Human Resource Planning Process (with steps)

Everything you need to know about HRP: human resource planning process. Human resource planning (HRP) involves developing strategies for acquisition, utilization, improvement and retention of human resources.

It takes into account the future organisational objectives and plans, future human resource needs, current human resource position and assure future human resource availability.

HRP is a long range and strategic decision and myopic outlook here ‘often creates a situation of poor, short, or excess manpower. The purpose of HRP is to assess where organization is heading, what the demand supply situation of people and try will beat to match this demand and supply in the interest of the firm.

The process of the HR planning begins with considering the organisational objectives and strategies.

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Both external and internal assessments of HR needs and supply sources must be done and forecasts developed. Key to assessing internal human resources is having solid information, which is accessible through a human resource information system (HRIS).

The human resource planning process can be studied under the following heads:

A: Logical steps of human resource planning process includes:- 1. Human Resource Demand Forecasting, 2. Human Resource Supply Forecasting and 3. Initiating Human Resource Actions

B: Major stages of human resource planning process includes:- 1. Analyzing Organisational Plan 2. Forecasting Demand 3. Forecasting Supply 4. Identifying Human Resource Gap 5. Future Course of Action and Controlling.

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C: Steps of human resource planning process includes:- 1. Forecasting Demand 2. Forecasting Supply 3. Developing HR Plans 4. Evaluation.

D: Unique steps in human resource planning process includes:- 1. Assessing Current Human Resources 2. Implications of Future Demand 3. Implications of Future Supply 4. Matching Demand and Supply.

E: Multi step process of human resource planning process includes:- 1. Objective of Human Resource Planning 2. Analysis of Organisational Plans 3. Demand Estimation 4. Auditing Human Resource 5. Job Analysis 6. Estimating Gap between Demand and Supply 7. Preparing Human Resource Plan.

HRP: Human Resource Planning: Process, Steps and Stages

Human Resource Planning Process – 3 Main Steps: Human Resource Demand Forecasting, Human Resource Supply Forecasting and Initiating Human Resource Actions

Human resource planning (HRP) involves developing strategies for acquisition, utilization, improvement and retention of human resources. It takes into account the future organisational objectives and plans, future human resource needs, current human resource position and assure future human resource availability.

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The process of the HR planning begins with considering the organisational objectives and strategies. Both external and internal assessments of HR needs and supply sources must be done and forecasts developed. Key to assessing internal human resources is having solid information, which is accessible through a human resource information system (HRIS).

The purpose of effective human resource planning is to ensure that a certain desired number of persons with the correct skills will be available at some specified time in future.

The various steps involved in the human resource planning process can be logically divided into three:

Step 1 – Working out the human resource demand forecasting;

Step 2 – Working out the human resource supply forecasting;

Step 3 – Initiating human resource actions.

Step # 1. Human Resource Demand Forecasting:

The process of human resource planning starts with the forecasting of human resource requirement because it is always important for the management to first identify clearly the number of people required in future and then the entire process starts.

Resource demand forecasting is often subdivided into long-range and short-range forecasts because there are certain requirements of human resources for the long term and at times the human resource requirement is to meet the short-term objectives, goals, or targets.

i. Long Range Forecasting:

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Though it is difficult to forecast the exact number of people required for future, still those responsible for planning human resource requirements must be aware of the number of basic factors which should be taken into consideration so that the forecasting can turn out to be accurate to a certain extent-

1. The Firm’s Long-Range Business Plans:

It is important to know the long-range business plans for the firm, for example, if a firm wants to go in for automation or wants to bring in more of computers and replace the manpower with technology, this factor needs to be taken into consideration for working out the future manpower requirements.

2. Demographics:

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The likely changes taking place in the demographic profile of people in the years to come is another important parameter which needs to be taken into consideration while working out the human resource requirements as the overall rate of growth of the labour force depends to a large extent on the percentage of population in the age group of 18 to 65.

3. The Economic Conditions:

Movements from prosperity to recession and back to prosperity pose considerable problems for the HR executives. Though economic predictions are considerably difficult to make with accuracy, some considerations must be given to the level of economic activity in planning for human resource requirements.

