Discussion on the process of human resource planning.

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HUMAN RESOURCES PLANNING PROCESS

Introduction

Like every other management function, an efficient human resources planning function is

fundamental to the effective implementation of the strategy of a work organization. The essence

of sound human resources planning is the incorporation of the various human resources

management functions into the philosophy of the organization regarding the manner in which its

employees are intended to be managed. The outcome of these efforts is a strong and proactive

human resources department, well co-ordinated human resources functions, fair and consistent

human resources services that are capable of making optimum contribution to the achievement of

the organization's strategic objectives (Amstrong, M. 2006)

What is Human Resources Planning?

Human resources planning (HRP) may be defined as the process of anticipating and making

provision for the movement of people into, within, and out of the organization. Its primary

purpose is to enable the work organization to maximize the utilization of its human resources by

ensuring that the right number of people, of the right abilities, are available to perform in

correspondingly right job positions at the right time.

Movements of people into, within and out of the organizations

(1) Into the Organization

Planning for the movements of people into the organization involves the forecasting of the

quantity and quality of needed employees from the labour market to fill vacant job positions in

the organization.

(2) Within the Organization

During their stay in the organization, employees make four kinds of movements, commonly

called intra-organizational movements. These movements include transfers from one

geographical location to another, re-categorization from one job to another, promotions, and

demotions. These decisions are made by the organization in order to maintain a stable match

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between its performance requirements and its employees' performance capabilities, and thus

ensure optimum deployment of its human resources.

(3) Out of the OrganizationIt is more normal for employees to leave organizations normal separations than it is for them to

join them. This is because of the uncertainty, which surrounds employee recruitment in

comparison with normal separations. Normal employee exit is easy to anticipate because the

work organization has information regarding the employees’ ages, and knows for sure, that one

day, the employees will leave their jobs. After all, organizations are designed to live longer than

their organizational members do.

Importance of Human Resources Planning

The importance of any management function can best be discussed from the point of view of the

advantages derived from its effective and efficient performance. Accordingly, a good and well

implemented human resources plan enables the organization to reap the following major

benefits:

It enables the organization to maximize the utilization of its human resources. Almost all the

time, the organization has the right numbers and quality of employees for its jobs, thus

eliminating idle labour power, and overwork of employees.

It enables a better achievement of the organization's objectives by ensuring that management

efforts are made in good time to avail the requisite labour power for the organization's

performance processes.

It enables the organization to economize on its recruitment function. An organization with

poor or without human resources planning wastes money hiring the wrong numbers or

quality of employees.

It enables the organization to organize successful exit plans for the advantages of the

employees and the organization. Work organizations with poor or without human resources

planning cannot put in place employee succession programmes that prepare younger staff to

take over from retiring staff; they cannot give retiring staff useful preparatory counseling;

they are also unable to make the right preparations to meet their financial obligations to

retiring employees.

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It increases the organization's information base to the advantage of the human resources

department and other departments. Such information forms a basis for correct decisions in

the implementation of core and non-core human resources programmes.

It enables the organization to make a more effective and efficient use of the labour market.

An organization with good human resources planning approaches the labour market at the

right time and knows what it is looking for in terms of quantities and quality.

It facilitates career or personal development. An organization with poor or without human

resources planning makes it difficult for its employees to make plans for their personal

development, because they cannot clearly identify clear career paths, career opportunities,

and conditions for their access.

Factors Influencing Human Resources Planning

Human resources planning is influenced by various internal and external factors:

Internal Factors

i) Organizational Objectives.The objectives of the organization are its goals. These can be general or overall objectives

Organizational objectives are also specific, particularly those that relate to key result areas.

