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The approaches to human resources planning in work organisations today are much more different than what it was decades ago. Much of the debates reflecting this change in emphasis center on the role that human resource planning plays in the core strategies of small and large organisations. There has been a considerable deliberation among human resource planners on what aspects of human resource planning and management should be among the priority considerations in view of ongoing changes in almost all aspect of life today. Changing social, technical, political, economic, spiritual, and business environmental conditions have brought about these raging debates in planning and policy discussions within organisations. The complexity in managing large work organisations has largely increased due to several key considerations about the supply and demand of HR practitioners and skilled personnel in the different industries. Smaller organisations have been challenged to prepare for future human resources expansions.
While the structure and size of organisations will not determine choices about human resources, research has shown that it can have a very strong influence on the way human resources are managed, regulated, and planned (Newell and Scarborough, 2002, p. 26). Human Resource Planning (HRP) for large organisations is quite different from smaller organisations in different contexts and aspects. These major differences can be found in the way these organisations cover the areas of Human Resource Management (HRM) like recruitment, promotion, performance appraisal, compensation, training, and development, labour relations, job designs, and career development.
Governments around the world have come to realize that human resources have a crucial role in meeting the challenges of public service and global competition. According to Canave (2003, p.41), in the Philippines for example, the thrust of the Civil Service Commission (CSC) is to professionalize and humanize the bureaucracy. The CSC is a central personnel agency and quasi-judicial tribunal responsible for recruitment, maintenance and discipline of civil servants of the country's 1.4 million public servants. Human resource planning for such a very large organisation is not simple and easy.
It cannot be denied that HRM practices of an organisation can be an important source of competitive advantage. Kleiman (2001, p. 9) says that HRM practices enhance a firm's competitive advantage by creating both cost leadership and product differentiation. Employees are often viewed as the company's most valuable resource (Newell and Scarborough, 2002, p. 24). If people are truly an organisation's greatest assets, then their careful selection, development, and deployment can lead to a competitive advantage (Price). Accordingly, an effective HRP strategy provides the best option for supply of workers of organisations (Virtual University-Pakistan). But according to Thomas A Kochan and Lee Dyer (2001), many human resource functions today within many American corporations continue to be weak and relatively low in influence in relation to other managerial functions such as finance, marketing, and manufacturing. They stress that despite the outpouring of academic writing on strategic human resource management, not much progress has been made in developing systematic theory on the conditions under which human resources are elevated to a position where the firm sees and treats these issues as a source of competitive advantage.
People that make up organisations are the most important components for success. Internal and external factors that tend to influence the way people behave within the organisation have contributed to a lot of changes in HRM policies and planning techniques. The rapid changes in the field of work and working environments in recent years have caused great concern to the workforce. According to Cane (1996), there is a tendency for people going to work to get what they can out of it since that is the way they feel their employers treat them. People sometimes feel that their employers don't empathize with them about their economic and social plight. Miscommunications and other forms of organisational conflicts stem from the fact that people are sometimes not always considered and allowed to participate in the decision-making process. In the aspect of managing the organisation workforce,Â it is clear that where communication between the different levels and systems breaks down, there can be little workforce commitment to the organisation's goals (Cane, 1996, p.48).
The idea of change and why it is important for the organisation cannot always be explained to the members of the organisation by management.Â There is a genuine sense of fear of change and it is natural for people to avoid change, at all costs. In these times of uncertainty, people no longer feel secure working for a particular organisation or even a particular industry, and therefore they tend to feel little loyalty to it.Â Today, organisations are not just trimming fat off the meat. They are trimming the muscle. Part of today's mass layoffs caused by the need to cut down on redundant jobs and production costs is that organisations measure costs in terms of salaries, benefits, and overhead rather than in terms of the quality and quantity of work that people do.
Different organisations, whether large or small, have different attitudes and approaches to deadlines and quality of work, handling of information, communication, leadership, and understanding of their organisational objectives.Â In today's HR practices, organisations tend to measure these approaches based on how new and emerging technologies and other government and industry regulations are currently affecting the business environment and job market. In human resource planning, new emphasis are placed on these attitudes and approaches in order to plan for change in the human resource aspect.
