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Human Resource Planning: Meaning, Importance, Process.

25 min read

human resource planning guide

Human Resource Planning (HRP) is the process of understanding the requirements of an organization in terms of how many and what kind of individuals are needed.

It is also known as workforce planning. It identifies the current and future demands of a business to help achieve targets effectively.

Human Resource Planning (HRP) revolves around the fundamental economic principles of supply and demand concerning an organization’s workforce. Just like finding the right balance in a recipe, HRP ensures that a company has the right amount of workforce to meet its needs.

This article deals with the basic meaning of HRP and how scholars have defined it in the past and present. Meanwhile, we learn its importance, how HRP has evolved to what it is today, and what kind of processes are being followed at present. 

Meaning of Human Resource Planning

HRP or HR Planning, is the process of carefully and scientifically preparing a strategy to ensure the right people are available at the right time, in the right place, and at the right cost for the organization. 

Employees are the best resources of a company. Hence, HRP is all about finding the ideal employees and making sure they’re in the right job, that benefits both the individual and the organization.

Definition of Human Resource Planning

E.W. Vetter defines HR Planning as “A process by which an organization should move from its current manpower position to the desired manpower position. Through planning the management strives to have the right number, right kind of people at the right place and at right time, doing things which results in both organization and individual receiving maximum long run benefits.” 

Robbins and Coulter says “HR Planning is the process by which manager ensures that they have the right number and right kind of capable people in the right places and at the right times.” 

According to K Aswathappa, “HR Planning is the process of forecasting a firm’s future demand for, and supply of, the right type of people in the right number.

Importance of Human Resource Planning

human resource planning importance

In a study conducted by Ogunrinde in 2001, it was discovered that organizations that actively practiced human resource planning exhibited superior performance compared to those that did not engage in such planning.

Human Resource Planning is important in several aspects that revolve around working toward organizational goals. It is the baseline for all functions related to HR like recruitment, onboarding, reviewing, etc. 

Its key important features include:

1. Increasing productivity

In HR planning, maximizing productivity is crucial. Efficient use of resources and minimizing waste, achieved through staffing activities like training, performance appraisal, and fair compensation, leads to higher productivity. 

HR planning ensures employees are skilled, motivated, and properly rewarded, enhancing overall efficiency and productivity in the organization.

2. Implementing managerial activities

The success of managerial tasks like planning, organizing, directing, and controlling relies heavily on having the right people (human resources) in place. Human resources play a crucial role in making sure these managerial activities work effectively. 

So, HRP, which is about having the right staff in the right positions, is essential for all managerial functions to succeed. In simpler terms, having the right people is vital for any business to run smoothly.

3. Motivating employees

HR Planning goes beyond just placing the right people in the right roles. It also involves motivating employees through programs like incentives. These incentives are crucial because they encourage active participation and help in retaining employees within the organization. 

So, within the scope of HR planning, designing effective incentive plans becomes extremely important. It ensures not only hiring suitable individuals but also keeping them engaged and motivated to contribute their best to the organization.

4. Improving employee relations

Strong human relations are vital for a company’s stability. This strength is achieved through effective control, clear communication, and strong leadership. Human resources planning plays a key role in this. 

By focusing on training and developing the workforce, HR Planning ensures that employees are skilled and cooperative. This in turn fosters better human relations within the organization. Essentially, HR planning helps create a positive work environment where employees understand their roles, communicate well, and cooperate effectively.

5. Coping with change

Human resource planning is important for organizations to cope with changes in the external environment. It enables the development and implementation of strategies to enhance employee and organizational performance.

6. Evaluating demand and supply of resources

Human resource planning ensures there is the right number of employees (demand) to meet the company’s needs without overstaffing or understaffing. It’s like finding the perfect balance, ensuring there are enough people to get the job done efficiently without unnecessary costs or gaps.

7. Increasing quality of hire

Human resource planning impacts the quality of applicants an organization attracts. Companies practicing HR planning know what qualities they need in applicants, making their hiring decisions more precise and effective. This results in attracting candidates who are better suited for the organization’s needs.

8. Growing a competitive advantage

As discussed, organizations that invest in human resource planning can identify and nurture the best talents. By having the right people with the right skills in the right places, a company gains a competitive edge. 

They can adapt to changes faster, innovate more effectively, and deliver superior products or services. In essence, human resource planning helps companies stay ahead of the competition by ensuring they have the right team to tackle challenges and seize opportunities.

History and Evolution of Human Resource Planning (HRP)

history of hrp

Studying how HR Planning has changed over time helps us grasp its principles, roles, and methods in various contexts. This understanding guides us in developing appropriate HRP strategies for today’s situations.