Specific objectives for key result areas are objectives related to areas in which performance

determines the success of the organization. The processes of achieving organizational

objectives, whether general or specific necessarily involve people.

ii) The nature of tasksThe nature of work influences human resources planning.

iii) Leadership StyleThe style of a leader or supervisor, i.e. his or her experience, how he or she guides and

handles the employees determines how many employees will be necessary to execute the

work, as well as how often these employees will have to be replaced.

iv) Work groupsWork group dynamics influence human resources planning. For instance, the transfer of

individual members of a group requires that the dynamics of his or her work group be

taken into consideration. Also, the mutual interaction of work groups must be taken into

consideration.

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Eternal Factors

i) Government PoliciesGovernment policies may stipulate requirements or regulations which, for example

require that only employees with particular specialized qualifications are allowed to carry

out certain functions. For example, after the NBAA Act in 1973, it became illegal in

Tanzania, to recruit a person as an accountant unless they possessed recognized

accounting qualifications and were registered with NBAA.

ii) Economic Conditions

Economic conditions can exercise an important influence on planning for employment.

For example, in an economic slump the economy becomes less active and constrains

employment.

iii) Labour Market Conditions

The labour market generally keeps changing and at any given time, has particular

conditions for each occupation or profession. For instance in Tanzania, during the 1970s

and 1980s the labour market demanded lots of accounting staff as a result of strict

conditions laid down by the National Board for Accountants and Auditors (NBAA). But

during the 1990s and 2000s the labour market demanded less accounting staff and lots of

qualified human resources management staff probably as a result of economic

liberalization policies. In practice, the human resources plans of most work organizations

during the above-mentioned periods contained needs for recruiting the relevant

professional staff categories.

iv) Trade Unions

Trade unions can set certain requirements with regard to number and type of employees

for specific tasks.

v) Changes in Technology

Advancement in technology e.g. in information technology, calls for recruitment of

qualified IT experts but also displaces employees who used to perform given manual

tasks. For example, the advent of computer word processing skills calls for IT trained

personnel but also pauses a threat to “typewriter” secretaries.

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The Process of Human Resources Planning

The human resources department must play a visible and major role in the human resources

planning process. Human resource department maintains the organization's human resources

information base, and is located at the centre of the information network related to the labour

market conditions. The human resources department should utilize its position and information

base to manage the human resources planning process effectively. A typical HRP process

consists of six basic steps as listed below:

(i) Choice of HRP period.

(ii) Determining the impact of the organization’s objectives on specific organizational units.

(iii) Determining the total number of employees required to achieve the organization’s and

unit’s objectives. i.e. the total and unit demand for human resources in terms of quantity.

(iv) Defining the performance capabilities of needed employees i.e. the demand for human

resources in terms of quality or the educational and skill qualifications as well as the

experience, which the needed employees should possess.

(v) Determining the net or additional human resources requirements in the light of the

organization’s current human resources.

(vi) Developing action plans to meet the net human resources needs.

Six steps in the Human Resources Planning Process

The description of the human resources planning process

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ChooseHRPperiod

Define theperformancecapabilitiesof neededemployees

Determineadditionalhumanresourcesrequirements

Developactionplans tomeet nethumanresourcesneeds

Determine totalnumber ofemployees needed

Determineimpact oforganisational objectivesonobjectivesof units

i) Choice of Planning Period

The first step in a HRP process is to choose the planning period to which the plan should relate.

Normally HR plans are done over three planning periods: short, medium, and long term, which

are done over one year, one to five years, and over five years respectively. The most commonly

used planning period is short term, which is also easier to manage, due to the greater degree of

certainty, which the period affords. Short term human resources planning is a routine task that is

usually compiled within the last few months of the year of operations for the ensuing year.

