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What are the benefits of implementing human resource planning a guide.

human resource planning

A BLS report has estimated that the growth of Human Resource (HR) specialist jobs will increase by 8% by 2031. That statistic underscores the rising importance of human resource planning for businesses. In other words, companies have realized the role it plays in ensuring that they have people with the necessary skills to meet their objectives. As a result, organizations are seeking help from HR professionals to anticipate and prepare for future workforce needs. This allows businesses to make strategic decisions and, additionally, avoid potential talent shortages. The process also helps with workforce planning, a fundamental process that involves aligning business requirements with strategies. In this blog, you will get a better understanding of human resource planning. Moreover, you will learn about the roles and responsibilities of HR planners and the key benefits of the process.

What is Human Resource Planning?

Human resource planning is the process of forecasting the current and future needs of an organization. Additionally, it entails taking the necessary steps to ensure that the organization has the right number and quality of employees to achieve its goals. The main components of human resource planning include analyzing the current workforce and identifying the skills and competencies that will be required in the future. It also involves developing strategies to attract, develop, and retain employees to meet those needs. 

Roles and Responsibilities of Human Resource Planners

The roles and responsibilities that a successful HR professional is expected to perform include: 

  • Developing recruitment and retention strategies to attract and retain the best talent
  • Creating and managing employee development programs to enhance employee skills and knowledge
  • Developing and managing compensation and benefits programs 
  • Initiating a concrete plan for workforce development
  • Taking care of all the relevant employment laws and regulations
  • Monitoring and analyzing HR metrics to track the effectiveness of HR strategies

8 Key Benefits of Human Resource Planning

Human resource planning is a crucial process for businesses as it helps align the company’s workforce with its strategic goals and objectives. Implementing it can provide significant benefits to businesses as mentioned below.

1. Talent Management

HR planning can help businesses develop effective talent management strategies. For instance, this process involves identifying high-potential employees and providing them with targeted development opportunities to help them reach their full potential.

2. Strategic Decision-Making

Human resources planning provides valuable insights into the workforce and can inform strategic decision-making. For example, understanding the current workforce and anticipating their future needs helps businesses make informed decisions about organizational structure, resource allocation, and strategies.

3. Targeted Training and Employee Development

HR planning can help businesses identify skill gaps and provide targeted training and development opportunities for their employees. Therefore, this can lead to increased employee satisfaction and motivation, which can ultimately improve productivity and performance.

4. Future Workforce Needs

HR planning helps businesses anticipate and also address their future workforce needs. Conducting a thorough analysis of the workforce and forecasting their future needs allows businesses to take proactive measures. Therefore, this ensures they have the right talent and resources to meet their organizational goals.

5. Risk Management

HR planning can help businesses mitigate the risks associated with workforce disruptions, labor shortages, and changes in labor laws and regulations. For instance, anticipating risks and developing contingency plans can prepare businesses to handle potential challenges.

6. Managing Workforce Costs

Effective human resource planning can help organizations manage their workforce costs by, for example, avoiding overstaffing or understaffing. Additionally, it allows them to identify opportunities to optimize their workforce structure and performance.

7. Succession Planning

By identifying critical roles and the competencies required for them, human resource planning can help organizations zero in on and, also, develop potential successors. As a result, there is a smooth transition of leadership and continuity in business operations.

8. Employee Engagement and Retention

Effective human resource planning can help organizations create a positive work environment, and attract and retain top talent. It also promotes employee engagement and satisfaction.

ALSO READ: What is HR Analytics? How is it Important for Employee Retention 

How to Plan an HR Methodology

Human Resource Planning

HR methodology refers to the set of techniques, approaches, and frameworks used to manage and optimize human capital within an organization. The essential steps that need to be followed to plan an ideal HR methodology include:

1. Analyze Workforce

This involves assessing the current workforce to determine its size, composition, and also skills. 

2. Determine HRObjectives

Based on the results of the analysis, HR objectives should be determined to meet future workforce needs. 

3. Develop an Action Plan

An action plan has to be created to achieve the objectives (as decided above) for human resource planning. 

4. Implement the Action Plan

This involves putting the plan into action and monitoring progress. It also entails making adjustments as needed to ensure overall growth and success.

5. Evaluate the Results

After the action plan has been implemented, the results should be evaluated to determine if the objectives have been achieved. 

Human Resource Planning vs. Workforce Planning

Human Resource Planning

Human Resource Planning

  • A long-term strategic planning process
  • Focuses on the organization’s future workforce needs
  • Ensures that the organization has the right people with the right skills and also the competencies to achieve its goals

Workforce Planning

  • A short-term tactical planning process
  • Focuses on meeting the organization’s immediate workforce needs
  • Implements performance management processes to improve employee performance

Keep Learning With Emeritus

To conclude, human resource planning is an in-demand field, and professionals interested in pursuing it as a career can upgrade their skills by signing up for Emeritus’ online HR courses . These are offered in collaboration with top global experts. These will upskill professionals in different aspects of human resource management and also give them a competitive edge in their careers.

By Deepavali Sen Write to us at [email protected]

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Importance of Human Resource Planning

Anuj Kumar

  • 14 July 2022
  • Human Resource Management

Importance of Human Resource Planning

Human resource planning is the subsystem in total organizational planning. Organizational planning includes managerial activities that set the company’s objective for the future and determines the appropriate means for achieving those objectives. Following are the importance of human resource planning :

Future Personnel Needs

Part of strategic planning, creating highly talented personnel, international strategies, foundation for personnel functions, increasing investments in human resources, resistance to change, uniting the viewpoint of line and staff managers, succession planning, other benefits.

10 Importance of Human Resource Planning

Human resource planning is significant because it helps to determine the future personnel needs of the organization. If an organization is facing the problem of either surplus or deficiency in staff strength, then it is the result of the absence of effective Human Resource Planning .

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All public sector enterprises find themselves overstaffed now as they never had any planning for personnel requirements and went on a recruitment spree till the late 1980s. The problem of excess staff has become such a prominent problem that many private sector units are resorting to VRS’s‘ voluntary retirement scheme’.

The excess of labor problem would have been there if the organization had a good HRP system. An effective HR Planning system will also enable the organization to have good succession planning.

Human Resource Planning has become an integral part of strategic planning. HR Planning provides inputs in the strategy formulation process in terms of deciding whether the organization has got the right kind of human resources to carry out the given strategy.

Human Resource Planning is also necessary during the implementation stage in the form of deciding to make resource allocation decisions related to organization structure, process, and human resources. In some organizations, HRP plays a significant role as strategic planning and HR issues are perceived as inherent in business management.

Even though India has a great pool of educated unemployed, it is the discretion of the HR manager that will enable the company to recruit the right person with the right skills for the organization. Even the existing staff hope the job so frequently that organization faces a frequent shortage of manpower.

Manpower planning in the form of skill development is required to help the organization in dealing with this problem of skilled manpower shortage.

An international expansion strategy of an organization is facilitated to a great extent by HRP. The HR department’s ability to fill key jobs with foreign nationals and reassignment of employees from within or across national borders is a major challenge that is being faced by international business.

With the growing trend toward global operation, the need for HRP will as well be the need to integrate HRP more closely with the organization’s strategic plans. Without effective HRP and subsequent attention to employee recruitment, selection, placement, and development, career planning, the growing competition for foreign executives may lead to expensive and strategically descriptive turnover among key decision makers.

HRP provides essential information for designing and implementing personnel functions, such as recruitment, selection, training and development, and personnel movements like transfers, promotions, and layoffs.

Organizations are making increasing investments in human resource development compelling the increased need for HRP. Organizations are realizing that human assets can increase in value more than physical assets. An employee who gradually develops his/ her skills and abilities becomes a valuable asset to the organization.

Organizations can make investments in their personnel either through direct training or job assignment and the rupee value of such a trained, flexible, motivated productive workforce is difficult to determine. Top officials have started acknowledging that the quality of the workforce is responsible for both the short-term and long-term performance of the organization.

Employees are always reluctant whenever they hear about change and even about job rotation. Organizations cannot shift one employee from one department to another without any specific planning. Even for carrying out job rotation (shifting one employee from one department to another), there is a need to plan well ahead and match the skills required and existing skills of the employees.

HRP helps to unite the viewpoints of line and staff managers. Though HRP is initiated and executed by the corporate staff, it requires the input and cooperation of all managers within an organization. Each department manager knows about the issues faced by his department more than anyone else. So communication between HR staff and line managers is essential for the success of HR Planning and development.

Human Resource Planning prepares people for future challenges. The ‘stars’ are picked up, trained, assessed, and assisted continuously so that when the time comes such trained employees can quickly take the responsibilities and position of their boss or seniors as and when the situation arrives.

These are other benefits of human resource planning :

  • HRP helps in judging the effectiveness of manpower policies and programs of management.
  • It develops awareness of the effective utilization of human resources for the overall development of the organization.
  • It facilitates the selection and training of employees with adequate knowledge, experience, and aptitudes so as to carry on and achieve the organizational objectives.
  • HRP encourages the company to review and modify its human resource policies and practices and to examine the way of utilizing the human resources for better utilization.

