Unit 1 hrp

Prepared by M. Umrez & N. Ramanjaneyulu Page 1
UNIT –I
INTRODUCTION
Macro and micro level manpower planning, significance, process, factors influencing.
INTRODUCTION:
The success of an organization largely depends upon the
quantity and quality of Human Resources that it is able to attract &
retain. Human resources are one of the most vital assets of an
organization. It is the people who make other resources moving. The
placement of right kind of people in right numbers, at the right place
and right time is the basic function of Human Resources
management. Human Resource Planning (H RP) is a step in Human
Resource Management. The process of identifying how many people
to select, at what job and at what time is called Human Resource
planning. Human Resource Planning is to get the right number of
employees with the right skills, experience, and competencies in the
right jobs at the right time and at the minimum cost. This Human
Resource part of an organization ensures that the business
production requirements are met in an efficient and effective
manner. Having too many employees is challenging due to the risk
of high labour expenses, downsizing, or layoffs. Having too few
employees is also difficult due to high overtime costs, the risk of
unmet production requirements. Human Resource Planning is also
called as Manpower planning.
DEFINITIONS OF HUMAN RESOURCE PLANNING
According to Beach: “Human Resource Planning is the
process of determining & assuming that the organization will have
an adequate number of qualified persons available at the proper
lines, performing jobs which meet the needs of the enterprise &
which provide satisfaction for the individuals involved.
According to Stainer: “Human Resource Planning is the
strategy for the acquisition movement & preservation of an
organiation’s Human Resource.
Coleman defines Human Resource Planning as ―the process
of determining manpower requirements and the means for meeting
those requirements in order to carry out the integrated plan of the
organization.
E.W. Vetter has visualized resources planning as "a process

by which an organisation should move from its current manpower
position to its desired manpower position. Through planning,
management strive to have the right number and right kind of people
at the right places, at the right time, doing things which result in
both the organization and the individuals receiving maximum long-
run benefit."
OBJECTIVES OF HUMAN RESOURCE PLANNING
The following are the major objectives of Human Resource Planning
in an organization are as follows:
(i) To recruit and maintain the HR of required quantity and
quality.
(ii) To predict the employee turnover and make the
arrangements for minimizing turnover and filling up of
consequent vacancies.
(iii) To meet the requirements of the programmes of expansion,
diversification etc.
(iv) To anticipate the impact of technology on work, existing
employees and future human resources requirements.
(v) To ensure optimum use of Human Resources currently
employed;
(vi) To avoid imbalances in the distribution and allocation of
Human Resources;
(vii) To provide control measure to ensure availability of
necessary resources when required;
(viii) To control the cost aspect of Human Resources;
(ix) To formulate transfer and promotion policies.
(x) To estimate the cost of HR.
Therefore, the basic idea of the function of Human Resource
Planning is to coordinate the requirements for & the availability of
different types of employees.
ACTIVITIES OF HRP:
It consists of a series of activities, listed as following ways.
1. Forecasting future manpower requirements:
Forecasting future manpower requirement is the first function of
Manpower planning. Future forecasting is based on future
requirement of people in the organization.
2. Preparing an inventory of present manpower:
The next important task in Human Resource Management is to
prepare an inventory of present Human Resources. Such inventory
contains data about each employee’s skills, abilities, work
preferences and other items of information.
3. Anticipating manpower resources:
This can done by projecting present resources into the future and
comparing the same with the forecast of manpower requirements.

