What is Human Resource Planning?

What is human resource planning?

Human resource planning helps organizations identify current and future workforce needs as they relate to the overall strategic priorities for the company. It is the steps and processes that organizations take to properly plan their HR requirements and programs to ensure they are in alignment with the company’s strategic plan.

Most employees in most organizations have very little interaction with the human resources function. They work with HR during the recruitment and hiring process, the onboarding process and often during termination of employment. In between these two bookends, employees may go years at a time without speaking with HR.

But, the work that goes into HR planning has a direct impact on all employees at an organization. As such, it’s important that this side of the organization is clearly understood by all parties involved.

The nature of HR planning

It’s perhaps understandable then that most people inside most organizations are unaware of the tremendous amount of planning that the HR function engages in on a day-to-day basis. While R&D and product teams work on their product roadmaps, finance and accounting teams plan how and where to spend and invest corporate funds and the sales and marketing teams plan how to drive in more revenue, the HR team is also hard at work planning for the future. HR departments need to plan for recruitment and retention, employee training and development, succession, compliance within a dynamic legal and regulatory environment and much more.

Here we take a look at the nature of HR planning, some of the pros and cons, examples, and how Visier can help organizations of all sizes with their HR planning needs.

Elements of HR planning

Any business plan involves thinking about the future environment within which the business will operate and trying to predict the challenges and opportunities that will be a part of that environment. With these challenges and opportunities in mind, businesses then think about the best ways to address those challenges and capitalize on those opportunities. 

Next, the business needs to take stock of its current strengths, weaknesses, and general capabilities. Finally, the business creates a plan to move from where it is today to where it believes it needs to be in the future.

This general process applies as much to the human resources function as it does to sales, marketing, finance, accounting, product development, or any other corporate function.

Practical applications

HR planners follow the process described above with respect to their particular areas of responsibility. This may include ensuring the company has adequate staff capable of performing the core functions required to keep the business moving, helping the company stay compliant with new legal and regulatory requirements impacting workers and employers, or ensuring company-provided employee benefits can continue and even potentially expand subject to budget constraints.

HR planning involves short-, medium-, and long-term goals and can refer to the general strategic work of a particular HR department or specific, individual plans of varying time horizons. 

For example, an HR plan may be to hire five new customer service representatives by the end of the fiscal year. To achieve this short-term goal, the HR team will need to identify channels through which to market the new position, create and post ads for the customer service representative positions via those channels, process applications, interview candidates, make job offers, and potentially negotiate with the selected candidates. This is a relatively simple example, and there are many intermediate steps involved, all of which also require planning and preparation.

The HR planning process involves not only putting together a roadmap as provided in the example above, but also creating a target timeline and securing and allocating human and other resources. For example, staff to contact job applicants, money to pay for job ad placement and the salary to pay a new hire.

What are the pros and cons of human resource planning?

There are many, many benefits to HR planning. And while there are some potential drawbacks of HR planning, these can be avoided with proper preparation, organization, design, and execution.

Pros of HR planning

First and foremost, HR planning allows organizations to be proactive instead of reactive. A proactive HR department would, for example, be aware of potential regulatory changes impacting the organization well in advance of their effective date. This would ensure compliance and even open the door to potentially finding opportunities in the new regulatory landscape. 

A reactive company, on the other hand, would be caught flatfooted and be left scrambling to comply with the new regulations in the nick of time or even after-the-fact. By identifying and planning for the world of tomorrow, HR teams and the broader organization can capitalize on future opportunities instead of putting out one fire after another.

The ability to be proactive ties directly into the next benefit of HR planning: efficiency. Companies that plan for the future can save time and money compared to those that simply react. Major expenditures can be forecast, allowing the company to finance them as cost-effectively as possible and even to shop around and wait for more favorable conditions. A reactive organization often pays more for the same resources because it’s forced to adapt last minute. This applies to finding talent, procuring HR software and anything else an HR department spends money or time on.

Another benefit of HR planning is superior recruitment and retention. The top companies in the world today got to their dominant positions largely due to the talents and abilities of their employees.

Tech giants depend on creative and problem-solving software engineers. Retail powerhouses rely on operations and logistics wizards. Even professional sports teams require top caliber talent to outmatch their competition. These organizations put tremendous amounts of time and money into HR planning, because they know how crucial human capital is to their profitability. 

HR planning for recruitment and retention is essential for organizations to be confident in their ability to attract top talent now and in the future and to create a work environment in which employees want to stay.

Avoiding compliance landmines is another benefit of HR planning. The employer-employee relationship is one of the most heavily regulated in our society, and new employment laws are being enacted on an ongoing basis. New laws can often be extremely complex and require significant organizational change to remain in compliance. It’s impossible to manage such complicated and fundamental changes without planning in advance.

There are many more benefits of HR planning we could describe here, but for the sake of brevity, we’ll add one last general benefit: the ability to leverage the HR function in pursuing the broader corporate strategy. HR can and should be an asset to any organization and companies that can leverage HR planning to attract, train and retain the best talent have a leg up in any strategic initiative.