Human Resource Planning (HRP)
The effectiveness and efficiency of people within an organisation is often dependent on its operations.Â The goal of forecasting and planning is to keep and improve on the human resource assets of the organisation in order to meet their needs and objectives.
Planning involves being able to provide the different manpower, economic, social, and business requirements of the organisation in future situations. Planning provides a sense of purpose and direction (Virtual University-Pakistan).Â The planning process forces organisations to make a thorough analysis and study of the current situation in terms of internal resources and how these resources are utilised. It is making a decision in advance on the different concerns and future actions of the organisation.Â It is related to how these aspects are organised and controlled under certain conditions that may arise in the future.
Human resource planning considers the current state of manpower resources and how this resource can be utilised for future adaptation to changes in the environment. It also provides a more effective and efficient use of manpower skills and knowledge. A good human resource plan creates more satisfied and more developed employees and provides an effective equal employment opportunity. Human resource planning is the process of systematically forecasting human resource requirements of an organisation such as skills, salaries, hiring needs, layoffs, and other human resources concerns. It also involves finding ways and means to reduce the number of employees if a surplus is projected. If there is a projected shortfall of skilled personnel because of the acquisition of new equipment or changes in business processes, then the human resource plan should be able to attract prospective employees from outside of the organisation.
According to Milkovich and Boudreau (1997, p.142), planning is time consuming, expensive, and uncertain. It often does not produce accurate predictions or guarantee correct choices. They add that in a survey of general managers in large business units of Fortune 500 firms, it was found out that 82 percent of these managers considered human resource issues and costs in planning their business as important or very important. The fact is, human resource functions are the centerpiece of managers' rating criteria.
Human Resource Activities
Different human resource activities should be integrated in order to enhance the value of human resources. Planning should help ensure the balance of all the human resource activities of the organisations. These sets of activities are based on the recruitment and selection of the right candidates, pay scale determinants, employee appraisal, and many more.Â According to Milkovich and Boudreau (1997, p.1420, organisations that base their pay on performance don't necessarily perform better than those that don't. and organisations that select people very carefully don't necessarily perform better than those that select less.
Benefits of HRP
There are a lot of benefits associated with good human resource planning techniques. These benefits are primarily centered on the work quality or output and the general welfare of the workforce of the organisation. It helps in the proper distribution and assignment of jobs to the right personnel. It helps the organisation manage variations in staffing and recruitment. It also provides other relevant information about how the current human resources of the organisation are contributing to the successes or failures of key business processes.
Milkovich and Boudreau (2002, p. 147) emphasizes the role of human resource planning in the framework of organisational competitiveness by finding new ways to increase the quality of human resources. According to them, sustainable competitive advantage derives from a resource-based view of organisations. Organisations influence the quality of the resources available to them and these resources do not necessarily move easily between organisations. A good human resource plan which cannot be easily copied sustains the competitiveness of organisations.
Steps in HRP
The entire human resource planning process can be defined in the following steps (Virtual University-Pakistan):
- Determine the impact of organisational objectives on specific organizational units. By looking at the general objectives and how it affects the different entities and departments of the organisation, firms can start to identify the manpower concerns and needs in different departments and set their priorities.
- Determine the skills required to meet objectives. Changing business processes influenced by technological advances require new sets of skills in order to fulfill some of the organisation's objectives. It is important to determine which skills are more appropriate for future HR expansions and ulitisations.
- Determine additional human resource requirements in light of current requirements. It is not only appropriate to determine the labour supply and demand. There are intangible requirements for today's diverse workforce. Workers demand new benefits and compensation packages. Businesses demand new sets of skills and commitments from their employees. Determining these requirements for the formulation of the HR plan needs to consider both sides of the labour relationship. Trade unions demand new provisions in their collective bargaining agreements.
- Develop action plans to meet the anticipated HR needs. Should there be emergencies and unexpected disruptions, the HR plan should be able to provide the appropriate actions to meet these crises as they arise. Organisations in general are not complacent about events that might occur in the future. Workers should be able to provide the immediate needs of the organisation and the organisation should be able to provide the right remuneration packages to their workers.
