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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