The business world today is largely driven by two invaluable commodities: knowledge and skills. Human resources – or employees – are the most important variables leading to strategic success in virtually every industry imaginable. If you don’t have the best employees possible moving your company forward, it’s very difficult to beat out the competition. Because of this, the human resource planning process has become an integral part of the overall strategic direction of many of the world’s biggest companies.
The marriage of human resources and strategic planning has been largely necessitated by a variety of external market factors and, most significantly, the extreme competition for talent. As a result, the recruitment planning process is a critical subset of this larger HR program, as will be explained later in the article.
But first, let’s expand on what the human resource planning process is, and how it works.
What is human resource planning?
Human resource planning is a process that helps companies identify the current and future HR needs they’ll need to address to meet their strategic goals. It’s a process by which the human resources requirements of a given company are clearly identified, and a plan is put in place to ensure that those needs are met.
At its core, the human resource planning process serves as a link between the HR management team and the overall strategic planning of the company. Human resources leadership will work directly with executive and management-level employees to sync on what the current and future strategic needs of the company are, what gaps need to be filled, and how to ensure those needs are met.
Human resources planning is all about identifying a set of needs, and ensuring that the company can address that requirement with the right people, with the right skills, at the right time. As you can probably guess, recruitment plays a big role in ensuring that specific skills requirements are always addressed, and there is a backlog of candidates ready to step in when needed.
The human resources planning process
Depending on who you ask, the human planning process may entail anywhere from four to six steps. It’s an ongoing process of analyzing, planning, executing, and measuring the current state of your company’s human resources.
In general, the human resource planning process is broken into the following phases:
- Determining the company’s strategic goals, and HR’s role
- Analyzing the current labour supply and forecasting demand
- Analyzing the gap between labor supply and demand
- Creating and launching an HR action plan
- Monitoring, control, and feedback
Let’s jump deeper into each phase.
1. Determining the company’s strategic goals, and HR’s role
Before any HR planning can start, it’s important to sit down with your executive and management team to map out what the current and future goals are for the company. This will include discussing any new markets the company is looking to expand into, what their revenue and profit targets are, what the expectations are from the competition, and so on.
Understanding what direction your company is going in will help you determine what skills and knowledge you need right now, and what you are likely to need in the future. This knowledge alone can help guide your recruitment team in how they craft job descriptions and screen potential candidates.
2. Analyzing the current labour supply and forecasting demand
Once the strategic direction of your company is established, it’s time to take an inventory of your current human resources. This involves analyzing the HR strengths of your organization for factors including:
- Number of employees
- Contract length
- Performance rating
It’s important to have a clear picture of how many employees you have, what they know and can do, what you’re paying them, and how much longer they’re likely to be around. This datawill prove invaluable when it’s time to forecast what human resources you’ll need in the future to meet your goals.
To accomplish this inventory, it’s important to get insights from managers across the organization. They will able to provide real-world feedback on specific HR issues that their department faces, and areas that can be improved.
4. Analyzing the gap between labour supply and demand
Once you’ve taken an inventory of your human resources, and forecasted what the demand will be to meet your company’s strategic goals, it’s time to perform a gap analysis. This entails looking at what your human resources needs are in the future relative to what you currently have within your organization. This supply and demand analysis will result in either an HR surplus or a deficit for your company.
Deficits indicate that you need more resources within your company, which may lead to a recruitment blitz or the introduction of aggressive training and development programs.
Surpluses, on the other hand, indicate that you have too many human resources (or not the right kind) within your company. A surplus may be an issue if your company is attempting to make their operations leaner, and save costs on salaries. In these cases, layoffs or restructuring might be the best option to close this gap.
Important questions you should ask if you before you either recruit or lay off employees are:
- Are all of your current employees being utilized in the right areas? Would their skills be better suited in different roles?
- Should we focus on training and upskilling, rather than bringing in external candidates?
- Can we re-tool our current employees to fill gaps elsewhere in the company?
Covering all of your options in this phase will help you develop an HR plan that will yield the best results possible for your company and your employees.
5. Creating and launching an HR action plan
The specifics of your human resource plan will obviously depend on what your organization’s strategic goals are, and whether you have an HR deficit or surplus.
Depending on these two factors, your HR plan might entail some or all of the following strategies:
- Training and development
- Interdepartmental transfers
- Outsourcing jobs
- Collaboration enhancements
- Succession planning
- Compensation and benefits management
- Freelance and contract roles
Whichever route you take in your human resources action plan, it’s critical that your department has full support from the rest of the company to roll out this initiative. This includes a healthy budget to cover are requirements, and management buy-in across all departments in the company.
