Everything you need to know about the importance of human resource planning. Human resource planning is very important as it helps in determining the future human resource needs of the organization.
The effectiveness of human resource planning process decides the adequacy of available manpower in the organization. An unsuccessful human resource planning leads to either shortage or surplus of workforce in the organization and brings serious disaster.
The importance of human resource planning can be studied under the following heads:- 1. Key to Managerial Functions 2. Efficient Utilization 3. Motivation 4. Better Industrial Relations 5. Higher Productivity.
Importance of Human Resource Planning or Manpower Planning
Importance of Human Resource Planning – Key to Managerial Functions, Efficient Utilization, Motivation, Better Industrial Relations and Higher Productivity
We are acquainted with the objectives, approaches, forecasting, and techniques of HR planning. Obviously the importance of HR planning is manifold. It serves as a key to managerial functions, efficient utilization of men, identifying and motivating them, promoting industrial relations, and boosting productivity.
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i. Key to Managerial Functions:
Planning, organizing, leading, directing, and controlling (POLDC) are the five managerial functions that need HR for their execution. Human resources help in the accomplishment of all these managerial activities effectively and efficiently. Therefore, staffing becomes a key to all managerial functions.
With the emergence of the concept of the global village, handling HR efficiently has become an important function in the industry. Large organizations need huge HR to execute their job effectively. As such, the staffing function has emerged as a critical organization process.
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Irrespective of their levels, organizational citizens need motivation. The staffing function, in addition to putting the right men on the right job, also comprises various motivational programmes. It is essential to launch financial and non-financial motivational schemes, including incentive plans. Therefore, all types of incentive plans become an integral part of staffing function to satisfy both intrinsic and extrinsic motivation.
iv. Better Industrial Relations:
Stability, smooth running, and growth of a concern depend on the quality of interpersonal relations; especially on the relation between the management and unions. Members from the unions and associations form a collective bargaining forum. A strong relation between them helps taking decisions collectively. Furthermore, human relations can become even stronger through effective control, clear communication, and effective supervision and leadership.
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Productivity levels increase with the efficient utilization of resources in the best possible manner. Productivity is enhanced by minimizing wastage of time, money, efforts, and energies. Alternatively, cost reduction, value engineering, method study and work measurement, and other techniques help to enhance productivity. Human resource and its related activities/systems such as performance appraisal, / training and development, remuneration, further settle on productivity.
Importance of Human Resource Planning – 10 Benefits to the Organization
Human Resource Planning is an important and highly specialized activity.
If this activity is taken up professionally by the human resource team it can offer numerous benefits to the organization which are as follows:
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1. It is wise for the managers to anticipate the workforce requirements with precision rather than getting burdened with unrequited workforce.
2. Planning prevents the business from falling into the trap of ill-equipped departments with workforce which is a common concern among all industries.
3. It Works proactively as the expansion in the workforce market is not always in conjunction with the workforce requirement of the organization in terms of professional experience, talent needs, skills, etc.
4. Organizations in growth phase may face the challenge of meeting the need for critical set of skills, competencies and talent to meet their strategic objectives so they can stand well-prepared to meet the HR needs if they have planned well.
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5. Considering the organizational goals, HR Planning allows the identification, selection and development of required talent or competency within the organization.
6. Planning Provides organization with competent Personnel.
7. It Enables organization to optimally use manpower.
8. Human resource planning enables a company to plan its expansion and diversification.
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9. Human Resource Planning contributes towards management succession and development.
10. It helps in planning physical facilities.
It is, therefore, suitable on the part of the organization to opt for HR Planning to prevent any unnecessary hurdles in its workforce needs. An HR Consulting Firm can provide the organization with a comprehensive HR assessment and planning to meet its future requirements in the most cost-effective and timely manner.
Importance of Human Resource Planning
1. Human resource planning is a continuous process – Human Resource Planning is a continuous process by which management ensures that it has the right personnel, who are capable of completing those tasks that help the organization, reach its objectives.
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2. Human resource planning links people to company’s mission, vision, goals and objectives – Rigorous Human Resource Planning links people management to the organization’s mission, vision, goals and objectives, as well as its strategic plan and budgetary resources.
3. Human resource planning is forward looking process – Human resource planning is a forward-looking function. It occupies a pivotal place in successful human resource management programme. It ensures that people are available to extend their willing hands towards the development endeavours of an organization.
