Several factors affect HRP. These factors or determinants can be classified into external factors and internal factors.
External Factors
External factors are factors that are outside the organisation and cannot be controlled by human resource planners. These include:
- Government policies like labour policy, industrial relations policy, policy towards reserving certain jobs for different communities and sons-of-the-soil, etc.
- Level of economic development, as it determines the level of HRP in any country and thereby the supply of human resources in the future in the country.
- Business environment, which can influence the volume and mix of production and thereby the future demand for human resources.
- Level of technology, which determines the kind of human resources that are required in an organisation.
- International factors like the demand for resources and supply of human resources in various countries.
Internal Factors
Internal factors are factors stemming from within the organisation and can somewhat be controlled by human resource planners. These include:
- Company policies and strategies relating to expansion, diversification, alliances, etc. They determine the human resource demand in terms of quality and quantity.
- Human resource policies regarding the quality of the human resources, compensation level, quality of work-life, etc.
- Job analysis, as it forms the basis of the human resource. Job description and job specification determine the kind of employees required in the organization.
- Time horizons, as companies with a stable competitive environment can plan for the long run, whereas firms with an unstable competitive environment can plan for only short-term ranges.
In-Depth Look at Some Important Factors Influencing HRP
1. Type and Strategy of the Organization
The type of the organization determines the production processes involved, the number and type of staff needed, and the supervisory and managerial personnel required. HR needs are also defined by the strategic plan of the organization.
- If the organization has a plan for organic growth, then the organization needs to hire additional employees.
- If the organization is going for mergers and acquisitions, it needs to plan for layoffs, as mergers can create duplicate or overlapping positions that can be handled more efficiently with fewer employees.
The organization first decides whether to be reactive or proactive in HRP.
- Proactive: Organizations carefully anticipate the needs and systematically plan to fill the need in advance.
- Reactive: Organizations simply react to the needs as they arise.
Organizations must also determine the width of the HR plan:
- They can choose a narrow focus by planning in only one or two HR areas like recruitment and selection.
- Or they can take a broad perspective, planning in all areas including training and remuneration.
The nature of the HR plan is also decided by the formality of the plan:
- It can be informal, mostly in the minds of the managers and personnel staff.
- Or it can be a formal plan properly documented in writing.
The flexibility practiced in the organization also affects HRP:
- HR plans should have the ability to anticipate and deal with contingencies.
- Organizations frame HRP in a way that it can contain many contingencies, reflecting different scenarios, making the plan flexible and adaptable.
2. Organizational Growth Cycles and Planning
All organizations pass through different stages of growth from the day of their inception. The current stage of growth of an organization determines the nature and extent of HRP:
- Small organizations in the earlier stages of growth may not have well-defined personnel planning.
- As the organization enters the growth stage, they feel the need to plan its human resources and emphasize employee development.
- In the mature stage, the organization experiences less flexibility and variability, resulting in a low growth rate.
HR planning becomes more formalized, less flexible, and less innovative, with problems like retirement and possible retrenchment dominating planning.
During the declining stage, HRP takes a different focus like planning to do the layoff, retrenchment, and retirement. Planning becomes reactive towards the financial and sales distress faced by the company.
3. Environmental Uncertainties
Political, social, and economic changes affect all organizations. The fluctuations in these environments affect organizations drastically.
Personnel planners deal with such environmental uncertainties by formulating recruitment, selection, training, and development policies and programs carefully.
A balance in the organization is achieved through:
- Succession planning
- Promotion channels
- Layoffs
- Flexi-time
- Job sharing
- Retirement
- VRS
- Other personnel-related arrangements
4. Time Horizons
HR plans can be short-term or long-term:
- Short-term plans span from six months to one year.
- Long-term plans spread over three to twenty years.
The period depends on the degree of uncertainty in the organizational environment. Greater the uncertainty → Shorter the planned time horizon Lesser the uncertainty → Longer the planned time horizon
5. Type and Quality of Information
The information used to forecast personnel needs comes from many sources.
The forecast largely depends on:
- Type of information
- Quality of data available to personnel planners
The accuracy of information depends on how clearly the organization’s decision-makers have defined their:
- Strategy
- Structure
- Budgets
- Production schedule, etc.
6. Nature of Jobs Being Filled
Personnel planners must consider the nature of the jobs being filled:
- Lower-level jobs with limited skill requirements can be recruited quickly.
- Hiring for higher posts needs to be done with high discretion.
Organizations need to anticipate vacancies as early as possible to allow enough time to find the right candidate.
7. Outsourcing
Many organizations outsource part of their work to external parties as subcontractors.
This is common in both:
- Public sector companies
- Private sector companies
If the organization has surplus labour, they prefer outsourcing over hiring. Usually, non-critical activities are outsourced.
So, both critical and non-critical outsourcing decisions influence HRP.
Requisites for Successful HRP
In light of all these factors, here’s what makes Human Resource Planning successful:
- HRP must be seen as an integral part of corporate planning.
- It should have the support of top management.
- There should be coordination between different levels of management.
- Organization records must be complete, up to date, and readily available.
- Techniques used for HR planning should suit the available data and the accuracy required.
- Data collection, analysis, and planning techniques must be constantly revised and improved based on experience.
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