HUMAN RESOURCES PLANNING (HRP)

HUMAN RESOURCES PLANNING (HRP)

INTRODUCTION & DEFINITION

Human resource planning (HRP) is an attempt to forecast how many and what kind of employees will be required in the future, and to what extent this demand is likely to be met.  It involves the comparison of an organization’s current human resources with likely future needs and consequently the establishment of programmes for hiring, training, redeploying and possible discarding employees.  Effective HRP should result in the right people doing the right things in the right place at precisely the right time.

HRP is seen as a strategy for the acquisition, utilization improvement and retention of an enterprise’s human resources.  HRP is therefore a strategic process.

HRP is the process for ensuring that the HR requirements of an organization are identified and plans are made for satisfying those requirements.  It addresses HR needs in both qualitative and quantitative terms i.e., how many people and what sort of people.

HRP is also known as workforce planning or personnel planning.  HRP is the process of matching the supply of people – internally (existing employees) – and externally (those to be hired or searched for) – with the openings the organization expects to have over a given period time frame.

 

The context of HRP is dominated by:-

• The state of demand for the organization’s goods or services
• The supply of people in the labour market
• The time-scale involved.

THE LABOUR MARKET

This is basically seen as either, the external labour market or the internal labour market.  The external labour market consists of the local, regional, national and international labour markets.  The internal labour market is the market for labour within firms – the stocks available and the flow of people within the firm from entry, through various stages of their career, until they leave.

The internal labour market can be the main source of labour through policies of: –

 

• Development
• Training
• Promotion
• Career planning
• Management succession

 

Purpose of HRP

• HRP can help management in making decisions in the following areas:
• Recruitment
• Avoidance of redundancies
• Training-numbers and categories
• Management development
• Estimates of labour costs
• Productivity bargaining
• Accommodation requirements

 

Importance of HRP

• To enable organizations carry out their activities
• To replace personnel, who are no longer use or are old.
• To fill vacancies arising from labour turnover.
• To meet the needs of the expansion programmes which may include the increase in demand for goods and services of the organization.
• To meet the challenges f new and changing technologies
• To identify areas of surplus personnel or areas in which there is shortage of personnel.
• Plan for labour costs – as a basis for drawing up HR budgets.

DETERMINATION OF HR REQUIREMENTS

A critical decision facing organizations before procurement is done is the determination of the number and type of personnel that should be provided to the organization.  HRP seeks to ensure that a certain desired number of people with the correct skills will be available at some specified time in future.

 

The determination of HR requirements therefore involves: –

 

1. HR Demand forecasting
2. HR supply forecasting

• HR actions

 

HUMAN RESOURCE DEMAND FORECASTING

Demand forecasting is the process of estimating the future numbers of people required and the likely skills and competence they will need. Demand forecasting may be determined by taking into consideration:

 

• Long range factors
• Short range factors

LONG RANGE FACTORS

Though specific numbers are difficult to develop in forecasts, encompassing 2-5 years or more, those responsible for HRP, must consider the following: –

• The firms long range business plans
• Demographic trends
• Economic factors
• Technological trends
• Social trends

1. The firms Long Range Business Plans

Such plans may be to expand the firms operations by moving into new product lines.  This would require estimates of the needed number of employees and skills of the anticipated growth.

 

If plans call for more efforts in the international market in future, then decisions must be made regarding the utilization of the host country’s nationals.  Long-range plans may also call for reduction in labour due to elimination or product LINES OR PLANTS.  Relocation of a company may also have HRP implications.

2. Demographic trends

Demographic trends in a country can determine future demand patterns of labour by organizations.  Fluctuations in population affect the labour supply available in various categories – education, size, age characteristics, gender characteristics, diseases, birth & death rates.

3. Economic Trends

Movement from prosperity to recession and back to prosperity poses considerable problems for HR Managers.  During prosperity demand for jobs by firms is likely to increase.  The reverse happens during a recession.

 

4. Technological Trends

Advances in technology have definite effect on the nature and mixture of jobs available.  For instance, advances in I.T, resulted in a decrease in the number of bookkeepers and an increase in demand for computer programmers.  It has been noted that the current level of technology for building robots will enable the replacement of 2/3 of the factory workforce.

 

5. Social Trends

Changes in custom and civil rights would influence labour projections.  Mobility of personnel due to family commitments also affects demand for labour.

 

SHORT RANGE FACTORS

The short factors to be considered in demand forecasting include:-

 

• Production schedules/budgets.
• Affirmative action plans.
• Relocation/plant closings.

 

1. Production Schedules/Budgets

Specific sales forecasts for the coming year must be translated into a work programme for the various sections of an enterprise. Some plans must be made concerning the amount of work that each segment of the organization is expected to accomplish during some coming period.

 

 

2. Affirmative Action Planning

An organization may be forced to hire certain categories of employees – minority tribes or females. This must be reflected in the HRP.

 

3. Relocation/Plant Closings

Recession in the economy may lead to temporary closures or relocations.  This may lead to reduction in the labour force.  Poor company development and expansion strategy also may lead to relocations and closures.

