Human Resources Planning

Manpower Planning: Case StudyYou are management consultant. Your task is to give a report to your client ABC Hospitals on the

number of people needed to be hired and trained to start a 40 bed hospital in a rural area(200 KM from a city) with moderate specialties. Please make few reasonable

assumptions. Time given is :45 minutes (30 minutes discussion

and 15 minues presentation-no ppt needed)

Topics

1)The Pre-requisite for manpower planning; Manpower planning as an integrated part of business planning; setting manpower standard; Manpower forecasting for managerial staff, technical labor, Integrated Budget for manpower management, Controlling manpower costs.

Workforce Planning

• 2) Quantitative and qualitative approaches to manpower economy. Mathematical models and manpower planning; An econometric model for national manpower planning; Demographic and ecological models for manpower planning; Mathematical models for staff structure evaluation; Management Science and manpower analysis; Markov Chain models for manpower system; Network models for training and recruiting decision in manpower planning; A stochastic programming model for manpower planning; A simulation model for manpower planning.

Workforce Planning

3) Planning careers: Managing career structures and evaluating maintainable career policies.

4) Developing manpower strategies.

Topics

1)The Pre-requisite for manpower planning; Manpower planning as an integrated part of business planning; setting manpower standard; Manpower forecasting for managerial staff, technical labor, Integrated Budget for manpower management, Controlling manpower costs.

• Manpower Planning or Workforce Planning• Why?

• Changing demographics - accelerated “greying” in most geographies and

“younger” workforce bulge in India

• Changing attitude towards work and its role in life

• Generational differences – value shifts

• Increasing pervasiveness of technology in work and living

• Interconnectedness of people, countries and societies

• Geo-political developments

• Increasing regulatory interventions

• Changing expectation from employment – “skills” v/s “tenure”

• Employability – becoming more challenging compared to unemployment

Trends - Global Workforce

Trends - Global Workforce*United Nations, Morgan Stanley Research, November 2009

Projected Median Age: ( years) in the year 2025India-30 yearsChina-39 yearsUSA- 39 years Britain- 41 yearsJapan-51 years

India’s supply of educated talent will rise* Workforce*United Nations, Morgan Stanley Research, November 2009

Millions of People:2008: High School-5.2 2008: College- 3.62009:High School- 9.72009: College- 5.9 2010:High School-112010: College – 7

• Manpower Planning involves getting the right number of qualified people into the right jobs at the right time

• Strategic manpower (workforce) planning is not limited to hiring and retaining talent, but also anticipating future skill needs to ensure growth and stability

• Linked to business, the process involves providing for necessary resource “skill mix” to meet current and future market demands – that keeping changing

• It is integral to recruiting, retaining, retraining, redeployment and contingency planning (talent attrition) processes

Overview

Manpower Planning (also referred as Workforce Planning or Human

Resources Planning) is the process an organization uses to analyze it’s

workforce and determine steps it must take to prepare for future needs.

The process involves forecasting the future composition of the

workforce, conducting the gap analysis between the current staff and

the future staff, deciding how to close any gaps, and determining how to

best meet the needs through redeployment, training, recruiting, or

outsourcing.

Definition

*Source: SHRM

• A Strategy for acquisition, utilisation, improvement and preservation of an enterprise’s human resources. - Stainer

• An integrated approach to performing the planning aspects of the personnel function, in order to have sufficient supply of adequate developed and motivated people to perform the duties and tasks to meet organisational objectives and satisfy the needs and goals of organisational members.

- Leon. C. Megginson

• The development of strategies to match the supply of workers to the availability of jobs at organizational, regional, national or international levels.

• It involves reviewing current manpower resources, forecasting future requirements and availability, and taking steps to ensure that the supply of people and skills meets demand.

Additional Definitions…

Workforce Planning Model* SHRM

Workforce Planning

• The development of strategies to match the *supply of workers to the availability of jobs *organizational, regional, or national level• Manpower planning involves reviewing

current manpower resources, forecasting future requirements and availability, and taking steps to ensure that the supply of people and skills meets demand

Objectives –MPP(Workforce Planning)

• Link WP with Organisational Planning• Ensure the optimum use of human resources

currently employed• Assess or forecast future skills requirements• Provide control measures to ensure that

necessary resources are made available as and when required

Purpose of MPP(WP)

• Maintain and improve the organisation’s ability to attain the goals by developing strategies purporting to magnify the contribution of human resources.

Significance of Strategic WP

• Human resources skill gaps in terms of numbers, quality or availability influence and impact an organization’s ability to meet it’s business objectives

• While resource head count has direct impact on cost, the indirect impact (due to any imbalances) is far more critical for organization’s success

• Apart from determining current adequacy, shortage or surplus, forecasting future resource needs to sustain growth is an imperative

• Resource planning has a direct link with employee development, multi-skilling and succession planning

• The resource pool does not dynamically expand in direct correlation to talent needs (workers affected by layoffs may not meet organizations specific skills)

• Growing companies are increasingly challenged to acquire critical talent to achieve long term objectives with specific milestones in the short term

• Assess, forecast and meet the organizations current and future skill needs

• Analyze resource pool for trends that impact ability to meet requirements

• Optimize utilization of current human resources employed

• Provide control measures to ensure necessary resource availability as and when required

• Support the overall HR Strategy that is aligned to the organization’s strategy

• Help sustain organizational objectives and strategies by enhancing contributions of the human resources

Key Objectives of WP

• Provides managers with a strategic basis for making human resource decisions

• Allows managers to anticipate changes, rather than be surprised by events and make informed choices

• Provides managers the means of identifying workforce competencies needed in the present and future, and then selecting and developing that workforce

• It enables a shift from a transactional (incident) mode to a strategic (relationship) mode thereby enabling incorporation of new business developments and changes easily; priorities shift on the basis of collaboration with the business

• HR and recruiting professionals are viewed more as strategic business partners by the businesses they support

• Leading or participating in a manpower planning initiative might place you into the organization’s strategic business planning process

Benefits of Manpower Planning

Workforce Planning as a Strategic Business Tool

• Understanding of Manpower Planning as a strategic business tool

• Effectively engaging with key stakeholders to establish “real need”- asking questions- facilitating choice making

• Work towards “fit” with the HR planning process / integral and key part of the enterprise’s Total Resource Planning

• Linkage with organizational strategy to create business impact

Strategic Approach & Value Creation

• Set objectives/goals for the process

• Identify and engage key stakeholders

• Study the organisations - ethos, vision, mission, values and business strategy

• Scan the environment for vital information – social demographics, economic, political, technology, customer, industry , competition etc.

• Assess current vs. desired skill /competency needs based on business needs

• Craft an HR strategy and collaboratively deploy through the line managers

• Periodically evaluate the process outcomes - direct and indirect

Key Steps - WP Process

• What changes do we see in the industry / line of business?

