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Human Resource Planning (HRP) Meaning, Process, and Examples

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

What Is Human Resource Planning (HRP)?

Human resource planning (HRP) is the continuous process of systematic planning to achieve optimum use of an organization's most valuable asset—quality employees. Human resources planning ensures the best fit between employees and jobs while avoiding manpower shortages or surpluses.

There are four key steps to the HRP process. They include analyzing present labor supply, forecasting labor demand, balancing projected labor demand with supply, and supporting organizational goals. HRP is an important investment for any business as it allows companies to remain both productive and profitable.

Key Takeaways

• Human resource planning (HRP) is a strategy used by a company to maintain a steady stream of skilled employees while avoiding employee shortages or surpluses.
• Having a good HRP strategy in place can mean productivity and profitability for a company.
• There are four general steps in the HRP process: identifying the current supply of employees, determining the future of the workforce, balancing between labor supply and demand, and developing plans that support the company's goals.

Michela Buttignol

What Is Human Resource Planning (HRP) Used For?

Human resource planning allows companies to plan ahead so they can maintain a steady supply of skilled employees. The process is used to help companies evaluate their needs and to plan ahead to meet those needs.

Human resource planning needs to be flexible enough to meet short-term staffing challenges while adapting to changing conditions in the business environment over the longer term. HRP starts by assessing and auditing the current capacity of human resources.

Here, identifying a company's skill set and targeting the skills a company needs enables it to strategically reach business goals and be equipped for future challenges. To remain competitive, businesses may need advanced skills or to upskill their employees as the market environment evolves and changes.

To retain employees and remain competitive, HRP often looks at organizational design, employee motivation, succession planning, and increasing return on investment overall.

Challenges of Human Resource Planning (HRP)

The challenges to HRP include forces that are always changing. These include employees getting sick, getting promoted, going on vacation, or leaving for another job. HRP ensures there is the best fit between workers and jobs, avoiding shortages and surpluses in the employee pool.

To help prevent future roadblocks and satisfy their objectives, HR managers have to make plans to do the following:

• Find and attract skilled employees.
• Select, train, and reward the best candidates.
• Cope with absences and deal with conflicts.
• Promote employees or let some of them go.

Investing in HRP is one of the most important decisions a company can make. After all, a company is only as good as its employees, and a high level of employee engagement can be essential for a company's success. If a company has the best employees and the best practices in place, it can mean the difference between sluggishness and productivity, helping to lead a company to profitability.

What Are the Four Steps to Human Resource Planning (HRP)?

There are four general, broad steps involved in the human resource planning process. Each step needs to be taken in sequence in order to arrive at the end goal, which is to develop a strategy that enables the company to successfully find and retain enough qualified employees to meet the company's needs.

Analyzing labor supply

The first step of human resource planning is to identify the company's current human resources supply. In this step, the HR department studies the strength of the organization based on the number of employees, their skills, qualifications, positions, benefits, and performance levels.

Forecasting labor demand

The second step requires the company to outline the future of its workforce. Here, the HR department can consider certain issues like promotions, retirements, layoffs, and transfers—anything that factors into the future needs of a company. The HR department can also look at external conditions impacting labor demand , such as new technology that might increase or decrease the need for workers.

Balancing labor demand with supply

The third step in the HRP process is forecasting the employment demand. HR creates a gap analysis that lays out specific needs to narrow the supply of the company's labor versus future demand. This analysis will often generate a series of questions, such as:

• Should employees learn new skills?
• Does the company need more managers?
• Do all employees play to their strengths in their current roles?

Developing and implementing a plan

The answers to questions from the gap analysis help HR determine how to proceed, which is the final phase of the HRP process. HR must now take practical steps to integrate its plan with the rest of the company. The department needs a budget , the ability to implement the plan, and a collaborative effort with all departments to execute that plan.

Common HR policies put in place after this fourth step may include policies regarding vacation, holidays, sick days, overtime compensation, and termination.

The goal of HR planning is to have the optimal number of staff to make the most money for the company. Because the goals and strategies of a company change over time, human resource planning must adapt accordingly. Additionally, as globalization increases, HR departments will face the need to implement new practices to accommodate government labor regulations that vary from country to country.

