Human Resource Planning (HRP)

What Is Human Resource Planning (HRP)?

Human resource planning (HRP) is the continuous process of systematic
planning ahead to achieve optimum use of an organization's most valuable
asset—quality employees. Human resources 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 used by a company to

maintain a steady stream of skilled employees while avoiding employee
shortages or surpluses.
 Having a good HRP strategy in place can mean productivity and
profitability for a company.
 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.

Understanding Human Resource Planning (HRP)

Human resource planning allows companies to plan ahead so they can
maintain a steady supply of skilled employees. That's why it is also referred to
as workforce planning. The process is used to help companies evaluate their
needs and to plan ahead to meet those needs.

Human resource planning needs to be flexible enough to meet short-term

staffing challenges while adapting to changing conditions in the business
environment over the longer term. HRP starts by assessing and auditing the
current capacity of human resources.

Challenges of Human Resource Planning

The challenges to HRP include forces that are always changing, such as
employees getting sick, getting promoted, or going on vacation. HRP ensures
there is the best fit between workers and jobs, avoiding shortages and
surpluses in the employee pool.

To 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.
 Cope with absences and deal with conflicts.

 Promote employees or let some of them go.

Investing in HRP is one of the most important decisions a company can

make. After all, a company is only as good as its employees, and 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.

Steps to Human Resource Planning

There are four general, broad steps involved in the human resource planning
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 the
company's needs.

Analyzing Labor Supply

The first step of human resource planning 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.

Forecasting Labor Demand

The second step requires the company to outline the future of its workforce.
Here, the HR department can consider certain issues like promotions,
retirements, layoffs, and transfers—anything that factors into the future needs
of a company. 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.

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?
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.

Special Considerations
The goal of HR planning is to have the optimal number of staff to make the
most money for the company. Because the goals and strategies of a
company change over time, human resource planning is a regular
occurrence. 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
human resource planning and will require HR departments to use new
methods and tools to recruit, train, and retain workers.

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 and develop the skills needed amongst the workforce.

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. 1

What Are the Basic Steps in HRP?

HRP begins with an analysis of the available labor pool from which they 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. 1
What is Human Resource Planning ?
Human Resource Planning (HRP) is the process of forecasting the future human resource
requirements of the organization and determining as to how the existing human resource capacity
of the organization can be utilized to fulfill these requirements. It, thus, focuses on the basic
economic concept of demand and supply in context to the human resource capacity of the organization.

It is the HRP process which helps the management of the organization in meeting the future demand of
human resource in the organization with the supply of the appropriate people in appropriate numbers at
the appropriate time and place. Further, it is only after proper analysis of the HR requirements can the
process of recruitment and selection be initiated by the management. Also, HRP is essential in
successfully achieving the strategies and objectives of organization. In fact, with the element of strategies
and long term objectives of the organization being widely associated with human resource planning these
days, HR Planning has now became Strategic HR Planning.

Though, HR Planning may sound quite simple a process of managing the numbers in terms of human
resource requirement of the organization, yet, the actual activity may involve the HR manager to face
many roadblocks owing to the effect of the current workforce in the organization, pressure to meet the
business objectives and prevailing workforce market condition. HR Planning, thus, help the organization
in many ways as follows:

 HR managers are in a stage of anticipating the workforce requirements rather than getting
surprised by the change of events
 Prevent the business from falling into the trap of shifting workforce market, a common concern
among all industries and sectors
 Work proactively as the expansion in the workforce market is not always in conjunction with the
workforce requirement of the organization in terms of professional experience, talent needs,
skills, etc.
 Organizations in growth phase may face the challenge of meeting the need for critical set of skills,
competencies and talent to meet their strategic objectives so they can stand well-prepared to
meet the HR needs
 Considering the organizational goals, HR Planning allows the identification, selection and
development of required talent or competency within the organization.

It is, therefore, suitable on the part of the organization to opt for HR Planning to prevent any unnecessary
hurdles in its workforce needs. An HR Consulting Firm can provide the organization with a comprehensive
HR assessment and planning to meet its future requirements in the most cost-effective and timely
manner.

An HR Planning process simply involves the following four broad steps:

 Current HR Supply: Assessment of the current human resource availability in the organization is

the foremost step in HR Planning. It includes a comprehensive study of the human resource
strength of the organization in terms of numbers, skills, talents, competencies, qualifications,
experience, age, tenures, performance ratings, designations, grades, compensations, benefits,
etc. At this stage, the consultants may conduct extensive interviews with the managers to
understand the critical HR issues they face and workforce capabilities they consider basic or
crucial for various business processes.
 Future HR Demand: Analysis of the future workforce requirements of the business is the second
step in HR Planning. All the known HR variables like attrition, lay-offs, foreseeable vacancies,
retirements, promotions, pre-set transfers, etc. are taken into consideration while determining
future HR demand. Further, certain unknown workforce variables like competitive factors,
resignations, abrupt transfers or dismissals are also included in the scope of analysis.
 Demand Forecast: Next step is to match the current supply with the future demand of HR, and
create a demand forecast. Here, it is also essential to understand the business strategy and
objectives in the long run so that the workforce demand forecast is such that it is aligned to the
organizational goals.
 HR Sourcing Strategy and Implementation: After reviewing the gaps in the HR supply and
demand, the HR Consulting Firm develops plans to meet these gaps as per the demand forecast
created by them. This may include conducting communication programs with employees,
relocation, talent acquisition, recruitment and outsourcing, talent management, training and
coaching, and revision of policies. The plans are, then, implemented taking into confidence the
mangers so as to make the process of execution smooth and efficient. Here, it is important to
note that all the regulatory and legal compliances are being followed by the consultants to prevent
any untoward situation coming from the employees.