• What kind of organization will we be – size/structure/services/geography etc.?

• What will be our business model?

• How is /will value created for our customers / stakeholders (internal / external)?

• What part of the value chain (function / process) must be retained inside and what can be outsourced?

• What critical people competencies do we need to invest in?

• How should we differentiate our choices to optimize delivery of value?

Engaging with Stakeholders

• How are our current competitors (and future players) designing their business model / organization?

• How do we benefit from labour markets that have a demographic advantage?

• How do we mitigate risk of being present in labour markets that have significant demographic disadvantages?

• What will impact our ability to source required talent?

• How will we bridge the talent gap?

• What people challenges do we anticipate?

• What managerial and leadership roles are likely to emerge?

HR Environmental Scanning

Using Kaplan & Norton’s - Balanced Score Card framework

• Balanced Score Card (BSC): a framework/lens through which an organisation develops its business strategy and/or reviews strategic gaps. It flows from the organization’s vision, mission and values.

• 4 Perspectives: i. Financial iii. Internal Business Processesii. Customer iv. Learning & Growth

• In order for organisation to achieve its outcomes on financial and customer measures (inputs), what are the key: - business / learning & development / other functional / people processes that need to be leveraged for accelerated success / and or reducing strategic performance gaps?

Linkage with Organization Strategy

WP is a key input process for the delivery of planned customer & financial outcomes.

Choosing approaches for enhancing employee competencies aligning with the “process quadrant”:

- what will be the organization design/structure?- what number of resources are required? - what are the desired skills, competencies and experience?- will they be on organization rolls or outsourced? - what is the total budget available?

Linkage with Organization Strategy

Using McKinsey’s -7 S model

To ensure superior organization performance and success, alignment needed between 7 internal aspects:

• Key process/inputting into highlighted words

Hard Elements Soft ElementsStrategy Structure Systems

Shared ValuesSkillsStyleStaff

Linkage with Organization Strategy

ContextIndian Pharmaceutical Industry

• Low degree of concentration-large number of firms with similar market shares

• Low level of R&D intensity • High level of brand proliferation• Consolidation- world wide( Abbott- Piramal , Ranbaxy- Daichi ,

Pfizer-Wyeth)• Need and incentive for Innovation – limited by low purchasing

capability of the domestic market, price controls, ease of imitation and horizontal product differentiation

• 20,000 registered units- producing drugs• Representative of industries behind the technological frontier* D Kale:

Industry Background

• Growing -rapid space in the last 4 -5 years ( McKinsey Report India Pharma 2015 )• CAGR of 16% - period -2007-2011• Gujarat - 40 % -India’s total pharmaceutical production & 17 %

exports• Employs-500,000 people -across domestic & global firms

Competitive Advantages

• Largest numbers of US FDA approved plants -outside USA

• Favoured destination - Pharmaceutical activities( R&D and Clinical Research -front runners).

• English Speaking work force & low cost R & D• Many CRO’s -setting up • Demand for trained & skilled manpower has

increased significantly

Skills in demand

• Clinical Research Associates• Clinical Research Heads• Site Monitoring Officers• Regulatory Affairs Specialists• Regulatory Affairs Professionals

Significant Demand-Supply Gap

• Demand for Biotech Graduates(16,950) closely maps with the supply of graduates(17,390)

• Actual employment -paltry figure of approximately 2,000(barely 12 percent of industry demand)

* Source: Cygnus Business Consulting and Research - August 2009

Demand-Supply Gap

• Gap -attributed to 'multiple' factors( migrating abroad for doctoral studies, fundamental 'employability gaps' in graduating students, lack of adequate access to employers)

• Employability gap – attributable to: *inadequate curriculum alignment *insufficient academia - industry Interaction *lack of awareness of -'what constitutes employability'.

Erosion of competitiveness

• Higher than acceptable rate of attrition • Rising employee costs • Global- attrition @ 10 to 12%• India- annual employee churn- @30-35 %

(Field level) & @8 -10%- Managerial level.• Higher in large scale industries (25 %)

compared to small scale industries (20.6 %).

Steps in Workforce Planning

Aligned to organizational goals and objectives:

1. Determine and project current supply of resources

2. Forecast future demands for resources through needs analysis

3. Compare forecast needs with supply projection

4. Plan and implement programs / policies

5. Evaluate effectiveness of plan and process

Steps

1. Supply AnalysisConsiders the skill mix in the organization as it exists now and projects the future needs based on anticipated business growth or retention. Nominal attrition is taken into account in considering future supply.

2. Demand AnalysisConsiders the model organization of the future and its human capital needs. Based on supply analysis input, data can be compared to identify skill and number gaps.

3. Budget AnalysisConsiders how the organization will achieve cost-effective staffing.

4. Strategic AnalysisConsiders how the organization will get what it needs.

Needs Analysis Process

*Source: SHRM

Consult with the line managers to examine skills and time utilization to determine ways the organization can use its existing human resource capabilities more fully. This will help analyze whether:

• Employees are using their time appropriately

• Work should be reallocated to optimize skill utilization

• Jobs need to be redesigned

• Productivity rates are changing

• Current staff has the ability to achieve the desired outputs

• Staff growth is exceeding the expansion of outputs

• The staff has rights kinds of skills• Skills are not being applied or are missing

Projecting Needs

*Source: SHRM

Factors to consider:

• Absenteeism

• Leave

• Capability to retain talent

• Internal movements – job rotations, transfers, promotions etc.

• Changes in work timings, other conditions of work

• Changes in policies and terms of engagement

• Use of technology

Forecasting: Supply Side

Factors to consider:

• Economic and Political climate

• Market / Industry / Competition trends

• Law and regulation

• Technology changes

• Social and demographic factors

• New positions or skill sets needed

• Positions to be changed, eliminated or left unfilled

• Job design needs, organizational structure changes, job sharing

• Adjustments in contracted labour and supervision

Forecasting: Demand Side

Understanding Attrition

• Lower salaries, lack of growth opportunities & emerging perception of instability of Industry

• Marketing & Production - highest attrition rate @ 22 %)

• Highest attrition- employees( age - 20-25 Y-large scale organization) & (age - 26-30 yearsY-SSI)

• Women employees- lower attrition, but higher absenteeism

Workforce Planning in context of specific Business Scenarios

Source:::: KPMG::: Slides 28 to 44 44

Different Sourcing Models deployed by the firms

Pure Captive Model• An internal cost center

or a 100% subsidiary company set-up to execute offshore business processes and/or IT services

• Amex, Dell, Standard Chartered, HSBC, Ford, Sun

Captive Models

Joint Venture (JV)• Joint Venture with equity

participation from customer and vendor. Customer retains control due to investments in entity.