FAQ Related to Importance of Human Resource Planning

What are the five importance of human resources.

These are the five importance of human resources: 1. Future Personnel Needs 2. Part of Strategic Planning 3. Creating Highly Talented Personnel 4. International Strategies 5. Foundation for Personnel Functions.

Reason for current interest and importance in HRP?

You all know the challenges the business is facing due to turbulent and hostile environmental forces (e.g. technology, social, economic, and political upheaval) impinging on a single one of them.

Why HR Planning???

You all must have understood the importance of planning in general. In designing an environment for the effective performance of individuals working together in groups, a manager’s most essential task is to see that everyone understands the group’s purposes and objectives and its methods of attaining them. If group effort is to be effective, people must know what they are expected to accomplish. This is the purpose of planning! It is the most basic of the managerial functions (refurbish the text on POSDCoRB!). It bridges the gap from where we are to where we want to be. It makes it possible for things to happen which would otherwise not happen. Thus, in the context of Human Resources, planning is a must ‘cause (here I can enumerate many! But, I expect you to come up with an explanatory example for each. Right??)

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  • September 26, 2022

Why Is Human Resource Planning Essential For Businesses?

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Of all the resources in an organization, it is the human workforce that is considered most valuable. Only people can come up with innovative ideas to improve efficiency. Men are required to operate machinery. They are the ones who can create strategies and implement them. That is why organizations need to plan their human resources and ensure they have the right mix of people. HR managers play the vital role of planning a firm’s staffing requirements and employing them.

Importance Of Human Resource Management

Before we look at human resource planning , it is worth understanding what HR management is. This is a function that takes care of all aspects of human elements inside a company. Being the most valuable resource in a company, managing humans carries importance and must be done by experts in this subject. These professionals are responsible for searching, hiring, training, and retaining employees. They must make sure that the capabilities of the manpower are utilized for achieving company goals while not sacrificing their objectives.

Also Read:  How to grow your career in Human Resource Management in 2022

Human resources management is critical for every company because companies can’t achieve their goals unless people contribute their best efforts. People must also work cohesively towards the objectives. They must also reach their personal aims, without which they will not stay in the company. Retaining employees is an essential function under human resource management. Recruiting new persons is an expensive and tiring procedure. HR management is highly critical because people and their well-being are involved.

Now that we have understood why people management is crucial, let us see what human resource planning is and why companies must perform this task.

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Understanding Human Resource Planning

Those studying an XLRI course on HR management can explain that human resource planning is a process by which a company achieves the desired level of the human workforce. With thorough planning and execution, it is expected that there will be the right people in suitable positions. Such a situation will allow companies to achieve their objectives while also enabling employees to grow and advance in their careers. Both companies and individuals will have long-term benefits and will continue to be happy with each other.

When we talk about human resources, it doesn’t only refer to the staff strength. HR managers must do planning to ensure that the necessary skills, commitment, motivation, knowledge, and values are achieved. Companies must do human resource planning to satisfy the current and future manpower requirements of a firm. Both these must be appropriately aligned with the goals of the organization. It also includes developing existing staff members to meet future needs of technical knowledge and capability.

Human resource planning starts much before a company starts functioning. It is a process of converting a company’s objectives into the number of people required to achieve them. But HR planning doesn’t just happen in a new company. It also takes place when organizations expand. To complete the expansion plans and to achieve their revised goals, firms will require to increase their staff strength. At this time also excellent planning is necessary to get work done at the least cost.

Also Read:  The Functions of Human Resource Management

Let us now see why human resource planning is important for companies.

Importance of human resource planning, assessing the right number of employees required.

Having excess or fewer staff members can be a problem for any company. If there aren’t enough employees to complete all jobs, a firm can’t achieve its goals. Having surplus staff members can lead to excess expense and a drain on profits. Human resources planning is the way to ensure that there is just the correct staff strength that will help a firm achieve its goals. When the number of employees is apt, they will also get quick promotions and better pay.

Planning Lays The Foundation For Other Tasks

As human resource planning is the first task undertaken by the department, it lays the foundation for all other tasks. When planning is done, the officials can know-how recruitment must be done. They can decide on selection criteria. When they know what people are required, it also helps provide training for existing staff to make them skilled to occupy higher positions. Good planning also helps provide funds to pay salaries for the additional employees and increments to deserving people.

Also Read:  Is Human Resource Management a Good Career Option?

Preparing For Changes

Business and market environments are constantly changing. Job nature itself can change when there are changes in the market. The introduction of new technologies has made it necessary for employees to be appropriately skilled to adopt them. This will need training of existing employees or recruitment of new ones. Personnel managers keep an eye for such developments and plan accordingly. When HR planning is done correctly, it helps companies prepare for the changes and ensure that their employees can keep pace with the changes.

Investing In Workforce

Adding human resources will need additional funds. Such an investment must give the best returns. Planning is a part of human capital management that helps prepare for such investment and know what returns can be expected. It enables the top management to understand whether the money spent on inducting new employees will be profitable. Good planning will ensure that those who are recruited are most suitable for the job. These employees will give good benefits to a firm.

Enables To Make Expansion Plans

With human resource planning, companies can know exactly how many people are needed and what it will cost the company. Such information is vital during company expansion and diversification. Labor costs in different regions can vary. When a company is planning expansion to a new area, HR officials will check the prices in these areas and estimate. Such planning is helpful for management to assess how much the expansion will cost them and what revenues must be earned to offset this.

Also Read:  What Role Do HR Certifications Play in Developing Long-Lasting Careers?

Manage Employee Turnover  

There is a good demand for qualified and skilled people in India. This results in high employee turnover in many industries. People are constantly looking for better opportunities, and they don’t hesitate to move to a new company when the chance occurs. This means that companies will have a shortage of staff members. Human resource planning will consider such factors and make sure that they are ready with replacements when people leave. This will help work to go on smoothly without interruption.

Implement International Expansion Plan

As globalization progresses, many companies are looking at expansion to other countries. There are many countries with huge potential for Indian products. It will be beneficial for companies to expand to such nations. But there must be a clear idea for the management about how much it will cost them to employ staff for these operations abroad. Human resource planning will give an exact estimate about how many people will be needed and how much it will cost the company.

Managing Technology Integration

New technologies are frequently emerging, and this makes work more efficient and fast. The integration of such technology also reduces the need for the human workforce. As companies adopt modern developments, there is bound to be an excess of employees in specific departments. Companies must decide what to do with these people, making sure that they don’t suffer in any manner. Human resource planning is an essential activity before such technologies are introduced in a company.

Also Read:  Become an effective HR professional with this HRM course

Objectives Of Human Resource Planning

We have seen how vital HR planning is. It is essential to know what objectives this process will achieve.

  • HR planning allows for accurate assessment of future human resource needs.
  • This process helps to avoid excess or short staffing.
  • Companies will have suitably skilled manpower.
  • Companies can do modernization and technology integration easily.
  • HR planning helps companies achieve their objectives with the right workforce.
  • Good human resources planning helps reduce employment costs.
  • With planning, skill requirements can be fulfilled.
  • Employees also benefit by being able to achieve their objectives.
  • Training needs of employees can be planned correctly.
  • Planning helps improve employee productivity.

Steps In Human Resource Planning

Analyzing requirements.

Human resource planning starts with analyzing the requirements of various departments. Not every business unit will need to add people. Some may want to reduce some staff members due to automation. HR departments must analyze all the requirements and decide whether to recruit people or move some from one department to another. They must consider the organization’s objectives when planning for people. Understanding the goals of different departments helps to know the changes necessary in the organization.

Taking The Human Resource Inventory

Once the necessary changes have been identified, the next step in human resource planning is to take an inventory of the available workforce in the firm. Human resources will not just include the people but also their capabilities, skills, and performing capacities. This will help the HR planning officials decide how to fill the vacancies due to additional requirements of various departments. They can determine whether they can find the people from within or have to recruit new hands.

Also Read:  How to Find Human Resources Job Opportunities?

Forecast Employee Demand And Supply

Human resource planning also helps in forecasting the demand for employees in various departments. HR officials understand the development plans of each business unit and predict how many employees they will need. These officials can also use analytics to find out employee requirements for the future. Another important task they undertake is to find out how the supply of people will be in the future. This is essential to decide the right time to hire more people. Such forecasting helps to acquire the best talents at low costs.

Knowing The Gaps

Once the demand and supply are forecasted, personnel managers can understand what gaps will be arising in the future. There can be either shortage or surplus of employees in future. Among departments themselves, some can have excess and others not have enough people. Knowing the gaps helps the human resource managers to see how they can be offset by using people from within. Sometimes it is possible to train some surplus workers and make them capable of filling up vacant positions.

Create A Plan

Once the gaps are identified along with departmental requirements and supply status, it is time to formulate a plan to fill them. The HR management team can decide how they must do this. They can recruit, transfer, terminate, retire or upskill employees to ensure that every business unit has the required staff members. They must also ensure there are no surplus workers, which can drain the profits. The plan must also include the costs that will be incurred for these activities.

