Human Resource Planning (HRP): Process Explained

Human Resource Planning (HRP) is the backbone of an organisation’s workforce structure. It implies analysing how the company’s goals, existing workforce, and required skills match. It also helps to plan on how to attract, develop, and keep the right talent. This way, companies can solve staffing challenges and align their workforce with long-term objectives. Read this blog to learn more about the Human Resource Planning Process, why it is needed, what its goals and challenges are, and how to lead your business towards success. 

Table of Contents

1) What is Human Resource Planning (HRP)? 

2) What is the Goal of HR Planning? 

3) Importance of Human Resource Planning Process 

4) Challenges of Human Resource Planning Process  

5) Five Steps in the Human Resource Planning Process  

6) What Tools are Used for HR Planning? 

7) Conclusion

What is Human Resource Planning (HRP)?

Human Resource Planning (HRP) helps you forecast and meet your personnel’s needs. You need to evaluate your current staff, their skillsets, your budget, and your growth plans to predict your future requirements.

This way, you can ensure that you have enough people with the right set of skills for your business goals. For example, if you have more design projects than app projects, you need more designers than developers.

Moreover, you also need to consider any challenges that might affect your employees’ availability or performance. For example, someone in a significant role might go on a sick leave or a vacation during a project. At this time, you might need an additional workforce with a new skillset for a project that you don’t have in-house. You must plan to fill skill gaps by recruiting, outsourcing, or training people.

Otherwise, you risk harming your business operations by overspending, hiring poorly, overworking your staff, or losing your customers’ trust. Here's a brief look at various activities involved within Human Resource Planning, a critical function of Human Resource Management:

What is the Goal of HR Planning?

The primary goal of Human Resource Planning (HRP) is to maintain an optimal workforce size that enhances the company’s profitability. To achieve this, HRP focuses on securing the right number and quality of Employees necessary for meeting organisational goals. This involves not only recruitment but also development, retention, and workforce optimisation.

As globalisation and flexible work practices rise, more people are working remotely. HRP helps HR Managers adopt new strategies for Recruitment, training, and employee retention. This enables them to effectively manage and assess a global workforce. Additionally, HRP ensures that talent is strategically distributed across departments, promoting agility and adaptability.

Importance of Human Resource Planning Process 

Human Resource Planning (HRP) isn’t just a concept—it’s a driving force behind productivity and profitability. A well-executed HR planning process enables businesses to attract and retain the right talent, equipped with both the technical and soft skills needed to excel in their roles. HRP is essential for several reasons:

1) Enhances Employee Value: HRP assesses current employees’ skills and training needs, allowing businesses to upskill their existing staff. This not only reduces recruitment costs but also fosters employee growth and loyalty.

2) Adapts to Industry Shifts: HRP enables organisations to anticipate talent needs and adapt to industry changes. This allows for agile role transitions and effective budgeting for new positions in emerging markets.

3) Maintains a Competitive Edge: HRP empowers businesses to make informed hiring and training decisions. It ensures these decisions align with employee preferences, work-life balance, and other attractive job factors.

4) Supports Long-term Growth: HRP helps HR professionals forecast hiring needs, department expansions, and retirements. This ensures a balanced workforce and enables smart budgeting for future growth.

HRP acts as a strategic compass, guiding businesses through industry changes, promoting cost efficiency, and driving workforce productivity. It’s important for maintaining a competitive advantage and securing long-term success.

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Challenges of Human Resource Planning Process

While HRP offers numerous benefits, it also presents several challenges that organisations must navigate. These obstacles can range from the unpredictability of future events to challenges in forecasting employee turnover. Additionally, managing absences, promotions, vacations, or role changes can also present difficulties for HR Managers.

To overcome these issues, HRP needs to be adaptable, with managers continuously monitoring performance for any changes. When developing their HR plan, HR Managers should strategise how to:

1) Attract, hire, and retain skilled employees

2) Select, train, and reward top talent

3) Manage absences and conflicts

4) Handle promotions or layoffs

5) Key challenges in the HRP process include:

6) Time and effort required

7) Financial investment

8) Imperfect forecasting

9) Market fluctuations

10) Technology and data integration

11) Employee resistance to internal changes

By recognising these challenges, HR Managers can better prepare to address them. This ultimately enhances their HRP initiatives.