This helps to determine the quantitative and qualitative adequacy of
manpower in future.
4. Meeting Manpower requirements:
This can be achieved through planning, Recruitment and selection,
training & development, introduction and placement Promotion and
transfer, motivation and compensation to ensure that future
manpower requirements are correctly met. Human Resource P is the
process of forecasting an organization’s future demand for and
supply of the right type of people in the right number. It is only after
this that the Human Resource Management department can initiate a
recruitment and selection process. In simple, Human Resource
Planning is a sub-system in the total Organizational planning.
SIGNIFICANCE OF HUMAN RESOURCE PLANNING
Human Resource Planning is considered as the way by
which management can overcome problems relating to Human
Resource by identifying the future requirements of Human Resource
of an organization and the estimates of Human Resource supply.
Organization can ensure the smooth functioning through placing the
right individual at the right time at the right job. Human Resource
Planning is important as it helps to determine future personal needs.
Surplus or deficiency in manpower strength is the result of the
absence of an effective planning mechanism working in an
organization. The following are the significances of Human
Resource Management:
i. Forecast future personnel needs:
To avoid the situations of surplus or deficiency of manpower in
future, it is important to plan manpower in advance. For this purpose
a proper forecasting of future business needs helps to ascertain
future manpower needs. Thus, HRP plays an important role to
predict the right size of manpower in the organization.
ii. Recruitment Of Talented Personnel
Another purpose of HR planning is to recruit and select the most
capable personnel to fill job vacancies. It determines human
resource needs, assesses the available HR inventory level and finally
recruits the personnel needed to perform the job.
iii. Coping with Change
Human Resource Planning enables an enterprise to cope with
changes in competitive Human Resource market place, technology
and government regulations. Such Changes generate changes in job
content, skill demands and number and type of personnel.
iv. Providing base for developing talents
Jobs are becoming highly intellectual all over the world and
individuals are getting vastly professionalized. The Human
Resource manager must use skill to attract and retain qualified

personnel within the organization.
v. Protection of weaker section of society
In employment sector sufficient representation need to be given to
SC/ST candidates, physically handicap and backward class citizen.
A well conceived personnel planning Programme would protect the
interests of such groups.
vi. Proper Utilization Of Human Resources
Human resource planning measures that the organization acquires
and utilizes the manpower effectively to achieve objectives. Human
resource planning helps in assessing and recruiting skilled human
resource. It focuses on the optimum utilization of human resource to
minimize the overall cost of production.
vii. To Meet expansion and diversification needs of the
organization:
Through the HRP the managers ensure that they have right number
and right kind of employees available for the organization
expansion, diversification and modernization
viii. Fulfill individual needs of the employees:
It helps the individual employees to satisfy their needs like
promotions, transfer, salary encashment, better benefits etc.
ix. Helps to formulate the budget:
It supports the HR to estimate the cost of human resources like
salary, and other benefits for various departments of an organization.
x. To check joblessness:
In the process of right-sizing of employees by the organization,
some of the employees may become surplus. It tries to foresee the
need for redundancy. It plans to check job loss or to provide for
alternative employment in consultation with various concerned
parties and authorities.
xi. Resistance to change
There is chance of increasing resistance among employees to
change. There is also a growing emphasis on self – evolution of
loyalty and dedication to the Organisation. A sound Human
Resource management can predict the possible resistance from
employees and to develop suitable strategies for Human Resource
development.
CHARACTERISTICS OF HRP:
i. Future Oriented
Human resource planning is prepared to assess the future
requirement of manpower in the organization. It helps identify the
size and composition of resources for future purpose.
ii. Continuous Process

Human resource planning is a continuous process. The human
resource planning prepared today may not be applicable for future
due to ever changing external forces of the environment. Hence, to
address such changing factors, the human resource planning needs
to be revised and updated continuously.
iii. Optimum Utilization Of Human Resources
Human resource planning focuses on optimum utilization of
resources in the organization. It checks how the employees are
utilized in a productive manner.
iv. Right Kinds And Numbers
Human resource planning determines the right number and kind of
people at the right time and right place who are capable of
performing the required jobs. It also assesses the future requirement
of manpower for organizational objective.
v. Determination Of Demand And Supply
Human resource planning is a process of determining demand for
and supply of human resources in the organization. Then a match
between demand and supply estimates the optimum level of
manpower.
vi. Environmental Influence
Human resource planning is influenced by environmental changes,
hence, it is to be updated as per the change occupied in the external
environment.
vii. A Part Of Human Resource Management System
As a part of total human resource management system, human
resource planning is regarded as a component or element of HRM
which is concerned with acquisition anD assessment of manpower.
It serves as a foundation for the management of human resource in
an effective and efficient manner.
LEVELS OF HRP:
Human Resource planning is required at different levels. Such as:
 National level
 Sectoral level
 Industry level
 Unit level
 Department level.
 Job level
National Level: It anticipates the demand and supply of human
resources at national level, generally done by central government.
Sectoral level: Central and state governments also plan human
resource requirements at sectoral level. It tries to satisfy needs of

