Anticipating the human resource is not an easy task. You need to have a vision regarding the business resources that will map the future operational and administrative capabilities. Human Resource Planning is one of the most pivotal aspects of any business as it helps organisations with risk mitigations and, most importantly, running out of resources. 

Think of an extreme situation like a pandemic when you need employees of a specific skill set. The organisation’s economic situation is delicate due to the downfall in markets.

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It is a situation that needs an advanced Human Resource Planning process to counter the consequences. According to a report, the US’s employment rate was an all-time low in 2019, and yet, organisations are struggling to find the right talent. So, HRP becomes quintessential to have the resources in the place when you need them as an organisation. Let’s discover how you can create effective Human Resource Planning, and what defines it?

  1. What Is Human Resource Planning?
  2. Importance of Human Resource Planning
  3. The Demographic Challenge
  4. The Productivity Gap
  5. Performance Management
  6. Steps to Human Resource Planning
  7. Benefits of Human Resource Planning

1) What Is Human Resource Planning?

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The meaning of Human resource planning or workforce planning is to ensure the right staffing level to meet current and future needs. The human resource planning process involves,

  • Current workforce analytics
  • Business strategy alignment with future scope of operations
  • Detecting and mitigating gaps between current skill set and required skills
  • Planning for risk mitigation of business through human resource

These activities help curate the best talents in an organisation and keep up with the latest business staffing needs in sync with projects’ innovations. But, the question that might be popping up in your mind is – 

What is human resource planning? And why to apply it to your business?

Let’s find some answers to it!

2) Importance of Human Resource Planning

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Human capital is one of the most vital factors in any economy’s progress, and the same thing applies to an organisation looking to scale higher. As you grow and expand your business, you will need highly skilled human capital to handle different projects across domains. It is the reason why many governments spend massive money on harnessing human capital, as this tweet below indicates. 

Human Resource Planning helps an organisation to nurture human capital for better productivity and efficiency. Let’s look at some of the business challenges that will help you understand the need for Human Resource Planning.

3) The Demographic Challenge

The modern workforce is diverse and has demographic challenges. For example, your organisation has 30% of the workforce remote scattered across the world and 70% of in-house employees. Now there are many difficulties like timeline differences and technological boundaries to make collaborations happen. 

Human resource planning can mitigate the effects of demographic challenges and make reliable collaborations happen. Especially for remote workforce management HRP becomes paramount because you need to plan everything from contracting to integrations.

4) The Productivity Gap

With the advent of technologies like mobile, Artificial Intelligence, cognitive computing, and others, the transition to better productivity has seen performance gaps. An urgent need for employee training and onboarding for new technologies creates performance gaps due to delay in production.

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Human Resource Planning can help improve the rate of change and mitigate technology gaps for better productivity.

5) Performance Management

A Human Resource Planning process ensures that you have the measure of performance before it is too late. Performance analytics is a common thing among many organisations to boost productivity. But, analytics integrations and planning to mitigate the gaps through data needs robust HRP. 

The best practice is to have a reliable strategy with Human Resource Planning to measure real-time performances. According to HR.com, about 89% of human resource professionals prefer ongoing performance measurement yearly. As a human resource professional, you need to know how to execute such performance analytics, which you can obtain through specialised training programs.

Now that we have an idea about the meaning and importance of human resource planning let’s discover how to achieve them step by step!

6) Steps to Human Resource Planning

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Human resource professionals need to have a complete picture of the organisational needs before constructing an HRP. This step-by-step guide explores the gradual integration of different needs into your plan. It is like a roadmap for businesses to create successful processes and scale better.

Step1: Setting up the objectives for Human Resource Planning

When you think of managing the workforce, you will need the business objectives of Human Resource Planning. Every organisation has different objectives of Human Resource Planning; for some, it is about growing sales, while for others, it’s just increasing the volume of production. But the best practice for every human resource professional is to devise an objective sheet that determines the critical touch points your plan can cover. 