4. Human Resource Planning is Value Addition in Competition and Economic Downturn – In the times of great economic turbulence, the importance of human resource planning is more apparent than ever. A short-sighted lay-off, intended to temporarily reduce overhead, can result in much heavier long-term costs. We may regret letting people go when we are spending time and money to hire and train new staff. Plus, we lose profits when we lose experienced, knowledgeable and talented employees.
Increasing environmental instability, demographic shifts, changes in technology, and heightened international competition are changing the need for and the nature of human resource planning in several organizations in India and across the world.
In addition, organizations are realising that in order to adequately address human resource concerns, they must develop long-term as well as short term solutions. As human resource planners involve themselves in more programmes to serve the needs of the business, and even influence the direction of the business, they face new increased responsibilities and challenges.
Importance of Human Resource Planning – With Reasons Why Human Resource Planning is Essential
Human resource planning is very important as it helps in determining the future human resource needs of the organization. The effectiveness of human resource planning process decides the adequacy of available manpower in the organization. An unsuccessful human resource planning leads to either shortage or surplus of workforce in the organization and brings serious disaster.
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The importance of human resource planning are as follows:
a. Human resource planning helps in finding out surplus and shortage of manpower in the organization. Hence it creates reservoir of talents;
b. It leads to systematic employee development and prepares people for future;
c. It is useful in finding out the deficiencies in existing manpower and providing corrective training;
d. It is helpful in overall planning process of the organization;
e. It facilitates the expansion or contraction of scale of operations;
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f. It helps in preparing appropriate human resource budget for each department or division, which helps in controlling manpower costs; and
g. It plays a major role in succession planning for the key personnel in the organization.
When man is considered as a resource, it is understood, he has some potential characteristics, which can be used to organizational needs in the path of fulfilling the organizational, social and national goals. Manpower or Human resource can be considered as the total knowledge, skills, creative abilities, talents and aptitudes of an organization’s work force, as well as the values, attitudes and benefits of an individual involved.
Among the resources used for production i.e. materials, machines, methods, money and manpower, the most important M is manpower resource. When considered as a resource, it is valuable asset of the organization. Hence, planning for manpower is as important as planning for other resources.
Manpower planning or Human Resource Planning is synonymous. It is forecasting future manpower requirement to cater the needs of the organization. It involves of making an inventory of present manpower resources and assess the extent to which these resources are employed optimally. It consists of projecting future manpower requirements and developing manpower plans for the implementation of the projections.
If Human resource planning is used properly, it helps in maximum utilization of human resources, reduces excess labor turnover and high absenteeism; improves productivity and excels the organization in achieving the purpose for which it is established. A bad manpower plan may induce dissatisfaction in labor and lead to higher labor turnover, reduces productivity.
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Human resource planning is essential because of the following reasons:
i. It provides the required personnel with necessary qualification, skills, knowledge, work experience and aptitude.
ii. To replace the employees who retire, who leave the organization for some reason or the other and to promote/transfer people, proper manpower planning will help the manager.
iii. It helps in estimating the labor turnover and making a forecast and provides adequate supply of labour force in time.
iv. Manpower planning helps the manager to estimate the human resource required for business expansion programs.
v. Human resource planning helps in planning for training needs due to challenging changes in industrial environment, technology etc.
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vi. It helps in identifying areas of surplus or shortage of personnel and making the necessary modifications.
Importance of Human Resource Planning – 7 Ways in Which Human Resource Planning is an Important Tool of Human Resource Management
Human resource planning is a two-phased process by which management can project future human resource requirements and develop human resource plans. It helps in proper recruitment and selection so that right types of people are available to occupy various positions in the organisation.
It also facilitates designing of training programs for the employees to develop the required skills in them. Thus, human resource planning plays an important role in the effective management of personnel.
Systematic human resource planning provides lead time for the acquisition and training of employees to meet future requirements. It is all the more crucial because the lead time for procuring personnel is a time consuming process and in certain cases, one may not always get the requisite type of personnel needed for the jobs.
Non-availability of suitable human resource may result in postponement or delays in executing new projects and expansion programs, which ultimately lead to lower efficiency and productivity. To overcome this, an organisation must plan out its human resource requirements well in advance so that it could compete effectively with its competitors in the market.
Human resource planning is an important tool of Human Resource Management as it helps in the following ways:
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1. Human resource planning results in reduced labour costs as it helps the management to anticipate shortages and/or surpluses of human resource and correct these imbalances before they become unmanageable and expensive.
