Human Resource Management Dersi 2. Ünite Özet

Human Resource Planning

Human resource planning includes quantitative and qualitative analyses of the human resources needs in a business based on the developments and changes in internal and external factors and the estimations for the organization of employee movements.

Human Resource planning is the process of periodical review of human resource requirements conducted to provide the required number of employees when needed.

Human resource planning is concerned with the flow of people into, through, and out of an organization. Human resource planning involves estimating the need for labor. After the estimation, right employees and skills are important for the needs of the organization.

Human resource planning, mentions as a workforce planning or a personnel planning. It is a process of finding people who are qualified for jobs and hiring them at the right time. Human resource planning is also defined as a system of matching the supply of people internally (existing employees) and externally (those hired or searched for) with organization expects to have over a given time frame.

Organizations want to achieve their goals. This depends on employing the right people in the right jobs at the right time. When people have suitable talents, skills, and desire about the work they would do, organizations would reach their objectives and strategies easily.

An effective human resources planning is the essential of the organizational success. With human resource planning, organizations knowhow many positions are empty, what type of positions are available, and which positions will be vacant in the future, and how many employees are required in which departments.

The basis for accurate predictions of the future is past and present data. However, it should be noted that the available data might not be sufficient. While planning should focus on highly qualified national human resources, other segments should not be neglected.

Human resources issues are fundamentally qualitative. However, the measures introduced by human resources planning are quantitative, and this aspect of the issue should not be forgotten.

Human resources plan may fail when policies change. They may also fail in some exceptional cases when there is a surplus in occupations that were considered to experience problems of supply. Thus, the reasons for failure should be well analyzed.

An effective human resources planning is the vital element of organizational success. Ideally, this plan should be developed before all other personnel activities. Human resource planning activities are:

• The first stage is about collecting and analyzing data from labor inventory and forecasts.
• The second stage is about determining labor targets and plans and getting support from top management.
• The third stage is about planning and applying present and future plans and promotions for having the right person at the right time in organizations.
• The fourth phase is about controlling and estimating human resource planning. With control and estimation, managers could know if they reach their goals or not. Human resource planning helps managers identify human resource requirements and needs. Also it helps problem solving ways in the future. Human resource planning is very important for organizations because it determines future aspects of labor and guides how to solve future problems in human resources. All of these cause effective and efficient performance in organizations.

In human resource planning also the following are included: knowledge skills, experiences, retirements, promotions, transfers, and discharges of present employees. Human resource managers cannot decide what to plan without executives and top managers. They cannot succeed in human resource planning without the support of top management.

Objectives of Human Resource Planning

An organization cannot rely solely on finding qualified personnel from external sources. Searching for qualified and skilled personnel for current and future vacancies and developing plans to attract these candidates to the organization should be a continuous activity. This would enable the organization to have a reserve of assets that it could hire when needed.

For the achievement of business goals, two main objectives should be fulfilled in human resources planning. The first one allows for business forecasts and plans on recruitments and layoffs in the present and future. The second one helps the business inadequate usage of the knowledge and skills of the current workforce.

In addition to these general objectives, they would use the secondary or other objectives that are not clearly defined in human resources planning. These secondary objectives are:

• Human resources planning helps the business to provide a systematic process from the determination of human resources requirements to the placement and improvement of the employees. Human resources planning allows for the announcement and assignment of available positions on time. Human resources planning allow businesses to adapt to rapidly the external environmental conditions, which are changing market, competition, and technology factors.
• Human resources planning allows for the execution of legal and regulatory measures in a timely and accurate manner in business.
• Human resource planning eliminates uncertainties about the future expectations of staff.
• With an effective human resources planning, identifying and solving the problems of employees’ become easier, and the managers’ workload is reduced.

Factors Affecting Human Resources Planning

Human resource planning is a dynamic process that continuously collects data, processes, applies, and transfers them to required points. Internal and external factors of the organization have an impact on this process.

Analysis of External Environmental Factors

It is important to conduct analyzes the current and future trends of the labor market in human resource planning. An analysis of external environmental factors significantly affects human resource planning.

