Human resource planning defined

Human resource planning is a strategic method of forecasting and planning for your company’s talent. The goal of an HR plan is to ensure your organization has enough people with the right skills to complete upcoming workloads efficiently.

HR managers assess upcoming projects and initiatives to anticipate what type of staffing and skills are necessary to make them a success. Using data and a systematic approach, the team aims to have the right amount of staffing to avoid shortages or excess employees.

Importance of HR planning

HRM planning offers many benefits to your organization, including:

• Productivity: When you accurately anticipate your staffing, you can have employees in place to minimize productivity disruptions. Being ready to hire means you can get new employees on board and trained quickly to minimize downtime.
• Profitability: Accurate staffing can save you money on hiring costs, training costs and lost productivity, which can help you increase your profits.
• Quality staffing: Anticipating staffing changes allows you to take your time during the hiring process. This gives you time to find employees who offer the right talents instead of rushing to get anyone to fill the vacancy.
• Increased quality of current employees: HR planning can also help improve the skills of your current employees by identifying the skills and training you can offer.
• Maximizing employee skills: HR planning can help you identify employees who aren’t utilized to their full potential. You might discover that some employees already have the necessary skills, or you might identify employees with management potential to allow for internal promotions.
• Employee retention: By providing your employees with training and keeping your company properly staffed, you could retain more employees. You can have high turnover if employees are overworked due to understaffing or don’t get the training and support they need.
• Planning for other HR functions: The information you uncover from HR planning can guide other areas of HR. For example, it can help you develop your training program, support diversification efforts or re-evaluate your benefits package to better attract new employees.
• Adapting to industry changes: Using industry data in addition to internal data about your company helps you adapt as the industry changes. By anticipating changes or learning about them when they first start, you can make staffing changes to accommodate those developments. This positions you ahead of competitors and can help you avoid any problems the changes might cause.

Challenges of HRM planning

Human resource planning isn’t perfect since you can’t control all the factors. You can use the data you have, but you can’t control certain things, such as employee turnover, vacations, extended leaves, promotions and changes in the industry that affect staffing. Unexpected, explosive growth can also make planning challenging. For example, you might create a viral social media post that suddenly inundates your company with new business.

HR planning process

There are four basic parts to the human resource planning process. Each step involves a great deal of research and planning, which can make it a lengthy process. Learn more about the four steps below.

1. Evaluating your current HR situation

Before you can plan for the future, you need data on your current staffing situation. This step requires you to evaluate your current employees and the employment situation overall. Some things you should evaluate include:

• Number of employees in total and broken down by department and position
• Employee skills and qualifications
• Performance and proficiency levels for each employee
• Benefits you offer
• Employees nearing retirement age

Some of this data, such as the number of employees, is easy to collect. Other information, such as individual employee skills and performance levels, might require tools, such as surveys, performance reviews and input from other managers.

2. Forecasting changes and future needs

Now it’s time to analyze where your company is going. This is where you consider how you might have to change your staffing going forward, which might include increasing the number of employees, expanding the skills of current employees or both.

This process requires both supply and demand forecasting. In supply forecasting, you review your current staff to see how well they can meet your goals going forward. You’ll also consider things, such as anticipated promotions, retirements and turnover , that will affect your current staffing. In demand forecasting, you determine how many people and what type of skills you should add.

When creating these forecasts, review both internal and external factors. Internal factors could include product lines you anticipate launching or changes with your current employees. External factors can be overall labor shortages, changing technology and increasing labor costs.

3. Identifying the gaps

Using the evaluation of your current staffing and the forecasted changes, you can perform a gap analysis to see what changes are necessary. It helps you compare where you are to where you want to be, so you can figure out how to get there.

This helps you determine how well your current employees fit their role and how well you’re maximizing their skills, as well as any new skills you want your employees to learn. It helps you identify how many and what type of employees you should hire. For example, your analysis might help you determine that you could benefit from more managers or add a new role to your staff.

4. Implement the HR plan

Using all the data and evaluations you did, you can create and implement your plan for getting to your ideal staffing situation. Break down the changes into steps that your HR department can implement, such as creating a budget, developing a hiring plan and establishing new training programs for current employees. You might also create timelines for adding new positions or completing current employee training.