The term ‘Human Resource Planning’ has only been recently introduced. Historically, the production of goods and services was usually owned and managed by the same individuals. There were fewer employer-employee problems. As industrialization boomed up, newer issues arose in managing human resources. 

In this section, we study the evolution of HRP period-wise.

  • Before 1900 (HRP as a science)

Modern Human Resource Management or Planning traces back to Robert Owen, considered its founder, in the early 19th century. Owen emphasized better industrial relations, improved working conditions, and eliminated child labor. His contemporaries, like J.S. Mill and Andrew Yule, developed HRM as a science, promoting ideas such as wage incentives and labor welfare.

  • 1900-1920 (Efficiency and Productivity)

Between 1900 and 1920, there was a focus on efficiency and productivity, marked by the rise of scientific management led by Taylor. (Taylor’s Scientific Management Thought) This period saw the growth of larger organizations, scientific job analysis, cost standards, and improved worker selection and training. Taylor opposed workers’ unions and emphasized a mental shift in work attitudes.

  • 1920-1930 (Era of Welfare Focus and Industrial Psychology)

In the 1920s, HRM took shape with the establishment of staff line organizations. Workers’ opposition to scientific management led to the emergence of industrial psychology. During this period, industrial psychologists introduced techniques like psychological testing, interviews, worker training, and non-financial incentives. These developments professionalized HR planning and management, turning it into a recognized field and specialist role.

  • After 1950 (Modern Era)

From 1950 to 1970, HRM entered a new phase emphasizing worker rights and industrial democracy. During this period, HR managers faced increased responsibilities, and the concept of HRM as a separate discipline gained widespread acceptance.

  • After 1970 (Transition to Behavioral Science and Open Systems) 

After 1970, HRM evolved further, becoming a behavioral science focused on human elements and organizational behavior. The idea of ‘open social and industrial systems’ gained popularity, solidifying HRM as a recognized profession managing human resources and expanding its scope.

Human Resource Planning Process

human resource planning process

The Human Resources Planning (HRP) process contains systematic steps in HRP that drive effective management of human resources. It is sometimes referred to as the process of human resources planning or manpower planning.

This methodical approach involves careful analysis, prediction, and strategic allocation of workforce resources. By understanding the process of manpower planning, businesses can ensure that the workforce remains a dynamic and responsive asset, vital for achieving long-term success.

Step 1: Analyzing the Environment

Analyzing the environment marks the starting point of Human Resource Planning (HRP). It involves scrutinizing both external and internal factors to identify potential issues, threats, and opportunities shaping the organization’s strategic planning.

External environment:

  • Competitors
  • Legal environment

Internal environment:

  • Strategy
  • Technology factors 

Step 2: Predicting Labour Demands

Predicting labor demands is essential to avoid labor shortages that often impede business expansion. Various methods are employed to forecast how business needs will influence HR requirements. Here are two basic method categories:

  • Qualitative Methods: Qualitative techniques like the Delphi and nominal group techniques involve expert collaboration to create forecast statements and assumptions. These methods, although time-consuming, allow for in-depth discussions and idea sharing among experts.
  • Quantitative Methods: Quantitative techniques, such as trend analysis, rely on historical data to project future workforce needs. Crucial steps in trend analysis include selecting appropriate business factors, plotting historical records, computing productivity ratios, determining trends, and making necessary adjustments for future projections.

Step 3: Assessing Labour Supply

Labour supply assessment focuses on both internal (existing workforce) and external (potential recruits) resources. These resources are crucial to determine the supply required in the present and the future. 

Internal and external labor supply can be explained as:

  • Internal Supply: Internal labor supply refers to the available individuals and jobs within the organization. Human Resource Information System (HRIS) data projects future trends based on current patterns.
  • External Supply: External supply encompasses individuals in the broader labor force who are potential recruits. The relevant labor market varies based on job skills. For highly skilled positions, it might be a national or global market, whereas for unskilled jobs, it typically is the local community.

Step 4: Bridging Gaps

Gap analysis merges labor demand and supply forecasts. This critical process identifies potential skill shortages or surpluses. By aligning environmental forecasts with supply and demand projections, HR planners evaluate the organization’s readiness to pursue different business scenarios in alignment with its objectives.

Step 5: Implementation Planning

Following the analysis, implementation planning outlines the necessary steps to put the chosen solution into action. This phase ensures that decisions made in the above steps are translated into actionable plans, setting the sequence of events in motion.

Step 6: Oversight and Evaluation

Oversight and evaluation involve monitoring the effectiveness of human resource plans over time. Any deviations from the plans are identified, and corrective actions are taken as needed. Feedback from various outcomes is utilized to measure the extent to which human resource objectives have been achieved.

Tools and Techniques Used in Human Resource Planning

structured. Using verified techniques also validates the process for employees and stakeholders. 

