Human resource planning is an essential part of every successful business. Unfortunately, many managers neglect this vital practice for other, easier tasks because they don’t understand what this type of planning requires.
Other times, managers may not understand how pivotal human resource planning is to their long-term corporate strategy and the ultimate success of their business.
That’s where Sling can help. In this article, we define human resource planning, outline its objectives, and provide a step-by-step guide to implementing this crucial practice in your business.
Human Resource Planning Defined
Human resource planning (or HRP for short) is the ongoing process of systematically planning ahead to optimize and maximize your business’s most valuable asset — high-quality employees.
When you incorporate HRP into every aspect of your strategy — functional, business, or organizational — you streamline the process of creating the best fit between available jobs and available employees. All while avoiding a shortage or surplus in your workforce.
As simple as that may sound, there’s more to human resource planning than setting up a system and implementing it in your organization.
The objectives of HRP are very specific and can mean the difference between success or stagnation. We’ll discuss those objectives in the next section.
Human Resource Planning Objectives
As we mentioned earlier, human resource planning is about matching the right employees with the right jobs in your business.
While matching employees to jobs is a big part of human resource planning, the goals of HRP don’t stop there. Other HRP objectives include:
- Adapting to rapid technology changes
- Powering product innovation
- Adjusting to a more globalized economy
- Preparing for generational and cultural shifts
- Anticipating job and skill changes
- Facilitating growth
- Improving business operations
- Mitigating risk
- Preventing talent shortage or surplus
- Complying with local, state, and federal regulations
- Implementing a successful onboarding process
As you can see, HRP is integral to the successful operation of your business and its growth over both the short- and long-term.
Because this process is connected to every aspect of your business, you may feel overwhelmed by the prospect of creating a new HRP strategy.
Don’t let this prevent you from implementing a system that can revolutionize the way your business operates — both now and in the future.
Keep in mind that human resource planning doesn’t have to address all of the objectives on this list from the moment it goes into effect. Start small and expand into different areas once you’ve addressed one or two objectives.
Later on in this article, we discuss a step-by-step method for producing a human resource planning strategy for your business.
But, first, let’s take a moment to discuss one of the most-confused aspects of human resource planning: how it differs from strategic human resource management.
HRP Vs. SHRM
Before we delve into the minutiae of human resources, let’s put the two relevant definitions side-by-side to see how they compare.
Human Resource Planning: HRP is the ongoing process of systematically planning ahead to optimize and maximize your business’s most valuable asset — high-quality employees.
Strategic Human Resource Management: SHRM is a holistic approach to assembling the best team for your business’s growth and success.
At first glance, it may appear that human resource planning is the same thing as strategic human resource management under a different name. They seem so similar because one is actually part of the other.
In this case, HRP is a small part of SHRM. Viewed from a different perspective, SHRM contains and governs HRP.
It’s very much like a set of nesting dolls: the smallest one (HRP) fits nicely into the next largest (SHRM), which, in turn, fits into the next largest, and so on.
For practical purposes, it helps to think about human resource planning as the frontline, boots-on-the-ground application, while strategic human resource management is the guiding principle behind those applications.
In other words, SHRM is the why to HRP’s what.
Another way to think about SHRM and HRP is to view your business as a large, complicated machine.
Human resource planning is one component (a gear, for example) that works with other similar components (e.g., production, logistics, shipping, management, etc.) to keep the machine running.
Strategic human resource management, on the other hand, takes a step back and analyzes the machine itself.
SHRM looks at the performance of each component (each department in your business), how they work together to make everything run smoothly, and what the business as a whole can do to improve.
HRP And Organizational Strategy
Let’s return, for a moment, to the example of the nesting dolls mentioned earlier.
We established that human resource planning is the smallest doll and that strategic human resource management is the next largest doll. But what comes after that?
What’s the next largest doll in the series? Organizational strategy.
Organizational strategy, at its most basic, is a plan that specifies how your business will allocate resources to support infrastructure, production, marketing, inventory, and other business activities.
How does this affect human resource planning? Organizational strategy directs strategic human resource management directs human resource planning.
In many ways, the strategy side of your business mirrors the relationship between SHRM and HRP.
Organizational strategy is subdivided into three distinct categories: corporate strategy, business strategy, and functional strategy. Just like SHRM and HRP, each level is a part of the one above it.
Corporate level strategy is the main purpose of your business — it’s the destination toward which your business is moving.
Business level strategy is the bridge between corporate level strategy and much of the “boots-on-the-ground” activity that occurs in functional level strategy.
Functional level strategy is the specific actions and benchmarks you assign to departments and individuals that move your business toward the goals created by your corporate level strategy. They are a direct offshoot of your business level strategies.
With those categories in mind, we start to see the bigger picture of your business. SHRM is a component of your business level strategy, while HRP is a component of your functional level strategy.
Now that you understand the theory behind human resource planning, let’s focus our attention on the practice itself.
Steps In Human Resource Planning
1) Analyze Organizational Strategy
Any successful workforce-management program — including human resource planning — is a direct offshoot of your business’s organizational strategy.
Therefore, you should always start your HRP process by analyzing the goals and plans of your organization. With those strategies in mind, you can then move on to crafting a general human resources mission statement.
From there, you can work your way through the various departments in your business to address issues such as:
When you have that information written down, you can craft a human resource plan to help your business reach and maintain its goals.
2) Inventory Current Human Resources
After analyzing your organizational strategy, it’s time to take stock of your business’s current human resources.
In the process, it’s beneficial to investigate such variables as:
- Total number of team members you employ
- Who works in what department
- Skills of each employee
- Performance reviews
- Team and individual potential
With that data in hand, you then make sure that your existing workforce is large enough and skilled enough to cover current demands before moving on to the next step in this guide.