One of the issues that need to be analyzed is the demographic factor. Personal characteristics such as age, gender, race, language, education, etc. are important for organizations. On the other hand, it should also be considered that the increase in the average life expectancy would increase the number of retirees, and these people would need employment due to their inadequate pension plans. Thus, it is important to consider the future changes in the workforce in the labor market and the supply and demand of human resources in certain professions.

Legal regulations, such as changing laws, also force organizations to be careful in the planning process. For example, changes in the regulations on retirement age, severance payments and the employment of individuals with disabilities could lead to planning revisions.

Economic factors could be considered as another issue. Economic data are significant in human resources planning, similar to several other fields. The national economy has a great impact especially on the supply and demand of human resources. Businesses tend to lay off employees during the economic recession and increase employment during the times when the economy expands and the demand increases. An increase in interest rates leads to a decrease in investments and employment.

Technology is another issue to consider; rapid developments and advances in technology affect the structural and functional qualities of organizations and create diversity in the production of goods and services. Due to these developments and advances, several jobs disappear, and several new jobs and occupations emerge. Human resource management attaches particular significance to the impact of technological advances on organizations. New jobs and tasks that arise due to the rapid technological changes require different types of workforce in the organization. Therefore, technological advances are viewed as an important external environmental factor that affects human resource management.

Analysis of Internal Environmental Factors

Human resources planning require the analysis of internal environmental factors as well as external environmental factors. This analysis process examines the strengths and weaknesses of the organization based on its internal resources. For this purpose, initially, the already jobs are analyzed, and then the labor force skills inventory is developed.

Job analysis is a detailed examination of the current jobs in the organization creates the main task in the analysis of internal environmental factors. The relation between these jobs and the number of employees required for each job are determined.

Job analysis is a procedure through which the duties and responsibilities, as well as the nature of the jobs are determined; qualifications, skills, and knowledge required for an employee to perform a particular job are defined. It helps to understand what tasks are important and how they are carried on.

It is important for developing effective training programs, selecting employees, setting up performance standards, and making performance appraisals.

Organizational culture, which can be defined as the values, beliefs and habits shared within an organization, is an internal environmental factor that significantly affects human resource management practices. It should be known that organizational culture is not invariant; especially external environmental changes would closely affect the organizational culture, and thus the human resource management tasks, functions and practices. The organizational management style, closely associated with the organizational culture, would have a significant impact on how organizational activities and jobs will be conducted.

The value judgments, attitudes, preferences and objectives of the senior management would actually affect human resource management. Human resource managers should be well aware of how the top management would transform their value judgments, attitudes, preferences, and objectives into adequate human resource management practices.

Workforce skills analysis; or in other words, workforce inventory; is a resource that reflects the human resources employed in the organization from various perspectives based on their qualifications. To conduct an effective Human resource planning and to meet the needs of the employees within the framework of this plan requires possessing sufficient knowledge about the quantity, skills, and potentials of the existing human resources. Developing such an inventory provides information about the wage level and quantity of employees in any position in the organization, and their age, gender, seniority, skills, education levels, and potential.

Determining of Human Resources Needs

The fundamental of human resources planning is to provide the highest employee efficiency in present and future of organization, and also it keeps enough number of employees in organization. Since the labor force is a changeable resource, it is not easy to optimize the number of employees. For this reason, various methods ranging from simple to complex are used in determining the human resources needs by considering the size and the sector of the organization.

Human resource planning identifies human resources requirements of an organization and supply of human resources. This can be achieved by following the process below.

Replacement of persons could be explained as some reasons to why large number of human resource is recruited in an organization. These reasons are retirement, old age, death, etc. Recruitment could be from internal resources or from external resources. Although for this two case, human resources should get prepared for the vacancy position.

There is always labor turnover in every organization. The degree of labor turnover may vary from concern to concern but it cannot be eliminated altogether. There will be a need to recruit new persons to take up the positions of those who have left the organization.

