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What is Human Resource Planning?

What is Human Resource Planning?

Introduction

This post discusses one of the most critical and preliminary human resource functions: human resource planning. People are considered the most valuable resource of an organization. 

There is a deliberate process of ensuring that the organization has the people it requires to achieve that.

What is Human Resource Planning?

Human resource planning is one of the fundamental strategic roles of human resources managers. Walker (2009) defines human resource management as a process of assessing an organization’s human resources needs in light of organizational goals and changing conditions and making plans to ensure that a competent and stable workforce is employed. On the other hand, Fayana (2002) defines it as a systematic way a firm provides that it has the correct number of people and the right kind of people in the right place while doing things for which are economically most useful. Fayana (2002) emphasizes that human resource planning responds to the importance of business strategy and planning to ensure the availability and supply of people both in number and quality for organizational effectiveness.

On the other hand, Bulla and Scott (1994) in Armstrong (2010) defined human resources planning as

Thus, human resource planning directly links the organization’s strategic plan, strategies, and activities. For the strategic plan to achieve its goals and objectives, an organization needs people. People implement the strategic plan. Therefore, it is essential to plan for the number and type of people who can perform various technical, financial, administrative, and management activities to achieve the intended goals of the organization.

Why Human Resource Planning?

The basis of various activities like recruitment and selection, training, career progression redeployment and succession planning to meet present and future business needs; good human resource plans enhance organizational sustainability and profitability if there is integration and a close relationship with the organization’s strategic goals.

In general, organizations that do not plan for the future have fewer opportunities to survive. No wonder that human resource planning is central in the human resource management function. The demand for human resources springs from the organization’s need to continue the business. The Human Resources department exists, among other things, to match future organizational requirements with the supply of the right kind of people. That is why the Human Resource department needs to plan carefully to ensure effective and efficient management of workers in the organization.

Naturally, human resource planning attempts to project future changes and events and the impact these changes will have on the organization’s operation. Organizations do not operate in isolation from their more comprehensive and immediate task environment. Any economic, social, political, and technological environment changes significantly impact organizational performance. Reilly (1999) in (Armstrong 2010) noted that human resource planning is done for substantive reasons. First, it seeks to optimize the use of the current human resources by obtaining the maximum output from employees. This also involves nurturing the available skills by providing the right employment conditions that retain staff. Secondly, human resources planning ensures that the organization maintains its current skills for future needs.

For Reilly (1999), a deep understanding of the present helps the organization to confront future preparedness with confidence. Information about the present also gives ammunition and a factual base to transform and develop plans that meet future organizational requirements. This is true because one cannot understand the future without understanding the present, just as one cannot understand the present without understanding the past. Whatever the state, today’s organization is based on decisions made in the past. Practitioners in human resource management should use information about the present to plan the future.

By nature of its process, human resources planning enhances communication within an organization. Business strategic plans are communicated across all levels and departments. Questions are raised for clarification by bosses; information is given from the bottom level of the organization to managers who need that information. The process seeks to align human resource needs to the business to which line managers and human resource managers require. There is, therefore, both top-down and bottom-up communication from the executive level to the shop floor and vice-versa in the process of undertaking human resource planning. This builds motivation and commitment towards the achievement of business plans.

According to Cole (1986), several aims are surrounding human resource planning, some of which are:

  • To ensure maximum use of existing human resources
  • To forecast future human resources needs
  • To provide control measures to ensure the necessary human resources are available as and when need arise
  • To determine the level of recruitment and training
  • To attract and retain the competent workforce
  • To project potential surpluses or deficit of staff
  • To develop a force capable of adapting to changes in the organization and its environment.
  • To formulate retention strategies.

Steps in human resource planning

As a process that has a beginning and end, there are several activities in human resource planning and takes the following significant steps: defining corporate objectives, assessing workforce requirements (demand forecasting), assessing workforce supply (supply forecast), meeting workforce requirements (action plan), reviewing progress and revising plans as necessary (Cole 1986). However, Armstrong (2010) provides a comprehensive scope of human resource management by outlining the following steps:

  1. Drawing strategic business plan which entails defining future activity levels and initiatives demanding new skills.
  2. Developing resourcing strategy through planning to achieve competitive advantage by developing intellectual capital.
  3. Developing scenario plan by assessing in broad terms where the organization is going.
  4. Forecasting demand or supply by estimating future demand for people and assessing the number of people likely to be available from within and outside the organization.
  5. Analyzing labour turnover by presenting the actual figures and trends as an input to the supply forecast.
  6. Analyzing the work environment in terms of its scope for using and developing skills and achieving job satisfaction.
  7. Analyzing operational effectiveness in terms of productivity, utilization of people and the scope for increased flexibility to respond to new and changing demands.