The following showcases all the tools and techniques used in the HRP process categorized into various HR activities:

1. Determining Human Resource Requirements

  • Jobs analysis
  • Workday tasks analysis
  • Instantaneous observation
  • Time recording
  • Workday shooting
  • Standard administrative times
  • Work standards determination
  • Scenario planning
  • Extrapolation
  • Correlation coefficient analysis
  • Physical and/or value work productivity assessment
  • Critical incidents method

2. Forecasting Human Resource Needs

  • Dynamics of market demand for company products
  • Dynamics of market offer for company products
  • Forecasts on the company’s branch of activity
  • Forecasts on the evolution of the national economy
  • Dynamics of the company’s turnover
  • Dynamics of production
  • Productivity dynamics analysis
  • Trends analysis
  • Regression method
  • Delphi method
  • Business plan
  • Gantt chart
  • Staff fluctuation index
  • Retirement index
  • Investment value per workplace
  • Investment value for the next period

3. Recruiting and Selecting Talent

  • Human resource selection model
  • General knowledge tests
  • Specific knowledge tests by field, positions, etc.
  • Skills tests (attention, communication, negotiation, etc.)
  • Personality tests
  • Practical exams
  • Projects elaboration
  • Case study assessments
  • Interview techniques
  • Questionnaires
  • Personnel file review
  • Curriculum vitae (C.V.) analysis
  • Studies diploma verification
  • Recommendations from former managers

4. Integrating New Employees

  • Individual labor contract establishment
  • Orientation discussion between manager and new employee
  • Job description explanation
  • Internal regulation comprehension
  • New employee introduction to colleagues
  • Specific work instructions provision
  • Methodologies in new employee’s field explanation

5. Training and Development

  • Individual study
  • Bachelor’s degree programs
  • Master’s degree programs
  • Doctor’s degree programs
  • Vocational schools attendance
  • Workplace apprenticeship
  • Panel discussions
  • Case study analyses
  • Specialized training sessions
  • Job rotation experiences
  • Research projects involvement
  • Managerial simulations
  • Managerial game participation
  • Information seminars attendance
  • Specialty site referrals
  • Quality, skill, and knowledge tests

6. Communication Strategies

  • Information dissemination through various means (e-mail, written communication, etc.)
  • Balanced scorecard reviews
  • Instruction set provisions for specific activities
  • Organization’s internal communication tools utilization (e.g., “newspaper”)
  • Panels with high performers within the organization
  • Annual letters from CEOs or managers to employees

7. Human Resource Assessment

  • 360-degree assessment
  • Assessment interviews
  • Work productivity evaluations
  • Management by objectives (MBO)
  • Diagnostic analysis methods
  • Notation systems
  • Overall assessments
  • Functional evaluations
  • Self-assessment tests
  • Assessment tests
  • Graphic scales for classifying human qualities
  • Various assessment methods (essay, critical incidents, behaviors checklist, etc.)
  • Human Resource Assessment Center participation

8. Career Development

  • Job analysis for career planning
  • Career plan creation
  • Organigram understanding for growth opportunities
  • Mentoring sessions
  • Tutoring programs
  • Coaching sessions

Using the above-mentioned tools and techniques manually makes HR planning a tedious task. A solution to such a problem would be to automate such tasks. Organizations worldwide use HRMS software to assist with HRP processes. 

Here are some tools incorporated by Keka’s dashboard to make HR Planning easier for HR professionals:

1. Employee database

With Keka HR, you can manage your employee database seamlessly. It digitizes every aspect of your employee’s documentation processes – storing documents, company policies, issuing letters, and collecting signatures, all in a digital format.

Also, check out: Employee Profile

2. Recruitment and talent acquisition

Keka’s applicant tracking system allows easy talent acquisition practices from recruiting to onboarding. You can manage the whole recruitment process on the dashboard while screening the perfect candidates. Here are some of the features offered by it:

  • Candidate Kanban: Obtain a clear overview of candidate application statuses.
  • Pre-employment tests: Assess candidate skills and competence through specialized assessments.
  • Scorecards: Access summarized test results and feedback for more informed hiring choices.
  • Job boards: Publish and track your job openings across different platforms.
  • Reports and analytics: Utilize measurable data and analytics from your hiring processes to improve decision-making and strategies.

3. Performance management

Keka’s performance management software keeps an eye on employee performance, analyzing and tracking it to ensure goals are met and the desired results are achieved. 3 of its top features are:

4. Workflow automation

Keka’s Professional Services Automation software automates workflows for service businesses smoothly. It enables efficient project management, optimized resource allocation, and enhanced profit margins amidst tough competition.

Its key features include:

  • People-centric platform
  • Bill and track revenues
  • Intelligent resource planning
  • Predictive analysis

5. Data security and compliance

Keka prioritizes your data security by following industry best practices. We cover all aspects, from storage to monitoring, ensuring a safe environment for your subscription data. Our approach emphasizes data privacy and access, using meticulous strategies to maintain your trust.

