No matter how much automation or computers penetrate our daily lives or workplaces, they will never be able to replace human resources entirely. Some jobs or activities will always necessitate the use of human resources. 

The global market is a competitive battleground. There is fierce competition in most sectors; we must upgrade the manufacturing process or workplace with modern technological infrastructure.

At the same time, we must recognize that hiring a workforce is one thing, but managing them or keeping them happy at the workplace is quite another. Besides, it is also an important responsibility that every organization should work towards.

This blog will provide a comprehensive overview of human resource planning (HRP). We will learn about the various aspects of the human resource planning process, such as the importance of human resource planning, the benefits of human resource planning, the steps in the human resource planning process, and much more. 

The purpose of this article is to improve your understanding of the HR planning process so that you can effectively hire and manage your workforce as well as manage your workforce inventory.

Let’s start with the basics: what is the human resource planning process?

What is the Human Resource Planning Process?

The human resource planning process can be defined as the process of forecasting, developing, and managing human resources. The HR planning process helps organizations to ensure that they have the right amount and right type of people, in the right location, at the right time, doing the activities for which they are the best fit.

6 Steps of Human Resource Planning (HRP)

1. Determining The Objectives of Human Resource Planning.
2. Analyzing Current Workforce Inventory.
3. Forecasting The Demand & Supply of Human Resources.
4. Identifying Manpower Gap.
5. Preparing Action Plan.
6. Monitoring, Control & Feedback.

Let’s simplify this definition.

In simple terms, human resource planning (HRP) is simply a process by which an organization ensures that they have or will have required human resources at a given time. The process aims to have the workforce that is skilled enough or capable of carrying out specific projects or tasks that will help the firm accomplish its business goals.

This process includes several sub-processes, such as analyzing the current workforce inventory, evaluating future needs, identifying the human resources gap, formulating strategies, outlining policies and training programs, and so on.

And, as one might assume, carrying out all of these operations in a streamlined and organized manner is a challenging task. You will need to evaluate a variety of parameters, including employee profile, employee experience, employee expectations, the time frame, the organization’s resources, the organization’s limitations, and much more.

Let us proceed to the next section to better understand the challenges of the human resource planning process.

Challenges of Human Resource Planning Process

Human resource planning challenges are dynamic and constantly evolving. For example, employees may be transferred to another organization, or they may be on leave, fall sick or be promoted and transferred to another location, and so on.

In addition to these dynamic issues, human resource planning faces several other challenges, as listed below:

• To keep the organization’s limitations in mind when hiring new workers.
• To identify and recruit skilled workers.
• To design training programs.
• To establish an environment in which employees can offer their best.
• To provide each employee with growth opportunities.
• To recognize and reward the top employees based on their performance.
• To deal with the workforce deficit, and
• To resolve human resource problems.

If the organization is small or has few employees, 1-2 HR personnel can handle this. However, if the organization is large and has a large number of employees, a full-fledged team of HR professionals is required. Later on, each HR employee can be allocated a specific task, such as hiring and acquisition, workplace management, people operations, and so on.

This classification of duties will allow them to perform their tasks better and carry out the human resource planning process.

In addition to these, some of the major barriers to human resource planning are as follows:

• Top management often believes that human resource planning (HRP) is unnecessary. They think they will be able to find qualified staff whenever they are required. However, this is not the case. Hiring suitable candidates is a challenging as well as a critical process. The best way to hire the right employees is to have well-thought-out human resource planning and use of advanced hiring software.
• Another significant challenge encountered during strategic human resource planning is the accurate estimation of future needs. It is indeed a difficult task to precisely predict the future supply and demand gap.
• Furthermore, as the time horizon stretches, the process becomes increasingly difficult; for example, strategic human resource planning for the next 6 months may be easy, but planning for the next 2-3 years may be difficult.
• Even if you prepare the ideal hiring strategy and account for all potential roadblocks, there is still a chance that you will fall short of your goals. It is because uncertainties like absenteeism, resignation, personnel turnover, and technical issues can make human resource planning ineffective.

Source: peoplemanagingpeople.com

These are some of the major challenges encountered during the human resource planning process. However, by leveraging advanced HR tools and technology, properly assessing future needs, and understanding the organization’s objectives, one can achieve this goal to a significant extent.

