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Blog Human Resources

6 Steps to Create a Strategic HR Plan [With Templates]

By Jessie Strongitharm , Aug 25, 2022

hr plan

The backbone of any successful business is the people and processes behind it — that’s why creating a human resources (HR) plan is key. This strategic document drives your business forward by evaluating where your workforce is at, and comparing it to future needs. 

Without an HR plan, organizations can suffer from issues that would have otherwise been avoided. From productivity pitfalls to costly employee turnover, there’s no shortage of risks you can sidestep if you do human resource planning in advance. 

Not sure where to start? No worries. I’ve outlined six steps you can take to create an effective HR plan that ensures your organization is well-staffed and well-served. You’ll also find a variety of  HR templates  that you can customize in just a few clicks — no design expertise required. 

Click to jump ahead:

What is human resource planning.

  • Assess employees’ current skill levels
  • Forecast your labor needs based on available information
  • Revisit your organizational design
  • Outline how you will manage, motivate and retain talent 
  • Align your workforce planning with your budget 
  • Establish KPIs for your human resource planning objectives

Human resource planning is the process of considering the current and future “people needs” of an organization.

This involves evaluating an organization’s workforce structure and protocols to ensure operational goals are met, productivity stays high and future demands for labor and talent can be fulfilled. 

The result of this process is the creation of an HR plan, which typically takes the form of a written document. These documents tend to follow a similar structure to most  strategic business plans  and are created on an annual basis, by HR managers or company leaders.

Check out the template below for an example. 

hr plan

This eye-catching, one-page  HR Strategic Plan Template  offers a concise summary of your human resource planning efforts, so you can easily share info with colleagues. 

Just swap out the text and visual assets for those of your choosing in  Venngage’s editor , and you’re off to the races. 

Return to Table of Contents

Start creating a strategic HR plan in 6 steps

Ready to create a strategic plan for the human resources that power your business? Here are six steps to help you succeed at the human resource planning process.

  • Assess current employees’ skill levels

The first step to creating a future-forward HR plan is to assess employees’ current skill sets, and compare them to your operational needs moving forward. This will help you identify gaps and inform any hiring of new employees.

Employees’ skill levels can be assessed by reviewing their work history, hard and soft skills and professional growth over time. 

Using a matrix is a great way to understand where the skill gaps in your current workforce exist. Below is an example that describes the skills needed for different marketing roles. 

hr plan

Don’t need it for marketing specifically? No worries — you can fully customize this template by swapping in your own text to examine any human resource gaps. 

Another way to assess skills is by giving employees a questionnaire they can fill out. This  Employee Competency Assessment Template  does just that.

hr plan

Based on the information collected, you’ll get a sense of what positions best suit each individual, and whether any upskilling or hiring is required. 

Next in your strategic strategic HR management plan, you’ll want to consider the future. This involves accounting for any upcoming changes to your workforce, so operations can continue without error.

When forecasting labor needs, the following should be considered: 

  • Planned promotions
  • Upcoming retirements 
  • Layoffs 
  • Personnel transfers 
  • Extended leaves of absence (i.e. maternity/paternity leave) 

Beyond those, it’s a good idea to assess the impact of external conditions on your labor needs during your human resource planning. For example, new technological developments may decrease the amount of employees you require to operate your business. 

Organizational design is the process of structuring the way a business operates so it can best achieve its goals. This is hugely important when it comes to your human resource planning process! 

With a clear understanding of your organization’s strategic objectives in mind, reviewing your organizational design allows you to understand the staffing requirements you’ll need to succeed at them. This means taking into account your  organizational structure  and chains of command, as well as how work gets done and the way information flows.

 From there, you’ll be able to see which departments need more team members so it can accomplish the organization’s objectives. 

An easy way to get started is by using an organizational flow chart. 

hr plan

With its color coding and layout, even a new manager can quickly look at this chart to identify the people responsible for leading teams and making decisions. 

And if there are any changes, it’s easy to to reflect them in the chart itself. All you need to do is customize the text and visual assets in  Venngage’s Chart Maker  as desired. 

Not quite your style? There’s plenty of other  organizational chart templates  to choose from. 

hr plan

Here’s an organizational chart that’s perfect for small businesses that have limited employees. One quick look, and you’re good to go. 

The bottom line is, no matter how big or small your business may be, you should always revisit your organizational design to optimize your workforce management and business operations. 

Related:  Types of Organizational Structure [+ Visualization Tips]

In this day and age, it’s a known fact that companies must provide more than just a paycheque to attract and retain talent, and encourage growth. 

It’s true —  studies have shown  employees are more engaged in their work when they feel it is meaningful, fulfilling and slightly challenging. So your human resource plan should consider how to inspire such feelings, and what actions you can take to motivate employees to stay. (Hint: a strong HR training and development program is key.)  

The  talent management infographic template  below is a great way to begin. 

hr plan

Using this  process chart , you can detail the steps you’ll take to retain the talent you have. Reference it as needed in your human resource planning.

 Another great way to keep staff motivated and geared towards their professional growth is by coming up with  ideas for employee development . Facilitating a company culture that champions continuous learning guarantees your team will feel supported and challenged in all the right ways.

The two employee development plan templates below will help you do just that. 

hr plan

Though both templates are geared towards healthcare organizations, it’s easy to customize their content in Venngage to promote the continuous learning and development of employees in any industry.

 As a result, your employees will be able to reach their full potential, while simultaneously supporting the long-term goals of your organization. 

Related:  6 Employee Development Ideas for Efficient Training

 Let’s face it, human resources ain’t cheap.

 Meaning, if you struggle at organizing and monitoring your HR budget, you’re bound to overspend on your initiatives —and no financially savvy business wants that. 

That’s why I recommend including financial information in your HR planning process, so you can reference your budget and expenses as needed. This ensures you’ll be able to stay within range as you work towards achieving your strategic goals for human capital . 

Plus, you don’t need to use one that contains walls of text and wack-loads numbers. Check out the clean and cheery option below — it’s as easy to fill out as it is to understand. 

hr plan

And if you’re looking to compare a forecasted budget to previous annual spending when strategizing your HR budget, the  Budget Comparison Infographic Template  below will help. 

hr plan

The bar graph is a great  data visualization  of annual expenses, organized by category. Just add (or import) any values to Venngage’s editor, swap out the text, and you’re ready to compare with ease. 

Related:  10+ Expense Report Templates You Can Edit Easily

Measurable results are important when it comes to your HR planning processes, because they indicate whether your strategy is working or not. 

Keeping those metrics in mind, your company can make adjustments and improve upon any future plans — AKA strategize for future success in business. That’s why your human resource plan should include info re: the specific key performance indicators (KPI) you’ll be measuring. 

KPIs are established to help determine if HR strategies and plans are working. Much like those used for evaluating the performance of  marketing  or  sales plan , KPIs for human resources are measurable results that indicate an organization’s success at achieving predetermined goals.

These may take the form of headcounts, turnover rates, demographic information, time to hire and employee satisfaction scores. 

Here’s one employee satisfaction survey you can use to understand your workforce better. 

hr plan

When you’re ready to organize those HR KPIs in a document, the  recruiting template  below is perfect for keeping tabs at a glance. 

hr plan

Related:  10+ Customizable HR Report Templates & Examples

How do I make an HR plan? 

After you’ve collected the data you need, you’ll want to convey this info in an engaging, professional manner for easy referencing and sharing amongst colleagues. Given this, using Venngage is the best route to go. 

Here are the simple steps to help you bring an actionable HR plan to life: 

  • Outline the information you would like to include in your strategic hr plan
  • Pick the human resource planning templates that best suits your needs 
  • Customize the templates’ text and visual assets so they speak to your organization 
  • Apply your company’s brand guidelines with a few clicks using Venngage’s automated branding feature,  My Brand Kit
  • Download and share as desired

Note: sharing is available free-of-charge. However, the option to download your creations and access features like  My Brand Kit and Team Collaboration  are available with a  Business plan . 

FAQ about HR plans

How long should an hr plan be .

There are no hard and fast rules when it comes to the length of an HR plan. That being said, if you’re going to share it with colleagues, you probably don’t want to create a 20+ page document. One to five pages should suffice. 

Try to be as concise as possible when relaying the facts, and use  data visualizations  wherever possible to save room.

Do I need an HR contingency plan?

In the same way creating an HR plan is a proactive move that helps your organization account for future needs, it’s a good idea to devise an HR contingency plan. This ensures there’s a back-up plan in place should your initiatives not go as expected. 

For example, if you’ve identified that you need five new hires to keep up with consumer demand, but the talent pool is lacking, a contingency plan could house suggestions for restructuring your workforce to mitigate this. 

In other words, it’s best-practice to hope for the best, but prepare for the worst. 

Is an HR plan different from an employee development plan?

Yes. While an HR plan is a strategic document describing how an organization addresses its personnel-related needs at a high-level, an  employee development plan  outlines the processes needed to help an individual achieve their professional goals.

 Even though the human resource planning process may involve outlining some employee development tactics, it is not unique to each employee as in the case of an employee development plan.

Make your HR planning processes effortless 

You don’t need a crystal ball to feel confident about your people moving forward. With a solid HR plan and strategy in place, you’ll prime your workforce — and all business endeavors — to succeed in even the most competitive of markets. 

Just remember this: human resources planning, and creating strategic business plans in general, doesn’t have to be exhausting. 

With Venngage’s huge selection of  professionally-designed templates  and easy-to-use editor, all it takes is a few minutes to produce a polished document perfect for all your needs.  Sign up for free today ! 

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Human Resource Planning (HRP) Meaning, Process, and Examples

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

human resource planning in a business

What Is Human Resource Planning (HRP)?

Human resource planning (HRP) is the continuous process of systematic planning to achieve optimum use of an organization's most valuable asset—quality employees. Human resources planning ensures the best fit between employees and jobs while avoiding manpower shortages or surpluses.

There are four key steps to the HRP process. They include analyzing present labor supply, forecasting labor demand, balancing projected labor demand with supply, and supporting organizational goals. HRP is an important investment for any business as it allows companies to remain both productive and profitable.

Key Takeaways

  • Human resource planning (HRP) is a strategy used by a company to maintain a steady stream of skilled employees while avoiding employee shortages or surpluses.
  • Having a good HRP strategy in place can mean productivity and profitability for a company.
  • There are four general steps in the HRP process: identifying the current supply of employees, determining the future of the workforce, balancing between labor supply and demand, and developing plans that support the company's goals.

Michela Buttignol

What Is Human Resource Planning (HRP) Used For?

Human resource planning allows companies to plan ahead so they can maintain a steady supply of skilled employees. The process is used to help companies evaluate their needs and to plan ahead to meet those needs.

Human resource planning needs to be flexible enough to meet short-term staffing challenges while adapting to changing conditions in the business environment over the longer term. HRP starts by assessing and auditing the current capacity of human resources.

Here, identifying a company's skill set and targeting the skills a company needs enables it to strategically reach business goals and be equipped for future challenges. To remain competitive, businesses may need advanced skills or to upskill their employees as the market environment evolves and changes.

To retain employees and remain competitive, HRP often looks at organizational design, employee motivation, succession planning, and increasing return on investment overall.

Challenges of Human Resource Planning (HRP)

The challenges to HRP include forces that are always changing. These include employees getting sick, getting promoted, going on vacation, or leaving for another job. HRP ensures there is the best fit between workers and jobs, avoiding shortages and surpluses in the employee pool.

To help prevent future roadblocks and satisfy their objectives, HR managers have to make plans to do the following:

  • Find and attract skilled employees.
  • Select, train, and reward the best candidates.
  • Cope with absences and deal with conflicts.
  • Promote employees or let some of them go.

Investing in HRP is one of the most important decisions a company can make. After all, a company is only as good as its employees, and a high level of employee engagement can be essential for a company's success. If a company has the best employees and the best practices in place, it can mean the difference between sluggishness and productivity, helping to lead a company to profitability.

What Are the Four Steps to Human Resource Planning (HRP)?

There are four general, broad steps involved in the human resource planning process. Each step needs to be taken in sequence in order to arrive at the end goal, which is to develop a strategy that enables the company to successfully find and retain enough qualified employees to meet the company's needs.

Analyzing labor supply

The first step of human resource planning is to identify the company's current human resources supply. In this step, the HR department studies the strength of the organization based on the number of employees, their skills, qualifications, positions, benefits, and performance levels.

Forecasting labor demand

The second step requires the company to outline the future of its workforce. Here, the HR department can consider certain issues like promotions, retirements, layoffs, and transfers—anything that factors into the future needs of a company. The HR department can also look at external conditions impacting labor demand , such as new technology that might increase or decrease the need for workers.

Balancing labor demand with supply

The third step in the HRP process is forecasting the employment demand. HR creates a gap analysis that lays out specific needs to narrow the supply of the company's labor versus future demand. This analysis will often generate a series of questions, such as:

  • Should employees learn new skills?
  • Does the company need more managers?
  • Do all employees play to their strengths in their current roles?

Developing and implementing a plan

The answers to questions from the gap analysis help HR determine how to proceed, which is the final phase of the HRP process. HR must now take practical steps to integrate its plan with the rest of the company. The department needs a budget , the ability to implement the plan, and a collaborative effort with all departments to execute that plan.

Common HR policies put in place after this fourth step may include policies regarding vacation, holidays, sick days, overtime compensation, and termination.

The goal of HR planning is to have the optimal number of staff to make the most money for the company. Because the goals and strategies of a company change over time, human resource planning must adapt accordingly. Additionally, as globalization increases, HR departments will face the need to implement new practices to accommodate government labor regulations that vary from country to country.

The increased use of remote workers by many corporations will also impact human resource planning and will require HR departments to use new methods and tools to recruit, train, and retain workers.

Why Is Human Resource Planning Important?

Human resource planning (HRP) allows a business to better maintain and target the right kind of talent to employ—having the right technical and soft skills to optimize their function within the company. It also allows managers to better train the workforce and help them develop the required skills.

What Is "Hard" vs. "Soft" Human Resource Planning?

Hard HRP evaluates various quantitative metrics to ensure that the right number of the right sort of people are available when needed by the company. Soft HRP focuses more on finding employees with the right corporate culture, motivation, and attitude. Often these are used in tandem.

What Are the Basic Steps in HRP?

HRP begins with an analysis of the available labor pool from which a company can draw. It then evaluates the firm's present and future demand for various types of labor and attempts to match that demand with the supply of job applicants.

Quality employees are a company's most valuable asset. Human resource planning involves the development of strategies to ensure that a business has an adequate supply of employees to meet its needs and can avoid either a surplus or a lack of workers.

There are four general steps in developing such a strategy: first, analyzing the company's current labor supply; second, determining the company's future labor needs; third, balancing the company's labor needs with its supply of employees; and fourth, developing and implementing the HR plan throughout the organization.

A solid HRP strategy can help a company be both productive and profitable.

International Journal of Business and Management Invention. " Human Resource Planning-An Analytical Study ," Page 64.

human resource planning in a business

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Use Human Resources Planning to Forecast for (Less) Risky Business

By Becky Simon | October 18, 2017 (updated July 21, 2021)

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No organization can afford the risk of a critical skills shortage. Human resource planning (HRP) helps to ensure that you have the right people on your team - those with the skills to compete, innovate, or grow your company.

How do you anticipate workforce needs in a business environment where the rate of change is increasing while the number of people with the right skills is shrinking? The answer is human resource planning. In this article, five experts share their perspectives on what’s needed to operate comfortably in rapidly changing times. While human resources (HR) forecasting isn’t an exact science, you’ll find ideas and processes, examples, and templates that you can use to forecast more confidently, manage operations, and take control to increase current and future profitability.

What Is the Meaning of Human Resource Planning?

Human resource planning, also known as workforce planning , helps organizations recruit, retain, and optimize the deployment of people needed to meet strategic business objectives and to respond to changes in the external environment. In order to proactively avoid talent shortages or surpluses and achieve a balance of talent based on need, effective human resource planning is an ongoing, systematic process.

Darrin Murriner

Darrin Murriner is the author of Corporate Bravery , a field guide to eliminating fear-based decisions, and the Co-founder of Cloverleaf.me , a technology platform that helps business leaders and managers build thriving teams.

He says, “Human resource planning and organizational strategy connect at the hip. You can't deliver business strategy without making sure you have the right human capital you need in the right places for the task at hand.”

Smart companies get the human capital part right by implementing a tactical human resource plan that connects directly to organizational and human resource strategies.

Starbucks: Serving Up Human Resources Planning Derived from Mission and Strategy

Starbucks, the world’s largest coffee chain, recorded $21.3 billion in sales for 2016, ranking it at 131 on the 2017 Fortune 500. The company projects that it will reach $35 billion in sales by 2021 by opening 12,000 stores over the next five years , the majority of them in China. How do you plan human resources with such a massive growth goal? For Starbucks, their approach remains the same no matter where stores are located. Their human resource planning flows from its organizational strategy and its brand. People are Starbucks’ primary resource, as their mission clearly states: "Our mission: to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time." 

An important aspect of Starbucks’ human resource planning is its selection process, which uses specific interview techniques to determine if potential employees are ‘on brand’ and evaluate their skill sets. The company identifies capable company leaders and hires them using a program called "New Partner Orientation and Immersion." This human resources planning approach has led to the lowest employee turnover rate among quick-service restaurants. While most quick-serve restaurants range between 150 to 400 percent turnover, Starbucks’ rate is 65 percent . The company is always on the lookout for new employee perks and focuses energy on employee training, which includes an elaborate online portal that offers an instruction program imparting the necessary job knowledge.

The Difference Between Strategic Human Resources Planning and Human Resources Planning

“The war for talent around the world continues to grow.” says Matthew Burr, Moderator of the Upstate HR Podcast and Principal at Burr Consulting, LLC , a human resource consulting firm focused on small and medium organizations. To win the human capital competition, companies should use a strategic human resource plan as a roadmap to achieve three- to five-year goals. Strategic plans influence the development of tactical resource planning (Starbucks being a prime example). For example, a human resources strategic plan may include long-term aims to recruit and retain an excellent staff with a high-level of technical expertise. The tactical plan would include detailed action plans with completion due dates. For the strategic recruitment goals, the tactical program might consist of short-term goals, such as benchmarking salaries via survey data, or creating a social media campaign to identify and recruit technical professionals. The plan may also target filling IT positions through international recruiting.   

Human Resources Supports Organizational Strategy

Both strategic and tactical human resource plans support the overall organizational strategy. To learn more about strategic human resources management, read Welcome to the HR Revolution: Strategic Human Resources Management .

Why Is It Important to Plan Human Resources?

Our world is increasingly one of swift technological change, constant product innovation, economic globalization, and generational and cultural shifts. Correspondingly, the life cycles of business designs and products are shortening. Companies must adapt. More than physical or financial capital, human capital efficiently adapts to this new reality. Simultaneously, human capital is at most significant risk of depreciation or obsolescence within a business — and that’s a risk that organizations can’t afford if they’re going to survive and thrive. In fact, only 12% of firms that were on the Fortune 500 list in 1955 remain on the list in 2016.

Matthew Burr

​“Talented people will always have options; Knowing succession plans, training, leadership development will be a tremendous asset to a growing firm,” adds Burr. “HR planning is critical to organizational strategy: We need subject matter experts and leaders to drive the strategy forward in evolving industries. HR planning plays a significant part in supporting strategy, as human resources are the biggest investment for any organization. Evolving laws and regulations also impact strategy internationally.  Staffing levels, recruitment and retention programs support scalability of any firm or organization.” 

Laura Handrick

Handrick says it’s all about planning for future growth. “Small businesses that are planning to open a physical or second location also need to think through their HR strategy. Most small businesses begin as sole proprietorships. They need to know when it makes sense to bring on staff, where that staff will work, their compensation, and how to offer benefits, perhaps by partnering with a professional employer organization (PEO).” 

  • Improving Company Operations: Human capital management and resource planning is a driver for improved company operations and value creation. In July 2017, a group of institutional investors petitioned the Securities and Exchange Commission to disclose policies, practices, and performance of public companies’ human resources management . The petition signifies a move to use workforce analytics to measure the value of an organization’s most valuable asset in a knowledge-based economy .

Lou Adler

“You need to work systemically,” says Adler. “Part of the operating plan has to be a workforce plan. HR has to make sure they have a place at the strategy and decision-making table. In my experience, I’ve seen that HR usually doesn’t get involved until it’s late. In this environment, you need to be moving at the speed of light and not the speed of sound.”

  • The Talent Shortage and Demographic Change: In its 2016/2017 Talent Shortage Survey , the ManpowerGroup reported the highest worldwide talent shortage since 2007. Forty percent of employers are having difficulty filling positions, up from 38 percent in 2015. The Harvard Business Review article, Employers Aren’t Just Whining - the “Skills Gap” Is Real , states that “New technologies frequently require specific new skills that schools don’t teach and that labor markets don’t supply.”  At the same time, there’s a demographic change. In most developed economies, the ‘silver tsunami’ - the group of aging individuals that results from ebbing birth rates and graying baby boomers - is surging. The percentage of the U.S. workforce between the ages of 55 and 64 is growing faster than any other age group.
  • Technological Change and The New Generation: Millennials now make up more than 50 percent of the current workforce — and will be 75 percent of the global workforce by 2020 . Human resources need to ride this rising tide and learn to welcome technological advancements to meet talent’s expectations and business requirements. Talent and workplace analytics will become customary, and organizations using the data will be far more competitive.
  • Organizational Change: With technology driving change everywhere, organizations need to be nimble and often make significant changes in the way they do business. They also need to make changes with care. Research shows that change initiatives are more likely to fail because of poor communication, employee resistance, and failure to adequately prepare. Human resources are an integral part of change management , which is a systematic approach that applies tools, knowledge, and resources to deal with business transformation. The primary goal of change management is to successfully implement new processes, products, and business strategies while minimizing adverse outcomes. Effective change management includes and also goes beyond project management and involves leading the "people side" of the change equation. 
  • Government/Legislative Changes: Each state has regulations that affect everything from employee criminal records checks, labor relations, records retention, and mileage reimbursements. Additional federal laws impact human resource management, too. Consequently, human resource professionals need to be conversant in dynamic employment law to minimize company liability. Not being on top of legislation can pose a significant risk to companies and expose them to expensive lawsuits or damage their brand, which can also be off-putting for potential hires.

Seven Steps to Human Resource Planning

There are seven different steps in the human resource planning process, but the pivot point is forecasting demand. That means that today’s human resources professionals need to have a well-rounded picture of their own company and a grasp of multiple factors to put together a plan. “Understanding the three- to five-year business strategy provides what HR must have to forecast workforce needs within the firm,” says Burr. “But there’s also a need to understand the global economy and potential growth options, laws, and regulations to add value to any HR strategy and forecast.”  

The seven steps to creating a human resource plan provide a roadmap for companies, but one size does not fit all. The amount of detail and which factors to include are different for every organization. Startup sole proprietorships working in a single geographic area will need to create an entirely different plan than a multinational enterprise. 

Seven Steps to Human Resource Planning

Step One: Analyze Organizational Objectives

Aligning HR practices to strategic objectives is fundamental to an effective human resources plan. In a perfect world, human resources management works hand in hand with other top managers so there is a clear understanding of ultimate goals, and then they focus on the human capital needed to meet them. It’s vital that the human resources plan encompasses every part of the company from product development to sales and expansion plans. 

HR Strategic Plan Template

If your company hasn’t written a strategic human resource plan, this template will help you get started. Modify the template to suit your specific needs or to focus on target areas such as benefits or retirement. Stakeholders will appreciate the basic design when they want to review important aspects of your plan.

human resource planning in a business

‌ ‌Download HR Strategic Plan Template

Need more strategic planning templates to clarify goals for your organization? You can find more free strategic planning templates here . 

Step Two: Inventory Current Human Resources

If you have one, use the updated human resource information storage (HRIS) sys­tem to analyze the number of people you currently employ, along with their skills, perfor­mance, and potential. Once you determine which jobs need to be filled based on your forecast, you can then decide whether you have enough internal candidates to fill the job requirements or if you need to go to external sources or strategies to add staff. 

Employee Evaluation Template

If you don’t have an HRIS system, you can use this performance evaluation template for performance reviews and as a first step in referencing your current human resource inventory.  Adapt this easy-to-use form to gain a better understanding of the duties for each position by identifying gaps in performance and staffing when you review information in the aggregate. This template documents performance against set goals, employee evaluation, and professional development plans for the upcoming year.

Employee Evaluation Template

Download Employee Evaluation Excel Template

Excel | Smartsheet

Step Three: Forecast Demand

Forecasting human resource demand involves estimating the number of future employees of the right quality and quantity, with a view to the company’s strategic plan over a given period of time. Forecasting demand is the most crucial part of human resource planning and the most daunting. It’s challenging for many reasons, and even more so because there are no absolute answers on how to accomplish it. 

There are two categories of forecasting methods: quantitative and qualitative. You can use both methods to track the work performance of the workforce as a whole, individuals, or business units. Qualitative reports contain anecdotal observations, while quantitative data is statistical or more data-driven. Select the methods that make the most sense in your environment. For example, in a non-manufacturing company, the work-study method which calculates the necessary working hours to produce units may not make sense. By gathering both quantitative and qualitative information, you can identify issues that are impacting your business's productivity, and then develop a well-rounded forecast to increase the company's efficiency, ensure you’re not over or understaffed, and understand future needs.

Qualitative HR Plan Forecasting Methods

SWOT Matrix Template

The classic SWOT layout provides a clear view of your compiled findings as they relate to your human resources plan. The template also includes a column for rating the importance of each item by category so you can have a clear understanding of how the analysis elements compare and which will need the most attention. You can add Excel worksheets to hold supporting data and clarify the basis of your findings. 

Basic SWOT Matrix Template

Download Basic SWOT Matrix Template

If you’re looking for different formats in Excel, PowerPoint, or Word, you can find free SWOT templates here . 

Step Four: Estimate Gaps

With your forecast completed, you’ll have an understanding of future needs and if you will need to fill them with external workers hired full-time, part-time, or as contractors. If you have the right number of employees that don’t have the right skills, you can use training and development to upgrade employee skills to fill the gaps, or you may need to deploy workers in another role.