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Implement The Plan

The next step in planning is to implement the plan. It is not as easy as it sounds because it will need acceptance and permission from business heads and the top bosses. Funds must be allocated for hiring, training, or termination of employees. Departmental heads must concur with the plans made by HR. Training must be arranged where necessary and ensured that the person selected for promotion would fit the role perfectly. If they must recruit, then personnel managers must initiate the procedures for that.

Monitoring and controlling

The implementation is not entirely in the hands of the HR department. Even in the department, the planning team won’t be the ones to recruit people. Training is given by someone else, either from within the company or outside. Department heads must keep track of their new additions, if any. If they have reduced workers, they must ensure that the work is being done by someone else. The HR planning team must collect all this information to ensure proper implementation of the plan.

Human resource planning is the way of finding out and filling the staffing requirements of a firm. We have seen the steps in this process. Now it is essential to see what factors must be considered when making a human resource plan.

Factors Affecting Human Resource Planning

The employment situation in a region or the country is a significant factor that affects resource planning. Depending on whether there is high unemployment or a shortage of skilled people, labor costs can change. Cost is an essential factor in HR planning, which can affect how an organization fulfills its manpower requirements. Sometimes the shortage of people with specific skills can also raise their costs steeply. In such cases, companies may shelve the plan to appoint anyone and outsource such jobs.

Type And Objectives Of The Organization

This is another essential aspect that is considered when planning for human resources. Companies in the same industry may vary from each other in their style of functioning. This can affect the way the workforce is designed. The objectives of a company will also have an impact on the selection of the type of workforce. If a company plans to have organic growth, it will need to appoint additional staff members. But if it aims to grow through mergers or acquisitions, it may have to restructure or reduce employees to avoid overlapping functions.

Also Read:  Scope and Opportunity in Human Resource Management in India

Organizational Status

An organization goes through different stages, from embryonic to declining. At various stages, its requirement of employees is different. When it starts functioning, there may not be much HR planning required as the organization must get its footing firmly. When the firm starts growing, there will be hectic workforce planning as there is a need for additional employees. In the mature stage, there will hardly be any need for more workers. The plans will be only for the retirement of existing personnel. When the enterprise starts to decline then, HR will be planning for reductions or layoffs.

Technological Advancements

Human capital management is greatly affected by advancements in technology. Any new development is immediately used for commercial purposes. Companies adopt modern sciences to improve efficiency and reduce costs. This will also result in the need for a lesser human workforce. When doing HR planning, officials must indeed look at whether there is a possibility of adopting new technologies and how many employees will be replaced by the machines. Companies must do planning to relocate or reduce the employees.

Both the company’s the nation’s economy will affect employment planning. If the company is going through a financial crisis, any addition of human resources will be put on hold. HR officials will be more concerned about retaining existing employees. The economy of a country can also affect workforce planning. If the nation goes into recession, then there will be less money with people. Their purchases will be restricted to essentials. This will result in reduced sales of many items. Companies making such products will not plan for any expansion or human resources addition.

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Plan Duration

Companies will need to plan for both the present and future. Short-term planning will be different from long-term planning. With so many uncertainties in the market, long-term planning may undergo various changes before it is implemented. But short-term plans are executed quickly because situations can change rapidly. If a company is going through an uncertain phase, there may be no long-term planning. New companies will make more short-term plans till they stabilize. Planning must be completed, taking into consideration the goals of the company and their duration.

Quality Of Data

Modern HR managers take the help of analytics when planning for people. This is an excellent way to understand past incidents and get valuable insights for the future. Analytics is done using past data held by a firm and from external sources. The quality of data is a very critical factor for getting the right results. If the information is not used correctly, analytics results will vary and lead to wrong decisions. This is why HR officials must ensure that quality data is used when planning for human resources.

Social Responsibility

Inclusiveness is every corporation’s responsibility. Whatever be the size of the establishment, it must make sure that the staff comprises all communities and genders. Avoiding people from certain communities or genders can significantly affect the efficiency of the firm. This can also go against its social responsibility obligations. When planning for a workforce, HR managers must ensure that enough representation is there for all communities and genders. They must also see that the local community is given more preference to get their support.

Though human resource planning is a critical function for every organization, not everyone seems to think so. There are various obstacles to complete the workforce planning task. Some of these are man-made, and others are due to the improper use of technology. Such barriers make it difficult for HR managers to plan the workforce correctly. This can result in the firm having either excess, short or unskilled employees. It is worth looking at these challenges in detail.

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Obstacles To Human Resource Planning

1. lack of support.

Any activity in a company will be successful only if the top management supports it. Human resource planning is no different. But in many companies, it can be seen that the chiefs consider HR planning as a waste of time. They are in a false notion that people can be recruited at any time, and there is no need to plan for that. Such a lack of support can be a major obstacle to this activity. HR managers must convince their bosses that the company could find itself falling short or having excess staff without proper planning.

2. Not Understanding HR Officials

It is very common to see managers controlling human resources departments being considered as not the right people to recruit. Department heads often feel that they are more qualified to plan and select the workforce for their team. This can put HR managers in a challenging position. They need to convince department heads about their capability to appoint the right people to achieve its goals. The previous aspect is essential for this. They must get the support of their top management.

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3. Incompatible Information

A company makes its strategic plans on a long-term basis. The information used for this purpose is with the view to forming strategies for the future. But when human resource planning is done, it may not be possible to use such long-term strategies. Conditions keep changing, and HR can only make plans on the basis of short-term information. This incompatibility can become an obstacle to proper planning. It is necessary to put efforts into aligning the HR planning goals with that of the company.

4. Using Multiple Approaches

Every organization must have the required number of employees. They must also have employees with the qualities that are needed for the successful execution of various jobs. Sometimes there are differences of opinions on this matter between HR officials themselves or with others like the top management or department heads. While both these approaches are relevant for an organization, it is necessary that they are used correctly. All stakeholders must come to an understanding and use each approach where it is most suitable.

5. Lack Of Coordination  

Coordination is vital for proper HR planning. The human capital management team depends on the support from various departments in deciding on the quantity and quality of employees required to achieve goals. The cooperation of the operations manager is vital for planning. But often, it is seen that many managers in the company are not in favor of coordinating with the HR departments for various reasons. There are many causes for the difference of opinion with the personnel department. These can come in the way of supporting those officials in proper HR planning.

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6. Not Knowing The Goals

Human resource planning is done with specific goals in mind. There can be both short-term and long-term goals for this activity. It is not only just about appointing or terminating people. HR planning involves the transfer of people to different departments. Training for employees forms a part of the plan. HR officials must clearly understand the purpose for which this activity is undertaken. Planning can be for different goals during different periods. A lack of understanding of these goals can derail the process. The process can go wrong and result in the wrong positioning of people.

7. Wrong Efforts

HR employees who are tasked with planning must have a deep understanding of the functioning of a company. Different firms function differently, and their manpower requirements will be different. When the organizational setup is not the same everywhere, the planning process and the techniques used cannot be similar. Copying a process from other companies or using technologies just because competitors use them can be the greatest obstacle to proper planning. HR officials must formulate a method that is unique to their firm and one that will suit perfectly.

8. Employee Resistance

Human resource planning happens on many occasions. When there is an expansion, this activity is undertaken. Even when there is a reduction in business and revenues are not up to expectations, there is a restructuring of staff members. This needs planning too. Mergers and acquisitions are events that warrant HR planning. During all these processes, employees are likely to be shifted to other departments or lose their jobs. Some may also see themselves rise to higher positions. Because of this uncertainty, there is resistance from workers for manpower planning, and this can be an obstacle.

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9. Cost And Time

Planning employee placements can be a time-consuming process. The experts must consider both the short-term and long-term impact of changes in employee strength and positions. In companies where the human resource department has fewer members, it could take them away from regular work. Employers can fear that their normal work will be disturbed and resist planning activities. Planning is good only if it is implemented. Implementation can be expensive if it involves hiring new people and promoting existing ones. This is another reason for business owners to resist HR planning.

10. Fear Of Uncertainties

Despite using the latest analytical technologies, planning can go wrong due to various uncertain factors. Fluctuating trade cycles and market conditions can upset the operations of a company. If employees are hired as per plans and revenues drop suddenly, the company may find itself struggling to pay salaries. Manpower turnover is another factor. Fast turnover of employees can force HR officials to drop long-term plans and resolve to manage contingencies. They may not be able to execute what they have planned. Such fear of uncertain factors can prevent personnel managers from attempting to do HR planning.

11. Lack Of Modern Technology  

Not all companies have the latest HRIS packages. This can be a hurdle for the collection of accurate information. Without such information, HR managers cannot know the exact nature of all employees or their skills. They will not have data about which employees are compatible with which department heads. This is crucial information that is needed when moving people from one area to another. Precise information about which department suffers the most employee attrition is crucial for proper planning. This may not be available in the absence of HR software. This can be a barrier to attempting HR planning.