 

HOW TO FORECAST PERSONNEL NEEDS

There are several things to consider when forecasting personnel needs.  The expected demand for your product or service is paramount.  These sales are generally estimated first.  Then the staff required to achieve this volume of output is estimated. Other things to consider are;

 

• Projected turnover – resignations/terminations
• Quality and skills of your employees – in relation to the changing needs of the organization
• Decisions to upgrade the quality of products or services that enter into the market.
• Technological and other changes resulting in increased productivity.
• The financial resources available to the department

Whichever method one uses, managerial judgment will play a big role. Judgment is thus needed to modify the forecast based on factors – such as projected turnover, or a desire to enter new markets.

METHODS OF LABOUR DEMAND FORECASTING

In a particular situation the following factors in addition to other factors may affect future labour demand:-

• Organizational goals and plans
• Changes in productivity
• Changes in organizational structure or job design

The above factors are known as Leading Indicators.  The task in forecasting labour demand is;

First to obtain direction in which the leading indicators are moving and

Second, to assess the likely effects of these events on the number and type of   employees that will be needed by the organization.

The methods of demand forecasting involve the following 4 steps: –

1. Select from among the leading indictors, those most likely to be relevant in the particular situation at hand.
2. Establish the nature of historical relationships between the leading indicators selected and the labour demand

• Obtain forecasts or projections of the leading indicators

1. Forecast demand (make estimates using data from steps (ii) & (iii). This helps identify the gap between the current and needed workforce.

 

TOOLS AND TECHNIQUES FOR DEMAND FORECASTING

The following are the basic demand forecasting methods for estimating the numbers of people required: –

 

1. Managerial judgment
2. Ratio-trend analysis

• Work-study techniques

1. Modelling
2. Delphi technique
3. Time series analysis

• Scatter plot
• Regression analysis

1. Productivity ratios p=workload/people

 

1. MANAGERIAL JUDGEMENT

Under the managerial estimates method, managers make estimates of future staff needs based primarily on past experience.  These estimates can be made by top-level managers and passed on to other managers.  The managers simply, sit, think about their future workloads, and decide how many people they need.  It may be a top-down or bottom-up process.  The forecasts made one man reviewed and agreed with departmental managers.

TASK Discuss the factors on the basis of which managers can be able to make judgment about personnel needs.

 

 

 

 

 

 

 

 

The best way to managerial estimates is by se of both top-down and bottom-up processes.  The two forecasts are reviewed by a HR planning committee and approved. This is known as the right-angle method.

 

2. RATIO-TREND ANALYSIS

This is carried out by studying past ratios between the number of direct workers and indirect workers (support) in a manufacturing plant and forecasting future ratios.  The number of direct workers needed can be used to determine the number of indirect workers needed.

 

This means making forecast based on the ratio between (i) Same causal factor (e.g. sales volume) and ii) number of employees required.  Ratio analysis assumes that productivity remains about the same.

 

 

3. WORK STUDY TECHNIQUES

These can be used when it is possible to apply work measurement to calculate how long operations should take and the number of people required.  This starts from a company’s production budget.  Work-study techniques for direct workers can be combined with ratio-trend analysis to calculate the number of indirect workers needed.

 

4. MODELLING

Mathematical modelling techniques using computers and spreadsheets can help in the preparation of demand and supply forecasts.

 

Employers also use computer programs to forecast personnel requirements.  Typically data needed include direct labour hours needed to produce one unit of the product and three sales projections – minimum, maximum and probable.  Based on such data a typical programme generates figures on average staff levels required to meet production demands, as well as separate computerized forecasts for direct labour and indirect staff, plus the exempt staff.  Method also known as modelling.

	TASK Describe the process of demand forecasting using the work study technique.

Examples of statistical modelling techniques.

5. TIME SERIES & ANALYSIS

Past staffing levels (instead of workload indicators) are sued to project future HR requirements.  Past staffing levels are examined to isolate seasonal and cyclical variations, long-term trends and random movements.  Long-term trends are then extrapolated or projected.

Here one studies a company’s employment level over the last 5 years or so to predict future needs.  Trend analysis is valuable as an initial estimate, but employment levels rarely depend solely on the passage of time.

6. PRODUCTIVITY RATIO’S

Historical data are used to examine past levels of a productivity index.

 

P    =               Workload    

Number of people

 

Where constant, or systematic, relationships are found human resource requirements could be computed by dividing predicted workloads by P.

7. REGRESSION ANALYSIS

Past levels of various workload indicators, such as sales, production levels and value added are examined for statistical relationships with staffing levels.  Where sufficiently strong relationships are found, a regression model is derived.  Forecasted levels of the related indicator are entered into the resulting model and used to calculate the associated level of HR requirements.

8. DELPHI TECHNIQUE

With this method, each member of a panel of experts makes an independent estimate of what the future demand will be, along with any underlying assumptions. An intermediary then presents each experts forecast and assumptions to the others and allows the experts to revise their positions if they desire.  This continues until some consensus is reached.

THE SCATTER PLOT.

This can be used to determine whether two factors – a measure of business activity and the staff levels are related. If they are, then one can forecast the measure of business activity he should be able to get and also estimate the HR requirements.

 

	TASKS   q  What is the role of the HR Personnel in the HR planning process? q  List the common pitfalls in HR planning.