Employee Training Plan Template

Training is relevant for both employee success and team member retention. Though training takes time and effort, it's essential to have a plan in place to ensure a productive ramp-up period for new employees or existing employees who are learning the tasks and responsibilities of a new role. With this adaptable employee training schedule template, you can create training activities lists, add details about which team members need help to complete each task, track status, and provide a way for the manager and employee to enter feedback.  

human resource planning in a business

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Transition Plan Template

Moving team members to fill different roles can be the ideal solution to filling workforce gaps. When making these changes, ensure that you maintain the information and knowledge the employee had in the initial role. An employee transition plan keeps the information accessible and easy to share. You can also use this transition plan template to assist the person previously in the role train any new team members. Input every aspect of the role that will be useful in the present and future.

Transition Plan Template

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Step Five: Formulate the Human Resource Action Plan

The human resource plan relies on identifying deficits or surplus in the company. You’ll need to determine if you need to begin recruiting or training, transition, or develop voluntary retirement processes and redeployment in case of a surplus. Include priorities and critical planning issues in your plan.

Action Plan Template

This action plan template provides sections for goals, but you can add more sections to customize it to complete your human resources plan. Goals are translated into actionable steps that you can track to check progress. Assign start and end dates for each action, and take notes about each part of the plan. 

action plan template

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Word  | Smartsheet

Step Six: Integrating/Implementing the Plan

This is the most challenging aspect of any human resources plan. The organization often invests time and money on plans that are shelved and not utilized. Company executives need to grant buy-in, embrace the plan, and bring the organization on board. Overcome any potential employee resistance to the process by rolling in one aspect of the plan at a time to help employees acclimate to changes.    Staffing or Recruiting Plan Recruitment is one of the top responsibilities of any human resources team. Searching for, vetting, and finding the right talent to join your team are all crucial steps to ensure the success of your organization. Having a staffing plan in place makes your team aware of the available recruitment sources, hiring goals, and budget. Use this staffing plan to organize all staffing details with columns for budgets, hiring goals, status, and comments. 

Staffing Plan Template

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Candidate Screening Tracker

If you don’t have an automated system, you can track and manage applicants’ cover letters,  resumes, applications, and details about job openings. Tracking this information can be a lot of work depending on the size of the company and current hiring plan. Use this candidate tracker template to organize candidate documentation and details, and ensure that you provide a positive experience for candidates and people involved in the interview process. Track candidate contact information, phone interview questions and answers, status, comments, next steps, and more using this template.

Candidate Tracker Template

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Onboarding Plan Template

Onboarding ensures proper training and enculturation for new team members, and is also a powerful retention tool for any organization. Develop your own onboarding plan by using this template to plan activities at each stage of the process. Since a full year of onboarding is a best human resources practice, this spreadsheet shows tasks assigned to individual contacts over a twelve-month period. Add or remove columns to create a comprehensive onboarding plan.

Onboarding Plan Template

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For more best practice information and free templates to support your human resources planning, read Top Excel Templates for Human Resources . 

Step Seven: Monitoring, Control, and Feedback

Strictly monitoring progress helps identify sticking points in your plan and helps you avoid making changes too quickly. It’s essential to compare actions to how the plan is being implemented to ensure fidelity. The human resource plan is an evergreen document that takes changing circumstances into account. Ongoing measurement, reporting, and continuous improvement efforts will keep the company moving towards its stated strategic goals. 

Project Management Dashboard Template

Monitoring all the changes you need to while executing a complicated human resources plan can be time consuming. With this customizable project management dashboard, you can compile every aspect of the process, share status information with management and other team members, and view the big picture at a glance.

Project Management Dashboard Template

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Forecasting Is an Ongoing Process

“HRP plans should be reviewed annually, just after the business completes its strategic planning and forecasting for the year,” says Handrick. “For example, if the business plans to open an additional manufacturing location, or offer additional services requiring tech skills not currently in place, then HR will come along and provide estimates as to how many FTEs, what roles, and what kind of skills will be needed. HRP helps with the budgeting for the next fiscal year, and once approved can get to work filling those roles. In a fast-moving environment, HRP may need to be updated with every major change. For example, let's say your organization is project based and you just won a huge contract. Right away your HRP team will need to work with project managers to estimate staffing needs, whether temp or permanent, contract or hire.”

Human Resource Planning Round-Up: Best Practices and Expert Insights

Our experts share their thoughts on some additional issues to keep in mind as you develop your own plan:

  • The Importance of Policy Planning: Company policy supports your human resources plan. Policies such as employment classification, benefits, compensation, performance, and improvement are designed to target not only the selection, training, and support of team members, but also to provide guidelines for conduct in and out of the work environment and many other aspects of employment.
  • Social Media as Friend and Foe: Social media sites like LinkedIn and Twitter can be powerful recruiting platforms and a friendly, fun way to communicate with team members. However, they can also potentially be an issue when disgruntled employees or competitors get into negative commentary. It’s important to be alert to your company’s social media profile and to take corrective action when the buzz may not be favorable to your goals. 

Sharon Margulies

Sharon Margules, MA, CPC, ACC and CEO of Margules Leadership Consulting says, “The ability of a business to achieve its strategy is largely based on the talent it has to execute. While market and competitive forces can significantly impact the capacity of an organization’s pursuit of its strategy, the explicit capabilities of those doing the work will determine if the result is a success or failure.”

  • The “New” Human Resources Professional: “Ultimately, a good HR person is a good business person,” says Adler. “The best HR professionals are system and integration project managers who understand deadlines and highly complex projects. A great candidate has business experience in something other than HR. In my consulting work, I’ve told CEOs that they should look for HR managers with a business background. I think it’s an important consideration, particularly for large firms.”
  • More About Markov Predictive Analysis Modeling: One of the most difficult analyses to execute and potentially one of the most valuable tools in forecasting is the Markov model. It’s not a quick fix, but for most mid-to-large companies, it’s worth the time investment to learn how to execute it. For a detailed explanation, read A Markov Model for Human Resources Supply Forecast Dividing the HR System into Subgroups . 
  • Leadership and Succession Planning: “HR plays a critical role in enabling leadership, in mature or scaling organizations, to anticipate and understand the talent capabilities that will be necessary to meet their strategic objectives,” says Margules. She lists four items: 
  • HR should have a seat at the table when the strategy is being conceived to align on what capabilities are needed, and by when, to realize the strategy.
  • HR needs to influence progressive and aggressive budgeting for resource acquisition, training, coaching, and development every year.
  • HR must institutionalize effective succession and talent planning practices at all levels, and build an adaptive organization that can flex its structure to optimize performance.
  • HR must use far-reaching ideas to retain its key talent and sustain a highly-engaged workforce in a diverse and driven culture. 
  • Plan Implementation: “HR plans should align with business strategy and annual plans and should be adaptive to a volatile and uncertain business climate,” says Margules. “While many organizations take a reactive, in-service approach to HR planning and determine their priorities and plans largely in support of annual plans, the most effective organizations are proactive: They anticipate needs and build plans that achieve short term and long term objectives. They adopt progressive practices such as allocating a portion of the staffing budget and resources to recruit and hire key talent for future-focused work. And, they have enough foresight to invest in high potential programs at multiple levels, entry-level accelerated development programs and coaching to build pools of qualified talent for future growth plans.”
  • Buy HR Planning Tools or Do It Yourself? “The problem with traditional human resource planning is that it often hasn't supported the scalability of a growing business,” says Burr. “This is precisely why we have to consider new models for talent management, organizational design, and learning and development to ensure that our human resource planning processes can be flexible to meet the scaling needs of the business. This is part of the reason why you have seen an explosion of people analytics tools in the HR marketplace. It is to fill the demand for flexible and scalable models that provide the needed tools for business leaders to plan their people needs as the business grows.”  Adler concurs and says: “I think a spreadsheet can often do a better job. Workforce planning has been around a long time. I think the main point is to be proactive and less reactive in the planning process.”

Five Challenges to Human Resources Planning and Implementation

“People are naturally change- and-risk-averse. Planning and proper support by HR and the people they hire need to happen 100 percent of the time,” says Adler. More often than not, there are some challenges involved in human resources planning and implementation. Here are the five main hurdles:

  • Forecasting Is an Imperfect Art: Human resource planning relies on forecasting and supply, which can never be a 100 percent accurate process. 
  • Resistant Workforce: Employees may feel that their workload will increase, so they resist the process, or they may be uncomfortable altering familiar patterns in their work life and tasks.
  • Ambiguity and Rapid Change: Uncertainties such as labor absenteeism, employee turnover, seasonal employment, technological changes and market fluctuations all affect planning.
  • Inefficient Information Systems: Human resource information systems need to be reliable, comprehensive, and up to date. It makes it difficult to plan without good data about current employees.
  • Cost and Time Factors: With all of the work hours involved in completing and repeating the seven steps, human resource planning is a time consuming and expensive process, so companies sometimes avoid it altogether, despite the benefits. 

A Look to the Future of Human Resources Planning

Here are some of the themes experts think will influence human resources professionals, their companies, and the people they hire in the near future:

  • Going Global: Globalization, the export of U.S. jobs and the import of non-U.S. employees are already underway, as is offshoring (basing services or processes in different countries). “Globally planning can be complex for any HR professional,” says Burr. “It can be a stressful situation for offshoring and outsourcing of jobs within a firm. HR planning should involve a detailed assessment of the new location globally, the workforce demographics, industry competitors, laws and regulations and the potential impact on U.S. jobs. How do we communicate? How do we train? This will all vary by organization, but a strategic HR plan that communicates the information can lessen the impact. With a sound and detailed HR plan, recruiting, retaining and growing talent within the organization will be much easier.”   “Expect more offshore jobs, outsourcing and contract hiring because frankly they’re cheaper, and in many disciplines like finance, IT, marketing, can do the same work for less,” says Handrick. “Other than providing training for supervisors to manage off-site work teams, there's really no difference for HRP except where the line item goes on the plan. For instance, if you know you'll need 12 FTEs next year, and can get four of them offshore, that line item goes to 'expenses' rather than to 'salary' for the remaining eight.”
  • More Technology: Social media will likely be in higher use to reach potential workers, particularly millennials who use Twitter, LinkedIn, and Facebook in their job hunts. Telecommuting and the use of social collaboration tools and video conferencing apps will keep people working and in touch with company culture. Emerging platforms will further streamline basic human resources functions to make onboarding and professional development more cost-effective and accessible from anywhere in the world for a virtual workforce.
  • Big Data: Metrics and in-depth analysis of processes and people will become increasingly important in human resources as they are in other functional areas. Data- driven decision making is the future, as are metrics to show ROI in people and technology.  
  • Security Issues: All this new technology brings up security concerns for employers and employee. Data breaches are a fact of life, and the threat to personal data security, company security, and supply chain risks will likely continue. 
  • Health Care Costs: Costs are likely to continue increasing, since they have been rising steadily in the last several decades. New legislation will perhaps slow the costs of health care. In the meantime, strategies to lower employee healthcare costs will likely take the form of initiatives to improve employee health, and taking advantage of health reimbursement accounts (HRAs) that are consumer-driven or health savings accounts (HSAs).

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How to Succeed with Human Resource Planning: A Step-By-Step Guide (+11 Free Templates)

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“ The term planning is imbecilic; everything can change tomorrow. “

That was a quote made by a French manager , straight after the 1973 oil crisis.

He’s right, of course. Everything can change tomorrow. We’re living in a world where we see changes every day. Ground-breaking technology, product innovations, and medical breakthroughs.

But does that mean “ planning is imbecilic ” though?

The truth is that planning can be ineffective and damaging if it’s done badly.

Good planning, on the other hand, can minimize the uncertainty brought on by change.

Don’t believe me?

Take the 1911 race to the South Pole, for example. The race was between two explorers: Roald Amundsen and Robert Falcon Scott. They each had a similar amount of experience and were the same age. Both faced 1,400 miles of gale-force winds, blizzards, and minus temperatures on their expeditions.

Amundsen meticulously planned his trip for several years. Scott didn’t.

Guess which expedition tragically failed?

Amundsen was already sailing back to Norway when Scott’s team finally gave up hope.

So, now we’ve established that planning is sensible, and not ‘ imbecilic ’, let’s find out why human resource planning is one of the most valuable processes a company can follow.

To do this, I’ll cover:

What is human resource planning?

Why is human resource planning important, the 7 steps of human resource planning, how human resource planning is done, human resource planning in hrm.

Let’s get on with helping you to plan for success!

Corporate leaders often say employees are their most valuable asset . In fact, employees are so valuable that over 23% of businesses fail because they don’t have the right team.

That’s why investing in Human Resource Planning (HRP) is one of the most important decisions a company can make. It’s also why 80% of companies do HRP on a regular basis.

In simple terms, HRP is a process that manages employees within an organization .

No organization can afford the risk of a critical skills shortage and without HRP, companies face expensive losses. This can be seen with 90% of the UK’s larger organizations , which have all restructured in the last five years – nearly always involving job losses.

“ Human resource planning is the most important component of the entire human resource system. ” –  Dr. Rajendra Mishra

We’ve established what human resource planning is, let’s talk about why it’s important.

The success of a business is directly linked to the performance of those who work for that business. It’s therefore critical to make sure that the business has the skills and competencies that it needs to succeed.

The quality of human resources in an organization is solely dependent on the success of human resource planning.

Look at Starbucks.

Starbucks has the lowest employee turnover rate among quick-service restaurants. Most quick-serve restaurants have between a 150 to 400% turnover rate. Starbucks’ rate is at 65% , and it’s all down to their human resources planning approach.

Not only will its low turnover rate positively affect the culture, motivation, and morale of its staff , but it will also massively help its profit margins.

On average, companies spend 33% of an employee’s annual salary to replace them when they leave.

We know that human resource planning is a continuous process of planning ahead to make optimum use of an organization’s most valuable asset: its employees .

We also know that the process helps companies maintain a steady supply of skilled employees to meet their strategic objectives.

So we know what human resource planning is and why it’s important, now let’s look at how to do it.

There are seven steps to a good human resource planning process:

  • Understand business goals
  • Assess the current workforce
  • Forecast demand
  • Estimate gaps
  • Formulate a plan
  • Implement the plan
  • Monitor the plan

Let’s dive into the detail of each step.

Step 1: Understand business goals

The first step in HRP involves analyzing the organizational strategy, goals, and objectives.

It’s important to understand where the organization wants to go and how it wants to get there so that HR practices can be aligned with the company’s strategic objectives .

Step 2: Assess the current workforce

The next step is to take stock of the current employees in the organization to see if they fit the organizational needs.

The inventory of current employees should capture data concerning ages, locations, capabilities, and skills. This will determine what jobs are required and if you can use internal candidates or if you need to look elsewhere.

Step 3: Forecast demand

The third step in the process is to forecast future staffing needs based on the company goals.

This process will establish if the company needs to grow its workforce , or if it can improve its current staff through training.

Step 4: Estimate gaps

Once the future resource needs and the current capability of the workforce have been identified, step four requires you to highlight the gaps between the two .

These questions will help you find out where the gaps are:

  • Do you foresee a skill shortage in a specific occupational group?
  • Will changes in program delivery require the acquisition of new skills?
  • Do you have succession plans for critical positions?
  • Have you conducted a risk analysis of the elements of the scan critical to the success of your organization?

Step 5: Formulate a plan

Step 5 is all about formulating a plan to close the gaps you found in step 4.

The plan should identify the skill shortages and surpluses within the company. It should determine HR priorities and list actions to be taken around recruitment, training, internal role transitions, retirements, and lay-offs.

Step 6: Implement the plan

This step involves integrating the HR plan into the company . It will require support from different departments and teams.

Step 7: Monitor the plan

This step often gets missed, but is a fundamental part of the HR planning process.

Ongoing measurement, reporting, and continuous improvement will keep the company moving toward its strategic goals. If everything is running smoothly, continue with the plan . If there are roadblocks, change the plan to suit your company’s needs.

And there you have it. Seven steps to the efficient management of human resources in an organization.

What’s next?

Lucky for you, this isn’t where your human resource planning journey ends.

Process Street has created  eleven super-powered checklists to help you with your human resource planning:

  • Training plan template

Employee evaluation form

Employee transition plan.

  • Gap analysis template

HR strategic plan

  • Employee satisfaction survey

Workforce planning template

Employee development plan template, hipaa compliance checklist for hr, vacation request form, business needs assessment checklist.

These templates will enable you to:

  • Analyze your current workforce;
  • Establish future workforce requirements;
  • Formulate, implement, and monitor a formidable human resource plan.

Use the following Process Street templates to really smash your human resource planning!

Training plan

Training plan for human resource planning

The training plan aims to improve workforce competency to increase productivity and reach organizational goals. Preparing an annual, company-wide training plan is a detailed and complex process .

Our training plan template will make it easy for you. It will identify who needs to be trained, when they should be trained, and what they need to be trained in. It also ensures alignment with your organizational goals.

Click here to access our training plan template!

Employee evaluations exist to make sure there is clear communication between employers and employees about performance levels. The process boosts morale and identifies areas of weakness.  These can inform your HR strategy, gap analysis, and training plans.

Use this employee evaluation form to:

  • Capture performance metrics;
  • Analyze your workforce;
  • Make decisions about what future resources are needed.

Click here to access our employee evaluation form!

Performance review

Performance review in human resource planning

We also have this performance review template which you can use as an alternative.

Click here to access this performance review template!

This process is for the HR team to ensure that a transitioning employee moves into their new role, smoothly and at a minimal cost to the business. It’s important the employee, their current line manager and their new line manager are all clear about the transition arrangements.

Our employee transition plan will provide guidance on handover and orientation tasks. It will also minimize disruption and uncertainty for employees affected by the change.

Click here to access our employee transition plan!

Gap analysis

Gap analysis in human resource planning

Gap analysis involves you considering current skills in your workforce. As times change, skills will change to suit the modern business market. The below template gives you the foresight to keep your team and company up to date with current skill trends.

Use this gap analysis template to help your organization plan for growth. Use it to project the hiring needs for your future workforce. It can also help you to understand the skills and experience of your current workforce. You can also use it to develop strategies for overcoming the gap between the two.

Click here to access our gap analysis template!

An HR strategic plan is a tool to help businesses align their HR capabilities with their organizational goals . It establishes how human resources can make a direct impact on a company’s growth.

Our HR strategic plan will assess the needs of your organization. It can help to determine appropriate initiatives for the HR department to pursue and support the business in meeting its goals.

Click here to access our HR strategic plan!

Employee satisfaction

Employee satisfaction survey for human resource planning

An employee satisfaction survey is intended to understand how employees are feeling about the company.

Our employee satisfaction survey will help you understand the current dynamics of the workplace. Once completed, it will identify areas within the business that need to be improved to keep your employees satisfied.

Click here to access our employee satisfaction survey!

Workforce planning ensures that a business has the right staff in place with the right skill sets.

Our workforce planning template will highlight areas within the workforce that need attention .

Click here to access our workforce planning template!

The employee development plan template will help your employees improve in their current job. It will also help them acquire knowledge and skills for new roles and responsibilities within the organization.

Click here to access our employee development plan template!

HIPAA is a series of regulatory standards that health care organizations must implement in their business to protect the privacy, security, and integrity of protected health information .

The compliance program that healthcare organizations need to follow is complicated and can take a long time to complete. Use our HIPAA compliance checklist for HR to make sure you don’t miss any vital steps.

Click here to access our HIPAA compliance checklist for HR!

You can also use this HIPAA compliance checklist , which is specifically for hospitals.

Run this checklist to determine how compliant your hospital is with HIPAA standards and regulations.

Click here to access our HIPAA compliance checklist!

Our vacation request form is designed to make sure that the company doesn’t suffer as a result of the employee’s holiday .

Using this checklist, a line manager can approve or reject a holiday request and HR can keep track of the number of holiday days an employee has taken.

Click here to access our vacation request form!

Or, try this other holiday leave application form .

Click here to access our holiday leave application form!

Use our business needs assessment checklist to:

  • Determine priorities;
  • Make improvements;
  • Allocate resources.

Click here to access our business needs assessment checklist!

So you’ve done your HR planning, now you need to put your plans into action.

We have thousands of HR-related articles and functional checklists to help you implement your HR plans. From refining recruitment processes, and interview techniques, building a strong work culture, and improving employee engagement.

Take a look at this list of insightful gems:

  • The Essential Processes Your HR Team Needs Today (+60 Free Templates)
  • 12 HR Management Tips to Run an Effective Business (and Prevent Total Chaos)
  • A Beginner’s Guide to Setting up HR Software in the Cloud
  • How to Choose the Best HRIS (Human Resources Information System)
  • Why HRMS is Becoming a Must-Have & How to Get Started

And there we have it. Your complete guide to planning for success with human resource planning!

We’d love to hear what you think about human resource planning in the comments. Who knows? You may even get featured in an upcoming article!

Get our posts & product updates earlier by simply subscribing

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Amanda Greenwood

Amanda is a content writer for Process Street. Her main mission in life is to write content that makes business processes fun, interesting, and easy to understand. Her background is in marketing and project management, so she has a wealth of experience to draw from, which adds a touch of reality and a whole heap of depth to the content she writes.

This is quite the comprehensive compilation. Any chance you have any advice where to start and what to weed out if you’re short on time?

My recommendation would be to start in one of two ways:

Either begin with a strategy process – so you can better understand your pain points and then work on the other processes based on those identified priority needs…

Or, if you already know one of your key pain points as an organization, start working on that first and then you can think about the strategy angle once you’ve patched up that problem!

Thanks for the quick reply. 🙂

What a brilliant quote! But still, I think the planning makes sense, even in the world of instant changes.

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strategic human resource planning process

4 steps to strategic human resource planning

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4 steps to strategic human resources planning

  • Assess current HR capacity
  • Forecast HR requirements
  • Develop talent strategies
  • Review and evaluate

It’s easy to understand the importance of the human resource management planning process—the process by which organizations determine how to properly staff to meet business needs and customer demands. But despite its obvious importance, many organizations do not have a strategic human resource planning process in place, with many HR professionals reporting their departments need to improve strategic alignment.

If you’ve considered developing an HR planning process, you’re in the right place. This article will explain what human resource planning entails and how to document your strategic plan. With this knowledge under your belt, you’ll be filling positions and growing as a company in no time.

steps to strategic human resources planning

Introduction to strategic human resource planning

In order to improve the strategic alignment of staff and other resources, it’s essential to understand how to create a strategic HR planning process. At its most basic level, strategic human resource planning ensures adequate staffing to meet your organization’s operational goals, matching the right people with the right skills at the right time.

It’s important to ask where your organization stands currently and where it is going for your plan to remain flexible. Each company’s plan will look slightly different depending on its current and future needs, but there is a basic structure that you can follow to ensure you’re on the right track.

The strategic human resource planning process begins with an assessment of your current staff, evaluating whether it fits the organization’s needs. After that, you can move on to forecasting future staffing needs based on business goals. From there, you’ll need to align your organization’s strategy with employment planning and implement a plan to not only to hire new employees but also to retain and properly train the new hires—and your current employees—based on business changes.

Read on to understand human resource planning in more detail.

1. Assess current HR capacity

The first step in the human resource planning process is to assess your current staff. Before making any moves to hire new employees for your organization, it’s important to understand the talent you already have at your disposal. Develop a skills inventory for each of your current employees.

You can do this in a number of ways, such as asking employees to self-evaluate with a questionnaire, looking over past performance reviews, or using an approach that combines the two. Use the template below to visualize that data.

skills inventory by department

2. Forecast HR requirements

Once you have a full inventory of the resources you already have at your disposal, it’s time to begin forecasting future needs. Will your company need to grow its human resources in number? Will you need to stick to your current staff but improve their productivity through efficiency or new skills training? Are there potential employees available in the marketplace?

It is important to assess both your company’s demand for qualified employees and the supply of those employees either within the organization or outside of it. You’ll need to carefully manage that supply and demand.

Demand forecasting

Demand forecasting is the detailed process of determining future human resources needs in terms of quantity—the number of employees needed—and quality—the caliber of talent required to meet the company's current and future needs.

Supply forecasting

Supply forecasting determines the current resources available to meet the demands. With your previous skills inventory, you’ll know which employees in your organization are available to meet your current demand. You’ll also want to look outside of the organization for potential hires that can meet the needs not fulfilled by employees already present in the organization.

Need advice on calculating your staffing needs and developing a staffing plan?

Matching demand and supply

Matching the demand and supply is where the hiring process gets tricky—and where the rest of the human resources management planning process comes into place. You’ll develop a plan to link your organization’s demand for quality staff with the supply available in the market. You can achieve this by training current employees, hiring new employees, or combining the two approaches.

skills supply and demand chart

3. Develop talent strategies

overview of the talent development process

Recruitment

In the recruitment phase of the talent development process , you begin the search for applicants that match the skills your company needs. This phase can involve posting on job websites, searching social networks like LinkedIn for qualified potential employees, and encouraging current employees to recommend people they know who might be a good fit.

Once you have connected with a pool of qualified applicants, conduct interviews and skills evaluations to determine the best fit for your organization. If you have properly forecasted supply and demand, you should have no trouble finding the right people for the right roles.

Decide the final candidates for the open positions and extend offers.

Bring clarity to the hiring process to find the best candidates for your company.

Training and development

After hiring your new employees, it's time to bring them on board. Organize training to get them up to speed on your company’s procedures. Encourage them to continue to develop their skills to fit your company’s needs as they change. Find more ideas on how to develop your own employee onboarding process , and then get started with this onboarding timeline template. 

timeline for onboarding

Employee remuneration and benefits administration

Keep your current employees and new hires happy by offering competitive salary and benefit packages and by properly rewarding employees who go above and beyond. Retaining good employees will save your company a lot of time and money in the long run.

Performance management

Institute regular performance reviews for all employees. Identify successes and areas of improvement. Keep employees performing well with incentives for good performance.

Employee relations

A strong company culture is integral in attracting top talent. Beyond that, make sure your company is maintaining a safe work environment for all, focusing on employee health, safety, and quality of work life.

4. Review and evaluate

Once your human resource process plan has been in place for a set amount of time, you can evaluate whether the plan has helped the company to achieve its goals in factors like production, profit, employee retention, and employee satisfaction. If everything is running smoothly, continue with the plan, but if there are roadblocks along the way, you can always change up different aspects to better suit your company’s needs.

Why document your strategic HR plan

Now that you know the steps to strategic human resource planning, it's time to adapt those steps to your own organization and determine how to execute.

There are a number of reasons to document your strategic human resources plan, particularly in a visual format like a flowchart. Through documentation, you standardize the process, enabling repeated success. Documentation also allows for better evaluation, so you know what parts of your plan need work. In addition, a properly documented plan allows you to better communicate the plan throughout the organization, including how everyone, from the top down, can contribute to make sure the plan works. 

Document every step of the process, from beginning to end, and find room for improvement in your human resources process along the way.

strategic human resource plan

Start creating your own strategic human resource plan with this template.