It is not possible or appropriate to drop human resource planning altogether because there are so many barriers to formulating and implementing it. Those in charge of HR management must look for ways in which planning can be made successful. Here are some ideas that can help to make this process a success.

Also Read:  The Key Responsibilities of a Human Resources Department in a Business

Guidelines To Successful Planning

1. organize well.

Manpower planning is not something that can be done hastily. It must be a well-thought-out process that is done using people who are proficient in it. Personnel managers must select a group of officials who have in-depth knowledge about the company and its functioning. A separate committee must be created to do the planning. They must coordinate with different departments and complete the procedure successfully.

Firstly the HR experts must assimilate all information about employees and their skills. They must see who will give the best results in each position. Such an analysis must be done before starting the planning process. Further, the human resource officials must understand the employee numbers and placements in competing companies. This will give an idea of how to make this process a success.

2. Support From The Top

Human resource planning requires people and money. It is a process that needs a dedicated team to be set up. This team must work out all the details before finalizing the plan. It is also a process that requires money. If the plan must be put into practice, there may be a need for more employees or promoting some of them. This needs extra funds. Both people and funds can be sourced only with the top management’s permission.

HR managers must put up their planning process and its need to the bosses. They must convince the top management about the need for proper HR planning and how it will benefit the company. The improvement in efficiency and the subsequent cost saving must be explained, so that company owners understand the need for the exercise. Once HR managers receive support from the top, the work becomes much easier.

Also Read:  Challenges of Human Resource Management

3. Get Adequate Information

Accurate information is key to the success of any operation. Employee panning is no different. Without proper information, it is not possible to plan the placement of workers. The information must come from both inside and outside. Past information about employee movement and turnover must be analyzed to understand if there are any jobs where workers will not stay for long. Such information is crucial for planning.

Market data is also very important. HR officials must take the help of sales and marketing departments to know the market trends. If there is going to be a decline in the demand for the company’s products, then there can be a drop in revenue. This can affect the planning process. Depending on the growth rate of the company, employee requirements will change.

4. Customize The Plan

Every company is different in its objectives and way of functioning. Even companies in the same industry don’t have similar goals. Some may be looking to expand to new areas, while other firms may try to add new customer segments. This means that the skills and capabilities needed will also be different. The mix of employees must be tailor-made for each company, and this necessitates planning also to be unique.

Those in charge of HR management must make a plan that is customized to suit their firm’s requirements. The plan must be in line with the company’s objectives. It is necessary to have workers with skills that will help in achieving such objectives. Personnel managers must formulate a plan to ensure that suitable employees are available in every department to meet its goals.

5. Make Timely Plans

A company that is starting its operations will have a different requirement from one that is already established and functioning well. An expanding organization will have a need for employees at the various locations they are planning to set up their new offices. Mergers will have different employee requirements. When a company introduces a new item, there may be a need for new employees experienced in that product. Every situation has a different need.

An HR manager must stay updated with the company’s position and what its requirements are. The official must know if there is any change in the objectives of the company. According to this, the planning for human resources will also change. Plans must be made to suit a particular period. One cannot recruit for all times. Human resource departments must know what their bosses are planning and what would be the employee requirements.

Also Read:  How Human Resource Can Helping Business with Talent Acquisition and Management?

6. Participation Of Managers

One of the critical factors in human resources planning is the participation of line managers. They are the ones who are on the ground and will know the requirements of every department. They will know the skills that are required for achieving the company objectives. These officials also know their teams very well and can precisely tell which worker is good in what skills. Such knowledge is crucial for HR planning.

HR managers must take these managers into confidence and convey the information they seek. Such details are available with the line managers, and they will gladly help senior management in this matter. The team leaders are also essential to implement HR plans and make sure employees are following the new plans and changes in their duties without any resistance.

7. Make Plans Flexible

Market situations are changing very quickly. This will require companies to also have capabilities that are relevant at that particular time. It is not just market situations that change. Even internal employee positions can change. The sudden drain of employees to new companies can create a necessity for restructuring. If a company is not able to suddenly fill up the vacancies, it may need to move employees to suitable positions to ensure that critical jobs are completed.

Internal changes can happen in other ways too. If there is a drop in profitability due to raw material prices, then the firm may be forced to have a rethinking about its product mix. This will demand the appointment of people who are familiar with the new products and their production. Even the marketing team will need new members. Such flexibility in the plan must be built-in to take care of rapidly changing situations.

8. Have A Focused Approach

Human capital management can be effective only when there is a focused approach to planning. Personnel managers must consider both the qualitative and quantitative requirements of manpower to achieve company goals. While considering manpower requirements, they must look at skills that are needed. HR officials must try to upskill existing workers to satisfy the capability needs.

Instead of focussing on adding new employees alone, there must be an in-depth study about how the changing needs of a company can be satisfied using employees that are already present. Recruiting new employees is expensive. A high employee turnover can affect a firm’s reputation.

Wrapping Up

HR planning is not given much importance in many firms as unions object to this activity. There is a general feeling that this procedure is aimed at reducing manpower. Such views should be changed by human resource officials, and planning should be brought in as a regular exercise.

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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.

importance of human resource planning in business

Michela Buttignol

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.

Human Resource Planning

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.

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Importance of Human Resource Planning

importance of human resource planning in business

Everything you need to know about the importance of human resource planning. Human resource planning is very important as it helps in determining the future human resource needs of the organization.

The effectiveness of human resource planning process decides the adequacy of available manpower in the organization. An unsuccessful human resource planning leads to either shortage or surplus of workforce in the organization and brings serious disaster.

The importance of human resource planning can be studied under the following heads:- 1. Key to Managerial Functions 2. Efficient Utilization 3. Motivation 4. Better Industrial Relations 5. Higher Productivity.

Importance of Human Resource Planning or Manpower Planning

Importance of human resource planning – key to managerial functions, efficient utilization, motivation, better industrial relations and higher productivity.

We are acquainted with the objectives, approaches, forecasting, and techniques of HR planning. Obviously the importance of HR planning is manifold. It serves as a key to managerial functions, efficient utiliza­tion of men, identifying and motivating them, promoting industrial relations, and boosting productivity.


i. Key to Managerial Functions :

Planning, organizing, leading, directing, and controlling (POLDC) are the five managerial functions that need HR for their execution. Human resources help in the accomplishment of all these managerial activities effectively and efficiently. Therefore, staffing becomes a key to all managerial functions.

ii. Efficient Utilization :

With the emergence of the concept of the global village, handling HR efficiently has become an impor­tant function in the industry. Large organizations need huge HR to execute their job effectively. As such, the staffing function has emerged as a critical organization process.

iii. Motivation :

Irrespective of their levels, organizational citizens need motivation. The staffing function, in addition to putting the right men on the right job, also comprises various motivational programmes. It is essential to launch financial and non-financial motivational schemes, including incentive plans. Therefore, all types of incentive plans become an integral part of staffing function to satisfy both intrinsic and extrinsic motivation.

iv. Better Industrial Relations :

Stability, smooth running, and growth of a concern depend on the quality of interpersonal relations; especially on the relation between the management and unions. Members from the unions and asso­ciations form a collective bargaining forum. A strong relation between them helps taking decisions collectively. Furthermore, human relations can become even stronger through effective control, clear communication, and effective supervision and leadership.

v. Higher Productivity :

Productivity levels increase with the efficient utilization of resources in the best possible manner. Productivity is enhanced by minimizing wastage of time, money, efforts, and energies. Alternatively, cost reduction, value engineering, method study and work measurement, and other techniques help to enhance productivity. Human resource and its related activities/systems such as performance appraisal, / training and development, remuneration, further settle on productivity.

Importance of Human Resource Planning – 10 Benefits to the Organization

Human Resource Planning is an important and highly specialized activity.

If this activity is taken up professionally by the human resource team it can offer numerous benefits to the organization which are as follows:

1. It is wise for the managers to anticipate the workforce requirements with precision rather than getting burdened with unrequited workforce.

2. Planning prevents the business from falling into the trap of ill-equipped departments with workforce which is a common concern among all industries.

3. It Works proactively as the expansion in the workforce market is not always in conjunction with the workforce requirement of the organization in terms of professional experience, talent needs, skills, etc.

4. Organizations in growth phase may face the challenge of meeting the need for critical set of skills, competencies and talent to meet their strategic objectives so they can stand well-prepared to meet the HR needs if they have planned well.

5. Considering the organizational goals, HR Planning allows the identification, selection and development of required talent or competency within the organization.

6. Planning Provides organization with competent Personnel.

7. It Enables organization to optimally use manpower.

8. Human resource planning enables a company to plan its expansion and diversification.

9. Human Resource Planning contributes towards management succession and development.

10. It helps in planning physical facilities.

It is, therefore, suitable on the part of the organization to opt for HR Planning to prevent any unnecessary hurdles in its workforce needs. An HR Consulting Firm can provide the organization with a comprehensive HR assessment and planning to meet its future requirements in the most cost-effective and timely manner.

1. Human resource planning is a continuous process – Human Resource Planning is a continuous process by which management ensures that it has the right personnel, who are capable of completing those tasks that help the organization, reach its objectives.

