What is process of Human Resource Planning?

Are you looking for an article which explains process of Human Resource Planning? Then your search ends here. Read this article, herein the detail about process of Human Resource Planning is given. Also the important points of Demand forecasting and Supply forecasting is given. This article highlights the various techniques used while the Human Resource Planning, what are the challenges need to be faced during Human Resource Planning. Apart from various methodologies are briefed in this article.

Steps in process of Human Resource Planning:

Are you looking for the steps for the process of Human Resource Planning? There are basically eight steps involved in this process. However, in this article we will see first three steps. The steps involved in this process are :
1. The very first step is analysis for organisational plans.
2. After analysis Demand forecasting is required. Basically, organisation sets some plans for execution. So in order to satisfy that requirement, demand or number human resources need to be calculated and it is nothing but the demand forecasting.
3. Like Demand forecasting, there is Supply forecasting. For getting data as well as information related to the present number of human resources. This will help to forecast the upcoming changes in the human resource capacity.
4. The next important step is calculating or estimating the net human resource.
5. There is need to have specific plan for layoff, redeployment, and retrenchment. These terms will be explained in detail in the article.
6. The deficit occurs in the organisation, if any case numbers of resources present in the organisation are less or more than the requirement then such surplus resources need to be managed. The specific plans need to be set to overcome bad period of organisation.
7. Do we need plan for development, recruitment, or internal mobility? Yes off course, the proper plan is required for development, recruitment, or internal mobility in order to satisfy the future demand. This situation may occur if demand of people is more than the existing number of employees in the organization.
8. If any case, there is no sufficient number of employees available or present in the organisation in order to satisfy the current demand. So how to tackle such situation. So proper plan is set to handle such kind of situations. The various references are set and accordingly plan is executed.

The steps involved in the process we have mentioned above. These are important eight steps of human resource planning. So if someone wants to do human resource planning, then these steps are needed to be followed. It is not required that, these steps are executed one after other. Any steps can be executed at any time. Each step involved in the process is independent of other. For a case, first step, or last step, second step or third step, fifth step sixth step, second step or seventh step can be executed simultaneously. There is no restriction on execution of the steps in sequence as these steps are not depending on each other.

Analysing the Organisational Plans:

It can be first step for process of Human Resource Planning, however, as we mentioned the steps for process of Human Resource Planning are independent so it can be possible that this step get carried out further. But in most of the cases and depending upon the organisations decision, the Analysing the Organisational Plans is done as first for planning. These steps have very much importance in whole life of human resource planning. This analysis gives out much information and data which can be further process in order to get actual implementation and co-operation in the organisation.

Forecasting the Overall Human Resource Requirements:

Do you know what is Managerial Judgement or statistical Technique or Work study Technique? For what purpose these methods are used? So these important things we are going to discuss in this section of our article. We should know what skills of employees are, what the capabilities of each employee are, or what knowledge level of individual one is. So can we come to know it? So for this job design analysis of existing one is necessary. Also clear analysis of job is must requirement for it and then it reviewed by experience person in that domain knowledge. After analysing it, job is required to be redesigned and again analysed but this time we have to keep our views towards the organisational goals. During this time, future skill demand, future values needs, knowledge base, capabilities of each employee, quantity of work in future, proposed future programs, proposed plan of organisation, various activities expected, task involving in upcoming releases is also need to be kept in mind for designing and re analysing. If we look at overall aspect then we can come to conclusion that, future human resources, and organisational demand forecasting is basic need of such design. So finally come to the point where we will discuss the important methodology involved in the forecasting. There are various methods of forecasting, however following methods are very much popular in now a days -
a) Managerial Judgement
b) Statistical Techniques
c) Work Study Techniques