Medium and long-term plans are more complicated and more demanding processes due to the

enormous amounts of assumptions about the future period.

ii) Determine Impact of Organizational Objectives

Human resources plan must be based on the organization’s strategic plans. In practice, this

means that the objectives of the human resources plan must be derived from the organization’s

objectives. The organization’s objectives are statements of what it intends to achieve or its

expected results, that are designed to give the organization and its members direction and

purpose.

iii) Define HR Performance Capabilities

After establishing organizational, departmental, and sectional objectives, the line managers

should determine the performance capabilities i.e. knowledge, skills, experience required to meet

their respective objectives. The key here is not to look at the performance capabilities of present

employees but to objectively define the performance capabilities required to meet the objectives

of each organizational level.

iv) Determining Total HR

After establishing the performance capabilities required to achieve an established objective, line

managers should determine the total number of employees needed. In practice, a review of

current job descriptions will indicate if the current number of employees can absorb the

additional tasks or if additional staff needs to be recruited.

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v) Determining Net HR Demand

Once line managers have determined the total quality and numbers of employees required, he or

she should analyze these data in order to determine additional (net) staff requirements. This

process involves a thorough analysis of present employees against expected changes.

vi) Developing Action Plans

Once the net human resources requirements have been determined, line managers develop action

plans for achieving the established objective. If the net requirements indicate a need for

additions, plans must be made to recruit, orient, and or train the required staff

The Human Resources Planning ProcessThe human resources planning process has two main constituent steps: needs forecasting, and

programme planning.

(1) Needs ForecastingThis stage comprises the process of predicting the organization's future demand for human

resources. The organization's future demand for human resources, makes use of the department's

information base, and is arrived from three analyses: analysis of the external environmental

constraints, analysis of human resources demand, and the analysis of human resources supply.

(a) External Environmental ConstraintsThis step involves analyzing the technological economic, social, political, legal, and demographic elements to assess their impact on the organization's future human resources demand. Let us take a closer look at these elements.

(b) Human Resources Demand Forecasting Demand forecasting is the process of estimating the future numbers of

people required and the likely skills and competences they will need. The

ideal basis of the forecast is an annual budget and longer term business

plan, translated into activity levels for each function and department, or

decisions on ‘downsizing’.

(c) Human Resource Supply Forecasting Supply forecasting measures the number of people likely to be available

from within and outside the organization, having allowed for attrition (labour

wastage and retirements), absenteeism, internal movements and

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promotions, and changes in hours and other conditions of work. The forecast

will be based on:

Internal variable to be considered:

(i) The organization’s strategic plan for adding or closing facilities.

(ii) The organization’s plan to add or drop product or service lines.

(iii) Attrition during the period.

(i) Effects of the employee training and development programme.

The external variables to be considered include:

(i) Immigration in and out of the area.

(ii) People graduating from schools, colleges, and professional associations.

(iii) Changing work force composition and patterns.

(iv) Technological developments and shifts.

(v) Behaviour of competing employers.

(vi) Government laws and regulations.

(vii) The security situation surrounding the country e.g. is war imminent?

(2) Programme Planning

Programme planning is done after the future human resources needs have been determined.

According to Walker, programme planning involves the planning of performance management,

and career management.

(a) Performance Management

Performance management includes the planning of broad organizational matters such as

performance standards, quality of work life, and core human resources management

programmes.

(b) Career ManagementCareer management involves planning of recruitment policies and systems, i.e. recruitment,

selection, training, and management succession.

Factors which determine Demand for Human Resources

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In most work organizations the human resources planning function attaches greater emphasis to

estimating human resource demand than supply. In this section we will examine the factors

which influence the demand for human resources in a work organization.

(1) Strategic PlansThe organization's strategic plan shows the long-term objectives of the organization, such as the

forecast growth rate, markets, new products, and technological acquisition. These objectives

point to the number and types of employees that will be needed to enable the organization to

achieve its objectives in the future.

(2) BudgetsThe organization's strategic plan also shows the short-term objectives of the organization, i.e. objectives, which the organization intends to achieve in the coming year. In effect this is a gradual operationalization of the organization's long-term objectives. These objectives are operationalized in the form of budgets.

Budget increases reflect increased financial ability to carry out the planned activities of the organization. If these activities call for recruitment, then the budget increase is a green light for recruiting. A budget cut conveys the opposite message.