Importance of HRP
According to Newell and Scarborough (2002, p. 83), there is little evidence to suggest that many organisations actually operate strategically rather than making resource decisions on an informal basis. They view the role of human resource functions within organisations as one of the most importance factors that influence certain strategies and decisions. They add that for human resource planning to be strategic, it need to take place within an organisation where human resource issues are seen as central to business strategy, which is closely related to issues to do with the status and power of the human resource functions within the organisation.
There has been a marked increase on emphasis on HRP in recent years. Recent global developments in the economic and political front calls for the need to adapt to new requirements in skills, labor costs, labor demands and supplies, and business practices. The liberalization of trade and globalization of businesses has been one of the key factors pushing for the need to concentrate on adapting the human resource management and policies to the needs and trends of the world economy. New technologies and how these are slowly being incorporated into the overall corporate plans of large and small organisations are changing the face of planning approaches at a rate where planning is no longer confined to traditional methods for achieving results.
In relation to changing technologies are the changing skill levels andÂ types. Certain skills are no longer viable nowadays while new areas of developing skills are emerging. Training to improve on current skills need to be incorporated into the strategic plans of organisations. This would help ensure the continuity and acclimatization ofÂ skills with new global requirements.
The reason for adapting HR policies and practices to emphasize more on HRP is to make sure that the organisation remains competitive in a global setting. This has come to light in recent years because of the need to make changes in the overall organisational structure and culture.
Approaches to Human Resource Planning
In view of this new emphasis on human resource planning in work organisations, there are different models by which they analyze what approach to take. According to Henry (1995), one useful model for analyzing what approach an organisation has to human resource planning can be described in the four main types of employment systems namely:
- The internal labour market
- The external labour market
- The occupational labour market
- The technical/industrial labour market
The internal labour market refers to the structure of jobs within an organisation where it is characterized by the development of firm-specific skills, jobs are flexible and broadly defined, where long service is highly regarded, where employment security is high, and where there are few entry points into the firm. Usually, because long service is valued and staff turnover is kept at a minimum, this market provides a structure for promotions via a well-defined career ladder. Job satisfaction is usually high because the staff feels secured and well taken cared of. While most of what happens in the internal labour market is true to large work organisations, it is not usually the case to small firms.
Henry (1995) argues that firms are not really in a good position to maintain staff satisfaction to the highest level possible. They are less likely to provide long term employment security to their staff because they are less likely to sustain the internal labour market. In reality, small firms are often vulnerable to external market forces that often results to movements in labour demands and needs. Small firms are also usually not in the position to match employment incentives and wages offered by larger firms.
The external labour market is characterized by narrow jobs and lack of skills. There is usually a surplus of skills in the labour market. In view of this surplus, there is a minimal need for training. Deployment is tightly controlled by the employer. These contributing factors often results to low job security and low employee morale.
The occupational labour market often focuses on the external labour market where skills are sought after. Jobs are controlled by occupation agreements and development activities are usually valued. The technical and industrial labour markets are often characterized by detailed agreements with trade unions through collective bargaining agreements or CBAs. Jobs are narrow and tightly defined by employers and CBAs.
Traditional Emphasis of HRP
Organisations usually treat human resource planning as a part of the overall strategic plan for the organisation. It is distinct and does not usually cover the other areas ofÂ the corporate model. It was usually thought that the organisation can survive with minimal human resource planning.
Carter et alÂ (2001) describes organisations in the 1960s as a lot simpler than today. It was simpler then because people didn't know very much and didn't know any better. Organisational development and personnel planning was new. People viewed training, process consultation, and team-building as activities which were solutions in order to search for other problems.
How do organisations traditionally view human resource planning in general? Much of the answers here focus on planning activities that have taken place for several years and have been proven to work for small and large organisations.