The objective sheet can include columns like SWOT analysis and different factors that affect business efficiency. SWOT analysis can help you picture the objectives in terms of opportunities or threats to better formulate the plan. Here is an example of an ideal SWOT analysis.

  • Strength– Management Hierarchy
  • Weakness– Lower Skillset
  • Opportunity– Recruiting new talents
  • Threat- Running out of resources

Step 2: Inventory of Current Human Capital

Employee retention is one of the most vital parts of any business objective because you can’t just fire the present workforce and go on a hiring spree. It will be a big blow to your entire budget and your projects that will need urgent resources. 

So, how do you sustain the current workforce of your organisation and still plan the recruitment?

An HRP will include a dedicated inventory of the organisation’s current human capital with all the essential data. For example, your organisation needs a development team for a custom software project, and you need to plan a recruitment drive for it. Now, suppose you have already created an inventory of current employees. In that case, you will have an exact idea about whom to promote as a project manager and save organisational resources on recruiting one. 

Step 3: Demand Forecasting

This step involves planning future employees and the quality of new talents that your organisation may need. An inventory will help you identify the current employee pool for specific skill sets, but with demand forecasting, you will have the right idea about the ones that you might need in the future. 

These two categories of demand forecasting in Human Resource Planning,

  • Qualitative Demand Forecasting
  • Quantitative Demand Forecasting

Qualitative demand forecasting is essential for non-manufacturing businesses. But, the same is not right for a manufacturing plant where quantity matters the most.  Demand forecasting is also a step that helps human resource professionals define metrics that will dominate recruitment decisions; for a development team, it can be what level of projects a developer has in his/her portfolio. 

Step 4: Gauging Performance Gaps 

The first three steps of HRP involve identifying objectives, inventory the current workforce, and forecasting future recruitment; with this step, you can gauge the need for employee training. Employee training needs analytical data regarding performance gaps. 

Let’s take an example of a bank with several different branches across Europe. Now, some branches are doing better than others. When the analysis was conducted, data suggested that the less performing departments had less time to collaborate as a team, while branches with better performance were great at collaborating. 

So, what should this bank’s HRP include?

It will have a plan for training the staff with the training of collaborative tools. Similarly, you can devise your employee training plan by analysing the performance gaps in your organisation. 

Step 5: Formulating, Executing, and Integrating HRP

The last step is to formulate your plan keeping the objectives, demand forecasting, employee training, and performance gap in mind. Your project must include an objective statement, resources to achieve them, and possible outcomes. 

Once you have the HRP ready, your next goal should be to integrate it into existing systems. HR professionals can devise an onboarding plan, recruitment plan, and candidate screening tracker to gather vital data. These data can help integrate the HRP efficiently into the existing process. 

Next, you should monitor the performance of your human resource planning by evaluating the outcomes. Note every feedback from different departments of the organisation and understand your plan’s impact on existing systems. It will help you understand the digital resources and other tools that you need to improve the HRP.

7) Benefits of Human Resource Planning

  • HRP leads to a better overall understanding of business decisions with systematic and process-oriented actions that yield good results. 
  • Proper HRP executions can lead to better employee retention and reduce the cost of recruitment. 
  • HRP helps in identifying the real need for talent acquisition and plan accordingly
  • It helps in performance management and risk mitigations through analytics.
  • Human Resource Planning can enhance workforce management in an organisation.

Conclusion

The process of Human Resource Planning focuses on the talent acquisition and retention of existing skilled personnel. Any HR professional who wants to formulate an efficient HRP needs to have some form of training in understanding the importance of human capital. 
Apart from human capital, HR managers and professionals should also possess digitised tools that help with analytical data. Jigsaw Academy, in collaboration with IIM Indore, offers a 3-month online People Analytics & Digital HR for existing and aspiring HR professionals to make them data-smart!

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