Human Resource Planning and Organisation Planning - Literature review Example

HR Planning and Organisation Planning Student’s Name: Course: Tutor’s Name: Date: Planning for use of human capital is an essential aspect of creating successful for-profit (business) and not-for-profit (government) organisations, as human resource planning (HRP) is the fundamental process of determining and forecasting the human capital needs of an organisation for the present and the future. It is arguably true that human resource planning (HRP) is an essential aspect of creating successful for-profit and not-for-profit organisations. Kandula (2004, p. 56) for example observes that without proper HRP, organisations are often saddled with manpower that performs below standards, and/or an imbalanced human resource where there is either a deficit or surplus in both the quality and quantity of manpower. Yet, HR planning is not the only factor that determines whether organisations succeed; organisational planning is also a vital aspect in determining whether or not an organisation is successful. According to Bailey (2010, p. 1), organisational planning “provides clearer focus of organisations, producing more efficiency and effectiveness. It bridges staff and board of directors, building strong teams, and produces great satisfaction among planners around a common vision”. In other words, HRP is part of organisational planning, which is linked to the organisation’s vision. Reverting to HRP, this paper agrees to the above statement especially in light of the financial economic crisis that occurred between 2008 and 2009, and whose effects are still being felt in some economies. In a HR survey conducted by Hudson (2010) for example, it was discovered that companies faced with the economic realities of the day had to cost-cut by retrenching the “not-so-important” staff and retaining employees who could serve strategic roles that organisations could not do without at the time. Although the economic crisis was not foreseen by many organisations, it took the ingenuity of HR managers (some) using HR plans to understand just which manpower was integral for the survival of individual companies in light of the dwindling economic fortunes. In the Hudson (2010, p. 3) survey, it was discovered that organisations were “attempting to balance the impact of downsizing with an increased focus on talent engagement and long-term strategy”. Specifically, Hudson (2010, p. 3) notes that while some organisations recognised the need to downsize the human resource in the short-term if only for purposes of surviving the short-term consequences of the economic crisis, they were also cognisant of the impact that such downsizing would have on the long-term strategy of their respective organisations. In organisations with the need for high expertise human resources, losing such manpower would for example cost more or even take longer to regain. In other words, losing competencies through downsizing presented organisations with serious risks and costs, which could only be gauged based on the organisations’ plans, which (possibly) detailed the long-term vision for each such firm. From the economic crisis example, one could therefore argue that organisational planning should precede HRP. After all, the human resource needs should ideally be based on the mission and vision of the organisation, and as Huselid (1993, p. 36) indicates, a “HR Plan is developed to help implement the firm’s business strategy”. The strategic aspects of HRP According to Devanna, Fombrun and Tichy (1981, p. 53), strategic level activities focus on the long-term future of an organisation. In relation to HRP, strategic-level decisions involve considering “what kinds of people will be needed to manage and run the organisation...the implications of the long-run position on...current selection, placement and training practices” (Devanna et al. 1981, p. 53). Following the aforementioned, the strategic aspects of HRP can therefore be said to include the identification of human resources requirements (i.e. the quantity/numbers and the type) of employees needed in an organisation. Determining the availability of employees based on the requirements analysis as indicated by Richards (2013, n.pag.) would be the second strategic aspect of HRP. Here, HRP would be used in determining whether there is a shortage or surplus in manpower. Strategically, HRP has to use systematic forecasting for purposes of establishing the manpower needs of the organisation (Richards 2013, n.pag.). The systematic forecasting process is based on prevailing and forecasted business conditions. Based on systematic forecasting, manpower needs in the organisation are planned and monitored. Performance management is also a critical aspect in HRP since it helps the HR planners to analyse, improve and/or monitor each employee’s performance and that of the entire organisation. Another strategic aspect of HRP relates to career management, whereby, the HR planners determine, plan and monitor the aspirations of individual employees in the organisation (Richards 2013, n.pag.). By so doing, the HR planners are able to develop such employees with the intent of improving productivity. Finally, management development is a key strategic aspect of HRP since HR planners are able to assess and determine the developmental needs for future managers in preparation for succession in the organisation. As Devanna et al. (1981, p. 55), state, HRP needs to strategically “specify the characteristics of people needed to run the business over the long-term”. Only then can the HR planners alter the organisation’s internal and external system and link them to the long-term strategy. Pitfalls and challenges of HRP Among the major pitfall and challenge of HRP is the fact that planning for human resources is not an exact science. As indicated by Martin, Whiting and Jackson (2010, p.116) HRP involves considering different internal and external factors that could possibly affect the demand and supply of human capital. However, organisations do not always get the facts right, especially because there could be destabilising factors in the internal or external