2. Human resource planning links people to company’s mission, vision, goals and objectives – Rigorous Human Resource Planning links people management to the organization’s mission, vision, goals and objectives, as well as its strategic plan and budgetary resources.

3. Human resource planning is forward looking process – Human resource planning is a forward-looking function. It occupies a pivotal place in successful human resource management programme. It ensures that people are available to extend their willing hands towards the development endeavours of an organization.

4. Human Resource Planning is Value Addition in Competition and Economic Downturn – In the times of great economic turbulence, the importance of human resource planning is more apparent than ever. A short-sighted lay-off, intended to temporarily reduce overhead, can result in much heavier long-term costs. We may regret letting people go when we are spending time and money to hire and train new staff. Plus, we lose profits when we lose experienced, knowledgeable and talented employees.

Increasing environmental instability, demographic shifts, changes in technology, and heightened international competition are changing the need for and the nature of human resource planning in several organizations in India and across the world.

In addition, organizations are realising that in order to adequately address human resource concerns, they must develop long-term as well as short term solutions. As human resource planners involve themselves in more programmes to serve the needs of the business, and even influence the direction of the business, they face new increased responsibilities and challenges.

Importance of Human Resource Planning – With Reasons Why Human Resource Planning is Essential

Human resource planning is very important as it helps in determining the future human resource needs of the organization. The effectiveness of human resource planning process decides the adequacy of available manpower in the organization. An unsuccessful human resource planning leads to either shortage or surplus of workforce in the organization and brings serious disaster.

The importance of human resource planning are as follows:

a. Human resource planning helps in finding out surplus and shortage of manpower in the organization. Hence it creates reservoir of talents;

b. It leads to systematic employee development and prepares people for future;

c. It is useful in finding out the deficiencies in existing manpower and providing corrective training;

d. It is helpful in overall planning process of the organization;

e. It facilitates the expansion or contraction of scale of operations;

f. It helps in preparing appropriate human resource budget for each department or division, which helps in controlling manpower costs; and

g. It plays a major role in succession planning for the key personnel in the organization.

When man is considered as a resource, it is understood, he has some potential characteristics, which can be used to organizational needs in the path of fulfilling the organizational, social and national goals. Manpower or Human resource can be considered as the total knowledge, skills, creative abilities, talents and aptitudes of an organization’s work force, as well as the values, attitudes and benefits of an individual involved.

Among the resources used for production i.e. materials, machines, methods, money and manpower, the most important M is manpower resource. When considered as a resource, it is valuable asset of the organization. Hence, planning for manpower is as important as planning for other resources.

Manpower planning or Human Resource Planning is synonymous. It is forecasting future manpower requirement to cater the needs of the organization. It involves of making an inventory of present manpower resources and assess the extent to which these resources are employed optimally. It consists of projecting future manpower requirements and developing manpower plans for the implementation of the projections.

If Human resource planning is used properly, it helps in maximum utilization of human resources, reduces excess labor turnover and high absenteeism; improves productivity and excels the organization in achieving the purpose for which it is established. A bad manpower plan may induce dissatisfaction in labor and lead to higher labor turnover, reduces productivity.

Human resource planning is essential because of the following reasons:

i. It provides the required personnel with necessary qualification, skills, knowledge, work experience and aptitude.

ii. To replace the employees who retire, who leave the organization for some reason or the other and to promote/transfer people, proper manpower planning will help the manager.

iii. It helps in estimating the labor turnover and making a forecast and provides adequate supply of labour force in time.

iv. Manpower planning helps the manager to estimate the human resource required for business expansion programs.

v. Human resource planning helps in planning for training needs due to challenging changes in industrial environment, technology etc.

vi. It helps in identifying areas of surplus or shortage of personnel and making the necessary modifications.

Importance of Human Resource Planning – 7 Ways in Which Human Resource Planning is an Important Tool of Human Resource Management

Human resource planning is a two-phased process by which management can project future human resource requirements and develop human resource plans. It helps in proper recruitment and selection so that right types of people are available to occupy various positions in the organisation.

It also facilitates designing of training programs for the employees to develop the required skills in them. Thus, human resource planning plays an important role in the effective management of personnel.

Systematic human resource planning provides lead time for the acquisition and training of employees to meet future requirements. It is all the more crucial because the lead time for procuring personnel is a time consuming process and in certain cases, one may not always get the requisite type of personnel needed for the jobs.

Non-availability of suitable human resource may result in postponement or delays in executing new projects and expansion programs, which ultimately lead to lower efficiency and productivity. To overcome this, an organisation must plan out its human resource requirements well in advance so that it could compete effectively with its competitors in the market.

Human resource planning is an important tool of Human Resource Management as it helps in the following ways:

1. Human resource planning results in reduced labour costs as it helps the management to anticipate shortages and/or surpluses of human resource and correct these imbalances before they become unmanageable and expensive.

2. It serves as a basis for planning employee development that is designed to make optimum use of workers’ skills within the organisation.

3. It enables identification of the gaps of the existing personnel so that corrective training could be imparted. Thus, the training program becomes more effective.

4. It leads to improvement in the overall business planning process.

5. It helps in formulating managerial succession plan as a part of the replacement planning process which is necessitated when job-change plans for managers are formulated. Besides, this exercise would provide enough lead time for identifying and developing managers to move up the corporate ladder.

6. It leads to a greater awareness of the importance of sound human resource management throughout the organisation.

7. It serves as a tool to evaluate the effect of alternative human resource actions and policies.

Importance of Human Resource Planning – In Indian Organisations

For industrial organizations in India, the issue of manpower planning has special significance. Advance planning and action for a resource is required when it cannot be acquired or divested quickly according to the requirement of the business and/or when it can be acquired but cannot be used in the organization without further development over a period of time. There are several reasons why human resource acquisition or reduction in our country cannot be done at will.

The foremost reason being the difficulty in estimating the actual requirements of manpower in the company based on company business projection. The question arises how to estimate the demand for manpower in a company? How much can one rely on such estimation? Though Indian economy has made considerable progress in developing database and statistical information about industrial activities, yet very few organizations are aware of this and even fewer organizations have expertise in using it.

One of the critical differences between a developed economy and a developing economy is that in a developed economy the documentation process of economic activities is also quite developed. And, most people have good access to this publicly available information on economy.

Moreover, the problem related to statistical information on economy in general and company specific manpower information in particular get compounded further by the widespread apprehension among industrial organizations for loss of company secret. Some of these concerns are possibly valid but much of it are overreactions.

Mostly these reactions are due to unawareness of public good that may come from sharing of information with public agencies. All the same, the apprehensions are very much there. A lot of work needs to be done to allay these fears before an industry specific database can be built for estimation of manpower demand or supply.

The second issue is the general response of the local population in terms of choice of career to market signal on economic opportunity and career. Poor communication infrastructure and low mobility of workforce are two characteristics which give our labour markets certain levels of rigidities. In the Indian economy, it is quite common to find a low wage sector operating side by side with a high wage sector for many years without much exchange of manpower or market-based correction of the wage rates.

Example – Illiterate workers working as regular peon in a government office at block level versus similarly skilled rural labour in agricultural household. The annual income of a regular government employee is more than double that of a rural unorganized labour.

The labour market adjustment process is too slow to make much difference in the wage rates of workers in organized and unorganized sectors. It is this kind of market inertia which may make it very risky for business organizations to rely on the external market for their required manpower.

The nature of academic training facility of the country does not make the load lighter either. Aca­demic institutes in general and technical institutes in particular have developed and grown along es­tablished lines. Very few institutes show interest to keep up with the changing demands of the industry and innovate into new areas or new ways of delivering educational programmes.

The lack of academic material and inadequate communication between academic institutes and industry makes all the more difficult to have academic programmes in emerging areas. Most academic programmes developed along traditional lines because these were the areas where documented knowledge were available.

With, this state of academic training facilities and the response patterns of the general population, the industry has no choice but to rely for most of its manpower requirements on in-house facility. Development of expertise is a slow process and development of skill through on the job experience is even slower. Most in-house learning processes follow a conservative route along established lines because of high cost of managerial time and apprehension of trainees’ mistakes.

Trainees or newly hired employees are rarely given the opportunity for experimentation or jobs that require reflection. The result is that most on job learning processes are slow and require careful advance planning for appropriate job placement and managerial guidance. Naturally, the supply of manpower from internal learning system is a long drawn process.

Apart from the slow learning process, progressive loss of interest in learning by the learners and/or because of poor facilities for learning are other factors which take heavy toll on the number of learners who survive a learning process. There is always a possibility that in a batch of say 10 learners all of them would not pass out with flying colours at the end of a long learning programme.

This attrition rate is higher when the duration of the programme is long and the content of the programme requires a lot of hard work and self-initiative. The attrition also depends on the quality of the facilities provided to the learners. A simple statistic from national educational programme at high school level will show how the natural attrition of the learners reduces the potential number of candidates at the end of a long-learning programme.