Lets discuss each one methodology here -
a)Managerial Judgement:
If you look at the organisations management then we come to know that, the success of company is totally dependent on the management of every aspect of company. However, in small scale companies we come across the unorganization in various aspects. So there is lack of properly planned and specifically designed management. In such case, the managerial judgement plays a vital role. Most of the decisions are taken by higher management. Generally, in small scale organisation, manager or supervisor takes the decision and depending on that the analysis is done and appropriate action is taken on it. Such managers thinks the current workload of employee, current efficiency of individual, current ability of each employee of each department and based on that analysis they decide what would be the future workload of each employee, what would be the future efficiency of individual and finally what would be the future ability of each employee present in individual department. You may be curious about, how it is done? So the explanation of your query would be, it is done by sending the proposals which varies depending upon the various factors, such proposals are sent to top official managers and off course with the organisational approach. After that top management of the organisation plans for resources, then take appropriate and fissile actions for resource hiring or lay off depending on the situation. They also prepare various plans such as organisational plans, departmental plans and human resource plans to decide which is having first priority to execute. All these decision are taken by top management and work item as send to below levels for execution.

b) Statistical Techniques:
What is Statistical Techniques involved in process of Human Resources planning? What are the types of statistical techniques? Basically, there are two types of techniques involved int eh statistical techniques and these are Ratio – trend analysis and second is Econometric models.

Let’s discuss in details these techniques,

i)Ratio – Trend Analysis:
Ratio – Trend Analysis is one of the good techniques which is used for Forecasting the Overall Human Resource Requirements. There are various levels involved in it. The level such as sales level, production level, activity level, direct employees level, indirect employees level and work load level, these are the level involved in it. In this method, ratio is calculated using the previous data which is related to number of employees of each category and different levels in which they are working, the levels which we have mentioned above. Based on these rations, the future ration is estimated and using that predication is done. It is very useful technique and will help to analysis in fast manner. It is very effective technique and generally gives positive outcome from it. Generally this kind of technique is used in small scale as well as large scale companies as well.

ii)Econometric Models:
The second type of model is Econometric Models. As like in Ratio – Trend Analysis model, in this model also the data from previous record is used for modelling purpose. Related to this type of modelling, the related variable are get linked and new specific model is prepared for human resource planning. Proper analysis is done and depending on the availability of resources the further planning is done. The basic requirement of human power along with other things such as production, activities, investments, workloads are determined using this analysis. These kinds of models are also famous in now days in small scale as well as big organization.

C) Work Study Techniques:
After Managerial Judgement and Statistical Techniques the Work Study Technique is another technique which is used for forecasting the Overall Human Resource Requirements. Work Study Techniques is generally used where volume of work is measurable. The work is determined and mapped properly to individual and then it is measured. If such kind of measuring is easy one, in that case Work Study Techniques is more suitable. Using this technique, the various activities, like production activity or other activities are estimated with effectively. However, in order to do it, man hours are required done the unit of work to perform or produce it. These techniques definitely help in ability, skills, knowledge of each and every employee of organization. Depending upon various factors which have influence on it, the technique is appropriately implemented. Using various calculations, the number of employees required in the organization is estimated rather calculated.

There are other methods also exists for estimation of Human Resource Demand. Would like to know about it? If want the details of these methods? Here we have briefly explained those -
• One more method which is similar to managerial judgement and it is estimates which are based on experience opinions of heads from heads of departments.
• There are charts are also available using which analysis is done such charts are called Organisation succession charts, such charts are very useful for analysis.
• One more very simple and important method of analysis is Work Study Method. The production, activities, skills, charts, knowledge, employee, number of tasks, current positions, various aspects of organisation, policies involved and number of active member are considered during the analysis process.
• If you are expert in technology, or equipment or layouts or design, then estimation can be done using equipment, technology or layout as well as design also.
• Historical records of production data is one of the good technique to analysis and if very effective
• Job analysis technique is very much popular for forecasting the Overall Human Resource Requirements.
• Do you know Statistical Methods? Yes this method is also used for analysis purpose. This technique is divided into two parts, and that is Projection of basic manpower ratios and second is regression and correlation analysis.

As in above section we have discussed many more aspects of analysis for forecasting the Overall Human Resource Requirements. Depending upon the situation the appropriate technique is needed to be used.