(3) Production ForecastA planned increase in production, suggests a planned increase in human resource demand. A planned decrease in production suggests either an employment freeze or layoff. The thrust here is to consider the increase or decrease in terms of not only numbers but also skills levels as well.

(4) Sales ForecastA planned increase in sales suggests an increase in the human resources required to realise the forecast. A planned increase in sales suggests an increase in profits and thus the organization’s increased ability to carry out the recruitment drive. A planned decrease in sales suggests a hiring freeze or layoff.

(5) New ProjectsIf an organization introduces a new project it definitely hires new people for the project. Even where existing staff are placed with the new project, hiring must still be done to fill their positions. Sometimes the project is a result of either a take-over or merger of existing projects. In this case, the planners redesign the jobs, reassess the human resources requirements of the new project, and very often hire new employees apart from laying off those surplus to the needs of the project.

(6) RetirementRetirement is a systematic separation of older workers from an organization. Retirement is a

normal and natural organizational phenomenon. Retirement should be planned in order to ensure

continuity of the performance of the organization. In an organization, which has good human

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resources planning, employee retirement entails recruitment. Retirement should not be a difficult

problem to human resources planners because it is a separation method, which can be anticipated

with accuracy.

(7) ResignationResigning means a voluntary separation of an employee from the organization. Resignations are

an unplanned reduction of the work force and as such necessitate hurried transfers or hiring of

new employees. Resignations pause a more difficult problem to human resources planners

because of the uncertainty attached to them. Resignations can be avoided through such

programmes as motivation, improvement of quality of work life, and job satisfaction.

(8) TerminationTermination is another method of separation, which is caused by the decision of the employer.

Terminations usually necessitate hiring. Terminations disturb human resources plans because

usually, they amount to the employer's response to unforeseen events such as disciplinary

problems.

(9) Death

The death of an employee is as uncertain as resignation or even termination. It necessitates hiring.

(10) Leave of Absence

The failure of a crucial employee to report for work can seriously impair the functioning of the

organization. It creates immediate and urgent demand, which must be filled to ensure continuity.

Also included under leave of absence are sabbatical and maternity leaves.

(11) Technological ChangesChanges in technology are difficult to predict, and their impacts are difficult to assess. Most

technological innovations cause the fear of replacing employment. The computer for instance

was expected to replace many employees. These fears have however, proved to be untrue,

because the computer industry has turned out to be the fastest growing industry that is employing

very many people today. The problem caused to planners by complicated technology is that it

tends to reduce employment in one category and to increase it in another, resulting either in zero

effect or net increase.

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(12) Competition

Competition causes either an increase or a decrease in business, and thus necessitates an increase

or decrease in the demand for human resources.

Supply of Human Resources

After projecting the future demand for human resources, the human resources department

proceeds to fill the job openings after the approval of the projections. There are two possible

sources of supply for the candidates: inside, and outside the organization.

The internal supply comprises the current employees of the organization. In order to get them to

fill vacant positions, current employees may be moved from their current job positions by

promoting, demoting, or transferring them to fill the vacant job positions. This task is easy

because it lies mainly within the decision prerogatives of management to effect it.

The external supply consists of people who do not currently work for the organization. In order

to get them to fill vacant job positions in the organization, these people will have to be induced

to leave the employ of their current organization. This is a more difficult task than dealing with

current employees. The candidates are new to the work organization and thus must be processed

through a lengthy and costly process. This process will be discussed in chapter six.

(1) Estimates of internal supply

The estimate of the internal supply of human resources requires knowledge of the number, and

job categories of current employees in the organization. In addition to the numbers and job

categories, the planners should audit the current work force to determine the capabilities of the

employees. This information allows the planners to determine which job openings current

employees can fill. This information is recorded on a replacement chart. It is important to find

out which employees, among the current employees, can fill vacant job positions every time they

occur, because of the motivational and retentionist value of giving the current employees priority

over outside candidates.