different sectors like agriculture sector, Industrial sector and service
sector.
Industry Level: This level of planning is done to suit manpower
needs of a particular industry such as Engineering, Heavy Industries,
paper industry, consumer goods industries, public utility industries,
cement industry, chemical industry etc.
Unit Level: It estimates the need of human resources of an
organization or company.
Departmental Level: It represents the needs of a particular
department in a company. Ex: production department, marketing
department, Finance department, HR department etc.
Job Level: This level of planning fulfills the human resource needs
of a particular job family within department. For example, the
requirements of number of HRs in the HR department.
These levels can be broadly classified into two levels. Macro and
micro level
MICRO LEVEL MANPOWER PLANNING:
It is the process of manpower planning at the organization or
department level i.e, at unit level. Develops and implements the
tactics needed to help the organization achieve its strategic
objectives. Micro HRP tactics ensure that the business has the
appropriate number of employees with the appropriate mix of
knowledge, skills and abilities in the proper areas or departments.
Stages in Micro level HRP:
i. Investigation stage
ii. Forecasting stage
iii. Planning and control of Manpower
iv. Utilization
i. Investigation: It is the primary stage of HRP in any
organization try to develop their awareness about the detailed
manpower scenario with a holistic view looking at their current
manpower. In investigation SWOT analysis plays a very important
role.
ii. Forecasting: The next process is forecasting based on
manpower analysis of demand and supply. In forecasting Internal
and External factors include – In Internal factors is career planning,
development, training and succession plan, policies procedure etc. In
external factor – Political, Technical, Economic, Social etc.
Forecasting means what is to be done.
iii. Planning and Control of Manpower: Third stage is very
important. HRP related issues like recruitment, training and
development. While going for recruitment it is necessary to
understand the job description, which proceed job analysis & job

role under planning important in skills, knowledge etc. under
controlling include Important judgment technique – Delphi,
Nominal etc.
iv. Utilization: HRP process success is measured in terms of
achievement trend, both quantitatively and qualitatively. While
quantitative achievement is visible from productivity trend,
manpower cost etc. Qualitative achievement is a subjective appraisal
on achievement of organizational objectives.
MACRO LEVEL MANPOWER PLANNING:
It is a manpower planning conducted at the aggregate level like
national or state level. Manpower planning at this level is influenced
by various uncontrollable factors like demographical changes, legal,
political, economical etc. Macro manpower planning is required for
the economical development of a country for a long term.
Need for HRP at Macro Level:
i. Employment-Unemployment Situation: In the present
economy the number of educated unemployed is increasing and
on the other hand there are acute shortages for a variety of
required skills. Therefore an intensive macro level manpower
planning can help in this direction in order to bridge the gap
between employments –unemployment Scenario.
ii. Technological Changes: The rate of change of technologies
in production, marketing methods and management techniques
has been extensive and rapid in outside world. In order to adopt
the change of technology in accordance with global trend,
necessitate high degree of extensive Macro level Manpower
Planning.
iii. Organizational Changes: The turbulent business
environment affected by global economic cycle and
discontinuities, the nature and pace of changes in organizational
environment in terms of its activities and structures affect
manpower requirements that require strategic considerations at
Macro level.
iv. Demographic Changes: The changing profile of the work
forces in the economy, in terms of age, sex, literacy level,
technical competency and social background have implications
for macro level HRP.
v. Skill Shortages: There are acute skill shortages in labour
market. Unemployment does not mean that the labour market is
a buyer’s market. Organizations have generally become more
complex and require a wide range of specialist skills that are
rare and scarce. These skill gaps can be bridged by proper
Macro level Manpower Planning.