Supply Forecasting:

Supply Forecasting is also one of the step for the process of Human Resource planning. For Supply Forecasting the data of human resources is required. However, this data should be of present human resources not the future human resource demand. Based on it the further analysis is done.
Existing Inventory:
Existing Inventory is very important aspect and it is required for analysis and planning of human resources. The number of human resource inventory, designation of employee, number of departments in which they are working are have equal importance in it. So the given or existing data should have details of all these things. Not merely mentioning is sufficient for proper analysis.
The major principal and dimensions of human resources is briefly given as:

a) The number which are related to total number of employee currently working in the organisation is required along with it, the details such as number of employee department – wise, sex – wise and designation – wise is need to be noted. The technical and other skill possessing employee along with what is number for employee who are on payroll is also required.
b) Another important data is nothing but Job Family Inventory. This specifically includes the count and different kind of category exists for employees. Production engineer, maintenance engineer with related to mechanical field, or site supervisor, site engineer with related to Civil field are the example of this kind of data. These kinds of jobs or responsibilities having common characteristics hence they are grouped in this type of category.
c) The last and most important type of data is Age Inventory. Age Inventory data mostly includes the data employee as age – wise. The number of employees are grouped in age wise first then into category type. So that the grouping will encourage the difference in various kind of functionality at the working site. This will also helps to enhance the business and achieve the organisational goals which were set during the start of organization.

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What is fund flow statement in financial accounting?

Are you looking for the article which will give you detailed description of fund flow statement in financial accounting? Your search ends here; herein you will get detailed explanation of fund flow statement. The meaning of funds, meaning of flow of funds and also meaning of no flow funds is explained in the various sections of this article. This article also highlights on statement of changes in financial position.

Introduction:

 In this article, we will see and understand what the purpose of fund flow statement is. The important terms such as funds and flows we will have look on it. There is difference in between fund flow statement and in balance sheet and Profit and Account, that difference we will see in this interesting article. Fund flow statement is used to identify the various transactions which mainly cause the changes in the funds. The measurement of trading performance, operational efficiency and most importantly profitability and off course financial position of the company can be done with the help of Trading account, Profit and Loss Account and Balance sheet. So do you know, what are all things which are used for finding out Gross profit or Gross loss? Yes, trading account, Profit and Loss Account and Balance sheet are used for finding out Gross profit or Gross loss, even further tasks such as net profit, net loss and the most important financial soundness of the firm. This is applicable for particular period of time. Fund flow statements are very important with respect to management point of view. The information available in fund flow statement is efficiently and effectively used for various analysis and management. Fund flow statement plays vital role for not only management of firm but also to creditors and investors also, in order to evaluate or determine, the various sources of money so called funds for firm or company. As of now we have seen the various aspects of management but there are other aspects associated with it also. There is need of analysis of not only movements of assets, but also liabilities. There is also need of analysis of movement of funds from operation and capital as well. This capital considered is in between two financial years. The information provided in these statement is meaning fully used in the various analysis and future forecasting as well. So fund flow statement is very important in various important management aspects of the organization. In upcoming section we will see the meaning of funds and meaning of flow of funds.

 What is meaning of funds? 

 Basically, the term fund is refers to Cash. It is also refers to working capital or to cash equivalent which involved in the business. The business mainly includes various aspects such as men, money, plant along with various kinds of equipments, off course the material and apart from it the other things which plays major role in the business. If you are aware of working capital, then fund is broadly refers to working capital of firm. Do you want to know what working capital is? Then here is the explanation of it. The difference between current assets and current liabilities is nothing but the working capital. Working capital is mainly divided into two parts and these are, Gross working capital and Net working capital. Here Gross working capital mainly represents the total of the entire current asset with the firm. While Net working capital is referred for excess of current assets over the current liabilities. So finally we can say that cash or cash equivalent is nothing but the fund with respect business.

 What is meaning of flow of funds? 