environments. For example, the changing technologies, fluctuating economy, changes in consumer demand among other issues are some of the factors that could affect the demand and supply of human resources. Closely related to the above is forecasting demand for specific skills and vacancies. As indicated by Richard (2013, n.pag.) for example, nursing has always been in demand in the healthcare industry; however, it is hard to determine if indeed more people will be willing to study for the same in future, and it is therefore challenging to forecast the supply side regarding that area of expertise. Sheehan (2011, p. 130) recommends that understanding the industry where an organisation is operating in and comprehending the regulatory and economic changes therein can assist an organisation to manage such challenges. Succession planning has also been identified as another pitfall/challenge in HRP. While succession planning is important as part of developing leadership in the organisation, there is no guarantee that the people featured in the succession plan will stay long enough in an organisation. In some cases, they may change jobs, die, or even prove incapable of managing high-responsibility roles in the workplace. If any of the mentioned scenarios were to happen, all the efforts by the HR planners would have gone to waste. Ideally, HRP should be considered by all organisations. However, and as Huselid (1993, p. 37) indicates, different firms have varying opinions regarding HRP. On one hand are HRP implementers, who incidentally happen to tie the process with their overall organisations’ missions, while on the other hand are non-implementers who do not find the concept useful. For the implementers, HRP has to be applied based on the prevailing internal and external conditions. In other words, there is no one-size-fits-all type of HRP. As Huselid (1993, p. 38) states, the variables in the internal and external environments of each organisation make it necessarily for organisations to customise HRP to suit their own situations. The concept of human capital relates to HRP because as Ceridian Ltd. (2007, p. 1) observes, the former refers to “all the competencies and commitments of people within an organisation i.e. their skills, experience, potential and capacity”. Additionally, the human capital concept indicates that additional investments in people yield output (Zula & Chermack 2007, p. 249). Based on the aforementioned therefore, it is evident that HR planners would need to factor the need for training and development and other motivational factors such as salaries, benefits and bonuses among others. As Dreher and Dougherty (2002 cited by Davies and Sofo 2007, p. 4) indicates, “bringing the role of HRP to an integrated workforce planning model involves human resource management (HRM) in strategy formulation, requiring a knowledge of internal and external labour market conditions...”. In other words, through HRP, the HRM function in an organisation is able to understand the external and internal labour conditions better. The basic HRM functions include manpower planning, recruitment and selection, employee motivation, evaluation, industrial relations, and training and development (Sheehan 2011, p. 126). HRP on the other hand coordinates the basic HRM functions to ensure that they fit into plans that “guide the long-term acquisition, use and development of intellectual capital and knowledge assets” (Rothwell & Sredl 2000, p. 242, cited by Zula & Chermack 2007, p. 253). Overall, HRP has its advantages and disadvantages. On the positive side, HRP provides clear linkages between the organisation’s objectives and its HR functions (Compton, Nankervis & Morrissey 2009, p. 9). Additionally, it enables organisations to save on cost and time during recruitment and selection since the organisation already knows the kind of people it wants to incorporate into its workforce. Closely related to the aforementioned is the possibility that organisations that use HRP succeed in getting the right people from the labour market. Finally, organisations that have HRP are more likely to have responsive and systematic HR policies as indicated by Compton et al. (2009, p.9). The main disadvantages related to HRP include the time required to attain good plans. Additionally, HR plans are subject to variables such as economic factors, variation in skills, demographic factors, and employment/unemployment levels, thus compromising the accuracy of projections made in the HR plans. References Bailey, B 2010, ‘Organisational planning’, GIO Project, viewed 11 February 2013, . Ceridian Ltd. 2007, ‘Human capital white paper’, pp. 1-4, viewed 11 February 2013, . Compton, R, Nankervis, A, & Morrissey, B 2009, Effective recruitment and selection practices, 5th edition, CCH Australia Limited, North Ryde, NSW. Davies, D & Sofo, F 2007, ‘Work-life balance: A critical outcome of strategic workforce planning’, University of Canberra, pp. 1-8. Devanna, M A, Fombrun, C, & Tichy, N 1981, ‘Human resources management: a strategic perspective’, Organisational Dynamics, winter, pp. 51-68, viewed 11 February 2013, . Hudson 2010, ‘Tackling the economic crisis: has HR learned from the past?’ Hudson EU HR Survey Report, viewed 11 February 2013, . Huselid, M 1993, ‘The impact of environmental volatility on human resource planning and strategic human resource management’, Human Resource Planning, vol. 16, no. 3, pp. 33-50, viewed 11 February 2013, . Kandula, S R 2004, Human resource management in practice: With 300 models, techniques and tools, PHI Learning Pvt. Ltd., New Delhi. Martin, M, Whiting, F, Jackson, T 2010, Human resources practice, 5th edition, CIPD, London, viewed 11 February 2013, . Richards, L 2013, ‘Human resource planning process’, Chron, viewed 11 February 2011, . Sheehan, C 2011, ‘Human resource Planning’, In Kramar, R & Syed, J (Eds.), Human resource management in a global context, Palgrave, London, pp. 125-148, viewed 11 February 2013, . Zula, K J & Chermack, T J 2007, ‘Human capital planning: A review of literature and implications for human resource development’, Human Resource Development Review, vol. 6, no. 3, pp. 245-262. Read More