6. Monitoring, control, and feedback
Once launched, it’s important that you continuously measure and monitor the success and outcomes of your programs against your company’s goals. Regularly evaluate whether your HR plan has helped the company achieve its strategic goals. If it hasn’t, then you might need to go back and re-evaluate your plan and execution.
Now that we’ve dug into how the human resource planning process works, let’s talk about some of the benefits of this approach.
Benefits of human resource planning
Human resources planning’s importance to companies across all industries cannot be overstated in today’s competitive talent environment. Recruitment is very difficult these days at the best of times, let alone if your company doesn’t have a clear direction and set of requirements for you to work from. Human resource planning, at a high level, helps recruiters to focus in on what roles and skills are most important.
With that being said, here are some of the primary benefits of human resource planning:
- It allows companies to plan ahead and maintain a steady supply of skilled workers.
- It helps to better anticipate the company’s needs for specific skills during growth and pivot phases.
- It addresses major HR challenges today like the aging workforce, and tight competition for qualified workers.
- It ensures the best possible fit between employees, jobs, and company needs.
- It helps companies avoid workforce shortages.
- It maintains the health of a company’s talent pool.
- It helps to ensure that the HR department is always prepared for changing skills requirements.
- It helps companies adapt quickly to shifts in the market and competition.
- It enables companies to adapt to automation and advanced technologies entering their market.
- It empowers managers and employees to continuously hone their skills to stay relevant to the company’s strategic plans.
Overall, human resources planning helps companies work much smarter and more strategically. It empowers employees to expand their skills, and provides clear and valuable direction for the recruitment team about where they should be directing their efforts.
Factors affecting human resources planning
There are many factors affecting human resources planning that will guide how you prioritize your next steps. It’s important that the strategic leaders at your company have a strong handle on the external factors that impact your business. Without this insight, it’s difficult to determine where to start your human resources planning strategy.
Some of the most common factors affecting human resources planning include:
- Market, industry, sector trends. These can be trends like the introduction of new technology, a shift in priority, or an increase or decrease in the size of the market overall.
- New technologies. Factors such as automation and artificial intelligence – or just more advanced tools being introduced into your industry – can have a drastic impact on your strategic direction and HR needs.
- Future projects and trends. Most industries will have go-to analysts who analyze the market and predict future trends. These insights will undoubtedly affect how you manage your human resources needs, especially if there is significant technological or process interruptions projected in the near future.
- Natural employee attrition. The rate at which employees leave and positions become vacant will help guide your HR planning and recruitment needs each year.
- Layoffs, retirements, and regular vacancies. Likewise, the natural life cycle of employees at your company will have a continuous impact in how you plan your HR program in the short and long term.
- Succession and promotion. Factoring in how successful your promotion and succession planning programs have been will allow you to plan for employee movement in the future, rather than only focussing on recruitment.
- Needs of the organization. Perhaps above all else, where your organization intends to go will have the greatest impact on your HR plan. This could include entering a new market, launching new products or services, or expanding into new geographies. All of these decisions and changes will have direct impacts on your HR plans, the skills your company needs, and what your recruitment team should be focussing on.
Recruitment plays a central role in most human resources plans due to its importance in addressing skills and labour volume gaps. As such, the recruitment planning process deserves significant attention from the HR department and company as a whole.
Why the recruitment planning process is important
The recruitment planning process refers to a strategy for hiring new employees, which ties directly into the core goals of the wider human resource planning process. Specifically, it acts as a way for companies to continuously find qualified applicants to meet specific, mission-critical skills gaps, without causing downtime and lost revenue for the company.
As a recap, the recruitment planning process typically looks something like this:
- Identifying requirements (i.e. a skills gap, future need, or job opening)
- Deciding how to fill that gap (i.e. new employee, contractor, or freelancer)
- Identifying the ideal candidate or target groups
- Writing job descriptions and job requirements
- Advertising the opening
- Screening candidates
- Selecting, hiring, and onboarding
Recruitment is the frontline to many human resources planning processes. This is especially true if a company is reacting to external changes in the market. Recruitment strategy is flexible and informed enough to meet any specific skills need, thanks to powerful screening, tracking, and analytics tools on the market today.
Combined with a strategic approach to human resources planning, as well as wider efforts in talent management to ensure ongoing performance and engagement, intelligent recruitment can help to ensure that any skills gap can be easily addressed within a company. These initiatives also ensure that human resources receives the credit it deserves as a core, strategic function within your company.