Process of Human Resource Planning

The process of HRP usually followed in a large organisation, consists of the foliowing:

Forecasting the Demand for Human Resources Most firms estimate how many employees they require in future. The demand for human

talent at various levels is primarily due to the following factors:

External challenges: These challenges arise from three important sources:

Economic developments: Liberalisation, opening up of banking sector, capital market reforms, the on-line trading systems have created huge demand for finance professionals during 1990-1995 in India. The late 90s saw the rise of manufacturing, FMCG, Pharmaceuticals, Auto-components, Healthcare and Chemical Industries in a steady manner. Consequently, the demand for Engineering and Management graduates, Scientists and Healthcare professionals has picked up in recent times.

Political, legal, social and technical changes: The demand for certain categories of employees and skills is also influenced by changes in political, legal and social structure in an economy. Likewise, firms employing latest technology in construction, power, automobiles, software, etc., have greatly enhanced the worth of technicians and engineers during the last couple of years. Technology, however, is a double-edged weapon and hence, its impact on HR plans is difficult to predict. For example, computerisation programme in Banks, Railways, Post and Telegraph Departments may reduce demand in one department (book keeping, for example) while increasing it in another (such as computer operations). High technology with all its attendant benefits may compel organisations to go lean and downsize workforce suddenly.

Employment planning under such situations becomes complicated.

Competition: Companies operating in fields where a large number of players are bent upon cutting each other’s throat (with a view to enhance their market shares) often reduce their workforce. Competition is beneficial to customers but suicidal for companies operating on thin margins. Such companies have to necessarily go ‘lean’ by reducing their workforce. On the other hand, companies that are doing well and progressing smoothly will always look for people with critical skills.

Organisational decisions: The organisation’s strategic plan, sales and production forecasts and new ventures must all be taken into account in employment planning. If Britannia Industries Ltd expects higher demand for biscuits and bread, the longterm HR plan must take this into consideration. Likewise, if it tries to venture into other lucrative fields such as milk based products and confectionery items, the demand for people possessing requisite skills in those areas in the next couple of years should be looked into carefully.

Workforce factors: Demand is modified by retirements, terminations, resignations, deaths and leaves of absence. Past experience, however, makes the rate of occurrence of these actions by employees fairly predictable.

Forecasting techniques: The manpower forecasting techniques commonly employed by modern organisations are given below:

Expert forecasts: In this method, managers estimate future human resource requirements, using their experiences and judgements to good effect.

Trend analysis: HR needs can be estimated by examining past trends. Past rates of change can be projected into the future or employment growth can be estimated by its relationship with a particular index.

Other methods: Several mathematical models, with the aid of computers are also used to forecast HR needs, e.g., regression, optimisation models, budget and planning analysis.

To proceed systematically, human resource professionals generally follow three steps. Let’s examine these steps as applied in respect of, say a commercial bank.

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