 During the normal working course of business, the changes or movements of funds or even the changes in the working capital of business is called as flow of funds. If you know the inflow of working capital or outflow of working capital then you are well aware of what is result of it? Capital changes i.e. working capital, cause inflow of working capital or outflow of working capital. If there is increase in working capital or decrease in working capital cause the flow of money i.e. fund, so the flow of fund occurs. Suppose there are several component of working capital and it causes the increase in the funds, and then is known as inflow of funds. On the same line, if there are several components of working capital and it causes the decrease in the funds it is known as outflow of funds. We can put example for it, if some shares are brought to raise fund such increase in the fund is called inflow funds. If we consider another example of buying the machinery for business, to purchase machinery result in decrease in the funds. Such decrease in the funds is called outflow of funds. This is because, it causes the decrease in the flow of the funds.

 What is meaning of no flow of funds? 

 There are also some transactions which take place but does not have any influence on the increase or decrease in the fund of working capital. These transactions are involved in the business purpose or business concern only. If we want to put an example for it, then the good example for it would be transactions which occur in current assets and the current liabilities do not cause any fund flow. Also the transactions which occur in non-current assets and non-current liabilities do not take part in causing flow of funds. One more example is the transactions in between non-current accounts which do not take part in increase or in decrease of working capital position. So as we have discussed in this section, there are some transaction which are involved in the flow of funds but still important in the business.

 What is statement of changes in financial position? 

 Using resources i.e. financial resource such as liabilities, assets and capital the statement of Changes in Financial Position is prepared. Statement of Changes in Financial Position is used in order to measure changes in non-current and also current account. In the next mentioned transactions the changes in the financial position of the business. The transactions occur in between current asset and non-current assets. Second transaction example is the transaction between current liabilities and non-current assets. The third example of transaction is the transaction between current asses and non-current liabilities. The fourth and final example of transaction is the transaction between current liabilities and non-current liabilities.

What are the components of flow of funds? 

 Till now we have seen various aspects of flow of funds. Now it is time of know about components of flow of funds. Components of flow of funds are used to analyze fund sources and fund applications. So let's see these components. There are mainly six components of flow of funds exists. These components are current assets, non-current asset or popularly known as fixed or permanent assets, current liabilities, non-current liabilities also known as capital and long-term liabilities, provision of tax and last one is I proposed dividend.

In upcoming part of this article we will see these components in detail.

Current assets: 

Current assets are those assets which are meant for resale. These can be converted into other form during the business period which is predefined. So the assets which are transitory in nature are called as Current assets which occur during the course of business period. If we look at the raw material example, in this case, the raw material is purchased, it is processed by labour. The finished product is sale. Even after, all the raw material is not converted into the finished good. The remaining raw material is called as the current asset. Apart from it, the labours which are working for making finished good are also come into current assets.

Non-current asset i.e. fixed or permanent assets: 

Non-current assets or popularly known as permanent assets are those assets which are tangible and also intangible assets. These assets are not consumed during the course of business, however it is specially meant for providing services. It also helps in producing saleable goods or products. These assets play a base role in the every aspect or task of business. So it is very necessary asset. Specifically, the land or building which forms basic foundation of any business is come into Non-current asset i.e. fixed or permanent assets. Apart from land, building other things such as plant and machinery, goodwill and also patents comes under non-current assets. The non-current or permanent Assets are goodwill, land, building, Plant and Machinery, Furniture and fittings, Trademarks, Patent rights, Long-term investments and discount which are on issue of shares and debenture.

Current liabilities:
 Current liabilities are those liabilities which are currently due for payment. Creditors which have to pay by business come under the current liabilities. Apart from creditors, other thing such as bank loan due for repayment and also the proposed dividend and off course the proposed tax is also comes into the category of current liabilities. If you want some more examples then here we go. Bills payable, Sundry creditors, outstanding expenses, dividends payable, bank overdraft, short term loans, provisions which are against the current assets, one more provision and it is against the taxation and one more example of current liabilities is proposed dividend it may be current or non-current liabilities.

