Human resource planning: process, levels and control

1. Meaning and need

E.W. Vetter (1967): human resource planning is the process by which management determines how the organisation should move from its current manpower position to its desired manpower position; through planning, management strives to have the right number and the right kind of people, at the right places, at the right time, doing things which result in both the organisation and the individual receiving maximum long-run benefit.

It is also called manpower planning. It answers four questions: how many people, of what kind, when, and from where.

Need for HR planning

• To forecast future requirements arising from expansion, diversification or new technology.
• To replace people who retire, resign, die or are promoted (labour turnover is constant).
• To identify surpluses and shortages in advance, so that layoffs or crash hiring are avoided.
• To plan training and career development ahead of need.
• To control labour cost: overstaffing raises cost; understaffing loses output.
• To meet legal and social obligations, such as reservation in public employment.
• To support succession planning for key positions.

2. Integrated strategic planning and HR planning

HR planning is not a separate exercise. The corporate strategic plan (growth, new markets, mergers, cost reduction) determines what people the firm needs; HR planning translates it into numbers and skills. The reverse link also matters: the availability of skilled people limits which strategies are feasible. Golden and Ramanujam (1985) described four degrees of linkage:

1. Administrative linkage — HR does routine work with no role in strategy.
2. One-way linkage — strategy is made first and HR is told to implement it.
3. Two-way linkage — HR is consulted on the people implications before the strategy is final.
4. Integrative linkage — the HR head sits in the top team and HR is part of strategic planning from the start.

Integrated planning means the fourth: business plan, HR plan, budget and appraisal targets are set together and reviewed together.

3. HR planning at different levels

The levels connect: national plans shape the supply of educated people; industry plans shape demand; the enterprise plan is where HRM in the narrow sense operates.

4. Process of HR planning

1. Analyse organisational objectives and plans. Production, sales, expansion, technology plans set the demand for people.
2. Prepare the HR inventory. A record of present employees: numbers, skills, qualifications, age, performance, potential (skills inventory; management inventory).
3. Forecast demand. Techniques: managerial judgment (top-down or bottom-up); ratio-trend analysis (for example one supervisor per 15 workers); work-study or workload analysis (below); the Delphi technique (a panel of experts answering anonymously in rounds); and statistical or econometric models.
4. Forecast supply. Internal supply from the inventory, adjusted for expected retirement, turnover, promotions and transfers (replacement charts, succession plans, Markov analysis); external supply from the labour market.
5. Estimate the gap (net requirement) by comparing demand with supply: a shortage or a surplus, by category.
6. Action plans. For a shortage: recruitment, overtime, training, promotion, outsourcing. For a surplus: freezing recruitment, voluntary retirement, redeployment, retraining, and only last of all retrenchment (which the Industrial Relations Code regulates).
7. Control and review (section 6).

5. Job analysis

Job analysis is the process of collecting and studying information about the operations and responsibilities of a specific job (Flippo). Its two products:

• Job description — what the job is: title, location, duties, tools, working conditions, reporting relationships.
• Job specification — what the jobholder must have: education, experience, skills, physical and personal qualities.

Methods: observation, interview, questionnaire, checklists, employee diaries, critical incidents, and technical conference with supervisors. Uses: HR planning, recruitment and selection, training, performance appraisal, job evaluation and pay, safety, and job redesign.

6. Control and review mechanisms

An HR plan is reviewed because assumptions change. The mechanisms:

• HR budgets — approved headcount and staff cost per department; variances are reported.
• Periodic reports on headcount, vacancies filled, time to fill, labour turnover, absenteeism and overtime.
• HR audit — a systematic check of HR policies and their results.
• HRIS — computerised records that allow monthly comparison of plan and actual.
• Review meetings — the plan is revised annually, or sooner if business plans change.

7. Worked numericals

(a) Workload analysis. A factory plans to produce 1,20,000 units next year. Each unit needs 0.5 standard man-hours. A worker gives 2,000 working hours a year. Expected absenteeism is 10%. How many workers are needed?

If 28 workers are on the rolls and 2 will retire, internal supply is 26 and net requirement is 34 − 26 = 8 workers to recruit.

(b) Labour turnover rate. Workforce: 190 at the start of the year, 210 at the end; 12 employees left. Average workforce = (190 + 210) ÷ 2 = 200. Separation rate = 12 ÷ 200 × 100 = 6%. This figure feeds the supply forecast: at 6%, roughly 12 replacements a year are needed on a workforce of 200 before any growth.

How this is examined

“Describe the process of Human Resource Planning” (June 2025, 10 marks); “Explain HR planning at different levels” (August 2024, 10 marks) and the short note on “HR Planning at different levels” (January 2026); “Briefly explain the need for HR planning” (August 2024, 6 marks); short note on job analysis (June 2025). Use the levels table and the seven-step process. A small workload calculation in the process answer is not demanded but shows the forecasting step in action.