here, need of the human resource is the shortage of skills, ability and expertise. In order to formulate the human resource planning, assessing the current human resource is the initial stage. Human resource managers are assigned this task. They analyze the human resource inventory and find the strengths, skills, ability, experience, organization. On the basis of analysis of external environment, the identify the threats and opportunity. They analyze whether existing skills and abilities can fulfill the demand of skills required to beat the threats and grab the opportunity. Moreover, human resource managers use human resource inventory and job analysis for the assessment of current human resource.

Demand And Supply Forecasting:

Demand and supply forecasting is the most important step in human resource planning process. Demand forecasting is the process of predetermination of further need of human skills and expertise in the future. At the same time, supply forecasting is the process of predetermining source of supply of human skills and expertise in vacant post to determine organizational objectives. Human resource managers conduct demand forecasting and supply forecasting one after another.

Demand Forecasting:

It is the process in which total skills in terms of number and types are estimated. Human resource demand is the situation of shortage of the skills to attain the organizational goals. If future needs cannot be satisfied by the existing skills need then, there will be demand of human resource. Human resource demand forecasting can be changed with the change in internal and external environmental factors of organizations. Demand forecasting is done in corporate and functional plans. While forecasting HR demand, managers need to consider employment trends, replacement needs, productivity, growth and expansion, absenteeism, work study etc.

In order to forecast HR demand, following important techniques can be used:

Managerial Judgement:

In this method, managers and supervisor will analyze the additional need of human resources on the basis of their self intuition. Under this technique, following approaches are used to forecast HR demand:

Bottom up approach:

In this method, operational level supervisors prepare the unit level need forecasting and submit to the departmental managers. Departmental managers analyze the departmental need with the help of supervisors report and submit to top level managers. Top level managers then prepare organizational level demand forecasts.

Top down approach:

In this method, top managers prepare department level need forecast and hand over to department level manager. They will further forward to the lower level supervisors. This approach is also called management drives approach.

Participative approach:

In this method, all level managers and supervisors sit together to analyze the present condition of HR skills and estimate the future demand.

Work study technique:

Under this techniques of demand forecasting, work to be done need to be analyzed. Total duration to complete the work, complexity of the job, chances of change in job, machinery to be used, dependency to carry out job, etc. are studied and skills, ability and expertise are estimated. Following techniques are used under this method of demand forecasting:

Work load analysis:

In this technique, the work load for the employees is calculated and compared with standard norms. The shortage is the HR demand.

Work force analysis:

Number of employees working in the organization may not be same in all the working days because of absenteeism and turnover. Efficiency of all workers may not be same. So, work force should be analyzed and additional force should be estimated. For example, if 100 employees are required to produce 500 thousand annual production in regular basis. But 10 percent additional workforce is required because of the above reason may be desirable. In this condition, 10 extra work force is required to hire to meet the production unit.

Statistical techniques:

In order to forecast the future demand more accurately for long period, statistical computer based more sophisticated techniques for human resource demand forecasting. Some of the techniques are as follows:

Trend analysis:

Forecasting can be made on the basis of past records regarding number of employees, production level, sales level, activity level, turnover ratio, etc. On the basis of these records, trend analysis is conducted and the future need of human resource is estimated.

Regression analysis:

Regression analysis is conducted with the regression equation estimated as effect of independent variable on dependent variable. The contribution of each independent variable on dependent variable inter of percentage or unit is calculated and the number of employees required can be estimated. Different statistical computer based programs are available to run regression equation.

Econometric model:

Econometric model are complex statistical technique which establish the relationship between large number of past variable which may be responsible to estimate the future need. Here, relationship of more variable can be analyzed to estimate the need of human resources at future.

Supply forecasting:

Supply forecasting is the process of estimating the source of future human resource. Management studies the human resource inventory to search the skills, ability, experience and special expertise available in the organization. It also analyzes the external environment to estimate the human resource supply from educational institution, competitive organization and labor market. It first identifies the possibility of internal supply through job rotation, promotion and transfer. Possibility of human resource supply from external source then is identified for the additional demand. So, major sources of human resource supply are internal source and external source.

HR supply can be affected by different factors. They can be local factors like population density, competition to get job, unemployment rate, rate of emigration and immigration, education system and policy, attractiveness of company, etc. and national factors like population growth rate, national economy, national plans for education and priority of development, employment regulation, foreign employment opportunities etc. 

A large number of supply forecasting techniques can be used for this purpose. Some of them are discussed below:

Labor wastage:

Labor wastage indicates the loss of human power in the organization because of technological disturbance, personal attitudes, supervisory weakness, turnover effect, peer effect, etc. Labor turnover index and labor stability index are the most important indicators for identifying the labor wastage. 