2. It serves as a basis for planning employee development that is designed to make optimum use of workers’ skills within the organisation.
3. It enables identification of the gaps of the existing personnel so that corrective training could be imparted. Thus, the training program becomes more effective.
4. It leads to improvement in the overall business planning process.
5. It helps in formulating managerial succession plan as a part of the replacement planning process which is necessitated when job-change plans for managers are formulated. Besides, this exercise would provide enough lead time for identifying and developing managers to move up the corporate ladder.
6. It leads to a greater awareness of the importance of sound human resource management throughout the organisation.
7. It serves as a tool to evaluate the effect of alternative human resource actions and policies.
Importance of Human Resource Planning – In Indian Organisations
For industrial organizations in India, the issue of manpower planning has special significance. Advance planning and action for a resource is required when it cannot be acquired or divested quickly according to the requirement of the business and/or when it can be acquired but cannot be used in the organization without further development over a period of time. There are several reasons why human resource acquisition or reduction in our country cannot be done at will.
The foremost reason being the difficulty in estimating the actual requirements of manpower in the company based on company business projection. The question arises how to estimate the demand for manpower in a company? How much can one rely on such estimation? Though Indian economy has made considerable progress in developing database and statistical information about industrial activities, yet very few organizations are aware of this and even fewer organizations have expertise in using it.
One of the critical differences between a developed economy and a developing economy is that in a developed economy the documentation process of economic activities is also quite developed. And, most people have good access to this publicly available information on economy.
Moreover, the problem related to statistical information on economy in general and company specific manpower information in particular get compounded further by the widespread apprehension among industrial organizations for loss of company secret. Some of these concerns are possibly valid but much of it are overreactions.
Mostly these reactions are due to unawareness of public good that may come from sharing of information with public agencies. All the same, the apprehensions are very much there. A lot of work needs to be done to allay these fears before an industry specific database can be built for estimation of manpower demand or supply.
The second issue is the general response of the local population in terms of choice of career to market signal on economic opportunity and career. Poor communication infrastructure and low mobility of workforce are two characteristics which give our labour markets certain levels of rigidities. In the Indian economy, it is quite common to find a low wage sector operating side by side with a high wage sector for many years without much exchange of manpower or market-based correction of the wage rates.
Example – Illiterate workers working as regular peon in a government office at block level versus similarly skilled rural labour in agricultural household. The annual income of a regular government employee is more than double that of a rural unorganized labour.
The labour market adjustment process is too slow to make much difference in the wage rates of workers in organized and unorganized sectors. It is this kind of market inertia which may make it very risky for business organizations to rely on the external market for their required manpower.
The nature of academic training facility of the country does not make the load lighter either. Academic institutes in general and technical institutes in particular have developed and grown along established lines. Very few institutes show interest to keep up with the changing demands of the industry and innovate into new areas or new ways of delivering educational programmes.
The lack of academic material and inadequate communication between academic institutes and industry makes all the more difficult to have academic programmes in emerging areas. Most academic programmes developed along traditional lines because these were the areas where documented knowledge were available.
With, this state of academic training facilities and the response patterns of the general population, the industry has no choice but to rely for most of its manpower requirements on in-house facility. Development of expertise is a slow process and development of skill through on the job experience is even slower. Most in-house learning processes follow a conservative route along established lines because of high cost of managerial time and apprehension of trainees’ mistakes.
Trainees or newly hired employees are rarely given the opportunity for experimentation or jobs that require reflection. The result is that most on job learning processes are slow and require careful advance planning for appropriate job placement and managerial guidance. Naturally, the supply of manpower from internal learning system is a long drawn process.
Apart from the slow learning process, progressive loss of interest in learning by the learners and/or because of poor facilities for learning are other factors which take heavy toll on the number of learners who survive a learning process. There is always a possibility that in a batch of say 10 learners all of them would not pass out with flying colours at the end of a long learning programme.
This attrition rate is higher when the duration of the programme is long and the content of the programme requires a lot of hard work and self-initiative. The attrition also depends on the quality of the facilities provided to the learners. A simple statistic from national educational programme at high school level will show how the natural attrition of the learners reduces the potential number of candidates at the end of a long-learning programme.
At the all India level, during 2006-2007 the dropout rate of students who passed out from fifth standard education was 25.4%. The corresponding rate of those who passed out eight standard was 46% and those who passed out the tenth standard was 60% (Ministry of Human Resource Development 2009).