Cons of HR planning

Despite the many, and obvious, benefits of HR planning, there are some potential pitfalls.

The first is simply failing to take HR planning seriously. This could mean an HR leadership team paying lip service to HR planning efforts or an organizational leadership team that doesn’t take the insights and recommendations of the HR team seriously. 

In an extremely competitive and dynamic employment environment, organizations and their HR professionals really need to stay on top of new developments and keep an ear to the ground. And when new challenges or opportunities are identified on the horizon, the HR function needs to work diligently to address them.

On the other end of the spectrum of HR planning pitfalls is being too rigid with HR plans. As we’ve noted, the human resource function exists within an extremely dynamic environment. New developments emerge all the time, and HR teams need to be flexible and agile. This means not only being willing to adapt quickly, but being able to adapt quickly as well. The latter may entail budgetary resources as well as leadership support.

What are the key steps in the human resource planning process?

We alluded to the HR planning process earlier in this article. It all starts with trying to predict the future. Obviously, it’s impossible to predict the future with perfect accuracy. But experienced and informed HR professionals can do a decent job of foreseeing impending regulatory changes, understanding the company’s expected hiring needs over the next several years, and identifying skills gaps with respect to the key abilities the organization needs now and into the future.

To accomplish that, HR departments need to follow tried and tested techniques and processes to help planning and future-proofing easier. Here are the key steps in human resource planning that every organization should know. 

A place for data

Really savvy HR teams will even try to predict multiple possible futures, based on the occurrence (or not) of certain events or trends. For example, what will we do if that major new legislation passes? What if it doesn’t?

Technology, of course, can help with this aspect of the planning process. Using existing data to help make future predictions can increase the likelihood that planning efforts will be reliable and valid. 

Reviewing capabilities

Once an HR team has identified the predicted world of tomorrow, it then can think about what capabilities the broader organization will need to thrive in that future environment, and how the HR team can help develop those capabilities. Maybe the organization is expected to need more experience in artificial intelligence or automation, for example.

Assessing current state

HR planning also involves taking stock of where a company, its employees, and the HR team are at today. This may seem like an exercise in the obvious, but many organizations have terrible understandings of their current capabilities and skills gaps or even their diversity numbers.

Developing a timeline and budget

Once a company has a firm grasp of where it is now and where it wants to be in the future, it can start to develop its roadmap and timeline. For example, if a company believes it will need to significantly beef up its AI expertise over the next five years, it should probably start learning about the top AI schools and industry-standard compensation for AI professionals, and start developing job descriptions for key positions.

This all requires, of course, integrated planning between HR and finance to ensure the company has adequately budgeted to achieve identified HR strategies and goals. 

Measuring and monitoring progress

Finally, HR teams will need to identify metrics and create reporting cycles to assess progress and facilitate intelligent changes to the plan as needed. This will ensure that resources are used in the most effective way possible, and that decisions are made based on objective data and reasoning.

What are some examples of human resource planning?

Consider an organization that is planning a large expansion into a new geographic region where it expects it will need to employ around 500 employees. The HR function for this organization would have a lot of planning to do. The HR team would need to:

• Understand the employment laws and regulations of this new jurisdiction and work with department heads to identify staffing needs for the new location. 

• Get to know the local labor market and determine the most effective means of attracting talent.

• Plan for large-scale onboarding of new hires.

Next, imagine a company that has an older workforce, a large proportion of whom are nearing retirement age. This organization’s HR team should be thinking about the looming large-scale attrition of workers and planning to both replace those employees and retain as much of their institutional knowledge as possible before they’re gone.

Here are some actual examples of how Visier clients have used data to help them in the HR planning process:

• Empower AI, a provider of enterprise solutions and artificial intelligence services combined iCIMS talent acquisition data with Visier for more data flexibility and visibility into the entire employee lifecycle.

• Providence, a large healthcare organization with 120,000 employees wanted to determine how raising salaries would affect turnover and what the costs would be. They leveraged historical data and survival analysis to help in their planning process.  

Clearly, HR planning is a critical organizational function. Data can make the difference between guesswork and calculated, forward-looking thinking to boost productivity, engagement, and bottom line results.

Put human resource planning front and center with the right tools

Human resources planning should be a fundamental element of every organization’s strategic plan. Well-conceived and well-executed HR planning helps to drive better recruitment and retention, a skilled workforce, and more. Crafting and executing effective HR planning, however, requires the right tools. 

Strategic compensation tools, for example, help you keep tabs on employee compensation levels to ensure that they’re commensurate with performance, and inline with employee performance. Retention tracking provides valuable benchmarks for turnover at the organization, helping you predict and address causes of employee attrition. Talent pathways and better manager tools help you identify top performance, map desirable career paths, and place them in positions of great influence. And tools that track employee satisfaction help you identify key employee satisfaction and engagement benchmarks, and uncover underlying problems or opportunities.