Length of service analysis:

In this method, the ratio of length of timing of employees is estimated. This helps to estimate the index of labor turnover for each service category. This provides the idea for finding the number of employees leaving with respect to number of employees employed. 

Promotion and transfer analysis:

Vacancies can also be created because of promotion and transfer of employees. This can be reliable internal source of supply of human resources. Management should analyze the rate and culture of promotion and transfer of employees. This is equally important to find the possibility of promotion and transfer of employees with matching human skills and abilities as per the demand of organizational position. 

Working environment and contract:

Organization may have different terms and conditions of working. It may or may not have the tradition of overtime working system, causal leave and absenteeism system, work shift system, etc. This may also affect in human resource supply forecasting. 

Human resource planning consists of different steps in sequential order. It starts with identification of future demand and ends at preparation of action plan. As it is continuous process, it follows with the regular feedback in planning process. Human resource planning process consists of following steps:

Assessing current Human Resource:

This is the first step in HR planning process. In this step, current jobs being done and people doing these jobs are analyzed. After the analysis of current human resources skills, experience, ability and expertise of the available resources will be known. This is done on the basis of human resource inventory, human resource information system and job analysis. Business scenario can be analyzed with PEST analysis and organizational strength in terms of skills and experience are analyzed with SWOT analysis. This analysis provides information regarding the internal supply of human skills and additional skills to be hired from external labor market.

Forecasting human resource demand:

Human resource planning mainly concerns with the determination of number of employees, their skills and qualifications requirement. So, HR planning, in second step, determines future demand of the employees. External environmental forces, organizational objectives, business plan, succession plan, work force factors are seriously considered before forecasting human resource demand. If more human resources, additional skills, qualification and expertise is expected in future than those available in the organization, the situation is the human resource demand. This means if internal supply of employees with desired skills and expertise in right number is limited or insufficient, then human resource demand is made. Human resource planning should identify demand for right number of employees with right qualification and skills at right time.

Forecasting human resource supply:

After finding actual searched. It involves finding sources inside and outside the organization. Human resource can be obtained internally from different departments through job rotation, transfer and promotion. They can be obtained through external environment from educational institutions, other competing organization and labor market. Internal supply of human resource is less risky than external source because management already knows their strengths and weakness. Internal supply becomes the source of motivation but it provides the limited chance of getting more appropriate skills.

Matching demand and supply forecasts:

In this step, possible candid

s from different source will be searched to fulfill the positions available in organization. Right person will be searched at the right job from several possible candidates. Job description and job specification are compared with individual skills and competencies. More precisely, in this step, skills required and sills available will be compared in order to decide whether the source and candidate fulfill the demand or not.

Preparation of action plans:

Finally, action plans are prepared to deal with shortage and surplus of human resources. The action plan includes time bound specific activities for implementation. For this, human resource management prepares plan for recruitment and selection, training and development personal growth and career advancement of employees, reward and compensation system, promotion and transfer of employee, etc.

Assessing Current Human Resource:

Assessing the current human resource is the task of analyzing strengths and weakness of employees currently working in the organization. Human resource planning determines the human resource demand and supply in the organization. Here, need of the human resource is the shortage of skills, ability and expertise. In order to formulate the human resource planning, assessing the current human resource is the initial stage. Human resource managers are assigned this task. They analyze the human resource inventory and find the strengths, skills, ability, experience, organization. On the basis of analysis of external environment, the identify the threats and opportunity. They analyze whether existing skills and abilities can fulfill the demand of skills required to beat the threats and grab the opportunity. Moreover, human resource managers use human resource inventory and job analysis for the assessment of current human resource.

Demand And Supply Forecasting:

Demand and supply forecasting is the most important step in human resource planning process. Demand forecasting is the process of predetermination of further need of human skills and expertise in the future. At the same time, supply forecasting is the process of predetermining source of supply of human skills and expertise in vacant post to determine organizational objectives. Human resource managers conduct demand forecasting and supply forecasting one after another.

Demand Forecasting:

It is the process in which total skills in terms of number and types are estimated. Human resource demand is the situation of shortage of the skills to attain the organizational goals. If future needs cannot be satisfied by the existing skills need then, there will be demand of human resource. Human resource demand forecasting can be changed with the change in internal and external environmental factors of organizations. Demand forecasting is done in corporate and functional plans. While forecasting HR demand, managers need to consider employment trends, replacement needs, productivity, growth and expansion, absenteeism, work study etc.

In order to forecast HR demand, following important techniques can be used:

Managerial Judgement:

In this method, managers and supervisor will analyze the additional need of human resources on the basis of their self intuition. Under this technique, following approaches are used to forecast HR demand:

Bottom up approach:

In this method, operational level supervisors prepare the unit level need forecasting and submit to the departmental managers. Departmental managers analyze the departmental need with the help of supervisors report and submit to top level managers. Top level managers then prepare organizational level demand forecasts.