 

 

 

 

 

 

ADVANTAGES OF HRP

1. Equips the organization to cope with the HR consequences of changed circumstances.
2. May enable a firm to discover new and improved ways of managing human resources.

• Helps create and develop employee training and management succession programmes.

1. Labour shortfalls and surpluses may be avoided.
2. May enable a company foresee some of the consequences amid needs of managing change.
3. Compels management to examine the strengths and weaknesses of its labour force and personnel policies.

• Duplication of effort among employees may be avoided.
• Improves co-ordination and integration of workers efforts.

1. Assists in career management and management development programmes.

HR LABOUR SUPPLY FORECASTING AND THE HR ACTIONS

In assessing the supply of labour available to the organization there are tow major areas to be reviewed.

 

1. The existing workforce (the internal labour market)
2. The supply of potential employees (the external labour market)

 

Supply forecasting measures the number of people likely to be available from within and from outside the organization, having allowed for absenteeism, internal movements and promotions, wastage and changes in hours and other conditions of work.

 

The supply analysis covers: –

 

• Existing human resources
• Potential losses to existing resources through employee wastage
• Potential changes to existing resources through internal promotions
• Effect of changing conditions of work and absenteeism
• Sources of supply from within the organization
• Sources of supply from outside the organization – national and local labour markets

 

A typical analysis of supply will focus on the following: –

 

• Existing staff:

Numbers, categories, skills, performance, flexibility, promotability

• Potential staff:

Location, categories, skills, trainability, attitudes and competition

• Less Leavers:

Retirement, wastage rates, redundancies and dismissals

Manpower Flows in an Organization

ANALYZING EXISTING HUMAN RESOURCES

The basic analysis should classify employees by function or department, occupation, level of skill and status.  The aim is to identify “resource centres” consisting of broadly homogeneous groups from which forecasts of supply need t be made.

A detailed analysis is needed to provide inventories of skills and potential, and knowledge of the number of promotable people available.  An analysis of employees by age helps to identify problems arising from a sudden rush of retirements, a block in promotion prospects or a preponderance of older employees.

Length of service analysis will provide survival rates, which are a necessary tool for use by planners in predicting future resources.

The analysis of current resources should look at the existing ratios between different categories of employees – mangers and tam leaders, skilled to semi-skilled, direct to indirect, office staff to production.  Recent movements in these ratios should be studies to provide guidance on trends and to highlight areas where raid changes may result in supply problems.

1. Labour Turnover or Wastage

A common index of labour performance is labour turnover.  It provides information about the ratio of leavers to the average numbers employed during the course of a year.  It is usually examined as: –

Number of Employees leaving during the year   x 100

Average numbers employed during the year

A turnover rate of 25% would be considered satisfactory, while a turnover rate of 100% is considered a major problem.

The above index however has some disadvantages; it does not indicate in which areas of the organization the rate of leavers is high; it does not identify the length of service of the leavers; it does not indicate any sudden changes in the numbers employed from one year to the next.

Some organizations, in addition to the labour index, make use of a labour stability index which links the leaving rate with length of service.

Number of leavers with more than one years service     x 100

Number employed one year ago

The result of the measure of performance is to identify the extent to which new recruits leave, rather than longer serving employees.

Employee turnover should be analysed in order to forecast future losses and to identify the reasons for people leaving the organization.

The stability index provides an indication of the tendency for longer-service employees to remain with the company – the degree to which there is continuity of employment.  The index will however not show the vastly different situations that exist in a company or department with a high proportion of long-serving employees in comparison with one where the majority of employees are short service.

The shortcomings of the stability index may be partly overcome if an analysis is also made of the average length of service of people who leave – length of service analysis.

Period 1 Jan – 31 Dec

 

Category	Less than 6 months	6 to 12 Months	1 to 2 Years	3 to 5 Years	6 to 10 Years
Unskilled
Skilled
Clerical
Supervision
Management

* Leavers by length of service

 

If required such an analysis could be further refined to show leavers by department or unit as well as by length of service.

 

Another method of analysing turnover is the survival rate.  This is the proportion of employees who are engaged within a certain period who remain with the organization after so many months or years of service.  Thus, an analysis of trainees who have completed training might show that after 2 years, 10 of the original cohort of 20 were still with the company – a survival rate of 50%. HR planners must allow for half the recruits in any one-year to be lost over the next couple of years, unless they take care of the factors causing the wastage.

 

A simpler concept derived from survival rate analysis is that the half – life index – time taken for a group or cohort of starters to reduce to half its original size through the wastage process.

 

LABOUR TURNOVER

Labour turnover is the movement of people into and out of firm.  The term separation is used to denote an employee who leaves for any reason.  Staff turnover has a number of advantages and disadvantages.

Advantages

• It provides an incentive to recruit fresh staff
• It enables organizations to shed staff more easily when redundancies are planned (i.e. through natural wastage)
• It opens up promotion channels for longer – serving staff.
• It introduces an element of ‘self-selection’ among new employees, which may save dismissals at a later date.

Disadvantages

• Additional cost of replacement recruitment
• Disruptions to production of gods or services caused by leavers.
• Additional training costs, especially induction and initial job training
• Wasted investment in people
• May lead to difficulties in attracting new staff

 

Separations and their consequent replacements can be expensive.  The cost of labour turnover increases when employees are more specialized, more difficult to find and require more training.  The cost of labour turnover is made up of some or all of the following components.

