The HR Planning Process is a critical yet neglected part of business planning. For organizations that take a resource-based view of strategy, human resources form a central theme of their competitive advantage, Human resource planning originates from the scanning of the environment and concludes in the creation and monitoring of the plan. From an organization’s point of view, it is essential to understand the budget and timeline required to achieve the strategy. Hence, in the Strategic Human Resource Process, the HR planning process assumes a very important part.
Importance of HR planning Process
Importance of HR planning Process 1: Meeting manpower needs
Manpower is critical for any organization. Manpower needs are primarily derived from three factors:
- The changing business environment
- Development of new competency or technology
- Attrition in the current organization.
As a human resource manager, it is critical to project all these things before initiating the planning process for the organization. Also, serious thought process and analytics is required to understand the reasons and assign root causes to these three important items
Importance of HR Planning Process 2: Recruitment and selection
It is critical to forecasting the number of employees needed at all times because it enables these organizations to anticipate suitable sources when they need to find new resources. Tests and interviews are administered to identify the best candidate for a job and place them in their ideal position. Also Focusing on the right platform is important as sourcing potential candidates is a time-consuming process.
Importance of HR Planning Process 3: Placement of personnel
HR Process facilitates the placement of new employees in departments in need of their skills and qualifications. A Perfect Placement will increase employee satisfaction and productivity. Also, a perfect placement is necessary from a business alignment point of view.
Importance 4: Performance appraisal
The Performance appraisal and KPI of a potential employee should begin from the planning phase only. A Perfect planning process defines the right KPIs for the potential search. Also, identification of skill gaps, if any should happen during this phase of the project
Importance 5: Promotions and Transfers
Human Resource Planning also focuses on the promotion and transfer of right and capable resources. In the annual planning exercise of the human resource planning process, this critical element needs to be looked at as backfills need to be fulfilled
Importance of HR Planning Process 6: Training
The human Resource Process is involved in the training of employees. Training can help develop knowledge, skills, and personalized attitudes and behaviors. HRP helps identify which employees are not trained, or need more training so that the organization can seek to provide it. Determination of training gaps also forms a critical part of the Human resource planning process
Importance 7: Determine future personnel needs
It is necessary to determine future personnel needs. Many companies are expanding internationally, furthermore, the environment is very dynamic: it is difficult to know precise requirements with certainty. The company’s general growth rate and the industry-specific growth rate are indicative of future personnel needs.
Importance of HR Planning Process 8: Adjusting manpower requirements
A common problem in companies is the imbalance of staff; when they have more people in one department and fewer people in another department. They try to solve this by transferring and promoting some people so that they have more people to cover the deficit. Also, this phenomenon is common when any specific department is facing a decline in sales or operations. The resources need to be reskilled and deputed to other departments in case there are no plans of downsizing
Importance 9: Career development
HRP is meant to help employees with their career development. It helps them to better understand what the long-range goals of the organization are and offers them guidance on how best to pursue their careers within that organization. Human Resource planning is required as there are substantial budgetary requirements for training and employee development.
Importance Of HR Planning Process 10: Motivation of personnel
One of the core outcomes of a Human Resource Planning exercise is the ability to motivate an individual. Without proper planning, the motivation of the employees will be seriously dampened and can have long-term implications for the productivity and profits of the organization.
Importance of HR planning Process 11: Help in strategy formulation
The various strategies for marketing, management, and finance in the organization are planned by people. These strategies would only be effective when the human resource is a priority and employees are well educated about how to use them. From a Resource Based View of competitive advantage, Human Resource Management forms a key part of the organization’s strategy and how it differentiates from the competition. Hence, from an organizational Strategic Point of view, Human Resource Planning plays a very important role
The HR Planning Process Explained
The strategic planning process is the key to success for any business. By taking the time to develop a well-thought-out plan, businesses can ensure that they are making the best possible decisions to achieve their desired results. From an Input and Output scenario, the inputs to the HR planning process are environmental scan, emerging business, competition, or addition of new competency. Whereas in the output side of the planning, HR managers have a solid strategy and a detailed project timeline to execute it. Here is a graphic to explain it
One Key Component of a strategic exercise is the environmental scan. There are many ways to execute a Environmental Scan. Some of the most followed methods are The SWOT analysis, The PESTEL analysis and the Porter 5 Forces analysis.
SWOT ANALYSIS
The SWOT analysis is a strategic planning tool that helps businesses identify the strengths, weaknesses, opportunities, and threats of their business. It can be done by looking at the internal and external factors of the business. The internal factors would be the strengths and weaknesses of the business, while the external factors would be the opportunities and threats. An example of a SWOT analysis in a business environment would be if a company was considering starting a new product line. The company would need to look at its strengths (such as its research and development capabilities) and weaknesses (such as its manufacturing capabilities) to see if it had the resources to develop and produce the new product. It would also need to look at external factors such as the opportunity for growth in the market for the new product and any potential threats (such as competitors already selling similar products)
The Pestel Analysis
PESTEL analysis is a strategic planning tool that helps organizations identify their most important issue and potential threats. The tool was developed by Francis Aguilar nearly 50 years ago and has since been used by many organizations, including the United States Department of Defense.