4. Technological Trends:

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Advances in technology have definite effects on the nature and mixture of jobs available. For example, advances in computer technology resulted in a decrease ill the number of book-keepers, and an increase in the number of computer programmers. The use of robots in place of some kind of human labour is also beginning to take off.

5. Social Trends:

The socio-cultural trends prevailing in an economy are another important parameter effecting the human resource planning as it directly influences the number and the nature of people seeking jobs, especially in case of women and people from minority groups. The social factors also play an important role in affecting the movement of labour from rural to urban areas which again has its impact on the human resource planning.

In considering the above factors and making a specific long-range projection, one method that can be utilised is termed as the “Delphi technique.” Essentially, it is a questionnaire technique in which recognised experts are asked to make separately specific estimates of human resource needs in the future.

This is followed by feedback of summarised results, followed by a request for a new estimate. After three or four iterations, there tends to be some similarity in specific future estimates of all the exports. In effect, it is a “judgment refining” process, but the numbers resulting should still be regarded with considerable suspicion.

ii. Short Range Forecasting:

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Though long-range planning may appear to be a luxury to most firms, the HR executives does require some lead time to provide the manpower required by the firm in the short run-

1. Production Schedules and Budgets:

Specific sales forecast for the coming year must be translated into a work plan for the various parts of the enterprise. In the light of the sales forecast the requirements of manpower for all other departments need to be worked out in the light of the production program, purchase requirements, research and development and finance department activities.

Some plans must be made concerning the amount of work that each segment of the firm is expected to accomplish during some coming period and manpower requirements need to be worked out accordingly.

2. Human Resource Objectives:

The basic goals or objectives to be followed by the human resource department also play an important role in working out the human resource requirements. For example if the goal is to hire some minimum percentage of minorities or females in the workforce this definitely will be taken into consideration while working out the human resource plan.

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3. Relocations/Mergers/Acquisitions/Plant Closures:

The recession of the early 1990s saw major retrenchments on the part of many firms. The reductions in workforce that follows such major changes as mergers, acquisitions, relocations or plant closures are particularly stressful for not only the employees involved but also for the HR executives.

The HR people should always be informed about such changes as soon as possible so that they should be able to make arrangements to adjust the manpower wherever required and ensure the termination of employees in a nice and congenial atmosphere.

Thus, resource demand forecasting, whether long-range or short-range gives the management an idea about the number and nature of people required in future and the human resource planning process starts from here.

Step # 2. Human Resource Supply Forecasting:

Though the available supply of human talent would appear to be easier to determine than projected needs, there are a number of complexities in this decision as well.

In projecting future availability, the following factors are usually considered:

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1. Current Inventory:

Maintaining proper personnel records are essential to indicate the availability of talent in various jobs, units and divisions within the firm. For example, an ‘inventory card’ should be maintained by the organisations, so that whenever there is a requirement for human resource the first thing an organisation should do is to check the availability from within.

If possible the requirements should be filled in from within and if not possible then the entire hiring process should start.

2. Productivity Levels:

Future projection of resource needs are often made on the basis of past experience. As technology improves the productivity levels of a workforce, the number of persons required per unit of output will decline. So it is important for the organisation to consider the productivity levels to forecast the future workforce requirements.

3. Turnover Rate:

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The rate of turnover for the organisation is an important parameter affecting the human resource planning for future. The turnover takes into consideration separations, quits, discharges, retirement, death, replacements, etc. The rate of turnover can be calculated with the help of formula, such as,

Number of people leaving the organisation/average number of persons in the organization × 100

Turnover rate has to be taken into consideration because the management will be making the arrangements for future manpower requirements keeping this into mind. An organisation having a high rate of turnover will have to go for frequent hiring exercises and vice versa.

4. Absenteeism Rate:

Absenteeism is the title given to a condition that exists when a person fails to come to work when properly scheduled to work.

The most common measure is the percentage of scheduled time lost and is computed as follows:

Number of person-days lost / (average number of persons) × (number of working days) × 100

Absenteeism obviously reduces the number of personnel actually available for work. If the monthly absenteeism rate is around 4 per cent, this means that on the average only 96 per cent of people are present each day and are ready to work.

