HR Planning: Forecasting, Gap Analysis & Strategy

TAKEAWAYS:

• HRP is proactive: It bridges workforce needs and organizational goals through data-driven forecasting.
• Two key forecasts: Demand (future workforce needs) and supply (internal/external talent availability).
• Gap analysis reveals: Shortages/surpluses that trigger recruitment, training, or layoffs.
• Strategic alignment: HRP ensures the right people, with the right skills, are in the right roles at the right time.
• Tech tools matter: Software like Workday or BambooHR automate forecasting and scenario planning.
• Legal/compliance link: Nepal’s Labour Act (2017) mandates fair workforce planning (e.g., no forced layoffs without notice).

Core Concepts of Human Resource Planning (HRP)

HRP is the process of anticipating and meeting an organization’s future human resource needs. It ensures:

1. Right quantity of employees (avoiding overstaffing/understaffing).
2. Right quality (skills, experience, diversity).
3. Right timing (hiring before demand peaks, e.g., Daraz’s holiday season).

Why HRP Matters

• Cost efficiency: Reduces turnover and recruitment costs (e.g., Nabil Bank’s structured onboarding).
• Competitive advantage: Companies like Himalayan Java use HRP to retain skilled baristas during peak seasons.
• Legal compliance: Nepal’s Labour Act requires fair workforce planning (e.g., no discriminatory layoffs).

Step 1: Workforce Demand Forecasting

Definition: Predicting the number and type of employees needed to meet organizational goals.

Methods

Step 2: Workforce Supply Forecasting

Definition: Assessing internal (promotions, transfers) and external (market labor) talent availability.

Internal Supply Sources

1. Promotions/Transfers: Existing employees filling higher roles (e.g., Nepal Rastra Bank promoting clerks to officers).
2. Retirements: Planned exits (e.g., Ncell’s succession planning for senior engineers).
3. Turnover: Voluntary/involuntary departures (e.g., Pathao tracking driver attrition rates).

External Supply Sources

• Labor market trends: Unemployment rates (e.g., Nepal’s 10% youth unemployment per NSB).
• Education pipelines: Universities producing graduates (e.g., PU’s BBA grads for HR roles).
• Temporary agencies: For short-term needs (e.g., ManpowerGroup Nepal supplying event staff).

MERMAIND FIGURE: Supply Forecasting Process

flowchart TD
    A["Start: Assess Internal Supply"] --> B["1. Promotions/Transfers"]
    A --> C["2. Retirements"]
    A --> D["3. Turnover Rates"]
    B --> E["Update Org Chart"]
    C --> E
    D --> E
    E --> F["Calculate Internal Availability"]
    F --> G["Assess External Supply"]
    G --> H["1. Labor Market Data"]
    G --> I["2. Education Trends"]
    G --> J["3. Temp Agencies"]
    J --> K["Final Supply Forecast"]

Step 3: Gap Analysis

Definition: Comparing demand vs. supply to identify shortages/surpluses.

How to Conduct Gap Analysis

1. Quantitative Gap: Number of employees needed vs. available.
   • Example: Daraz needs 300 delivery agents but only has 200 → shortage of 100.
2. Qualitative Gap: Skill mismatches (e.g., Nabil Bank lacks digital marketing skills for online loans).
3. Temporal Gap: Timing mismatches (e.g., NTC needs IT staff now but universities graduate in 6 months).

Step 4: Action Planning

Based on gaps, HR designs strategies:

• Shortage: Recruitment, training, or outsourcing (e.g., Nepal Rastra Bank hires actuaries for risk analysis).
• Surplus: Layoffs, early retirement, or redeployment (e.g., NTC redeploys call-center staff to digital teams).
• Skill gaps: Training programs (e.g., Himalayan Java trains baristas in coffee science).

MERMAIND FIGURE: HRP Action Plan

mindmap
  root((HRP Action Plan))
    Shortage
      Recruitment["Hire 100 delivery agents (Daraz)"]
      Training["Upskill 50 existing staff (Nabil Bank)"]
      Outsourcing["Contract temp agencies (Pathao)"]
    Surplus
      Redeployment["Move call-center staff to IT (NTC)"]
      Early Retirement["Incentivize exits (Nepal Army)"]
      Layoffs["Last resort (comply with Labour Act)"]
    Skill Gaps
      Internal Training["Certification programs (Himalayan Java)"]
      External Hiring["Target PU grads for HR roles"]

In the Real World

1. Nabil Bank’s Loan Officer Forecasting

   • Uses ratio analysis (loans per officer) to predict needs during festival seasons (e.g., +30% demand in Dashain).
   • Action: Hires 50 temporary officers and trains 20 existing staff in digital lending.