 

1. Lower production during the learning period
2. Lost production while the employee is being replaced

• Payment to other employees at overtime rates while waiting for a replacement

1. Possible diversion of efforts of more highly skilled employees while waiting for a replacement
2. Cost of recruitment, selection and medical examination
3. Training costs

• Administrative cost of removing from and adding to payroll

 

Reducing Labour Turnover

If an employing firm wishes to reduce its labour turnover, because it considers it excessive, it may take the following action:

 

• Recalculate: the separation rate for various categories of the firms employees departments, are groups, occupations to see I turnover in any of these categories is particularly high; and if so be investigated.
• Ensure: that selection procedures are adequate; suitable employees are more likely to stay than the unsuitable.
• Ensure: that the immediate supervisor, by being involved in selection, feels some responsibility towards a new employee.
• Check: that employees are being fully utilized – some may be leaving because of boredom or job dissatisfaction.
• Overhaul: the pay structure perhaps using job evaluation.
• Introduce: or improve an induction course.
• Give new employees appropriate training
• Show that prospects in the company are good by promoting from within wherever possible.
• Ensure that physical working conditions are adequate.

ANALYSING THE EFFECTS OF PROMOTIONS & TRANSFERS

The supply forecast should indicate the number of vacancies that will have to be filled to meet the demand forecast.  In a large organization, persistent patterns or of promotion or transfer may develop and it may be possible to predict the proportions of employees in particular categories who are likely to be promoted or moved in the future by starting with a forecast of the chain reaction factor, to give a broad indication of the number of displacements that may occur.

 

Assessing changes in conditions of work and absenteeism

This assessment should cover factors operating within the firm such as changes in all the following; normal weekly hours of work, overtime policies, the length and time of holidays, retirement policy, the policy for employing part-timers and shift systems.  The effect of absenteeism on the future supply of employees should also be allowed, and trends in absenteeism should be analysed to trace causes and identify possible remedial actions.

 

ANALYSING SOURCES OF SUPPLY

Internal labour market sources include the output from established schemes or management development programmes and the reservoirs of skill and potential that already exists within the organization. But the availability pf people from the local and national labour markets is also a vital factor when preparing plans.

 

It is necessary to identify at an early stage any categories of employees where there might be difficulties in recruiting the numbers required so that action can be taken in good time to prepare a recruiting campaign, or to develop training or re-training programmes to convert available staff to meet the company’s needs.

 

The factors that can have an important bearing on the supply of manpower are: –

 

1. Local Labour Market

• Population densities within reach of the company
• Current and future competition for employees from other employers
• Local unemployment levels
• Traditional pattern of employment locally, and the availability of people with the required qualifications and skills
• The output from the local educational system and training establishments.
• The attractiveness of the area as a place to live
• The attractiveness of the company as a place to work
• The availability of part-time employees
• Local housing, shopping and transport facilities.

 

2. National Labour Supply

• Demographic trends in the number of school-leavers and the size of the working population.
• National demands for special categories of employees – graduates, professional staff, technologists, technicians, and skilled workers.
• The output of the universities, professional institutions and other educational and training establishments
• The effect f changing educational patterns
• The impact of national training initiatives
• Impact of government employment regulations

Figure: Factors Affecting Nature of External labour Market

 

	TASK Discuss the specific government activities that have an impact on the national labour supply.

RECONCILING SUPPLY AND DEMAND FOR LABOUR AND THE HR ACTIONS

Upon completion of forecasts of labour and demand and supply the results must be reconciled before HR actions can be determined and taken.

 

Example of reconciliation table

 

Job category          labour demand     labour supply                      gap       interpretation

 

1                                  140                     137                         -3                     shortage

2                                  200                     251                         +51                 surplus

3                                  300                     282                         -18                  shortage

4                                  375                     282                         -93                  shortage

 

HUMAN RESOURCE ACTIONS

Action plans are derived from the broad resourcing strategies and the more detailed analysis of demand and supply factors. Action pans should be made in the following areas: –

 

1. An overall plan as required to deal with shortages arising if there are demographic pressures
2. A human resource development plan

• A recruitment plan

1. A retention plan
2. A plan to achieve greater flexibility
3. A productivity plan

• A downsizing plan

 

1) OVERALL PLAN

Demographic pressures are likely to be experienced even during a recession as there are still areas where skill shortage exists and these may multiply in the future. It is, as such, advisable to be prepared to take a selection of the following steps as part of an overall HR plan.

 

• Improve methods of identifying the sort of young people the organisation wants to recruit
• Establishing links with schools and colleges to gain their interest in the organisation
• Develop career programmes and training packages to attract young people
• Widening the recruitment net to include, for example, more women re-entering the labour market
• Finding ways of tapping alternative pools of suitable workers e.g. part time employees
• Adapting working hours and arrangements to the needs of new employees and those with domestic responsibilities
• Providing more attractive benefit packages e.g. child care facilities
• Developing the talents and making better use of existing employees
• Providing retraining for existing and new employees to develop different skills
• Making every effort to retain new recruits and existing staff.

