Whether in life or in business, what comes in handy in the face of unexpected circumstances? The answer lies in planning.
Leaving the philosophy of life and its unpredictability out of it, this article discusses the various aspects and importance of planning — specifically, human resource planning. Why? Because with human behavior and external factors are added to the mix, employees are one of the most unpredictable assets a company may have. This factor multiplies the importance of effective human resource planning as a part of human resource management.
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This article will explain what human resource planning is and what it seeks to accomplish, as well as discussing its various benefits and obstacles – read on to find out more about HR planning and HR tools.
In this article, we’ll talk about:
- What Is Human Resource Planning?
- Objectives
- Process
- Benefits
- Common Challenges
- Integration of Strategic Planning With Human Resource Planning
- FAQs
What Is Human Resource Planning?
Human resource planning (HRP) is the process of strategically forecasting the supply and demand for workers and aligning employees’ skills with organizational standards, goals and requirements.
The scope of human resource planning is vast and its impact is far-reaching — it includes present labor supply, labor demand forecast, projected labor demand and supply adjustment.
Human resource planning also determines if your current human resource capacity will be enough to fulfill your organization’s needs towards improved efficiency and, thus, overall profitability.
The process of human resource planning is dynamic and ongoing, involving thorough review, control and assessment. It commences with setting objectives and wraps up with feedback and control of the human resource planning process.
Practically speaking, human resource planning is a consolidated plan — for recruitment, compensation, training and development of skills, workplace rules and ethics, and other aspects. Its core lies in creating a seamless relationship between an employer and employees for more satisfied employees who deliver favorable outcomes for the business.
Objectives
When an organization puts efforts into comprehensive human resource planning, it commits to spending time and resources on the procedure. Naturally, no organization would commit valuable time and resources to anything that doesn’t accomplish any substantial objectives. Here are some of the objectives of human resource planning:
- Assess the required number of employees for the organization.
- Ensure optimum use of the existing workforce.
- Forecast, determine and plan for the levels of recruitment.
- Predict employee turnover and develop a way to minimize its impact on the present pool of resources.
- Forecast technological changes and determine the levels of training needed to avoid any skill gaps, thus maintaining the quality of human resources.
- Estimate and control the cost of human resources, especially for unforeseen circumstances.
- Maximize the future return on investment for human assets.
- Maintain continuity in the workforce.
- Ensure proper allocation of human resources based on knowledge, skill and productivity.
- Control and adjust the cost of salaries and wages in line with budgets.
Human Resource Planning Steps
Here are the steps to create effective human resource planning:
1. Identification of Needs
How do you plan for solutions to unforeseen problems? When it comes to human resource planning, the answer lies in identifying the prospective HR requirements of your company.
This analysis includes answering the following questions:
- At what scale does the organization function?
- What work ethic supports optimal productivity in alignment with employee satisfaction?
- What solutions and processes can enhance your organization’s functionality?
- How can you ensure alignment between HR requirements and employees’ skills?
- What risks can you forecast for the future? How can you mitigate those risks efficiently?
2. Analysis of HR Capabilities
As a part of human resource planning, it’s also important to have a robust analysis of your current HR capacity in mind. It helps bridge the gap between present capacity and forecasted requirements — efficiently planning for the future while making optimal use of present capabilities.
The main questions to ask here include:
- Does your current HR capacity align with forecasted requirements?
- What are the strengths and weaknesses of your current workforce?
- What HR concerns may arise in the future?
- What compliance regulations need to be in place for seamless operations?
3. Identification of Gaps Between HR Demands and Its Present Capacity
Analyzing your workforce’s present capacity as well as the forecasted requirements will surface a variety of gaps in how your organization functions. For instance, the analysis sheds light on the employees’ skills, procedures, policies, capabilities, resource allocation and other business aspects.
Identifying these gaps and obstacles is essential to HRP, as it allows you to do the needful to address them.
4. Development of Strategies to Bridge the Gaps
This step can be labeled as the problem-solving aspect of human resource planning.
The methods to address these gaps can range from work designing, compensation management and strengthening employee relations to improving workforce diversity.
The strategies you develop to address these concerns are according to each requirement and gap. Some examples include:
- Headcount adjustments to create new positions, tweak job descriptions and more.
- Cross-team training, internal internships and workshops for professional development.
- Restructuring for a new team, promotions and more.
5. Execution and Monitoring of the Plan
Proper execution, control and monitoring of strategies are important for completing human resource planning.
- How well is it helping execute your organizational strategy?
- How well are you achieving your productivity, employee retention and satisfaction goals?
- Are there any new practices which might be hindering the plan in certain areas?
