   Definition: According to Gary Dessler (2013) Human Resource Planning is the process of deciding what positions the firm will have to fill, and how to fill them (Dessler & Varkkey,2013). It embraces (holds) all future positions, from maintenance clerk to CEO.     The human resource planning process consists of 1. Forecasting 2. Goal setting and Strategic Planning 3. Program Implementation and Evaluation    The first step in the planning process is forecasting. In personnel forecasting, the HR manager attempts to determine the supply of and demand for various types of human resources. The primary goal is to predict areas within the organization where there will be future labor shortages or surpluses. According to Noe, 2007  Forecasting—The attempts to determine the supply of and demand for various types of human resources to predict areas within the organization where there will be future labor shortages and surpluses (an excess of production or supply).   Forecasting, on both the supply and demand sides, can use either statistical methods or judgmental methods. Statistical methods are excellent for capturing historic trends in a company’s demand for labor, and under the right conditions they give predictions that are much more precise (accurate) than those that could be achieved through subjective judgments of a human forecaster.   Typically, demand forecasts are developed around specific job categories or skill areas relevant to the organization’s current and future state. Once the job categories or skills are identified, the planner needs to seek information that will help predict whether the need for people with those skills or in that job category will increase or decrease in the future. Once a company has projected labor demand, it needs to get an indicator of the firm’s labor supply. Determining the internal labor supply calls for a detailed analysis of how many people are currently in various job categories (or who have specific skills) within the company. This analysis is then modified to reflect changes in the near future caused by retirements, promotions, transfers, voluntary turnover , and terminations.  Turn over in HR: the rate at which employees leave a company and are replaced by new employees    As in the case of labor demand, projections for labor supply can be derived either from historical statistical models or through judgmental techniques. One type of statistical procedure that can be employed for this purpose involves transitional matrices.  Transitional Matrices show the proportion (or number) of employees in different job categories at different times.  Typically these matrices show how people move in one year from one state (outside the organization) or job category to another state or job category.  Once forecasts for labor demand and supply are known, the planner can compare the figures to determine whether there will be a labor shortage or labor surplus for the respective job categories. When this is determined, the organization can determine what it is going to do about these potential problems.    For example: It is relatively easy to predict from historical data that in the future, the United States is likely to experience a shortage of nurses and, perhaps, a shortage of workers with knowledge of nuclear power. It is also easy to predict that the current shortage of skilled craftsmen is likely to get worse in the coming years. That is, jobs like ironworker, mechanist, sheet metal worker, pipe fitter, plumber, and welder are in huge demand (Noe, Hollenbeck, Gerhart & Wright, 2007).  The second step in human resource planning is goal setting and strategic planning.  The purpose of setting specific quantitative goals is to focus attention on the problem and provide a benchmark for determining the relative success of any programs aimed at redressing a pending labor shortage or surplus. The goals should come directly from the analysis of labor supply and demand and should include a specific figure for what should happen with the job category or skill area and a specific timetable for when results should be achieved.  For example:  The auto parts manufacturer might set a goal to reduce the number of individuals in the production assembler job category by 50 % over the next three years.  Similarly, the firm might set a goal to increase the number of individuals in the sales representative job category by 25 % over the next years.   Once these goals are established, the firm needs to choose from the many different strategies available for redressing labor shortages and labor surpluses. Options Speed Human Suffering 1. Downsizing Fast High 2. Pay Reductions Fast High 3. Demotions Fast High 4. Transfers Fast Moderate 5. Work Sharing Fast Moderate 6. Hiring Freeze Slow Low 7. Natural Attrition Slow Low 8. Early Retirement Slow Low 9. Retraining Slow Low Options Speed Revocability 1. Overtime Fast High 2. Temporary Employees Fast High 3. Outsourcing Fast High 4. Retrained Transfers Slow High 5. Turnover reductions Slow Moderate 6. New external hires Slow Low 7. Technological innovation Slow Low Natural attrition refers to the natural reduction of a business's workforce due to employees leaving on their own accord. Examples of natural attrition include retirement, relocation or leaving the company to pursue other opportunities at another company or in another industry.  Unfortunately for many workers, in the past decade the typical organizational response to a surplus of labor has been downsizing, which is fast but high in human suffering.  Beyond this economic impact, the psychological impact spills over and affects families, increasing the rates of divorce, child abuse, and drug and alcohol addiction.   The typical organizational response to a labor shortage has been either hiring temporary employees or outsourcing, responses that are fast and high in revocability (The quality of being revocable; the ability to cancel/ able to be cancelled).  “Downsizing is the planned elimination of large numbers of personnel designed to enhance organizational effectiveness (Noe, 2007)”.  Many organizations adopted this strategic option in the 1990s, especially in the United States. In fact, over 85% of the Fortune 1000 firms downsized between 1987 and 2001, resulting in more than 8 million permanent layoffs—an unprecedented (extra ordinary) figure in U.S. economic history.   The jobs eliminated in these downsizing efforts should not be thought of as temporary losses due to business cycle downturns or a recession but as a permanent losses due to the changing competitive pressures faced by businesses today.    Another popular means of reducing a labor surplus is to offer an early retirement program. On the other hand, many organizations are moving from early retirement programs to phased retirement programs. Phased retirement programs/ Buyouts allow the organization to tap into the experience of older workers while reducing the number of hours they work (and hence reducing costs). This option is often helpful psychologically for the workers, who can ease into retirement rather than being thrust all at once into a markedly different way of life (retirement life).  Finally, many early retirement programs are simply converted into buyouts for specific workers that have nothing to do with age.  For example: in 2006, Ford reduced the size of its workforce by close to 50% using across-theboard buyouts of workers.    Whereas downsizing has been a popular method for reducing a labor surplus, hiring temporary workers and outsourcing has been the most widespread means of eliminating a labor shortage. Temporary employment affords firms the flexibility needed to operate efficiently in the face of swings in the demand for goods and services.   In fact, a surge in temporary employment often precedes a jump in permanent hiring, and is often a leading indicator that the economy is expanding. For example: the number of temporary workers grew from 215 million to 230 million between 2003—2004, signaling to many the end of the recession.   Outsourcing: “an organization’s use of an outside organization for a broad set of services(Noe, 2007)”. Whereas, a temporary employee can be brought into manage a single job, in other cases a firm may be interested in getting a much broader set services performed by an outside organization; this is called outsourcing.  Outsourcing is a logical choice when a firm simply does not have certain expertise and is not willing to invest time and effort into developing it. Offshoring: “A special case of outsourcing where the jobs that move actually leave one country and go to another(Noe, 2007)”.  In other cases, outsourcing is aimed at simply reducing costs by hiring less expensive labor to do the work, and, more often than not, this means moving the work outside the country.  Offshoring is a special case of outsourcing where the jobs that move actually leave one country and go to another.   The third step in human resource planning is program implementation and evaluation.  The programs developed in the strategic-choice stage of the process are put into practice in the programimplementation stage.  A critical aspect of program implementation is to make sure that some individual is held accountable for achieving the stated goals and has the necessary authority and resources to accomplish this goal.  It is also important to have regular progress reports on the implementation to be sure that all programs are in place by specified times and that the early returns from these programs are in line with projections.     The final step in the planning process is to evaluate the results. The most obvious evaluation involves checking whether the company has successfully avoided any potential labor shortages or surpluses. Although this bottom-line evaluation is critical, it is also important to go beyond it to see which specific parts of the planning process contributed to success or failure.
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