Expansion plans is another factor to consider. Businesses always want to expand their activities either national or international. Therefore, they expand their activities, employees, facilities, or earnings. Whenever they decide to expand, they should prepare their employees for this change. Employees need to know that there could be new positions.

Technological changes will be another parameter. Rapid developments and advances in technology affect the structural and functional qualities of the organizations and create diversity in the production of goods and services. New jobs and tasks that arise due to the rapid technological changes require different types of workforce in the organization.

Assessing needs should also be a factor to consider. Human resource planning is not only about finding the right person for the right job; it is also about shortage or excess of employees. If there are fewer persons than needed, it will affect the work negatively. Human resource planning provides the employment of suitable workforce.

Human Resource Planning Model

Collecting information is the first step in human resource planning. Planning activity is mostly about forecasting the future, and for forecasting, information is vital element. Human resource planning depends on two types of information; data from external and internal environment.

External environmental data contain economy, technology, competition, labor markets, demographic and social trends, and government regulations. Each of the factors has an impact on business plans and human resource needs. Before planning, planners should be informed about the unemployment rates of the environment and about the age race and sex distribution of labor force.

The other factor that affects planners is government regulations. The second type of information is internal information. Internal information is from the inside of the organization. This information contains short and long term organizational plans and strategies. An example of internal information for human resources could be the information about the employees’ skill level, the number of employees expected to retire or leave their jobs, or the number of the currently employed.

Both internal and external information help the planners for forecasting future demand for employees. This forecasting could be involve the estimation of the number of the employees needed in the next five or more years. After forecasting the demand, planners forecast the supply of labor. Supply of labor could be provided from the inside or outside of an organization. It depends on the employees’ skill, effectiveness, and efficiency.

The final step in human resource planning is to plan particular programs. These programs contain recruiting plans, training and development, or career planning.

Forecasting the Demand for Labor

In traditional organizations, human resource department determines, initiates, and become in charge of human resource planning. Since information needed is obtained from all members of the organization, a line manager has to be in the process of human resource planning. For forecasting demand of labor, human resource planners gather information from the internal and external environment. This is done to determine the number of and type of future employees. Forecasting information includes information about past and present and future.

Demand forecasting methods are of two types, judgmental and mathematical. Usually, most organizations use a combination of these methods. Judgmental methods have knowledgeable people to forecast the future. The methods deal with quantitative data but allow consideration of expertise and human insight. These types of methods are used by small organizations or organizations which do not have any forecasting activities.

The simplest judgmental method is bottom-up or unit forecasting. In this method, each unit, division or department predicts the future needs of the employees. Managers get some instructions and information, and they integrate with their own aspects to reach the estimation of future.

The other judgmental method is top-down forecasting. Top managers and executives are experts about business plans, trends, economy, and the other factors will affect the need for human resource. They meet and discuss all these factors. They predict future and they forecast for the best and worst case.

The last judgmental method is Delphi Method. In this method, a large number of experts come together as a group for forecasting. Each of the group members makes estimations about the demands of future by using assumptions. Delphi Method has an intermediary during the estimation of group members. Intermediary doesn’t belong to any group and tries to be equal during the process. After each member makes the assumptions, the intermediary presents each assumption and forecast to the others.

Simple mathematical methods need different statistical and modeling methods for forecasting human resource needs. Organizations use four common statistical and modeling methods.

The first one is time series analysis. In this method, the number and level of past staffing are used for predicting future human resource needs.

The second one is ratio-trend analysis. It is about investigating the past ratios and the forecasting ratios for the future.. This method depends on the availability of past records and the internal environmental changes likely to occur in future.

The third method is econometric model. In this model, the previous data are analyzed and the relationship between different variables in a mathematical formula is developed.

The last method is regression analysis. It is used to forecast demand for human resources at some point of time in future by using factors such as sales, production services provided etc.

Forecasting The Internal Supply of Labor

After predicting labor demand, a business must forecast labor supply. The internal supply of labor includes all individuals who are already in the organization. These employees help to predict future demands of the organization by continuing to work at the same position, get promotion, or change position because of vacancies in the organization.