5. Movement among Jobs:

Some jobs are sources of personnel for other jobs; for example, secretaries may be obtained by the promotion of typist, and branch managers are obtained from a pool of section managers through internal transfers. So it is important for the human resource executives to take such internal movements into account before finalising the requirements for hiring from outside for meeting their future human resource requirements.

All these factors clearly necessitate the need to take various things into account while working out the resource supply for future.

Step # 3. Initiating Human Resource Actions:

The matching of projected human resource needs with projected human resource available provides the basis for undertaking various actions to ensure that supply will be able to match with demand at the time specified.

Such actions as the following can be undertaken:

1. Hiring:

In case projected supply is short of projected demand; the addition of new personnel is a likely possibility. Keeping the rate of turnover and absenteeism and the movement amongst various jobs into account the organisation has to work out the figures for conducting their recruitment and selection drive.

2. Training and Development:

In order to sharpen the skills of people on the job and to prepare them for transferring them to higher positions in future it is important to impart training and development to them constantly.

3. Career Management:

It is to the advantage of both the employee and the firm that changes in job assignments be planned to form a career. HR department should have some system of recording and tracking career moves throughout the organisation.

4. Productivity Programs:

Improving productivity levels will increase the supply of human resources available without increasing the number of personnel. Organised labour has also been involved in the process to participating in improved quality of work life programs, and agreeing to alter various work rules that hold down productivity.

5. Reductions in Workforce:

In case the projected supply of human resources is in excess of projected demand; the firm may have to close plants and lay off personnel. A reduction in workforce is always a difficult process for everyone – the employee, the management, the union, the government, and the community. But in a competitive economy of today, such human resource actions are not uncommon. So they need to be handled carefully.

Human Resource Planning Process – 6 Major Stages: Analyzing Organisational Plan, Forecasting Demand, Forecasting Supply, Identifying Human Resource Gap and a Few More

A manpower structure may be based on the calculation of the required manpower with the use of the different methods and factors. Manpower planning, rather than focusing upon the present manager, must look into the future so that the recruitment and training needs are anticipated and planning is initiated sufficiently in advance.

The major stages involved in human resource planning are as follows:

Stage # 1. Analyzing Organisational Plan:

It is the first step in which the objectives and plans of the organization should be analyzed. It aims at giving the immediate requirement and collection of data, analysis of data, forecasting and implementation. In this the plan concerning technology, production, finance are given an idea about the volume of future work activity.

The future organisation structure and job design should be made clearly and changes in the organisation structure should be examined so as to anticipate its manpower requirements. The organization plans are based on economic forecast, company’s sales and expansion forecast and labour market forecast.

Stage # 2. Forecasting Demand for Human Resources:

Human Resource Planning is the forecasting needs for human resource in an organisation over a period of time. In one way we can say that it depends on the scale of operations of the organisation over that period of time.

Taking into consideration the employment trends, education system, social and industrial mobility, rate of production, work load analysis, expansion etc. the forecasting of future demand and supply is made. Job analysis and forecasts of future actively level help in human resource forecasting.

Human resource forecasting helps in achieving the following purposes:

(i) To identify the jobs necessary for producing a given number of goods.

(ii) To prevent shortages of people where and when they are needed most.

(iii) To fulfill the legal requirements regarding jobs.

The various techniques which are generally used for forecasting human resources are:

(a) Work Study Method:

In this method, time and motion study are used to analyze and measure the work being done. With the help of such studies standard time required per unit of work is decided. It is more appropriate for repetitive and manual jobs when it is possible to measure work and set standards. Job methods should not change frequently.

(b) Managerial Judgement Method:

In this method the managers prepare the forecast of human resource needs of various categories in their department. This plan is applied in various departments where there is necessity so that necessary amendments can be done with proper justification. This method is very simple in the preparation of human resource forecast.