 

2)  THE HUMAN RESOURCE DEVELOPMENT PLAN

The HR development plan will show:

 

• Number of trainees required and the programme for recruiting and training them
• Number of existing staff who need training, retraining and the training programmes required
• The need learning programmes to be developed or the changes to be made existing programmes and courses
• How the required flow of promotable managers can be maintained

 

3)  THE RECRUITMENT PLAN

This will take account of the flow of trainees or retraining staff and set out: –

 

• Numbers and types of employees required to take care of the deficit
• Likely sources of recruits
• Methods of attracting good candidates training and development programmes, attractive pay and benefits packages, golden hellos (money paid up front to recruits), flexible working arrangements, generous relocation payments, child care facilities and so on.

 

4) THE RETENTION PLAN

This should be based on why people want to leave. Exit interviews may provide some information but they can be unreliable – people rarely give the full reasons why they are leaving. A better method is to have attitude surveys on a regular basis. A retention plan should address each of the areas in which lack of commitment and dissatisfaction can arise. Such areas include:

1. a) PAY

Problems arise because of uncompetitive, in equitable or unfair pay systems. Remedial action may include: –

 

• Review of pay levels
• Job evaluation – to provide equitable grading decisions
• Ensure people understand the link between performance and reward
• Review performance – related pay schemes – ensure they are fair.
• Adapt payment – by – results systems to ensure that employees are not penalized when they are engaged only on short runs
• Tailor benefits to individual requirements and preferences
• Involve employees in developing and operating job evaluation and PRP schemes

 

1. b) JOBS

Dissatisfaction arises if jobs are unrewarding in themselves. Job design should maximize skill variety, task significance, autonomy and feedback and provide opportunities for learning and growth

 

1. c) PERFORMANCE

Unclear responsibilities and performance standards may cause demotivation. The following actions can be taken. The following actions can be taken.

 

• Express performance requirements as had but attainable goals
• Get employees and managers to agree on performance goals and what should be done to achieve them
• Encourage managers to praise employees for good performance, give regular performance feedback and discuss performance problems.

 

1. d) Train managers in performance review techniquesg. counselling; brief employees on how the performance management system works and obtain feedback from the workers

 

 

1. e) TRAINING

Lack of proper training may increase resignation s and turnover.  Learning programmes and training schemes should be developed and introduced which: –

 

• Give employees the competence and confidence to achieve set performance standards
• Enhance existing skills and competence
• Help people to acquire new skills and competence – make use of their abilities, take greater responsibility, variety of tasks and earn more under skill and competence based pay schemes.

 

TASKS – What are the four basic steps in the HRP process? – What is the role of HR personnel in the HRP process? – List and explain eight common pitfalls in HRP

1. f) CAREER DEVELOPMENT

Dissatisfaction with career prospects is a major cause of turnover. Companies should plan to provide career opportunities by: –

• Providing employees with wider experience
• Introducing more systematic procedures for identifying potential such as assessment or development centres
• Encourage promotion procedures
• Provide advice and guidance on career paths.

 

1. g) COMMITMENT

This can be increased by: –

• Explaining organisations mission, value and strategies
• Commitment to all employees on time
• Provide opportunities for employees to contribute their ides on improving work systems

 

1. h) LACK OF GROUP COHESION

Employees feel isolated and unhappy if they are not part of a cohesive team.

This can be tackled through: Teamwork, setting up self – managed or autonomous work groups, Team building

1. i) DISSATISFACTION AND CONFLICT WITH MANAGERS AND SUPERVISORS

A common reason for resignations is the feeling that management and supervisors are not providing leadership, are treating people unfairly or bullying their staff. This can be solved by: –

 

• Selecting managers/supervisors with well-developed qualities
• Training in leadership skills, conflict resolution and dealing with grievances
• Have better grievance handling procedures

 

1. j) RECRUITMENT, SELECTION AND PROMOTION

Turnover may result from poor selection or promotion decisions. Selection and promotion procedures must match the capacities of individuals and demands of the work they have to do.

 

1. k) OVER MARKETING

Creating expectations about career development opportunities, training programs and interesting work and not matching this with reality may lead directly to dissatisfaction and early resignation. Take care not to oversell, the firm’s employee development policies.

 

5. THE FLEXIBILITY PLAN

Such a plan should aim to: –

• Provide for greater operational flexibility
• Improve the utilization of employees skills and capacities
• Help to achieve downsizing smoothly, avoiding compulsory redundancies
• Increase productivity

 

A flexibility plan should consider: –

• New arrangements for flexible hours
• Alternatives to full-time permanent staff
• New overtime arrangements
• New shift working arrangements
• Flexible hour arrangements

 

Alternative to full-time permanent staff includes us of temporary workers, job sharing, home working and teleworking, subcontracting and so on.