In planning for future opening of new jobs and assigning new roles to employees, small organisations can usually manage this scenario by waiting for these openings to develop and fill it as fast and as best as they can. But for larger organisations, some forecasting and careful planning is needed because of the greater change of encountering mistakes.Â According to Dessler (1978, p. 59), manpower plans are built on premises-basic assumptions about the future -and the purpose of forecasting is to develop these basic premises. In the case of personnel requirements, it is usually important to consider the supply and demand of the needed skills (both internal and external to the organisation), the current labour costs and economic conditions, and how itÂ the job would fit into the department and the organisation as well.
Some organisations manually keep lists of qualified and waiting candidatesÂ and their personnel recordsÂ This is especially true to small organisations which cannot afford to automate their human resource functions orÂ purchaseÂ human resource systems.
Other organisations base their pay systems on performance and seniority. Others base these systems on educational qualifications and work experiences. Compensation and incentive plans involve paying them based on their output and time. Employees learn to be competitive and marketable by being paid on incentives. Promotions and reward systems are often based on job classification evaluation methods andÂ performance appraisals.
In extending other types ofÂ benefits to their employees, firms usually provide their employees with vacation and holiday pays, sick leaves, life insurance plans, hospitalization benefits, and retirement benefits.Â Company unions have existed for a while and they are usually in the forefront of the battle for bargaining power ofÂ workers.
Organisations usually provide job enrichment programs designed to motivate individuals within the organisation perform better. Motivators usually come in the form of opportunities for growth into the job and reorganization of the individual's job so as to make it more interesting. The job is designed to be less specialized and more 'enriched. Usually, this job enrichment program can be accomplished by giving the workers autonomy and allowing them to take part in the planning and decision-making process
New Emphasis on HTP
While most of the principles of human resource management still holds true today, industrial relations initiatives are affected by pressures, many of which are exerted by globalization.Â De Silva (ILO) asserts that changes in HR practices such as increased collective bargaining at enterprise level and flexibility in relation to forms and nature of employment functions and opportunities have occurred as a result of such factors as heightened competition, innovations, and the increasing importance of acquiring the right skills at the right time and at the right place.
Most organisations nowadays see the need to automate their human resource transactions and records. They acknowledged the strategic importance of getting quick and accurate information about their personnel and staff.
In most ofÂ today's networked environments, organisational boundaries extend beyond their geographical locations. Organisational units can be located in different places and time zones. Technology has contributed a lot in changing the nature and context of human resources in organisations. It has made it possible for dispersed organisational units to be constantly in touch with each other and share real-time information when needed. It has also assumed a new role in the performance ofÂ tasks usually done by human intervention.
The labour front has a new battleground: labour costs.Â Most companies in Europe and the USÂ have already relocated most of their offices and stores offshore where labour costs are cheap and government regulation policies encourage the entry of foreign companies to generate investments and create more jobs. The proliferation of call centers and IT consulting firms in countries like India, China, and the Philippines proves thatÂ labour costs, no matter how cheap, can still be well within the reach of companies. Outsourcing and renting out software applications from Application Service ProvidersÂ have saved lots of organisations in operating and maintenance costs. Indeed, the business landscape nowadays has proven to be much more complicated and technologically-inclined thatÂ adapting traditional planning methods do not always guarantee success.
In applying for a job nowadays, it is always wise to have the right knowledge and skillsÂ on the use of commercial software applications and office suites. For clerical and administrative positions, knowledge of office applications like word-processing programs, spreadsheets, presentations, and e-mail is required and often mandatory. This is because firms have considered investing on computer hardware and software packages in order to speed up and minimize the errors in their business operations. Candidates applying for clerical jobs who only know how to use the typewriter virtually have no place in the organisation which has already considered using computers and work processing programs in lieu ofÂ obsolete mechanical devices. ForÂ IT professionals, earning a computer science or IT bachelor's degree is not often enough to land them jobs in the IT sector. They need further training on specific areas of information technology like network and internet security and administration, database development and administration, and e-commerce. Earning certifications on any of these areas can be plus factors also.
New pay schemes and incentive plans are much more different now than before. Human resource planning would take into consideration other variables and metrics in enforcing these schemes.Â Employees would be compensated based on their new roles and new services that would be rendering. Mission critical operations supported by computer application systems should be attended to immediately in case of problems regardless of the time and day it occurred.
