Human Resource planning is a process of identifying current and future human resources needs for an organization to achieve its goals and strategic objective. It involves, but not limited to forecasting an organization’s future demand and supply for different types of employees directly linked to its business needs. Implementation of gap analysis between future HR supply and future demand is taking place first. Strategies are then developed in order to minimize the gaps and may involve recruitment, internal staffing, development and training, and activities relating to rightsizing. Forecasting future needs implies proper understanding of the future business directions of the organization, so that the HR objectives can be appropriately identified. HR planning is conducted at the organization level or at a component level within the organization, but a key factor for success is to understand and link planning at any level to the to the strategic directions of a company.
Many professional HR managers specialized in industrial and organizational psychology work on activities focused on designing and implementing programs in recruitment, selection, training, etc., in order to realize organizational needs. Such activities generally involve elements of planning that are named as future-oriented.
We can identify the 4 major stages in HR planning, as following:
Stage 1: Evaluation of human resources within the company and understanding of their availability in the market
Stage 2: Estimating the currently employed manpower resources that are willing to be with the firm. Predict losses of current manpower at the end of forecasted period.
Stage 3: Assess and forecast of labor requirements during the forecast period, to achieve the company’s objectives and goal.
Stage 4: Ensuring that the required human resources are available during and by the end of forecasting period.
Even some projects for which objectives are expected to be achieved in short time (2-3 months) should be designed with a clear understanding of how the short-term objectives are linked to the achievement of longer term objectives. For example, a Construction Company “X” engaged in a recruitment campaign to hire 50 engineers should have a clear understanding of how this hiring goal will help the company achieve its long-term goals such as becoming the most reputable and proficient company in that industry. This particular company can also focus on finding 25 engineering graduates to provide for them an on job training program. Due to the fact that a growing company needs to prepare a number of top and middle managers, HR dpt. should plan ahead of time. It will take from 5 to 7 years to develop middle-level managers, as well as the top level managers will be prepared within 10 to 15 years.
This particular example allows us to discover a clear linkage between human resource planning and strategic business planning. It is preferable if top executives would have a properly designed vision of the future, which has been communicated and accepted by managers throughout the organization. Nevertheless, in case if company “Y” does not have a common understanding of the vision, a professional HR manager can facilitate a number of strategic planning sessions, and develop Vision, Mission, and Objectives for the whole company. Based on the overall strategy, HR department will mobilize its human power and proceed with planning.
FORECASTING THE DEMAND AND SUPPLY
The demand and supply of human resources can be predicted by understanding the business needs of a company and having an updated picture of the labor market in the region. Human resource dpt. objectives follow logically from consideration of any discrepancies between demand and supply. Demand refers to the number and characteristics (e.g., skills, abilities, pay levels, or experience) of particular jobs at a given point in time and at a particular place. Supply refers to the number and characteristics of people available for those particular jobs. Basic questions that HR planners should answer are the following: “What are the jobs needed to be filled during the coming period of time?” and “How and where we are going to get people from to fill those jobs?”
What are the jobs needed to be filled? Answering the demand question requires prediction: who will leave jobs and create vacancies, which jobs will be eliminated, and which new jobs will be created. One of the methods for predicting the vacancies and increasing number of jobs is to project historical statistics into the future, the so called Statistical Techniques. This is applicable for organizations with a long history in the market and a clear understanding of their business, which can easily predict the demand for their products or services (production volume, level of sales, number of contracts, etc.).
Behavioral theories of the causes of turnover (Richard Mowday, Lyman Porter, and Richard Steers – The psychology of commitment, absenteeism, and turnover – 1982) accompanied with conducting employee surveys particularly designed to assess basic predictors of turnover (such as job satisfaction), in addition to the support of human resource planners can give enough information to predict how many filled positions can possibly become vacant. This information is more accurate and can be useful mostly when a single organizational department has a large number of employees. Nevertheless, on practice it is less precise when making predictions about which positions are potential to become vacant. Such predictions about how many and what types of jobs will be eliminated or created in the coming period should be directed by business plans previously developed by department heads and line managers (Judgmental Techniques).
The second question related to the supply: “How and where are we going to get people from to fill those jobs?” The first step in answering this supply question requires identification of the desired characteristics of employees who can fill the jobs of interest. Then, the availability of those characteristics within the organizations current work force (Internal Scanning) and in the external labor market must be assessed (External Scanning). The particular characteristics of current potential employees that are tracked by human resource planners are influenced by the nature of the organization and the environment in which it operates. For example, for human resource planners in growing organizations, simply finding people with the needed skills and abilities is a top priority.