TASK What are the advantages of using part time workers, and what are the disadvantages

6. THE PRODUCTIVITY PLAN

This sets out programmes for improving productivity or reducing employment costs in such areas as: –

• Improving or streamlining methods, procedures and systems mechanization, automation or computerization
• Use of financial and non-financial incentives

 

7. THE DOWNSIZING PLAN

Such a plan should be based on the timing of reductions and forecasts of the extent to which these can be achieved by natural wastage or voluntary redundancy. The plan should set out:-

 

• Number of people who have to go, when and from which departments
• Arrangements for communicating to the employees and union
• The redundancy terms
• Financial inducements
• Arrangements for retraining counselling sessions

 

The HRP should include budgets; targets and standards clarify responsibilities for implementation and control and establish reporting procedures

 

TASKS: Identify and discuss some of the alternative activities to retrenchment that a company may undertake

Reducing the total number of employees, downsizing, can be undertaken in four basic ways: – layoffs, terminations, early retirement inducements and voluntary resignation inducements.

A layoff as opposed to a termination, assumes it is likely that the employee will be recalled at some later date.

Approaches that do not result in employees leaving the organisation include; reclassification (either a demotion of an employee, downgrading of job responsibilities or a combination of the two), transfer and work sharing.

 

COMMON PITFALLS IN HRP

Unfortunately HRP is not always successful. The following are some of the common pitfalls

 

• The identify crisis – HR planners work in an environment characterized by ambiguous regulations, company politics and diverse management style. HR planners spend so much time looking for something meaningful to do while the organisation questions the reason for their existence
• Sponsorship of top Management – for HRP to work, it must have the support of at least one influential senior executive. If this is missing the process may fail
• Size of the initial effort – many HRP programmes fail because of an overcomplicated initial effort. A good programme should start slow and gradually expand. An accurate skills inventory and replacement chart is a good place to start.
• Coordination with the Management and HR functions – HRP must be coordinated with the other management and HR functions. Unfortunately, HRP tends to become absorbed in their own function and fail to interact with others
• Integration with organizational plans – HRP must be derived from organisation plans. If this does not happen, the process is doomed to fail
• Quantitative Vs Qualitative approaches – a strictly quantitative approach HRP is numbers game – in, out, up, down and across, while a strictly qualitative approach focuses on concerns for promotability and for career development. A balanced approach is one that may yield better results
• Non – involvement of operating managers – HRP is strictly not a HR department function. Successful HRP requires a coordinated effort on the parts of operating managers and the HR personnel
• The technique trap – there is sometimes a tendency to adopt one or more of the HRP methods not for what they can do, but rather because every one is using them. Pre occupation with the ‘in thing’ can be a major shortage.

 

HRP LIMITING FACTORS

HR planning can be difficult and often in accurate. The chief reasons are:

1. Type of industry – some depend on new product development in an extremely competitive environment; others may depend on political decisions which are impossible to forecast, while others work on a tendering basis
2. Opposition or scepticism among members of management; all must be convinced of the value of HRP if it is to be a success
3. Resistance to the changes expressed in the plan. Forecasts of labour structure, with their effects on skills and status, may be regarded as a threat
4. The difficulty of forecasting social and economic changes accurately, especially in an era of high unemployment
5. The need to have very complete and accurate employee records, to be used to detect trends in employee movement. Such may be unreliable in times of high unemployment
6. Rapid growth of new technologies
7. The plan may indicate recruitment and training, which although desirable, may not be possible due to cash flow constraints

TASKS:   o    The physical relocation of a business’s premises creates a number of HRM problems. Which ones are these? o    Discuss examples of outplacement procedures that may be undertaken by an organisation o    Define outplacement and explain how it operates o    State some ways in which labour turnover may be reduced

 

 

 

 

 

 

 

 

TOOLS AND TECHNIQUES OF HUMAN RESOURCE PLANNING.

The following tools are available to assist in the HRP process

 

1. Skills inventory
2. Succession planning/organisation replacement chart
3. Commitment manpower planning
4. Ratio planning

 

SKILLS INVENTORY

This consolidates information about the organisation human resources. It provides basic information on all employees, including in its simplest form a list of names, certain characterizes and skills of employees.

 

Because the information from a skills inventory is used as input into promotion and transfer decisions, it should contain information about each employee’s portfolio of skills and not just those relevant to the employee’s current job. The following broad categories of information should be included in a skills inventory

 

• Personal data, age, sex, marital status
• Skills; education, job experience, training
• Special qualifications: membership in professional groups, special achievements
• Salary and job history: present and past salary, dates of raises, various jobs held
• Company data; benefit plan data, retirement information, seniority
• Capacity of individual; test scores on psychological and other tests, health information
• Special preferences of individual; geographical location type of job

 

The primary advantage of a skills inventory is that it finishes a means to quickly and accurately evaluate the skills available within the organisation. In addition to helping determine promotion and transfer decisions, this information is necessary for making other decisions, such as whether to bid on a new contract or introduce a new product.

 

A skills inventory also aids in planning future employee training and management development programmes and in recruiting and selecting new employees

SUCCESSION PLANNING

This identifies specific people to fill key positions throughout the organisations. It almost always involves use of a replacement chart. Succession planning is basically a plan for identifying who is currently in post and who is available and qualified to take over in the event of retirement, voluntary leaving, dismissal or sickness.

A typical succession chart is as shown below: – (such information is contained in an organisation replacement chart, which shows both incumbents and potential replacements for given positions.

