Human resource planning - Process steps
— August 19th, 2021
In today's knowledge economy an organization's most valuable asset is its human resources – its employees. Their skills and knowledge, as well as their relationships with key customers, can often be irreplaceable and can determine an organization's success. So much so, human resource planning is now an integral part of an organization's strategy.
Human resource planning is a four-step process that analyzes current human resources, forecasts future requirements, identifies areas where there are gaps, and then implements a plan to tighten up those gaps. Breaking it down, the objectives of human resource planning are to make sure you have the right number of people in the right jobs at the right time.
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What are the steps in the human resource planning process?
Step 1: Assess your current human resource capacity
Start by looking at your current human resources state of play. This will involve analyzing the HR strength of your organization across factors including employee numbers, skills, qualifications, experience, age, contracts, performance ratings, titles, and compensations.
During this phase, it's a good idea to gather insight from your managers who can provide real-world feedback on the human resource issues they face, as well as areas in which they think changes are necessary.
Step 2: Forecast future HR requirements
You will then need to look at the future HR needs of your organization and how human resources will be applied to meet these organizational goals. HR managers will typically look at the market or sectoral trends, new technologies that could automate certain processes, as well as industry analysis in order to gauge future requirements.
Of course, there are a number of factors affecting human resource planning such as natural employee attrition, layoffs, likely vacancies, retirements, promotions, and end of contract terms. Above all of this, you will need to understand the goals of the organization: are you entering a new market, launching new products or services, expanding into new areas. Forecasting HR demand is a complex task based on several dynamics.
Being informed and having a seat, or at least an ear, at the boardroom level is essential if you are to make accurate HR projections.
Step 3: Identify HR gaps
An effective human resource plan walks the fine line between supply and demand. By assessing the current HR capacity and projecting future requirements you should have a clear picture of any gaps that exist. Using your HR forecast you can better judge if there will be a skills gap, for example.
Should you upskill existing employees or recruit employees who are already qualified in specific areas? Are all current employees being utilized in the right areas or would their skills be better suited to different roles?
Step 4: Integrate the plan with your organization's overall strategy
After you've assessed your current human resources capacity, projected future HR demands, and identified the gaps, the final step is to integrate your human resources plan with your organizational strategy. On a practical level, you will need a dedicated budget for human resources recruiting, training or redundancies, and you will also need management buy-in across the business.
You will need cooperation and the necessary finances in order to implement the plan and a collaborative approach from all departments to put it into practice. Learn about the benefits of strategic human resource management.
What is the importance of human resource planning?
- The HR department is prepared for changing requirements
- Your organization is not caught off-guard in the shifting workforce market
- Adapt faster to the introduction of automation or advanced technologies
- Gain competitive advantage through the rapid rollout of new products or into new markets
- Better anticipate the need for critical skills during growth phases
- Be proactive by honing the skills of the current workforce in order to move into new areas
What are the different types of Human Resource planning?
One of the most important responsibilities of HR is to identify, attract, and hire new employees. To make sure the recruiting process runs smoothly, HR must dedicate sufficient time and energy to planning it effectively.
Benefits, compensation, opportunities for growth are all key elements employees seek in a new position, and they all should be taken into consideration when planning the recruitment process, especially if an organization wants to scoop up the best employees.
By helping employees develop their skills, knowledge, and abilities, an organization can improve its overall effectiveness. Human resource planning in terms of development should focus on how it can improve the current and future workforce.
HR must plan for how this development will take place, will it be informal such as coaching managers or learning from more experienced employees, or formal such as in-classroom training, or hiring a paid consultant.
Retaining employees is not an easy task but it's HR's duty to build a strategy that can prevent employees from quitting. This strategy or plan should have the goal of finding the best methods to keep employees content and satisfied in their current role.
Encouraging a healthy work-life balance, rewarding hard work, offering opportunities for career advancement are all factors to consider in an employee retention plan.
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Other types of Human Resource Planning:
- Contingent workforce
- Leadership development
- Career paths
- Performance management
- Potential retirements
- Internal placements
- Identifying job and competency needs
What is the role of Human Resource planning
Foundation of other HR functions
When carried out effectively, Human resource planning is the foundation of the HR department as a whole and allows all major functions such as selecting, hiring, onboarding, and training staff to run smoothly.
Coping with change
As always in the business world, companies continue to restructure and reorganize. Human resource planning is important to help businesses cope in the middle of this change whether it's got to do with technology, the economy, staff qualifications, or employee demand.
Recruitment of Talented Personnel
Another purpose of HR planning is to recruit and select the most capable employees for available roles. It determines human resource needs, assesses the available HR inventory level, and finally recruits the personnel needed to perform the job.
Human resources must engage in tracking a company’s turnover rate. In other words, the ratio of employees who leave to the average number of all employees. Once turnover tracking is in place, the data can be used to analyze trends, outline any issues, report to management, and prepare reduction strategies.
Creating a talented skills inventory
A skills inventory is a record of the skills, qualifications, and past experiences of current employees. Creating this record ensures that an organization has the right workers to carry out the work it requires. With an increasing need for dynamic and engaged employees, HR planning to attract talented and capable workers is more important than ever.
Assessing future employee needs
Several questions that can help HR professionals recognize current workforce shortages and predict future necessities include:
- How can we fill existing skill shortages?
- How can we reduce current turnover rates?
- What competencies will our company need to meet our business objectives?
- Will future hires be full or part-time, permanent or temporary?
- Where will the labor force be located?
- What rewards system will be used?
- How will our company rank with competitors?
Human resource planning is not just an essential part of every successful business but one of its most important assets. The main purpose of HR planning is to set the goals and objectives of the company and allow businesses to determine the talent that they currently have and the talent they will likely need in the future.
By determining these current and future employment needs, businesses can match talent requirements and reach their goals. This enables companies to maintain a competitive advantage, promotes the growth and longevity of the organization, increases the value of current employees, and aids companies in adapting to industry change.