HR Guide: Manpower Planning & Budgeting

In this article, we will explain how to forecast the right amount of manpower with the right skills in the right position at the right time to ensure your business runs smoothly.

Business Plan

First things first, we need to refer to the company’s business plan. A business plan is a summary of business objectives with specific business targets for the future. It is crucial to combine business plans with manpower planning to make sure the current and future manpower needs are met, so the business can achieve its objectives.  

Reviewing Manpower Needs

1. Assess the current position and manpower inventories. In order to identify the current or future challenges in managing HR, ask yourself these two questions:

   1. Vacant position:

      1. Is there any trouble filling up open positions?

      2. If there is/are, why?

   2. Manpower:

      1. What’s the age demographic?

      2. Who’s retiring in 1 to 3 years?

      3. What skills do we need now or in the future?

2. Hold a meeting with leaders from every department to understand their manpower needs in terms of number, skills and experience.

3. Based on the business plan, take note of the impact on current manpower. The impact may be a need for either additional or reduction of manpower or new skills to be developed or acquired.

4. Here’s the part where you determine the recruitment plan if the requirement for the plan year is redundant or resource is limited. Other than the recruitment plan, HR might need to decide on other plans to secure future manpower needs:

   1. Training and Development

   2. Restructuring

   3. Internal promotion

Review the Manpower Plan

The manpower plan shall be reviewed with heads of departments. If there is proper justification for changes, then make the necessary adjustments.

Once the manpower plan is finalised, the Human Resource Department can proceed with computing the manpower budget. This will ensure sufficient budget is allocated to fulfil the plan year’s requirements.

Don’t forget to analyse past years’ budget against actual budget to identify any budget variances and its causes.

This analysis will assist the HR department to solve the incorrect budget formula, unrealistic budget factor or even unrealistic manpower requirements (such as the number of additional or reduction manpower).

Deliberation and Approval by Management

The Human Resource Department will then present the manpower plan and budget together with justifications to the Managing Director and other management members for approval.

Based on the management’s feedback, make the necessary changes to the plan and budget submission.

Headcount Change

The first step in executing the manpower plan (especially if the plan predicts headcount change) is taking the necessary steps as listed below and observe closely for any headcount change. This will help to ensure the manpower needs are available at the needed time.  

1. Increase headcount through recruitment and filling up open positions:

   1. Fill up job vacancy by existing employees who are suitable through either promotion or lateral transfer.

   2. Hire an external candidate if the internal candidate is not available.

2. Decrease headcount through natural attrition or retrenchment where the job will be waived right after the incumbent leaves. Natural attrition includes retirement, resignation or death.  

Template: Manpower Requisition Form

Download the template here

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Source: National Human Resource Centre
 

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