(c) Ratio Trend Analysis:

Under this method ratios are calculated on the basis of past data. Future ratios are calculated on the basis of time series analysis, after making changes in organisation, methods and jobs. Moving average and exponential smoothing can be used for projection. On the basis of establishment ratios the demand for human resource is estimated.

Work study method is more appropriate for repetitive and manual jobs when it is possible to measure work and standards. Job methods should not change frequently.

(d) Delphi Technique:

This technique is used in group decision making in the present world. It can be used for forecasting human resource needs in two forms i.e. it can be used to know the changing trends of job profile across the country and this technique can be used in the organisation about the changing profile of personnel in their departments according to the environmental needs.

(e) Mathematical Models:

A mathematical model expresses the relationship between independent variables and dependent variable.

(f) Statistical Model:

It expresses the relationship between dependent variables and independent variables. Various factors influencing manpower needs can be expressed by different types of models such as regressions, optimization model etc. These are appropriate for large organizations.

In other words, various factors influencing manpower needs are expressed in the form of a formula. Several types of models can be used. These are complex and appropriate only for large organizations.

Future demand for human resource depends in several factors, which are given below:

(i) Productivity:

Improvements in productivity influence manpower requirements. Better utilization of existing manpower is one method of securing gains in productivity. Work study techniques can be used to judge manpower utilization and improvements therein. Automation and computerization is another method of productivity improvement.

It will influence both the quantity and quality of manpower required in future. Matching of skills with job requirements is the third method, Job analysis techniques are helpful in such matching.

(ii) Replacement Needs:

These depend on death, retirement, resignation and termination of employees. These can be assessed on the basis of past experience and retirement situation in future.

(iii) Expansion and Growth:

The company’s growth plans and expansion programme should be carefully analysed to judge their impact on manpower requirements in future. Steps must be taken in time for procuring and developing the talent required to implement expansion and growth plans without delay.

(iv) Absenteeism:

While estimating demand for manpower, the prevailing rate of absenteeism in the company should be considered.

(v) Employment Trends:

Trends in the company’s manpower can be judged by comparing and analyzing the staff during the past five years.

Stage # 3. Forecasting Supply of Human Resources:

Every organization has two sources of supply of human resources internal and external sources. Manpower supply forecasting measures the number of people like to be available from within and outside an organization after making allowances for absenteeism, internal movements and promotions, wastage and changes in work hours, and other conditions of work.

The future manpower needs of an organization depend on the number of employees required due to loss of current manpower and the additional staff needed due to expansion of the organization. After the estimation of internal supply of human resource, the external supply resources are analysed.

The internal factors affecting manpower supply are training facilities, interpersonal relationship, company’s goodwill etc. External factors consists of working population, unemployment level, transport facility, security measures and technology.

Stage # 4. Identifying Human Resource Gap:

Manpower gaps can be identified by comparing demand forecasts and supply forecasts, such types of comparison will either help in deficit or surplus of human resources in future.

Deficit means the number of people recruited from outside whereas surplus implies people to be redeployed or terminated. Employees estimated to be deficient can be trained whereas employees with higher skills may be given more enriched jobs.

Stage # 5. Future Course of Action:

When 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 trade unions. People may be persuaded to quit voluntarily through their own wish. Deficit can be met through recruitment, selection, promotion, transfer or training methods.

Stage # 6. Controlling:

It implies checking, verifying and regulating to ensure that everything occurs in conformity with the plans adopted and the instructions issued. Such monitoring helps to minimize the gap between desired results and actual performance. Controlling the management of human resources involves auditing training programmes, directing morale surveys etc.

Human Resource Planning Process – 4 Step Process

Institute of Personnel Management, 1988, attempted to establish the use of systematic human resource planning, defined as a long-term strategic planning of human resources concerned more with the development of skill, quality and cultural change than statistical numerical fore casting, succession planning and hierarchical structures. This survey was to assess the extent to which human resource planning was being practiced by the organizations.

The results indicated that only 60% claimed that they were now practicing human resource planning in terms of the identification of future training, retraining and development needs.

According to Cowling and Walters 1990, the modern style of human resource planning places considerable emphasis on a proactive strategy which anticipates and responds to changes in the environment linked to a corporate strategy designed to enhance competitive advantage. The process of HRP is one of the most complex and continuing managerial functions generally followed in a large organization.