vi. Government legislation: Macro level manpower planning
must go hand in hand in a very systematic way in accordance
with Government control and changes in legislation.
vii. Lead Time: The long lead time is the gestation period
required to provide education and training and deployment of
the employees to handle new knowledge and skills successfully
can be avoided by Macro level Manpower Planning.
The development at this level will takes place through population
planning and control, literacy and education, health and medical care
and housing etc.,
A. Population planning and control:
To enforce control over population explosion to avert economic
imbalances, population planning and control measures have been
initiated at macro level. Unless such control is enforced in a planned
manner, no amount of institutional support can sustain this resulting
in generation of unproductive population which will remain a drain
on the national resource.
Ex: Government of India has adopted National Population Policy
(2000) to stabilize population.
B. Literacy and education:
The development of human resources will takes place when the
illiteracy rate is reduced and the all the individuals should have
minimum education. This level of education can be possible with the
support of public and private sectors. This can be achieved by right
direction i.e, from focusing from primary education (standard V) to
secondary education, higher education and university level,
technological, vocational education, adult education. The
educational development of human resources reflects the
development at aggregate level.
Ex: Government of India adopted the National policy of education,
1986.
C. Health and medical care:
The quality of work life of individuals of a society depends on
health and medical facilities. The individuals at macro level should
get the health related activities such as water supply, sanitation etc.
The provision of medical facilities should be increased to avoid the
dangerous diseases like malaria, leprosy, blindness, AIDS, cancer
etc.
D. Housing:
The infrastructure of a society will shows the development of human
resources. The basic objective of this is to provide sustainable
development to the human resources with public and private
participation.

Ex: Government of India adopted National Housing and Habitat
Policy, 1998, Housing and Urban Development Corporation
(HUDCO) . Jawahar Gram Samridhi Yojana(JGSY), Nehru Rozgar
Yojana (NRY), Prime Minister’s Rozgar Yojana etc.
FACTORS INFLUENCING HRP:
i. Type and strategy of organization:
Based on the type of organization and its strategies the HR planner
will decide the take the decision regarding the type of manpower
required, timing to conduct HRP, decision about the number of
employees etc.
Strategy Decision
Manufacturing unit complex manpower
service oriented unit customer supportive
Internal growth Additional employees required
External growth Layoff
(M& A)
Proactive Advance planning
Reactive Emergency placement
ii. Organizational growth cycles and planning:
The effectiveness of manpower planning and its associate decisions
will be influenced by the stage of organization.
Stage HRP decision
Introduction No need to have effective plan
Growth More manpower required
Maturity Retirements, retrenchment
Decline layoffs, VRS, Retirements,
retrenchment
iii. Environmental uncertainties:
Uncertainties due to political, economical, social, cultural ,
technological factors etc., HR planner can reduces these
uncertainties through recruitment, selection, training and
development, layoffs, retirement, VRS, succession planning
iv. Time Horizons:
Manpower planning can be done for different time periods. i.e, short
run and long run.
HR planner makes short run (6 months or 1 yr) planning
when there are more uncertainties in a business. Such as
 Many new competitors enter into the market
 Rapid changes in social and economical conditions
 Changes in demand for the goods/services
 Small organizations, poor management
Manpower planning can also be made for a long period of time(3-25
yrs) when the business is stable and it has