On the other hand, for planners in mature and declining organizations, the costs (e.g., compensation package) associated with employees becomes a crucial factor for taking a decision, especially if work-force reductions or downsizing are needed. Therefore it is important for human resource planner to know the business needs and characteristics of the organization. This information is usually gathered by human resource planners while meetings the top and line managers to discuss their business plans as well as their human resource needs. The process of discussion increases the accuracy of supply and demand forecasts and facilitates the establishment of human resource objectives.
ESTABLISHING HR OBJECTIVES
Setting HR objectives is essential, and when it comes to the planning, objectives are often easy to express in quantifiable form. Human resource objectives should include targets for increasing the number of people attracted by the organization and applied for certain jobs (increasing the pool of applicant); attracting a different applicants mixture, including different skills and different locations, etc.; improving the skills and qualifications of newly hired employees. Resulting in increasing the period of time that desirable employees would work for the organization, at the same time decreasing the length that undesirable employees will waste within the organization; helping retaining permanent employees, and assuring that newly hired employees will develop certain skills required by the organization faster. The abovementioned objectives can effectively be achieved by applying modern human resource management techniques and cooperating with line managers to ensure agreement and common understanding of the program objectives.
DESIGNING HR PROGRAMS
The technical skills of HR specialists are often applied to program design and implementation:
Programs for recruitment are used to influence the quality and size of the pool of applicants.
Selection programs are conducted for making proper hiring decisions.
Performance appraisal systems identify weak performance of some employees that must be corrected and highlight achievements and competencies of other employees to be fairly rewarded.
Training programs point out developing skills that are currently deficient or will be required in the future.
Compensation and benefits systems incur objective to motivate staff for a better performance, to attract new potential candidates, and to retain current qualified employees.
Although, the above programs and systems are designed for achieving not only short-term objectives and are expected to deliver effective results relatively fast, they are also serving long-term goals and help an organization to achieve them.
EVALUATING HUMAN RESOURCE PROGRAMS
When it comes to program evaluation, it could be required to asses how well objectives were achieved. As mentioned before, the objectives of HR planning such as amount of applicants, number of hired employees, and their performance appraisal score can be easily quantified; therefore an ongoing overview of human resource programs is valuable, for the purpose of reporting of achieved objectives to a higher authority. Some methods of program evaluations are very common in large organizations. For example, submitting the annual HRM report to the board of directors gives them a clear picture about the HR activities and a corrective action plan for improving/adjusting HR programs if and when needed. It will always keep the HR department on a highly professional level.
Benefits for the HR department for conducting evaluation of the HR programs are related, but not limited to the following:
Ideological and financial back up provided for the HR department (by board of directors).
Gaining power of influencing employees, therefore a better control on them.
Obtained authority and trust among employees creates a higher level of cooperation and interaction.
Common understanding (across an organization) of the importance of HR functions.
In the book “Evaluating Human Resources Programs” written by Jack Edwards, John C. Scott, Nambury S. Raju this subject is deeply studied and analyzed: “Human resource (HR) functions, large and small, have played an expanding role in supporting the strategic direction of their organizations. Where at one time HR was seen primarily as an enforcer of policies, it is now considered among top-performing organizations to be a key partner in driving and supporting critical business objectives. HR’s ability to contribute to the organization’s bottom line involves more than aligning its talent management accountabilities with the mission and vision of the organization. It means continually evaluating and strengthening these accountabilities to ensure value, meaningful impact, and competitive advantage.” (http://www.shrm.org/books/evaluate/)
Human Resource is an essential economic resource of any organization and it requires the same amount of attention that top executives give to other resources or functions. This is why most of the modern organizations realize the importance of qualified HR department and contribute efforts to its development. For a single company, the pay-offs from HR functions are usually measured by higher efficiency and productivity, achievement of the company’s goals and objectives, and overall employee satisfaction. It is obviously that an organization can not accurately forecast the requirements for human resources unless it is directly linked to future strategic direction. The best results are achieved when a company integrates HR planning with the overall business needs.
– Information gathered from the book: “Globalizing Human Resource Management” by Paul Sparrow & Hillary Harris – 2004
– Richard Mowday, Lyman Porter, and Richard Steers – “The psychology of commitment, absenteeism, and turnover” – 1982
– Jack Edwards, John C. Scott, Nambury S. Raju – “Evaluating Human Resources Programs” – 2007.