We adhere to the EU’s General Data Protection Regulation (GDPR), ensuring our product features, corporate protocols, and legal documents assist users and customers in compliance efforts.

6. Communication and Collaboration

Keka Wall helps employees interact with one another in the company-wide portal, gaining insights into the best performers of the organization or the achievements of various departments. Additionally, features like One-on-One meetings simplify the entire mechanism of giving and receiving feedback.

Wrapping it Up

In conclusion, human resource planning is like creating a roadmap for a successful journey in the business world. Just as travelers consider external factors like weather and road conditions, companies must adapt to external influences such as laws and market trends. 

Internally, it’s akin to aligning company policies, fostering a positive work culture, and ensuring employees have the skills needed. By carefully considering these factors, businesses can navigate challenges, foster a motivated workforce, and ultimately, reach their desired goals and success. 

HR planning promotes innovation and creativity by cultivating a diverse and skilled workforce. Furthermore, thoughtful planning paves the way for a thriving and harmonious workplace.

Frequently Asked Questions (FAQs)

1. What are the basic steps in HRP?

The 5 basic steps in Human Resources Planning are:

Step 1: Assess the organization’s goals and strategies. 

Step 2: Examine the existing workforce and identify disparities. 

Step 3: Predict future HR needs. 

Step 4: Create and execute a plan. 

Step 5: Oversee, re-evaluate, and adjust the plan as necessary.

2. What is human resource planning?

Human resource planning (HRP) is the ongoing process of carefully planning to make sure a company uses its employees effectively. It’s about finding the right balance between the number of employees and the available jobs. This helps avoid situations where there are too few or too many employees for the work that needs to be done.

3. Why is human resource planning important?

HR Planning is vital because it allows businesses to predict and prepare for their future staffing needs. By studying the current workforce and foreseeing future requirements, companies can plan ahead. This guarantees they have the necessary skills and resources to achieve their goals smoothly.

4. What are the stages of human resource planning?

The human resource planning process involves four main stages: 

  1. Identifying the current employee supply.
  2. Determining future workforce needs.
  3. Finding a balance between the available workforce and demand.
  4. Creating plans that align with the company’s objectives.

5. What are the benefits of human resource planning?

Here are the benefits of human resource planning:

  • Talent Optimization: Ensures the right people are in the right roles, improving efficiency.
  • Cost Efficiency: Avoids overstaffing or understaffing, saving costs.
  • Skill Development: Identifies skills gaps and plans for training and development.
  • Strategic Alignment: Aligns workforce planning with organizational goals.
  • Adaptability: Enables quick response to market and industry changes.
  • Succession Planning: Facilitates smooth transitions in leadership positions.
  • Employee Satisfaction: Ensures workload balance, promoting job satisfaction.

6. What are the factors influencing human resource planning?

Human resource planning is influenced by external factors like government policies, technological advancements, and the business environment. Company policies, organizational culture, and the need for specific skills are internal factors. These factors shape workforce planning strategies and ensure alignment with organizational goals.

7. What is the purpose of human resource planning?

The purpose of HR planning is to match employees with jobs and prevent having too few or too many staff. There are three main steps: predicting how much staff will be needed, understanding how many employees are currently available, and making sure the predicted staff needs and available staff align properly.

8. How does human resource planning contribute to organizational success?

Human resource planning impacts organizational success by enhancing employee experiences. Proper orientation programs, for instance, help employees understand the organization’s values, leading to improved performance and overall effectiveness.

9. What are the key components of the human resource planning process?

Human resource planning involves three key components. First, it predicts future staffing needs. Second, it evaluates the current workforce’s skills and performance. Lastly, it ensures there’s a proper match between the predicted demand and the available skilled employees, preventing shortages or surpluses. This process helps organizations align their staffing with their goals effectively.

10. What challenges are commonly faced during the human resource planning process?

The common challenges commonly faced during the human resource planning process are:

  • Retaining Skilled Employees
  • Hiring New Talent
  • Work Burden
  • Skill Shortages
  • Limited Career Progression
  • Resource and Budget Limitations
  • Ambiguous Job Descriptions
  • Ineffective Leadership

Table of Contents

    Meet the author

    Keka Editorial Team

    A bunch of inspired, creative and ambitious youngsters- that’s Keka’s editorial team for you. We have a thirst to learn new subjects and curate diverse pieces for our readers. Our deep understanding and knowledge of Human Resources has enabled us to answer almost every question pertaining to this department. If not seen finding ways to simplify the HR world, they can be found striking conversations with anyone and everyone , petting dogs, obsessing over gadgets, or baking cakes.

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