Non-current liabilities i.e. capital and long-term liabilities: 
The capital and long term debt is generally referred as Non-current liabilities i.e. capital and long-term liabilities. Sometimes it is referred or called as permanent liabilities. If business is paying some amount continuously for a long period to someone year after year then it is treated as Non-current liabilities i.e. capital and long-term liabilities. Loans on mortgage, long-term loans and debenture are some examples which we can put here for Non-current liabilities i.e. capital and long-term liabilities. You want some more examples for Non-current liabilities i.e. capital and long-term liabilities. Then examples for permanent liabilities are equity share capital, debentures, preference share capital, long-term loans, share forfeited, share premium, profit and loss account, capital reserve, capital redemption reserve, preliminary expenses and other deferred expenses.

Provision of tax: 
The appropriation of profit or current liability is treaded for provision of tax or provision of taxation. When provision of taxation is done for given year i.e. during the same year in which business is running, in that case provision taxation is not used for adjustment of net profit. It must be treated as current liability. Application fund or non-current liability in this case is nothing but the amount of tax paid during the year of business. You may ask question why it is so, this is because net profit adjustment is done using provision of tax during the same year during which business is in running condition.

Proposed dividend:
 So we have seen that provision of taxation is treated as either current liability or non-current liability. Similarly, when dividend is declared it is considered as current liability or non-current liability. As like provision of taxation, proposed dividend is also not used for adjusting the net profit which is made during the year i.e. business period. This proposed dividend is used to analysis of the sources as well as application funds. So proposed dividend is also one of the important component for flow of funds.

 What is fund flow statement? 

 Till this section we have seen basic concepts such as meaning of funds, flow of funds, no flow of funds, statement of changes in financial position, components of flow of funds etc. Now we are going to describe what is fund flow statement? Is it same as income statement? These queries will be get answered in this and upcoming sections. If there are two balance sheet dates and there are significant financial changes in financial position items and such changes occurred in between these mentioned dates then summery of it is mentioned through fund flow statement. Based on the working capital which is concept of funds this fund flow statement is prepared. During the course of business fund flow statement helps in measuring application of funds as well as sources of funds. So we come to know that fund flow statement plays a vital role in analysis. Where got and where gone out statement, statement of sources and application of fund or inflow of funds and outflow of funds statement are some of the other terms for fund flow statement.

 What is importance of fund flow statement? 

 Below are uses of fund flow statement which helps in financial analysis to meet need of people. Lets discuss the importance of fund flow statement as below-

1.   The different sources and applications or fund usage in between mention business period or accounting period is highlighted with the help of fund flow statement. 
2.  It also helps show or highlights the weakness as well as strength of financial condition of the business. 
3.  We can say fund flow statement is a tool which measure the causes of changes in financial condition or working capital With the help of fund flow statement analysis is done and in result corrective actions can be taken by the management. 
4. This is done during the situation where there is deviation is found in between two balance sheet data.
5.  At the time of investment proposals, investors usually use fund flow statement for effective decisions. 
6.  The information about operational efficiency, profitability and financial aspects is described or presented with the help of fund flow statement.
7.  Fund flow statement acts as guide to not only management but also to everyone in order to derive retention policy, dividend policy or investment policy etc. Finance and investment related transaction process related consequences are effectively tackled with the help of it.
8.  If it required to know detailed information about the what are the uses of fund or where the fund has moved, then fund flow statement plays vital role in this process. 