 Strong competitive position
 Evolutionary social, political and technological changes
 Stable demand
 Strong management practices
v. Type and quality of information:
Hr planner collects the information from various sources to know
the uncertainties and to forecast the need of manpower according to
that. The quality and accurate data gives clarity to the decision
maker to understand the strategy (uncertainty) and helps to prepare
plans.
For example, vacancy for a position by the retirement of an
employee. The HR should predict it in advance. The HR may collect
this information from the employee records, HRIS, other employees.
The information from the other employees may not be reliable
always. Thus, the HR should select a reliable source to get the
information about internal organization and external market.
vi. Nature of job:
A job vacancy in different levels of an organization may arises
because of promotion, demotion, transfer, separation of an
employee. Depending upon the level and nature of the job the
planner puts his efforts. If the job is in the higher level then the HR
planner should anticipate it in advance and for lower level no need
to have any type of planning about the manpower and vacancies.
vii. Outsourcing:
Outsourcing is process by which an organization will assign or
involve a third party to perform some of their business operations.
The need of manpower planning depends upon the extend to which
the organization outsourcing its operations.
PROCESS OF HUMAN RESOURCE PLANNING
The following are the major steps involved in Human Resource
Planning.
1. Analysis of Organizational Plans and Objectives
Human Resource planning is a part of overall plan of a business
organisation. Plans relating to technology, production, marketing,
finance, expansion and diversification give an idea about the volume
of future work activity. Each plan can further be analyzed into sub-
plans and detailed programmes. It is also important to decide the
time horizon for which Human Resource plans are to be prepared.
The future organization structure and job design should be made
clear and changes in the organization structure should be examined
so as to anticipate its Human Resource requirements in future.
2. Forecasting Demand for Human Resources
Demand analysis identifies the future human resource requirements

needed to maintain the organization’s mission and goals. The end
result of a demand analysis is the identification of the required
number of employees in an organization and the necessary functions
that the employee must perform to meet organizational objectives.
Due to the high number of factors that influence demand, demand is
often more difficult to predict than supply.
HR demand forecasting techniques:
i. Managerial Judgment
ii. Ratio Trend Analysis
iii. Work load analysis
iv. Econometric Models
v. Delphi technique
i. Managerial Judgment:
Managerial judgment technique is very common technique of
demand forecasting. This approach is applied by small as well as
large scale organisations. This technique involves two types of
approaches i.e. 'bottom-up approach' and 'top-down approach'.
Bottom-up approach, line mangers send their departmental
requirement of human resources to top management. Top
management ultimately forecasts the human resource requirement
for the overall organisation on the basis of proposals of departmental
heads.
Top-down approach, top management forecasts the human
resource requirement for the entire organisation and various
departments. This information is supplied to various departmental
heads for their review and approval.
However, a combination of both the approaches i.e. 'Participative
Approach' should be applied for demand forecasting. Under this
approach, top management and departmental heads meet and decide
about the future human resource requirement. So, demand of human
resources can be forecasted with unanimity under this approach.
ii. Ratio Trends Analysis:
Under this method the ratios are calculated for the past data related
to number of employees of each category i.e. production, sales and
marketing levels, work load levels. Future production and sales
levels, work load, activity levels are estimated with an allowance of
changes in organization, methods and jobs. The future ratios are
estimated. Then future human resources requirement is calculated on
the basis of established ratios. This method is easy to understand.
iii. Workload analysis:
Under this method the staff workload and the continuity of
operations are determined. Accordingly the labour requirement is
determined. The workload becomes the base for workforce analysis
for the forthcoming years. Here due consideration is given to