At the all India level, during 2006-2007 the dropout rate of students who passed out from fifth standard education was 25.4%. The corresponding rate of those who passed out eight standard was 46% and those who passed out the tenth standard was 60% (Ministry of Human Resource Devel­opment 2009).

This means that if we took a sample of 100 students who started their first standard education today, then at the end of their five years of education we would end up with just 75 students, at the end eighth standard we would get just 56 students, and at the end of tenth standard we would be left with just 40 students in the class.

The rest 60 students were dropped dead either because they lost interest or because the learning programme content was too tough for them to understand. At the national level quite a high dropout of school level learners could be attributed to poor learning facility both in school and/or at home. This is why dropout rates are so high in rural schools than those in urban centres.

Now imagine a batch of fresh graduate managers going through an organizational learning and developmental programme of say 10-year long. Do you think all of the freshly recruited managers would pass out with flying colours at the end of say 10 years of internal experience-based developmental programme? Most likely they will not.

Some will dropout because they are getting better offer in other organization. Some will fail because they do not fit with the internal human infrastructure of the company well. Some will lose interest to acquire expertise because the company does not have that many chairs at higher level.

The dropout rate for company managers is likely to be much more than the dropout rates of the school-going children. First, a freshly recruited manager may get lots of other opportunities knocking on his/her door every other day disturbing his/her concentration to acquire new skills and expertise. His/her family organization may place lot of additional demands on his/her time.

Second, because the number of positions in higher levels comes down as one moves up in the hierarchy, unless an organization grows very fast the organizational hierarchy may not be able to accommodate all the freshly recruited managers in higher levels. In other words, because the capacity for developmental opportunity in an organization comes down as one moves up in the hierarchy, there is likely to be purposeful rationing process for allocation of opportunities.

Most Indian business organizations operate in a single country. They compete with many other organizations in the same product as well as factor markets. Naturally, their growth could not be very high to accommodate all the learners with newer positions continuously. This means such organiza­tions may find that dropout rates of their freshly recruited managers are pretty high.

An Indian organization which is expecting to develop all its senior managers through in-house development process must plan its internal developmental programme well in advance and with sufficiently large pool of candidates.

Another related issue in manpower planning is the requirement of manpower reduction. With the Indian economy getting integrated with the world market, much of the advantage of inward-oriented economy that provided a lot of insulation to the Indian organizations from the ups and downs of the world market may go away. And, many organizations may have to live with frequent highs and lows of their businesses.

Manpower planning is a hard job, but for Indian business organizations perhaps it is harder to reduce manpower. Due to lack of employee mobility any business driven manpower reduction attempt is not taken kindly by either the employee union or the government.

This means before hiring an employee, a company has to assume and ensure that there will be enough job for that employee for the rest of his/her career. A company may not be able to close its plant even when its ecological niche has shrunk in size and does not support its continued sustenance or growth.

Inadequate manpower acquisition and development may jeopardize a company business expan­sion plan in future yet excessive zeal in manpower acquisition and development without considering the long-term business prospect may make it sink fast in hard times.

Importance of Human Resource Planning: 10 Important Points

1. Estimating future demand for human resources – HRP determines the future requirement of personnel on the pace of development, expansion and diversification of business. It also deals with surplus and deficit workforce of the organization.

2. Bridging the gap – HRP plays an important role in bridging the gap between the demand and supply of workforce in an organization.

3. Enhancing workforce – HRP advocates for training and development of workforce to cater to the future demand for workforce.

4. Coping with changes – HRP facilitates to cope with changes. As the changes are inevitable, HRP focuses on change in nature of workforce, technological change, organizational change, demographic changes, legality and ethicality in dealing with workforce.

5. Determining the cost of human resources – Out flow of money is involved in every process of HRM. HRP takes into account the money spent on every activity of HRM and facilitates cost control and cost reduction.

6. Cost of hiring and training – HRP minimizes the cost of hiring and procurement. It is simple to understand that money unspent is money saved.

7. Diversification and expansion of business – Diversification and expansion of business results in demand for workforces. HRP determines the qualitative and quantitative workforce requirement for an organization.

8. Management development programmes – HRP decides upon the need for management development programmes and facilitates to conduct the same more effectively and efficiently.

9. Optimal utilization of human resources – Effective Human Resource Planning will help ascertain the adequate workforce and facilitate to use them optimally. It also prevents disguised unemployment and overloading, leading to job stress.

10. Essential for strategic planning – Strategic plans are the long-term plans of the organization. In the absence of HRP, strategic planning will become ineffective.

Related Articles:

  • Definitions of Human Resource Planning
  • Need for Human Resource Planning
  • Barriers to Human Resource Planning
  • Importance of Human Resource Management

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Human Resource Planning (HRP): Definition, Importance & Process

Human resource planning.

Human Resource Planning is a systematic process of forecasting both the prospective demand for and supply of manpower, and employment of skills with the objectives of the organization. It can also be termed as the method of reviewing the manpower necessities to ensure that right kind of skills is made available to the organization.

The main purpose of HRP is to set the goals and objectives of the company. In other words, it is to have the precise number of employees, with their skills matching the requirements of the organization, so that the organization can move towards its goals. Chief objectives of Human Resource Planning are as follows:

  • Guarantee ample supply of resources, whenever there is a need for it.
  • Make sure that the current manpower in the company is being used properly.
  • To foresee the potential requirements of manpower at various skill levels.
  • Evaluate excess or scarcity of resources that are available at a given point of time.
  • Predict the impact of technological changes on the resources as well as on the kind of jobs they do.
  • Manage the resources that are already employed in the organization.
  • Ensure that there is a lead time available to pick and train any supplementary human resource.

Need for Human Resource Planning

The need of HRP may arise because of the following reasons:

  • In India, unemployment is a grave concern. Scarcity of manpower and that too with the required skill sets and competence, has given rise for need of Human Resource Planning.
  • It comes handy for smooth and continuous supply of workers when a huge number of employees is retiring, or leaving the company or maybe they are incapable of working due to psychological or physical ailments.
  • There is a need for Human Resource Planning when there is an increase in employee turnover, which is obvious. Some examples of this turnover are promotions, marriages, end of contract, etc.
  • Technological changes lead to a chain of changes in the organization, right from skill sets product methods and administration techniques. These changes lead to an overall change in the number of employees required and with entirely different skill set. It is here that the Human Resource Planning helps the organization deal with the necessary changes.
  • Human Resource Planning is required to meet the requirements of diversification and growth of a company.
  • There is a need for Human Resource Planning in downsizing the resources when there is a shortage of manpower. Similarly, in case of excess resources, it helps in redeploying them in other projects of the company.

Importance of Human Resource Planning

After the need for HRP, it is apt to discuss the importance of it. A few are mentioned below.

  • It gives the company the right kind of workforce at the right time frame and in right figures.
  • In striking a balance between demand-for and supply-of resources, HRP helps in the optimum usage of resources and also in reducing the labor cost.
  • Cautiously forecasting the future helps to supervise manpower in a better way, thus pitfalls can be avoided.
  • It helps the organization to develop a succession plan for all its employees. In this way, it creates a way for internal promotions.
  • It compels the organization to evaluate the weaknesses and strengths of personnel thereby making the management to take remedial measures.
  • The organization as a whole is benefited when it comes to increase in productivity, profit, skills, etc., thus giving an edge over its competitors.

Human Resource Planning Process

In any Human Resource Planning model there are three key elements which the management should adhere to:

  • Forecasting recruitment needs : There are a number of ways in forecasting your business needs, to know the exact number of employees required to run the business. Factors to be considered are the economical situation of any given country, internal and external factors of an organization and the demand for the products.
  • Evaluate Supply : In estimating this, there are two aspects, one is the evaluation of the internal resources and the other is the prospective or external resources. Among the two, external factors require extra care, these include education, unemployment rate and law that is in existence. Evaluating these factors very closely will help the organization in filling the right resources at the right time with the right skill set.
  • Supply and demand balance : This element of Human Resource Planning is very important, as striking a balance between these two forces will help the organization in understanding if there is shortage or excess of employees available in a particular group. It also helps in understanding as to the need of full time or part time needs of the organization.

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Human Resource Planning: Definition, Importance, Objectives, Process & Prerequisites

importance of human resource planning in 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.


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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Understanding the Importance of Human Resource Planning

  • StaffAny Team
  • February 6, 2023

Home » HR Management » Understanding the Importance of Human Resource Planning

Human Resource Planning (HRP) is a vital aspect of business operations that involves forecasting future personnel needs and developing strategies to meet them. It includes determining the number and types of employees needed, identifying skill gaps, and creating a plan to attract, retain, and set the necessary talents.

By effectively implementing HRP, businesses can manage their staff efficiently and adapt to changes in the economy, legislation, or technology. To effectively manage your business’s staffing, it’s essential to understand the importance of HRP and develop strategies to meet your personnel needs.

What Is Human Resource Planning?

