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What Is HR Planning?

HR planning is a strategic process that seeks to align an organization’s talent management strategies with its business goals and objectives.

The HR planning process involves forecasting future workforce needs, assessing current workforce capabilities and needs, analyzing the market, and identifying specific issues related to talent management e.g. retention.

What Is The Purpose Of HR Planning?

The ultimate purpose of HR planning is to ensure that an organization has the skills it needs to achieve its goals and objectives and that those skills are being properly utilized within the organization.

For example, if a software company has plans to release a new product into a new market, does it have the requisite skills to design, develop, test, and market it?

Why Is HR Planning Important?

“Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” - Abraham Lincoln

The above quote from Abe Lincoln is a testament to the overall importance of careful preparation and planning. HR planning is crucial for several reasons:

  • Alignment with organizational goals: HR planning aligns HR goals with the strategic objectives of the organization, ensuring that human resources contribute effectively to achieving business goals.
  • Forecasting and meeting future workforce needs: By forecasting future staffing needs based on organizational goals, HR planning helps organizations prepare for and meet these demands.
  • Optimizing resource utilization: Effective HR planning ensures optimal utilization of skills, reducing excess labor costs while ensuring that departments have the necessary skills to meet their objectives.
  • Supporting employee development and career planning: HR planning helps guide the career growth and development of employees, aligning individual aspirations with organizational needs.
  • Enhancing organizational agility: HR planning enables organizations to be more agile, allowing them to adapt more quickly to changes in the market, technology, or competitive landscape by having a well-planned strategy for their workforce.
  • Risk management: It helps in managing risks related to human resources, such as compliance with labor laws and regulations, succession planning for key positions, and preparing for unexpected changes in the workforce.
  • Improving employee retention: By providing guidance for people’s career development and helping to shine a light on any issues impacting retention, HR planning helps in improving job satisfaction and retention.
  • Facilitating diversity and inclusion: Strategic HR planning includes can be used create more diverse workforces.
Download our 2024 Workplace Trends Report to stay ahead in a transforming HR landscape. Get insights from leaders on trends that will define your strategies in AI, talent dynamics, and DEI.

Download our 2024 Workplace Trends Report to stay ahead in a transforming HR landscape. Get insights from leaders on trends that will define your strategies in AI, talent dynamics, and DEI.

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Challenges Of Human Resource Planning

The future is notoriously difficult to predict and several internal and external factors can complicate the HR planning process.

  • Competing priorities. Sometimes, a lack of clear priorities from business leaders makes planning for future talent needs difficult. Organizations often struggle to balance immediate staffing needs with long-term strategic goals, leading to potential misalignments between workforce capabilities and organizational objectives.
  • Data management and analytics: Collecting and analyzing reliable workforce data to inform HR planning decisions can be tricky, especially for organizations that lack the necessary tools or expertise.
  • Adapting to market changes: Fluctuations in the labor market, such as skill shortages, can complicate the planning process.

9-Step HR Planning Process

The HR planning process is both forward-looking and adaptable, aiming to align workforce capabilities with the organization’s goals and objectives. The key steps in the HR planning process are:

1. Understanding organizational objectives

  • Begin by thoroughly understanding the organization's strategic plan, including its long-term goals, competitive positioning, and key business drivers.

2. Workforce analysis

  • Conduct a talent review to assess the current workforce in terms of size, skills, competencies, age, turnover rates, and other relevant factors.
  • Assess the external labor market for the availability of required skills and competencies.
  • Assess employee feedback about any challenges they’re facing in the organization and how they’d improve things.

3. Forecasting demand for talent

  • Predict future workforce requirements based on organizational objectives, projected turnover, technological advancements, and market trends.
  • Consider both the quantity and quality of employees needed to achieve organizational objectives.

4. Identifying skills gaps

  • Perform a skills gap analysis to compare the demand for labor with the current supply, both internally and externally. The aim is to identify where the organization may face shortages or surpluses of specific skills or roles.

5. Developing HR strategies to address gaps

  • Formulate strategies to bridge identified gaps and optimize talent usage This could include recruitment, training and development, restructuring, outsourcing, workforce reduction, and retention strategies
  • Create goals and key performance indicators (KPIs) to make it easier to track progress
  • Consider long-term strategies like succession planning.

6. Assessing HR’s capabilities

  • Complete the above steps for the HR department. Is there capability within the team to meet the new objectives and deliver projects?
  • What HR software solutions could help and which processes could be improved?

7. Plan and implement HR Initiatives and Programs

  • Plan how these initiatives will be implemented, including timelines, responsibilities, and required resources.
  • Implement initiatives in accordance with project plans and timelines.

8. Monitoring, evaluation, and feedback:

  • Periodically monitor the implementation of HR plans against set objectives.
  • Evaluate the effectiveness of HR strategies and make adjustments as needed.
  • Collect feedback from stakeholders to inform future HR planning efforts.

9. Review and revision:

  • Regularly review HR planning processes and outcomes in light of changing organizational needs and external conditions.
  • Revise HR plans to ensure they remain aligned with organizational goals and responsive to the dynamic nature of the labor market.

HR Planning Best Practices

There are a lot of moving parts when it comes to talent management and the HR planning process.

Use these best practices to help make the process more accurate and efficient.

  • Engage senior management: Ensure that senior executives understand and support the HR strategy. Leadership buy-in is critical for securing the necessary resources and for cascading the importance of the strategy throughout the organization.
  • Keep good data hygiene. Being able to accurately measure key HR metrics such as attrition and retention rates is vital for HR planning. Technology such as HR analytics software can help here.
  • Set clear KPIs. Your human resources strategies and initiatives should always be mapped back to your organizational strategies. Likewise, your HR KPIs should be able to articulate how HR professionals are providing real value realization against those same strategies.
  • Gather feedback from employees. Great ideas can come from anywhere and employee listening should inform any HR planning process.
  • Create a skills library. Many organizations are now moving from a roles-based approach to talent management to a skills-based one. Part of this is building out skills libraries that define what skills mean in an organization and make it easier to track them.
  • Deconstruct complex processes. As part of your HR planning efforts, segment complex HR challenges into simpler, easier-to-implement components. Each component should stack back to the big picture/end goal of what you are trying to accomplish.

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For further advice on HR planning and other strategic initiatives, join our supportive community of HR and business leaders sharing knowledge and best practices to help you grow in your career and make greater impact in your org. 

By Finn Bartram

Finn is an editor at People Managing People. He's passionate about growing organizations where people are empowered to continuously improve and genuinely enjoy coming to work. If not at his desk, you can find him playing sports or enjoying the great outdoors.