Top down approach:

In this method, top managers prepare department level need forecast and hand over to department level manager. They will further forward to the lower level supervisors. This approach is also called management drives approach.

Participative approach:

In this method, all level managers and supervisors sit together to analyze the present condition of HR skills and estimate the future demand.

Work study technique:

Under this techniques of demand forecasting, work to be done need to be analyzed. Total duration to complete the work, complexity of the job, chances of change in job, machinery to be used, dependency to carry out job, etc. are studied and skills, ability and expertise are estimated. Following techniques are used under this method of demand forecasting:

Work load analysis:

In this technique, the work load for the employees is calculated and compared with standard norms. The shortage is the HR demand.

Work force analysis:

Number of employees working in the organization may not be same in all the working days because of absenteeism and turnover. Efficiency of all workers may not be same. So, work force should be analyzed and additional force should be estimated. For example, if 100 employees are required to produce 500 thousand annual production in regular basis. But 10 percent additional workforce is required because of the above reason may be desirable. In this condition, 10 extra work force is required to hire to meet the production unit.

Statistical techniques:

In order to forecast the future demand more accurately for long period, statistical computer based more sophisticated techniques for human resource demand forecasting. Some of the techniques are as follows:

Trend analysis:

Forecasting can be made on the basis of past records regarding number of employees, production level, sales level, activity level, turnover ratio, etc. On the basis of these records, trend analysis is conducted and the future need of human resource is estimated.

Regression analysis:

Regression analysis is conducted with the regression equation estimated as effect of independent variable on dependent variable. The contribution of each independent variable on dependent variable inter of percentage or unit is calculated and the number of employees required can be estimated. Different statistical computer based programs are available to run regression equation.

Econometric model:

Econometric model are complex statistical technique which establish the relationship between large number of past variable which may be responsible to estimate the future need. Here, relationship of more variable can be analyzed to estimate the need of human resources at future.

Supply forecasting:

Supply forecasting is the process of estimating the source of future human resource. Management studies the human resource inventory to search the skills, ability, experience and special expertise available in the organization. It also analyzes the external environment to estimate the human resource supply from educational institution, competitive organization and labor market. It first identifies the possibility of internal supply through job rotation, promotion and transfer. Possibility of human resource supply from external source then is identified for the additional demand. So, major sources of human resource supply are internal source and external source.

HR supply can be affected by different factors. They can be local factors like population density, competition to get job, unemployment rate, rate of emigration and immigration, education system and policy, attractiveness of company, etc. and national factors like population growth rate, national economy, national plans for education and priority of development, employment regulation, foreign employment opportunities etc. 

A large number of supply forecasting techniques can be used for this purpose. Some of them are discussed below:

Labor wastage:

Labor wastage indicates the loss of human power in the organization because of technological disturbance, personal attitudes, supervisory weakness, turnover effect, peer effect, etc. Labor turnover index and labor stability index are the most important indicators for identifying the labor wastage. 

Length of service analysis:

In this method, the ratio of length of timing of employees is estimated. This helps to estimate the index of labor turnover for each service category. This provides the idea for finding the number of employees leaving with respect to number of employees employed. 

Promotion and transfer analysis:

Vacancies can also be created because of promotion and transfer of employees. This can be reliable internal source of supply of human resources. Management should analyze the rate and culture of promotion and transfer of employees. This is equally important to find the possibility of promotion and transfer of employees with matching human skills and abilities as per the demand of organizational position. 

Working environment and contract:

Organization may have different terms and conditions of working. It may or may not have the tradition of overtime working system, causal leave and absenteeism system, work shift system, etc. This may also affect in human resource supply forecasting. 

Characteristics/Features of Human Resource Planning

HR planning is responsible to identity human power required for the future and assures availability of right person at the right job. Human resource planning possesses following characteristics:

Focus for meeting demand:

HR planning always focuses its main concern to match demand supply of human resource with required qualification. It than plans the required number of employees with desired qualification, skills, experience and expertise. In case of shortage, it plans for getting right man at right job with pre determined qualification, skills, experience. It plans training and development program to meet the skills requirement. So, HRP focuses for meeting future demand.

Goal Oriented:

HRP is linked with overall plan of the organization. It concerns to determine actual human needs with achieve organizational goal. It is the process of estimating right candidates at right time for right job so that organizational goals can be attained with minimum risk. In this way, HRP is goal focused.