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Human Resource Planning (HRP): A Step-By-Step Guide

Human Resource Planning (HRP): A Step-By-Step Guide

In today’s rapidly evolving business landscape, having a plan in place for managing your human capital is key — and that’s where human resource planning (HRP) comes in. Human resource planning plays a critical role in making sure that your organization is well-equipped with the right talent at the right time.

Today, we’re walking through the intricacies of HRP so you can implement this practice in your organization.

What Is Human Resource Planning?

Human resource planning, or HRP, stands out as a strategic and methodical process designed to ensure that your organization fully leverages its human capital . It is not a one-time event but rather a continuous journey toward operational excellence and strategic alignment.

At its core, HRP aims to establish a seamless alignment between your employees and their respective roles, meticulously crafting a workforce that is both skilled and adequately sized to meet your organizational demands.

This proactive approach goes a long way in safeguarding your business against potential manpower shortages or surpluses, ensuring that you are well-prepared for the future.

Why Is HRP Important?

HRP is crucial for syncing your current workforce with your future needs. It entails a rigorous analysis of your existing staff, evaluating their skills, competencies, and performance.

This is where metrics come into play, providing a quantitative backbone to your workforce planning efforts. By leveraging data-driven insights, you can make informed decisions, ensuring that your team is not only talented but also aligned with your business objectives.

HRP doesn’t stop there, though — it’s a comprehensive approach that intertwines various facets of human resource management. Staffing, forecasting , performance management, and employee retention all fall under its umbrella. Each of these elements is crucial in building and maintaining a robust workforce.

In terms of staffing, HRP helps you decipher not just the number of employees you need, but also the types of skills and competencies they should possess. Forecasting, on the other hand, empowers your HR department to anticipate future demand, aligning your human resources with your company’s strategic direction.

Performance management is another vital cog in the HRP machine. It ensures that your employees are not just present but also productive and engaged. This, in turn, enhances employee retention, fostering a company culture that values growth, stability, and satisfaction.

HRP even plays a role in shaping your company culture . By aligning your human resources with your company’s needs and values, you create an environment where employees feel valued and aligned with the organization’s goals.

What Are the Advantages of Human Resource Planning?

At its core, human resource planning places the right talent in the right place at the right time, ensuring that your organization’s objectives align with your workforce’s capabilities. Now, let’s talk about the advantages of HRP and how it can lay the foundation for organizational success.

Ensures Effective Management of Current Employees

Strategic workforce alignment is at the heart of HRP. With effective human resource management, HR professionals can ensure that the current workforce is in sync with the company’s overarching goals.

This alignment can translate to better resource allocation, more informed decision-making, and enhanced overall performance.

Reveals Knowledge Gaps in the Workforce

The ever-evolving business landscape means organizations need to be adept at forecasting and adapting — and human resource planning plays a role here.

By examining current employees’ skill sets and comparing them with future needs, knowledge gaps can become more apparent. Addressing these gaps, whether through hiring new talent or upskilling existing employees, helps you ensure that your business stays competitive.

Balances HR Costs

Cost-effectiveness is crucial for the HR planning process. By anticipating future human resource needs, last-minute external recruitments — which often come with high costs — can be avoided.

Plus, recognizing surplus areas within your current workforce allows for internal reassignments to take place, cutting down on recruitment and onboarding expenses.

Keeps Companies Adaptable to Change

Change is constant, especially in today’s fast-paced business world, and human resource planning positions organizations to seamlessly navigate these changes.

From staying updated with industry trends to adapting to regulatory shifts, an HR department’s proactive planning ensures businesses remain resilient and agile. With Mosey , you can more effectively track, manage, and stay on top of changing regulations and requirements, making HR compliance a breeze.

Helps Secure Long-Term Growth

Another key component of HRP is succession planning. Identifying roles and preparing a talent pipeline ensures that your organization isn’t caught off-guard if leadership positions open up.

This planning not only opens the door to future leaders, but also ensures that institutional knowledge is retained, fueling your business’s long-term growth and stability.

Contributes to Organizational Goals

The nexus between human resource planning and organizational goals is undeniable. By streamlining the hiring process, ensuring employee satisfaction , and fostering employee retention, HRP contributes directly to the achievement of business objectives.

When employees see clear growth trajectories and development avenues, their commitment to the company’s vision intensifies, driving the organization closer to its goals.

What Are the Steps for Human Resource Planning?

HRP ensures that businesses are well-equipped, both in terms of the quantity and quality of their workforce, to meet their evolving goals and challenges. So, how can you actually navigate the intricacies of HRP? Here’s a step-by-step walkthrough of the essential phases that make up the human resource planning process.

Analyze Employee Skills and Performance

Human resource planning centers around an understanding of your company’s current workforce.

During this initial phase, the HR department dives into understanding the number of employees, their competencies, qualifications, positions, benefits, and performance levels. This skill inventory ensures that HR professionals have a clear picture of the strengths and areas for improvement in the present workforce.

Research Industry Trends and Forecasts

Effective human resource planning can also help you predict, and plan for, the future, so the next stage is to outline what your company will need in terms of human capital in the foreseeable future.

This forecasting phase requires the HR department to consider various factors, such as potential promotions, retirements, layoffs, and transfers. External conditions, like emerging technologies or industry shifts, can also have a significant impact on labor demand. Ensuring you stay ahead in terms of industry trends helps you align your staffing needs more effectively.

Conduct Demand Forecasting

Having a clear understanding of both the present workforce, potential employees, and future needs is vital to bridge the two through demand forecasting. This step in the HR planning process involves creating a gap analysis that points out discrepancies between the current workforce and future human resource demands.

This type of analysis leads to important questions like:

  • Should current employees learn new skills?
  • Is there a need for more managers?
  • Are all employees fully utilizing their competencies in their present roles?

Answering these questions is key to crafting a strategic human resource plan that aligns with both the present and the future.

Determine Future Human Resource Needs

Once your demand forecasting has highlighted the shortages or surpluses in terms of competencies or number of employees, the next step is to determine the specific future human resource needs.

Whether it’s upskilling the current employees, succession planning for key roles, or identifying the need for new hires, this phase ensures that your business is poised for future growth without any HR hiccups.

Align HR Needs With Organizational Strategy

Human resource planning is intertwined with your broader business goals and strategies. Once your HR needs are identified, it’s important to make sure those needs align with your organizational goals.

This strategic planning phase ensures that every hiring process, training initiative, or retention effort contributes directly to your company’s overarching objectives.

Plan for Employee Development and Training

Once your future human resource needs are aligned with your company strategy, it’s time to implement plans for employee development. This might involve setting up training programs, workshops, or certifications to upskill current employees.

Ensuring your workforce is equipped with the right skills enhances employee satisfaction and retention and gives your business a competitive advantage.

Implement Plan for Forecasted HR Needs

The culmination of the human resource planning process is the implementation of your action plan. Taking cues from the gap analysis and strategic alignment, HR can now roll out a well-thought-out plan.

This could involve tweaking job descriptions, initiating new hiring processes, onboarding new employees, or even revisiting HR policies such as vacation, sick days, or overtime compensation. Collaboration with all departments is key here to ensure the successful execution of your plan, ensuring the HR strategies benefit the organization as a whole.

Support HRP Efforts With Mosey

From identifying when and where to open payroll accounts to managing workers’ compensation and paid family medical leave, Mosey simplifies the complex web of compliance and regulatory demands.

Why not explore how Mosey can streamline your HR processes and compliance management ? Our platform is designed to provide clarity, guidance, and ease, allowing you to focus on what matters most — nurturing and growing your most valuable asset, your employees. Try Mosey today .

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  • What Is a Legal Entity? Definition & Examples
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Human Resource Planning: Definition, Objectives, And Steps

  • Employee Management , Templates & Guides

Human resource planning is an essential part of every successful business. Unfortunately, many managers neglect this vital practice for other, easier tasks because they don’t understand what this type of planning requires.

Other times, managers may not understand how pivotal human resource planning is to their long-term corporate strategy  and the ultimate success of their business.

That’s where Sling  can help. In this article, we define human resource planning, outline its objectives, and provide a step-by-step guide to implementing this crucial practice in your business.

Table Of Contents

Human Resource Planning Defined

Human resource planning objectives, hrp vs. shrm, hrp and organizational strategy, steps in human resource planning, why human resource planning is important, challenges of human resource planning, scheduling and communication for effective hrp.

Human resource planning (or HRP for short) is the ongoing process of systematically planning ahead to optimize and maximize your business’s most valuable asset — high-quality employees .

When you incorporate HRP into every aspect of your strategy — functional , business , or organizational  — you streamline the process of creating the best fit between available jobs and available employees. All while avoiding a shortage or surplus in your workforce.

As simple as that may sound, there’s more to human resource planning than setting up a system and implementing it in your organization.

The objectives of HRP are very specific and can mean the difference between success or stagnation. We’ll discuss those objectives in the next section.

group of coworkers having a meeting

As we mentioned earlier, human resource planning is about matching the right employees with the right jobs in your business.

You can do this while interviewing  prospective employees, or even during the performance review  of a long-time team member who is reaching out for more responsibility.

While matching employees to jobs is a big part of human resource planning, the goals of HRP don’t stop there. Other HRP objectives include:

  • Adapting to rapid technology  changes
  • Powering product innovation
  • Adjusting to a more globalized economy
  • Preparing for generational and cultural  shifts
  • Anticipating job and skill changes
  • Facilitating growth
  • Improving business operations
  • Mitigating risk
  • Preventing talent shortage or surplus
  • Complying with local, state, and federal regulations
  • Implementing a successful onboarding process

As you can see, HRP is integral to the successful operation of your business and its growth over both the short- and long-term.

Because this process is connected to every aspect of your business , you may feel overwhelmed by the prospect of creating a new HRP strategy.

Don’t let this prevent you from implementing a system that can revolutionize the way your business operates — both now and in the future .

Keep in mind that human resource planning doesn’t have to address all of the objectives on this list from the moment it goes into effect. Start small and expand into different areas once you’ve addressed one or two objectives.

Later on in this article, we discuss a step-by-step method for producing a human resource planning strategy for your business.

But, first, let’s take a moment to discuss one of the most-confused aspects of human resource planning: how it differs from strategic human resource management.

Three employees in a meeting

Before we delve into the minutiae of human resources , let’s put the two relevant definitions side-by-side to see how they compare.

Human Resource Planning : HRP is the ongoing process of systematically planning ahead to optimize and maximize your business’s most valuable asset — high-quality employees.

Strategic Human Resource Management : SHRM is a holistic approach to assembling the best team for your business’s growth and success.

At first glance, it may appear that human resource planning is the same thing as strategic human resource management under a different name. They seem so similar because one is actually part of the other.

In this case, HRP is a small part of SHRM. Viewed from a different perspective, SHRM contains and governs HRP.

It’s very much like a set of nesting dolls: the smallest one (HRP) fits nicely into the next largest (SHRM), which, in turn, fits into the next largest, and so on.

For practical purposes, it helps to think about human resource planning as the frontline, boots-on-the-ground application, while strategic human resource management is the guiding principle behind those applications.

In other words, SHRM is the why to HRP’s what.

Another way to think about SHRM and HRP is to view your business as a large, complicated machine.

Human resource planning is one component (a gear, for example) that works with other similar components (e.g., production, logistics, shipping, management, etc.) to keep the machine running.

Strategic human resource management, on the other hand, takes a step back and analyzes the machine itself.

SHRM looks at the performance of each component (each department in your business), how they work together to make everything run smoothly, and what the business as a whole can do to improve.

human resource planning

Let’s return, for a moment, to the example of the nesting dolls mentioned earlier.

We established that human resource planning is the smallest doll and that strategic human resource management is the next largest doll. But what comes after that?

What’s the next largest doll in the series? Organizational strategy.

Organizational strategy , at its most basic, is a plan that specifies how your business will allocate resources to support infrastructure, production, marketing, inventory , and other business activities.

How does this affect human resource planning? Organizational strategy directs strategic human resource management directs human resource planning.

In many ways, the strategy side of your business mirrors the relationship between SHRM and HRP.

Organizational strategy is subdivided into three distinct categories: corporate strategy, business strategy, and functional strategy. Just like SHRM and HRP, each level is a part of the one above it.

Corporate level strategy is the main purpose of your business — it’s the destination toward which your business is moving.

Business level strategy is the bridge between corporate level strategy and much of the “boots-on-the-ground” activity that occurs in functional level strategy.

Functional level strategy is the specific actions and benchmarks you assign to departments and individuals that move your business toward the goals created by your corporate level strategy. They are a direct offshoot of your business level strategies.

With those categories in mind, we start to see the bigger picture of your business. SHRM is a component of your business level strategy, while HRP is a component of your functional level strategy.

Now that you understand the theory behind human resource planning, let’s focus our attention on the practice itself.

Business owners in a private office discussing human resource planning

1) Analyze Organizational Strategy

Any successful workforce-management  program — including human resource planning — is a direct offshoot of your business’s organizational strategy.

Therefore, you should always start your HRP process by analyzing the goals and plans of your organization. With those strategies in mind, you can then move on to crafting a general human resources mission statement.

From there, you can work your way through the various departments in your business to address issues such as:

  • Recruitment
  • Employee relations

When you have that information written down, you can craft a human resource plan to help your business reach and maintain its goals.

2) Inventory Current Human Resources

After analyzing your organizational strategy, it’s time to take stock of your business’s current human resources.

In the process, it’s beneficial to investigate such variables as:

  • Total number of team members you employ
  • Who works in what department
  • Skills of each employee
  • Performance reviews
  • Team and individual potential

With that data in hand, you then make sure that your existing workforce  is large enough and skilled enough to cover current demands before moving on to the next step in this guide.

3) Forecast The Future Of Your Workforce

Step three is all about planning, prediction, and preparing for the future.

Guided by your organizational strategy and your current employee data, do your best to forecast what the future of your workforce will look like. Be sure to incorporate any goals and plans into your forecast.

Examine variables such as:

  • New product offerings
  • New services
  • A second (or third) location
  • Labor costs
  • Vendor and supplier  relations
  • Cost of goods sold

A forecast of this type, coupled with the workforce data from step two, gives you an accurate picture of where your business is right now and where you want it to be five, 10, even 15 years down the road.

4) Estimate Gaps

Armed with the information you’ve produced so far, you can now estimate whether or not there are any gaps in your human resource strategy.

Will you need more employees to get your business from the present to where you want it to be in the future? If so, how many? Will you need fewer employees? If so, how many?

Does your forecast call for a reallocation or redistribution of current team members? If so, how would you go about doing this?

Once you’ve estimated the gaps between your current and future workforce numbers, you can move on to step five, where all the planning and brainstorming comes to fruition.

5) Formulate An Action Plan

Formulating an action plan is where the rubber meets the road, so to speak.

Your action plan should take into account all the analysis that came before it — organizational strategies, current HR inventory, HR forecast, and gaps between present and future — to create a step-by-step system for taking your business from point A to point B.

The action plan will be different for every business. Some businesses may need to begin recruiting  and training . Other businesses may need to promote  or transition their existing workforce.

Still other businesses may need to develop a retirement  program or a redeployment process to deal with surplus employees.

When crafting your plan, start with the theoretical — evolve from X to Y — and then move on to actionable steps that your HR department can take — hire and retain  two new team members every year, for example — to transform the theory into reality.

With these steps in mind, you can implement a successful human resource planning system into your business, no matter how many employees you have.

As you go about implementing your business’s HRP, don’t neglect the foundation of all good employer/employee relations: scheduling and communication. We’ll discuss this topic at the end of the article.

6) Integrate With The Rest Of The Company

Two Coworkers doing human resource planning

Now that you’ve got an action plan, your human resource planning efforts will start to yield results.

That said, the integration stage is the most difficult of the entire process, so be ready for some speed bumps.

Without proper preparation — and even with proper preparation, in some cases — both management and frontline employees may show resistance to the proposed changes.

In addition, all departments within your business work together in one way or another (even if it doesn’t at first appear so). This makes the integration phase challenging on many levels.

One of the best ways to integrate human resource planning into the rest of the company is to start with the recruitment , hiring , and training practices in your business.

Once you’ve brought in new, high-potential employees and have begun funneling them into the various departments, you can start to make other changes to accommodate these new hires.

Integrating slowly and pairing the changes with new employees who will further the goals and productivity of each department makes putting your new human resource planning into place much easier.

7) Monitor, Evaluate, And Adjust

The final step in human resource planning is to monitor the new practices, evaluate them for their effectiveness, and adjust as necessary.

In addition to monitoring each department and your business as a whole, it’s also beneficial to zoom in on how any changes made affect the individual employee.

To take the pulse of the front-line worker, include questions about your human resource planning during mid-year reviews and performance appraisals . You can even ask for their opinion when you have them complete an employee self-evaluation .

Monitoring and evaluating in this way will help you get a detailed view of how any new policies, procedures, and practices affect the men and women in the trenches.

Once you have all the information you need, you can then take steps to adjust your human resource planning accordingly.

For that, it’s best to return to the top of this list and start again at step one, incorporating what you learned from the previous run-through.

In essence, then, you can view this list as less of a straight line and more of a circle, with step seven leading directly back into step one. As such, your HRP should be in a constant state of development.

Management doing human resource planning

Your business can function without HRP, and, yes, it can be a challenge to get the plans in place, but the benefits far outweigh the drawbacks.

Among other things, HRP can help your business:

  • Anticipate workforce needs in a changing market
  • Plan for short-term and long-term growth
  • Improve operations
  • Facilitate staffing changes
  • Avoid talent shortage
  • Stay ahead of the technology curve
  • Remain agile as the market evolves
  • Maintain compliance with government laws and regulations

Human capital management is one of the most important parts of your business. HRP helps you maximize that potential.

As beneficial and powerful as human resource planning is, it is not without its drawbacks and challenges.

For one thing, HRP relies on forecasting, which is an imperfect art and is never — and can never be — 100% accurate.

Similarly, you can never account for the ambiguity in the market and the rapid change that could come out of nowhere.

There may be some error when you forecast the future of your workforce. That error will affect the other steps on this list for the good or the bad (depending on how accurate your forecast is).

Realistically, though, that can’t be helped and all you can do is give it your best shot. If you discover errors in your forecasting, you can always return to step one and start the process over with the new information.

Other challenges of the human resource planning process include:

  • Resistant workforce
  • Inefficient information systems
  • Overall cost
  • Time and effort

That said, when you are aware of these challenges going in, you can take steps to overcome them right away so that you can get to the benefits sooner.

Sling tool for human resource planning

Scheduling and communication are key components of an effective human resource planning process.

Your team’s schedule is the cornerstone on which you build their work experience. If the schedule doesn’t satisfy all parties — employees and management alike — your business suffers.

Similarly, clear communication with all your employees fosters a strong team and keeps everyone in the loop about employee performance, inventory, standard operating procedures , customer satisfaction , and your business as a whole.

In the 21st century, the best schedules are created and the best communication maintained with help from dedicated software like Sling .

Whether your business has one shift  or three, offers flextime  or a compressed workweek , or works a 9-to-5 work schedule or a 9/80 work schedule , Sling can help simplify the schedule-creation process.

And with advanced communication features built in, Sling is the only tool you’ll ever need to keep your employees informed about your business and connected with each other.

In fact, we developed the Sling app  to streamline communication as well as make scheduling, tracking labor, finding substitutes, assigning tasks, and building employee engagement  extremely simple.

There are so many ways Sling can help improve your human resource planning that we don’t have room to talk about them here. So instead of reading about it, why not try it out?

Sign up for a free account and see for yourself how Sling can help you implement the necessary strategies  to make your team and your business successful.

For more free resources to help you manage your business better, organize and schedule your team, and track and calculate labor costs, visit GetSling.com  today.

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This content is for informational purposes and is not intended as legal, tax, HR, or any other professional advice. Please contact an attorney or other professional for specific advice.

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  • Building Your Business
  • Becoming an Owner
  • Business Plans

Management and Human Resources Business Plans

The management portion of your business plan, the hr portion of your business plan, frequently asked questions (faqs).

As a startup, it’s never easy to come up with a business plan, let alone the management and human resources sections of a business plan. Despite that, it’s important that you start your business plan for human resources as soon as possible. Doing so gives your management goals a plan that will guide you and keep your business on track as it grows. 

The key components of your human resources business plan should include your organizational structure, the philosophy and needs of your HR department, the number of employees you want to hire, how you plan to manage them, and all the estimated costs related with personnel.

You’ll want to start your HR business plan by outlining your own managerial experience and skills as well as those of your team. Highlight the roles of each member of your team, and any particular areas of strength or deficiency in your personnel lineup. For example, your HR team may be strong in compliance and conflict resolution but weak in hiring. 

Don't worry if you don’t have a complete team in place when you write your HR business plan. Simply use this section to outline the organizational structure along with job descriptions, how you plan to recruit key team members, and what their responsibilities will be.

This section should look like a pyramid with you at the top and will likely have lateral positions. Be as specific as possible when defining an employee's responsibilities because this is what will drive your business.

Do You Need an HR Manager?

If you’re a solo practitioner, you may not think of including an HR manager in your management business plan. However, if you expect to hire non-managerial employees (such as salespeople or clerical workers), you should consider recruiting a human resources manager.

If hiring a human resources manager can’t be done, consider a human resources consultant. Human resource management requires an immense amount of time and paperwork, and an experienced HR consultant will be able to quickly get your payroll and benefits program up and running, affording you more time to concentrate on growing the business. Human resource responsibilities should include:

  • Handling FICA and unemployment taxes and paperwork
  • Ensuring compliance with the Family and Medical Leave Act
  • Staying on top of IRS filings

There are plenty of companies that offer HR management platforms tailored to each business's needs. Research these companies and be sure to include their estimated cost in your HR business plan.

When you develop the HR portion of your business plan, begin by including a brief overview of your HR strategy. Investors may be curious about how your payroll will be handled and the associated costs of administering it, as well as the type of corporate culture you plan to create. Specific items to highlight in the HR section include:

  • Payscale: Show the salaries for managers and non-managers based on the market for those jobs.
  • Vacation time: Describe your vacation-time policy. How much time do employees get? How quickly does it accrue? Vacation time is not required by law, but most firms offer vacation time to stay competitive and keep employees refreshed. 
  • Insurance: Health insurance is a common staple benefit, although skyrocketing prices have forced many firms to cut back on this benefit. If you can’t afford a health plan, look into subsidizing one with employees paying the rest. Alternatively, inquire if a professional insurance representative can help you get a bulk rate.
  • Additional benefits: Other things to consider include life insurance, a 401(k) and matching funds, bereavement leave, religious and floating holidays, and a bonus structure, if applicable.

In addition to the key elements above, it helps to have a framework from which to build your HR business plan. Here’s a basic outline that can help you get started: 

  • Figure out what your human resources department would need. 
  • Determine a strategy for recruiting talent.
  • Formulate your hiring process. 
  • Develop a training program for new employees. 
  • Determine how much you want to pay your team (this is a good spot for payscale info)
  • Create performance standards

It may be overwhelming to contemplate these benefits and their costs in the early stages of setting up your business, but in a competitive labor market, your firm needs to offer enough to entice qualified people and, more importantly, to keep them happy.

Consider revisiting your management and HR business plans every couple of years to see if you need to create action steps to refine your processes.

What should be in an HR business plan?

An HR business plan should include a mix of the steps you plan to take to launch an effective HR department, as well as specifics about how you plan to handle time off, insurance, and other benefits you plan to offer.

How do I write a human resources plan?

It helps to start with a simple framework. Try to break the plan down into sections: HR needs, recruitment, hiring, training, pay, and performance reviews. From there, incorporate other aspects of HR, like benefits and promotions.

U.S. Chamber of Commerce. " Does Your Small Business Need an HR Department? "

 University of Minnesota. “ Human Resources Management: 2.2 Writing the HRM Plan .”

Mecklenburg County, North Carolina. “ FY 2020-2022 Strategic Business Plan: Human Resources .”

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  • Human Resource Planning (HRP)

human resource planning in a business

Written by True Tamplin, BSc, CEPF®

Reviewed by subject matter experts.

Updated on July 12, 2023

Are You Retirement Ready?

Table of contents, what is human resource planning (hrp).

Human Resource Planning (HRP) is the process of systematically analyzing and forecasting an organization's current and future human resource needs, and developing strategies to meet those needs.

This involves identifying the right number of employees with the appropriate skills, knowledge, and experience to effectively accomplish the organization's goals and objectives.

HRP is a crucial component of business planning and finance, as it ensures that an organization's workforce is aligned with its strategic direction and can adapt to changes in the business environment.

HRP directly impacts an organization's ability to achieve its goals and objectives by ensuring that the workforce is well-prepared, skilled, and motivated.

HRP also contributes to the financial health of a company by optimizing workforce productivity, minimizing costs associated with hiring and training, and reducing employee turnover.

Additionally, effective HRP enables businesses to respond more quickly and efficiently to changes in the external environment, such as technological advancements, economic fluctuations, and shifting market demands.

This adaptability is crucial for maintaining a competitive advantage and achieving long-term success.

The HRP Process

Environmental scanning.

The HRP process begins with environmental scanning, which involves collecting and analyzing information about the internal and external factors that may impact an organization's workforce.

This can include examining economic trends, technological advancements, demographic changes, industry competition, and government regulations, as well as assessing the company's internal strengths, weaknesses, opportunities, and threats (SWOT analysis).

By conducting a thorough environmental scan, organizations can gain valuable insights into the factors that may affect their workforce and identify potential opportunities and challenges that need to be addressed through HRP.

Forecasting

Forecasting is a critical step in the HRP process, as it involves estimating the future demand for and supply of human resources within the organization.

This includes predicting the number of employees needed, the types of skills and competencies required, and the availability of internal and external talent to meet these needs.

Forecasting can be accomplished through various methods, such as trend analysis, regression analysis, or expert judgment.

Accurate forecasting is essential for developing effective HRP strategies and ensuring that the organization has the right people in the right roles at the right time.

Job Analysis

Job analysis is the process of collecting, analyzing, and documenting information about the tasks, duties, and responsibilities of each job within an organization.

This information is used to create detailed job descriptions and specifications, which are essential for HRP as they provide a clear understanding of the skills, knowledge, and abilities required for each role.

A thorough job analysis helps organizations identify the competencies needed to perform each job effectively and serves as a foundation for workforce planning, recruitment, training, performance management, and career development initiatives.

Supply Analysis

Supply analysis involves assessing the current workforce's skills, knowledge, and abilities to determine whether the organization has the necessary human resources to meet its strategic objectives.