PESTEL analysis is a strategic planning tool that helps organizations identify their most important issue and potential threats.
The tool was developed by the United States Army in the 1970s and has since been used by many organizations, including the United States Department of Defense. PESTEL stands for Political, Economic, Social, Technological, Environmental, and Legal. These are the six dimensions of an organization’s environment that analysts use to evaluate risks and opportunities.
When using PESTEL analysis, analysts first determine which dimension is the most important for their organization. They then look at all of the factors within that dimension and select those that are most important to their organization. For example, when analyzing the political environment, an organization might focus on issues such as democracy, corruption, terrorism, and violence.
The Porter 5 Forces analysis
We wrote a detailed post of Porter 5 Forces analysis with a Case Study Here.
In short, Porter 5 Forces is a framework that helps business owners understand the competitive landscape of their industry and take steps to improve their position within it. This blog post will provide a detailed overview of the framework and its applications.
Once the Environmental factors are documented and prepared, it is time to create a dive into the HR Planning Process. The HR planning process comprises of 7 Steps:
- Analyzing Organizational Plans
- Forecasting for Demand
- Forecasting for Supply
- Reconciliation
- Drafting a Project Plan for Execution
- Monitoring and Control
- Management Reporting
HR planning Process Step 1: Analyzing Organizational Plans
To start, you analyze the goals of the company and can then add subplans that take into account technology, production, marketing, finance and expansion in order to break down how long it’ll take to reach your objectives. It must also follow some cardinal principles like what technologies should be developed, which department should be expanded, which units to be downsized and which manpower needs to be reskilled. This is also allow to create a budgetary requirement and amount of manpower to be brought into the system.
HR Planning Process Step 2: Forecasting demand for HR
Companies use forecasting to determine what quantity of people they need to employ in different departments in the coming weeks and years, based on their plans for expansion and diversification.
HR Planning Process Step 3: Forecasting supply of HR
The HRD Manager must create a forecasting and pipeline for activities. This would allow the manager to understand the respective timeline after which the strategic process can be completed. If the requirements are high like huge recruitment, new department and business formalization, proper plans must be taken so that enough buffer is built either in the system or in the process so that timeline of execution is not diluted.
HR Planning Process Step 4: Reconciliation
The next step is to match the demand with the supply. If they are not matching, then Human Resources can try to find out if people can be recruited from other places, which might include recruiting overseas.
HR planning Process Step 5: Drafting a Project Plan for Execution
Drafting a Project plan along with an charter becomes very important once the requirement is analyzed and reconciled. It has to be noted that the the management must give an approval and an commitment to support the projects with a finance and resources whenever required.
With an identified manpower gap, plans are made to bridge this gap. If there is a surplus of manpower in one department/unit, it can be redeployed in another unit/department or retrenched by consulting with trade unions Employment may be voluntary, through “golden handshakes”. Institutions can also recruit employees or choose to promote or train them. A Proper Reskilling and promotion plan also be added to supplement the same
HR Planning Process Step 6: Monitoring HR requirement
An organization that wants to be effective in HR management should give the issue enough attention such that it can take the appropriate measures. What is necessary for a successful HR management is periodic updates of manpower, which allows timely and appropriate changes in manpower plans in the light of any changes in the environment. Also proper KPIs needs to be defined.
Following are the list of KPI that can be formulated and tracked so that strategic plan is executed to success
| Definition of the Strategy | KPI to be tracked |
| # of New Manpower Required | Clear definition with job definition identified by the hiring manager |
| New Skill Addition | Training Calendar creation |
| Restaffing of a underperforming department | -# of positions dissolved -Dissolved positions refilled via internal transfers |
| Training Needs | Training need identified within the stipulated time and closed |
HR Planning Process Step 7: Management Reporting
It is imperative to Report to management on a regular basis about the key initiatives and the progress achieved regarding the same. Also, the HR manager must seek help from the Management wherever required.
Before the completion of every financial cycle, every HR manager must conduct a PDCA (Plan-Do-Check-Act) cycle, and carry over pending activities for the next year and built learnings from the current year for process improvement in the next year.
Samrat is a Delhi-based MBA from the Indian Institute of Management. He is a Strategy, AI, and Marketing Enthusiast and passionately writes about core and emerging topics in Management studies. Reach out to his LinkedIn for a discussion or follow his Quora Page