What Is Human Resource Planning

Human Resource Planning (HRP) is a vital process for any business that aims to align its workforce with its strategic objectives. It involves forecasting future personnel needs, identifying potential skill gaps, and developing strategies to address them. By effectively implementing HRP, businesses can ensure they have the right number and types of employees with the necessary skills to meet current and future demands. This human resource management also involves creating a plan to attract, retain and set the necessary talents.

One of the key components of hr planning is forecasting the number and types of employees needed in the future. This step involves analysing current and projected business needs, as well as considering external factors such as changes in the economy, legislation, or technology. Once the forecast is complete, businesses can develop strategies to meet those needs, such as recruiting new employees , training existing staff, or outsourcing specific tasks. This allows businesses to proactively address workforce shortages and skill gaps, and position themselves for long-term success.

Read more: The Importance of Relationship Management with Customers

Why Human Resource Planning Matters?

What Human Resource Planning Brings to the Business

Human Resource Planning brings many benefits to businesses. In this section, we will explore some of the specific benefits that HRP brings to your business.

1. Improved Efficiency

Effective human resource planning helps improve efficiency and is essential for any business that wants to achieve operational excellence. By forecasting future personnel needs and developing strategies to meet them, businesses can ensure they have the right number and types of employees with the necessary skills to meet current and future demands. This leads to increased productivity, better performance and reduced costs.

2. Better Talent Retention

Human resource planning helps your business with employee retention adn employee turnover rate as well. B y identifying skill gaps and developing strategies to fill them, businesses can provide their employees with the necessary skills to advance in their careers. This not only helps to reduce turnover but also improves employee satisfaction and engagement. This can help a business to build a talented and motivated workforce that can drive long-term success.

3. Increased Flexibility

Human resource planning can be a powerful tool for increasing the flexibility and competitiveness of your business. By forecasting future human resource needs and developing strategies to meet them, your business can ensure it has the right talents with the necessary skills to adapt to changes in the market, such as new technologies or changes in consumer preferences.

This allows a business to stay agile and responsive to market shifts, giving it a significant advantage over competitors who lack the same level of foresight and strategic manpower planning. 

4. Better Financial Planning

Human resource planning can help your business make better financial decisions. You can better predict and plan for human resource budget, such as salaries and benefits for existing employees and hiring costs for attracting new talents. This allows for more informed financial strategic planning and decision making , as the business can more accurately project and allocate resources for staffing needs.

Read more:   Understanding Employee Management System and Its Benefits

5. Improved Employee Development

Lastly, human resource planning enables a business to identify potential skill gaps among its current employees and provide opportunities for professional development and growth. By providing your human resources with training, mentoring, and other opportunities for skill-building, a business can not only improve employee satisfaction and retention but also increase the overall skill level of its workforce. This can lead to increased productivity and improved performance, driving the growth and success of the business. 

6. Compliance and Risk Management

Effective human resource planning ensures compliance with legal and regulatory requirements related to employment practices, diversity and inclusion, compensation, and employee benefits. It also mitigates risks associated with workforce gaps, skill shortages, or sudden changes in labor market conditions.

7. Organizational Agility

By having a well-planned and adaptable workforce, organizations can respond effectively to changing market conditions, industry disruptions, or growth opportunities. Human resource planning allows organizations to anticipate and address talent gaps, ensuring the availability of the right skills and competencies at the right time.

Overall, human resource planning plays a critical role in aligning the organization’s workforce with its strategic goals, optimizing talent utilization, fostering employee development and engagement, and ensuring long-term organizational success.

Read more:  Understanding Manpower Planning and Its Importance in F&B

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The Steps of Human Resource Planning Process

Basic Steps in Human Resource Planning

Implementing human resource planning involves several steps, from forecasting personnel needs, developing strategies to meet those needs, implementing, and monitoring those strategies. Let’s elaborate:

1. Forecasting Personnel Needs

First, as a human resource planners, you should forecast personnel needs by analysing current and projected business needs, taking into account external factors such as changes in the economy, legislation, or technology. This will help you determine the number and types of employees you will need in the future.

2. Developing Strategies

Once the forecast is complete, you can develop strategies to meet those needs. This can include recruiting new employees, training existing staff, or outsourcing specific tasks. It’s essential to consider the organisation’s overall goals and objectives when developing strategies to ensure that they align with the overall mission and vision of the company.

3. Job Analysis and Job Design

Conducting a detailed job analysis to understand the specific tasks, responsibilities, and qualifications required for each job role within the organization. This information helps in determining the skills and competencies needed for future hires or existing employees to perform effectively. Job design involves structuring and organizing job roles to optimize productivity and align with the organization’s objectives.

4. Implementing and Monitoring

The next step is to implement the strategies developed in the previous step. During the implementation, it’s important to track the progress of these strategies to ensure that they are achieving the desired results. This can include monitoring the recruitment process, employee retention, and performance metrics.

5. Reviewing and Updating

HRP is an ongoing process, and it is vital to review and update strategies as needed. This step may involve adjusting strategies to meet changing business needs or recruiting and retention strategies to address changes in the job market.

Read more:  A Comprehensive Guide on Shift Work Schedule Management in the F&B Industry

With effective HR Planning in place, your business can reduce turnover and improve employee satisfaction which ultimately leads to reduced costs associated with the recruitment and training of new staff. Overall, HRP is a critical process for any business looking to promote employee development, improve performance, and drive long-term success.

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Aside from helping with human resource planning,  your business can improve communication between staff – where they can view their own timesheets, improving trust and eliminating payslip discrepancies. Find out how StaffAny can help with your human resource planning, get in touch with us via whatsapp or start your free trial now!

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Explain why human resource planning is so important to an organization.

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1 Explain why human resource planning is so important to an organization

Planning is very important to our everyday activities; it is not easy as one might think because it requires someone to come out with a programme that would make your work easy. Human resource planning is important to an organization because it develops the strategies for matching the size and skills of the workforce organizational needs. Human resource planning help assist organizations to recruit, retain, and optimize the development of the personnel needed to meet the business objectives and to response to change in the external environment. HR planning involves gathering of information, making objectives and making decisions to enable the organizations achieve its objectives. The organization objectives and strategies for the future determine future needs of human resource. It means number and mix of human resources are reaction to the overall organizational strategy. It follows different procedures including the need to assess the impact of technological changes and new jobs and new skills.

There are four main reasons for human planning human planning

  • It encourages employers to develop clear link between their business plan and their HR plans so that they can bring together the two effectively
  • Organization can control staff costs and numbers employed more efficiently.
  • Employees can build up a skill profile for each of their employees. This makes it easier for employers to give them work where they are most value to the organization
  • It creates a profile of staff, which related to gender, race and disability.

If HR planning works effectively the outcomes will be…

  • Employees are stretched to their full potential to benefits the organization.
  • Employees do challenging work, which motivates them
  • Overtime is only done when vitally necessary
  • Employees are properly qualified to the job given to them.

Example: KPN came out with the new wireless modem their staff would need to operate the system before, but also present complex IT equipments must to handle. By forecasting the needs of technical and other human resources it can minimize the future risk of losing. A delay in recognizing human resources might be costly and expensive in the future. (Example: ABN AMRO banks are compelled to upgrade their staffs by providing the latest skills and knowledge, so that they stay competing against other banking businesses. Human resource planning is also good for investors who want to invest in the business. Any investment in the HR activities considered an investment for the future growth and development of the organization. It is also helpful to accommodate government legislation regarding inclusion, qualification for possible future demand of trade unions. Human resource planning promotes the awareness that human resource activities are equally important at every level of the organization both lone and staff managers have to be involved in human resource planning activities.

There are three key stages, which are involved in HR planning such as:

  • Stock taking- stocktaking is to do with what is the quantity and quality off staff available in the organization. It uses the techniques such as job analysis, which is gathering all the information available about all the jobs in the organization. The most important aspect of this job is to do the job description and the person specification for each job.
  • Forecasting supply- meaning looking at the internal and external source of labour
  • Implementation and review- organization must undertake regular reviews to ensure that their human resources planning are effective.

Training involves employees being taught new skills or improving skills they already have. A well trained workforce has definite benefits for the business for example; a well trained workforce will be more productive. This will help the business achieve its set objectives such as to make profit. It also helps to create a more flexible workforce and improve employee’s chance of promotion. HR also needs to be able to indentify need for training, because there is a difference between the knowledge and skills of the employee and those, which are actually required, this may indicate need for training. Employees can also be asked about which areas there performance is not of high standards. This will make the workforce more committed to training and can be found in different levels in a business. Employers should only train people for the job they are employed to do but also train them for the future. Most managers will have a system of indentifying career potential in an employee. If they don’t have a system to do this they can end up in a dead end job and which will not motivate them. Employees who’s potential are not realized will often leave the organization, this means that employer will lose people who could have been a very great asset to the organization, had their potential been realized.

