Human Resource Planning: Meaning, Importance And Key Steps
Updated 19 September 2022
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Systematic planning for your company's future requires to involve plans for retaining its quality employees, anticipating requirements for additional staff and recruiting knowledgeable, skilled talent. Proper planning of human resource enables employees to work in roles that suit their abilities, ensures work satisfaction, and contributes towards the company's long-term business success.
In this article, we explain what human resource planning is and its importance for the continued well-being of the business. We also discuss the its process and learn about the tools necessary for developing and implementing the plans.
Related: What Are The Essential Human Resource Management Objectives?
Understanding Human Resource Planning
Human resource planning is concerned with assessing a company's current human resources, identifying its future staff requirements and arranging for skills training for its current, new and future employees. The company's HR department is responsible for its human resource planning and for organising its recruitment drive. The planning process helps the company figure out what type of talent it needs and which company departments would benefit from an infusion of new talent.
Related: On-the-Job Training for Efficient Staff Development
The Importance Of Human Resource Planning
Staffing your company with the right kind of skilled employees is crucial for maintaining its productivity and profit levels. Human resource planning can help you with making present and future hiring decisions according to your business requirements.
Some of the benefits of human resource planning include:
It reviews the skills and capabilities of existing employees
With human resource planning, you can review the skills and capabilities of your current employees and evaluate if they are performing their work tasks adequately or require additional training. You can also decide to promote some of the employees to positions with more responsibilities. That can expand their professional abilities and you would save the time and money needed to interview and recruit new candidates.
Related: What Is Resource Planning? (With Benefits And Techniques)
It anticipates and adapts to industry developments
Human resource planning can help your company adapt to the rapid changes and developments taking place in the industry. You can determine if you would require to create and budget for new roles within your company to handle business operations in new marketing niches. Such preparation would enable your company to expand and prosper in the long term.
It allows the company to stay competitive
To stay competitive in your industry, you require to hire the right people and provide them with the right incentives to continue working for your company. Human resource planning can help ensure that you use the best hiring techniques and offer attractive work terms and benefits to current and prospective employees. Talented, driven people might want to work for your company if you are known to provide decent job training and excellent remuneration and work-life balance.
It ensures the company's long-term growth
It is necessary to consider how your company might evolve and cope with inevitable changes in the future. For instance, you may decide to expand or shrink your business operations, leading to corresponding changes in your requirements for employees and your expectations from them. The employees, too, may have different needs and plans. Some of them may choose to change careers, look for other work opportunities or retire. You would require to keep these things in mind when planning your budget and hiring needs for the coming years.
Related: The Career Planning Process: Practical Steps
Key Steps In Human Resource Planning
You can use the following steps in your human resource planning to develop effective business strategies:
1. Analysing the business objectives of your company
By analysing your company's business objectives, you would be able to determine the type and amount of work you require to do. For instance, you require to set and achieve work goals in production, marketing and sales. You may also require to review your finances and business expansion plans.
Related: Analytical Skills: Definition, Tips and Examples
2. Taking an inventory of your available human resources
It would help to do an inventory of your current employees and review their contribution to your company. You can consider the total number of employees you have in your company, in each department of the company and in each job position. You can also evaluate their qualifications, their work performance and the benefits they receive. Depending on the data you gather, you can pinpoint the areas in which they require to improve and offer counselling or additional training. In some cases, you may be required to decide to let some employees go.
Related: What Is Workforce Planning? (Definition And Steps)
3. Predicting human resource demand and supply requirements
Based on your employee-related data, you can make reasonably accurate supply and demand forecasting for your human resource requirements. You can assess whether you have the skilled and experienced personnel to fulfil your company's business goals or if you would require to make new hires. You would also be able to plan for vacancies that could arise from forthcoming retirements, promotions, job changes and layoffs. Additionally, you would be able to plan for hiring professionals you might need in the future as your company expands and undertakes new specialised tasks.
4. Undertaking gap analysis
Gap analysis is a method of comparing the current performance level of your company with the level of performance you ideally expect from your employees. By determining the existing gap between the current and expected performance levels, you would be able to plan strategies to narrow it down. You would be able to decide if you require to overhaul the company culture, offer training programs to the existing staff, provide more job benefits or hire new and more experienced employees.
5. Creating a human resource action plan
It is necessary to have a human resource action plan to implement changes in your company to deal with talent deficit or surplus. In the case of a talent deficit, you would require to plan for employee redeployments, interdepartmental transfers or a recruitment drive to hire new people. In case of talent surplus, you may be required to cut jobs, ask people to consider voluntary retirement or offer them positions in other less-staffed departments.
6. Monitoring the plan and getting feedback
After implementing the human resource plan, you would require to monitor it and get feedback from the department heads in your company. You would require to make sure that the plan is fulfilling your requirements for human resources allocation, employee training, budgeting and inventory updates. You are also required to plan on taking the appropriate actions in case of deficiencies.
Related: Top HR Skills and Activities
Human Resource Planning Tools
Human resource planning has been facilitated by the availability of a range of technological tools. With these, you can both develop an effective plan and monitor its implementation. Here are some of these tools:
By conducting human resource surveys, you can collect data about employee skill and productivity levels, the effectiveness of training programs and employee satisfaction with workplace culture and work environment. You can also discover if employees feel valued in your company and what advancement opportunities you can offer them. Such surveys are useful in identifying problem areas that you can then address and resolve.
With HR dashboards, you can collect and display a range of employee-related data that you can refer to and use in your human resource planning process. The data can include employee skill levels, employee turnover rate, employee productivity and more.
Scenario planning is a strategic analysis and planning method that helps companies make informed assumptions about their business's future and plan for the expected changes in their business environment and business operations. Successful scenario planning involves identifying and considering different plausible situations, driving forces and outcomes.
Performance management systems
A performance management system is a software program that company managers can use to provide performance ratings and feedback to the employees. You can refer to this performance data in your human resource planning process to decide on promotions and job role changes. You can also decide if you require to introduce training programs to boost skill and productivity levels.
Human resource management systems
A human resource management system is a software program that uses different systems and processes to facilitate human resource management, data management and business process management. You can enter information about human resource planning, payroll management and compensation and benefits into the system. Additionally, you can include details about your recruiting process, hiring decisions, employee productivity, employee promotions, employee work hours and so on. The ability to automate many of the human resource processes makes the human resource management system convenient and time-saving.
Related: What Is an MIS System? (Definition, Importance and Benefits)
Compensation and benefits analysis software
The compensation and benefits analysis software is a program that is useful for planning, structuring, managing and administering employee compensation and benefits packages. You can use it in the human resource planning process to streamline company-wide salary budgets, performance-based incentives and bonuses and fair compensation payouts.
Related: What Is A Resource Manager? (With Duties And Skills)
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