What Is HR Planning? Benefits and Steps to Follow for an Effective Process

It's vital to plan for the future and anticipate changes in the workforce to ensure a company’s efficiency and longevity. One way to do so is with HR planning (HRP). 

HR planning involves assessing current talent and forecasting future talent needs. Understanding the impact of HR planning on employee performance and company success is key to strategic planning and business growth. 

In this article, we will dive into what HR planning is, its benefits, and effective tools. We’ll also explore the steps to conduct successful HR planning in your organization.

What is HR planning? 

Human resource planning is the strategic process through which HR professionals identify current and future hiring and training needs. 

This crucial process is designed to ensure an organization possesses the appropriate talent across its various departments. 

Moreover, human resource planning empowers businesses to determine areas of deficiency in their workforce and execute targeted strategies to address these gaps effectively.      

Research on HR planning found “organizations engaged in human planning performed better than those that did not.”

Benefits of HR planning

But how does human resource planning benefit organizations? 

Here are several aspects where HR planning can affect a company’s workforce,  translating into tangible results for the organization.

Employee satisfaction 

A well-structured HR strategy, including strategic HR planning, allows organizations to equip their employees with needed resources, training, and support. 

This allows them to foster a positive work environment, attract and retain top talent, and boost employee engagement and satisfaction. All of this will ultimately lead to higher employee retention and morale.

Talent Management

HR planning is crucial for businesses to develop effective talent management strategies. 

This involves confidently identifying high-potential employees and providing them with targeted development opportunities to ensure they reach their full potential. 

It can also help them identify their self-development needs and progression.

Improved workforce arrangement

HR planning ensures the organization has the right people with the right skills, in the right place, at the right time. 

In other words, it contributes to workforce arrangement and to the success of the entire organization.

Decision making

By providing valuable insights into the workforce, HRP contributes to the organization’s strategic decision-making, resource allocation, and strategies.

Targeted training and employee development

HR planning helps businesses to identify skill gaps to provide targeted training and development for employees. 

With trained team members, companies can see an improvement in satisfaction, motivation, and higher team productivity.

Future workforce needs

Besides evaluating current needs, HR planning helps businesses anticipate and address future workforce needs. 

This can involve conducting a comprehensive analysis of the current workforce, the company’s growth plans, business development strategy, and more to forecast future needs. 

This proactive approach ensures businesses have the right talent and resources to meet their organizational goals.

Risk Management

Companies that rely on HR planning can navigate workforce disruptions, labor shortages, and changes in labor laws and regulations. 

By proactively identifying potential risks and developing effective contingency plans, businesses can equip themselves to overcome these challenges.

Managing workforce costs

Organizations can effectively manage workforce costs by implementing strategic human resource planning, which involves avoiding over-staffing and understaffing. 

Moreover, this approach enables them to identify and capitalize on opportunities to optimize workforce structure and performance.

Succession planning

Many companies forget about the benefits of succession planning. Put simply, succession planning is identifying and supporting talents’ professional growth to fill leadership and managerial roles in the company.

By identifying those critical roles and required competencies, human resource planning can help organizations develop potential successors, ensuring smooth leadership transitions and business continuity.

Steps for successful HR planning 

A strategic HR planning process ensures the right talent is in place to achieve goals and stay ahead of the competition.

Here are the essential steps every HR planning process must include:

Make predictions about future changes 

Using current employee data, you can forecast future changes in company employment. 

Use data like supply forecasting, which evaluates existing employees and potential vacancies, and demand forecasting, which focuses on the number of employees needed to meet future business goals.

Analyze the company's offerings and current employees 

Analyze your company’s current offerings, business goals, along with staff skills. Use the information to identify areas for improvement. 

Consider factors such as the total number of employees, departmental distribution, job titles, benefits packages, employee ages, performance evaluation data, and employee skills and qualifications. 

This data will help you determine if your company's workforce has the necessary skills and resources to achieve its business objectives.