The human resources audits, and replacement charts derived from the above-described exercise,

are important additions to the human resources information base. It gives the human resources

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an updated knowledge of the organization's work force, and a basis for performing the other

functions e.g. training and development, and career planning, more effectively. Due to their

importance of career development, and human resources audit, we have devoted separate

chapters for them each in chapter eight and twelve, respectively.

(2) Estimates of external supply

Not all vacant job positions can find suitable candidates from current employees. Sometimes

there is simply no suitably qualified current employee to fill the vacant position. Some jobs for

instance, are direct entry jobs, meaning that they are to be filled by candidates entering directly

from training institutions. Another restriction is that employees with the right skills may be

available, but the organization cannot spare them for the new jobs. It is theoretical to expect the

organization to release every employee for the new jobs simply because they are qualified for

them and they would mean promotion for them. In both the above cases, it becomes necessary

for the organization to look outside for a suitable candidate.

Finding new employees from the external market is not an easy task. Very much depends on the

condition of the labour market and on the skills of the human resources department. Even when

unemployment rates are high, many needed skills may still be difficult to find.

Methods of Human Resources Forecasting An organization’s future human resources needs can be forecasted using a variety of methods.

Some methods are simple and some are complex and demanding, but basically the methods used

in most organizations to forecast human resources needs, can be either judgmental, or

mathematical. Judgmental methods which use either managerial estimates or the Delphi

technique, call on managers to make subjective estimates of future staffing needs based primarily

on past experience.

i) Managerial estimates

Managerial estimates are basically judgmental methods of forecasting that call on managers to

make estimates of future staffing needs. There are three approaches of making managerial

estimates. First these estimates can be made by top level managers and be passed down to lower

level managers. Secondly, these estimates can be made by supervisory level managers and be

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passed up to top level managers for consideration and further revision after some explanation.

Thirdly, the estimates can be conceived through a participatory process involving top level and

lower level managers.

ii) Delphi Technique

With the Delphi technique, each member of a panel of experts makes an independent estimate of

what the future demand of human resources needs will be, along a set of underlying assumptions.

An intermediary then presents each expert’s forecast and assumptions to others and allows the

experts to revise their positions as desired. This process continues until some consensus or

composite estimate emerges.

(a) Mathematical MethodsMathematical methods of forecasting human resources needs include various statistical and

modeling methods. Statistical methods use historical data to project future staffing demand. On

the other hand, modeling methods provide a simplified abstraction of staffing demands

throughout the organization. The manipulation of input data allows the HRM ramifications for

different demand scenarios to be tested. With increasing development of user-friendly

computers, mathematical methods are being more frequently used to forecast staffing needs than

judgmental methods.

(1) Time Series Analysis

Under time series analysis, past staffing levels (instead of workload indicators) are used to

project future staff requirements. Past staffing levels are analyzed to isolate seasonal and

cyclical variations, long-term trends and random movements. Long-term trends are then

extrapolated or projected using a moving average, exponential smoothing, or regression

technique.

(2) Regression/correlation models

Regression models are most appropriate where the level of required manpower is dependent on

such factors as production, sales, and unit costs. There is a general relationship between the

products produced by using a given technology, with the capital and labour used in the process.

Thus the optimal number of employees required in a production process, can in some way be

derived from the demand of the produced goods. The problem here, is to formulate the empirical

relationship between the inputs and outputs.

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(3) Stochastic Models

Stochastic models are most commonly used by organizations such as government contractors, and consulting organizations in which the demand for human resources is derived from many projects. The issues used to determine human resources requirements here are three: (i) The varying probabilities of securing each contract.

(ii) Uncertainties about the pending project start-up date.(iii) Uncertainties of the required manpower over the life cycle of the project.

(4) Productivity Ratios

Here historical data are used to examine past levels of productivity index.

(5) Personnel Ratios

Past personnel data are examined to determine historical relationships among the number of employees in various jobs or job categories. Regression analysis or productivity ratios are then used to project either total or key group staff requirements. Personnel ratios are then used to allocate total requirements to various job categories or to estimate requirements for non-key groups.

