Human Resource Planning Process: A Comprehensive Guide

Posted on Aug 27, 2024 in Other subjects

ITEM 5: Stages of the Human Resource Planning Process

Stage 1: Data Collection and Analysis

This stage involves gathering and analyzing information to forecast the supply and demand for human resources.

1. Analysis

A. Current Workforce Analysis: Conduct a thorough inventory of the existing workforce, including:

  • Skills, abilities, interests, and preferences of employees
  • Characteristics of jobs and required organizational skills
  • Job fulfillment levels

Utilize a Human Resources Information System (HRIS) to gather data on individual employee history, such as age, education, training, work experience (internal and external), responsibilities, and wage developments.

Applications of HRIS:

  • Supports decision-making in areas like succession planning and wage/productivity analysis.
  • Improves scheduling for equal employment opportunities and ensures non-discrimination compliance.
  • Provides a basis for anticipating the effects of various scenarios, such as potential skill deficiencies or surpluses in the future.
  • Helps create career paths and track the impact of training programs on productivity improvement.

B. Labor Market Analysis: Analyze the current and future labor market composition based on wage groups, occupations, and sectors. Utilize historical data to project future HR needs.

C. Productivity Analysis: Determine the current labor productivity and its likely evolution. Consider factors like turnover and absenteeism, which can impact productivity levels and future HR requirements. Evaluate the desired degree of employee turnover.

D. Organizational Structure Analysis: Study the organizational structure to gain insights into the potential size of different organizational levels and anticipate changes in HR needs. As organizations adopt complex technologies, their structures also become more intricate. The trend of flattening hierarchies, with fewer intermediate management levels, significantly impacts HR management aspects, such as internal mobility channels.

2. Projected HR Demand

Predict future HR demand using various forecasting techniques. The accuracy of these approaches typically increases with shorter time perspectives.

Informed Forecasting Techniques:
  • Delphi Technique: Experts provide independent forecasts, which are then reviewed and revised through multiple rounds of feedback until a consensus is reached.
  • Nominal Group Technique: Individuals brainstorm ideas independently, then present and discuss them as a group. Ideas are ranked or prioritized to reach a decision.
Statistical Techniques:
  • Simple Linear Regression Analysis: Project future demand based on the historical relationship between employment levels and a related variable (e.g., sales). If a strong correlation exists, future sales predictions can be used to estimate future employment needs. However, organizational learning can influence this relationship. The learning curve, determined through logarithmic calculations, can improve the accuracy of future employment projections. This analysis can also relate the learning curve of production volume to time spent and determine HR needs accordingly. Example of a mathematical learning curve equation: Y = A * X-b, where Y is the average unit labor hours to produce X units, A is the labor hours to produce the first unit, X is the number of units produced, and -b is the learning rate.
  • Multiple Linear Regression Analysis: This technique involves multiple variables, leading to more accurate forecasts, and is often used in large organizations.
  • Productivity Rates: Utilize historical data to project future productivity and corresponding HR needs.
  • HR Indices: Analyze historical relationships between employees in different positions using HR data. Then, apply regression analysis to project future staffing needs.
  • Time Series Analysis: Project future HR requirements by analyzing past staffing levels, considering seasonal variations, trends, and random fluctuations.
  • Probabilistic Analysis: Estimate hiring needs by combining the probability of securing contracts with the HR requirements for each contract.

3. Projected HR Supply

  • Analyze both internal and external labor markets.
  • External Market Analysis: Consider the qualitative composition of the labor market, migration patterns, and competitor demands.
  • Internal Market Analysis: Gather information on the current workforce composition and determine the company’s attrition rates (voluntary and involuntary departures).

Indicators to Determine Turnover:

  1. Considering Inputs and Outputs: Turnover Rate (R) = [(E + S) / 2] / Em * 100, where E represents employee inputs, S represents employee outputs, and Em represents the average workforce size.
  2. Considering Only Outputs: R = S / Em
  3. Considering Internal Movements: R = [(E + S) / 2 + R + T] / Em, where R represents resource inflows from other units and T represents outflows to other units.

Disadvantage: These indicators do not provide information on the characteristics of the workforce. Solution: Utilize survival analysis techniques to gain deeper insights.

4. Reconciling the HR Budget

Translate the workforce forecast into monetary terms. Ensure that the resulting budget aligns with the organization’s performance objectives and budgetary constraints.

Stage 2: Setting HR Objectives and Policies

After analyzing supply and demand, identify any misalignments and design HR policies that align with the organization’s overall objectives.

Stage 3: HR Programming

Need for New Resources

If the planning process reveals a future gap between HR needs and availability, develop new personnel policies related to recruitment, selection, training, and internal movements. Factors like expanding into international markets, launching new products, or incorporating new technologies can drive the need for new resources.

Workforce Reductions

Intense competition or reduced demand may lead to a labor surplus. Organizations may need to adjust production capacities, adopt new technologies, or restructure work organization. HR planning helps companies develop plans for workforce reductions, internal movements, or retraining programs necessitated by technological advancements.

Stage 4: Monitoring and Evaluation of HR Planning

This stage focuses on quantifying the value of HR and recognizing it as a valuable organizational asset. The HR management system facilitates the monitoring and evaluation of the HR plan. Data collection should occur at regular intervals to track progress and identify deviations.

Criteria for Evaluating HR Planning:

  • Actual staffing levels versus hiring needs
  • Productivity levels versus stated objectives
  • Implemented programs against action plans
  • Labor costs and program expenses against established budgets
  • Relationship between results (benefits) and program costs

Obstacles in Human Resource Planning

  • Lack of support from top management
  • Difficulty integrating all necessary HR activities for effective planning
  • Lack of involvement from line managers