This includes evaluating the number of employees, their skills and competencies, and their potential for growth and development.

By conducting a supply analysis, organizations can identify existing talent gaps and develop targeted strategies to address them, such as training and development programs, succession planning , or external recruitment.

Demand Analysis

Demand analysis focuses on estimating the organization's future human resource requirements based on its strategic goals and objectives.

This involves projecting the number of employees needed, the skills and competencies required, and the anticipated changes in workforce composition due to factors such as turnover, retirements, and promotions.

A comprehensive demand analysis enables organizations to develop targeted HRP strategies that align their workforce with their strategic direction and ensure they have the right people in place to achieve their goals.

Gap Analysis

Gap analysis is the process of comparing the organization's current human resource supply with its future demand to identify any discrepancies.

This includes evaluating the differences in the number of employees, skills, and competencies required to meet the organization's strategic objectives.

By conducting a gap analysis, organizations can determine whether they have a surplus or shortage of human resources and develop appropriate strategies to address these gaps.

This can include recruitment and hiring initiatives, training and development programs, or workforce restructuring efforts.

Action Planning

Action planning is the final step in the HRP process, which involves developing and implementing strategies to address the identified gaps between the current workforce supply and future demand.

This can include initiatives such as recruiting new employees, providing training and development opportunities for existing staff, implementing succession planning, or adjusting organizational structures to better align with strategic objectives.

Effective action planning requires ongoing monitoring and evaluation to ensure that the HRP strategies are achieving the desired results and that the organization remains well-prepared to respond to changes in its internal and external environment.

Human-Resource-Planning-(HRP)-Process

Benefits of HRP

Improved workforce productivity.

By ensuring that the organization has the right number of employees with the appropriate skills and competencies, HRP helps to optimize the use of human resources and enables employees to work more efficiently and effectively.

This increased productivity can lead to higher levels of employee engagement, job satisfaction, and overall organizational performance, ultimately contributing to the company's bottom line.

Cost Savings

HRP can result in significant cost savings for organizations by helping to minimize expenses associated with hiring, training, and retaining employees.

Through effective workforce planning, companies can reduce the costs of recruiting and onboarding new staff, as well as the expenses associated with high employee turnover, such as lost productivity and the need for additional training.

Additionally, HRP can help organizations identify opportunities for streamlining their workforce and eliminating redundancies, leading to further cost savings and improved operational efficiency.

Reduced Employee Turnover

Effective HRP can contribute to reduced employee turnover by ensuring that the organization has the right people in the right roles and that employees are provided with the necessary support and development opportunities to succeed in their positions.

By fostering a positive work environment and promoting employee engagement, HRP can help to improve job satisfaction and employee retention, ultimately reducing the costs associated with high turnover rates.

Increased Flexibility and Adaptability

HRP enables organizations to be more flexible and adaptable in the face of changing market conditions, technological advancements, and other external factors.

Through effective workforce planning, companies can quickly adjust their human resource strategies to respond to emerging trends and capitalize on new opportunities.

This increased agility is essential for maintaining a competitive advantage and ensuring long-term success in today's rapidly evolving business environment.

Better Risk Management

HRP plays a crucial role in risk management by helping organizations identify and address potential workforce-related risks, such as skill gaps, labor shortages, or an aging workforce.

By proactively addressing these risks through targeted HRP strategies, companies can mitigate potential negative impacts and ensure the continued success of their operations.

Challenges of HRP

Uncertainty.

Uncertainty is a significant challenge in HRP, as organizations must make predictions about future workforce needs based on a variety of factors, such as economic trends, technological advancements, and competitive pressures.

These factors are often unpredictable and subject to change, making it difficult for companies to accurately forecast their human resource requirements.

To address this challenge, organizations can leverage scenario planning techniques and continually update their HRP strategies as new information becomes available.

Resistance to Change

Employees may be reluctant to embrace new organizational structures, job roles, or training programs, which can impede the organization's ability to achieve its workforce planning goals.

To overcome this challenge, organizations should involve employees in the HRP process, clearly communicate the reasons for change, and provide adequate support and resources to help staff adapt to new roles and responsibilities.

Lack of Resources

The lack of resources, including time, funding, and personnel, can pose a significant challenge to implementing effective HRP strategies.

Organizations may struggle to allocate the necessary resources for workforce planning initiatives, particularly in times of financial constraints or competing priorities.

To address this challenge, organizations should prioritize HRP as a critical component of their overall business strategy and invest in the necessary resources to ensure its successful execution.

Inaccurate Forecasting

Inaccurate forecasting can undermine the effectiveness of HRP efforts by leading to imprecise estimates of future workforce needs. This can result in talent shortages or surpluses, which can negatively impact organizational performance and employee satisfaction.

To improve the accuracy of their forecasting efforts, organizations can leverage a variety of forecasting techniques, such as trend analysis, regression analysis, or expert judgment, and continually update their projections based on the latest available data.

Inadequate Data Analysis

Inadequate data analysis can hinder the effectiveness of HRP efforts by preventing organizations from identifying and addressing critical workforce gaps and opportunities.

This can result in suboptimal HRP strategies that fail to align the workforce with the organization's strategic objectives.

To overcome this challenge, organizations should invest in robust data collection and analysis tools, as well as develop the necessary skills and expertise within their HR teams to effectively analyze and interpret workforce data.

Benefits-and-Challenges-of-Human-Resource-Planning-(HRP)

Best Practices in HRP

Involvement of top management.

Gaining the commitment and support of senior leaders is essential for the successful implementation of HRP initiatives, as it helps to ensure that workforce planning is prioritized and integrated into the organization's overall business strategy.

Collaboration Between HR and Other Departments

By working together, HR professionals and departmental leaders can share insights, resources, and expertise to develop and implement targeted HRP strategies that align the workforce with the organization's strategic objectives.

Use of Technology

Leveraging technology is a best practice in HRP, as it enables organizations to streamline and automate various aspects of the workforce planning process, such as data collection, analysis, and reporting.

By utilizing advanced HR software and analytics tools, companies can gain valuable insights into their workforce and make more informed decisions regarding their HRP strategies.

Regular Review and Update of HRP

Regular review and update of HRP strategies are essential for ensuring their ongoing effectiveness in the face of changing business conditions and workforce dynamics.

Organizations should continually monitor and evaluate their HRP efforts, making adjustments as needed based on new information, emerging trends, and shifting priorities.

Integration With Overall Business Strategy

Finally, HRP should be fully integrated with the organization's overall business strategy. This helps to ensure that workforce planning initiatives are aligned with the company's strategic objectives and that the organization has the necessary human resources to achieve its goals.

The Bottom Line

Human Resource Planning (HRP) is the systematic process of analyzing and forecasting an organization's current and future human resource needs and developing strategies to meet those needs.

It plays a critical role in aligning the workforce with the organization's strategic objectives and ensuring its long-term success.

The HRP process involves several key steps, including environmental scanning, forecasting, job analysis, supply analysis, demand analysis, gap analysis, and action planning.

Each of these steps plays a crucial role in identifying the organization's workforce needs and developing targeted strategies to address them.

To ensure the success of HRP initiatives, organizations should adhere to best practices, such as involving top management, fostering collaboration between HR and other departments, leveraging technology, regularly reviewing and updating HRP strategies, and integrating HRP with the overall business strategy.

By understanding and effectively implementing the HRP process, organizations can optimize their workforce, manage risks, and ensure their long-term success in today's competitive business environment.

Human Resource Planning (HRP) FAQs

What is human resource planning (hrp).

Human Resource Planning (HRP) is the process of forecasting future human resource needs and developing strategies to meet them.

Why is HRP important for business planning?

HRP helps businesses ensure that they have the right people with the right skills in the right positions at the right time to achieve their strategic objectives.

What is the HRP process?

The HRP process typically involves environmental scanning, forecasting, job analysis, supply and demand analysis, gap analysis, and action planning.

What are the benefits of HRP?

The benefits of HRP include improved productivity, cost savings, reduced employee turnover, increased flexibility, and better risk management.

What are some challenges associated with HRP?

Some challenges associated with HRP include uncertainty, resistance to change, lack of resources, inaccurate forecasting, and inadequate data analysis.

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide , a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University , where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon , Nasdaq and Forbes .

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Human Resource Planning: 17 Tips for Scaling Your Business

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Ever thought about how important your team is to your business success? They’re like the engines driving your growth—the ones that keep things running smoothly. But hey, managing them can sometimes feel like trying to gather a bunch of playful kittens. From finding new teammates to getting them up to speed, it can be as tricky as herding those cute felines. And when your business is growing, these challenges can get even trickier. That’s where Human Resource Planning comes in.

Welcome to your roadmap for scaling your business while keeping your workforce happy and productive. This guide is like a treasure map with 17 golden strategies to master Human Resource Planning. These strategies are here to help you level up, showing you how to make your scaling journey smoother and your business even better.

Table of contents

What is Human Resource Planning (HRP)?

What is human resource planning used for, challenges of human resource planning.

  • Why is Human Resource Planning important? 

Steps to Human Resource Planning

  • Regularly assess your current workforce ability
  • Cultivate talent to align with your business’s vision
  • Streamline internal management succession planning
  • Improve your hiring process now
  • Establish and actual HR department
  • Budget for human capital growth
  • Get your best practices in line with your actions
  • Perform a gap analysis
  • Leverage analytics for informed decision-making
  • Take a customer-centric view of HR
  • Build a comprehensive employee handbook
  • Evolve and adapt your employee communication
  • Create mid-term employee goals
  • Find a mentor
  • Evaluate your leadership
  • Know when you need to subtract

Human Resource Planning: FAQs

Imagine your business as a puzzle, and each piece is a member of your team. Human Resource Planning (HRP) is like being the master puzzle solver. It’s the process of figuring out who you need in your team and when you need them. Just like you plan ahead for a party or a trip, HRP helps you plan for the people you’ll need in your company as it grows. It’s all about being prepared so your business can run smoothly even when things change.

Key takeaways

  • Plan your team’s growth: Plan out how your team will grow, write down the jobs you need, and set goals for when to add new members.
  • Keep checking on your team: Keep an eye on your team’s skills, listen to their feedback, and see how you stack up against other businesses.
  • Help your team shine: Find the talents in your team and give them training that matches your business goals.
  • Make hiring easier: Improve your hiring process, make sure job descriptions are clear, and find people who fit your company culture.

Think of HRP as a magic map that guides your business through growth. It helps you make smart decisions about hiring, training, and managing your team. HRP is used to predict what skills and talents your business will need in the future. This way, you can find the right people for the right jobs at the right time. It also helps you avoid surprises by keeping an eye on your team’s strengths and areas that need improvement.

Like every adventure, HRP has its own challenges. One big challenge is predicting the future accurately. You’re not a fortune teller, but you need to guess how many people your business will need months or even years from now. Another challenge is keeping up with changes. As your business grows, things change fast, and you need to adjust your plans accordingly. And let’s not forget about finding the perfect people—hiring the right folks with the right skills can be a puzzle all its own.

Why is Human Resource Planning important?

Imagine building a house without a plan. It might fall apart or not turn out how you want. That’s why HRP is crucial. It helps you build your business with a solid foundation. It saves you from hiring too many or too few people, and it makes sure everyone knows what they’re supposed to do. HRP also boosts employee morale. When people know they’re part of a well-planned team, they feel valued and motivated to do their best.

  • Know your goals: Understand your business goals and what kind of team you need to achieve them.
  • Assess your current team: Figure out what skills your current team has and what they might need to learn.
  • Predict the future: Guess how many people you’ll need in the future and what skills they’ll need.
  • Find the gaps: Compare your future needs with your current team’s skills to see where you’re lacking.
  • Recruit and train: Start hiring new people with the right skills and train your current team to fill the gaps.
  • Keep watching: Continuously check how your plan is working and adjust it as your business grows.

17 tips for scaling your business

Whether it’s hiring, recruiting, training, orientating, onboarding, or providing benefits, planning your human resources is challenging. Now throw in a growing business and the need to scale for it.

That’s where this list comes in.

1. Plan for strategic staff growth

Maybe your business started out with just two on staff. Then four. Someday, hundreds.

Plan now. Think of the specific tasks and jobs that are going to be needed. Write down the jobs (and descriptions) you think you’ll need. Decide what order you’ll need those jobs to become a reality.

Sure, things might change and you’ll have to tweak those plans. Yes, early on you’ll have to cross-train your staff so fewer people can cover more of those jobs. But you should set up a plan that has benchmarks that indicate when a new position is needed.

Maybe that benchmark is a specific number of customers, or a certain sales volume. Maybe when customer complaints or support wait times reach a particular level you know you need to add staff. The point is to have a plan of what comes next in terms of human resources, and delineation as to when that plan kicks in.

2. Regularly assess your current workforce ability

Assessment is the foundation of pretty much anything else we’ll be talking about in this post.

It’s important to assess your workforce regularly, because it’s the only way you’ll know what you have, what you need, and what is changing both in your actual workforce and also what is changing in your industry that your workforce needs to adjust to.

Things to assess might include:

  • Current employee skills and abilities. This includes technical, knowledge, interpersonal, and leadership.
  • Trends spotted in employee reviews. Any trend is worth paying attention to, whether positive or negative, particularly responses regarding training and the ability to do the job before them.
  • How your competitors compare. Find successful competitors, and consider how your workforce compares to theirs in terms of capability (skills, knowledge, training).

3. Cultivate talent to align with your business’s vision

Employees have inherent talents, but you need to encourage them to grow.

ConAgra studied the performance of both trained and untrained employees to determine what kind of effect training had on them. They learned that managers with training had half the employee turnover than those who did not receive any training. That discovery led to better training and the numbers to back up the cost of paying for training.

When it comes to scaling your business, you should know what direction you want to see it grow. Train and cultivate the talent of employees to take it in that direction. Looking for leaders? Provide leadership training. Looking for better customer service? Provide customer service training.

4. Streamline internal management succession planning

As your business grows, you’ll also see your need for management to grow.

Ideally, if you’ve been training your employees, you’ll have a good pool of potential managers to draw from in your own workforce so that succession and transition aren’t as jarring.

Your plan should include things like:

  • Having a system that identifies employees with management and leadership abilities.
  • Identifying personality and interpersonal strength and weaknesses in potential leaders.
  • Knowing what your employees career goals are, and pinpointing those who wish to manage.
  • A known system that alerts employees to the fact that they have the possibility of promotion and being a manager some day.
  • Establishing training for management techniques, as well as decision-making techniques.
  • Normalizing communication with employees regarding changes in management and other similar decisions that have an effect on them so they are used to being involved in such moments.

Not all of your management needs will come from within your growing business, but scaling means you’ll want to tap into those employees who have been with you from early on and who know your business better than a newcomer.

5. Improve your hiring process now

Getting your hiring process perfected when you are still on the smaller side is best.

This might include:

  • Talking to current employees about the hiring process and what they liked or would change.
  • Being serious about exit interviews and finding out if the hiring process was misleading and led to turnover.
  • Improving the process of letting potential employees see what your work culture is really like before they sign on.
  • Improving tools that assess whether an employee is a good fit for both the position and your business’s work culture.
  • Improving how you advertise for job openings, both in the copy you use to describe them as well as where you place job advertisements.

Hiring new employees is extremely time consuming and expensive. You want that time and money well-spent. There will be no magic moment where, as your business grows, your hiring process smooths out and gets better on its own. The whole point of being aware of scaling is to consider that your successes and failures scale to the same degree as your growth. If your hiring process is in turmoil, that’s only going to increase to the same degree as you grow.

6. Establish an actual HR department

Smaller businesses often do not have an actual human resources department, and they may function completely fine without one.

Larger businesses, however, do not have that luxury. Remember, HR departments are dealing with benefits, training, and interpersonal relationships. The larger your business and the more management layers grow, the more disconnected or distant your employees can become from those making decisions. Even if your HR department starts as one dedicated employee, be ready to start it.

7. Budget for human capital growth

Your employees are your most important asset. They are your human capital.

Be sure you’re budgeting not just for business expansion, but also for employee growth, too. That means considering benefits, expectations of employees, and workplace culture.

It’s not terribly complicated, but remember: if it isn’t in the budget, it isn’t going to happen.

8. Get your best practices in line with your actions

Most businesses have best practices, but they don’t always do so great on the actual follow-through.

For example, you may say that team collaboration is a best practice, but you have actually incentivized individual rewards. Or, you reward employees on a quarterly basis but only do performance reviews twice a year.

When your best practices are out of sync with your actions, you will fail to meet the goals that the best practices are meant to achieve.

9. Perform a gap analysis

A gap analysis is where you locate current gaps in what your business has and what it currently needs. It’s a bit different than regularly assessing your actual employees. It takes other things into consideration that actually affect your employees

  • Job descriptions. They should accurately reflect what the jobs are. Their accuracy, both in description and expectation, has an effect on employee retention.
  • Current tools employees use. This includes all tools, from computers in offices to kitchenware.
  • Employee benefits. This includes such things as retirement funds, health insurance, sick days, vacation days, and any other items your employees generally receive.

A gap analysis takes into consideration where your company is at now. It’s pretty common for a business to set their policies and benefits and not realize they are outdated in a few year’s time. Over time, your business changes. It grows, it needs to scale, and it needs to attract and retain great employees. A larger business, for example, can probably afford better benefits. You can’t rely on what you set up in the early days, and a gap analysis is set to specifically pinpoint what needs changing.

10. Leverage analytics for informed decision-making

Data is your friend.

It’s found everywhere, from employee interviews to your accounting department. The problem is that if you don’t make an effort to collect data regularly and with a consistent reason, that data goes unused in a file.

Knowing the numbers for what is happening in your business is the best way to make informed decisions. When it comes to Human Resource Planning, you’ll want data on:

  • Productivity. Are your employees as productive as they were when you were smaller? Is productivity scaling correctly with your business growth?
  • Retention. Are your employees staying or leaving, and at what rate? What direction is this trending?
  • Managerial effectiveness. Are your managers effective or causing problems with how they lead employees?
  • Benefit costs. Are your benefit costs in tune with goals and budgets, or are they overwhelming your profits?
  • Training, recruiting, and onboarding expenses. Are training expenses as you expect, or have they become more than you bargained for? These costs will be closely tied to retention and hiring.

Tracking analytic data on HR-related issues is the only way to take the guesswork out of whether or not scaling your business will be a nightmare.

11. Take a customer-centric view of HR 

Take an outside-in approach to viewing your employees.

What kind of experiences are your customers having as your company grows? You want to be sure to look for areas where business growth can damage a great customer experience, such as:

  • Personal interaction. Are your customers still having a personalized experience with your employees, or is business booming so much that your employees are trying to juggle too many customers at once?
  • Customer support. When customers have questions or complaints, are your employees able to keep up with the increased demand?
  • Service or product selection. As your business grows, are you adjusting what you offer to fit a growing and changing customer base?
  • Knowledge of services or products. Do your employees have the necessary knowledge of what your growing business offers customers, or are there knowledge gaps?

Are your human resources where they should be? Are they ready to be what they’ll need to be for future customer needs?

12. Build a comprehensive employee handbook

You can’t “go by the book” if you never created one.

As a small business, a slim employee handbook and a casual approach to guidelines as rules might have worked. But as your business grows, you need, in writing, more to the plan.

An employee handbook that is as detailed as needed provides consistency. No employee feels as if they are being treated unfairly if the handbook is followed.

Using the assessments and other tips in this post should help you know to adjust your employee handbook. Reviewing your employee handbook at least once a year (preferably more) is ideal, and if changes are made, you will need to bring all of your employees together to inform them and get them to sign off on the new book.

13. Evolve and adapt your employee communication

Early on, you may have had more personal interaction with your employees because your business was smaller. As it grows, though, that interaction changes and lessens. You might not even realize that there are some employees who are used to more communication with you but aren’t getting as much of it since you are busier than usual.

The problem is that even if you feel like you’re just as busy and just as communicative, you have employees who are growing distant from you. So while you may not have needed formal staff meetings or communication in the early days, a business that is going to scale has to adjust for a different approach to communicating.

It might seem silly, but start with staff meetings when you are still small. Get staff used to the idea. Small staff meetings can scale to department or large staff meetings. Daily one-on-one conversation with every employee, however, does not scale.

14. Create mid-term employee goals

Growing your business means you have a big goal, and you are pushing for it.

That’s true enough. But the middle of that growth process requires mid-range goals.

Long-term vision and goals are at the opposite end of the playing field from where you started, but there’s a lot of game play between one end to the other. You need the structure of goals there, too.

Create goals for human resources for that middle time. These tend to be plateau or benchmark goals that indicate a step in the right direction or that trigger the next phase of a plan. Perhaps you want to see 100% of your employees trained in a specific skill set, but might set a goal of 50%  during the fast growth period.  Or maybe you’d like to see all of your employees hit a certain sales or productivity level, but it’s too difficult to get them all there while you’re in the growth process of hiring and onboarding, so you set a mid-range goal that helps you move forward without abandoning that larger, future goal.

15. Find a mentor

Scaling your business can be scary, particularly when dealing with human resources. Find other business owners who have already done what you are in the midst of, and see if they will mentor you.

16. Evaluate your leadership

If you have top-level management that are creating a problem now, they are certainly going to be just as difficult (if not worse) later.

Are there personality clashes? Leadership issues? Ethical or trust issues? Anti-authority problems? Are they able to self-start or do they need you to micromanage them or give them detailed instructions constantly?

And not only that, but your team of leaders needs to be…smarter than you. That’s how you grow.

17. Know when you need to subtract

The idea of growth necessarily brings to mind adding things.

Adding sales, customers, employees. Growing.

But scaling also means knowing when to subtract . There are processes (and even job positions) that you may have needed earlier on, but which now are slowing you down. It is critical to be able to look dispassionately at some business traditions and positions and determine which ones have no place in a growing business.

Do you see a common theme running through these tips?

It’s all about planning ahead now, before your business gets too big to make changes. Remember: scaling magnifies the foundation. You can scale the good or the bad just as easily.

Paving the path to success with When I Work

As we unravel the intricate art of human resource scaling, one solution stands out as a guiding light—When I Work. It’s an hourly scheduling software meticulously designed to harmonize and streamline your workforce management efforts. With benefits such as automated scheduling, real-time communication, and easy shift swapping, When I Work presents itself as a catalyst for successful business expansion. By harnessing this innovative tool, you can ensure that your scaling journey is marked by precision, efficiency, and seamless HR management, allowing you to focus on propelling your business to new horizons. Explore the potential of When I Work and revolutionize the way you scale your business today. Sign up for your free 14-day trial of When I Work today.

Q: Is Human Resource Planning only for big businesses?

A: Human Resource Planning is not limited to big businesses. It’s equally important for businesses of all sizes, especially those with hourly, shift-based teams. Imagine you’re running a café with waitstaff, cooks, and baristas. HRP helps you ensure you have the right number of people on each shift, preventing understaffing during busy hours or overstaffing when things are quiet. Tools like scheduling software, such as When I Work, can simplify this process by helping you plan shifts effectively based on your team’s availability and skillsets.

Q: Predicting the future accurately seems tough. How can HRP help with managing an hourly, shift-based team?

A: HRP can assist you in managing your hourly, shift-based team by giving you insights into historical patterns. Let’s say you manage a retail store with fluctuating foot traffic. HRP can help you identify peak hours when more staff is needed and adjust shifts accordingly. Scheduling software like When I Work can take this a step further, helping you create flexible schedules that align with demand. It ensures you have the right number of employees in each shift, avoiding staff shortages or surplus.

Q: Is HRP only about hiring? How does it impact the day-to-day operations of an hourly team?

A: HRP goes beyond hiring—it’s a comprehensive strategy that involves everything from recruitment to performance management. For businesses with hourly teams, like a customer service center, HRP ensures there’s a balanced distribution of skills among different shifts. This guarantees that no shift is understaffed due to a lack of specific expertise. Scheduling software, such as When I Work, plays a vital role here. It empowers you to assign the right people with the right skills to each shift, improving efficiency and delivering excellent service.

Q: Can HRP help avoid problems in managing an hourly, shift-based team?

A: Absolutely! HRP is a proactive approach that prevents issues like insufficient staff coverage during busy periods or overworking employees. Let’s say you’re managing a restaurant with peak dining times. HRP helps you anticipate these busy periods and schedule more staff to handle the rush, enhancing customer satisfaction. By incorporating scheduling software like When I Work, you can ensure a smooth operation by distributing shifts evenly among your hourly team members, minimizing burnout, and ensuring that everyone has a fair workload.

Q: Is HRP a one-time thing for managing hourly teams?

A: No, HRP is an ongoing process, especially crucial for businesses with hourly, shift-based teams. As customer demands fluctuate, you need to adapt your schedules accordingly. For instance, managing a call center with varying call volumes requires constant adjustments. HRP helps you align staffing levels with call traffic patterns. Scheduling software, like When I Work, simplifies this continuous process by allowing you to quickly modify schedules based on changing needs, ensuring your hourly team remains efficient and your customers stay satisfied.

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  • Human resource

Human Resource Planning Definition and Complete Guide

  • By Jyoti Kapoor
  • No Comments

Human Resource Planning Definition

The war of talent is ever-growing. At the times when the need for superior talent is a necessity, no organization can stand manpower shortages. The employees are more empowered today with the choices to say  “yes” or “no” to a certain job and have substantial say in the company’s growth strategy. Jobs are many, yet employable talent is limited. So greater the challenge to find out unicorns who can contribute towards attaining your business goals. A well-built policy and strong Human Resource Planning ensures to forecast and develop a competitive workforce that meets current business needs meanwhile making it future-ready.

“In a future-ready organization, ‘talent’ is increasingly a metaphor for capability—at the right place, at the right time and equally, at the right price.”  – Gyan Nagpal (Author)

Table of Contents

What is Human Resource Planning?

Human Resource Planning  is a process of forecasting and strategizing to meet the organization’s demand and supply of manpower needs in the present and future. It is a process to ensure that you have the right people with the right skillset in your team thereby building a strong workforce capability in your organization. 

No business strategy can succeed without an abled workforce that innovates and competes to grow your organization. Human resource Planning helps to take care of any critical shortages in manpower hence mitigating business risks. 

Why we need Human Resource Planning?

