What is human resource planning? (With tools and benefits)

By Indeed Editorial Team

Published 11 April 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Planning for the future and forecasting human resource changes are essential to ensuring long-term viability and productivity. Organisations can use human resource planning to assess their current workforce and predict their future needs. You may begin developing a plan that matches human resource forecasting if you understand human resource planning and its impact on employee contributions and the success of your business. In this article, we answer the question ‘What is human resource planning?', learn the steps to human resource planning and review its benefits.

What is human resource planning?

If you're interested in maximising the efficiency of a business, you might have asked yourself the question, 'What is human resource planning?'. Human resource planning is a continual effort to recruit and keep people who are capable of increasing productivity, delivering high-quality work and assisting the organisation in achieving its objectives. Corporations and organisations can execute a resource plan to guarantee that each department has the correct number of employees and the right experience levels. Then, the organisation can review the strategy to determine if they can make any changes or improvements before they continue.

Related: A guide to resource management (plus skills and duties)

How to utilise human resource planning

You can use these six processes to help you plan your human resources:

1. Create human resource objectives

Human resource objectives can include company-wide and department-specific objectives. Each department may have goals that align with its duties and requirements and contribute to more significant business objectives. The marketing department, for example, requires at least three to four persons for each project to run efficiently. There are at least nine people needed in the company's marketing department if the company plans to work on three projects at the same time each year.

2. Analyse current workforce

Analysis of the current workforce includes looking at the current employees' skills, experience and performance assessments to establish the company's strengths. Communicating with department heads and managers on how they view their employees' performance and whether they require additional resources to meet their department's tasks can also be valuable during this stage. It may be beneficial to administer self-evaluations and surveys to understand better how employees feel about their work performance and what they hope to get out of the new human resources strategy.

Create a spreadsheet or document that emphasises the skill sets of each department, depending on the people in that department. Identifying the strengths and weaknesses of each department and the broader business might help you understand where the organisation wants to focus its attention.

3. Determine supply and demand of human resources

Analysing current employee data, assessing the organisation's current needs and predicting what issues may occur in the future are necessary steps in determining a company's supply and demand for human resources. A company can consider employee scarcity or surplus when examining the data. They also might examine employee wages and the quality and amount of their work to get an idea of savings. The company may have a labour surplus if the costs of employee pay are too high for the company to maintain and the employees are producing more goods or services than they require.

Consider industry trends and potential technical improvements to see if sections of your firm can automate in the next several years. This can help you to predict your future needs. Determine whether you require investing money in training employees immediately or if you can wait until you implement the new technology.

4. Create an action plan

A corporation can decide whether it needs to hire extra staff, transfer or renegotiate some employees' contracts or focus on strengthening its current employees' skills when drafting an action plan. If a company needs to hire additional people, it's critical to discern what kinds of skills they require and where they can be most helpful. Identifying employees who could contemplate retiring or relocating to different parts of the organisation if a corporation has an excess of staff might be beneficial.

If some employees are deficient in specific abilities or knowledge, it's helpful to identify what they are and how they might develop them. For example, suppose a company doesn't have the money to hire more sales associates but still wants to increase sales. In that case, they might construct a training program for their personnel to improve their communication skills.

5. Continue to train and develop

Even after a corporation has completed its human resources plan, there may still be a need for on-the-job training and development. Training programmes can improve some employees' vocational abilities, which can help them grow in the future. Rather than bringing in new employees from the outside, organisations can save time, money and other critical resources by promoting employees who already know the business and its systems.

6. Evaluate the plan

After testing, it may be beneficial to gather feedback from current employees and managers on the human resource plan's efficacy. It's possible to establish whether the strategy has increased productivity, boosted profitability or solved human resources deficiencies in certain divisions by examining its aims and objectives. Adjusting the human resource plan and identifying areas where the organisation may improve can be beneficial if they don't meet its goals. Some companies' marketing departments may require reassessing their departmental competencies. There are also likely other causes for the lack of work, such as poor management or clarity about obligations.

Related: Core HR functions and different human resource specialities

Benefits of human resource planning

Human resource planning can provide several advantages, including:

Enhancing the value of present employees

Reviewing present personnel, job titles and other talents essential to company operations is vital for human resource planning. HR specialists identify employees who require more training to perform their work duties effectively or possess different qualities that make them suitable for a leadership position or another specialisation. In this way, HR professionals assist their businesses to save money that they would otherwise spend on acquiring new employees and benefit from investing in their employees' professional development.

Helping companies adapt to industry changes

Using human resource planning, organisations can foresee changes in their workforce or the way their industry runs to adjust and continue to grow. As soon as an organisation identifies a new market niche, human resource professionals require a strategy for transitioning employees into new jobs and budgeting to hire new employees. This helps the company adjust to the changes effectively.

Helping companies keep a competitive advantage

Human resource planning helps firms make more informed hiring and training decisions with the long-term future in mind. HR specialists know prospective employees are looking for certain benefits, work-life balance and other enticing job features. For hiring and benefits, HR professionals can prepare to adapt their methods and offerings to new employees. This makes them a better option for employment than a competitor.

Boosting the company's long-term viability

Employee numbers and requirements can differ significantly in just a few years. Some employees may resign, look for new possibilities or receive a promotion. Therefore, there's a steady movement in the jobs that organisations are looking to fill. Human resource professionals can consider these likely changes and predict their hiring needs for the next several years to plan for the future. In addition, they can plan and budget for additional staffing needs, department expansions and retirements because of this.

Related: Why is HR important? An essential guide

Tools for human resource planning

To maximise your human resource planning, here are some tools you can use:

HR dashboards

Human resources dashboards are valuable tools firms can develop or invest in. A few examples of this application's data collection includes employee attrition, employee contentment, employee productivity, employee skill levels, internal promotions and employee engagement from job prospects. This data can make the human resource planning process much simpler.

Performance management systems

Managers can provide feedback and give performance ratings to their employees using performance management systems. These systems include several software packages. In the early stages of human resource planning, these techniques are essential in determining whether employee switching or additional training was successful.

Human resource management systems (HRIS)

HR management systems include human resource planning, payroll management, salary and benefits, hiring and onboarding, recruiting, employee turnover rate, productivity and satisfaction. You can also use it to automate tasks like screening applications or keeping track of employees' hours at work. Using this data, human resource professionals can adjust their human resources planning or track progress.

Related: Why work in HR? A guide to careers in human resources

Software for analysing compensation and benefits

This software allows human resource professionals to contrast existing pay scales and rewards to market performance or popular benefits options. Human resource planners can use this program to check if employees receive compensation and benefits in line with industry changes. It reduces turnover rates while enhancing productivity in the workplace.

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