• British Telecom - Mahindra

Strategic Alliance/Joint Venture Models

BOT and Inverted BOT • Where the Indian Provider sets

up facility and provides implementation support to start with • Customer can buy out at a

predetermined stage • Reverse scenario has also

been seen in the market• Aviva-WNS/EXL,24/7, AIG-

Polaris

Pure Outsource• Use of a India-based

provider to offshore business processes or IT services

Outsource Model

Managed Outsource• Full-/part-time resources on

the ground in India to facilitate transition, relationship mgmt and transfer of organization and domain knowledge to third party providers

India Business Models

45

The Human Resource Advantage in INDIA : very young and dynamic workforce

• 500 million+ people born after 1980• 272 universities and

nearly 14,000 colleges in India• India produces 3 million graduates,

700,000 post-graduates and 1,500 PhDs every year

• 75000 engineering graduates every year in the three southern states, 30,000 every year from Karnataka alone

• Largest pool of educated and English-speaking people in the world

Proportion of population

below 25 years (% RHS)

600

500

400

300

200

100

0

60

50

40

30

20

10

0

India

China

Indonesia

US Brazil

Japan

Germany

54% below 25 years…

• One quarter of the world’s youth live in India

• By 2013, the net addition to the productive population (aged 25-44 years) will be 91 m, or 33%

• That is an addition of 1/3rd of USA’s current population or five new Australia’s in the age group 25-44

Source: CLSA

Absolute population below 25 years (m)

46

..resulting in the upward trends in Off-shoring – The changing service portfolio

• Body shopping / Staff augmentation

• Compliance formulations

• Legacy Maintenance• Shift from onsite to offsite• Quality Assurance• Emergence of ITES such as

BPO, call centres• Moving towards products and

embedded software

• Domain expertise• Total Cost of

ownership (TCO)• Total Time to Market

(TTM)• Product co-

development• Product ownership• KPO• Large deals

growing with innovation

building onthe first wave

47

The case of Indian IT and ITES Industry

Information Technology (IT) Business Process Outsourcing (BPO)

Human ResourcesHuman ResourcesApplication DevelopmentApplication Development

Finance and AccountingFinance and Accounting

Back Office AdministrationBack Office Administration

Payment ProcessingPayment Processing

CRMCRM

Tech SupportTech Support

Application Support & MaintenanceApplication Support & Maintenance

Infrastructure ServicesInfrastructure Services

Engineering/ Design ServicesEngineering/ Design Services

Knowledge Process OutsourcingKnowledge Process Outsourcing

System Integration & ConsultingSystem Integration & Consulting

48

…with global service delivery becoming a mainstream phenomenon

Global BPO Revenue Global IT Services Revenue

India Offshore IT Services Revenue

Total Offshore IT Services Revenue

India Offshore BPO Revenue

$ Billio

n

$ Billio

nTotal Offshore BPO Services Revenue

0

100

200

300

400

500

600

700

800

2004 2005 2006 2007 2008 2009

0

10

20

30

40

50

60

70

Source: neoIT

49

Today, several large global corporations source IT-ITES from India…

OthersICTBFSI Auto Healthcare

…across industry verticals and business functions

Research / Analytics/ Engineering

Shared Services (IT / HR / FA)

Customer Relationship Management

Back Office Processing

Data Entry / Transcription

50

While cost advantage was the initial attraction…

PROCESS ACHIEVED SAVING

Transaction Processing 25%-40%

Accounting / Contact Center Services

30%-40%

IT Services 25%-50%

Finance / Insurance 40%-60%

Digital Content 30%-50%

Software/ ERP / Analytics 40%-60%

Source: GECIS

COST ELEMENT US INDIA SAVING

USD / FTE / Year Value Share Value Share On US Cost base

Personnel Costs42,927 73.3% 6,348 48.4% 85%

IT/ Telecom Costs2,400

4.1%3,770

28.7% -57%

Office Facility Costs3,700 6.3% 1,991 15.2% 46%

Other G&A Expenses 9,571

16.3%

1012.5

7.7% 89%

Total Cost 58,598 100% 13,121 100% 78%

Source: NASSCOM, E-value serve AnalysisBlended rate for voice and non-voice operations

• Significantly favorable total transaction cost economics

• Gross savings on factor cost up to 78% • Net realized savings ranging between

25-60%

51

…access to a large, highly qualified pool of talent is the real force

100% > 1 billion

45.1%

47.9%

7.0%

0-19 years

20-59 years

Over 60years

Indian Demographic Profile

56

160

284

430522

670

842

1,045

0

200

400

600

800

1,000

1,200

1990-91 1996-97 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 E

'000s

• Favourable demographic profile • High annual graduate turnout• Attractive employment prospects –

beyond monetary compensation• Rapid scaling up of employment in the

sector

Source: NCAER, Registrar general of India

Source: NASSCOM

292,000

195,354

103,44082,409

60,914 45,145

India China Japan Russia US SouthKorea

Undergraduate engineering degrees granted in 2003

52

Food for thought……

• Questions to be asked :

• Is my recruitment machinery geared up to recruit multiple times the numbers that I am hiring toady? (Sourcing Strategy)

• Am I developing middle managers of tomorrow today? (Middle Management Development)

• Am I making a compelling employment promise and delivering it? (Employer Branding)

• Are all my associates motivated and aligned to organisations goal? (Employee Engagement)

• Do we communicate – effectively and regularly (Employee Communication)

• Are our associates living and breathing the same promise and commitment? (Culture & Values)

53

And hence there is an urgent need for Workforce Shift in India

• The Situation today

–Limited linkage of Workforce Development Systems to Labor and Market economic needs–Inefficient Public Education System–Uncertain Employee Career Path –No ongoing support for lower rung of workers–Fragmented Governance Structures

• The Future Vision

– Establish Linkages from Economic Needs to Workforce Development

– Develop Talent with strong Foundational Skill

– Help workers in career management – Strengthen work support systems– Create the framework for correct

Governance and Accountability

India need to develop a skilled labor force to achieve “Workforce Development” aligned to economic realities

54

Point of View on the Future Workforce…

• The workforce is in the midst of a dramatic transformation

• There will be a huge demand of unskilled and semi-skilled workers from country like India to get absorbed in the first world nations

• Demographic, economic, socio-political, and technological shifts are driving five workforce trends:

– Smaller and Less Sufficiently Skilled– Increasingly Global– Highly Virtual– Vastly Diverse– Autonomous and Empowered

SmallerSmaller

GlobalGlobal

VirtualVirtual

DiverseDiverse

EmpoweredEmpowered

Unstoppable Trends

55

Address the complete value chain differently for better employability (slide 1 0f 2)

Stu

dent

s School EducationPrimary School

Secondary School

College Education

Stu

dent

s

Em

plo

ymen

t O

pp

ortu

nit

ies

Employers

Parents, Friends, Society

Dept. of School Education Employment ExchangeDept. of Labor

Dept. of Higher EducationDept of Technical Education

Dept. of Industry Dept of CommerceDept. of ITOther departments

Department of Finance

Department of Planning

56

Address the complete value chain differently for better employability (slide 2 0f 2)

