Functions of Human Resources Management: Manpower Planning

Hey everyone! Welcome to your study notes on Manpower Planning. Don't let the formal name scare you. Think of it as a company's 'game plan' for its people. It's all about making sure a business has the right people, with the right skills, in the right jobs, at the right time. It’s super important for any company that wants to succeed!

In this chapter, we're going to cover two main things:

1. Why manpower planning is so important for a business.
2. How businesses actually carry out the manpower planning process, step-by-step.

Let's get started, and don't worry if it seems tricky at first – we'll break it all down together!


1. The Importance of Manpower Planning

Imagine trying to win a football match. You wouldn't just send 11 random people onto the field, right? You'd need a plan! You'd need to know how many defenders, midfielders, and strikers you need. Manpower planning is exactly like that, but for a business.

Here’s why it's a game-changer for any organisation:

To Avoid Labour Shortages

A labour shortage (or deficit) happens when a company doesn't have enough employees to do the work. This is a huge problem!

  • Example: Imagine a popular bubble tea shop on a hot Saturday with only one person working. The queue gets super long, customers get angry and leave, the single employee is stressed, and the shop loses a lot of money.

Good manpower planning helps a company predict when it will need more staff (like hiring extra part-timers for the summer) so it can avoid this chaos.

To Prevent Labour Surpluses

The opposite problem is a labour surplus, which means having too many employees for the amount of work available. This is also bad for business.

  • Example: A company that makes winter jackets hires 50 new workers in May. During the summer, there's not much to do, so the company is paying salaries to people who are just sitting around. This is a huge waste of money.

Manpower planning helps a company match its workforce size to its actual needs, avoiding wasted expenses.

To Match Skills with Company Needs

It’s not just about the number of people, but also about their skills. A company needs to make sure it has employees with the right talents to meet its goals.

  • Example: A bank wants to launch a new mobile banking app. It's not enough to just hire more bank tellers. They need to specifically plan to hire app developers, cybersecurity experts, and digital marketers.

Planning ensures the company has the right expertise on board to grow and innovate.

To Cope with Change

The business world is always changing! New technology, new laws, and new competitors pop up all the time. Manpower planning helps a company prepare for these changes.

  • Example: When supermarkets started introducing self-checkout machines, they needed fewer cashiers but more technicians to maintain the machines. With good planning, they could retrain existing cashiers for these new roles instead of firing them.

To Improve Cost-Effectiveness

When you put all the points above together, it all leads to saving money! By avoiding shortages and surpluses, and by hiring the right people at the right time, a company becomes much more efficient. It avoids the high costs of rush-hiring or the painful costs of laying people off (redundancy payments).

Key Takeaway

Manpower planning is crucial because it helps a business have the right number of people with the right skills at the right time. This helps the company achieve its goals, cope with change, and save money.


2. The Manpower Planning Process

Okay, so we know WHY it's important. Now, let's look at HOW it's done. This might seem like a lot of steps, but it's a very logical process. Think of it like planning for a big holiday trip!

Step 1: Forecasting Future Manpower Demand

This is the first and most important step: trying to predict the future! The company asks: "How many employees, and with what skills, will we NEED in the future?"

This isn't just a wild guess. Managers look at things like:

  • Business goals: Are we planning to open a new branch next year? If so, we'll need a new manager, new sales staff, etc.
  • Economic trends: Is the economy growing? If so, customers might buy more, and we might need more production workers.
  • Technological changes: Are we introducing a new machine that does the work of three people? Then we'll need fewer operators.
  • Sales forecasts: If we predict sales will increase by 20%, we'll probably need more salespeople.

Analogy: This is like deciding where you want to go on your holiday and what you want to do. This determines how much money, what clothes, and what equipment you will NEED.

Step 2: Forecasting Future Manpower Supply

Once the company knows what it needs, it looks at what it already has. The question here is: "How many employees do we HAVE now, and who is likely to stay or leave?"

This involves looking at two sources:

  • Internal Supply: This means looking at the current employees. Who might be promoted? Who might be transferred to another department? Crucially, who might retire or resign soon? The company creates a skills inventory to see what talents it already has in-house.
  • External Supply: This means looking at the job market outside the company. Are there many skilled people looking for jobs in our industry? Is it easy or hard to find qualified candidates?

Analogy: You know what you need for your trip. Now you check your wardrobe and your bank account. What do you already HAVE? You also think about things you might lose or use up (like employees who might resign).

Step 3: Comparing Demand and Supply (Gap Analysis)

This is the moment of truth! The company compares the results from Step 1 (Demand) and Step 2 (Supply) to see if there's a match or a mismatch. This is called a gap analysis.

There are three possible outcomes:

  1. Labour Shortage (Deficit): Demand > Supply. The company will need more employees than it expects to have. (e.g., "We need 100 workers but we only have 80!")
  2. Labour Surplus: Demand < Supply. The company will have more employees than it needs. (e.g., "We only need 50 workers but we have 65!")
  3. Equilibrium (Balance): Demand = Supply. The perfect scenario! The company has exactly the right number of people. (This is the goal, but it's rare to get it perfectly right).

Analogy: You compare what you NEED for the trip with what you HAVE. You realise you don't have enough money (a shortage!), or maybe you have too many winter coats for a beach holiday (a surplus!).

Quick Review Box

Here are the 4 simple steps to remember:

Step 1: Forecast DEMAND (What we need)
Step 2: Forecast SUPPLY (What we have)
Step 3: COMPARE (Find the gap: shortage or surplus?)
Step 4: Action PLAN (Solve the problem!)

Step 4: Formulating an Action Plan

Based on the gap identified in Step 3, the Human Resources department creates a plan to fix the problem. The actions will be very different depending on whether there is a shortage or a surplus.

Action Plans for a Labour SHORTAGE:

If the company needs more staff, it can:

  • Recruitment and Selection: The most obvious one! Hire new people from outside the company.
  • Overtime: Ask current employees to work extra hours. (This is usually a short-term solution).
  • Training and Development: Train existing employees to give them new skills so they can fill the new roles (this is called upskilling).
  • Outsourcing: Pay another company to do some of the work (e.g., a company might outsource its cleaning services instead of hiring its own cleaners).
Action Plans for a Labour SURPLUS:

If the company has too many staff, it needs to reduce its workforce carefully:

  • Hiring Freeze: Stop hiring new people. When an employee leaves, they are not replaced.
  • Early Retirement: Offer attractive financial packages to encourage older workers to retire early.
  • Reducing Work Hours: Ask employees to work fewer hours per week (and receive less pay).
  • Layoffs / Redundancy: This is usually the last resort, as it's very difficult for the employees. It means letting people go because their jobs are no longer needed.

Analogy: If you have a money shortage for your trip, your action plan could be to work part-time (recruitment) or ask for more hours at your current job (overtime). If you have a surplus of clothes, your plan is to leave some at home (redundancy)!

A Common Mistake to Avoid!

Some students get confused and think that manpower planning involves a detailed 'job analysis' (studying a job's duties and responsibilities). For the HKDSE exam, the syllabus clearly states that the process of job analysis is NOT required. So, just focus on the four steps we covered above!


Did you know?

Tech giants like Google and Apple are in a constant state of manpower planning. They need to predict how many A.I. specialists, software engineers, and designers they will need years in advance to stay ahead of the competition. If they get it wrong, they could miss out on the next big thing!