Some of the critical areas of human resource planning are elaborated on below.

Environmental scanning

The assessment of human resources begins with environmental analysis. External ecological research includes the political, economic, social and technological aspects. Objectives, resources, and structure are analyzed to assess the internal environment’s currently available human resource inventory level. 

Armstrong (2006) emphasizes that after analyzing external and internal forces, it is easier for a human resource manager to find out the strengths, weaknesses, opportunities, and threats facing the organization in human resources. Inventory takes stock of the current employees in the organization. Not only does it relate to data concerning numbers, ages, and locations, but also job analysis and individual skills information.

Demand forecasting

After environmental scanning, the demand for human resources is also forecasted. Demand forecasting involves predicting the number and types of people the organization will need in future. Demand forecasting is the process of determining future needs for human resources in terms of quantity and quality. It is done to meet the needs of future employees of the organization. Future human resource is estimated with the help of the organization’s current human resource situation and analysis of organizational plans. After a systematic evaluation of resources strategy and informal environment assessment, human resources planning then forecasting future human resources requirements. This is the demand and supply forecasting phase. According to Armstrong (2006), demand forecasting involves ‘establishing the future number of people required and the likely skills and competencies they will need’. Armstrong (2010) observes that techniques employed to develop a sound forecast of human resource requirements include professional or expert judgement, ratio trend analysis and work-study. In other words, statistical and judgmental are two approaches to forecast demand. Using a statistical method, an organization predicts its needed workforce size based on specific business factors.

Biles and Holmberg (2002)

An example is that of a hospital that could use the business factor of projected patient load to predict the number of nurses it would need in future. In an academic institution like a university, the number of courses in a faculty of a department can determine how many lecturers would be required if the workload of a single lecturer is established. On the other hand, judgement is a technique where management forecasts the human resource requirement for the overall organization based on strategic plans and proposals of departmental heads. Organizations operating in less stable environments are more likely to rely on a critical approach. However, it is impossible to forecast the future demand for human resources accurately. As such, an organization may come up with different scenarios other than the demand forecasting method depending on the interpretation of data (Byars and Rue, 1984).

Supply forecasting

According to Armstrong (2012), supply forecasting measures the number of people likely to be available from within and outside the organization, allowing for promotions, labour wastage, retirements and promotions. It relates to the analysis of current resources and the estimation of the supply of human resources based on future availability. It evaluates the future sources of human resources that are likely to be available from within and outside the organization. Internal sources include promotion, transfer, job enlargement and enrichment, whereas external sources include recruiting fresh candidates from outside. However, due to globalization, supply forecast is limited. This is also precipitated by the rapid political and economic changes, affecting the supply of human resources anytime.

Supply forecasting is also a stock-taking process whereby existing labour and skills analysis is done to establish what is currently available. Paul (2011) also noted that an audit of current labour strength has to be done so that plans to close the gap between what is available and desired is based on a solid factual base. At the supply forecasting stage, the Human Resources Department could also establish sources of labour supply which can be within and outside the organization.

Gap analysis

When the demand and supply are forecasted, the two are then matched. 

In case of deficiencies, an organization has to hire an additional required number of employees. On the other hand, the organization will be forced to reduce existing employment in the case of over-staffing. Thus, the matching process gives knowledge about requirements.

Action plans

Determination of demand and supply through gap analysis are processes toward developing action plans meant to bring staff to match the required level of quality and quantity.

Therefore, human resource planning is centred on developing action plans that would ensure that the organization has the human resource requirements it needs to meet its overall bottom line. After a rigorous scanning of the environment, demand and supply forecasting based on the organization’s strategic plans, the planning process will come to a level of action or human resource plans. Armstrong (2010) points out that action plans are derived from broad resourcing strategies and a more detailed analysis of demand-supply factors. They deal with deficits or surpluses.

In terms of deficits, concrete plans are then crafted as to where and how to obtain the people required. Recruitment is one of the main plans recommended to fill the skills gap. As noted above, sources of recruitment fall under two broad categories. Internal resources look at potential candidates, while external resourcing looks outside the organization.

In cases of surpluses, plans are developed to deal with the excess so that the organization has the correct number of employees and avoid high and unnecessary costs. In environments where the economy is poor, capacity utilization across industries has declined sharply. The severe economic outlook reduction has negatively affected the industry, which is one of the plans that can recommend rationalizing labour, cutting costs, and ensuring organizational survival. Also, the introduction of two weeks rotational leave where employees would come to work for only two weeks in an entire calendar month and be paid an equivalent of 50% of basic salary could be another option. This is an attempt to realign labour with production levels.