The HRP process has the following four steps:

Process # 1. Forecasting Demand for Human Resources:

It is a starting point for forecasting demand of human resource. The analysis of the organizational objectives and goals helps in forecasting the demand for the human resources in the organization. Under this step two main activities are involved.

These are:

i. External Challenges:

The key external challenges are globalization, nature of competition, technology and technological changes, economical, social, political and legal conditions affect the HR forecasting in the organization. Technology is a double edged weapon and would be very difficult to predict its impact on HR plans. In a similar way, the competition is beneficial to customers but suicidal for organizations operating on very narrow margins.

In addition, it is generally argued that industry and business are increasingly demanding more skilled worker. The demand for Engineering and Management graduates are increasing in recent times as compared to simple graduates. Therefore, HRP forecasting under such situations becomes complicated.

ii. Demand Forecasting Techniques:

No forecast can be hundred percent correct, however scientifically designed the forecasting techniques are in view of the reason that the future is uncertain.

However, the most widely used technique for forecasting manpower demand are:

a. Jury of Executive Judgment Method:

In this method, the experts in a particular field are requested to give their estimated manpower requirements for future and then aggregated for the whole organization. Generally small or medium size organization adopt this method.

This method is also called the Hunch Method since the experts give their opinions after weighing pros and cons of all factors affecting the demand and arrive at an estimate, which is nothing but a hunch; the hunch of course in backed by knowledge and experience of the experts. This is an expeditious method for developing a demand forecast but the reliability of this technique is questionable.

b. Delphi Method:

Named after the ancient Greek Oracle at the city of Delphi. This is a group decision by experts in which the individual experts act separately. The HR experts act as intermediaries and summarise the views of various experts and an attempt is made to arrive at consensus.

If the views of the experts differ significantly, then the individual experts are fed with the views of other experts in areas where there is distinct difference and they are asked to further analyze the problem and to revise their views in the light of views of the other experts in the group. The process can be repeated till a near coincidence of views are achieved. This method seems to be more accurate and less expensive than the traditional face-to-face interaction and the experts are free to express their views.

c. Trend Analysis Method:

Under the trend analysis method, HR needs can be estimated by analysing the past trends and projecting future demand by extrapolating the trend. The basic assumption of trend analysis is that in future all the factors that were responsible for the past movements will be present and will exert influence in the same way as had been in the past. The relationship is often expressed in the form of a mathematical formula.

Now the future additional requirements for the year 2006-07 are:

(a) Number of workers required = 200 – 150 = 50 workers

(b) Number of supervisors required = 8 – 6 = 2 supervisors

d. Work Study Method:

This method is useful where the volume of work can be quantified. The number of man hour required to produce each unit is carefully calculated then to calculate the number of persons required with reference to a planned output after giving due weight-age to absenteeism, rest, idle time, and ability of person.

For example:

(i) Planned output for year 2006 – 07 = 50000 units

(ii) Standard time required to produce one unit = 2 hours

(iii) Total planned hours required to produced 50000 units = 50000 x 2 = 100000 hours

(iv) Productive hours per person per year = 2000 hours

(v) Number of workers required = 10000/2000 = 50 workers

(vi) If span of control in the unit is 10 per officer, then 5 officers are also required.

This method is particularly suitable for production line work and short-term estimates. A study of past trends may serve as a useful guide in this regard.

e. Work Force Analysis Method:

Under this method, the average loss of manpower due to retirement, death, discharge, labour turnover and rate of absenteeism may be taken into account during process of demand forecasting of human resources.

Process # 2. Forecasting Supply for Human Resources:

Forecast demand analysis provides the means of estimating how many and what kind of employees will be required. Management must determine if they will be able to secure employees with necessary skills and from what sources these individuals may be obtained. In general, the supply of employees may be met by obtaining people from within the organization or the management may decide to go outside the organization to meet its needs.