Human Resource Planning is no science but an approach based on ideas and processes that help to forecast and manage operations effectively. Before we study how we can create a robust Human Resource Plan, let us understand and answer why we need it and the benefits thereof.

human resource planning

1. Building Resilience To The Dynamic Economic Environment

Our world is going through metamorphic changes in technology. Globalization and cultural shifts are a reality. Consequently, product shelf life is shortening and the skill gaps are rising high. Not just the physical or financial capital, human capital needs to adapt to this new reality. The world’s socio-economic structure has changed to a knowledge-based economy and having talent superheroes is fundamental to survival.

An effective Human Resource Planning enables us to build resilience in combating volatile business situations like mergers and acquisitions, increased offshore jobs, industry competition, changes in government legislature, etc.

2. Improving Operations In Your Human Resource Planning Process

Workforce analysis and human resource planning process helps to streamline various business functions as you can plan the right deployment of the workforce according to need. You know well in advance potential shortages in any discipline of business and are prepared to take care of it. This avoids any potential operational danger that may result due to the shortage or surplus of manpower. 

Good HR planning also supports the distribution of talent across geographies and culture in a planned way hence creating a positive value proposition. Introducing training and proper succession plans reduces risks of talent void thereby increasing productivity .

3. Adapt To Technology Changes

Millennial is a huge 50 percent of the workforce distribution and the future belongs to a technologically advanced human resource team that can learn and adapts to meet the expectations of these millennials. Data-driven analysis has become imperative for future-ready businesses. A correct Human resource plan is instrumental in introducing and distributing talent across diverse business functions and technology groups thereby supporting growth.

Also,  technology changes require organizations to keep evolving the way you do business. Current skills may become obsolete in the future. New technology requires a new skill set that is not readily available in the labour market. A proper plan to scout and hire for the required skillset is vital. 

Here it is also important to note that technology change initiatives fail due to employees’ resistance towards it and poor communication. Change management is effective in minimizing adverse effects only when it involves people’s plans in it.

4. Enable Growth Phase For Small And Mid-Size Businesses

Small businesses’ growth is often sudden and dynamic. They get impacted by the external environment the most.HR planning for small businesses is not just an additional adjustment but an integral part of the overall growth strategy. Often small businesses need to plan when to outsource, how many people to recruit, what are the compensation benefits on offer etc.

A small business may initially start with 2-3 people, but their business strategy needs to involve the human plan to know how they are going to grow in team size to meet business goals.

5. Anticipating Changes In the Labour Market

As per Deloitte’s 2017 report on Global Human capital trends , the digital age is changing the skill requirements constantly. Acquiring the right talent has become quite a challenge and pose a growth risk for many companies. The economy has become Knowledge-based and the expectations of the employees have changed manifold. They have become equal opportunity stakeholders and have their voice in defining the growth strategy.

Hence it is an advantage to create a sound strategy involving talent management,  team management , succession planning, training, etc to cater to the ever-changing staffing demands.

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An HR Planning Process Involves the Following Steps

You can’t deliver business strategy without the right human capital in the right places for the task at hand. After you are ready with your reasons to have effective Human Resource Planning, create a planning process which will act as a roadmap to add value to your strategy and forecast. 

Though there is no one size fit all strategy, you can customize and build your own strategic process to plan your HR goals in the most efficient and cost-effective way.

1. Define the HR Planning Goal

It is fundamental to align the HR practices to the business goals at large. Human resource planning that does not encompass the holistic vision and mission of the business function is unstructured and unreliable. 

So the best practice involves setting out a clear objective guideline to know what are your Human Resource Planning goals. This may include:

  • Goals around building a strong recruitment strategy.
  • Fostering positive employee relations
  • Enabling positive work culture.
  • Creating an attractive employee benefit plan.

A SWOT analyzing your organization’s employee capability is also a beneficial exercise at the beginning to map your Human Resource Plan accordingly.

2. Analyze The Current HR Supply

The foremost step in an effective Human Resource Planning is to analyze and assess the current resource availability and strength. It involves an exhaustive study of the human resource of the organization in terms of skills, qualifications, experience, age, tenure, performance, designations, compensation, benefits, etc. 

Extensive meeting sessions with managers and top leaders can help you identify the critical HR issues that they face and the impact on the business growth consequently.

3. Forecast the HR Demand

Analyzing the future manpower requirements of the business is a significant step in HR Planning. There are no absolute and objective conclusions to it but a forecast can be built around known factors like attrition, lay-offs, retirements, promotions, etc. Further, there could also be uncertain factors and situations like resignations, abrupt transfers, etc affection your employee retention rate , which are integral to study from the scope of analysis.

There are broadly two types of forecasting analysis that can help understand the future workforce demands.

  • Qualitative: This includes analyzing behavioral and performance-related issues and impacts. Forecasting through manager discussions and perspectives around employee engagement and involvement.
  • Quantitative: This is more statistical and objective analysis. e.g demand as the ratio of production achieved divided by the number of workers deployed, work-study analysis, etc. 

Here, it is also essential to understand the business strategy and objectives in the long run so that the workforce demand forecast is aligned to the organizational goals.

4. Know the Gaps

Once the demand forecast is complete and you are ready with the blueprint of future needs, you will be able to identify the gaps against the previous study of the availability of resources. Study the gaps and identify if you need to fulfill the manpower needs through hiring full time, part-time or contractual labors according to the business goal strategy. Map the forecast with the currently available resources to create a suitable implementation strategy.

5. Human Resource Planning Strategy And Implementation

(a). planning stage.

After reviewing the existent gaps between the demand and supply, it is time to create a sound plan of action that determines to fill the needs and meet the forecasts. Determine whether to hire, train or outsource manpower to meet the requirement and also create a buffer. To manage surplus, you can consider voluntary retirement, internal transfers, relocation or redeployment. 

Training and up-gradation can also be used as an additional strategy to build internal capability resource. Training is not only an effective retention strategy but also serves your purpose to create a future-ready workforce with the required skill set.

A Simple Plan will include:

  • Defining goals and objectives 
  • Action required with desired outcomes and the resources to be used.
  • Defining timelines to achieve the outcomes.
  • Scope of periodic review of the plan to know the progress.

(b). Implementation Stage

Implementing any strategy from paper to practice is the most challenging and daunting task. Many organizations fail to deliver when it comes to execution. Take your managers into confidence to make the implementation process smooth. Follow one step at a time to absorb and handle any unexpected resistance or challenge that you may face from employees. Give gradual conditioning to the execution plan so that your employees get to acclimate to the changes. 

Also, ensure that all necessary legal compliances and regulations are taken into consideration while implementing the Human Resource planning strategy to avoid any glitches.

6. Review, Feedback, and Control

The process of successful Human Resource Planning is ongoing. It is important to have a frequent review of the actionable plan to know if your strategy is moving in the right direction and meeting the goals and objectives. Monitor the progress of your plan regularly to mitigate any risks of failure. Create a handy and objective project management sheet to analyze and monitor the action plan to achieve this.

Proactively avoiding talent shortages and manage surpluses to achieve the best talent pool based is an ongoing, systematic process. Any major change in the business function or any new contract won will require you to re-align the Human Resource Planning. 

Also, there could be different planning models within the same organization to meet different departmental needs. A strong and detailed eye on coordinating all the factors put together can help you develop a robust plan.

With all the essential requirements that you may ensure to meet, there would be some challenges and hurdles involved.

  • Resistance from the workforce : 

The most permanent thing in the world is CHANGE. Yet humans are mostly change-averse. Any altercations in the regular course of life are uncomfortable. Employees may feel extra workload due to the change in plan and may resist it.

  • Rapidly changing environment

Uncertainties like employee attrition, resignations, market dynamics or technological changes influence and impact  Human resource Planning.

  • Cost and Time Investment

Completion of all stages of Human Resource Planning is time- consuming and involves huge manpower and facility cost. Mid-Size companies at times do not possess the required budget or resources to engage in proper planning.

  • Incomplete data and information:

Lack of accurate data around employee information especially with unstructured small size organizations pose a hurdled in creating a concrete plan.

Tips To Create A Robust Human Resource Planning Process

The whole idea of Human Resource Planning is about the value proposition and how to build world-class leadership capabilities. There is no final version of a perfect team and it is a constant process of evolution. However, a few approaches in establishing correct value culture at the workplace can help resource your manpower with best results.

1. Participative HR Model

HR is key to the success of any strategic goal for the organization and should actively participate to institutionalize effective talent management plan. HR plays a proactive role in building enabled leadership and hence should be involved in strategic business decisions.

2. Proper Policy Framework

The Importance of structured policies in any organization is inevitable. A defined policy structure gives a roadmap to the HR and also the management to direct the right action forces in building the talent pool.

Proper policies on Performance mapping, training, succession planning helps to recruit and retain the right talent and lessen talent crunch. 

3. Employer Branding

Recruitment and retention of good talent is a challenge these days. The Company’s brand value plays a crucial role in attracting the right talent. With social media playing an integral communicating tool, sites like LinkedIn, indeed, etc does facilitate hiring. But they can pose potential threats as disgruntled employees can spread negative words about your company as well. Be alert about such negativity on social media to avoid any dangerous impacts. 

4. Fostering A Positive Work Culture

The Business environment will always be volatile and uncertain. Fostering a positive work culture will help you boost productivity amongst your teams and create a loyal force of unicorns. It helps challenge talent shortages and hence avoids operational risks for your business.

5. Investing In Proper HR Tools

Traditional approaches and methods of HR Planning can be daunting and may overlook the scale of issues or challenges. It is always wise to invest in proper HR Tools that help you make accurate decisions. Technology markets are exploded with enumerable analytics tools that can solve your business needs. New and upgraded tools for talent management , performance management, learning, and development supports and caters to flexibility.

Final Thought

The future of Human Resource planning is quite complex thanks to globalization and greater emphasis on outsourcing and offshoring. The companies have to be agile in responding to changing market trends and this is only possible through sound HR planning that can lessen the impact of change. In the end, as we understand, data-driven decision making in the future is as critical as other business functions. ROI is essential and can be secured through a strong Human Resource Plan based on an analytical viewpoint.

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Human Resource Planning Process FAQ

What is human resource planning process.

The human resource planning process is a way for businesses to channelize their workplace people according to a defined policy for better business management.

What are the three major types of HR planning?

Three major types of HR Planning are tactical, operational and strategic planning.

Is it really difficult to do human resource planning?

Hr planning is not difficult if you have a good team of HR in your business. You just need to streamline your people with the policies which can keep the workflows of the business smooth, acceptable, adaptable and transparent.

Jyoti Kapoor

Jyoti Kapoor

Astute Human Resource Professional with 13 years of experience and a strong focus on details.Sound exposure to Talent Management, Performance Appraisal, Employee Engagement, Rewards, and Recognition & Research

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Strategic human resource management: The ultimate guide

Brynne Conroy

Alana Rudder

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“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.

Published 7:34 a.m. UTC Dec. 13, 2023

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Strategic human resource (HR) management treats human capital — or employees — as another financial asset of the company. Just like you’d consider real estate or raw materials as an asset to be optimized, strategic HR does the same for the company’s labor force. The more effective your strategic human resources plan is, the stronger the company will be both financially and culturally. 

Considering a strategic approach to HR management is increasingly important in our changing world. Creating a strategic human resource management plan can ensure you have a pipeline to qualified employees as time goes on, ensuring the sustainability of the business.

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What is strategic human resource management?

A good way to think of human resources is on an input/output paradigm. Traditional human resources weigh inputs more heavily. You’re focused on following compliance standards, regulations and processes. You’re managing benefits packages, running payroll , hiring and managing talent as well as day-to-day employee relations .

“Strategic HR focuses on supporting organizational goals,” said Anette Harris, owner and senior director of human resources at Harris Financial Coaching. “It plays a crucial role in analyzing employee life-cycle trends that can help an organization achieve its objectives.”

In other words, you’re much more focused on output. You’re looking at metrics like employee engagement and profit per employee. You still have to consider employment law, but you’re also aligning the company’s missions and objectives with what’s happening in the HR office and the company’s long-term goals. 

Benefits of strategic human resource management

There are a number of benefits to implementing strategic human resource management. They include: 

  • More quantifiable data. You can’t measure the impact of strategic HR unless you actually implement it. Once you start implementing it, you can gather the data that will help you measure the tangible benefits of the company’s strategies in terms of real dollars. As more time goes on and more data is gathered, you’ll gain even deeper insights.
  • Better the company’s finances. “Any financial measure that you can think of is greatly impacted to the positive when there’s a strong employee experience in place,” said Jim Link, chief human resource officer at SHRM. That means implementing strategic HR can help your company’s bottom line. 
  • Less turnover. If you have good strategic HR, your employees are likely to be happier. Happier employees are more likely to stick with you, saving you the costs of having to hire and train new employees. 
  • Prepare for future skill gaps. If you’re approaching HR strategically, you’ll be able to project future skill gaps that may pop up in the labor market. When you anticipate these shortages, you can draft policies that create a clear pipeline to get skilled applicants trained for the work you’ll need done.

Creating an effective HR strategy

Align hr and company goals.

The first step in creating an effective HR strategy is aligning HR’s goals with the larger company’s goals. If management and HR don’t interact a lot currently, it’s the strategic human resource manager’s job to bridge that gap. You’ll need your HR skills to mediate the two departments at first, but you’ll also need to break out your math skills. 

“The first thing you should do is learn the numbers of the business,” said Link. “But that doesn’t mean you just learn the numbers. You also learn the mission, values, goals and guiding principles of the organization.” 

Having this data will help you identify the most important metrics to measure as you create the best employee experience possible within the company’s budget. 

Define and assess company culture

It takes time to build company culture. Before you can start on the journey, you need to understand where company culture currently stands. The four key cultures you should assess are:

  • Collaboration

Link conveys these four cultures as individual legs on a four-legged stool. When one leg is longer or shorter than the others, everything is thrown off balance. The goal, then, is to grow each culture symbiotically with the other. As you build your stool, you’ll also want to consider cultures employees are likely to value in the future.

“When we look at the world and what employees are really seeking from their employer moving forward, they’re seeking a culture of care,” said Link.

Track important HR metrics

When you’re building out your company’s strategic human resource plan, you’ll want to start measuring metrics like: 

  • Cost per employee.
  • Revenue per employee. 
  • Employee productivity.
  • Employee engagement.
  • Retention rate.
  • Voluntary turnover rate. 

Some of these metrics can be measured by numerical data input, but others will require different approaches. For example, you might use employee surveys to gather data for a final SWOT analysis. This data can then help you present information to management or the board as you attempt to implement new policies.

Identify key areas of improvement

Once you have the data from current performance, hold it up against the company’s mission statement, stated values and – of course – its bottom line. First, evaluate company culture based on the four-legged stool model. If there are any areas where the culture could be performing better, that’s something you’ll want to address. 

Whether or not the culture is on course, you’ll need to also consider the financials before presenting any information across departments. Let’s say your employees are beyond happy and productive, but profit per employee is still low. You’d then use that data to find innovative ways to maintain company culture while also increasing revenue per employee. 

Set a plan to reach HR goals

After you’ve identified areas for improvement, you’ll need to get together a plan to work towards your new goals. That may mean implementing new initiatives within HR, but in most situations, it requires the involvement of other departments — most notably leadership. 

Get leadership buy-in and support

Improving employee experience and performance often requires policies from the top. That means strategic human resource managers need to engage leadership. You may need their stamp of approval to do something like changing the employee benefit package or streamlining processes in a particular department to enable employees to do their work more efficiently. 

If you’ve done your work on the numbers side of things, Link doesn’t see any reason for leadership to stand in opposition: “Companies that make a purposeful strategic investment in their employees have a much greater likelihood of generating short- and long-term success for the business. Full stop.”

Execute, monitor and adjust your plan

Once you’ve created buy-in with the necessary parties, execute your plan. Gather data as you go so you can monitor your progress, making any adjustments as necessary. 

Remember that as you grow one leg of your strategic HR stool, you’ll inherently need to work on the others. Being prepared to make adjustments along the way is a necessary part of the job.

Frequently asked questions (FAQs)

Strategic HR focuses more on outputs than inputs. It measures factors like employee performance, productivity, profit and retention against short and long-term company goals. All of these metrics are key indicators for either the success or failure of a business.

Traditional HR focuses primarily on compliance and regulations, handling day-to-day tasks like employee interactions and payroll . It considers federal, state and local employment law (inputs). Strategic HR focuses on the net financial impact employee policies have on the company (output) over the long-term and if they help the company meet its goals.

If your company isn’t agile, it’s going to be difficult to implement strategic HR — though the key factor is getting leadership buy-in. While it may initially be challenging to get managers or ownership on board with your vision, if you do ample research on current performance and projected profit margins after policy implementation, it gets a lot easier to convince leadership to implement changes.

Let’s say your organization knows it’s going to need employees capable of working with AI in the next five years. With that human resource need in mind, you may implement a training program or develop a relationship with a local college to identify talented graduates. That way, the company’s strategic plan is sustainable in the long run, as it won’t run into as many labor shortages.

Link says two of the best examples of successful strategic human resource management are IBM and Google. 

“IBM was ahead of the curve,” he said. “They focused on the area between human performance and capability vs. business outcomes. Because they’re so insightful about what their employees need, they can very quickly offer a personalized approach to each and every employee through their career coaching system, fostering a culture of learning which creates new business opportunities.”

Google is known for its strategic efforts during the hiring process in particular. On top of unique perks in its benefits package, Google makes group decisions when onboarding new members rather than leaving the decision to a single manager. This fosters a culture of collaboration even within the HR department itself.

Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.

Blueprint has an advertiser disclosure policy . The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.

Brynne Conroy

Brynne Conroy has over 12 years of experience writing about money, with a particular focus on women's finances and small business lending and credit products. Her debut book was an Amazon #1 New Release across multiple categories, and she has been awarded a PEN America grant for the body of her work in the field. Find her bylines on LendingTree, Her Agenda, GoBankingRates, and Business Insider, and features on MSN Money, Jean Chatzky's HerMoney, and Yahoo Finance.

Alana is the deputy editor for USA Today Blueprint's small business team. She has served as a technology and marketing SME for countless businesses, from startups to leading tech firms — including Adobe and Workfusion. She has zealously shared her expertise with small businesses — including via Forbes Advisor and Fit Small Business — to help them compete for market share. She covers technologies pertaining to payroll and payment processing, online security, customer relationship management, accounting, human resources, marketing, project management, resource planning, customer data management and how small businesses can use process automation, AI and ML to more easily meet their goals. Alana has an MBA from Excelsior University.

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A complete guide to effective HR strategy planning (& a free template!)

human resource planning in a business

Businesses are beginning to recognize the strategic value of human resources. In fact, our State of People Enablement Report found that 79% of people ops leaders felt their C-suite saw them as important.* They no longer viewed HR as an administrative or supportive department, but as vital to the organization’s success.

As the role people teams play expands and grows in importance, taking a more systematic, data-driven approach is essential. Effective, intentional strategies ensure your human resources department stays aligned with overarching company goals while positively impacting the employee experience and making your organization a truly enjoyable place to work.

To that end, this article covers the essential steps you need to take for successful HR strategy planning. We’ve also included a best practice HR strategy template you can customize or use as inspiration for your own team.

* Leapsome’s State of People Enablement Report , 2023 ‍

🤿 Dive right into HR strategy development Our customizable HR strategy template includes all the essential stages and action points you need to structure and flesh out your ideas. 👉 Download template here

What is an HR strategy & why does it matter?

An HR strategy is a comprehensive plan that aligns team management with organizational goals. By integrating the two, companies can ensure that they recruit and retain the right talent to keep their initiatives and long-term objectives on track.

However, an HR strategy goes beyond hiring and keeping positions filled — it can help you engage, empower, and develop employees in a way that supports sustainable growth and fosters a positive work environment. 

When human resources plays a more strategic role, the company can also take a more proactive stance in its industry and build workplace resilience . People teams can forecast staffing needs and spot potential gaps and issues before they escalate into larger problems. For instance, you might anticipate turnover and escalate or adjust hiring efforts instead of scrambling to bring people on board as team members leave. ‍

💭 “In the future of HR, the People function continues to be a strategic partner to the business that is highly integrated into company performance and no longer seen as just a support and administrative function. Well-supported People functions and teams will result in better business results, deeper engagement, high employee enablement, and happy customers.” ‍ — Luck Dookchitra , VP People at Leapsome

Last, remember that while HR managers may take the lead, the best strategies are a collaborative effort between leaders, team leads, and team members. Including stakeholders from every area of your business gives you a more holistic perspective, ensuring that your plan will benefit the entire company. ‍

Free download: Our actionable HR strategy template

Screenshot of the first page of Leapsome’s HR strategy plan template

Human resources strategies aren’t one-size-fits-all. It’s best to tailor them to your company’s unique needs, goals, and culture rather than adopting a generic blueprint.

That said, having a detailed template can provide you with a structure and save you time on planning. You can check that you haven’t missed any essential steps and customize the strategy to suit your context. 

That’s why we’ve provided this free, downloadable template based on Leapsome’s own strategies and values. ‍

🏆 Create a winning HR strategy Streamline your HR planning processes with our comprehensive template that covers every step and checkpoint.  👉 Download template here

8 steps to creating an effective HR strategy plan

Whether you’re working off a template or starting from scratch, there are some essential steps that should go into the development of any great human resources strategy. Here’s everything you need to consider at each stage. ‍

1. Establish your HR strategy’s aims

Setting clear goals is essential as they will guide all the future decisions you make about your HR strategy. This step involves understanding your organization’s broad objectives and determining how you can support them, ensuring your plan contributes directly to the company’s aspirations and long-term success.

For example, your leadership team might clarify that their long-term objective is to enter the European market and establish a strong presence within the next two years. HR and the C-suite could collaboratively decide on the following aims:

  • Hire 80% of the team for the new branch locally
  • Relocate the remaining 20% of team members from existing branches

Speaking to other departments allows you to assess where your interests align and how you can support each other most effectively. In the example, HR might work alongside legal and accounting to find potential regulatory roadblocks to hiring in Europe.

When you’re developing cross-departmental aims and sharing them across the organization, tracking them can be challenging. Using goal-setting software like Leapsome allows you to establish complex objectives and track your progress toward them. Choose a platform that accommodates various methodologies, such as OKRs and SMART goals , so you can easily tailor your workflow to your company’s needs and preferences.

A screenshot of Leapsome’s goal management feature with progress bars.

2. Review your industry

Staying up-to-date with industry happenings is essential to keeping your HR strategy relevant and competitive. You need to research the current state of recruitment, retention, and team management to understand what’s realistic before you develop any plans.

Going back to the example in step one, imagine you’re investigating the current European job market. You discover that there’s a talent shortage in your industry, which means that you may struggle to hire locally.

Look at official sites like Eurostat , the International Labor Organization (ILO), and the US Bureau of Labor Statistics (BLS) for the most recent information. HR thought leaders such as SHRM and the Harvard Business Review also report on job market trends.

Evaluating your position within the market can give you extra insights into developing a realistic strategy. You can see where you need to improve, where you already shine, and where competitors outmatch you. For instance, while looking into European expansion, you may notice that another company already has a strong foothold in the job market.

During your research, see where you can update your current HR tools and resources to support your strategizing. People enablement platforms like Leapsome can automate time-consuming parts of your workflow, such as distributing surveys, data collection, and scheduling meetings, so you can prioritize the planning itself. Automation also has the power to make you more adaptive to changes during the strategizing process — 63% of companies said it helped them to pivot. ‍

3. Analyze & check in with your team

Consider your team’s composition to evaluate the talent you’ve got and look for gaps. You might look into:

  • Employee demographics
  • Tenure and experience levels
  • Job performance
  • Salary and benefits

Let’s say you’re considering which team members would be ideal candidates to relocate to your new European branches. You might note that a high percentage of the team are digital nomads who are highly likely to be interested in traveling and living abroad.

To conduct an effective analysis, you need to go deeper than superficial numbers to uncover your team’s needs and wants. Running engagement surveys can help you measure employee sentiment about upcoming company initiatives. Use a flexible tool like Leapsome’s Surveys module so you can come up with questions that are specific to your organizational goals and strategy or customize a ready-to-implement template. Setting up an anonymous suggestion box also creates a space where employees can share concerns that you haven’t covered in your survey.

To keep employees at the forefront of your initiatives, use their feedback to create action points for your strategy. For example, you might discover that team members would be willing to relocate to head an expansion abroad if it meant they were getting a promotion. Tools like Leapsome’s AI-powered sentiment analysis can help you summarize written responses while our post-survey action plans can analyze them to give you quick suggestions. 

A screenshot of Leapsome’s action plan tool within the Survey module.

🎯 Put employees at the center of every plan Our engagement surveys can help you uncover your team’s concerns and align your strategies with their best interests. 👉 Learn more

4. Consider development opportunities 

Now that you’ve got a better understanding of your current team, see whether your company has the skills and expertise it needs to meet its objectives in-house. If not, determine how quickly you can fill any gaps through learning and development initiatives.

Start by conducting a skills gap analysis to compare the talent you need against your team’s current capabilities. Visualizing the knowledge and expertise you need for your company initiatives on a competency framework can help you spot areas for development. You’ll also see how many steps employees need to take to reach an optimal skill level. Leapsome’s AI-powered competency framework can help you get started — just input your department name, number of competencies, and number of levels to generate a framework in minutes.

A screenshot of Leapsome’s Competency Framework feature

Let’s say that you’re looking for employees to manage payroll for new branches in the United Kingdom. While no one in the existing accounting department is familiar with British regulations, one person has experience in international finance.

Once you’ve got a clearer idea of your talent needs, explore how effectively you can meet them by developing existing team members. For instance, you might:

  • Ask managers to hold career development talks and report on which team members would be open to learning new, critical skills.
  • Assess your current learning and development programs to see if you can adjust them to include the desired expertise.
  • Research which training courses on the market cover the competencies you need.
  • Explore the possibility of creating personalized courses to equip team members with the specific skills they need.

A screenshot of the learning pathways feature in Leapsome’s Learning module.

5. Explore pathways for career progression

As you develop your HR strategy, decide how roles should change to align with organizational goals and employee needs. You may need to create new positions if your current team structure doesn’t support your plans, especially if you’re growing or expanding.

Again, a competency or career progression framework could help you determine which employees can be upskilled or are ready to move into the positions you need. Leapsome’s Compensation and Reviews modules could save you time here by providing you with relevant data on all your internal candidates. You can also use the platform to collaborate with each employee’s team lead to make informed, well-rounded decisions.