The increased use of remote workers by many corporations will also impact human resource planning and will require HR departments to use new methods and tools to recruit, train, and retain workers.

Why Is Human Resource Planning Important?

Human resource planning (HRP) allows a business to better maintain and target the right kind of talent to employ—having the right technical and soft skills to optimize their function within the company. It also allows managers to better train the workforce and help them develop the required skills.

What Is "Hard" vs. "Soft" Human Resource Planning?

Hard HRP evaluates various quantitative metrics to ensure that the right number of the right sort of people are available when needed by the company. Soft HRP focuses more on finding employees with the right corporate culture, motivation, and attitude. Often these are used in tandem.

What Are the Basic Steps in HRP?

HRP begins with an analysis of the available labor pool from which a company can draw. It then evaluates the firm's present and future demand for various types of labor and attempts to match that demand with the supply of job applicants.

Quality employees are a company's most valuable asset. Human resource planning involves the development of strategies to ensure that a business has an adequate supply of employees to meet its needs and can avoid either a surplus or a lack of workers.

There are four general steps in developing such a strategy: first, analyzing the company's current labor supply; second, determining the company's future labor needs; third, balancing the company's labor needs with its supply of employees; and fourth, developing and implementing the HR plan throughout the organization.

A solid HRP strategy can help a company be both productive and profitable.

International Journal of Business and Management Invention. " Human Resource Planning-An Analytical Study ," Page 64.

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Blog Human Resources 6 Steps to Create a Strategic HR Plan [With Templates]

6 Steps to Create a Strategic HR Plan [With Templates]

Written by: Jessie Strongitharm Aug 25, 2022

The backbone of any successful business is the people and processes behind it — that’s why creating a human resources (HR) plan is key. This strategic document drives your business forward by evaluating where your workforce is at, and comparing it to future needs. 

Without an HR plan, organizations can suffer from issues that would have otherwise been avoided. From productivity pitfalls to costly employee turnover, there’s no shortage of risks you can sidestep if you do human resource planning in advance. 

Not sure where to start? No worries. I’ve outlined six steps you can take to create an effective HR plan that ensures your organization is well-staffed and well-served. You’ll also find a variety of  HR templates  that you can customize in just a few clicks — no design expertise required. 

Click to jump ahead:

What is human resource planning?

• Assess employees’ current skill levels
• Forecast your labor needs based on available information
• Revisit your organizational design
• Outline how you will manage, motivate and retain talent 
• Align your workforce planning with your budget 
• Establish KPIs for your human resource planning objectives

Human resource planning is the process of considering the current and future “people needs” of an organization.

This involves evaluating an organization’s workforce structure and protocols to ensure operational goals are met, productivity stays high and future demands for labor and talent can be fulfilled. 

The result of this process is the creation of an HR plan, which typically takes the form of a written document sometimes autogenerated using HR software . These documents tend to follow a similar structure to most  strategic business plans  and are created on an annual basis, by HR managers or company leaders.

Check out the template below for an example. 

This eye-catching, one-page  HR Strategic Plan Template  offers a concise summary of your human resource planning efforts, so you can easily share info with colleagues. 

Just swap out the text and visual assets for those of your choosing in  Venngage’s editor , and you’re off to the races. 

6 steps to create a strategic HR plan

Ready to create a strategic plan for the human resources that power your business? Here are six steps to help you succeed at the human resource planning process.

1. Assess current employees’ skill levels

The first step to creating a future-forward HR plan is to assess employees’ current skill sets, and compare them to your operational needs moving forward. This will help you identify gaps and inform any hiring of new employees.

Employees’ skill levels can be assessed by reviewing their work history, hard and soft skills and professional growth over time. 

Using a matrix is a great way to understand where the skill gaps in your current workforce exist. Below is an example that describes the skills needed for different marketing roles. 

Don’t need it for marketing specifically? No worries — you can fully customize this template by swapping in your own text to examine any human resource gaps. 