SKILL INVENTORY PROFORMA

 

PERSONAL FACTORS

 

Name ——————————–                                           Place of birth ———–

Age ———————————-                                            Present address ——–

Gender —————————–                                            Tel No ———————-

Marital status ———————-

 

EDUCATION AND TRAINING

 

School/college/university attended with years ————————————

Diploma/degree obtained (with distinctions) ————————————–

Details of training completed ————————————————————-

 

EXPERIENCE AND SKILLS

 

Job areas/ field of specialization ——————————————————–

Special skills ————————————————————————————–

Title / title of job / jobs held / with period / duration —————————–

 

ADDITIONAL INFORMATION

 

Pay/salary ———————————–                               Grade ———————Performance /evaluation ratings ——————–

Absenteeism period ———————————————————————

Disciplinary records ——————————————————————–

Career plans ——————————————————————————

 

Department	Manager			Date
Present	Management	Jobholders		Possible successors	Ready
Post	Jobholder	Age	Performance	First choice: Second choice

                        A Management succession chart

 

To be effective replacement charts must be periodically updated to reflect changes in scenarios and potential requirements. Under an optimal succession planning system, individuals are initially identified as candidates to move up after being nominated by management. Then performance appraisal data are reviewed, potential is assessed, developmental programmes are formulated and career paths are mapped out.

 

A potential problem with many succession plans is the “crowned prince syndrome” – which occurs when management considers for advancement only those who have managed to become visible to senior management.  Another problem with succession planning is that so much information must be tracked that it is very difficult to do it manually.

 

COMMITMENT MANPOWER PLANNING (CMP)

This is a relatively recent approach, to HR planning designed to get managers and their employees thinking about and involved in HRP. In addition to encouraging managers and employees to think about HRP, CMP provides a systematic approach to HRP.

 

CMP generates three reports that supply the following information;

 

• The supply of employees and the promotability and placement status of each
• The organizations demand, arising from new positions and turnover and projected vacancies for each job title and
• The balance or status of supply versus demand, including the name, job and location of all those suitable for promotions

 

RATIO ANALYSIS

Two basic premises apply here.

 

First, that an organisation is “vital” in terms of its human resources to the extent that it has people with high potential who are promotable, either now or in future and backups have been identified to replace the incumbents.

 

Second, is that an organisation is “stagnant” to the extent that employees are not promotable and no backups have been identified to replace the incumbents. The end product ratio analysis is an overall organizational vitality index (OVI). This is calculated based on the number of promotable personnel and the number of existing backups in the organisation.

 

TOPIC 4:RECRUITMENT AND SELECTION

 

At the end of this topic, the trainee should be able to: –

• Explain the meaning of recruitment and selection
• Explain the basis for determining when to recruit
• Identify sources of recruitment
• Apply the procedure for recruitment
• Determine appropriate organization’s policy on disadvantaged groups
• Definitions
• Recruitment involves seeking and attracting a pool of people from which qualified candidates for job vacancies can be chosen.

There is a minor distinction between recruitment and selection.  Recruitment involves the attraction of suitable candidates to vacant positions, both internally and externally to the organisation.  Selection involves the choosing of suitable candidates attracted via the recruitment process.

It is seen as the process of seeking out and attempting to attract individuals in external labour markets who are capable of and interested in filling available job vacancies. It is concerned with developing or generating a pool of job candidates in line with the HR plan.

Recruitment is the process of searching for prospective employees and stimulating and encouraging them to apply for jobs in an organization. Since it involves the process of searching for prospective employees, it is concerned with the range of sources of supply of labour and the techniques involved in getting the employees into an organisation.

It is an intermediate activity whose primary function is to serve as a link between HRP and selection. The purpose of recruitment is to provide a large pool of job candidates so that the organisation will be able to select qualified candidates it needs.

Recruitment therefore has no direct effect on the quality of employees taken into an organisation; rather selection is relied upon to pick candidates who have the ability and motivation to become productive employees of the organisation

 

Significance of the Recruitment Process

Recruitment enables organisations to receive a large pool of job applicants from where short listing and selection of the right candidates can be done. Recruitment is an activity used by organisations to fill job vacancies with qualified individuals and hence the attainment of organizational goals.

 

Failure to generate adequate numbers of reasonably qualified job candidates can be costly to an organisation in the following ways: –

 

• It may greatly complicate the selection process e.g. by leading in extreme cases, to the lowering of the set hiring standards. Lower qualities hires mean an extra expenditure on employee development and supervision to attain satisfactory levels of performance.
• When recruitment fails to meet organizational needs for talent, a typical response is to rise they pay level but this may however distort traditional wage and salary relationships in the organisation. A rise in pay level will be needed to attract highly skilled manpower that will be stimulated and encouraged to apply for an organisation vacant position.
• Lack of qualified candidates may lead to added costs through re-advertisement

 

BASIS FOR DETERMINING WHEN TO RECRUIT

One of the first steps in planning for recruitment of employees into an organisation is to establish adequate polices and procedures. A recruitment policy represents the organization’s code of conduct in this area of activity.

 

Before recruitment is undertaken, the need for recruitment must be determined. A determination by the organisation, on when to recruit involves conducting HR planning and analysing the HRP results. If the projected labour demand is more than projected supply, the organisation should fill the gap through recruitment. Recruitment will thus be sourced from internal and external sources.