Moreover, you must ensure that the process is carried out in a systematic manner and that all necessary actions are performed. The next section explains the Steps in Human Resource Planning.

6 Steps of Human Resource Planning (HRP) Process

Although each firm has its unique methodology, the human resource planning process consists of 6 major phases. Each phase is critical and serves as the foundation for the next. For this reason, it is recommended that you follow each step in order, without skipping any, in order to achieve the desired results.

1. Determining the Objectives of Human Resource Planning

The first step in the human resource planning process is to identify the goals. As we learned in the previous section, the ultimate goal of HR planning is to bridge the workforce supply and demand gap in order to meet the organization’s future needs. Also, there could be both immediate and long-term goals of HR planning.

This analysis will ensure that you recruit the right number of people for the right kind of positions. For example, suppose you are a website development company, and you expect multiple website development projects from one of your long-term clients in the coming month. In that case, you can hire a few web developers to meet this future need.

Objectives of HR Planning

• To ensure optimum use of the existing human resource.
• To forecast future requirements for HR.
• To link HR planning with organizational planning.
• To provide control measures to ensure that necessary human resources are available as and when required.
• To assess the surplus and shortage of human resources.
• To meet the needs of expansion and diversification programs.

This will save you from a staff crunch when the project arrives, and it will also empower you to complete the project on time and with the best standard. However, it is worth noting that, depending on your needs, you can recruit full-time employees, freelancers, or part-time employees.

2. Analyzing Current Workforce Inventory

The next step in the human resource planning process is to assess the existing workforce inventory. At this stage, you must determine the number and type of staff required for both existing departments and new vacancies.

Moreover, at this juncture, the HR department can evaluate multiple factors such as how many employees will be promoted in the near future or transferred to another office, how many employees will retire in the next quarter or year, how many employees will be laid off, and so on.

In a nutshell, for strategic human resource planning, consider every element that may impact the company’s future needs.

In addition to these internal elements, the Human Resources (HR) department should also consider external elements such as a new technology infrastructure upgrade that your firm is expecting in the near future, or a long holiday season such as Christmas, and so on.

3. Forecasting the Demand & Supply of Human Resources

The 3rd step in the human resource planning process is to forecast human resource demand and supply based on the organization’s objectives and current workforce analysis. Demand is forecasted based on employment trends and replacement needs in the near future, expansion plans, growth expectations, absenteeism rates, and work assessments.

Methods For Demand Forecasting In HR Planning

• Time Trends
• Ratio Analysis
• Managerial Judgment
• Delphi Technique
• Work Study

Most organizations around the world use one of these three fundamental strategies for forecasting demand for strategic human resource resources:

1. Managerial judgment
2. Delphi technique
3. Work-study techniques (Includes workload analysis, workforce analysis, and job analysis)

However, these three methods are primarily used for short-term assessment. But, if your human resource planning objectives are long-term, the following statistical and mathematical methods should be used:

1. Ratio and trend analysis
2. Econometric model
3. Regression analysis

This analysis will eventually allow the HR department to forecast employment demand at a specific time in the future. Aside from demand forecasting, the HR department should also work on supply forecasting. The majority of organizations will have two key sources of human resources supply: A) Internal sources and B) External sources.

Internal resources include transfers, promotions, demotions, employee referrals, retrenched staff, and so on. On the other hand, external sources include campus recruitment, placement agencies, consultancies, online recruitment through job portals, and so on.

4. Identifying Manpower Gap

Identifying the workforce imbalance is the 4th phase in the strategic human resource planning process. The workforce gap is defined as the difference between the workforce required at a certain period in the future and the workforce available at the time. This gap might emerge as either an excess of employees or a shortage of employees.

In the event of a staff shortfall, efforts should be taken to fill the void through new recruits using staffing software or promotions within the organization. Similarly, if there is an excess workforce, it must be decided how to deal with it. You may consider options like transfer, retrenchment, and layoffs.

Source: aihr.com

It is important to mention that underestimating the quality and number of people needed would result in a performance shortfall, whereas overestimating would result in avoidable or unnecessary costs to the organization.

5. Preparing an Action Plan

The next step in the human resource planning process is to create an action plan based on the outcome. For example, if you find that the firm has excess human resources, you must design a strategy to reduce the workforce to an ideal level.

You can implement a variety of techniques, such as voluntary retirement plans, layoffs, retrenchments, and decreased working hours, among others.