Conduct a gap analysis 

A gap analysis compares current employee performance with the desired performance.

It involves identifying the current situation, establishing the ideal situation, determining gaps, and developing methods to bridge those gaps. 

HR professionals use it to isolate differences in employee skill level, quantity, company culture, benefits, training programs, and onboarding strategies.

Recruitment and talent acquisition

Based on the gap analysis, develop a recruitment and talent acquisition strategy. Determine if you need to hire new employees, upskill existing ones, or both.  

Set up and review KPIs for recruitment so you can measure the impact of your efforts. 

Create job descriptions, conduct interviews, and use different recruitment methods to attract the right talent. 

Training and development

After hiring new talent, invest in their growth through training and continuous learning to keep your workforce competitive in a changing business landscape.

Integrate your HR plan into the whole business 

To understand current talent, future needs, and any gaps between them, integrate your HR plan with your organizational strategy. 

Communicate with company leadership about potential training programs and resource needs. 

Monitor and adjust

Effective HR planning is a continual process that requires daily monitoring to make necessary changes and ensure an effective strategy.

Remaining attentive to changes in the business environment, embracing continuous change, and being ready to adapt the workforce accordingly is crucial for successful HR planning.

Tools for HR planning

To conduct effective human resource planning, you consider the following tools.

HR dashboard

Through the HR dashboard, HR team members can collect data about employees in the company. The dashboard can display this various data in the form of metrics, uncategorized information,...etc. 

The data usually includes employee turnover rate, satisfaction, productivity, skill levels, internal promotions, and candidate engagement.

Compensation and benefits analysis 

Companies need to have compensation and benefits KPIs within their broader strategy. 

Part of HR resource planning is analyzing your current compensation and benefits strategy. This means setting internal pay standards, categorizing individuals, along with labor market statistics to compare internal pay structures and benefits, with industry standards. 

Doing so will help your company reduce turnover and enhance satisfaction and employee productivity.

Use an HRMS 

Human resource management systems (HRMS) combine various processes like HR planning, payroll, hiring, onboarding, and recruitment. 

An HRMS is not just one system but comprises various systems or software in a single dashboard. 

Using an HRMS, HR professionals can automate tasks such as application sorting, and tracking employee hours. This can contribute to helping HR team members make necessary adjustments and measure improvements.

Surveys

Surveys are an essential tool for gathering data about different HR challenges, internal issues, so you can identify needed changes. 

Surveys help you identify potential weaknesses that may be causing high turnover or reduced productivity.

Depending on the problem you’re trying to solve, you should consider the survey used accordingly. Make sure you don’t download and use a generic online survey. Tailor it to your company’s needs.

Use the surveys to assess department managers' opinions, determine training needs, evaluate employee satisfaction with benefits packages, understand workplace culture, and gauge employee morale, among others.

Make sure you survey employees and managers independently to get a clear picture of each team and category.

Workforce mapping

The workforce mapping tool helps businesses understand their organizational goals and strategy. 

It's important not to confuse this with strategic workforce planning, which is the result of organizational strategy informed by an environmental scan.

In HRP, an environmental scan is the process of conducting surveys and interpreting relevant data to identify external opportunities and threats.

According to the Society for Human Resource Management, environmental scanning “is closely related to a S.W.O.T. analysis and should be used as part of the strategic planning process.”

Performance management systems

Performance management systems are software programs that empower managers to deliver feedback on employee performance and assign performance ratings over time. 

They play a vital role when integrating HR planning into your company. These systems help HR professionals evaluate the effectiveness of changing employee roles and offered training.

Scenario planning

In strategic workforce planning, scenario planning is used to predict and analyze future scenarios and their impact on your workforce and business performance.

To conduct thorough scenario planning, you need to understand the internal and external factors driving change within your workforce. 

Reflect on the environmental scan factors used in developing your organizational strategy to anticipate future scenarios.

To learn more about creating an HR planning process for your organization, reach out to Tawzef’s team.