Government deregulation policies have had different consequences and eventually changed the business environment. The deregulation of the oil and telecommunications industries has removed monopolies that allowed other players to compete and offer alternatives to their customers. These policies however, have resulted to massive layoffs of companies who have, all the while enjoyed quite a bit ofÂ domination.Â Newell and Scarborough (2002, p. 89) say that in a number of countries, the recruitment and selection practices are influenced and supported by legislation which outlaws discrimination with regard to sex, race or age. In the UK for example, professional bodies like the UK Chartered Institute for Personnel and Development issues a code on the recruitment process. Publications made by the UK Equal Opportunities Commission also inform employers about the Fair and Efficient Selection process.
Information now has a new role in the organisation. Technology enables the use of information not just for communications between internal and external organisational entities. It is also used for decision support and online analytical processing in real-time.Â Milkovich and Budreau (2002, p. 140) say that human resource planning gathers and uses information to support decisions about investing resources in human resource activities. his information includes future objectives, trends, and gaps between desired outcomes.
Future ofÂ HRP within a large organisation today
A big part of human resource planning should at least give some answers to the following questions like :
1.Â Where do we want to be (Demand Analysis)?
2.Â Where are we now (Internal Supply Analysis)?
3.Â Where will we be?(Internal Supply Analysis)?
4.Â Who is joining the organisation (External Supply Analysis)?
5.Â Who will be joining (External Supply Analysis)?
According to Milkovich, G & Boudreau, J (1997, p.156), demand analysis describes the future human resource needs. Actual demand forecasts don't try to predict human needs down to the individual employee, competency or labor cost.Â These needs are summarized into key employee groups, key competencies, or diversity targets focusing on the critical ones. They also say that internal supply analysis is a matter of judgment; various techniques can make internal supply analysis more systematic and grounded in experience. External supply is created by the organisation's activities that attract and select job candidates. Unlike the internal supply analysis, this form of analysis focuses on the supply of employees projected to join the organisation from other outside.
Organisations should be prepared to be alert for any future form of changes. Both planning and strategy are dependent on some methods of forecasting the future (Price). HR strategies and plans are usually proactive and take a longer perspective. Large organisations have the power to make deliberate decisions about their products and markets, quality, standards, and are capable of deploying their human resources at any time and at any place. Most organisations involved in designing HRP techniques and methodologies put emphasis on creating environments for personal growths and skills enhancements.Â Unstable organisations would continue to study how to reduce redundant positions and functions in order to cut costs and lessen economic baggage.
Established companies would continue to create more room for expansions and improve on their recruitment and selection processes. They would also continue to invest in human resource system applications and technology in order to collect the right information and aim for a more strategic use of human resource information. Knowledge derived from information systems would continue to evolve and be maximized for different strategic purposes. Job skills and job competencies will also continue to growth and improve as technology is embraced.
Although it may not always be the case, at this point in time however, smaller organisations tend to look outwards for all means of support while established players and large organisations can afford to look inward and concentrate on protecting advantages rather than innovating on products and services. After the initial shakeout and industry stabilization, change is often largely incremental, consisting of add-ons to existing offerings by large organisations (Kanter, 1992, p.25).Â Large organisations can afford to protect their competitive advantage by employing effective human resource planning that utilises their other resources for creating a more stable but competitive environment for their workforce. For smaller organisations, change is largely a major concern with regards to policy formulation and human resource management.
As globalization continues to hound smaller industries, larger organisations are more challenged to respond to a new order of communication and information and resource sharing. Most managers nowadays recognize the value of being connected with people at every level and of getting unfiltered information (Duck, 2001, p. 214). Planning for this course of action usually does not require an elaborate communication structureÂ nor does it automatically consume much time. It usually comes from the initiatives of human resource planners to see to it that their business environment is conducive to change. Penetrating at the core of organisational culture and changing people's attitudes may present some challenges but a carefully crafted HR plan would eventually convince members of the organisation thatÂ the company is bent on creating an attractive environment where employees feel inspired and that it provides enough room for them to develop their own competencies.