Similarly, if statistics indicate that there will be a lack of human resources in the future, you should take steps such as recruiting and selection, promotion, training, and so on. Then, based on the action plan, you should also chalk out the proper budget allocation, develop a strategy, and work together with all departments to put that strategy into effect.

You can break the action plan into smaller tasks to improve the outcome or success of the strategy. For example, suppose you learn from the human resource planning that there will be a shortage of both experienced and fresher personnel.

In that case, you can split this task into two subtasks– A. Recruiting fresher employees and B. Recruiting experienced employees. You can later assign these tasks to individual HR personnel or a team to perform.

This segmentation of the action plan into sub-tasks will offer you a better understanding of each task, as well as allow you to monitor them in real-time and complete them within the deadline.

6. Monitoring, Control & Feedback

The final phase in the strategic human resource planning process is to monitor and control the operation, i.e., the action plan, and provide feedback based on the outcome. This step entails putting the human resource action plan into action, which will be closely monitored by the specialized HR personnel.

The strategy can be tweaked or changed based on the intermediate results. For example, suppose your action plan is to hire 20 new freshmen and 15 new experienced employees over the next three months. You have divided this task into two sub-tasks for better monitoring– One, hire 20 new employees in the first 40 days. Second, recruit 15 experienced employees in the next 50 days.

However, if you find that hiring freshers is taking longer than expected and there is a strong possibility that you will miss the deadline, you can begin hiring experienced candidates parallel so that the second task is not impacted. In a nutshell, you should modify the action plan based on the requirements or feedback.

These are the 6 steps of the human resource planning process. Although the procedure is simple, it is critical that you carry out each operation or activity with high emphasis and professionalism. Remember that if you fail to perform any of these steps correctly, not only the next phase but the entire process will suffer.

Now, let us proceed to the next and final section of this blog to better understand the importance of HR Planning.

The Importance of Human Resource Planning

A well-planned and strategic human resource planning provides many advantages. The following are some of the benefits that highlight the importance of human resource planning:

• Human resource planning ensures that you, the organization, will have the necessary number of employees with the relevant skillset at a specified time in the future.
• The HR planning process will also assist you in understanding the staff shortage or excess that you have or will have at the time. Based on this information, you may plan what needs to be done to ensure the availability of the personnel required by the firm to meet its business objectives.
• The thorough workforce inventory analysis will provide you the time you need to systematically carry out the hiring and acquisition process, hire qualified resources, and balance the workforce in terms of skill set and the number of employees.

Benefits of Human Resource Planning

• Create a reservoir of talent.
• Help cope with fluctuations in staffing.
• Ensure optimum use of the existing human resource.
• Help forecast future requirements for HR.
• Link HR planning with organizational planning.
• Assess the surplus and shortage of human resources.
• Meet the needs of expansion and diversification programs.
• The HR planning also enables the organization to manage overstaffing by laying off, transferring, or demoting employees. This will prevent organizations from wasting resources and unnecessary expenses.
• A strategic human resource planning (HRP) also allows the HR department to better plan the necessary recruitment, selection, deployment, transfer, promotion, and other programs.
• Human capital planning will also enable you to plan and implement an employee training program for new hires in order to prepare them for upcoming assignments.
• Strategic HR planning also lays the groundwork for future development by creating a reservoir of talent capable of filling leadership roles.

All of these advantages combined will help you with kickstarting, carrying out, and completing projects on schedule and with high quality. This will eventually improve client satisfaction and retention rates.

These are some of the primary benefits of human resource planning, which demonstrate its significance in both the short and long term. However, as previously stated, in order to reap the maximum benefit, the HR team must carry out each task correctly and adhere to the best HR practices. 

When properly implemented, a well-planned human resource planning process will provide significant benefits to the business in terms of efficiency, revenue, and reputation.

The Bottom Line

Human resource planning is a strategy used by organizations to maintain a pool of skilled resources while preventing staff imbalances. However, in order to reap the full benefits of human resource planning, you should have a robust HRP strategy in place.

Besides, carry out each task in a systematic and structured manner, from identifying the objectives to reviewing the current workforce inventory to forecasting the supply and demand gap to formulating the action plan. Moreover, you can engage an HR expert and leverage innovative HR tools and technology to assist you in this process while ensuring the best results.