Therefore, every organization will have two major sources of supply of manpower:

i. Internal Supply:

Many of the workers that will be needed for future positions with the organization are already employed. The management knows all workers so that their skills and aspiration can easily be matched. Management inventories and skills inventories are available to identify internal sources of supply of human resources discussed below –

a. Management Inventories:

The management inventory information relates to managers contains detailed data regarding each officer. An inventory would likely include data such as – Work history, strengths and weakness, personal data, promotions potential, and career goal etc.

b. Skill Inventories:

The skills inventory contains information regarding non-executive employees. Possible information that might be included in a skills inventory is – Personal data, specific knowledge and skills, work experience, supervisory evaluations and career aspirations, etc.

A properly designed and updated skills inventory system helps an organization to readily identify employees and match forthcoming job openings with employees back grounds.

ii. External Supply:

After working out internal availability, management will have to survey the external market. The rapid employment of new employees from open market can be an expensive and typically quite difficult. Therefore, it is relevant to prepare attractive employment conditions to ensure a steady flow of new applicants.

Forecasting can assist not only in identifying where the supply of employees may be located but also in predicting what type of individuals will likely succeed in the organization.

Process # 3. Developing HR Plans:

After having decided the supply of human resources, the next step refers to the development and implementation of the human resource plan. The HR planner should have a thorough knowledge of the labour market and to be in close liaison with different sources and use them as when the need arises.

The HR plan contains the following activities:

(i) Recruitment,

(ii) Training and Re-training,

(iii) Productivity,

(iv) Redeployment, and

(v) Retention.

Process # 4. Evaluation of HRP:

The responsibility of management to evaluate their HRP efforts to determine their effectiveness in helping to achieve organizational goals on one hand and on the other hand, to initiate any corrective action, if needed. J.W.

Walker may restrict the evaluation broadly to the following:

i. The extent to which HR planners are tuned into personnel problems and opportunities.

ii. The quality of their working relationship with personnel and financial specialists and line managers who supply data and use human resources planning results.

iii. The quality of communication among the parties involved.

iv. The extent to which decision makers from line manager to top management are making use of human resources planning forecasts, plans and recommendations.

v. The perceived value of human resource planning among decision makers.

In nut shell, an obvious measure of planning effectiveness is how well human resource needs are anticipated and met.

Human Resource Planning Process – 4 Unique Steps: Assessing Current Human Resources, Implications of Future Demand, Implications of Future Supply and Few More

It involves:

1. Assessing current Human Resources

2. Implications of Future Demand

3. Implications of Future Supply

4. Matching Demand and Supply

Step # 1. Assessing Current Human Resources:

This includes preparing inventory of workers and skills available with the firm and job analysis. Human resource inventory contains list of names, the qualifications and week experiences, salary level, skills, capabilities etc. This helps an organization to prepare its training inputs and recruitment functions.

Job analysis defines the jobs in an organization and the behaviour required on the jobs. For example the job of group leader to a firm (network management software development) requires knowledge of Windows NT/ UML/VCH-+/CORBA and that of Group leader (System engineering) requires knowledge of Windows NT/GDMO/ASN.

Job analysis explains the difference between these jobs whether these should be at the same or different in the hierarchy and what should be the gap between the two. Human resource inventory and job analysis tells an organization where it stands in terms of availability and supply of manpower.

Step # 2. Implications of Future Demand:

The projection of future demand depends upon firm’s growth plans. These plans should be available to manpower planners so that they can know what are going to be its growth areas in future. These help in estimating in which area and how much manpower will be required.

The projection is to be made well in advance to give time to HRM department to hire and train necessary people. Since people cannot be acquired at a very short notice so demand needs to be forecasted one year or six months in advance or some firm’s may even start early.

Step # 3. Implications of Future Supply:

The organization is required to project supply position of manpower in the future. A lean supply position means longer lead time between demand and supply must be maintained while in case of good supply even a shorter lead time can serve the purpose. The supplies of labour are affected by both internal and external factors. Internal factors are new recruits, promotions, transfers, leaves, layoffs, illness, retirements and deaths.