For example, your company might need a sales manager to head a new branch in another country. After looking at your employee data, you might identify a salesperson who’s got experience heading a team, and a quick chat with their team lead may reveal that they’re eager to advance professionally. You can then see how to support them and upskill them to move into the new role.  ‍

6. Examine recruitment & turnover

Hiring and retention are often at the heart of human resources initiatives. For example, reducing turnover can help businesses maintain a knowledgeable and experienced team while they launch new ventures. A stable team is also vital to protecting employee well-being and company culture during changes. When colleagues are constantly coming and going, surveys show that team members are up to 25% more likely to resign .

Using the following steps, you can get clarity into how hiring and retention may play into your HR strategy:

  • Measure your recruitment and turnover levels
  • Filter the results by department and role
  • Benchmark your results against the industry standard
  • Review reasons for job offer rejections and resignations
  • Consider whether you can expect these numbers to change
  • Estimate how many positions you’ll need to fill

A people analytics tool like Leapsome can help you implement many of these steps. Our platform not only collects and analyzes your HR data, but gives you AI-driven actionable insights . For instance, Leapsome can sort your information to indicate the biggest impact drivers and filter out less relevant details. You can also benchmark this data against competitors and use predictive analysis to uncover future trends in turnover.

Ultimately, you can see how to solve potential turnover issues at the same time as you discover them, saving valuable time. ‍

7. Design HR initiatives & strategies

Now, you should be ready to translate all the aims and the insights you’ve collected into actionable steps. Write objectives that relate to both the overarching business goals and your team’s needs. If you’re using a cascading goal framework like OKRs, you can tie them directly to each of your company’s aims. 

If you find the OKR methodology tricky to implement correctly, consider using Leapsome’s AI-powered OKR generation feature: Simply provide a descriptive objective as a prompt, and allow the AI tool to generate key results and initiatives tailored to your overall goal. You can then refine your choices from the generated list by selecting the most suitable key results, and include relevant and realistic deadlines and metrics for your organization.

Let’s return to our example of the organization that’s looking to expand abroad. You might establish the following objectives and key results:

Company-level

  • Objective: We operate in the EU within the next two years to diversify our market presence and increase our resilience. 
  • Key result: We have five teams of 750 local hires and 250 relocated employees working across offices in London, Paris, Berlin, Madrid, and Rome.
  • Objective: We have full teams with the best skills, experience, and culture add to run our European offices to ensure the success of our expansion.   ‍
  • Key result: There are ten managers from our existing offices working in our new European ones who have successfully undergone our relocation program.  ‍
  • ‍ Initiative: We arrange meetings to discuss career opportunities with the top 30 candidates.

Any key results should be measurable so you can track your progress and see whether you’re staying on course. For instance, the metrics in the examples above are the number of people hired and successful relocations.

Once you’ve written your objectives, finalize them with leadership, department heads, and employee representatives. You’ll need to double-check that everyone is aligned on the strategy. Returning to our example, perhaps the C-suite has agreed that ten managers can relocate and employees are on board, but department heads fear that it’ll leave them short-staffed. It’s essential to address these concerns: In this instance, you could consider implementing a transitional plan that outlines how the company will manage workload and resources during the relocation period. ‍

8. Monitor progress & review 

Your HR strategy plan doesn’t end with implementation — you need to decide how you’ll monitor how it’s going and potentially adjust your approach as your needs change and evolve. ‍

💭 “We’ve emphasized continuous improvement since our first HR strategy. Our approaches evolved as we gained insights from experiences and integrated more comprehensive training and development programs. We also honed our communication channels: Fostering transparent dialogues with staff proved essential in understanding their changing needs. By adopting the right technology, we’ve made HR processes more efficient and user-friendly. Our HR strategies have ensured we attract the right individuals who align with our company ethos and contribute meaningfully to our mission. We’ve seen significant benefits: increased productivity, improved teamwork, and a notable boost in our quality of service.” — Sarah Jeffries, Managing Director, First Aid Course Leicester

Using data analytics, you can continue to observe trends in:

  • Recruitment and retention
  • Onboarding, training, and development
  • Engagement levels
  • Punctuality and absenteeism

Looking at the data, you can determine whether you’re seeing the expected results. For example, if you’re expanding your organization abroad, you should see changes in recruitment levels and employee demographics. You might be interested in investigating your onboarding times if you’re hiring a lot of candidates to check that training is running smoothly.

You can also use the data to evaluate how well your company has managed the changes. Retention and engagement levels are often telltale signs — if the initiatives have improved job satisfaction, you can expect an increase in both.

A screenshot of Leapsome’s data analytics tool.

You can run surveys to get a clearer idea of employee responses toward the initiatives. When you’re managing hundreds of people over different locations, reading every answer won’t be feasible. Instead, turn answers to Likert and multiple choice questions into data to gauge your team’s overall sentiment using data analytics.

If you ask open-ended questions, you could use a tool like Leapsome’s AI survey comment summaries . Our Natural Language Processor interprets qualitative survey results to give you a deep analysis of written responses.

Screenshot of Leapsome’s AI survey comment summaries

How Leapsome enables HR professionals

A screenshot of the goal analytics tool within Leapsome’s Goals module.

‍ Human resource teams should be a vital part of any business’s big-picture strategies. With their input, organizations can strike an ideal balance between working toward ambitious company objectives and supporting team members.

To enable HR professionals to thrive as they take on more strategic roles within your organization, you need the right tools. Our people enablement platform is ideal for creating HR plans that are tailored to your specific business needs. We allow you to manage:

  • Company-wide goals and OKRs
  • Employee feedback and surveys
  • Career advancement processes
  • Onboarding, learning, and development
  • People analytics

With Leapsome, you can easily collaborate on any human resources strategy and get data-driven insights to make the best possible decisions for your organization’s future.  ‍

🖼️ Focus on the big picture, not the fine print Leapsome automates data collection, survey distribution, and review cycles so you’re free to strategize. 👉 Book a demo

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Human Resource Planning: Definition, Factors, Process, Barriers

Human Resource Planning: Definition, Factors, Process, Barriers

Human resource planning is when organizations determine the staffing support they need to meet business needs and customer demands.

Panning is the most important and primary function of management . It is a process of selecting the organizational objectives and taking actions to achieve those objectives. Planning must be realistic and workable.

Let’s understand human resource planning;

Meaning of Human Resource Planning

The planning of human resources is a major managerial responsibility. It is important because human resources provide a firm with a competitive advantage . In the age of competition, firms are focusing their attention on employee knowledge and skills.

Human resources are going to occupy the central stage of human activities, especially in industry and business. Given its importance in organizational effectiveness, separate HRP departments have been set up in most important business organizations.

Certainly, many organizations have voiced the idea that their human resources differentiated them from their competitors.

The significance of human resources as a core competency was confirmed in a study of 293 U.S. firms. The study found that HR management effectiveness positively affected organizational productivity , financial performance, and stock value.

Definition of Human Resource Planning.

Human resource planning is the major task of HRM because it is concerned with utilizing human resources. An organization does not own a person as it does capital and physical assets; this HR resource is seldom given proper attention.

Many managers have failed because they have taken their human resources for granted. It is one of the most critical management undertakings of this decade.

Various factors affect HR planning, such as retirements and transitions, the availability of employees with certain skill sets, and changes in the environment.

Some popular definitions of HRP are given below.

Robbins (2001) defines HRP as “the process by which an organization ensures that it has the right number and kinds of people at the right places, at the right time, capable of effectively and efficiently completing those tasks that will help the fulfill organization’s overall objectives.”

In the words of Coleman Bruce (1997), HRP is the process of determining human resources requirements and meeting those requirements to carry out the integrated plan of the organization.

Thus HRP translates the organization’s objectives and plans into the number of people needed to meet those activities. Through planning, management balances demand for and supply of the right number and kinds of people at the right time. It is a supply and demand calculation.

Human resource is an asset; it is an asset that appreciates and grows over time (Evanceivich, 1999). Machines, on the other hand, depreciate as time goes on.

According to the above definitions, HRP consists of the following elements:

  • Establishing and recognizing future job requirements,
  • Identifying deficiency in terms of quantity,
  • Identifying deficiency in terms of quality and specification,
  • Identifying the sources of the right type of man,
  • Developing the available workforce, and
  • Ensuring the effective utilization of the workforce.

8 Characteristics of Human Resource Planning

Future-oriented, continuous process, optimum utilization of human resources, right kinds and numbers, determination of demand and supply, environmental influence, related to corporate plan, a part of the human resource management system.

Human resource planning is prepared to assess the future requirement of the workforce in the organization. It helps identify the size and composition of resources for future purposes.

Human resource planning is a continuous process. The human resource planning prepared today may not be applicable for the future due to the ever-changing external forces of the environment .

Hence, to address such changing factors, human resource planning needs to be revised and updated continuously.

Human resource planning focuses on optimum utilization of resources in the organization. It checks how employees are utilized productively. It also identifies employees’ existing capabilities and future potentialities to perform the work.

Human resource planning determines the right number and kind of people at the right time and right place who can perform the required jobs. It also assesses the future requirement of human resources for the organizational objective.

Human resource planning is determining the demand for and supply of human resources in the organization. Then a match between demand and supply estimates the optimum level of human resources.

Environmental changes influence human resource planning; hence, it is updated as per the change occupied in the external environment.

Human resource planning is an integral part of the overall corporate plan of the organization. It can be formulated at strategic, tactical, and operational levels.

As a part of the total human resource management system, human resource planning is regarded as a component or element of HRM concerned with the acquisition and assessment of the workforce .

It serves as a foundation for the management of human resources effectively and efficiently.

10 Importance of Human Resource Planning

Human resource planning aims at fulfilling the objectives of the human resources requirement. It helps to mobilize the recruited resources for productive activities.

Human resource planning is an important process aiming to link business strategy and its operation. The importance of human resource planning is as follows:

  • Human resource planning determines the future needs of human resources in terms of number and kind.
  • Human resource planning is important to cope with the change associated with external environmental factors such as technological, political, socio-cultural, and economic forces.
  • Another purpose of HR planning is to recruit and select the most suitable personnel to fill job vacancies.
  • Human resource planning/human resources planning helps find out the surplus/ shortage of human resources.
  • It is helpful in employee development through various training and development campaigns to impart the required skill and ability in employees to perform the task efficiently and effectively.
  • It focuses on the optimum utilization of human resources to minimize the overall cost of production.
  • Another importance of human resource planning is that it reduces labor costs substantially by maintaining a balance between the demand for and supply of human resources.
  • An effective human resource plan provides multiple gains to the employee through promotions, increases in salary, and other fringe benefits. This boosts employee morale.
  • It is useful in finding out the deficiencies in the existing workforce and providing corrective training.
  • Another importance of human resource planning is the safety of health. It provides for the welfare, health, and safety of its employees, leading to an increase in employee productivity  in the long run.

In a word, Human resource planning is helpful in the overall planning process of the organization. It is essential for businesses because of the reasons shown above that have been elaborated very effectively.

10 Benefits of Human Resource Planning

Human Resource Planning has assumed importance in recent years for the following reasons;

Nature of Human Resources

Supply of skilled manpower, rapid technological change, costs of recruitment and hiring, increased mobility, reduction of wastage, human resources as corporate assets, size of the firm, profitability, management development.

The nature of human resources necessitates human resource planning. Human resources have four critical features.

  • First, for higher skills, a very long time is required for workers to achieve full productivity.
  • Second, a person generally achieves higher productivity the longer he is on the job.
  • Third, a person’s mental satisfaction affects his productivity.
  • Lastly, investment in human beings belongs to the individual who may take his skills where he goes.

Talented and skilled human resources have become scarce resources and are always in short supply. Human resources planning is necessary for the long-run survival of the business firm.

Jobs and job requirements are changing faster than in earlier periods. The pace of technological change has accelerated.

The direction of technological change has decreased jobs for unskilled workers but has increased the demand for new skills. Technological change makes re-training a must for many current jobholders.

Highly skilled personnel are in short supply, and it is very costly to hire and maintain them.

Recruitment and training costs, pensions, gratuity, provident funds, and other fringe benefits raise the costs of hiring a new worker. Higher recruitment costs encourage upgrading from within.

Increased mobility of human resources has created a problem for management to retain qualified employees. There is nothing to keep the worker from moving on when another job appears attractive.

As a result, individual employers face greater difficulties in holding preferred employees. Proper workforce planning will reduce the rate of turnover.

A proper workforce policy will reduce the wastage rate. It is also referred to as ‘ labor turnover ’ or ‘attrition rates.’ Wastage rate is determined in a variety of ways;

  • It is less among older employees,
  • It is less among longer-serving employees,
  • It is less among the more highly skilled because they are properly placed, and
  • It is less among men than women.

Staffing planning stresses the value of human resources as corporate assets.

Management has learned that if it neglects the individual, he is not likely to develop into the kind of performer that the firm wants.

Interest in human resources planning is increasing because the organization’s size is continually increasing .

Staffing planning helps the company have the workforce it needs to achieve its objectives and use its human resources to optimize employee satisfaction.

In a profit system, the basic motivation for human resources planning, like all other firm activities, would be its contribution to profitability.

Employee productivity is a major factor in profitability and has stimulated interest in the rationalization of work and incentive systems to motivate the worker.

Proper human resources planning can ensure the development of managers through proper training programs .

Requirements for Effective HRP Successful HR planning requires:

  • HR personnel understand the HR planning process,
  • Top management is supportive,
  • The communications between HR staff and line management are healthy,

The HR plan is integrated with the organization’s strategic business plan .

9 Purposes of Human Resource Planning

The general purpose of human resource planning has been described, but there are specific purposes in crucial areas of management that HR planning serves:

Determining recruitment needs

Determining training needs, management development, balancing the cost between the utilization of the plant and the workforce, industrial relations, consider future workforce, analyze current workforce, future preparation, evaluation process.

Let’s explain the 9 purposes of human resource planning.

An important prerequisite to recruitment is avoiding unexpected shortages, wastage, blockages in the promotion flow, and needless redundancies.

Planning training programs are critical . These programs improve not only quantity but also quality in terms of the skills required by the organization.

A succession of trained and experienced managers is essential to the organization’s effectiveness . And this depends on management development by providing accurate information about the present and future requirements in all management posts.

Cost balancing includes comparing costs between these two resources in different combinations and selecting the optimum. While costing projects, cost balancing plays an important role.

The business plan will, of necessity, make assumptions about human resource productivity. It will have an impact on the organization’s industrial relations strategies.

Organizations use strategic planning to achieve goals . This relates to the organization’s vision , mission , and strategic objectives . An organization must analyze its future employment needs.

If an organization decides it must increase productivity by 25 percent, it may need to grow its workforce by 2 percent. It must consider human resource requirements if an organization wants to increase market share by moving offices into new locations.

With future workforce needs to be considered, human resource planning must analyze the competency of the present workforce . Comparing future needs with current workforce strengths and abilities will identify gaps or surpluses.

Considering workforce surpluses and deficits, human resources must prepare action plans for the workforce.

This includes identifying the type and number of employees needed, employee competency, budget considerations , recruiting and retaining measures, and employee development and training .

Ensuring the future workforce is meeting objectives requires an evaluation process . This will determine if the workforce is adequate to satisfy strategic goals. Planning for this process now will more easily and quickly identify future workforce gaps or surpluses.

In practice, HR planning is concerned with the demand for and supply of labor and problems arising from reconciling these factors. Plans and decisions of any system follow the analyses of demand and supply.

9 Factors That Affect Human Resource Planning (Determinants)

Human resource planning can be defined as identifying the number of people required by an organization regarding quantity and quality.

All human resource management activities start with human resource planning. So we can say that human resource planning is the primary activity of human resource management.

A manager should consider the following factors when he or she makes human resource planning:

Technical changes in society

Organizational changes, economic factors, social factors, technological factors, legal factors, environmental factors, labor market.

HRP is affected by the employment situation in a country. In countries with greater unemployment, there may be more pressure on the government to appoint more people.

For example, public sector enterprises are highly overstaffed in some countries, while few private enterprises are understaffed.

Similarly, some companies may have a shortage of skilled labor and may have to appoint people from other companies.

Technology changes quickly, and new people having the required knowledge are required for the company.

In some cases, the company may retain existing employees and teach them new technology; in some cases, the company has to dismiss existing people and appoint fresh ones.

Changes take place within the organization from time to time.

For example, a company may diversify into new products or close down businesses in some areas. In such cases, a company may hire or dismiss people according to the situation.

The most immediate concern in human resource planning is how much money is available for salaries, training, and equipment.

However, external economics plays an equally critical role.

For example, people do not have much money to spend in an economic recession and tend to be much more selective in what they buy or the services they use.

This means some industries, such as those producing luxury items or non-essential services, sell less and may even have to lay off some staff.

This, in turn, makes the local economy even more difficult.

Social factors may influence the organization’s HR planning. There is a clear discrepancy between one social group. It’s a good idea to build in ways of opening up new opportunities.

New technology brings new skill requirements, so companies must always be aware of proficiencies and training needs when planning human resources.

New products and services also may require recruiting highly skilled employees or training existing employees to meet the need.

Employment law is the most significant sector of the legal system that affects human resource planning, and it changes all the time.

HR managers must keep themselves up to date and have an employment law specialist available to consult if necessary. Employment law changes must be reflected in company policy.

Environmental factors might include where the business is located, finding appropriate staff, or changes to the environment that mean a need for more or fewer employees.

A simple example of environmental factors affecting human resource planning is the consideration of how the employees get to work safely during extreme weather; the Firm’s plan may need to include the possibility of telecommuting to keep everything going.

The labor market comprises people with skills and abilities that can be tapped when needed. Although in many 3rd countries with surplus labor, there is a shortage of skilled people. We should take measures to make more skilled workers available in the country.

When one talks about labor supply, the following deserve due consideration: the size, age, gender, and educational composition of the population, the demand for goods and services in the country, the nature of production technology, and the employability of the people.

5 Stages of Human Resource Planning

1. first stage.

The first stage of human resources planning is integrating it with corporate planning. All human resources plans stem from business plans to a corporate strategy . There are mainly three types of business plans:

  • Plans to change the level of activity,
  • Plans to change the nature of the activity, and
  • Plans to change the organization of activity.

2. Second Stage

The second stage in HR planning is to forecast or assess the gross human resources requirements anticipate the company’s future program , and translate these into talent and skill requirements.

Most companies plan for the future growth of the business.

The workforce forecast is concerned with anticipating the number of replacements required due to;

  • resignations,
  • retirements,
  • dismissals,
  • transfers , and
  • promotions.

Determining the company’s staffing requirements involves two projections for each functional area;

  • The incremental number of positions needed as a result of growth, and
  • The number of vacancies created by retirements and terminations.

3. Third Stage

The third stage is to develop a phased program for recruitment and training. The phasing has to be related to the phasing of the construction and operation of the various units of a plant.

People must be provided with opportunities to develop themselves. People change jobs for definite reasons such as higher pay packet, better chances of promotion , or better job satisfaction .

Generally, the right types of people are attracted to firms that offer opportunities for development to the individual.

4. Fourth Stage

The fourth stage of human resources planning is concerned with allocating human resources within an organization over time – in other words, assigning individuals to jobs that are appropriate to their talents and needs and the organization’s requirements.

Once an individual is on the job, he can be developed. He may be rewarded for good performance as an incentive for future good performance and development.

5. Fifth Stage

The last stage of human resources planning is to locate the sources from where personnel required will be available. Broadly the sources can be divided into two:

  • recruitment from outside and
  • recruitment from within the organization.

Organizations can hire personnel from internal and external sources. The skill inventories method is one of the techniques used to keep track of internal supply. Skill inventories are manual or computerized systems that keep records of employee experience, education, and special skills.

A forecast of the supply of employees projected to join the organization from outside sources, given current recruitment activities, is also necessary.

7 Steps of HR Planning Process

Human resource planning is a process through which the company anticipates future business and environmental forces. Human resource planning assesses the human resources required for a future period. It attempts to provide sufficient staffing required to perform organizational activities.

HR planning is a continuous process that starts with identifying HR objectives, moving through analysis of workforce resources, and ends at the appraisal of HR planning.

Following are the major steps involved in human resource planning:

Integration of HR planning with corporate planning

Assessment of environmental factors, assessment of human resources, demand forecasting, supply forecasting, matching demand and supply, action plan.

The HR planning process begins with considering organizational objectives and strategies. The first stage of HR planning is to integrate it with corporate planning. All staffing planning stems from business plans with a corporate strategy.

The second stage in HR planning is to forecast or assess the internal and external environmental factors that affect the demand and supply of labor.

Some of the most significant environmental factors are government influences, economic environment, geographic and competitive conditions, technological factors, workforce composition, management philosophy, and work patterns. There are several techniques now available for doing HR forecasts.

The most important techniques, among others, are the Delphi technique , Brain Storming, Nominal technique, Committee Board, Expert opinion, Consultancy, Trend analysis, Regression, and Correlation Analysis.

The assessment of HR begins with environmental analysis, under which the external and internal (objectives, resources, and structure are analyzed to assess the currently available HR inventory level.

After the analysis of the external and internal forces of the organization, it will be easier for an HR manager to find out the internal strengths and weaknesses of the organization on the one hand and opportunities and threats on the other.

Moreover, it includes an inventory of the workers and skills already available within the organization.

HR forecasting is the process of estimating the demand for and supply of HR in an organization.

Demand forecasting is a process of determining future needs for HR in terms of quantity and quality. It is done to meet the future personnel requirements of the organization to achieve the desired level of output.

Future human resource needs can be estimated with the help of the organization’s current human resource situation and analysis of organizational plans and procedures. It will be necessary to perform a year-by-year analysis for every significant level and type.

Forecasts of demand may be either judgmental or mathematical. The HR forecast is concerned with anticipating the number of replacements required due to resignations, retirements, death, dismissals, transfer and promotions , and technological changes resulting in increased productivity.

This highlights shortage and overstaffs positions.

Supply is another side of human resource assessment.

It is concerned with estimating the supply of workforce given the analysis of current resources and future availability of the human resource in the organization. It estimates the future sources of HR that are likely to be available from within and outside the organization.

The internal source includes promotion, transfer, job enlargement, and enrichment, whereas the external source includes recruiting fresh candidates capable of performing well in the organization.

It is another step of human resource planning. It is concerned with bringing the forecast of future demand and supply of HR.

The matching process refers to bring demand and supply in an equilibrium position so that shortages and overstaffing positions will be solved. In case of shortages, an organization has to hire the more required number of employees.

Conversely, in the case of overstaffing, it has to reduce the level of existing employment. Hence, it is concluded that this matching process gives knowledge about requirements and sources of HR.

It is the last phase of human resource planning, which is concerned with a surplus and shortages of human resources. Under it, the HR plan is executed by designing different HR activities.

The major activities required to execute the HR plan are recruitment, selection, placement, training, development, socialization, etc.

Finally, this step is followed by control and evaluation of the performance of HR to check whether the HR planning matches the HR objectives and policies.

This action plan should be updated according to change in time and condition. HRP is concerned with the allocation of human resources within an organization over time.

Human resource planning is the process of determining its human resource needs and optimum use of an organization’s human resources.

Human resource planning is one of the most important elements in a successful human resource management program.

Because it is a process by which an organization ensures that it has the right number and kinds of people, at the right place, at the right time, capable of effectively and efficiently completing those tasks that will help the organization to achieve its overall strategic objectives.

Human resources planning then ultimately translates the organization’s overall goals into the number and types of workers needed to achieve those goals.

Without clear-cut planning and a direct linkage to the organization’s strategic direction, estimating an organization’s human resource needs is reduced to mere guesswork. This means that human resource planning cannot exist in isolation. It must be linked to the organization’s overall strategy.

So for achieving optimum use of an organization’s human resources, a systematic process of human resource planning is essential.

Following our deep dive into human resource planning; use our total guide on human resource management .

  • Job Promotion: Meaning, Types of Job Promotion
  • Career Planning: Process, Benefits, Limitations
  • Employment Tests: Meaning, 10 Types of Employment Tests
  • Techniques for Forecasting of Human Resources
  • Performance Evaluation: Definition, Steps, Methods
  • 11 Competitive Advantage In HRM
  • How to Measure HR Effectiveness [12 Tools HR Experts Use]
  • Creative Compensation: Non-Monetary, Non-Traditional Compensation
  • Human Resource Management: Meaning, Evolution, Objectives, Philosophy
  • Training and Development: Similarities & Differences in HRM
  • 11 Principles of Human Resource Management
  • Functions of Human Resource Management
  • Job Analysis: Meaning, Importance, Components, Methods, Process
  • Recruitment Process: 4 Steps of Recruiting Best Talents
  • 12 Features of Human Resource Management

human resource planning in a business

Human Resource Planning: Definition, Process And Examples

The term “human resources” encompasses everything to do with human capital in an organization. Most professionals interact with the HR…

Human Resource Planning Definition

The term “human resources” encompasses everything to do with human capital in an organization.

Most professionals interact with the HR department during a few phases of their careers:

  •   when they’re being hired and onboarded  
  •   when they’re having periodic performance assessments  
  •    when they quit  

But the role of the human resource department goes far beyond these functions.

Human resource planning is the systematic process of strategizing, implementing and evaluating decisions to maximize a workforce’s productivity. It’s critical to grow an organization efficiently and achieve its goals.

 Human Resources Planning Definition

 the human resource planning process,  effective human resource planning ,  hurdles to effective human resource planning, human resources planning definition.

Through HR planning, managers decide how resources are to be used for maximum productivity. Let’s break down the human resource planning definition :

  •   The human resource planning meaning is to ensure an organization’s personnel and human resources aren’t only productive but also working to the best of their ability
  •   From hiring the right people to laying them off when necessary to meet the needs of the business, human resource planning covers it all
  •   The human resource planning definition also includes factors that impact employee performance, recruitment, retention and succession planning

Human resources is a critical support function for any organization, large or small. While a small organization may not have a dedicated HR team, human resource planning will still be part of the portfolio of senior leadership.

The Human Resource Planning Process

In human resource planning examples , there are usually several processes involved in understanding an organization’s needs. Let’s inspect some of them:

Organizational Analysis

Organizational analysis is a method of investigating an organization’s state of affairs. The purpose of the analysis is to understand and improve an organization’s structure, processes and operations. In HR planning, organizational analysis is done to help managers identify the most effective ways of using current assets and employees.

Needs Assessment

The human resource planning definition includes needs assessment. This is analyzing how an organization can benefit from its workforce both currently and in the future. Any hiring needs, training requirements or downsizing issues will be addressed here.

Recruitment Planning

Recruitment is finding, selecting, training and integrating the employees so that the organization can achieve its business goals. HR planning includes a plan for how best to recruit new employees, how many new hires are needed in which functions and at what levels of experience. This will also include employee onboarding.