absenteeism and labour turnover. This method is also known as
work study technique. Here working capacity of each employee is
calculated in terms of man-hours. Man-hours required for each unit
is calculated and then number of required employees is calculated.
The example is given below:
Planned annual production = 2, 00,000 units
Standard man-hours required for each unit = 2 Hours
Planned man-hour needed for the year (a x b) = 4, 00,000 hrs.
Planned annual contribution of an employee = 2000 hrs.
No. of employees required ————- (c/d) = 4, 00,000/2000 = 200
This method is useful for long term forecasting.
iv. Econometric Models:
Econometric models are built on the basis of analysis of past
statistical data establishing the relationship between variables in a
mathematical formula. The variables are those factors such as
production, sales, finance and other activities affecting human
resource requirement. Econometric model is used to forecast human
resource requirements based on various variables.
v. Delphi Technique:
Delphi technique is also very important technique used for
estimating demand of human resources. This technique takes into
consideration human resources requirements given by a group of
experts i.e. mangers. The human resource experts collect the
manpower needs, summarises the various responses and prepare a
report. This process is continued until all experts agree on estimated
human resources requirement.
Factors influencing demand forecasting:
 Environmental scanning, including economic, legislative,
and competitive pressures.
 The organization’s future strategic goals and plans
 Expected demand for products or services, including
expected sales (across the organization or at the business
unit level)
 Estimated productivity measures of workforce (can be
stable, increase, or decrease)
 Organizational design or job design, including technological
advancements and administrative changes
 Projected budgets or financial resource availability
 New products/processes/ventures that the organization will
be launching in the future.
3. Forecasting Supply of Human Resources:
By reviewing the data in the Human Resource audits, projections
can be made for future Human Resource supply. The internal labor
force may be affected by temporary absences such as leaves,

permanent absences or turnover etc.
 Trend Analysis
Trend analysis is considered one of the simplest methods of
forecasting future Human Resource supply. It assumes that past
trends and ratios in employee movement are stable and indicative of
future trends and ratios in employee movement. The information
collected in the Human Resource audit is used to identify labor
patterns—hiring patterns, retirement patterns, productivity patterns,
and turnover patterns. By examining the trends of the past, the
Human Resource department can predict the effect of the same
activity on the future of the organization, because it is assumed that
these patterns will remain stable.
 Skills/Competency Models
Competency models focus on matching the right skills or
competencies needed for each job with the skills available within the
organization. The competency models focus on identifying the
skills/competency supply within the organization, and helping focus
future recruitment, selection, retention, and training activity in core
areas of key competencies needed for the organization to succeed.
A competency is a set of behaviours that encompass skills,
knowledge, abilities,
and personal attributes, that taken together, are critical to successful
work accomplishment.
The competency model is a future-oriented model that first
reviews competencies that are aligned with an organization’s
mission, vision, and strategy, and then aims to identify an ideal
workforce in terms of those competencies.
 Replacement Charts
A replacement chart is used to estimate vacancies in higher
level jobs and identify how potential Human Resource supply can
fill these vacancies via internal movements from lower levels jobs.
A comprehensive replacement chart will include information
regarding possible replacements for vertical or horizontal
movement. Generally, a replacement chart includes information
about employees’ performance, readiness to fill the position, and
education.
 Staffing Tables
A staffing table provides a clear graphical view of all
organizational jobs and the current number of employees at each
job. It presents a simple visual understanding of an organization’s
staffing level within each department and the organization as a
whole, in an effort to help understand the combination of employees
that make up an organization’s internal workforce. This information
is useful in evaluating staffing levels by department, branch, the

types of staff at each level and the combination of staff in all
categories.
4. Estimating Manpower Gaps
Net Human Resource requirements gaps can be identified by
comparing demand and supply forecasts.
5. Matching Demand and Supply
It is one of the objectives of Human Resource planning
to assess the demand for and supply of Human Resources and
match both to know shortages and surpluses on both the side in
kind and in number. This will enable the Human Resource
department to know overstaffing or understaffing. Once the
manpower gaps are identified, plans are prepared to bridge
these gaps. Plans to meet the surplus manpower may be
redeployment in other departments and retrenchment in
consultation, with the trade unions. People may be persuaded to
quit voluntarily retirement. Deficit can be met through Human
Resource planning ,recruitment, selection, transfer, promotion,
and training plans. Realistic plans for the procurement and
development of manpower should be made after considering
the macro and micro environment which affect the manpower
objectives of the organization.

Unit 1 hrp

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Unit 1 hrp