Parents, Friends, Society

EconomyVarious industry sectors

Department of Planning and Finance, Government

Supplier Input Process Output Customer

Trained Workforce as per industry needs

Identify master skillsIdentify special skillsAlign educational inputs

Raw Talent andGrowth projectionsWorkforce forecasts by various skills

National Council and Nodal Agency for workforce development

Various industry departments supporting nodal agency

57

Company Level - Future of Talent Management

• • To remain competitive, organizations

must adopt:

– Predictive Workforce Monitoring and Strategic Talent Decision Making

– Flexible and Anticipatory Talent Sourcing

– Customized Rewards and Communications

– Distributed and Influential Leadership– Unified and Compassionate Cultures

A radically different workforce requires a rethinking of approaches to managing talent

Predictive Monitoring

Predictive Monitoring Flexib

le Sourcing

Flexible Sourcing

Custom Rewards

Custom Rewards

Distributed Leadership

Distributed Leadership

Unified Cultures

Unified Cultures

Talent Implications

58

The organizations have to Align their People Strategies to stay competitive

RewardRewardBase Pay

Short-Term and LT

Incentives

Benefits

DevelopDevelop

Development

Training

Promotions

AlignAlign

Performance Management

EngagementSourceSource

Candidate Experience

On-Boarding

Processes

Succession Management

Recognition

High-Potentials

HR Strategy-HR Structure-HR Roles-HR Delivery/Technology

Communications

Organizations need to focus on‘Align’ to create the greatest leverage

There are challenges and potential for improvement in all the four areas

The firms able to tackle all the areas would emerge as successfulin the long run

60

EmployeePromise

The ExternalBrand

And finally, the Brand Promise will be delivered through employees

The Organization

Holistic Package of Goods and Services

Some of the benefits are real, other are intangible, and even imaginary The Customers

It’s employees who make brands come alive for their organizations!

It’s employees who make brands come alive for their organizations!

Brand AlignmentCustomer Promise

Attitude, discretionary

effort, creativity,

enthusiasm, innovation,

commitment, so on . . .

Capital, leadership,

vision, direction, etc.

The Employees

CustomerPerceived Value

60

• 2) Quantitative and qualitative approaches to manpower economy. Mathematical models and manpower planning; An econometric model for national manpower planning; Demographic and ecological models for manpower planning; Mathematical models for staff structure evaluation; Management Science and manpower analysis; Markov Chain models for manpower system; Network models for training and recruiting decision in manpower planning; A stochastic programming model for manpower planning; A simulation model for manpower planning.

Workforce Forecasting

• Demand side:• Process of estimating the future quantity and

quality of people required • Factors to be considered - both internal and

external• External factors -refer to economic climate,

market trends, competition, law and regulation, Technology changes, social and demographic factors.

Workforce Forecasting

• Supply Side:• Measures the number of people likely to be available

from within and outside an organisation• Factoring : *in absenteeism *capability to retain talent *internal

movements & promotions *changes in work timings & *other conditions of work & *identifying jobs -likely to be redundant into the future

of the Planning horizon.

WP & Business Scenarios

• Impending M& A and Post M&A• Planned redundancies• Entry- new geographies/markets- India & outside• Competitor Activity• Geo-Political changes• Changing Regulations-India & outside eg: FDA,

Global Trade negotiations• Sales-not in line with forecast• Industrial Relations( settlement with workers)

WP & Scenarios

• How flexible , are the people resources, nature of deployment & skill profiles, in responding to favourable and unfavorable developments in the business environment?

• In an inorganic move, what are the ‘new skills’ that are strategically important for us to pay attention and enhance retention? what are some of the redundancies that are likely to flow from ‘ one role- two persons’ ?

• What is the degree of risk associated with Industrial Relations going awry & dependency on sole manufacturing unit(s)?

WP Models

• Technique of using opinion or informed judgment • Matrix models- executive and management

manpower planning. • Quantitative techniques: *three categories: statistical methods, operations

research methods, and network techniques. • Computer simulation models ( including the

Weber model) *10 criteria

Managerial Judgment

• Most typical method for smaller organisations • Managers simply sit down, think about their

future work load and how many people they need

• Adopts both the ‘bottom-up' and ‘top-down’ approach• Delphi Technique- an example

Work Study (O&M)

• Apply work measurement to know how long operations should take and the amount of labour required

• Industrial Engineering/Organisations & Methods

• Work-load Analysis *Work-force Analysis * Time and Motion Study

Work Study…..

• In work load analysis the manpower expert needs to find out:

*sales forecasts, work schedules and thus determine the manpower required per unit of product

• In work-force analysis: * Factoring in -margin for absenteeism -labour turn over & -idle time on the basis of past experience

Statistical methods

• It is the technique of using high speed computers and new mathematical techniques

• The main statistical tools are *Ratios and Trend analysis

*Regression analysis *Bureks -Smith model

Ratios & Trend Analysis

• Ratios, which are calculated for the basis of past data relating to number of employees -in different levels

• Future manpower requirement is calculated on the basis of established ratios

• Depends on accuracy of records and realistic estimate of future activity levels and

the effect of improved performance

Regression Analysis

• The technique is used to estimate the workforce requirement of an organization's at

a future point of time • Used when dependent and independent variables are functionally related to each

other

Burek Smith Model

• Mathematical model -developed for personnel forecasting • En = (Lagg+G )1/x Y *En – it is estimated level of personnel demand inn planning period *Lagg - it is overall turnover or aggregate level of current business activity in rupees. *G- is the total growth in business activity *anticipated through period n in terms of rupees. *X-it is the average productivity improvement *Y-is conversion figure relating today’s overall activity

Delphi

• The objective of the Delphi technique is to *predict future situations by integrating the independent opinions of experts • A major goal of the Delphi technique is to *avoid direct confrontation of experts *some individuals may be unduly influenced by

others because of status differences, resultingin compromise of good ideas

Nominal Group Technique

• Group of Individuals- meet face to face-to forecast ideas and assumptions and priorities ideas

Manplan

MANPLAN was developed by General Electric• to overcome human resource modelling

problems (such as the overwhelmingmathematical complexity that can be broughtinto such planning efforts).

• Merit of MANPLAN is that running - computer model is relatively inexpensive

Manplan -GE

• This computer program needs for its forecast, asking such questions as: * How many different product lines do you manufacture? * How many months does your forecast cover? • Once these questions are answered and fed into the

computer, the computer can produce: *forecast estimating average human resource levels required to meet product demand- also provides

for ranges of possible human resource needs for any period

Markov Models

• The information for forecasting internal supply can often be treated as:

* if it were independent of the external environment and

* is often available within the firm• Matrix representing the probability of transition from

one job classification to another can be prepared for the relevant classifications

*Markov-chain theory can be used to generate a forecast of internal manpower supply.