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Future human resource needs future direction of the organization which is done basing upon its current human resource situation. Year by year the organization analyze every job level and type is necessary. It is good for an organization to have a mix of people but it is not easy task to maintain all types of people in the organization. If accurate estimates are to be made of future demand in both qualitative and quantitative terms, a lot of information is required. Increasing and decreasing of human resource is normal it’s good by estimating changes in the internal supply and looking at different factors of changes, by increasing it can be done by new hiring, transfer of personnel or individuals returning from a long leave. These are easy to estimate as they are for a fixed period. In this situation organization cannot fire their employee. Decrease in human resource can be done by retirements, dismissals or sabbaticals. These are all ways where human resource planning can assess their strategy. So, resource planning has been used by organization to ensure that the right person in is doing the right job and the right time.

M2 Compare the use of motivation theories in an organization

Motivation theories indentify aspects of motivation that can be enchanced through pay or responsibility. It influences on and within people that encourage and sustain them to work to their best ability. There are techniques that are used to improve motivation that a managers use in the workplace. Motivation can cause a business to be productively, because their employees are more dedicated to their work .

Employee motivation

To retain good staff and to encourage them to give their best while at work requires attention to the financial and physiological rewards offered by the organization as a continue exercise. Basic financial rewards and conditions of service such as working hours per week are determined externally in many occupations. Staffs needs will vary with the productivity of the workforce therefore a good personnel policy are desirable. The latter can depend up on other factors like environment, welfare, employee benefit, etc. but unless the wages are accepted as fair and just there will be no motivation. The motivation theories that have been used are:

  • Expectancy theory
  • Need theories

Maslow level-What the organization can do

  • Learning and pay theories

Expectancy theory   victor vroom define the expectancy theory as the theory that motivation will be high when workers believe that the high levels of effort lead to high performances and high performances least to attainment of desired outcomes. It reflects better in society today. This theory is to encourage the motivation of employees in a business, such as the Marriott hotel. The front desk clerk will do excellent appraisal performances so it can be reached through personel endeaover. He or she will then be dedicated to their job, knowing that doing your work good can be evaluated with benefits, such as bonus, raising salaries and even promotion. Employees are satisfied by incentive, so then that shows that the relationship between hard working and appraisal performances is the first aspect to promote a person’s value to a higher level

Need theories a need is a requirement or a necessity for surivival and well being. So therefore need theories suggest that in order to motivate a workforce, managers must first determine what needs employees are trying to satisfy within the organization, making sure that employee receive an outcome that satisfies such needs when performed at high levels and contribution to the organization, as Maslow hierarchy of needs, Herzberg’s motivator-hygiene theory and McClelland’s needs for achievement, affiliation and power. Their theories are probably the most popular motivation theories. Since Marriott hotel is a big sized building, housekeeping will wants to be satisfied before they can move onto the next level such as

Physiological needs-Competitive salaries, not because they only just clean but because of housekeeping is why the rooms and clean and appropriate for guest.  They should be given a good paid salary

Security needs-Safety working condition, knowing the chemicals they use to clean with are not harm to them.

Social needs -they are be able to work at social events, say now where celebrities or important people are at stay give them to work on those days.

Self-esteem needs-Giving those feed backs, letting them know they are doing a good job, since they only clean rooms door to door its good for management to come by and compliment them at times.

Self actualization-Giving them more challenges, giving someone leadership and being involved in a part of management. So then the head of housekeeping can receive more responsibility.

And the same goes Frederick Herzberg. If the motivation hygiene theory holds, management not only must provide hygiene factors to avoid dissatisfaction, but also must provide factors relating to the work itself in order for employees to be satisfied with their jobs. He believe that job enrichment for motivation is having sufficient challenges to utilize the full ability of the employee, giving them increasing levels of responsibility or even if  a job cannot use the full abilities of an employee, then the firm should consider a task or replacing the employee with one who has a low level of skills.

Nearly the same as David McClelland who took the needs of motivation and expanded them further, his needs allows for the shaping of a person’s needs. In his acquired needs theory he proposed that an employee specific needs are acquired over the time and are shaped by one’s life experiences. Most of the needs can be classed as achievement, affliation or power. So then you can see how housekeeping and other staffs motivation and effectiveness in their job function are influences by these there needs.

Learning and pay theories the learning theoriey suggest that managers can motivate people to perform highly by using positive and negative reinforcement. Just as McGregor he took the idea of motivation and applied it to management theories, such as treating workers will allow them to work better if they are showing lack of interest in the business. For example if the luggage carrier if he show poor work performances management can threaten him that he can receive verbal reprimand, loose his job or even cut down on his pay.  And if he is doing a good job he can be rewarded with bonuses or pay rises. Like that they will work harder and show their contribution to the job. Fredrick Taylor he believes the more an employee works, the greater their pay and the less they work the less they get pay. He believe motivation for workers are pay for doing a job., workers in a hotel must work for the pay but once they find the pay isn’t enough it can have an effort on their performance, they expect if they work hard and do their taskt that they should receive bonuses  or salary increases. Marriot hotel needs all their staff members in order to run a successful business so without pay there is no business.

M3 Explain how the results from measuring and managing performance inform employee development

Measuring and managing an employee development all has to do with their formal education, job experience, assessments of personality and abilities that help employees’ perform effectively in their current or future job and company. Measuring and managing helps a company to improve quality, retain key employees and be ahead of their competitors. A company can see how well a business is doing by the amount of customers and profits they make. They can compare how well employees work by checking each employee individually to see how much they have produced. Measuring employee development can be done by:

Bench marking

Using standard measurements in a service can be used to compare with other organizations in order to gain perspective on organizational performance. Performance management bring together many of the elements which go to make up the successful practice of people management, including learning and development. We’re used to thinking of ongoing performance management for employees, for example, setting goals, monitoring the employee’s achievement of those goals, sharing feedback with the employee, evaluating the employee’s performances, rewarding performance or firing the employee. Employees are happier if they know how they are doing, if they know they are doing a good job and it has been acknowledged, they will generally continue to do a good job as and strive to do more. If people don’t receive feedback and they aren’t doing a good job, employers expect them to be satisfied or productive.

When an employee start and new job they are often put on probation for a certain amount of time so they can be monitored more closely. This gives the employee the opportunity to demonstrate their suitability for the job but also allows an employer to depend on the level of the job they have been appointed to do. Probation can last from one week to one year. Having an employee on probation allows more feedback meeting and intervention to take place, which can be useful for the employer and employee to help them constantly to improve.

Appraisal systems in any organization should be designed to motivate and encourage employees to give their best performance. The targets that are set by the employer and employee should strike a balance between what is needed for the business and what the employee needs. an employee may feel they would like to attend a particular course in the coming appraisal period, but if it does not met a business need the manager may need to persuade them to understand different trainings.

Since Marriott hotel has products and service they can see how many guests have check in and out within the last months. Like this they can manage and see that customers are satisfied with their staff’s performances. They can also calculate the amount of complaints taken and who worked on that day to have their individual judgment on how they can improve customers satisfaction. Goal setting is important for providing ongoing and year end feedback. By monitoring targets management can give their employees input on their performances while motivating them to achieve more. It is important that targets are relevant to employee as well as the employer so they everyone is aware of what needs to be achieved and that way in which the targets will help to meet the business and employee needs. Staying on top of employee progress will help from any mistakes coming in the long run. This could be done by asking your employee what type of monitoring and feedback would be most helpful to them, especially if the task is challenging or if it’s the first time there doing it. A good way to measure and manage your employee is to have performance evaluation system, managers can then see their results and the targets that can perform, achieve and make improvements on. Management want employees to work as hard as they possibly can, but they need to understand and put into place methods of helping their employees, by making sure the environment is healthy and relaxing to work in. that can help employees to feel happy, safe and less stress. Making sure that employee don’t feel pressures at work is by giving them to much workload, have then done equally will help both the company and employee. Such as the security guards at hotel since nightshifts are heavier than day shift their work can be part time by having flexible working hours. Businesses have used awards, incentives and recognition schemes to encourage improved performances. Employees will then set out a goal to achieve to receive them incentives. If management can see that an employee is doing well, producing at a high level and is always motivated, they can be promoted. Some employees have a trial period so if they do their outmost best they can get the opportunity to work for the company in long term. This is measuring and managing by the competence that the employee has, like this employers must be prepared to invest in that individual. Like this they can make competence level for the staff and make adjustment to the future training process as necessary.

The employees have an important role in working for a company. They have to work to the best of their ability as the place was like their second home. If an employee has a problem with a situation on the job, it is the company role to be supportive to them. This will increase the loyalty of the staff working in the company. Employee development is the final area to look at when considering employee performance and monitoring. If employees want a change in department in the company, they should do courses so it can help them to develop and improve on their job performance. Is the same as job rotation by having more workload done. Giving your employees career breaks is a good way for them to function more effectively at work. So by giving them a break to develop themselves personally can take the form of stress or time management training. Those above indicators provide information on the outcomes of our actions, because they measure the outcomes that have resulted from past actions. It also indicates information about the current situation that may affect future performances. The reason for measuring and managing employee developments can help identify the main threats to the future performances and opportunities for improvement and actions that can be taken to remove threats or develop opportunities.

Explain why human resource planning is so important to an organization.

Document Details

  • Word Count 3090
  • Page Count 7
  • Level AS and A Level
  • Subject Business Studies

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