What Is Human Resource Planning (HRP)?
Human resource planning (HRP) is the continuous process of systematic planning to achieve optimum use of an organization's most valuable asset—quality employees. HR planning ensures the best fit between employees and jobs while avoiding manpower shortages or surpluses.
There are four key steps to the HRP process. They include analyzing present labor supply, forecasting labor demand, balancing projected labor demand with supply, and supporting organizational goals. HRP is an important investment for any business as it allows companies to remain both productive and profitable.
Key Takeaways
- Human resource planning (HRP) is a strategy companies use to maintain a steady supply of skilled employees while avoiding staffing shortages or surpluses.
- HRP needs to meet short-term staffing challenges while adapting to changing conditions in the business environment over the longer term.
- Having a good HRP strategy in place can mean productivity and profitability for a company.
- HRP is made harder by the fact that not everything can be predicted.
- There are four general steps in the HRP process: identifying the current supply of employees, determining the future of the workforce, balancing between labor supply and demand, and developing plans that support the company's goals.
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What Is Human Resource Planning (HRP) Used For?
Employees are a key part of any business. Without a strong workforce, income will likely dry up and the company will go out of business. HRP is designed to prevent this from happening. Its mission is to identify current and future hiring and training needs.
HRP allows companies to plan ahead so they can maintain a steady supply of skilled employees. The process is used to help companies evaluate their needs and to plan ahead to meet those needs.
HRP needs to be flexible enough to meet short-term staffing challenges while adapting to changing conditions in the business environment over the longer term. To help prevent future roadblocks and satisfy their objectives, HR managers have to make plans to do the following:
- Find and attract skilled employees
- Select, train, and reward the best candidates
- Keep employees motivated
- Cope with absences and deal with conflicts
- Succession planning
- Promote employees or let some of them go
- Keep tabs on trends that could impact future supply and demand
Identifying a company's skill set and targeting the skills a company needs enables it to strategically reach business goals and be equipped for future challenges.
What Is the Goal of Human Resource Planning (HRP)?
The goal of HR planning is to have the optimal number of staff to make the most money for the company. Staying on top of this and achieving effective HRP can ensure that the company:
- Gets the best out of current employees and increases their value
- Has a competitive advantage in its industry
- Is better placed to respond to challenges and adapt to changes
Challenges of Human Resource Planning (HRP)
HRP offers many advantages but it isn't without challenges. The future isn't easy to predict. A technology breakthrough can change everything, as can a black swan event. Issues such as employees getting sick and wealthier or more prestigious competitors poaching staff can also cause serious problems.
Additionally, as globalization increases, HR departments will face the need to implement new practices to accommodate government labor regulations that vary from country to country. The increased use of remote workers by many corporations will also impact HRP and will require HR departments to use new methods and tools to recruit, train, and retain workers.
Companies can set themselves up to better deal with these types of challenges if they are adaptable and continuously keep tabs on the world around them. The more prepared a company is for an event that impacts its human resources, the better it can handle and potentially take advantage of it.
HRP strategies must frequently be revised to match not only the company's changing needs but also external changes.
There's also the challenge of HRP being time consuming and potentially costly. HRP offers benefits but it can take a while to reap them.
A high level of employee engagement can be essential for a company's success. If a company has the best employees and the best practices in place, it can mean the difference between sluggishness and productivity, helping to lead a company to profitability. However, like most important investments, it can take a while for these efforts to pay off. In the beginning, HRP will be a drag on profits.
What Are the Four Steps to Human Resource Planning (HRP)?
There are four general, broad steps involved in the HRP process. Each step needs to be taken in sequence in order to arrive at the end goal, which is to develop a strategy that enables the company to successfully find and retain enough qualified employees to meet its needs.
1. Analyzing Labor Supply
The first step of HRP is to identify the company's current human resources supply. In this step, the HR department studies the strength of the organization based on the number of employees, their skills, qualifications, positions, benefits, and performance levels.
2. Forecasting Labor Demand
The second step requires the company to outline the future of its workforce. Here, the HR department can consider anything that factors into the future needs of the company, including promotions, retirements, layoffs, and transfers. The HR department can also look at external conditions impacting labor demand, such as new technology that might increase or decrease the need for workers.
3. Balancing Labor Demand With Supply
The third step in the HRP process is forecasting the employment demand. HR creates a gap analysis that lays out specific needs to narrow the supply of the company's labor versus future demand. This analysis will often generate a series of questions, such as:
- Should employees learn new skills?
- Does the company need more managers?
- Do all employees play to their strengths in their current roles?
4. Developing and Implementing a Plan
The answers to questions from the gap analysis help HR determine how to proceed, which is the final phase of the HRP process. HR must now take practical steps to integrate its plan with the rest of the company. The department needs a budget, the ability to implement the plan, and a collaborative effort with all departments to execute that plan.
Common HR policies put in place after this fourth step may include policies regarding vacation, holidays, sick days, overtime compensation, and termination.
Why Is Human Resource Planning Important?
Human resource planning (HRP) allows a business to better maintain and target the right kind of talent to employ—having the right technical and soft skills to optimize their function within the company. It also allows managers to better train the workforce and help them develop the required skills.
What Is "Hard" vs. "Soft" Human Resource Planning?
Hard HRP evaluates various quantitative metrics to ensure that the right number of the right sort of people are available when needed by the company. Soft HRP focuses more on finding employees with the right corporate culture, motivation, and attitude. Often these are used in tandem.
What Are the Basic Steps in HRP?
HRP begins with an analysis of the available labor pool from which a company can draw. It then evaluates the firm's present and future demand for various types of labor and attempts to match that demand with the supply of job applicants.
The Bottom Line
Quality employees are a company's most valuable asset. HRP involves the development of strategies to ensure that a business has an adequate supply of employees to meet its needs and can avoid either a surplus or a lack of workers.
There are four general steps in developing such a strategy: first, analyzing the company's current labor supply; second, determining the company's future labor needs; third, balancing the company's labor needs with its supply of employees; and fourth, developing and implementing the HR plan throughout the organization.
A solid HRP strategy can help a company be both productive and profitable.
