Importance of Human Resource Planning
When a company says that their workers are the essential factors in the growth and success of the business, you need to take such words seriously. Have all the financial resources to run a business, without the right employees; the company might not survive for long.
However, human resource planning is crucial. It is also one aspect that organizations should not take lightly. The performance and survival of the business depend largely on the human resources or employees that run the organization.
However, in order to highlight the importance of human resource planning, lets outline its role on the following lines:
Future Personnel Needs
Planning is significant as it helps determine future personnel needs. Surplus or deficiency in staff strength is the result of the absence of or defective planning. All public sector enterprises find them selves overstaffed now as they never had any planning of their personnel requirements. They went on a hiring spree up to the late 1980s. Since then, recruitment and selection have been almost banned, but the ban came too late. The private sector is no exception.
As many as 76.5 per cent of our organizations have surplus labor and the excess varies between 10 and 20 per cent in as many as 47 per cent of the units. The problem of excess staff has become so heavy that many units are resorting to ‘voluntary retirement schemes’ (VRS) to remove the excess staff. Such surplus labor (even shortage) would not have been there if there were human resource planning.
That the government undertakings have too many employees than they need it is too well known. But what is not widely known is the absence of succession planning in most public sector units. Absence of succession planning has resulted in a situation where many organizations function without chief executives. The anomaly of surplus labor, juxtaposed with the lack of top executives stems from the absence of or a defective human resource planning.
Part of Strategic Planning
HR management must become an integral part of strategic management process. All activities of human resource management planning, hiring, training, remunerating and maintaining – must be merged with strategic management
HR planning can become part of strategic planning at two ends. At the beginning of strategic planning, human resource planning provides a set of inputs into the strategic formulation process in terms of deciding whether the types and numbers of people are available to pursue a given strategy. At the end of strategic planning process, human resource planning is relevant in terms of implementation concerns. Once the strategy is set, executives need to make resource allocation decisions, including those pertaining to structure, processes and human resources.
In most successful companies there is virtually no distinction between strategic planning and HRP; the planning cycles are the same and HR issues are seen as inherent in the business management. HR managers are important facilitators of the strategic planning process and are viewed as important contributors to carve the organization’s future.
Creating Highly Talented Personnel
As stated earlier, jobs are becoming highly intellectual and incumbents are getting vastly professionalized. L&T, an engineering giant, has MBAs, engineers and technicians who collectively constitute 70 per cent of the total employee strength of 20,000. The HR manager must use his/her ingenuity to attract and retain qualified and skilled personnel.
These people are known for job hopping, thereby creating frequent shortages in the organization. Manpower planning helps prevent such shortages. Furthermore, technology changes will often up grade some jobs and degrade others. Indian Telephone Industries (ITI) had a stronger technology to start with, which later developed into crossbar telephone system.
This was later changed to electronic technology. Jobs created and people hired when old technologies were in use became extinct, obsolete and redundant. ITI became a public sector undertaking, could not retrench its workers, and were subsequently retrained and redeployed to supervise the electronic system now in use. Jobs became highly technical necessitating hiring of engineers who had majored in electronics. So, ITI had no use of engineers with civil or mechanical engineering as major.
Thus, ITI is in a tight spot so far as shop- floor workers are concerned, whose number is more than the demand for them. Even with regard to electronics engineers, the company is not in a comfortable position. With its existing compensation scheme, ITI is not in a position to attract talented people. This situation could have been avoided if ITI had done human resource planning.
Another facet of the high-talent personnel is management succession planning. Who will replace the retiring chief executive? From what pool of people will top executives be selected and how will these individuals be groomed for their increased responsibilities? HRP has an answer to these and other related questions.
International expansion strategies depend upon HRP. The department’s ability to fill key jobs with foreign nationals and the re-assignment of employees from within or across national borders is a major challenge facing international businesses. With the growing trend towards global operation, the need for human resource planning will grow, as well as the need to integrate human resource planning more closely into the organization’s strategic plans.
Human resource planning will grow increasingly important as the process of meeting staffing needs from foreign countries and the attendant cultural, language, and developmental considerations grow complex. Without effective human resource planning and subsequent attention to employee recruitment, selection, placement, development and career planning, the growing competition for foreign executives may lead to expensive and strategically-disruptive turnover among key decision makers.
Foundation for Personnel Functions
As stated earlier, human resource planning provides essential information for designing and implementing personnel functions, such as recruitment, selection, personnel movement (transfers, promotions, layoffs) and training and development.
Increasing Investments in Human Resources
Another compelling reason for human resource planning is the investment an organization makes in its human resources. Human assets, as opposed to physical assets, can increase in value. An employee who gradually develops his/her skills and abilities becomes a more valuable resource. Because an organization makes investments in its personnel either through direct training or job assignments, it is important that employees are used effectively throughout their careers.
The rupee value of a trained, flexible, motivated and productive workforce is difficult to determine, although attempts are being made to do so, as in HR accounting (HRA). An increasing number of executives are acknowledging that the quality of the work force can be responsible for significant differences in short-run and long-run performances.
Resistance to Change and Move
There is a growing resistance among employees to change and move. There is also a growing emphasis on self-evaluation and on evaluation of loyalty and dedication to the organization. All these changes are making it more difficult for the organization to assume that it can move its employees around anywhere and anytime it wants, thus increasing the importance and necessity of planning ahead.
Unite the Perspectives of Line and Staff Managers
Human resource planning helps unite the perspectives of both line as well as staff managers. Although human resource planning is initiated and executed by the corporate HR staff, it requires the input and cooperation of all managers within an organization. No one knows better the needs of a particular unit or department than an individual manager responsible for the area. Communication between HR staff and line managers is essential for the success of HR planning initiatives.
Following are other potential benefits of human resource planning: 1. Upper management has a better view of the HR dimensions of business decision; 2. Personnel costs may be less because the management can anticipate imbalances before they become unmanageable and expensive; 3. More time is provided to locate talent; 4. Better opportunities exist to include women and minority groups in future growth plans; 5. Better planning of assignments to develop managers can be done; and 6. Major and successful demands on local labor markets can be made.
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