Training And Development

Employee training and development are processes used to upskill and enhance the existing talent. They can help improve employee performance, increase efficiency and promote job satisfaction. HR planning aims to train all employees, at both junior level and top management, to become more productive.

Performance Review

Performance review is an assessment of performance conducted by the supervisor, employer or even a peer of the individual, along with human resources. It’s conducted for all employees at regular intervals, most often annually, but it might also be at the end of a project. These reviews evaluate employee performance against targets and standards for quality, quantity and costs. Compensation planning for employees is also a part of this. It’s important to reward individuals according to their contribution and level, which will make employees feel valued and reward desired behavior.

Now that we know the human resource planning definition and the various components of the HR function, let’s look at how an organization can plan for these.

Human Resource Planning Examples

The HR department is successful when managers and employees work together to benefit the organization to the best of their ability. Planning is a key part of this process because it allows managers to assess current needs and decide what human resources will be necessary for the future. HR planning can be structured in several different ways. Here are three stages of drawing up and implementing an HR plan:

Strategic HR Plan

A strategic HR plan includes elements such as how many people are needed in a team and a vision of the roles and expertise necessary to achieve organizational goals. An organization can’t advance without the people to do the work in the most efficient manner possible. Thus, strategic HR plans also look at how employees in each department will contribute to the organization.

Operational HR Plan

An operational HR plan is a detailed plan that describes how an organization will execute its strategic HR plan. It describes the roles of each employee in an organization. Operational plans can also include succession planning and performance management systems, including career development, job analysis, job descriptions, standards of performance evaluations and manager training.

Process HR Plan

A process HR plan is where HR collaborates with all members of the business unit to establish workplace best practices. This might include input from employees, managers and leaders. This will provide the human resources team with the opportunity to evaluate existing systems and procedures in a workplace environment, develop ideas for change and build new best practices.

As per the human resource planning definition , there are a few kinds of planning that organizations undertake. There’s a place for both strategic planning and operational thinking in an organization. When implemented properly, they can have a transformative effect on an organization.

Effective Human Resource Planning

Proper HR planning can only take place with the support of the leadership. The human resource function can’t work in isolation. If the true human resource planning meaning is to be realized to the fullest by an organization, these are the benefits it unlocks:

  •   Human resource management deals with the recruitment, selection, training, compensation and development of employees; if these needs are being met, it’ll increase both productivity and profits
  •   HR planning helps create a more effective workforce through training and process, increasing productivity levels throughout the organization and reducing costs and waste
  •   A well-planned HR process can also increase the level of employee satisfaction, which will result in them displaying more productive behaviors that provide higher quality outputs and outcomes for the organization
  •   Retaining staff will further reduce the time and cost of recruitment, ensuring that it’s done with efficiency and effectiveness
  •   A well-implemented HR plan can make sure employees are properly trained to the necessary level before they’re integrated into the organization
  •   HR can also ensure efficient payroll costs
  •   Human resource planning can help anticipate future needs in an organization; if there’s a technological shift underway, it’ll hire people who can fulfill those roles, allowing the business to maintain its competitive edge  

The benefits of an organized, high-performing HR team are evident when we see how organizations that use this process consistently outperform organizations that don’t. As an organization grows, these processes become more complex but also more important.

Hurdles to Effective Human Resource Planning

We’ve seen from human resource planning examples how a good HR plan can help. But it can be a challenge for many organizations too. Here are the common hurdles organizations face with effective HR planning:

  •   As human resource planning involves evaluating the organization’s current needs, it can be a challenge for businesses experiencing rapid growth or shrinking market share; it can also be a challenge for new entrepreneurs who lack experience
  •  HR planning is an ongoing need that should be incorporated into other business processes of the organization to be truly effective to determine how best to manage the workforce, hire in a timely way and organize training as needed; this isn’t possible if the other departments are working in silos
  •  HR planning should consider employee diversity, as well as work goals and objectives; these efforts won’t succeed unless a mandate from leadership drives them
  •  Human resource planning meaning may be difficult to fulfill as it involves a complex network within organizations; there may be conflicts created by having two or more departments working toward the same goals, fighting over the same resources
  •  Not all hurdles are internal to an organization – there are also external hurdles to human resource planning. Some of these include:
  •   Recessions, which have a negative impact on the workforce, making effective HR planning difficult
  •   Continuous changes in technology that make hiring people with the right skills tough
  •   Unforeseen circumstances, such as sudden closures because of a pandemic or natural disasters

Human resource planning meaning is of vital importance to organizations hoping to gain or retain their competitive advantage. It’s important to ensure existing employees feel valued and have a chance to grow internally; else, they may feel left behind. Equally, new staff needs to be brought in at the right time, given the necessary training during onboarding and then integrated into teams. As we’ve seen in human resource planning examples , it’s challenging enough when it’s business as usual. With work-from-home mandates, there’s an added layer of complexity.

Effective human resource planning takes empathy. It’s a soft skill essential to being a good people manager. Harappa’s Lead With Empathy learning pathway takes every working professional on a journey to becoming a leader with the skills to navigate conflict and work in teams. Leaders of tomorrow will learn active listening, emotional intelligence and how to build trust with this transformative self-paced module.

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A comprehensive human resource planning guide

  • Human Resource Management

A comprehensive human resource planning guide

Steps for human resource planning.

  • Understand and analyze company objectives
  • Review the current environment
  • Forecast future demand
  • Identify gaps within the business
  • Develop a human resource action plan
  • Put the plan into play
  • Monitor and adjust the plan as necessary

A common thread in all businesses — regardless of industry, size, market, or geography — is change. It’s difficult to predict consumer and market trends, economic trends, employee sentiment, and customer behavior.

At the same time, businesses need to ensure they have the right people on their teams to meet whatever changes come their way. How is this possible? With effective human resource planning, businesses can anticipate their workforce needs and prepare for the challenges ahead.

Build professional HR forms and surveys for free with Jotform.

What is human resource planning?

Human resource planning, which is sometimes referred to as workforce planning, is a systematic process that organizations use to determine who they need on the team to reach their business goals.

This type of planning includes developing a hiring strategy, forecasting needs, planning for recruitment, providing training and development, and optimizing people’s unique talents and skills.

The purpose of human resource planning is to minimize workforce, talent, or skill-set shortages and surpluses. When done effectively, it enables businesses to navigate any internal and external changes that could affect their operations.

Human resource planning should be in sync with the overall organizational strategy and business goals. If there’s a disconnect, the HR department won’t be able to effectively contribute to furthering company objectives. That’s why human resource planning needs to take a long-term approach and get buy-in from the organization’s leaders.

Why is human resource planning important?

Businesses conduct human resource planning because the process helps organizations reach their overarching goals. Related advantages include

  • Preparing for future growth. Knowing how many staff you will need, when you’ll need them, and how much they will cost is a critical aspect of growing a business.
  • Adapting to external changes. Planning helps businesses quickly pivot to respond to economic, market, consumer, legal, compliance, and competitive shifts.
  • Meeting internal changes. Effective succession planning and career trajectory planning help the business prepare for any internal organizational shifts.
  • Reducing organizational risks. A systematic and strategic approach to hiring and developing people, as opposed to hiring on a whim or without a plan, mitigates certain risks for the organization.
  • Having the right skills. Planning ensures that organizations not only have the right number of people, but people with the specific skills they need to reach business goals.

Each organization should customize the steps involved in human resource planning to meet its individual needs. Industry, business size, customer segments, competitors, and other factors will all come into play, so you can’t follow the same approach as another organization. 

Here’s a general outline of the steps to follow when creating your plan.

1. Understand and analyze company objectives

As with any kind of strategic planning, the first step in human resource planning is to establish the short-term and long-term goals the organization wants to achieve. Typically, these plans begin by outlining the vision, mission, and core values of the business — the “why” of the company. This helps clearly set the stage for what everyone in the business is working toward.

Outline specific business goals that have been established at the leadership level. Examples of these goals include increasing revenue by a certain percentage or becoming a market leader in a certain category over a certain period of time. 

Having a clear set of measurable goals as part of the human resource plan provides a pathway for establishing which employees you’ll need to get the job done. For example, if one of the business’s goals is to increase sales of its enterprise product, then the business will likely need more people who have expertise in selling to enterprise customers.

In addition to the goals of the organization, other elements to consider during this first step include

  • Budget allocation. Determine what the HR budget will be for the next fiscal year or several years. You’ll fine-tune this estimate in later steps after you’ve identified your specific human resource needs, but you’ll need a ballpark figure to work from.
  • KPIs. Establish the key performance indicators for human resource management. How will the business measure success for your initiatives? This may include metrics for employee engagement, turnover, retention, employee sentiment, productivity, and cost per hire.
  • Strategic partners. Identify who internally or externally will be a key partner in helping HR reach its goals. For example, internally this could include certain department managers or an executive. Externally, it may include a recruitment firm that focuses on a specific career category.
  • Possible changes. Be sure to consider the likelihood that the long-term direction of the business may change. For example, if an executive leaves the company mid-year or if a competitor corners the market on a product, what will the future of the company look like?
  • Feedback from the field. Be sure to check in with the people on the ground. High-level strategy often doesn’t include feedback from employees, which can lead to potential problems down the line. Including employee feedback in your strategy and human resource planning can provide insights you may not otherwise have. 

2. Review the current environment

While the first step is to figure out where the business wants to go in the future, the second step is all about understanding where the business is in the present. In this stage of human resource planning, businesses need to conduct a detailed internal and external scan of their current environment and resources.

  • Organize employees by skill. Outline the number of employees the business has currently, organized by specific skill sets or expertise that bring value to the business. A bakery, for example, may categorize employees by the type of baked goods each person specializes in, like cakes, breads, and pastries. For a tech company, employees may be categorized by their department, such as development, QA, marketing, and sales.
  • Determine future potential. Understanding how employees can bring added value to the business is also critical. For example, if you invest in professional development for your employees, could they learn new skills and trades that can assist the business in reaching its goals? Is this preferable to hiring someone new who already has those skills?
  • Consider possible changes. Are many employees set to retire in the next three years? Are some employees going to be promoted in the next fiscal year? Factor in likely changes to your current workforce and how that will affect your human resource plan.
  • Look at supply and demand. Consider the labor market for the specific skill sets you’re looking for. Is there a shortage or surplus of those types of candidates in the market? Why? Is this likely to change soon?
  • Review labor trends. Are there any trends within the labor market or within recruitment that may affect your plan? For example, a new technology could change the way people work or could change the types of skills people need to do specific jobs.

3. Forecast future demand

Now that you understand where the business wants to go compared to where it currently is, it’s time to get specific about what it will take to reach your goals. In some cases, it may make sense for human resource plans to begin with this step. 

When forecasting future demand, keep the larger business goals of the company in mind, as well as the KPIs you’ve set for the HR department. Forecasting typically includes two separate elements:

  • Quantitative forecasting. This refers to the number of employees you’ll need to accomplish the business’s goals. To determine this, review the measurable business goals. For example, if your goal is a 30 percent increase in sales, based on your typical sales cycle and customer acquisition process, you may estimate that achieving this increase will require hiring three salespeople and two marketing managers. 
  • Qualitative forecasting. This refers to specific expertise and skill sets you need to accomplish the business’s goals. To determine the type of employees your business will need, consider the methods of achieving business goals. For example, the business may require employees with exceptional leadership skills or expertise in Python. 

Effective forecasting requires a combination of quantitative and qualitative elements. Taking one approach or the other won’t give you a complete picture of the right people the business needs to reach its goals.

4. Identify gaps within the business

In addition to forecasting, which looks at what resources your company will need, businesses also need to consider the supply of talent. Where will these employees come from? Will they be external hires or employees promoted from within? 

In some organizations, this step is conducted simultaneously with forecasting. This aspect of human resource planning determines any gaps in your current organization that you need to fill.

Compare the forecast to the current talent pool within the business. Important questions to ask include

  • Are there any current employees who can take on the roles you’ve identified in your forecast?
  • If so, will they require any training or professional development?
  • What’s the cost of this training and professional development?
  • How long will the training and professional development take before the employees have the skills and expertise they need to fulfill the new role the business requires?
  • Will you require additional employees to take on recently vacated roles, or will those roles be made redundant?
  • Will you require succession planning or transition planning for any recently vacated roles?
  • How many employees will you need to hire from outside the organization? What kind of skills, expertise, or work styles will those employees need to have?

Keep in mind that for many organizations, recruiting, hiring, and onboarding a new employee is costly and time-consuming, which is why many organizations prefer to look internally to fill gaps before looking externally. Once the organization has determined the gaps that can’t be filled internally, it can begin to consider external sources of hiring and contracting.

5. Develop a human resource action plan

Next, it’s time to create an actionable step-by-step plan to fill the resource gaps you’ve identified. There are three key ways to fill the gaps:

  • Train and develop existing employees. By upskilling or reskilling employees, organizations can meet their business goals with people who already know their core values, processes, and systems. Doing so can save considerable time and resources compared to recruiting, hiring, and onboarding new employees.
  • Hire new employees. In many cases, the organization won’t have the current quantity or quality of employees needed to achieve its business goals and will need to look externally for new employees. Explore multiple recruitment channels, such as referrals, direct recruiting, or working with a recruiting agency to determine what’s right for the business.
  • Outsource specific projects or tasks. In some cases, outsourcing the role to another business or consultancy may be the right move. This is typically done for project-related work that isn’t the equivalent of a full-time role.

In addition to deciding how you’ll fill the employee gaps within the organization to reach business goals, outline your

  • Schedule. How long will it take to complete the hiring or training activities you’ve identified, and when can the business expect to see results?
  • Budget. What will the hiring or training activities cost, and how does that fit with the original budget outlined in step one?
  • Priorities. Be sure to identify the order of importance for all human resource planning activities.
  • Culture. How will you ensure that the mission, vision, and core values of the business are consistently communicated to new and existing employees during this period of change? How will the corporate culture of the business change or remain the same?
  • Communication strategies. How will you share the organizational changes being made with existing employees? Keep in mind that organizational changes can cause stress and feelings of uncertainty among employees if they aren’t kept informed.

6. Put the plan into play

One of the most challenging parts of human resource planning is the actual implementation of the plan. The human resource management team will need to roll up their sleeves and begin the hard work. Here are tips to make implementation easier and more effective:

  • Ensure executive approval and buy-in. Once you’ve created the action plan, be sure to get buy-in from the leadership team. While the executive team has likely been involved in earlier aspects of human resource planning, such as identifying business goals and budget, it’s still important to get formal approval and advocacy.
  • Delegate tasks clearly. Ensure the human resource management team understands what each person is responsible for and when they need to accomplish it. For example, one person may be responsible for training existing employees, while another may be responsible for recruiting efforts.
  • Use technology solutions to automate and track activities. Manually keeping track of which training employees have taken or which part of the recruitment process each candidate is in can be challenging and time-consuming, and can lead to inaccuracies or human error. Consider using a human resources management system (HRMS) to automate specific processes within your action plan.
  • Communicate often. Keep the organization informed of progress at regular intervals, such as weekly or monthly. This way, there won’t be any surprises, and business leaders will be aware of the plan’s progress at each step.

7. Monitor and adjust the plan as necessary

The key to success for any type of strategic planning is to monitor and measure results. However, this step is often forgotten, and many organizations don’t take the time to review KPIs and make necessary adjustments. 

For human resource planning, it’s critical to review the progress of the plan at regular intervals and see the relationship to the desired results. If something isn’t working or is behind schedule, it requires special attention. If something is tracking ahead of schedule, the business may be able to learn from it and replicate the strategy in other areas.

Set up a process for tracking progress and measuring KPIs. This may be as simple as setting up a weekly meeting with the members of the team who are implementing the plan, and discussing what activities they have completed and whether they’re facing any obstacles. 

It can also include human resources management system (HRMS) reporting tools for tasks like measuring progress on employee training and recruitment. Determine the most effective way for your organization to understand progress and measure success.

If something isn’t working as hoped, develop a strategy to correct your course. For example, if the business isn’t able to recruit employees with specific career expertise directly, you may need to work with a specialized recruiting agency. Be sure to communicate any strategic changes to the stakeholders involved so there are no surprises.Human resource planning is a strategic way to position your business for success and ensure it has the right number of people with the right kind of skills. Follow the steps outlined above to ensure you consider both internal and external factors that can affect the future direction of your business. Remember to actively monitor progress and adjust the strategy as needed to ensure the business reaches its goals.

Want the full rundown on the topic? Check out the complete guide we created on  human resource management .

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hadil - Profile picture

More than a year ago

Sree - Profile picture

Great post. I also believe that HR planning is a systematic process. An effective HR plan aims to minimize workforce shortages or surpluses while maximizing employees' potential by matching their talents with organizational needs as closely as possible. In addition, the HR application software should be able to create good communication between all stakeholders, including management, staff members, family members etc., so they can work together more effectively and provide solutions rather than problems

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Human Resource Planning: Definition, Importance, Objectives, Process & Prerequisites

human resource planning in a business

In this article we will discuss about human resource planning. Learn about:-

1. Introduction to Human Resource Planning 2. Meaning of Human Resource Planning 3. Definition 4. Need and Importance

5. Objectives 6. Organisation 7. Factors Affecting 8. Human Resource Planning at Different Levels 9. Quantitative and Qualitative Dimensions 10. Prerequisites and Other Details.

  • Introduction to Human Resource Planning
  • Meaning of Human Resource Planning
  • Definition of Human Resource Planning
  • Need and Importance of Human Resource Planning
  • Objectives of Human Resource Planning
  • Organisation of Human Resource Planning
  • Factors Affecting Human Resource Planning
  • Human Resource Planning at Different Levels
  • Quantitative and Qualitative Dimensions of Human Resource Planning
  • Prerequisites of Human Resource Planning
  • Relationship of Human Resource Planning with Other Personnel Processes
  • Cost-Contribution Analysis in Human Resource Planning
  • Responsibility of Human Resource Planning
  • Integration of Strategic Planning and Human Resource Planning
  • Human Resource Planning and Environmental Scanning
  • Human Resource Planning – Mapping an Organisation’s Human Capital Architecture
  • Edgar Schein’s Human Resource Planning and Development System
  • Human Resource Planning – Benefits
  • Problems of Human Resource Planning
  • Recent Implications of Human Resource Planning
  • Recent Trends of Human Resource Planning

Human Resource Planning – Introduction :

Human resources undoubtedly play the most important part in the functioning of an organization. The term ‘resource’ or ‘hu­man resource’ signifies potentials, abilities, capacities, and skills, which can be developed through continuous interaction in an organizational setting.

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The interactions, interrelationships, and activities performed all contribute in some way or other to the development of human potential. Organizational productivity, growth of companies, and economic development are to a large extent contingent upon the effective utilization of human capa­cities.

Hence, it is essential for an organization to take steps for effective utilization of these resources. In the various stages in the growth of an organization, effective planning of human resources plays a key role. Matching the requirements of the job with the individual is important at all stages, including the recruitment procedures, in this endeavour.

When organizations contemplate diversification or expansion, or when employees have to be promoted, human resource planning plays an import­ant role. Further, the organizational plans, goals, and strategies also require effective human resource planning.

Human Resource Planning – Meaning :

E.W. Vetter viewed human resource planning as “a process by which an organisation should move from its current manpower position to its desired manpower position. Through planning, management strives to have the right number and right kind of people at the right places at the right time, doing things which result in both the organisation and the individual receiving maximum long-run benefit.”

According to Leon C. Megginson human resource planning is “an integrated approach to performing the planning aspects of the personnel function in order to have a sufficient supply of adequately developed and motivated people to perform the duties and tasks required to meet organisational objectives and satisfy the individual needs and goals of organisational members.”

Human resource planning may be viewed as foreseeing the human resource requirements of an organisation and the future supply of human resources and- (i) making necessary adjustments between these two and organisational plans; and (ii) foreseeing the possibility of developing the supply of human resources in order to match it with requirements by introducing necessary changes in the functions of human resource management. In this definition, human resource means skill, knowledge, values, ability, commitment, motivation, etc., in addition to the number/of employees.

Human resource planning (HRP) is the first step in the HRM process. HRP is the process by which an organization ensures that it has the right number and kind of people, at the right place, at the right time, capable of effectively and efficiently completing those tasks that will help the organization achieve its overall objectives.

HRP translates the organization’s objectives and plans into the number of workers needed to meet those objectives. The actual HRM process starts with the estimation of the number and kind of people required by the organization for the coming period.

HRP is also known by other names such as ‘Manpower Planning’, ‘Employment Planning’, ‘Labour Planning’, ‘Personnel Planning’, etc. HRP is a sub-system in the total organizational planning. In other words, HRP is derived from the organizational planning just like production planning, sales planning, material planning, etc.

Human Resource Planning – Definition :

The organisation’s objectives and strategies for the future determine future requirement of human resources. It only means that the number and mix of human resources are reaction to the overall organisational strategy. If the intent is to get closer to people possessing requisite qualifications, the organisation should act quickly.

Human Resource Planning or Manpower Planning (HRP) is the process of systematically reviewing HR requirements to ensure that the required number of employees with the required skills is available when they are needed. Getting the right number of qualified people into the right job is the crux of the problem here.

In actual practice, this is not easy. Due to constant changes in labour market conditions, qualified people possessing relevant qualifications are not readily available. The organisation needs to go that extra mile, dig up every source of information and exploit every opportunity that comes its way in order to identify talent.

HRP is simply not a process of matching the supply of people (existing employees and those to be hired or searched for) with openings the organisation expects over a given timeframe. It goes a step further in order to reach out to right kind of people at right time, spending time, resources and energies. Without careful planning, advance thinking and prompt actions, it is next to impossible to get competent and talented people into the organisation.

Human resource planning is the responsibility of both the line and the staff manager. The line manager is responsible for estimating manpower requirements. For this purpose, he provides the necessary information on the basis of the estimates of the operating levels. The staff manager provides the supplementary information in the form of records and estimates.

Human Resource Planning – Need and Importance :

The following points highlight the need and importance of HRP in the organizations:

I. Assessing Future Personnel Needs:

Whether it is surplus labour or labour shortage, it gives a picture of defective planning or absence of planning in an organization. A number of organizations, especially public sector units (PSUs) in India are facing the problem of surplus labour.

It is the result of surplus labour that the companies later on offer schemes like Voluntary Retirement Scheme (VRS) to eliminate surplus staff. Thus, it is better to plan well about employees in advance. Through HRP, one can ensure the employment of proper number and type of personnel.

II. Foundation for Other HRM Functions:

HRP is the first step in all HRM functions. So, HRP provides the essential information needed for the other HRM functions like recruitment, selection, training and development, promotion, etc.

III. Coping with Change:

Changes in the business environment like competition, technology, government guidelines, global market, etc. bring changes in the nature of the job. This means changes in the demand of personnel, content of job, qualification and experience needed. HRP helps the organization in adjusting to new changes.

IV. Investment Perspective:

As a result of change in the mindset of management, investment in human resources is viewed as a better concept in the long run success of the enterprise. Human assets can increase in value as opposed to physical assets. Thus, HRP is considered important for the proper planning of future employees.

V. Expansion and Diversification Plans:

During the expansion and diversification drives, more employees at various levels are needed. Through proper HRP, an organization comes to know about the exact requirement of personnel in future plans.

VI. Employee Turnover:

Every organization suffers from the small turnover of labour, sometime or the other. This is high among young graduates in the private sector. This necessitates again doing manpower planning for further recruiting and hiring.

VII. Conformity with Government Guidelines:

In order to protect the weaker sections of the society, the Indian Government has prescribed some norms for organizations to follow. For example, reservations for SC/ST, BC, physically handicapped, ex-servicemen, etc. in the jobs. While planning for fresh candidates, HR manager takes into consideration all the Government guidelines.

VIII. International Expansion Strategies:

International expansion strategies of an organization depend upon HRP. Under International Human Resource Manage­ment (IHRM), HRP becomes more challenging. An organization may want to fill the foreign subsidiary’s key positions from its home country employees or from host-country or from a third country. All this demands very effective HRP.

IX. Having Highly Talented Manpower Inventory:

Due to changing business environment, jobs have become more challenging and there is an increasing need for dynamic and ambitious employees to fill the positions. Efficient HRP is needed for attracting and retaining well qualified, highly skilled and talented employees.

Human Resource Planning – Objectives :

The main objectives of HRP are:

(i) Proper assessment of human resources needs in future.

(ii) Anticipation of deficient or surplus manpower and taking the corrective action.

(iii) To create a highly talented workforce in the organization.

(iv) To protect the weaker sections of the society.

(v) To manage the challenges in the organization due to modernization, restructuring and re-engineering.

(vi) To facilitate the realization of the organization’s objectives by providing right number and types of personnel.

(vii) To reduce the costs associated with personnel by proper planning.

(viii) To determine the future skill requirements of the organization.

(ix) To plan careers for individual employee.

(x) Providing a better view of HR dimensions to top management.

(xi) Determining the training and development needs of employees.

Human Resource Planning – Organisation :

Every line manager is responsible for planning manpower of the respective department and the top management is responsible for the planning of resources for the entire organisation. The personnel department supplies relevant information and data to all the line managers and helps those regarding interdepartmental transfers, promotions, demotions etc. Personnel department also helps in using the techniques and forecasting the manpower.

Personnel department forecasts internal mobility surplus or deficit of human resources for the entire organisation, prepares action plans regarding redeployment, redundancy, employment, development and internal mobility and submits plans to the management at the top which either by its own or by appointing a committee reviews departmental plans and overall plans, make necessary adjustments and finalises the plans. Personnel department in its turn prepares modified plans for the departments based on finalised overall plan and communicates them to respective heads of department.

Personnel department may co-ordinate the control activity of human resource plan and it has to send coordinated reports to the management at the top for actual review, control and monitor the human resource system. The management at the top may appoint a committee consisting of heads of department and external identification of deviations, reasons thereof and steps to be taken to correct the deviations. The committee further helps the management in executing the programmes of corrections.

Human Resource Plan – Factors :

Several factors affect HRP. These factors can be classified into external factors and internal factors.

External Factors :

i. Government Policies – Policies of the government like labour policy, industrial relations policy, policy towards reserving certain jobs for different communities and sons-of the soil, etc. affect the HRP.

ii. Level of Economic Development – Level of economic development determines the level of HRD in the country and thereby the supply of human resources in the future in the country.

iii. Business Environment – External business environmental factors influence the volume and mix of production and thereby the future demand for human resources.

iv. Level of Technology – Level of technology determines the kind of human resources required.

v. International Factors – International factors like the demand for resources and supply of human resources in various countries.

vi. Outsourcing – Availability of outsourcing facilities with required skills and knowledge of people reduces the dependency on HRP and vice-versa.