Some of these an easy to predict while not often. External factors are availability of trained manpower from institutes, preferences of people for a particular type of jobs. For example our armed forces are experiencing shortage of bands in its officer’s cadre because more people are attracted by jobs in private sectors. Impact of both these factors must be considered to accurately predict the supply position in the desired area.

Step # 4. Supply and Demand:

This brings together the forecast of future demand and supply. It will identify shortages and excess in quantity and quality. If the firm finds mat shortages may exist in a particular area, efforts can be started to meet it by transferring, training, recruiting people. Otherwise the no availability of right people can affect the functioning and objectives of organization.

Process of Human Resource Planning – Multi-Step Process: Objective of Human Resource Planning, Analysis of Organisational Plans, Demand Estimation and a Few More

Process of human resource planning is a multi-step process including:

1. Objective of human resource planning.

2. Analysis of organisational plans.

3. Demand estimation.

4. Auditing human resource.

5. Job analysis.

6. Estimating gap between demand and supply.

7. Preparing human resource plan.

Process # 1. Objective of Human Resource Planning:

First step in the process of human resource planning is setting of objectives of human resource planning. Ultimate objective of human resource planning is to fulfil the manpower needs of the organisation for present and future. The objectives of human resource planning may be for short term, middle term and long term.

For example, short term plan may be to recruit 20 persons from backward districts. Long term plan may be to recruit persons for a new industry.

Objectives of human resource planning should be consistent with plans of organisation.

Process # 2. Analysis of Organisational Plans:

Objectives of the organisation are required to be studied before making human resource plan. Organisational plans may be for expansion, diversification, mergers & acquisition, downsizing, disinvestment, etc.

The need of manpower increases in case of expansion, diversification while decreases if organisation plans for disinvestment or downsizing.

Therefore, manpower requirement depends on the plans of organisation which should be properly studied and analysed.

Process # 3. Demand Estimation:

Third step in the process of human resource planning is estimating the need of manpower at different levels.

Demand forecasting depends on size of business, organisational structures, designs, management philosophy, etc. Demand is forecasted for existing departments as well as for new vacancies. Demand is forecasted in terms of functional category, persons needed, the levels at which they are needed.

While estimating manpower requirement, expected labour turnover such as quits, retirement, transfer, dismissal, lay off and other separations should be kept in mind.

Demand forecasting can be done using the techniques:

(a) Managerial Judgements:

In this method, managers or departmental heads estimate the manpower requirement on the basis of past experience. Then these departmental estimates are compiled to estimate the requirement of organisation. This method is appropriate for small firms.

(b) Ratio Method:

In this method, manpower requirement is estimated on the basis of past ratio analysis. For example, in the previous year, 100 workers were employed to produce 50,000 units i.e., 500 units per worker. To produce 80,000 units, 80000/ 500 = 160 workers will be required.

(c) Delphi Method:

In this method, the help of experts is taken to estimate manpower needs. The experts do not meet each other. Opinions of various experts are demanded again and again until the opinions of experts agree. The agreement so reached is demand forecast.

While estimating manpower needs, not only the quantity but the quality should also be estimated.

Process # 4. Auditing Human Resource:

After estimating the manpower requirement in organisation, next step is to check the current supply of manpower in organisation so that the difference between demand and supply can be seen.

Current supply of manpower in all departments is aggregated to find organisational supply.

Process # 5. Job Analysis:

Job Analysis refers to detailed analysis of job e.g., qualification, skills, training, experience required, etc. Job analysis consists of job description and job specifications.

Process # 6. Estimating Gap between Demand and Supply:

After demand and supply forecasting, they are compared with each other. There can be three cases; first demand = supply, second demand > supply and third demand < supply.

If demand = supply, then no new human resource is required and no separation is required. If demand is more than supply, more people will be needed to be hired and if demand is less than supply, layoffs and separation will be resorted.

Process # 7. Preparing Human Resource Plan:

This refers to preparation of detailed plan regarding sources of labour supply of right kind.

In human resource plan, following things are detailed:

(a) Number and kind of people required.

(b) Sources of labour supply.

(d) Criteria for selection of people.

(e) Training and development needs.

(f) Plans for promotion, demotion, transfer, dismissal, etc.