3) Forecast The Future Of Your Workforce
Step three is all about planning, prediction, and preparing for the future.
Guided by your organizational strategy and your current employee data, do your best to forecast what the future of your workforce will look like. Be sure to incorporate any goals and plans into your forecast.
Examine variables such as:
- New product offerings
- New services
- A second (or third) location
- Labor costs
- Vendor and supplier relations
- Cost of goods sold
A forecast of this type, coupled with the workforce data from step two, gives you an accurate picture of where your business is right now and where you want it to be five, 10, even 15 years down the road.
4) Estimate Gaps
Armed with the information you’ve produced so far, you can now estimate whether or not there are any gaps in your human resource strategy.
Will you need more employees to get your business from the present to where you want it to be in the future? If so, how many? Will you need fewer employees? If so, how many?
Does your forecast call for a reallocation or redistribution of current team members? If so, how would you go about doing this?
Once you’ve estimated the gaps between your current and future workforce numbers, you can move on to step five, where all the planning and brainstorming comes to fruition.
5) Formulate An Action Plan
Formulating an action plan is where the rubber meets the road, so to speak.
Your action plan should take into account all the analysis that came before it — organizational strategies, current HR inventory, HR forecast, and gaps between present and future — to create a step-by-step system for taking your business from point A to point B.
Still other businesses may need to develop a retirement program or a redeployment process to deal with surplus employees.
When crafting your plan, start with the theoretical — evolve from X to Y — and then move on to actionable steps that your HR department can take — hire and retain two new team members every year, for example — to transform the theory into reality.
With these steps in mind, you can implement a successful human resource planning system into your business, no matter how many employees you have.
As you go about implementing your business’s HRP, don’t neglect the foundation of all good employer/employee relations: scheduling and communication. We’ll discuss this topic at the end of the article.
6) Integrate With The Rest Of The Company
Now that you’ve got an action plan, your human resource planning efforts will start to yield results.
That said, the integration stage is the most difficult of the entire process, so be ready for some speed bumps.
Without proper preparation — and even with proper preparation, in some cases — both management and frontline employees may show resistance to the proposed changes.
In addition, all departments within your business work together in one way or another (even if it doesn’t at first appear so). This makes the integration phase challenging on many levels.
Once you’ve brought in new, high-potential employees and have begun funneling them into the various departments, you can start to make other changes to accommodate these new hires.
Integrating slowly and pairing the changes with new employees who will further the goals and productivity of each department makes putting your new human resource planning into place much easier.
7) Monitor, Evaluate, And Adjust
The final step in human resource planning is to monitor the new practices, evaluate them for their effectiveness, and adjust as necessary.
In addition to monitoring each department and your business as a whole, it’s also beneficial to zoom in on how any changes made affect the individual employee.
To take the pulse of the front-line worker, include questions about your human resource planning during mid-year reviews and performance appraisals. You can even ask for their opinion when you have them complete an employee self-evaluation.
Monitoring and evaluating in this way will help you get a detailed view of how any new policies, procedures, and practices affect the men and women in the trenches.
Once you have all the information you need, you can then take steps to adjust your human resource planning accordingly.
For that, it’s best to return to the top of this list and start again at step one, incorporating what you learned from the previous run-through.
In essence, then, you can view this list as less of a straight line and more of a circle, with step seven leading directly back into step one. As such, your HRP should be in a constant state of development.
Why Human Resource Planning Is Important
Your business can function without HRP, and, yes, it can be a challenge to get the plans in place, but the benefits far outweigh the drawbacks.
Among other things, HRP can help your business:
- Anticipate workforce needs in a changing market
- Plan for short-term and long-term growth
- Improve operations
- Facilitate staffing changes
- Avoid talent shortage
- Stay ahead of the technology curve
- Remain agile as the market evolves
- Maintain compliance with government laws and regulations
Human capital management is one of the most important parts of your business. HRP helps you maximize that potential.
Challenges Of Human Resource Planning
As beneficial and powerful as human resource planning is, it is not without its drawbacks and challenges.
For one thing, HRP relies on forecasting, which is an imperfect art and is never — and can never be — 100% accurate.
Similarly, you can never account for the ambiguity in the market and the rapid change that could come out of nowhere.
There may be some error when you forecast the future of your workforce. That error will affect the other steps on this list for the good or the bad (depending on how accurate your forecast is).
Realistically, though, that can’t be helped and all you can do is give it your best shot. If you discover errors in your forecasting, you can always return to step one and start the process over with the new information.
Other challenges of the human resource planning process include:
- Resistant workforce
- Inefficient information systems
- Overall cost
- Time and effort
That said, when you are aware of these challenges going in, you can take steps to overcome them right away so that you can get to the benefits sooner.
Scheduling And Communication For Effective HRP
Scheduling and communication are key components of an effective human resource planning process.
Your team’s schedule is the cornerstone on which you build their work experience. If the schedule doesn’t satisfy all parties — employees and management alike — your business suffers.
Similarly, clear communication with all your employees fosters a strong team and keeps everyone in the loop about employee performance, inventory, standard operating procedures, customer satisfaction, and your business as a whole.
In the 21st century, the best schedules are created and the best communication maintained with help from dedicated software like Sling.
And with advanced communication features built in, Sling is the only tool you’ll ever need to keep your employees informed about your business and connected with each other.
There are so many ways Sling can help improve your human resource planning that we don’t have room to talk about them here. So instead of reading about it, why not try it out?
Sign up for a free account and see for yourself how Sling can help you implement the necessary strategies to make your team and your business successful.
For more free resources to help you manage your business better, organize and schedule your team, and track and calculate labor costs, visit GetSling.com today.