Internal Factors :

i. Company policies and strategies – Company policies and strategies relating to expansion, diversification, alliances, etc. determines the human resource demand in terms of quality and quantity.

ii. Human resource policies – Human resources policies of the company regarding quality of human resource, compensation level, quality of work-life, etc., influences human resource plan.

iii. Job analysis – Fundamentally, human resource plan is based on job analysis. Job description and job specification determines the kind of employees required.

iv. Time horizons – Companies with stable competitive environment can plan for the long run whereas the firms with unstable competitive environment can plan for only short- term range.

v. Type and quality of information – Any planning process needs qualitative and accurate information. This is more so with human resource plan; strategic, organisational and specific information.

vi. Company’s production operations policy – Company’s policy regarding how much to produce and how much to buy from outside to prepare a final product influence the number and kind of people required.

vii. Trade unions – Influence of trade unions regarding number of working hours per week, recruitment sources, etc., affect the HRP.

Human Resource Planning at Different Levels:

Different institutions make HRP at different levels for their own purposes, of which national level, industry level, unit level, departmental level and job level are important.

i. National level – Generally, government at the centre plan for human resources at the national level. It forecasts the demand for and supply of human resource, for the entire nation.

ii. Sector level – Manpower requirements for a particular sector like agricultural sector, industrial sector or tertiary sector are projected based on the government policy, projected output/operations, etc.

iii. Industry level – Manpower needs of a particular industry like cement, textiles, chemical are predicted taking into account the output/operational level of that particular industry.

iv. Unit level – This covers the estimation of human resource needs of an organisation or company based on its corporate/business plan.

v. Departmental level – This covers the manpower needs of a particular department in a company.

vi. Job level – Manpower needs of a particular job family within department like Mechanical Engineer is forecast at this level.

vii. Information technology – The impact of information technology on business activities, human resource requirement and human resource plan is significant. It requires multi skilled expe rts, preferably less in number.

Human Resource Planning – Quantitative and Qualitative Dimensions :

Human resources have a dual role to play in the economic development of a country. On one hand they are the consumers of the products and services produced by the organizations while on the other hand they are one of the factors of production.

Along with capital and other factors of production, human resources can lead to increase in production and economic development. The rate of growth of human resources is determined by two aspects quantitative and qualitative.

Variables Determining the Quantity of Human Resources:

1. Population Policy:

Some population policies operate by influencing the factors responsible for growth such as fertility, marriage and mortality. These are known as population influencing policies. Another category of policies known as responsive policies are implemented to adjust to observed population trends with the help of programmes like health, nutrition, education, housing, etc. The aim of population policies is to achieve an optimum population for enhancing the country’s development.

2. Population Structure:

The structure or composition of the population is determined by two factors, sex composition and age composition.

(i) Sex Composition:

Sex ratio is the ratio of males to females in the population. It is the basic measure of the sex composition of the population of any area. Higher the number of females, higher will be the population growth rate in future.

(ii) Age Composition:

It is the distribution of population by age groups. Age composition is the result of past trends in fertility and mortality. The supply of labour depends on age composition as economically active population falls in range of 15-65 age groups.

3. Migration:

Net migration is another factor which causes changes in the population. Age and sex composition determine the natural growth in population, but for calculating the overall changes in population it is important to consider net migration also.

Net migration = total immigrants – total emigrants

A positive net migration will lead to a rise in population growth rate while negative net migration will reduce the growth rate of population. Migration can be both inter­regional and international.

4. Labour Force Participation:

The population of any country consists of workers and non-workers. The workers are the people, usually in age group of 15-65, who participate in economically productive activities by their mental or physical presence.

These include:

i. Employers,

ii. Employees,

iii. Self-employed persons, and

iv. Those engaged in family enterprises without pay.

The others in the population are the non-workers such as students, infants, elderly, beggars, retired people, inmates of jail or mental institutions, unemployed, etc. They do not contribute to any productive economic activity. It is the changes in the working population which affect the growth of human resources. The number of people who are unemployed but available for work also impacts the availability of labour.

Qualitative Aspects of Human Resource Planning:

The quantitative dimensions help to ascertain human resources in numbers while the productive power of human resources is assessed by the qualitative dimensions. For example, there may be hundreds of applicants for 20 vacancies, but out of these only a few may meet the quality standards required for the job.

Factors which determine the quality of human resources are:

1. Education and Training:

The quantity and quality of education and training received by human resources impacts their knowledge and skills. Education and training are important for the upliftment of both individual and society. It can be of two types, formal and informal.

Formal education is imparted through schools and colleges while informal education and training takes place through on-the-job training methods. Formal education stresses the transfer of theoretical knowledge, while informal education emphasizes on practical application of knowledge.

2. Health and Nutrition:

Health and nutrition along with education are vital for Human Resource Development. Health and nutrition impact the quality of life, productivity of labour and the average life expectancy.

Health status is determined by:

(i) Purchasing power of people.

(ii) Public sanitation, climate and availability of medical facilities.

(iii) People’s understanding and knowledge of health, hygiene and nutrition.

3. Equality of Opportunity:

Not all segments of people comprising human resources get equal employment opportunities. There is bound to be some discrimination.

The most common forms of discrimination are:

(i) Social discrimination – Discrimination on basis of gender, religion or social standing.

(ii) Economic discrimination – Discrimination based on financial positions or possession of wealth by the sections of workforce.

(iii) Regional discrimination – These are in form of discrimination between rural and urban population or between people belonging to different regions/ states.

Discrimination affects the quality and productivity of the human resources belonging to different sections of the population. The privileged classes get access to best education, nutrition and health facilities while underprivileged are deprived of their right share in the development process. For the overall, well rounded development of the country’s human resources, effective policies need to be implemented to deal with the problem of discrimination.

Human Resource Planning – Prerequisites :

i. There should be a proper linkage between HR plan and organizational plan.

ii. Top management support is essential.

iii. Proper balance should be kept between the qualitative and quantitative approaches to HRP.

iv. Involvement of operating managers is necessary.

v. Proper alignment between short-term HR plans and long-term HR plans should be there.

vi. HR plan should have in-built flexibility in order to adopt environmental uncertainties.

vii. Time period of HR plan should be appropriate to needs and circumstances of the organization.

Human Resource Planning – Relationship with Other Personnel Processes:

From a systems view, human resource planning is interrelated with many of the organization’s other endeavors in personnel management. The strongest relationship exists between human resource planning and selection. In fact, all selection efforts really are an integral part of the whole human resource planning process.

Organizations that have either stable or increasing human resource needs must go into the external labour market and hire employees even though they generally follow a promotion-from within policy.

In addition, human resource planning is related to both performance appraisal and training and development. Performance appraisals can pinpoint the skills that will be required for employees to move into higher-level positions via promotion, while training and development efforts may then be designed to provide these skills.

To meet organizational goals, human resource planning seeks to ensure that the organization’s demand for individuals at any particular time will be just met by available human resources. This view assumes that “stockpiling” employees at levels greater than needed and being understaffed are both undesirable.

This assumption represents a major difference between planning for human resources and planning for non-human resources. Although it is generally unacceptable to stockpile or build inventories of human resources, organizations may find it necessary or desirable to build up raw materials or finished-goods inventories.

It is unacceptable to hold human resource inventories for three reasons. First, human resources are costly and it may be difficult to justify the expense of excess personnel. There are sounder and more cost-effective options available to personnel planners in business firms. Second, excess people are not engaged in productive work, and are likely to be bored and frustrated by the lack of anything constructive to do.

Such boredom and frustration can create problems because excess people may make unnecessary work for productive people and may even inhibit the firm’s total productive efforts.

Third, since human resources, particularly skilled and professional people, may be in short supply, taking productive workers out of the economy’s labour pool may be considered socially unacceptable.

It is equally undesirable for an organization to operate with too few employees. As with “stockpiled” employees, individuals may feel frustrated, but in this case because of overwork rather than a lack of productive activity. This situation may also be dysfunctional to an organization’s goals.

Consider, for example, a department store during the holiday season with a shortage of sales personnel. In addition to the frustrations experienced by employees, such understaffing may also result in loss of employee efficiency.

Customers may respond to long lines and excessive waiting by taking their business elsewhere, with resultant loss of sales by the organization. Having too many or too few employees may create numerous problems for organizations-problems that can be reduced or eliminated through effective human resource planning.

Human Resource Planning – Cost Contribution Analysis :

Cost-contribution analysis of human resources is most important in HRP with a view to plan for more effective human resource system. The human resource components necessary to maximise employee contribution to the job and the organisation, and minimise the cost, should be determined in advance with the help of human resource accounting techniques.

The optimum human resource system should be planned and determined as the human resources system is the control system in the organisation because it emphasises the human contribution which critically influences the organisational effectiveness. Planning the human resource system includes determining the type of human resource components like creative and innovative skills and abilities, dynamism, leadership qualities, commitment, identification with the organisation, etc., considering the measures to acquire those human resources through recruitment, training and development and adjusting the components.

Similarly, cost of human resource should be streamlined and it should be taken as investment on human resources and not as mere cost. These items include remuneration cost (Pay, allowances, fringe benefits, other indirect costs), recruitment cost (cost of job design, advertising cost, cost for conducting tests, interview, reference checks, medical examination and induction), training costs, etc.

Human Resource Accounting (HRA) envisages capitalisation of all expenses like cost of recruitment, training etc. One of the systems of HRA i.e., replacement cost of human asset is an important tool for the formulation of manpower budget and plan for human resources.

Human Resource Planning – Responsibility :

Human resource planning is the responsibility of the personnel department. In this task, it is aided by the industrial engineering department, the top management and the team of directors of different departments. It is mostly a staffing or personnel function.

The overall responsibility lies with the Board of Directors because, as the manpower planning scheme of Hindustan Lever indicates, “these members are in a position to direct the future course of business, set appropriate goals for the management concerned in the formulation of personnel policies.”

The personnel department’s responsibility is “to recommend relevant personnel policies in respect of manpower planning, devise methods of procedure, and determine the quantitative aspects of manpower planning.”

The responsibilities of the personnel department in regard to manpower planning have been stated by Geisler in the following words:

(i) To assist, counsel and pressurise the operating management to plan and establish objectives;

(ii) To collect and summarise data in total organisation terms and to ensure consistency with long- range objectives and other elements of the total business plan;

(iii) To monitor and measure performance against the plan and keep the top management informed about it; and

(iv) To provide the research necessary for effective manpower and organisational planning.

Integration of Strategic Planning and Human Resource Planning:

Human resource planning like production planning, financial planning and marketing planning, should be a unified, comprehensive and integrated part of the total corporation. Human resource manager provides inputs like key HR areas, HR environmental constraints and internal HR capabilities and HR capability constraints to the corporate strategists. The corporate strategists in turn communicate their needs and constraints to the HR manager. The corporate strategic plan and HR plan thus incorporates both HR and other functional plans.

Corporations formulate plans to fit four time spans:

i. Strategic plans that establish company’s vision, mission and major long-range objectives. The time span for strategic plans is usually considered to be five or more years.

ii. Intermediate – range plans covering about a three year period. These are more specific plans in support of strategic plan.

iii. Operating plans cover about one year. Plans are prepared month by month in sufficient detail for profit, human resources, budget and cost control.

iv. Activity plans are the day-by-day and week-by-week plans. These plans may not be documented presents the link between strategic plan and human resource plan.

Strategic Plan Vis-a-Vis Human Resource Plan- Corporate — Level Plan :

Top management formulates corporate-level plan based on corporate philosophy, policy, vision and mission. The HRM role is to raise the broad and policy issues relating to human resources. The HR issues are related to employment policy, HRD policies, remuneration policies, etc. The HR department prepares HR strategies, objectives and policies consistent with company strategy.

I. Intermediate – Level Plan :

Large-scale and diversified companies organise Strategic Business Units (SBU) for the related activities. SBUs prepare intermediate plans and implement them. HR managers prepare specific plans for acquiring future managers, key personnel and total number of employees in support of company requirements over the next three years.

II. Operation Plan :

Operation plans are prepared at the lowest business profit centre level. These plans are supported by the HR plans relating to recruitment of skilled personnel, developing compensation structure, designing new jobs, developing leadership, improving work-life, etc.

III. Short-Term Activities Plan:

Day-to-day business plans are formulated by the lowest level strategists. Day-to-day HR plans relating to handling employee benefits, grievances, disciplinary cases, accident reports, etc., are formulated by the HR managers.

Human Resource Planning and Environmental Scanning :

Environment influences human resource management as well as business. Environmental scanning helps to know the nature and degree of environmental influence on human resource plan as well as business plan.

Managers have to scan the following environmental factors in particular:

i. Social factors including cultural factors, religious factors, child-care, educational programmes and priorities.

ii. Technological developments including information technology, people soft, automation and robotics.

iii. Economic factors including international, national and regional factors.

iv. Political factors including legal issues, laws and administrative factors.

v. Demographic factors including gender, age and literacy.

vi. Industry growth trends, competitive trends, new products, new processes, services and innovations.

The environmental scanning will help the managers to foresee the possible changes and make the adjustments in order to prevent the possible negative effects and get ready for the positive effects.

In addition to scanning the external environmental factors, organisations like Infosys, Satyam, Volvo and Southwest Airlines scan internal environmental factors. Organisational cultures, employees’ cultures affect the human resource plan as well as other areas of HRM. Organisations conduct cultural audits to know the impact of attitudes, values and activities of employees. As observed by Sears, employee positive attitude has direct and positive impact on customer satisfaction and revenue.

Most of the companies benchmark their standing and progress against each other as environmental scanning and HR planning are aimed at competitive advantage. Benchmarking is identifying the best HR practices like training and compensation in the industry, compare them with those of the firm and take steps to improve the practices to match with those of the best practices in the industry.

Target for benchmarking need not be a competitor, but the best in the industry, or companies in other industries. ‘Human Capital Benchmarking Report’ published by the Saratoga Institute provides information of 900 companies’ practices. Companies can use this source as well as the survey report of ‘Business Today’, published every year in addition to various research reports on pay structure, return on investment per employee, turnover rates, cost per hire, etc.

Human Resource Planning – Mapping an Organisation’s Human Capital Architecture :

The linkage between strategy and HR should focus on the development of core competencies. Some of the MNCs like Sony, Starbucks, Domino’s Pizza and South-West Airlines revolutionised their companies by developing core competencies.

These competencies helped these companies to have leverage by learning faster than others. Core competency is a portfolio of employee skills. Different skills of employees can be grouped based on ‘Strategic value’ they create and their distinctiveness to the organisation.

They are as follows:

i. Core Knowledge Workers:

This group of employees possesses firm-specific skills which are linked to the company’s strategy like R&D skills for pharmaceutical company and teaching skills for university employees. Companies invest in training of these employees, provide them with freedom and autonomy and offer higher salaries.

ii. Traditional Job-Based Employees:

This group of employees possesses skills that are important to the organisation, but are not critical/unique (like accountants, finance, marketing personnel). Companies invest less in developing these employees, but provide short-term financial benefits.

iii. Contract Labour:

This category of employees possesses skills, which are of less strategic value (like clerks, receptionists, drivers, security, etc.). This category of employees is normally hired from external agencies on contact basis. Organisations do not invest in training these employees and the employment relations are transactional.

iv. Alliance/Partners:

This group of employees has unique skills, but not directly related to organisation’s core function like lawyers, auditors and consultants. Companies do not employ them on regular basis, given their tangible link to the strategy but establish long- term alliances and partnerships with them.

HR managers make decisions with regard to whom to employ internally, whom to contract externally and the type of the employment relationship to be maintained. HR manager also considers the cost-benefit approach of internal employment vs. external contract in HRP.

v. Ensuring Fit and Flexibility :

Alignment between strategic planning and programmes, policies and practices of HR is vital and need to achieve two types of fit viz., external fit and internal fit.

A. External Fit:

External fit brings alignment between the business objectives/goals and major HR initiatives/practices. Growth strategy of the company is to be aligned with recruiting people with creative and innovative skills, providing freedom to them and investing on training for developing such skills. Low cost strategy is to be aligned with employing performance/productivity oriented employees.

B. Internal Fit:

Internal fit brings alignment among various HR policies and practices in order to establish configuration that is mutually reinforcing. Efficiency and creativity come from integrated effort of job design, HR Plan, recruitment and selection, training, performance management, compensation and motivation. Therefore, there should be integration among all HR functions. In addition, management should follow either individual approach or team approach for all HR functions.

Successful external and internal strategy and HRM alignment helps the organisation to increase organisational capability and competitive advantage.

vi. Cohort Analysis :

It is an analysis of risk factors of groups in which a group having one or more similar characteristics is closely monitored over time simultaneously with another group. It is one type of clinical study design and should be compared with a cross-sectional study. Cohort studies are largely about the life histories of segments of populations, and the individual people who constitute these segments. This method is used where case study approach is not feasible, creates too many statistical problems, or generally produces unreliable results. This is also called follow up study.

Cohort analysis helps to separate growth metrics from engagement metrics and helps to measure growth and identify growth problems.

Edgar Schein’s Human Resource Planning and Development System:

In his article entitled Increasing Organizational Effectiveness through Better Human Resource Planning and Development, Edgar Schein suggests that the process of HR planning and developing staff must take into account two important sets of needs – the needs of the company, and the needs and desires of the individual employees.

In the new millennium with companies showing less concern about employee career development, it’s useful to pay attention to the idea that when both employee and corporate needs are taken into account, the results, for both parties are much superior to the situation where only one set is considered.

Schein’s approach integrates HR planning and employee development.

This approach contains the following components:

1. Strategic business planning

2. Job/Role planning

3. Manpower planning and Human Resource Inventorying.

In addition staffing processes also form a part of the model

4. Job analysis

5. Recruitment and selection

6. Induction/socialization and initial training

7. Job design and job assignment

8. Development planning

9. Inventorying of development plans

10. Follow-up of development activities

11. Career development processes and a good deal more.

When doing an internal scan for purposes of human resource planning the questions that should be addressed.

When evaluating an organization’s current human resource capabilities for the purposes of human resource planning, the following questions and issues need to be addressed:

1. Are there any key forces affecting the organization’s operations (collective agreements, staffing issues, cultural issues, work/life balance, demographics, technology requirements, budget issues, expectation of clients)?

2. What knowledge, skills, abilities and capabilities does the organization have?

3. What is the company’s current internal environment? What elements support the company’s strategic direction? What elements deter the organization from reaching its goals?

4. How has the organization changed its organizational structure? How is it likely to change in the future?

5. How has the organization changed with respect to the type and amount of work it does and how is it likely to change in the future?

6. How has the organization changed regarding the use of technology and how will it change in the future?

7. How has the company changed with respect to the way people are recruited?

8. What is the public’s (or customers’) perceptions of the quality of the organization’s products, programmes, and/or services? What is being done well? What can be done better?

9. Are current programmes, processes or services contributing to the achievement of specific organizational goals?

When doing an external scan of the environment for purposes of human resources planning (HR planning), we should look for:

In order to do human resource planning, we need to have a sense of both the current external environment, and anticipate things that may happen in the future in the labour market place. We do this via an external scan or environmental scan that can address the following issues and questions.

1. How is the current external environment? What elements of the current environment are relevant to the company? Which are likely to inhibit the company from arriving its goals?

2. What are the company’s specific issues and implications of these issues? What key forces in this environment need to be addressed and which ones are less critical?

3. What is the impact of local trends on the company (demographic, economic, political, intergovernmental, cultural, technology, etc.)?

4. Are there comparable operations that provide a similar service? How might that change? How would that affect the company?

5. Where does the work of the company come from? How might that change and how would it affect the organization?

6. How might the external environment differ in the future? What forces at work might change the external environment? What implications will this have for the organization?

7. What kinds of trends or forces affect similar work in other jurisdictions?

8. What kinds of trends or forces affect the company’s partners/stakeholders and customers?

Human Resource Planning – Benefits :

Human Resource Planning (HRP) anticipates not only the required kind and number of employees but also determines the action plan for all the functions of personnel management.

The major benefits of human resource planning are:

i. It checks the corporate plan of the organisation.

ii. HRP offsets uncertainties and changes to the maximum extent possible and enables the organisation to have right men at right time and in right place.

iii. It provides scope for advancement and development of employees through training, development, etc.

iv. It helps to anticipate the cost of salary enhancement, better benefits, etc.

v. It helps to anticipate the cost of salary, benefits and all the cost of human resources facilitating the formulation of budgets in an organisation.

vi. To foresee the need for redundancy and plan to check it or to provide alternative employment in consultation with trade unions, other organisations and government through remodeling organisational, industrial and economic plans.

vii. To foresee the changes in values, aptitude and attitude of human resources and to change the techniques of interpersonal, management, etc.

viii. To plan for physical facilities, working conditions and the volume of fringe benefits like canteen, schools, hospitals, conveyance, child care centres, quarters, company stores, etc.

ix. It gives an idea of type of tests to be used and interview techniques in selection based on the level of skills, qualifications, intelligence, values, etc., of future human resource.

x. It causes the development of various sources of human resources to meet the organisational needs.

xi. It helps to take steps to improve human resource contributions in the form of increased productivity, sales, turnover, etc.

xii. It facilitates the control of all the functions, operations, contribution and cost of human resources.

Human Resource Planning – Problems:

Though HRP is beneficial to the organisation, employees and trade unions, some problems crop up in the process of HRP.

Important among them are:

1. Resistance by Employers and Employees:

Many employers resist HRP as they think that it increases the cost of manpower as trade unions demand for employees based on the plan, more facilities and benefits including training and development. Further, employers feel that HRP is not necessary as candidates are/will be available as and when required in India due to unemployment situation. Employers’ version may be true about unskilled and clerical staff but it is not true in the case of all other categories as there is shortage for certain categories of human resources.

Trade unions and employees also resist HRP as they view that it increases the workload of employees and prepares programme for securing the human resources mostly from outside. The other reason for their resistance is that HRP aims at controlling the employees through productivity maximisation, etc.

2. Uncertainties:

Uncertainties are quite prominent in human resource practices in India due to absenteeism, seasonal employment, labour turnover, etc. Further, the uncertainties in industrial scene like technological change, marketing conditions also cause uncertainties in human resource management. The uncertainties make the HRP less reliable.

3. Inadequacies of Information System:

Information system regarding human resources has not yet fully developed in Indian industries due to low status given to personnel department and less importance attached to HRP. Further, reliable data and information about the economy, other industries, labour market, trends in human resources, etc., are not available.

Human Resource Planning – Recent Implications :

Most of the organisations, employed human resources without proper HR plans before 1990s. This was more acute in the public sector whose objective was creation of employment opportunities. The absence of human resources planning before 1990s led to the following implications in Indian companies.

(i) Overstaffing – Most of the organisations are found to be overstaffed compared to their counterparts in other countries.

(ii) VRSI Golden-handshake – The absence of human resources planning led to overstaffing. Consequently, most of the organisations announced VRS/Golden-handshake programmes in order to reduce the consequences of overstaffing.

(iii) Delayering and Downsizings Most of the organisations de-layered their organisations and announced downsizing programmes to rectify the consequences of overstaffing.

Human Resource Planning – Recent Trends :

Unfortunately, the human resource planning efforts of organizations have often been inadequate by failing to emphasize the truly systematized approach geared toward meeting overall objectives.

As Lopez and others have observed:

Some organizations have perceived manpower planning primarily in terms of budgeting to control labour costs; others have viewed it as a management development technique; still others see it as a table of back-ups and replacements for current employees; and finally, others have viewed it as a means of establishing a human resource information system and a personnel inventory.

Since each of these approaches is necessarily limited in scope, the state of the art in human resource planning has limped along quite slowly.

Toward More Sophisticated Human Resource Planning:

In recent years, both personnel practitioners and researchers emphasized some of the basic facets of personnel decision making (1) taking systems and contingency approaches, and (2) developing more sophisticated human resource forecasting and planning models. For example, the growth of equal employment opportunity regulations in recent years has increased the awareness of human resource planners of the effects of external changes on personnel systems.

The observations are in order regarding these more sophisticated approaches. First, more complex planning systems have generally been used in larger firms. Large organizations generally must undertake complex human resource planning and can afford the higher costs of such approaches.

Second, although a wide range of human resource models have been developed, some of these models have ignored so many “real life” personnel variables that they have had virtually no practical application. On the positive side, there have been numerous quantitative models that have been very useful to organizations.

There are a number of reasons for the recent increase in the use of more sophisticated human resource planning models. For example, organizations simply have been growing larger and more complex, requiring more sophisticated approaches. This has been especially true in those organizations in which interdependencies have increased.

The invention and development of the computer has made possible the analysis of complex human resource problems that would previously have been so time-consuming as to be cost prohibitive or virtually impossible to deal with by manual computations.

“The manpower mix in organizations had gradually come to focus around highly skilled managerial and technical talent.” Such personnel have at times been in short supply, and more of a lead time has been required for their training and development.

Once an integrated, well-thought-out human resource planning programme has been initiated, managers tend to appreciate its benefits and work together with the firm’s human resource specialists in developing viable programmes-“they are more willing to plan in this area, if only they are shown how to begin,”

Problems with Sophistication in Human Resource Planning:

Despite these reasons for the growth of more sophisticated human resource planning, such approaches face a number of problems:

1. There is an inherent mathematical complexity associated with efforts to model human resource systems.

2. Always there is a lack of certainty surrounding human resource needs in the future, coupled with the existence of an acquisition lead time for meeting those needs. Even if an organization’s human resource planning experts were completely uncertain about the number of operation researchers that would be needed at a point in future, the organization would face no problems if it could at that future time instantaneously obtain any number of such personnel to meet its objectives.

However, lead times are needed to recruit and train new personnel and to train and promote existing employees for new positions or assignments. Acquisition lead times have become more of a problem in recent years because of the needs for highly skilled managerial and professional personnel.

Since this trend is expected to continue in future years, the problem of acquisition lead times creates forecasting difficulties for most organizations.

Finally, human resource plans must be updated more frequently in firms (or in any of their subsystems) in which greater uncertainty exists. As one observer has observed-

“Increasing instability and the greater uncertainties associated with certain job requirements (e.g., research and development or marketing) indicate a requirement for more up-to-date information on emerging needs. This manpower data is increasingly subject to change, and organizational needs dictate timely information with appropriate systems support”.

Related Articles:

  • Human Resource Planning Process (with steps)
  • Features of Human Resource Planning
  • Definition of Human Resource Management

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