HR Planning is forecasting the supply and demand for labor in a firm or unit, and planning programs to assure that supply matches demand in the future.

Who Is Planned For?

Aggregate level (total headcount, headcount in job or job family)

Individual positions (managerial succession planning)

When Is Planning Done?

At least annually

Time horizons vary


What is Human Resource Planning?


Figure 3.1 A Model for Human Resource Planning

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Human Resource Planning Model

Demand Analysis

Supply Analysis

Reconcile Gaps

Forecast Organizational Conditions

Forecast Labor Demand

Forecast Internal Supply

Forecast External Supply

Internal and External Information Collection

Judgmental Methods (use human insight, experience, and intuition)

Bottom-Up (Unit) Forecasting – sum the forecasts of each unit

Top-Down Forecasting – top management anticipate future employment requirements

Delphi Technique – experts respond to rounds of opinion surveys, eventually converging on a forecast


Forecasting the Demand for Labor: How many people will we need?

Simple Mathematical Methods

Use sales forecasts plus productivity and staffing ratios to predict labor requirements.

If we need 1 secretary per 8 salespersons, and each salesperson averages $2,000,000 in sales per year, how many of each are required if we anticipate total sales of $32,000,000 next year?


Forecasting the Demand for Labor: How many people will we need?

16 sales people and 2 secretaries

Complex Mathematical Methods

Multiple regression

Linear programming

Workforce modeling


Forecasting the Demand for Labor: How many people will we need?

Skills Inventories manual or computerized lists of employee experience, training, skills, and preferences

Human Resource Information Systems (HRIS)

database management systems

screens for inputting data

programs for cross checking accuracy

modules for specific purposes/reports

query features

self-serve interfaces


Tracking the Internal Supply of Labor: Who have we got?

Markov analysis

Transition Probability Matrix shows the likelihood of moving from one “state” (job) to another in a year.

When multiplied by numbers starting the year in each state, predicts the number in each state at the end of the year.


Predicting the Internal Supply of Labor: Who will we have next year?


Table 3.1 Applying Markov Analysis