Markov Models

Assumption: future employees in any level of the organisation are determined not so much by the numbers that are required BUT by the promotions & recruitment encouraging movement up through the system

Hence known as ‘Push’ model *Young & Almond model- example Employee in a particular rank – has a fixed probability of

promotion in a given year Employees receiving promotions depend on the number of

eligible staff in the rank below

Markov

• There is no requirement for a vacancy to exist in the higher rank

• Central equation: n(t+1)=n(T)P +R(t+1)r n(T)- vector of stocks at time t: number of employees in

each rank/level P: matrix of transition probabilities between each pair of

ranks r: vector of probabilities of a recruit starting off in each

particular rank/level R(t): number of new recruits at time t

Renewal Models

• Basic assumption-requirements are made by changes in promotions and recruitment rates

• Employees are ‘pulled’ through the system to meet pre determined requirements

• Hence- known as ‘pull ‘ models• Useful when future manpower requirements

are known within reasonable limits & what flows are required to meet the must be identified

Renewal Models

• Push and Pull methods- used independently has limited value

• Now being used in combination• Disadvantages: *Highly mathematical- becoming more complex * Non savvy HR Managers- find challenges * Many mathematically savvy Managers are not

in HR

Scope of the Topic

To develop the analytical abilities for understanding the implications of continuous changes in the manpower situation of KEC and so as to advise and assist the authorities concerned in their Manpower planning and development activities.

To enable the employees/HR to acquire the knowledge and skill necessary for preparing the manpower plan of a SBU, or to understand such a plan drawn up by it. Advantages of Manpower Planning: • Checks - corporate plan of the organization.• Identifies - Shortages and surpluses• Guides - Recruitment and selection programmes• Reduces - Labour cost• Identifies - changes in technology, marketing, management etc. and the consequent need for new skills and new categories of employees.• Identifies - and plan for physical facilities and proper working conditions.• Identifies - the available talents - develop those talents. • Helps in growth and diversification of business.

• Analysing the current manpower inventory -Type of organization -Number of departments -Number and quantity of such departments -Employees in these work units

• Making future manpower forecasts Demand forecasting-Expert Forecasts-Bottom up technique-Delphi technique-Nominal group technique-Ratio analysis-Regression analysis

Supply forecastingInternal Supply-Transfer-Promotion

External Supply-Campus-Web-Advertisement-Partners in progress

• Developing employment programmes

• Design training programmes

Manpower planning procedure

Internal Environment (Micro) • Organizational Objectives• Production• Organizational Structure• Finance External Environment (Macro)• Technological• Customers• Human Resources in the country• Social including religious• Economic• Political• Governmental• Legal

Aspects to be considered for MPP

• The future is uncertain • Cautious attitude of top management • Problem of surplus staff • Time consuming activity • Expensive process

Challenges of MPP

Steps in project planning:

-Defining the milestone-Detailing of activities-Setting timeline- both start and end date-Allocating resources-Monitoring and control

Project Planning

A Gantt chart is a type of bar chart that illustrates a project schedule. Gantt charts illustrate the start and finish dates of the terminal elements and summary elements of a project.

Gantt chart:

• Human Resource Audit

What is a HRD Audit* HRD Score Card 2500 (Dr TVRao )

• Comprehensive evaluation • Current HRD systems and strategies, structure

and competencies, culture , and impact in the context of short term and long term business plans of an organization

• Attempts to assess-competency requirements of employees to achieve the plans

What is a HRD Audit* HRD Score Card 2500 (Dr TVRao)

• In the context- competency requirements, the following assessments:

1)The competencies needed at present2)Existing systems to develop these competencies3)The adequacy/inadequacy or maturity levels of these

systems4)Existing structures and competencies and their

adequacy/inadequacy5)Commitments levels exhibiting mechanisms- to further it or

build work motivation6)Work culture and methods of building the same

Why would an organisation undertake a HRD Audit?

Focus of the audit* Dr TV Rao

• Culture building strategies• Quality and customer orientation• Communication strategy• Efficiency management and cost reduction

strategy• Employee engagement strategy

HRD Audit dimensions*Dr TV Rao

• HRD Systems and Strategies- 840 + 160 pointsa)HRD Systems: Objectives, Structure,

Understanding implementation and Business relevance of workforce planning , Performance Management, Training, Recruitment t, OD & Self – renewal

b)HRD Strategies: Quality, Cost, Customers, Culture Building, Entrepreneurship, communication & commitment

HRD Audit dimensions*Dr TV Rao

• HRD Competencies: 200+100+100+60+40 pointsa) Competencies of HRD staffb) Learning attitude of Line Managersc) Empowering styles of Top Managementd) Learning orientation of Non- Supervisory staffe) Credibility of HR Department and its Activities

HRD Audit dimensions*Dr TV Rao

• HRD culture and values: 160 + 340 pointsa)OCTAPACE Valuesb) Organisation Culture

• HR Impact and Alignment: 250+200+50 pointsa) Talent Managementb) Intellectual Capitalc) Financial contributions

Who will do the Audit

• External• Internal• Internal team – HR specialists• In house team or internal taskforce – Line

Managers and HR specialists• In house team- no HR specialists

Methods of Audit

• Interviews• Group discussions/workshops• Observation• Analysis- records and documents• Questionnaire

Dimensions of the Audit

• Extent of clarity of objectives ( 1/10 points)• How well structured is the system? How

complete and scientific are the elements?How comprehensive are they?( 2/20 points)

• How well are they understood?(1/10 points)• How well are they implemented?(2/20 points)• Are they resulting in tangible achievement of

business goals: Extent to which it meets organisation goals( 1/10 points)

Each dimension/sub dimensions

• Definition• Criteria • Standards*Workforce planning as and example:

Workforce planning

1) Clarity of objectives: Extent of clarity, existence of documentation, efforts made to clarify, comprehensiveness/coverage of efforts

2) Extent to which the process is well structured : situation analysis, workforce demand analysis, workforce supply, workforce plan

3) Extent to which it is understood: awareness, understanding of the objectives, understanding of the functioning of the system & understanding the benefits of the system

4) How well it is implemented: objectives, design and structure, implementation and functioning & benefits derived

SHRM metrics/templates• Mtrics provide a number of factors that can be measured to show how HR

contributes to the business. • Measures such as absence rate, health cost per employee, and HR expense

factors show that HR has a sense of the importance of human capital measurement in supporting business objectives.

• The following calculators are basic HR and business metrics to help measure your company’s absence rate, cost per hire, the value of your human capital and human capital return on investment.

• These calculators are not meant to be an all-inclusive listing of HR or general business metrics, only a listing of most commonly used metrics.

• More comprehensive guides, titled How to Measure Human Resource Management, by Jac Fitz-enz and Barbara Davison, and “Investing In People: Financial Impact Of Human Resource Initiatives” are available for purchase at the SHRM Store.”