The internal supply of labor changes regularly because of retiring, resigning, dying, or discharging of employees in the organization. In this context, not only the labor supply but also the skills of the employees change. Employees develop new skills by training, by work experience, or by displacement. Planners need some methods or systems for internal and future supply of organization. These are skills inventories and human resource systems.

Determination of human resources supply in organizations is the process of determining the qualifications and number of the employees in the organization. The most commonly used methods to determine human resources supply include personnel inventories, skill inventories, personnel turnover rate, and absenteeism rate.

The skill inventory is important for the future or current place of employees in an organization. It gathers information such as employees’ names list, and employees’ skills. Also, it includes information about each manager’s requirements about employee’s skill. The skill inventory is a tool used to help managers to evaluate the employees within the organization quickly and accurately.

There are seven categories of information included in a skill inventory. These are personal data, skills, special qualifications, salary or experiences, business data, individual capacity, and special preferences.

The personnel turnover rate refers to the ratio of the personnel employed in the organization to the personnel who leave their jobs due to layoffs, quitting, retirement, or death, and tendency to get away from unrest is called personnel turnover.

Personnel turnover can be assessed differently based on the organization structure, the number of employees, and the size of the organization. If there are high personnel turnover rates in an organization, this may have some benefits for that organization. Stable personnel turnover rates reflect the dynamism of the personnel. New personnel make every effort to prove themselves to the management.

Absenteeism rate refers to the case where the personnel suddenly arrive late for work or do not arrive at all, except for annual leaves and holidays. It is calculated by the division of working hours lost due to absenteeism in a given period by the planned work hours in the organization.

The External Supply of Labor

Organizations interact with external labor markets when they hire new labor, discharge labor and lose their employees. Human resource managers should know how to evaluate and specify the external supply of labor, both of which are evaluating and specifying external supply of labor are important for effective planning. The concepts about labor supply to mention are; the civilian labor force, which includes people who are sixteen years old or older, not in the military service, employed or seeking for a job. The labor reserve includes students, homemakers, and retired people.

The labor force participation rate is the percentage of total working age population currently in the labor. The unemployment rate is the percentage of the labor force searching for work rather than working. When many people look for a job and unemployment rate is high, employers can find new employees easily. When employment is very low, employers cannot find employees easily.

Tools and Techniques of Human Resource Planning

In the human resource planning process there are some tools used to help predict of demand or supply labor. The skills inventory, succession plan, a replacement chart are important tools for succession planning.

The organizational replacement chart gives information about the already employed and about potential replacements for given positions. For efficient and effective use of the replacement chart, potential requirements should be updated. This tool helps managers find out the suitable employee from internal of organization.

Comparison of Supply and Demand

The balance between the supply and demand in the organization provides the necessary information about the organization’s human resources. A demand that exceeds supply demonstrates a growing organization or the personnel turnover rate is high. On the other hand, when supply exceeds demand, it could mean that employee productivity is low.

The balance between supply and demand is an indication that the organization was working efficiently in that period. Furthermore, it means that there is no need for new personnel and layoffs.

Activity Schedules

At this stage in human resources planning, activity schedules are developed based on the balance or imbalance between personnel supply and demand. Conversely, developing activity planning does not depend on balance or imbalance of personnel supply and demand. This is because the supply and demand balances changes frequently since the organizations are actors in a dynamic environment, and different policies should always be put into effect in order to avoid these changes. When the balance between supply and demand demonstrates that the organization requires new employees, human resources should concentrate on finding candidates, selecting them, placing them and training the selected personnel.

On the contrary, if a reduction in the number of the personnel is required, the activity schedule would focus on the planning of the organizational human resources. In short, the policies that would be developed and implemented based on the organizational conditions are called the activity schedule. The first phase of activity scheduling is the determination of the objectives. When determining objectives, the balance between supply and demand is taken into account. Thus, if the demand is greater than the supply, measures will be taken to increase supply. At the next stage, different alternatives can be introduced to achieve the organizational objectives. Each solution proposal is individually assessed and the one who would benefit the organization the most is selected. Finally, action plans are developed and transformed into an accepted alternative action.