Introduction to Human Resource Management

Chapter 4 : Human Resource Planning

Definition of Human Resource Planning, Objectives of Human Resource Planning, Human Resource Planning at Different Levels, The Process of Human Resource Planning, Assessing Current Human Resources and Making an Inventory, Forecasting, Matching the Inventory with Future Requirements, Managing the Forecasted Demand/ Surplus, Managing Future Demand, Managing Future Surplus, Dealing with Surplus Manpower, Growing Importance of Human Resource Planning, Current Trends

Chapter Summary

HRP is the process by which an organization ensures that it has the right number and kinds of people, at the right places, at the right time and that these people are capable of performing their tasks effectively and efficiently. This helps the organization to achieve its overall objectives. Two major ways in which societal trends affect employment is through consumer markets, which affect the demand for goods and services, and labor markets, which affect the supply of people needed to produce goods and services.

Maintaining a flexible workforce is the major challenge of the HR department and HRP helps it handle this challenge. HRP is done at different levels – corporate, intermediate, and operations levels and for short-term activities. A proper human resource planning exercise should utilize the inputs of all the departments in the organization and enjoy the support of the top management.

A human resource professional would be better equipped for human resource planning if he has a good understanding of the market dynamics, changes in the economy, organizational processes and technological developments. The process of HRP involves three key steps – assessing and making an inventory of the current human resources, forecasting the organization's human resource needs and matching the demand and supply of human resources.

Forecasting the overall human resource requirements involves studying the factors affecting the supply and estimating the increase or decrease in the external and internal supply of human resources. New hires, transfers-in, individuals returning from leave etc. increase the internal supply of human resources, while retirements, dismissals, transfers-out of the unit, lay-offs, voluntary quits, sabbaticals, prolonged illness, and deaths reduce the supply.

The matching of supply and demand can help the HR department to identify areas in which shortages and surpluses exist. When there is a need for downsizing, organizations opt for retrenchment using several techniques such as lay-offs, outplacements, leave of absence without pay, loaning, work-sharing, reduced work hours, early retirement and attrition to reduce the number of employees. Effective HRP reduces the pressures on the management and employees, as both employment and retrenchment would be well planned and phased out over a comfortable time span, avoiding unpleasant consequences.

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