This means that if we took a sample of 100 students who started their first standard education today, then at the end of their five years of education we would end up with just 75 students, at the end eighth standard we would get just 56 students, and at the end of tenth standard we would be left with just 40 students in the class.
The rest 60 students were dropped dead either because they lost interest or because the learning programme content was too tough for them to understand. At the national level quite a high dropout of school level learners could be attributed to poor learning facility both in school and/or at home. This is why dropout rates are so high in rural schools than those in urban centres.
Now imagine a batch of fresh graduate managers going through an organizational learning and developmental programme of say 10-year long. Do you think all of the freshly recruited managers would pass out with flying colours at the end of say 10 years of internal experience-based developmental programme? Most likely they will not.
Some will dropout because they are getting better offer in other organization. Some will fail because they do not fit with the internal human infrastructure of the company well. Some will lose interest to acquire expertise because the company does not have that many chairs at higher level.
The dropout rate for company managers is likely to be much more than the dropout rates of the school-going children. First, a freshly recruited manager may get lots of other opportunities knocking on his/her door every other day disturbing his/her concentration to acquire new skills and expertise. His/her family organization may place lot of additional demands on his/her time.
Second, because the number of positions in higher levels comes down as one moves up in the hierarchy, unless an organization grows very fast the organizational hierarchy may not be able to accommodate all the freshly recruited managers in higher levels. In other words, because the capacity for developmental opportunity in an organization comes down as one moves up in the hierarchy, there is likely to be purposeful rationing process for allocation of opportunities.
Most Indian business organizations operate in a single country. They compete with many other organizations in the same product as well as factor markets. Naturally, their growth could not be very high to accommodate all the learners with newer positions continuously. This means such organizations may find that dropout rates of their freshly recruited managers are pretty high.
An Indian organization which is expecting to develop all its senior managers through in-house development process must plan its internal developmental programme well in advance and with sufficiently large pool of candidates.
Another related issue in manpower planning is the requirement of manpower reduction. With the Indian economy getting integrated with the world market, much of the advantage of inward-oriented economy that provided a lot of insulation to the Indian organizations from the ups and downs of the world market may go away. And, many organizations may have to live with frequent highs and lows of their businesses.
Manpower planning is a hard job, but for Indian business organizations perhaps it is harder to reduce manpower. Due to lack of employee mobility any business driven manpower reduction attempt is not taken kindly by either the employee union or the government.
This means before hiring an employee, a company has to assume and ensure that there will be enough job for that employee for the rest of his/her career. A company may not be able to close its plant even when its ecological niche has shrunk in size and does not support its continued sustenance or growth.
Inadequate manpower acquisition and development may jeopardize a company business expansion plan in future yet excessive zeal in manpower acquisition and development without considering the long-term business prospect may make it sink fast in hard times.
Importance of Human Resource Planning: 10 Important Points
1. Estimating future demand for human resources – HRP determines the future requirement of personnel on the pace of development, expansion and diversification of business. It also deals with surplus and deficit workforce of the organization.
2. Bridging the gap – HRP plays an important role in bridging the gap between the demand and supply of workforce in an organization.
3. Enhancing workforce – HRP advocates for training and development of workforce to cater to the future demand for workforce.
4. Coping with changes – HRP facilitates to cope with changes. As the changes are inevitable, HRP focuses on change in nature of workforce, technological change, organizational change, demographic changes, legality and ethicality in dealing with workforce.
5. Determining the cost of human resources – Out flow of money is involved in every process of HRM. HRP takes into account the money spent on every activity of HRM and facilitates cost control and cost reduction.
6. Cost of hiring and training – HRP minimizes the cost of hiring and procurement. It is simple to understand that money unspent is money saved.
7. Diversification and expansion of business – Diversification and expansion of business results in demand for workforces. HRP determines the qualitative and quantitative workforce requirement for an organization.
8. Management development programmes – HRP decides upon the need for management development programmes and facilitates to conduct the same more effectively and efficiently.
9. Optimal utilization of human resources – Effective Human Resource Planning will help ascertain the adequate workforce and facilitate to use them optimally. It also prevents disguised unemployment and overloading, leading to job stress.
10. Essential for strategic planning – Strategic plans are the long-term plans of the organization. In the absence of HRP, strategic planning will become ineffective.