Operating a business requires excellent planning and strategizing across all departments. While your finance team is creating budget plans and revenue forecasts, the HR department also has its planning to do so.
Human resource planning can help you understand your current employees’ skills and abilities while guiding your performance management and recruiting focuses.
Learn more about human resource planning (HRP) below, including the key steps to start the process.
What is human resource planning?
Human resource planning (HRP) identifies and plans for your organization’s current and future human resource needs. It’s a core part of strategic human resource management.
HRP is an ongoing process that can be used to address short-term hiring needs and plan for future demand.
You set business goals. You create strategic plans. Therefore, you must engage in human resource planning. This ensures your workforce can keep up with your organizational goals.
If you wish to enhance your social media strategy or expand your company’s products or services, you need employees with the right skills to support those initiatives.
Human resource planning can address many employee management, hiring, and training needs to prepare your future workforce for success, such as:
- Planning for a significant expansion, such as opening a new location.
- Upskilling or reskilling workers due to changes in technology or operational processes.
- Addressing staffing shortages or skill gaps.
- Developing a more robust talent pipeline through university and early career outreach or programs.
- Identifying succession planning needs.
Human resource planning steps
Ready to try human resource planning for your organization? Follow the key steps below.
Evaluating current talent
Start by taking an inventory of your current talent. Consider their current roles and skills while also looking ahead at what gaps they could fill in the future. Which of your current employees can you help upskill to meet the evolving needs of your business?
Ideally, you should have career development plans or conversations about future goals during performance reviews to keep this information up-to-date and readily available.
You’ll also want to consider job satisfaction and turnover rates. Are any of your top performers showing signs of disengagement, or do you routinely struggle with high turnover in a particular area?
You’ll also want to consider these issues when inventorying your current staffing resources and future needs.
Forecasting future needs
Next, start forecasting your future staffing needs. This step often focuses on growth. What roles will you need to reach your business’s next level and meet future demand?
You’ll also want to consider how technology evolves and what that means for your talent needs. What roles will shift due to automation, or what new technological skills will you need to have within your workforce to stay competitive?
Conduct a GAP analysis
Then, you’ll want to conduct a GAP analysis to look for gaps between your current human resources and your demand forecasting. What skills do you need to build, or what roles will you need to fill with new hires?
Are any key roles needing succession planning to ensure that they remain filled in the coming year? Are there skilled employees whose current roles require them to fully utilize their abilities and strengths?
List these gaps and try to prioritize them in urgency and necessity. Smaller businesses may only sometimes have the resources to fill every skill gap, so identify your most pressing needs and look for cheaper solutions like contract labor or internal upskilling to address gaps that can’t be filled with new hires.
Develop and implement strategies to address human resource needs
Once you’ve identified your needs, it’s time to develop HR strategies to address your external recruitment and internal development needs.
Think about what recruitment strategies and channels you can use to build up a recruitment pipeline to provide ongoing access to top talent or where you can better develop internal talent.
If you need more staff members for managerial roles; you may want to work on building a leadership development strategy or program.
If you need more early career talent in the coming years, offering internships or leveraging campus recruiting may help you connect with incoming talent.
You may also need to target more significant issues like employee satisfaction to maintain the necessary number of employees. You can build planned turnover into your HRP based on your current turnover metrics to forecast how many team members you’ll need to replace. Still, ideally, you’ll also want to develop strategies to reduce that turnover.
Review your plan regularly
Your needs and plans can change due to many internal and external shifts, such as changes in the labor market, funding, unexpected departures, and technological advancements that require new skill sets. Set regular reviews for your HRP documents, with at least one review scheduled yearly.
Benefits of human resource planning
Learn how HRP can benefit your organization.
Supporting business growth
Conducting human resource planning alongside your general strategic planning can ensure you have the staffing resources needed to support your business goals and desired growth.
Whether expanding a specific department or mass onboarding employees to open up a new location, the HRP process can support your business growth.
Developing a long-term hiring strategy
Many small businesses only focus on immediate hiring needs, but human resource planning can help you develop a long-term hiring strategy.
Having an ongoing recruiting pipeline enables you to build a pool of qualified talent to pull from on an ongoing basis as your workforce needs change.
By knowing where you’ll need talent, you can explore different hiring sources, such as industry networking events, building your employer branding, campus recruiting, and more.
Identifying and reallocating surplus labor
Part of the human resource process is reviewing your current employee population to see where shortages or surpluses occur. Without proper HRP practices, businesses may sometimes operate with a surplus in a particular area for too long, which is unsuitable for your budget or your employees (who are likely underutilized and may be at risk of being laid off eventually due to redundancy).
HRP allows you to identify surpluses and get a clear view of deficits and upcoming needs, helping you better understand how to reallocate and utilize your surplus employees.
Bridging skill gaps
An effective human resource planning process is beneficial. It gives you a clearer view of your workforce’s skills. Additionally, it shows you which competencies to focus on.
You need these competencies for talent acquisition. You also need them for employee performance development.
This allows you to take a proactive approach to talent management, where you can help your team gradually build the skills they’ll need to support future company needs.
It also can inform your hiring decisions by clarifying what skills to prioritize for new employees.
Common human resource planning challenges
While HRP can offer a competitive advantage and plenty of benefits, there are also some common roadblocks.
Forecasting accuracy
Getting an accurate demand forecast of your future needs (and whether you’ll have the budget to address those needs) can be difficult. The market and internal factors like turnover can be unpredictable.
Your product might go viral on social media, which is unexpected. Consequently, this leads to rapid growth, which may be more than needed. Alternatively, unexpected world events may occur. For example, a pandemic could sideline your growth plans.
For this reason, you need to regularly review your human resource planning and forecasts and adjust as needed.
Adapting your plan when needed
One issue in human resource planning is overly rigid workforce plans. HR managers or business leaders sometimes create these plans. However, adaptability is crucial.
Whether you write a business strategy or a human resource plan, you must adapt to changing business needs and budget adjustments.
Be prepared for resources and needs to shift. A profitability dip or disruptive new technology could quickly alter your plans.
Getting buy in
Both employees and leaders often need help understanding change, which can be a barrier to adequately implementing human resource planning (HRP). One of the end goals of HRP is to develop strategies to prepare your workforce for future needs. However, getting buy in on these strategies can be challenging.
This is especially true when more significant issues are involved. For example, these issues could include poor employee engagement and retention. As a result, more extensive adjustments may be necessary.
These adjustments would be within the work environment and company culture. This is to address the issues correctly.
The HR planning process may also uncover the need to upskill or reskill workers to ensure they have the competencies needed for the future business environment.
You may also find a surplus in a particular area and upskill or reskill current employees to help them transition to a more in-demand role within the company rather than being let go.
Again, employees must be willing to engage in this training and development process to have a positive outcome.
Additional Resources:
Skills gap analysis in 4 steps: How to identify and bridge talent gaps
Talent shortage: Addressing the growing gap in the workplace
Employee skill gaps: What they are and how to address them