 

Vacancies must be determined for various positions in various departments. Most organisations use a Personnel Requisition Form to officially request the HR manager to take action to fill a particular position. The Form describes the reason for the need to hire a new person and the requirements for the job. It is a good idea to attach a Job Description and personnel specifications to the Requisition Form.

Factors Influencing the Need for Recruitment

1. Expansion and growth of organisations
2. Separations; voluntary quits, death, retirement, retrenchment
3. Mergers and take over – this may call for a need for critical skills absent in the organisation especially the top position
4. Setting up a new enterprise
5. Changes in technology and methods of operation – new computers machines etc
6. Restructuring or reengineering
7. Introduction of new products or services

 

SOURCES OF QUALIFIED PERSONNEL

An organisation may fill a particular job either with someone already deployed by the organisation (Internal sources) or with someone from outside (External sources). Each source has advantages and also disadvantages

Internal Sources of Recruitment

This includes personnel already on the payroll of an organisation – its workforce. It is the best place to source someone to fill a vacancy but only for organisations that have been effective in recruiting and selecting employees in the past.

Recruitment is a costly business.  If the position can be filled in any other way other than direct recruitment, then it will be worthwhile for the organisation to pursue such possibilities.

Instead of spending lots of money recruiting a candidate externally, a company can fill a vacancy in a number of ways:

• Job Sharing: The job can be arranged so that the tasks are shared out among two or maybe three people. This is done on a part-time/job sharing basis.  This pattern is suitable for mothers who have returned to work after having a family and who want to combine looking after their families with a career.
• Overtime: This is a method used to resource peaks in production or demand. Employees work a set amount of hours over their usual contractual hours and usually get paid a higher premium than their normal hourly rate – sometimes “time and a half or double time”
• Secondment: This operates by staff being temporarily transferred to work in another section or department. This can be on both a full time or part time basis.
• Sub-contract: By sub-contracting certain jobs and duties, employers avoid on-costs like national insurance contributions, tax and sick pay. Many large employers use sub-contracting on a regular basis.  Sub-contracting is also known as outsourcing.
• Use of a recruitment agency: This is an option, which many companies use to fill temporary or permanent positions. It is also used by companies to cover maternity or long-term sick leave.

 

Whenever a vacancy occurs, someone from within the organisation is upgrade, transferred, promoted or sometimes even demoted.

 

Advantages

1. Better motivation of employees because their capabilities are considered and opportunities offered for promotion.
2. Better utilization of employees because the company can often make better use of their abilities in a different job
3. The employer is in a better position to evaluate those presently employed than the outside candidates
4. It is more reliable because a present employee is known more thoroughly than an external candidate
5. It promotes loyalty among employees for it gives them a sense of job security and opportunities for advancement
6. A present employee is more likely to stay with the company than an external candidate
7. It is quicker and cheaper than external sources
8. Since those employed are fully aware of and well acquainted with the organisations polices and operating procedures, they require little training and even induction
9. More accurate data and available concerning current employees thus reducing the chances of making a wrong decision
10. Full utilization of the abilities of the organisations employees improves the organization’s return on its investment – this takes into consideration that organisations have a sizable investment in their workforce

 

Disadvantages

1. Leads to inbreeding and discourages new blood, from joining an organization
2. Infighting for promotions can become overly intense and have a negative effect on the morale and performance of people who are not promoted

• There are possibilities that internal sources may “dry up” and it may be difficult to find the required person from within an organisation

1. As promotion is mostly based on seniority, the danger is that really capable people may not be chosen for promotion the likes and dislikes of the management may also play an important role in selection of personnel
2. It seldom contributes new ideas or innovations that may be very important for progress in a competitive economy
3. Internal sources should only be used if the vacancy to be filled is within the capacity of present employees and if adequate employee records have been maintained and an opportunity is provided in advance for employees to prepare themselves for promotion.

• If an organisation promotions from within, it needs a strong employee and management development programme to ensure its people can handle larger responsibilities.

 

External Sources of Recruitment  

External recruiting is needed in organisations that are growing rapidly or have a large demand for technical skilled or managerial employees.

 

External sources of personnel include: –

 

• New entrants – to the labour market e.g. fresh college graduates, school leavers
• The unemployed already in the labour market with a wide range of skills and abilities
• Retired experienced persons
• Employed persons from other organisations

 

Advantages

• The pool of talent is much larger than that available from internal sources. The best selection can be made
• External sources provide personnel having skills and training and education as required by the hiring organisation
• Employees hired from outside can bring new insights and perspectives to the organisation
• It is cheaper to hire technical, skilled or managerial people from outside rather than training and developing them internally – in case of immediate demand for the talent.

 

Disadvantages

• Attracting, contacting and evaluating potential employees is more difficult
• Employees hired from outside need a longer adjustment or orientation period
• Recruiting externally may cause morale problems among employees within the organisation and who feel qualified to do the job
• Method may be expensive and time consuming
• There is uncertainty due to changes in demand and supply of labour in the labour market

 

Summary of a recruitment and selection process

• Determine the vacancy
• Job analysis
• Job descriptions
• Personnel specifications
• Drafting the advert
• Sources of recruitment
• Arrival of applicants
• Pre-selection of candidates using CV’s/Resumes/Application forms
• The interview
• The job offer
• The induction process