 Fund flow statement, income statement and balance sheet: 

 Let's first explain fund flow statement here, the different sources, uses of funds during certain period is explained with help of fund flow statement. If you want to know regarding the format for preparation, then there is no surprise if it is said that there is no specific format in which this statement is prepared. The revenue and capital nature of income as well as expenditure is considered for this kind of statement. The flow of fund since operation starts are given with help of this statement. It helps to prepare income statement. Let's discuss about the income statement, the net profit or loss in given business period is described by income statement. If we check the format for it, then double entry book keeping and prescribed format is used for it. Here capital nature is not considered but revenue nature of expenditure or income fund is considered. Income statement does not help to prepare fund flow statement. So now, you may curious about to know what then balance sheet? Let have look on it. At the end of every account period, assets and liabilities are prepared with balance sheet. This is prepared on the Trial balance basis. Financial position of a concern as whole for defined period is explained by balance sheet. Balance sheet is prepared after profit and loss account and off course the trading account is finished.

 Limitations of fund flow statement: 

 Till this point we have considered various aspect of fund flow statement. We discussed what uses of it are. The significance, importance of it is also discussed in previous section. Now it is time to discuss its limitation. Below are some limitations of Fund Flow Statement. The statement is prepared based on historical data or information. This statement do not considered the future changes or future advantages. The transactions which are not involved in non-fund items is not considered while preparation of fund flow statement. Any additional information or analysis is not provided to management as it is simply a presentation Transactions involved in between current accounts or non current accounts are ignored in it.

 Let's first explain fund flow statement here, the different sources, uses of funds during certain period is explained with help of fund flow statement. If you want to know regarding the format for preparation, then there is no surprise if it is said that there is no specific format in which this statement is prepared. The revenue and capital nature of income as well as expenditure is considered for this kind of statement. The flow of fund since operation starts are given with help of this statement. It helps to prepare income statement.

 Let's discuss about the income statement, the net profit or loss in given business period is described by income statement. If we check the format for it, then double entry book keeping and prescribed format is used for it. Here capital nature is not considered but revenue nature of expenditure or income fund is considered. Income statement does not help to prepare fund flow statement. So now, you may curious about to know what then balance sheet? Let have look on it. At the end of every account period, assets and liabilities are prepared with balance sheet. This is prepared on the Trial balance basis. Financial position of a concern as whole for defined period is explained by balance sheet. Balance sheet is prepared after profit and loss account and off course the trading account is finished. Limitations of fund flow statement: Till this point we have considered various aspect of fund flow statement. We discussed what uses of it are. The significance, importance of it is also discussed in previous section. Now it is time to discuss its limitation. Below are some limitations of Fund Flow Statement. The statement is prepared based on historical data or information. This statement do not considered the future changes or future advantages. The transactions which are not involved in non-fund items is not considered while preparation of fund flow statement. Any additional information or analysis is not provided to management as it is simply a presentation Transactions involved in between current accounts or non current accounts are ignored in it.

 Let's first explain fund flow statement here, the different sources, uses of funds during certain period is explained with help of fund flow statement. If you want to know regarding the format for preparation, then there is no surprise if it is said that there is no specific format in which this statement is prepared. The revenue and capital nature of income as well as expenditure is considered for this kind of statement. The flow of fund since operation starts are given with help of this statement. It helps to prepare income statement.

 Let's discuss about the income statement, the net profit or loss in given business period is described by income statement. If we check the format for it, then double entry book keeping and prescribed format is used for it. Here capital nature is not considered but revenue nature of expenditure or income fund is considered. Income statement does not help to prepare fund flow statement. So now, you may curious about to know what then balance sheet? Let have look on it. At the end of every account period, assets and liabilities are prepared with balance sheet. This is prepared on the Trial balance basis. 

Financial position of a concern as whole for defined period is explained by balance sheet. Balance sheet is prepared after profit and loss account and off course the trading account is finished. 

 Limitations of fund flow statement:

  Till this point we have considered various aspect of fund flow statement. We discussed what uses of it are. The significance, importance of it is also discussed in previous section. Now it is time to discuss its limitation. Below are some limitations of Fund Flow Statement. The statement is prepared based on historical data or information. This statement do not considered the future changes or future advantages. 

 The transactions which are not involved in non-fund items is not considered while preparation of fund flow statement. 

 Any additional information or analysis is not provided to management as it is simply a presentation Transactions involved in between current accounts or non current accounts are ignored in it.

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