Effectively communicated plans are enforced better, thus improving implementation and its results in the long run.
In that sense, the process of human resource planning never really ends. With constant monitoring of the gap strategies, newly emerging gaps can be addressed and changes can be made to existing strategies accordingly.
Tips for HRP
While most procedures are complete by themselves, there is always scope for improvement. Some tips to improve the human resource planning process include:
- Invest in the right HR software to facilitate better decision-making based on actionable insights derived from reporting and analytics.
- Enforce a positive work environment to boost employee productivity and loyalty.
- Enhance the company’s brand value to attract and retain the right talent.
Primary Benefits
Now that we have gone through the steps to create effective human resource planning, let’s explore the key benefits of human resource planning.
What’s in it for your organization? Why should your HR administrators and employees step away from their responsibilities to spend their valuable time and energy on human resource planning?
Better Preparation
No insight brought forth or discussed as a part of human resource planning goes to waste. Everything has its own present or long-term benefits, from demand forecasts to skill gaps and strategies for the same. Time spent planning now is time saved in the future.
More Savings
By facilitating the proper allocation of resources, human resource planning enables optimal productivity while remaining within budget. Smarter use of all resources, whether human or machine, will inevitably lead to better results and minimize extra costs.
All-around Development
When strategies are developed to address the skill gaps arising within the organization, these strategies aren’t limited to the growth of the company.
HRP also leads to skill development that will prove beneficial for the employees irrespective of where they end up working. Employees appreciate these kinds of development opportunities, resulting in greater employee satisfaction.
Boost in Performance and Employee Satisfaction
Last but not least, effective human resource planning ultimately leads to an overall increase in performance and productivity along with higher employee satisfaction.
Investing in HRP provides a long-term advantage for the organization. According to a Gallup report, employees who are not engaged or who are actively disengaged cost the world $7.8 trillion in lost productivity.
Human resource planning helps avoid potential long-term setbacks and potentially detrimental obstacles.
Common Challenges
Nothing beneficial comes without its own set of hurdles. Human resource planning is no exception — especially considering the inherent limitations of forecasting, combined with the fickleness of human nature.
A common challenge you should be aware of before engaging in human resource planning is the conflict between the qualitative and quantitative approaches. It can be difficult to decide what’s more important — analytics and KPIs, or feedback, skill and morale.
Another challenge to look out for is the inaccuracy in the estimated supply and demand of human resources. After all, an estimate is just a calculated guess.
Also, the false assumption around the abundance of available human resources in a labor surplus market leads to resistance when it comes to being involved in human resource planning.
Lastly, uncertainties can throw off even the most well-laid plans. Absenteeism, labor turnover, market fluctuations and other factors are difficult to account for during the planning process. Estimating the accuracy of these uncertainties is far from achievable.
Integration of Strategic Planning With HRP
Strategic planning and human resource planning, while complete processes by themselves, share a codependent relationship. How? Let’s take a step back and understand.
You can’t formulate strategies without an accurate idea about your workforce and its skill, along with any existing gaps or weaknesses. On the other hand, you can’t draw up an effective human resources plan without some clarity about your organization’s long-term goals. The efficiency of one depends on the other.
So, what is the best way to make the most of these crucial aspects of managing a business? The answer lies in balance: alignment between human resources and the creation and execution of strategic plans.
Keep in mind that formulating either of those plans is an interactive procedure that requires insights from employees. Make sure to include all perspectives to avoid errors in both planning processes.
FAQs
How much time does the entire process take?
HR planning is an ongoing process with review and evaluation for constant improvement.
Who’s involved in the process?
HR administrators for forecasting requirements and determining various aspects of HRM. HRP also involves employees in deriving insights about skill gaps in the organization.
Will HR planning improve employee utilization?
It connects the right employee with the right position, thus improving employee utilization.
What are some common tools used?
Some common tools include SWOT HR analysis, organizational charts, RACI matrix, replacement HR charts and more.
Do small-scale organizations also need HR planning?
Human resource planning is required for organizations of all sizes looking to improve their employee productivity and ROI.
Conclusion
Human resource planning does not work in isolation; it involves a variety of aspects like goal setting, HR metrics, skills analysis and more. Employees are its most important factor.
All in all, HRP is a win-win. While HRP isn’t strictly dependent on software, having a strong hold on your HR metrics with reporting and analytics features can go a long way. If you’re considering investing in software or upgrading your current system for better HRP functionality, our HR requirements template makes it easy to find top solutions based on which features you care about the most.
Has human resource planning come in handy under unforeseen circumstances for your business? What tools have been helpful to you in enhancing the process of human resource planning? We’d love to know your insights in the comments below.