Future oriented:

Plans are always prepared for future. Human resource planning is thus prepared for meeting the future demand of human resources. It is not only concerned with the number of employees but it is basically focused to the skills, experience and quality. It prepares course of action regarding how many employees of what quality at what time will be available from what source. This means all the activities of human resource planning are future oriented.

System oriented:

Each activity of HR planning is based on systematic analysis and study. These functions are performed to match demand and supply chain as per organizational need. HR planning follows scientific process of identifying future demand of human resources, systematic process of recruitment and selection, training and development etc. HRP is thus fully system oriented.

Qualitative and quantitative Analysis:

HP planning estimates required quality and skills required for assigned job. Not only this, HRP is responsible to find out actual number of employees required at different time period of future. It identifies qualification, experience and skills etc. required to each job to be done. Thus, HRP includes qualitative and quantitative analysis.

Having time frame:

HR plans are prepared to meed short term demand as well as long term demand. Thus, HRP activities are confined for time period. Long term or short term plans are prepared as per the organizational requirement. It prepares schedule for each activity. Human resource plans, which are prepared with detail analysis, are effective plans as they fit in the future.

Linking with corporate planning:

HR planning acts as a part of corporate planning. It supports top management in formulating strategic, tactical and operational level goals and plan. It assists top level management in identifying required number of human power and other resources. HR plans are prepared to attain the corporate plans.

Sub System of HRP system:

Human resource planning is sub system of human resource management system. Human resource management system cannot be complete without it. The basic condition for effective HRM system for desired output is the effective human resource planning. As HRP determines the right skills at right time for right position and plans to get the corporate goals can be attained.

Environmental influence:

"Human resource planning is future oriented".  Future is uncertain because of the change environmental forces. Organization is affected by environment change and it has to cope with change in human resource plans. Thus, human resource plan is affected by environmental changes.

Continuous process:

Human resource is essential till the existence of organization and hence human resource planning is essential till then. Changing environment also influences the organization. To cope with such influences, human resource must be competent and committed. Skills, ability and qualification must be updated. For this, human resource must plan in continuous basis.

Importance/Need of Human Resource Planning:

Every organization requires various employees to achieve predetermined goals. HR planning is responsible to identify human power required for the future. HR planning is important to improve organizational effectiveness. Organizational success or failure largely depends on the effectiveness of human resource planning. Importance or need of human resource planning can be justified with following reasons:

It reduces uncertainty:

HR planning always focuses its concern to match future demand and supply of human resource. Globalization, technological inventions and development, work force diversity, temporary work force, detaching behavior employees, etc. create uncertainty in organization. HR planning should determine the required number of human resources with required qualification. If HR planning is continuous and effective organization can manage human resources at the time of need. So, uncertainty can be reduced by HR planning.

It serves as a basis of Organization success:

HR planning activities are goal oriented. HR planning is directed at determining actual human skills required for different responsibilities to attain organizational goals. HRP plans to get employees at right time at right position with maximum possible skills and qualification. It is a continuous activity and works for uncertainty reduction. With effective human resource planning, organizations grab the opportunity within the environmental threats. HRP prepares human resources to reduce the negative influence of business environmental change and to attain the maximum benefits. Thus, human resource planning is the basis of organizational success.

It support corporate planning:

HR planning acts as a part of corporate planning. It supports top management in formulating strategic, tactical and operational level plans and goals. It assists top level management in identifying required number of human power and other resources. It prepares plans for human resource development through training and development, succession planning, etc. This means human resource planning assists to the corporate planning.

Help in getting right people:

It is more challenging to get right candidate at right job at the right time. Organization cannot manage hired human resources if they do not match for the job. But, human resource planning determines the exact skills and experience required as per job responsibilities. So, there will be no chance of hiring wrong human for specific job responsibility.

Optimal use of HR:

Human resource planning prepares plan for right number and right skills of human resource required in the organization. If the HRP is efficient and sufficient, there will be no chance of over and under staffing as well as selecting inappropriate skills. HR planning is the source of motivation as well. Human resources pay their total effort for the organizational success. Thus human resource planning helps for the optimal use of human resources.

Plans for human resource development:

 HRP plans for the human resource training and development on the basis of skill analysis. This helps to enhance the skills which increases the confidence level of employees and reduces the wastage of resources.

Personal growth:

Succession plans, career development plans or personal growth plans are also prepared in human resource planning. Effective human resource plans assure the personal growth of employees.

Basis for employee retention:

Higher job turnover ratio hinders the growth of organization. Human resource management always works to increase the tenure of employees. For this, different employee welfare programs like provident fund plan, reward and compensation plan, retirement plan, security plan etc. need to be prepared. Human resource planning prepares such plans and assists to implement. As a result, rate of leaving the job by employees will be very low. This also increases the organizational image.