Sample- DiversityAverage Employee Age The average age of an organization’s total employee populationDiversity Hire Ratio The percentage of individuals hired externally who self-identified as a member of a diversity category (i.e.

Disabled, minority, etc.)Diversity Percentage The number of employees who self-identified in a diversity category as a percentage of total headcountPercentage Diversity At Executive Level The number of executive level employees who self-identified as belonging to a diversity category (i.e.

Disabled, minority, etc.)Percentage Diversity At Management Level The number of management level employees who self-identified as belonging to a diversity category (i.e.

Disabled, minority, etc.)Total Females As a Percentage of Headcount The number of executives who are female as a percentage of headcountPercentage Females At Executive Level The number of employees who are female as a percentage of headcountTotal Females at Management Level The number of management employees who are female as a percentage of headcount

HRM standards*SHRM website

• Representing more than 250,000 members in over 140 countries, the Society serves the needs of HR professionals and advances the interests of the HR profession.

• Consistent with SHRM's role in promoting professionalism in the HR field, the Society began an intensive effort to sponsor the development of organizational standards in 2009.

• SHRM's intent was to capture and codify the threshold customs, procedures, and practices of our most effective practitioners in HRM. This meant assembling interested parties whether they be members, non-members or laymen to the HR field.

• Through our relationships with both the American National Standards Institute (ANSI) and the International Organization of Standardization (ISO), SHRM has spearheaded the establishment of professional HR standards in the United States and around the globe.

Published StandardsANSI/SHRM 06001.2012, Cost-per-Hire• Designed as a tool to allow an organization to determine

accurate and comparable costs of recruitment through a standard algorithm to calculate the recruiting costs to be incorporated into cost-per-hire. Standard is structured at a high level. Specific consideration and responses are also addressed for consideration by individual organizations based on specific hiring environments and requirements.

• Errata: On page 16 of the standard, in Table 4, the first column should be labeled "Internal Costs", not "External Cost

• http://www.shrm.org/HRStandards/PublishedStandards/Pages/ANSISHRM060012012,Cost-per-Hire.aspx

Published Standards

• ASIS/SHRM WPVI.1-2011, Workplace Violence Prevention and Intervention Standard (In conjunction with ASIS)Provides an overview of general security policies, processes, and protocols that organizations can adopt to help prevent threatening behavior and violence affecting the workplace and better respond to and resolve security incidents involving threats and episodes of actual violence

Published Standards• Provides an overview of general security policies, processes, and protocols

that organizations can adopt to help prevent threatening behavior and violence affecting the workplace and better respond to and resolve security incidents involving threats and episodes of actual violence.

• Standard presents practical definitions of workplace violence that includes a continuum of problematic behavior, and that classifies incidents based on the relationship of perpetrator to victim.

• It outlines security prevention and intervention strategies as well as the procedures for detecting, investigating, managing and addressing threatening behavior or violent episodes that occur in a workplace or in association with it or its employees.

• Standard is based on the ASIS International Workplace Violence Prevention and Response Guideline.

• ww.shrm.org/HRStandards/PublishedStandards/Pages/ASISSHRMWPVI1-2011.aspx

ELEMENTS FOR HR SUCCESSSHRM’s competency model

ONE technical competency and eight behavioral competencies

• Human Resource Technical Expertise and Practice — the ability to apply the principles and practices of human resource management to contribute to the success of the business.

• The eight behavioral competencies, listed and defined below, allow human resource professionals to leverage their technical competence to contribute to organizational success.

• Relationship Management —the ability to manage interactions with and between others with the specific goal of providing service and contributing to organizational success.

• Consultation—the art of providing direct guidance to organizational stakeholders (e.g., employees and leaders) seeking expert advice on a variety of situations or circumstances.

• Organizational Leadership and Navigation —the ability to direct initiatives and processes within the organization with agility and to gain buy-in from stakeholders.

• Communication—the ability to effectively exchange and create a free flow of information with and among various stakeholders at all levels of the organization to produce impactful outcomes.

• Global and Cultural Effectiveness —the art of managing human resources both within and across borders and cultures.• Ethical Practice—the integration of core values, integrity and accountability throughout all organizational and business

practices.• Critical Evaluation —skill in interpreting information (e.g., data, metrics, literature) to determine return on investment

(ROI) and organizational impact in making business decisions and/or recommendations.• Business Acumen—the ability to understand business functions and metrics within the organization and industry. • .

http://www.shrm.org/HRCompetencies/Pages/Model.aspx

**This competency model is designed for developmental purposes only and is intended as a resource for HR professionals

• How to read the full competency model• Each competency has five distinct components:• Title. A distinct competency title• Definition. A one-sentence-long overall definition• Sub-Competencies. Competencies related to and/or subsumed by

the relevant general competency.• Behaviors. A list of defining behaviors that are demonstrated by

individuals at the highest level of proficiency on the indicated competency

• Proficiency Standards. Standards for proficiency at the four career stages (entry, mid, senior, and executive). Each proficiency standard represents a behavioral standard in which an HR professional at the relevant level should engage to be successful.

D Ulrich & W Brockbank

• The 2012 Human Resource Competency Study — is touted as “the largest global study ever on human resource professionals,” and it includes data from 20,000 respondents from around the world. In it, the researchers from Ulrich’s RBL Group and the University of Michigan Ross School of Business found that “HR managers play an integral role in the overall effectiveness of a company’s performance.”

• The survey went on to point out six specific competencies that successful HR professionals must be:

2012 Human Resource Competency Study• Strategic positioners who understand evolving business contexts,

stakeholder expectations and business requirements, and be able to translate them into talent, culture and leadership actions.

• Credible activists who build relationships of trust and have a clear point of view about how to build business performance.

• Capability builders who define, audit and create organization capabilities required for sustainable organizational success.

• Change champions who initiate and sustain change at the individual, initiative and institutional levels.

• HR innovators and integrators who look for new ways to do HR practices and integrate those separate practices to deliver business solutions.

• Technology proponents who use technology for efficiency to connect employees and to leverage new communication channels, such as social media.

2012 Human Resource Competency Study• “We can empirically show that when HR

professionals demonstrate these six competencies, they are seen as personally effective and they impact business performance,” said study co-director Wayne Brockbank, a professor at Michigan Ross and director of its Center for Strategic HR Leadership

•

HR Audit

– Audits of business personnel budgeting – objectives and need

– Human resource accounting – meaning and definition and recent trends in industry, treatment of people as assets

– Audit of executive turnover – study of attrition rate in industry and across industry, causes and analysis.

– Auditing of IR – settlements and negotiations– Auditing of Industrial Committee Management –

meaning and scope

HR Audit

– Costs Involved - budgeting– Recruitment, Training & Job evaluation – meaning,

scope, design, analysis– Compensation Planning – need, how, why, when in

an organization

Job Analysis Defined

Job analysis is the process of studying jobs to gather, analyze, synthesize and report information about job responsibilities and requirements and the conditions under which work is performed.