Some austerity measures could be implemented in other industries involving employees going on unpaid leave arrangements ranging from four to eight months to cut expenditure and ensure business continuity. Thus, an action plan is developed showing the various human resource activities that can implement to deal with the deficient or surplus identified in the gap analysis processes. Some activities might include recruitment, selection, placement, training and development, and decrease.

Challenges

Despite the advantages of human resource planning in an organization, concerns are raised. Some scholars have argued that human resource planning is not relevant in a practical world because it is challenging to ascertain an organization’s future human resource requirements due to uncertainty of the future (Byars and Rue, 1984). The end of any country is uncertain because political, economic, cultural, and technological changes occur every day, thereby affecting the employment situation. As such, human resource planning predictions are bound to go wrong, making the exercise less reliable. The sudden arrival of the coronavirus in the 2019-2020 period with its devastating impact on the human resources of nations is a case in point. For example, in Malawi, 2000 health personnel were recruited not based on regular organizational need but due to the sudden eruption of the epidemic, thereby distorting the human resource plan of the Ministry of health.

Additionally, because of the sudden directive by the government to close schools due to the Corona Virus, teachers in private schools, colleges and universities found themselves without a salary for several months because of the over-dependent fees by private learning institutions.

The link between human resource planning and strategic planning

The relationship between the human resource planning process and strategic planning has been stated above. According to Armstrong (2011), human resources planning contribute to strategic planning by ensuring that the organization has the skilled, committed and well-motivated employees it needs to achieve a sustained competitive advantage. Greer (1995) points out that human resource planning is essential to strategic business planning. The organization scans its strengths, weaknesses, threats, and opportunities before developing its vision, mission, values, and aspiration. Management formulates a strategy by evaluating the interaction between strategic factors and makes choices that guide managers to meet the organizational goals. To implement the goals to realize the vision, there is a need to consider this plan’s human resource implication. Human resource planning fits in this level as it helps develop techniques used to implement these strategies: recruitment, training and retention of human resources. Strategic plans depend on human resource planning, and human resource planning contributes to the strategic plan by producing action plans to help the organization achieve its key objectives and strategy.

In response to organizations’ strengths, weakness opportunities and threats analysis, human resource planning enable the organization to minimize its weaknesses and threats and to capitalize on its strengths and opportunities.

Thus, human resource planning is no longer an administrative and compliance role but a strategic partner in achieving organizational plans (Mondy et al., 2012). It helps to understand the operational side of the business. It facilitates the strategic capabilities of the organization’s employees for current and future purposes by determining the type of talent required in particular jobs, several employees needed, and the skills required. Storey (1992) points out that human resource planning is linked to strategic planning acts as a business partner. It becomes innovative, interventionist, operative and guardian on matters that uphold performance targets as a partner. It ensures that top managers develop a business strategy that best uses the core competencies of employees in the organization.

Case Study: Ministry of Education in Bakuba

A case study of the Ministry of Education, Science and Technology (MOST) primary schools can be used to illustrate some of the discussion on human resource planning.

The Ministry of Education in Bakuba takes the challenging approach where the emphasis is on balancing the projected demands for and supply of labour. Under the directive of the Ministry, the Teaching Services Commission carries out human resource planning. More input about the requirement of additional teachers is taken from primary schools across the country. Headteachers of various schools draw their human resource requirement plan every year, which is calculated based on the total number of learners at the school required pegged the ratio of teacher to learners of 1:60. These plans are then submitted to the Ministry through the division offices. Upon the directive from the division office, the District Education Manager’s office tries to outsource the additional teachers from other schools upon finding out that others have more teachers than learners. Transfers are arranged for relocation to various schools. This implies a surplus of internal labour supply, and redeployment was the best action. If redeployment is not possible, the Ministry through the Teaching Service Commission opts for an external labour supply. Vacancies are advertised in newspapers or any cost-effective media. The Teaching Service Commission makes recruitment and selection. 

Successful candidates go for training in various teacher training colleges. After they have completed and succeeded in the training session, they are deployed to multiple schools with shortages of teachers. Other pieces of training to develop the teachers are organized by the headteachers (in-service training).

Summary

Human resources planning remains an integral function of human resource management. People remain an organization’s most precious and essential resource. To this end, strategic plans need to be put in place and implemented to ensure that the organization has the human resource it requires to meet its strategic plan. It is an effective strategy that enhances and improves work performance by removing deficiencies and surpluses. Human resources planning include analysis of the level of skill, current and expected vacancies and providing plans to take care of the vacancies. This helps the organization tap efficient talent, which helps achieve organizational goals. Thus, the human resource planning process facilitates the integration of business strategy with business strategy and contributes effectively to organizational success.

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