2. Daraz’s Delivery Agent Planning

   • Demand: 500 agents during Diwali (vs. 300 baseline).
   • Supply Gap: 200 short → partners with Pathao for shared hiring and Khalti for instant payments to attract drivers.

3. NTC’s IT Workforce Strategy

   • Problem: Aging IT staff + digital transformation needs.
   • Solution:
     • Internal: Redeploys 100 call-center staff to cybersecurity roles.
     • External: Hires 50 freshers from IOE via campus recruitment.

HRP Models and Frameworks

1. Utility Analysis Model

• Purpose: Quantifies the financial benefit of HRP (e.g., cost of turnover vs. hiring).
• Formula: $$\text{Utility}=\frac{\text{Benefits of HRP}-\text{Costs}}{\text{Costs}}$$
• Example: Nabil Bank calculates that reducing turnover by 10% saves Rs. 50M/year in recruitment costs.

2. Markov Analysis

• Purpose: Predicts employee movement between roles (e.g., clerks → officers).
• Application: Nepal Rastra Bank uses this to plan succession for senior positions.

A 3-state chain: Entry-Level → Mid-Level → Senior with transition probabilities. (Image: Spider, CC BY 4.0, via Wikimedia Commons)

Challenges in HRP

Case Study: Himalayan Java’s HRP for Café Expansion

Scenario: Himalayan Java plans to open 10 new cafés in Kathmandu by 2025. HRP Steps:

1. Demand Forecast:
   • Each café needs 5 baristas, 2 managers, 1 chef → Total: 70 new hires.
2. Supply Analysis:
   • Internal: 10 managers can be promoted; 20 baristas can be transferred.
   • External: PU’s Hotel Management grads (50 available).
3. Gap:
   • Baristas: Need 40 more (hired from Hotel Schools).
   • Managers: Need 8 more (trained internally).
4. Action:
   • Recruitment drive at Hotel Management Colleges.
   • Barista certification program for existing staff.
   • Partnership with Khalti for employee discounts.

Outcome: Reduced hiring costs by 30% and improved café quality.

Exam Tip

How This Unit is Tested in PU Exams

1. Definitions: Expect 2–3 marks for definitions (e.g., "What is workforce demand forecasting?").

   • Answer: "The process of predicting future human resource needs based on organizational goals and external trends."

2. Scenario-Based Questions (10–15 marks):

   • Example Question:

     "Nepal Rastra Bank expects 20% growth in loan applications next year. Currently, it has 50 loan officers processing 10,000 loans/year. Using ratio analysis, forecast the number of officers needed. What HRP actions would you recommend?"

   • Key Steps in Answer:
     1. Calculate current ratio: 10,000 loans / 50 officers = 200 loans/officer.
     2. Forecast demand: 12,000 loans (20% growth) → 60 officers needed.
     3. Gap: 60 – 50 = 10 more officers.
     4. Actions:
        • Hire 5 new officers.
        • Train 5 existing staff in digital loan processing.

3. Comparison Tables (5 marks):

   • Compare two forecasting methods (e.g., Trend Analysis vs. Delphi Technique) in a table with accuracy, cost, and suitability for Nepal.

4. Case Study Analysis (15 marks):

   • Given a company (e.g., Daraz), describe how it would conduct HRP for a new service (e.g., Daraz Mart).
   • Structure:
     1. Demand: Estimate staff for warehouses, delivery, customer support.
     2. Supply: Use internal transfers (existing Daraz employees) + external hires (freshers).
     3. Gap: Identify shortages (e.g., warehouse staff) and solutions (partner with ManpowerGroup).

5. Short Notes (5 marks each):

   • Topics likely to appear:
     • "Advantages of Markov Analysis in HRP."
     • "How does Nepal’s Labour Act affect HRP?"
     • "Role of technology in HRP (e.g., AI, HRIS)."

Marking Scheme Breakdown

Final Checklist Before Exam

• Can you define workforce demand forecasting and supply forecasting?
• Can you calculate a ratio-based forecast (e.g., employees per sales target)?
• Do you know two HRP models (e.g., Utility Analysis, Markov Chains)?
• Can you analyze a case study (e.g., Daraz, Nabil Bank) with demand/supply/gap?
• Are you familiar with Nepal’s Labour Act constraints on layoffs/recruitment?