Modified from Heneman and Judge (2009)

117©SHRM 2009

Historical Perspective

• Frederick Taylor (1911) Scientific Management– Replaced rule-of-thumb work methods with scientific

study.– Scientifically select, train and develop workers.– Cooperate with workers to ensure that scientific

methods are followed.– Divide work such that managers apply scientific

principles and workers implement them.– Find the “one best way” to accomplish any task.– Utilized time and motion studies to analyze tasks.

118©SHRM 2009

Historical Perspective

• Elton Mayo (1927-1932) Hawthorne Studies – Informal organization affects productivity.– Work group norms affect productivity.– The workplace is a social system.– Work is more than tasks and duties.

119©SHRM 2009

Organizations in the New Millennium• Evolving work methods.• Organization structure.• Reporting relationships.• Global demands.• Knowledge workers.

120©SHRM 2009

Foundation of all HR practices

JOB ANALYSIS

HR Planning

Staffing

Training

PerformanceManagement

Safety&

Health

Rewards

EmployeeRelations

LegalCompliance

121©SHRM 2009

Foundational• HR planning:

– Work design.– Skills required.

• Staffing:– Advertising in labor

market.– Selection criteria.– Selection methods.– Succession planning.

• Training:– Training needs for new

employees.– Training program content.– Training evaluation.

• Performance management:– Performance standards.– Evaluation criteria.– Appraisal forms and methods.– Feedback and communication

with employees.

122©SHRM 2009

Foundational• Safety and health:

– Training required.– Protective equipment

needed.– Hazard communications.– Accommodations for

medical impairments.• Rewards:

– Value of each job for compensation purposes.

– FLSA status.– Pay adjustments.

• Employee relations:– Work rules, policies and

procedures.– Clear lines of authority and

responsibility.– Union work settings.

• Legal compliance:– Recordkeeping.– Accommodations.– Training.– Compensation practices.– Equal employment practices

and affirmative action.

123©SHRM 2009

Information Collected• Data, people, things.• Tasks or job functions:

– What gets done on the job.– Essential functions.

• Scope of responsibility:– Supervision received.– Supervision provided.

• Tools and equipment used on the job:– Computer software.– Hand tools.– Job-related equipment.

124©SHRM 2009

Information Collected• Work context and environment:

– Physical environment (discomfort, hazards).– Work schedule (hours, days).– Travel required.

• Social/relationship factors:– Nature of social contacts.– Level of social contact.

• Decision-making authority:– Judgment and discretion.

125©SHRM 2009

Information Collected• Personal and physical demands of the job:

– Stand, sit, reach, lift, walk.• Knowledge, skills and abilities required to

perform job tasks:– Education.– Experience.

• Certification (desired) and licensure (required):– Certification (HR).– Board licensure (physician, engineer).

126©SHRM 2009

Job Requirements MatrixTasks KSAs

Specific Tasks

Task Dimensions

Importance (% of time)

Nature Importance to tasks (1-5)

Arrange schedules with office assistant to ensure that office is staffed.

Supervision 30% Knowledge of office policies and operations.

4.9

Assign office tasks to office assistant and volunteers.

Supervision Knowledge of office policies and operations.

Type/transcribe letters, memos and reports.

Word processing 20% Knowledge of typing formats and software.

3.1

See Exhibit 4.3 on page 151 of Heneman and Judge, Staffing Organizations, 2009.

127©SHRM 2009

Data Sources

• Job incumbent• Supervisor or manager• Former jobholders• Job analyst• Subject matter experts (SMEs)• Industry resources• Professional organizations like SHRM

128©SHRM 2009

Dictionary of Occupational Titles• Dictionary of Occupational Titles is

now online on O*Net.

• Comprehensive searchable database:

http://online.onetcenter.org

129©SHRM 2009

O*Net Homepage

130©SHRM 2009

Data Collection Methods• Observation• Work sample• Work diary• Interview• Questionnaire• Perform the job• Background records• Multiple methods

131©SHRM 2009

Outcomes of Job Analysis• Job description:

– Systematic, detailed summary of job tasks, duties and responsibilities.

– Assures that employees and managers are on the same page regarding who does what.

• Job specification:– Detailed summary of qualifications needed to

perform required job tasks.• Performance standards:

– Establishes the level of satisfactory performance.

132©SHRM 2009

Job Description

• The job description should include at least the following elements:– Job title.– Job code.– FLSA status.– Job summary.– Essential job duty task statements.– Job context or any unusual elements.– Date created.– Revision number and date.

133©SHRM 2009

Job Specification• The job specification should include at least the

following elements:– Job title.– Job code.– Job summary.– Knowledge required to perform job.– Skills required to perform job.– Abilities required to perform job.– Education required.– Experience required.– Licensure required or certification desired to perform

the job.– Date created.– Revision number and date. 134©SHRM 2009

Performance Standards

• Performance standards define the level of expected quality and quantity of work produced on the job.

• Line managers’ input in developing performance standards is essential.

• Standards must be consistent and reasonable.

• Performance standards help the employee gauge performance on the job.

135©SHRM 2009

• Human resource accounting – meaning and definition and recent trends in industry, treatment of people as assets

• -American The American Accounting Society Committee on Human ResourceAccounting defines it as follows:

• “Human Resource Accounting is the process of identifying andmeasuring data about human resources and communicating this information tointerested parties.”

• In simple terms, it is an extension of the accountingprinciples of matching costs and revenues and of organizing data tocommunicate relevant information in financial terms. Association Committee :

10 important Objectives of Human Resource Accounting :

• a. To facilitate effective and efficient management within an organisation for human resources.• b. To provide information of changes in the structure of manpower to the management.• c. To provide basis to the future investors in making better decisions about investment in human

resources.• d. To provide qualitative information on human resources. (HR)• e. To measure the costs incurred on human resources by firms.• f. To evaluate the return on investment on human capital.• g. To communicate the organisation and the public at large about the worth of human resources

of an organisation.• h. To know whether the human resources have been properly utilised and allocated.• i. To help the persons interested in the human resources are giving a return equivalent to their

worth or not.• j. To help in development of Management principles by clarifying the financial consequences of

the various practices.

http://www.preservearticles.com/2012051932547/10-important-objectives-of-human-resource-accounting.html

• Sir William Petty was the pioneer in this direction. • The first attempt tovalue the human beings in monetary terms was made by

him in 1691. • Pettyconsidered that labour was “the father of wealth’ and it must be

included in anyestimate of national wealth without fail. • Further efforts were made by WilliamFar in 1853, Earnest Engle in 1883. • The real work started only whenbehavioural scientists vehemently criticized

the conventional accountingpractice of not valuing the human resources along with other resources.

• As aresult, accountants and economists realized the fact that an appropriatemethodology has to be developed for finding the cost and value of the people tothe organization.

