Human Resource Planning Introduction

Study Notes

Human Resource Planning is the process of ensuring an organization has the right personnel to complete tasks that help achieve its objectives.
It involves developing strategies to match the size and skills of the workforce to organizational needs.
HR planning assists in recruiting, retaining, and optimizing the deployment of personnel needed to meet business objectives and respond to changes in the external environment.

Analyzing: involves understanding the external business environment and trends, and analyzing the internal workforce to determine the availability of skills and competencies.
Forecasting: involves estimating the future numbers of people required and the skills and competencies they will need.
Planning: involves developing strategies to meet the forecasted needs.

Demand forecasting: estimates the future numbers of people required and the skills and competencies they will need.
Techniques used in demand forecasting include:
- Managerial or expert judgement
- Ratio trend analysis
- Work study techniques
Supply forecasting: measures the number of people likely to be available from within and outside the organization.
Factors to consider in supply forecasting include:
- Attrition (labor wastage and retirements)
- Absenteeism
- Internal movements and promotions
- Changes in hours and other conditions of work

Turnover rate: the rate at which employees leave the organization.
Types of turnover:
- Resignation (e.g. accepting a job elsewhere, poor health, etc.)
- Dismissal (e.g. misconduct, poor performance, etc.)

Involves planning for the addition of permanent employees, temporary employees, and contract workers.
Human resources must plan for the hiring and management of recruiting, and ensure that new employees are educated on company policies and procedures.

Involves planning for layoffs, which can be temporary or permanent.
Human resources must ensure that layoffs are handled properly and legally, and that employees are given maximum notice and support.

Human resource planning can influence productivity through employee wellness programs and initiatives.
Examples of wellness programs include:
- Incentive programs
- Health programs
- Gym membership discounts
- General wellness programs
Measuring productivity before and after the implementation of wellness programs can demonstrate increases in output.

Involves identifying replacement candidates for middle and top management levels.
This is a key component of human resource planning, but is often confidential and limited to key executives and the top HR executive.### Management Succession Planning
Focuses on specific individual managers, unlike general human resource planning which focuses on entry-level positions and number of bodies in general.
A good example of successful succession planning is Proctor and Gamble, which uses a rigorous leadership program called "Build From Within".
This program "microscopically tracks the performance of every manager, making sure that he is ready for the next slot".

Each of the top 50 jobs already has three replacement candidates lined up.
The company has a policy of promotion from within, which has been more successful than hiring from outside.
The company's CEO, Lafley, is extremely happy with their policy, citing a 50% fail rate when they used headhunters in the past.

The final step in the HR planning process is the implementation and evaluation of results.
Success is gauged on whether the plan was able to avoid a labor shortage or surplus.
Evaluation feedback serves as diagnosis of where the process failed and how to prevent it in the future.

A multinational company in the Philippines forecasted a low demand for their products and services and downsized their labor force by 35%.
The company offered a severance incentive to encourage voluntary retrenchment.
The forecast was underestimated, and the result was disastrous, leading to overtime costs and the need to hire new employees at higher salaries.