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Five Steps in Human Resource Planning Process

HRP Process has multiple benefits, such as increased productivity and adaptability. You can reap these benefits by following the five steps in your Human Resource Planning Process, which include:

Analyse the Current Workforce

The second step is to examine the current workforce: its size, composition, skills, competencies, performance, and potential. It involves collecting and analysing Data on various aspects of Human Resources, such as headcount, turnover, absenteeism, productivity, satisfaction, diversity, and development.

It also helps you to identify the strengths and weaknesses of the current workforce, as well as the gaps and opportunities for improvement. For example, a workforce analysis could reveal that the company has a high proportion of ageing workers nearing retirement. And subsequently, a low proportion of young workers with the skills and knowledge are required for the new product line.

Forecast Changes

This step can be more challenging, but with access to current employee data, you can predict future workforce needs. For example, workforce planning may include supply forecasting assessing whether your current team can meet business demands. It also involves demand forecasting determining the types and number of employees needed to achieve your future goals.

Carry Out Gap Analysis

After forecasting, the next step is performing a gap analysis. This process compares your current workforce size and skill levels with what’s needed to meet your organisational objectives. It involves identifying the current workforce status, defining the ideal future state, and highlighting the gaps that need to be addressed.

Develop and Implement a Plan

The next step is to develop and implement a plan to address the HR supply and demand gap and achieve the Human Resource Objectives. It involves designing and executing various HR strategies and actions that aim to attract, develop, retain, and motivate the Human Resources that the organisation needs.

The plan should also specify the roles and responsibilities, timelines, budgets, and expected outcomes of each HR strategy and action. For example, an HR plan could include strategies such as launching a recruitment campaign. It may also involve providing training and development programs, along with offering competitive compensation and benefits.

HR plan can also involve implementing Performance Management and feedback systems. It also creates career paths and succession plans.

Monitor, Review, and Reassess Your Plan

The fifth and final step in the Human Resource Planning process is to monitor, review, and reassess the plan. This helps evaluate its effectiveness and efficiency, allowing for adjustments as needed to ensure continued success. It involves measuring and analysing the results and impacts of the HR strategies and actions on Human Resources and organisational objectives and plans.

It also helps identify the best practices and lessons learned, as well as the challenges and risks that must be addressed. For example, an HR plan review could reveal that the recruitment campaign successfully attracted qualified candidates. Still, the training and development programs needed to be more comprehensive in preparing them for the new product line.

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What Tools are Used for HR Planning?

As a Human Resource professional, you will need to collect and analyse a lot of employee data. But how do you collect all this data from your employees? Don’t worry, there are tools you can use to collect this data! Here is a list of them for you:

a) Surveys: Help collect data on employee skills, productivity, and preferences for training programs. Additionally, it gathers information on satisfaction with benefit and compensation programs, workplace culture, and overall employee happiness.   

Taking these factors into account, you can identify opportunities for promotions within the current workforce. Alternatively, you may understand potential weaknesses, such as high turnover rates or decreased productivity.

b) HR Dashboards: Help gather and analyse data to provide a clear overview of Human Resource metrics. These metrics, including turnover rates, satisfaction levels, productivity, skill levels, and internal promotions, can be valuable for your planning processes.

c) Performance Management Systems: Performance Management Systems give employees feedback and give them performance ratings over a period of time.  This is especially important during the transition phase of HRP when HR professionals need to closely monitor the process. It helps them assess progress and determine if additional training is required.

d) Human Capital Management Systems (HCMs): Consolidate HR processes, from planning and managing payroll to handling compensation and recruitment. This includes turnover analysis, performance measurement, and more, all within a single platform. These procedures are automated to help in the adjustment of HR planning and performance measurement.

e) Compensation and Benefits Software: Effortlessly compare current salary and benefits against economic indicators as well as industry benchmarks. It plays a key role in keeping employees satisfied by offering competitive salaries and benefits. This, in turn, leads to reduced turnover, higher satisfaction, and increased productivity.

Conclusion

Organisations must manage their workforce effectively to achieve the desired results and sustain in the market. Forecasting needs, attracting talent, adapting to changes, and aligning strategies optimise Human Resources for an organisation's success. This blog gave you an understanding of Human Resource Planning. It also walked you through the process and explained some useful tools.

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