• For a long period of time, a number of experts have worked onit and produced certain models for evaluating human resources.

Historical Development Of H.R. Accounting

Eric G Falmholtz First stage (1960-1966)- Beginning of academic interest in the area of HRA

• Second stage(1966-1971)- The focus here was more on development and validating deferent models

• Third stage(1971-1976)- This period was marked by a widespread interest in the field of HR R.G. Barry experiments contributed substantially during the stage

• Fourth stage(1976-1980)- This was the period of decline in the areas of HRA

• 5 th stage(1980 onwards)- There was a sudden renewal of interest in the field of HRA

Methods Of HRA : Cost approach Economic value approach

• COST APPROACH • HISTORICAL COST OPPORTUNITY COST REPLACEMENT COST • The historical cost of human resources is the sacrifice that

was made to acquire and develop the resource a calculation of what would have been the returns if the money spent on HR was spent on something else the cost that would have to be incurred if present employees are to be replaced.

• Assumptions Underlying HR Accounting : • People are valuable organizational resource Human

resource value is influenced by management style HRA information is needed

ECONOMIC VALUE APPROACH

• PRESENT VALUE OF FUTURE EARNINGS COMPETITIVE BIDDING MODEL

• VALUE TO ORGANIZATION • Value of an individual is the present worth of the services that

he is likely to render to the organization in future an internal market for labor is developed and the value of the employees is determined by the managers.

• Managers bid against each other for human resources already available within the organization.

• The highest bidder ‘wins’ the resource. • This method helps in determining what an employee’s future

contribution is worth today.

• Monetary value based approaches: • i) The Lev and Schwartz Model • ii) The Eric Flamholtz Model iii) Morse Model

The Lev and Schwartz Model(1971):

the value of human resources is ascertained as follows 1. All employees are classified in specific groups according to their age and skill. • 2. Average annual earnings are determined for various ranges of age. • 3. The total earnings which each group will get upto retirement age are calculated.• 4. The total earnings calculated as above are discounted at the rate of cost of

capital. The value thus arrived at will be the value of human resources/assets. • 5. The following formula has been suggested for calculating the value of an

employee according to this model –•

CONT.. Vr = ÓTt=r I(t)/(1+r)t-r, Where, V = the value of an individual “r“years old. I(t) = the individual’s annual earnings upto the retirement t = retirement age r = present age of the employee R = discount rate:

• CONT.. Vr = ÓTt =r I(t)/(1+r)t-r , Where, V = the value of an individual “ r“years old. I(t) = the individual’s annual earnings upto the retirement t = retirement age r = present age of the employee R = discount rate

Limitations- Lev & Schwartz

• 1] It is essentially an input measure .It ignores the output i.e.

productivity of employees. • 2] Service state of each individual employee is not considered. • 3] The training expenses incurred by the company on its

employees are not considered. • 4] The attrition rate in organization is also ignored. • 5] Factors responsible for higher earning potentiality of each

individual employees like seniority, bargaining capacity, skill, experience etc. which may cause differential salary structure are also ignore.

Flamholtz Model (Reward Valuation method) (1971).:

• This is an improvement on ‘ present value of future earnings model’ since it takes into consideration the possibility or probability of an employee’s movement from one role to another in his career and also of his leaving the firm earlier, that his death or retirement.

• The model suggests a five steps approach for assessing the value of an individual to the organisation :

• 1. Forecasting the period will remain in the organisation, i.e., his expected service life; • 2. Identifying the services states, i.e., the roles that the might occupy including, of

course, the time at which he will leave organisation; • 3. Estimating the value derived by the organisation when a person occupies a particular

position for a specified time period; • 4. Estimation of the probability of occupying each possible mutually exclusive state at

specified future times; and • 5. Discounting the value at a predetermined rate to get the present value of human

resources.

MORSE MODEL (1973):

• Under it the value of human resources is equivalent to the present value of the net benefits derived by the enterprise from the service of its employees.

• The following steps are involved under this approach: • 1. The gross value of the services to be rendered in future by the

employees in their individual and collective capacity. • 2. The value of direct and indirect future payments to the

employees is determined. • 3. The excess of the value of future human resources (as per (1)

above) over the value of future payments (as per (2) above) is ascertained. This represents the net benefit to the enterprise because of human resources.

Non- monetary value -based approaches::

• Likert Model ii) Ogan Model• LIKERT’S MODEL (1960) • Rensis Likert in the 1960s was the first to research in HR and

emphasized the importance of strong pressures on the HR's qualitative variables and on its benefits in the long-run.

• According to Likert's model, human variable scan be divided into three categories:

• (i) causal variables; (ii) intervening variables; and (iii) end-result variables.

• The interaction between the causal and intervening variables affect the end-result variables by way of job satisfaction,costs, productivity and earnings

OGAN’S MODEL

• Pekin Ogan (1976) has given Net benefit model. • This, as a matter of fact, is an extension of “net benefit approach”

as suggested by Morse. • According to this approach, the certainty with which the net

benefits in future will accrue should also be taken into account, while determining the value of human resources. The approach requires determination of the following:

• Net benefit from each employee.• Certainty factor at which the benefits will be available. • The net benefits from all employees multiplied by their certainty

factor will give certainty-equivalent net benefits. This will be the value of human resources of the organization.

Indian companies & HRA

• First BHEL (Bharat Heavy Electrical Ltd), a leading public enterprise, during the financial year 1972-73.

• Later adopted- leading public and private sector Organization

• Some of them - Hindustan Machine Tools Ltd.(HMTL). Oil and Natural Gas Corporation Ltd.(ONGC), NTPC, Cochin Refineries Ltd. (CRL), Madras Refineries Ltd.,(MRL), Associated Cement Company Ltd.(ACC) and Infosys Technologies Ltd.(ITL).

Name of the HRA introduce Model Discount organization Year rate (in%)

• BHEL 1973 – 74 Lev & Schwartz model 12 • SAIL 1983 – 84 Lev & Schwartz model with 14

Some refinements as suggested by Eric.G. Flamholtz& Jaggi and Lev

• MMTC 1982 – 83 Lev & Schwartz model 12 • ONGC 1981 – 82 Lev & Schwartz model

12.25 • NTPC 1984 – 85 Lev & Schwartz model 12 • INFOSYS 1999 Lev & Schwartz model 12.96 • 2006-07 Lev & Schwartz model 14.97

PRODUCTIVITY & PERFORMANCE INDICATORS

Examples- India

• Secondary Terminology used:

1) PBT-Profit Before Tax2) HR- Human Resource3) TA-Total Assets4) Turn-Turnover ( or Sales)5) FA-Fixed Assets6) VA- Value Added

Limitations :

• Not easy to value human asset Results in dehumanizing human resource No evidence Hr is full of measurement problem Employees and unions may not like the ideas Unrealistic Lack of empirical evidence