Large organisations today need to be aware of the dynamics (Duck, 2001, p.212). Organisations should know how change in one dimension could impact another.Â Human Resource Planning should take into account the rate at which technology changes and how technology would eventually be integrated into the overall business processes. Technology opens opportunities to conduct formerly fragmented activities efficiently on a large scale-from a small custom crafting to a full-scale production (Kanter et al, 1992, p. 25). This can create future problems as redundant tasks are discovered and layoffs can be inevitable. Large organisations are more capable of providing retirement plans and compensation plans for workers who would be directly involved in future restructuring and reorganisations. It is therefore important for the human resource plan to consider the human, social, technological, and economic dimension of planned changes.
The future of HRP looks bright as the different types of change initiatives observed in organisations like structural change, cost cutting change, process change and cultural change are being emphasized on human resource management. More and more organisations are slowly recognizing how external and internal factors affecting human resources are also affecting the organisation and the entire industry as well. For large organisations, a good human resource plan can help them protect their competitive advantage. It would also help them to adjust quickly to unexpected events.
Mysterious operationalÂ and production problems that suddenly crop up that can't be resolved or a new IT system that suddenly malfunctions and disrupts the entire business operation are just some of the problems that large organisations have to be prepared for. Large organisations should also be prepared to meet new world standards of excellence and total quality of products and services. Preparing a good HR plan is needed in order to make future adjustments in costs, manpower, processes, and services. Different statistical forecasting approaches (trend analysis, ratio analysis, regression analysis) and judgmental methods (managerial judgment) available nowadays helps large organisations determine the demand and supply or labourÂ in the labour market.
The role of HRP in the future is getting bigger, better, complicated, and challenging. As the external environment changes, attention is slowly zeroing in on a more reliable business asset-human resources. As the internal environment also change, attention is also focusing more on the management of human resources. As regulations change, the heart of human resource policy considerations is on conformity to government labour laws and legislation.
The change in emphasis and importance of human resource planning is due to changes in the organisation in general. Several internal and external factors contribute to these changes. Organisations now view human resources as one of the most vital assets to be carefully analyzed and planned for their future.
Planning is the process that creates the link to everything within and outside of the organisation. A good human resource plan is a plan that helps employees and managers see how one of the most important resources of the organisation will be able to support the organisation's goal and mobilize other resources to sustain its competitiveness. There are common and modern views of human resource planning. The traditional views do not actually consider the importance of external and internal factors that account for change and adaptation in the molding of the organisation. New business conditions and emerging forces (globalization and changing customer demographics) place new emphasis on the strategic role that HRP plays in the organisation. New technologies require new skills and up the levels of existing ones.
New regulation policies of governments concerning social (discrimination and gender equality), political (protectionist policies) and economic (trade liberalization and tariffs) issues force organisations to rethink and reshape their human resource policies and existing practices. Debates would naturally center on these conditions. Some would argue that placing much emphasis on HRP would be to erode and loosen the organisational culture which highlights their identities and values. It would also signal the submission of organisations to policies which are seen as repressive, unjust and unfair.
Those who place much emphasis on the relevance of HRP in the strategic planning process believe that change is a reality that all organisations must face in order to stay competitive. HRP takes management of the organisation to a new area of emphasis: the people. Changing the way people think, feel, hear, see, and believe in the human resource utilization and management through a good human resource plan will not only benefit the entire organisation and its people. In the long run, society will have organisations which are highly professional, ethical, and responsive to the needs of the whole world and its people.
Back to: Example Essays
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Cane, Sheila (1996), Kaizen Strategies for Winning Through People, Pitman Publishing, London.
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Allan Price, Introducing Strategic HRM, Retrieved: April 20, 2005 from http://www.hrmguide.net/hrm/chap6/ch6-links1.htm
de Silva, S. R., Human Resource Management, Industrial Relations and Achieving Management Objectives, Retrieved: January 18, 2005 from http://www.ilo.org
Lecture 12: Human Resource Planning (HRP), Virtual University-Pakistan,Â Retrieved April 17, 2005 from http://www.vulms.vu.edu.pk/Courses/MGT501/Handouts/Lecture12.doc