(6) Extrapolation.

Extrapolation is a method of estimating future employment needs by extending past rates of change into the future. For instance, if an average of 5 salesmen were hired per month in the past two years, after extrapolating this trend, 5x12 or 60 salesmen will be needed in the coming year.

(7) Succession Analysis

This method, which is widely used, relies upon replacement charts. Replacement charts are in effect succession plans developed to identify potential human resources changes, identify back up candidates to understudy them, and consider attrition for each department. Succession analysis is more elaborately discussed in the following section.

Problems Facing Human Resources PlanningThe following are the main problems facing the implementation of human resources plans in

Tanzanian work organizations. They are derived from findings from interviews conducted by

the author with managers of Tanzanian public work organizations.

(1) Insufficient top management support.Like many other human resources programmes, human resources planning needs the support of

top managers to be able to play its role without its practitioners being accused of interruption.

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Unfortunately in many work organizations top management teams formulate the organization's

strategic plan without a sufficient blend of human resources planning ideas. Also, during the

implementation of the plan, because of insufficient top management support, one sees

insufficient human resources involvement.

(2) Insufficient funds.In some organizations the human resources planning function is appropriately incorporated in the

organization's planning process, though unfortunately, the human resources department is not

allocated enough funds to carry out the plans as desired. The usual excuse for cutting back on

budgets for human resources planning is that with general shortage of funds, the corporate

planning function can adequately cater for human resources planning as well.

(3) Shortage of experts.There is a general shortage of human resources practitioners who have specialized in human

resources planning, in many African countries. In these organizations, this problem is

compounded by the problem of recruiting people who are not trained in human resources

management to perform specialized jobs in human resources departments. Where the employees

in a human resources department are graduates in sociology, mathematics, law, or political

science, they are unlikely to be of use in a highly specialized field of human resources

management, like human resources planning.

(4) Inactive human resources departmentAs we noted in chapter one, the human resources occupation in many African work

organizations has not been accorded sufficient professional status. Many organizations have not

fully appreciated the pivotal role of human resources to the effectiveness and survival of their

organizations. We discussed also in chapter one that the human resources department in the

organization should play a co-ordinating, advisory role to the other departments and ordinary

employees on all human resources affairs. Such a role is difficult to play in a work environment

that doubts the professional status of the human resources practitioners to start with. Some

human resources departments however, increase these problems by being inadequately

aggressive, proactive, and involved in their roles, particularly human resources planning.

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(5) Poor Information baseAccurate human resources planning must be based on accurate and up to date data. Most

African work organizations do not maintain accurate and up to date information about their

human resources. This is a major weakness of their planning function.

(6) The Method trap.

As HRP continues to become more and more popular, new and sophisticated methods have been

developed. Several of these were discussed earlier in this chapter. While many are definitely

useful, there is sometimes a tendency to adopt one or more of some methods not for what they

can offer, but rather because “every company around is using them”. Human resources staff

should avoid becoming enamoured of a method merely because it is popularly used.

(7) Integration with organizational plans.

As we have underscored at the beginning of the chapter, human resources plans must be derived

from the broader organizational plans. Human resources plans should form an important part of

the organization’s plans. The organization’s planners should thus work in close co-operation

with human resources staff.

(8) Poor involvement of line managers.

Strictly speaking, HRP is not a human resources department function. Successful HRP requires

the co-ordinated effort of line managers and human resources staff, where the latter’s plans

depend on the other plans of the line managers.

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REFERENCE

Armstrong, M (2006), Human Resource Management Practice, 10th Edition, Kogan Page Limited, London.

Morgen Witzel (2004), Management The Basics, 1st Edition New York USA.

Sparrow, P et al (2002), Globalizing Human Resource, Manchester University, UK.

Kondalkar, V.G, (2007), Organizational Behavior, New Age International Publisher, New Delhi India.

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