Another way to assess skills is by giving employees a questionnaire they can fill out. This  Employee Competency Assessment Template  does just that.

Based on the information collected, you’ll get a sense of what positions best suit each individual, and whether any upskilling or hiring is required. 

2. Forecast your labor needs based on available information

Next in your strategic strategic HR management plan, you’ll want to consider the future. This involves accounting for any upcoming changes to your workforce, so operations can continue without error.

When forecasting labor needs, the following should be considered: 

• Planned promotions
• Upcoming retirements 
• Layoffs 
• Personnel transfers 
• Extended leaves of absence (i.e. maternity/paternity leave) 

Beyond those, it’s a good idea to assess the impact of external conditions on your labor needs during your human resource planning. For example, new technological developments may decrease the amount of employees you require to operate your business. 

3. Revisit your organizational design

Organizational design is the process of structuring the way a business operates so it can best achieve its goals. This is hugely important when it comes to your human resource planning process! 

With a clear understanding of your organization’s strategic objectives in mind, reviewing your organizational design allows you to understand the staffing requirements you’ll need to succeed at them. This means taking into account your  organizational structure  and chains of command, as well as how work gets done and the way information flows.

 From there, you’ll be able to see which departments need more team members so it can accomplish the organization’s objectives. 

An easy way to get started is by using an organizational flow chart. 

With its color coding and layout, even a new manager can quickly look at this chart to identify the people responsible for leading teams and making decisions. 

And if there are any changes, it’s easy to to reflect them in the chart itself. All you need to do is customize the text and visual assets in  Venngage’s Chart Maker  as desired. 

Not quite your style? There’s plenty of other  organizational chart templates  to choose from. 

Here’s an organizational chart that’s perfect for small businesses that have limited employees. One quick look, and you’re good to go. 

The bottom line is, no matter how big or small your business may be, you should always revisit your organizational design to optimize your workforce management and business operations. 

Related:  Types of Organizational Structure [+ Visualization Tips]

4. Outline how you will manage, motivate and retain talent 

In this day and age, it’s a known fact that companies must provide more than just a paycheque to attract and retain talent, and encourage growth. 

It’s true —  studies have shown  employees are more engaged in their work when they feel it is meaningful, fulfilling and slightly challenging. So your human resource plan should consider how to inspire such feelings, and what actions you can take to motivate employees to stay. (Hint: a strong HR training and development program is key.)  

The  talent management infographic template  below is a great way to begin. 

Using this  process chart , you can detail the steps you’ll take to retain the talent you have. Reference it as needed in your human resource planning.

 Another great way to keep staff motivated and geared towards their professional growth is by coming up with  ideas for employee development . Facilitating a company culture that champions continuous learning guarantees your team will feel supported and challenged in all the right ways.

The two employee development plan templates below will help you do just that. 

Though both templates are geared towards healthcare organizations, it’s easy to customize their content in Venngage to promote the continuous learning and development of employees in any industry.

 As a result, your employees will be able to reach their full potential, while simultaneously supporting the long-term goals of your organization. 

Related:  6 Employee Development Ideas for Efficient Training

5. Align your workforce planning with your budget 

 Let’s face it, human resources ain’t cheap.

 Meaning, if you struggle at organizing and monitoring your HR budget, you’re bound to overspend on your initiatives —and no financially savvy business wants that. 

That’s why I recommend including financial information in your HR planning process, so you can reference your budget and expenses as needed. This includes not only hiring and training costs but also the complexities of managing a global payroll for diverse teams.

Ensuring this allows you to stay within range as you work towards achieving your strategic goals for human capital . Plus, you don’t need to use one that contains walls of text and wack-loads numbers. Check out the clean and cheery option below — it’s as easy to fill out as it is to understand. 

And if you’re looking to compare a forecasted budget to previous annual spending when strategizing your HR budget, the  Budget Comparison Infographic Template  below will help. 

The bar graph is a great  data visualization  of annual expenses, organized by category. Just add (or import) any values to Venngage’s editor, swap out the text, and you’re ready to compare with ease. 

Related:  10+ Expense Report Templates You Can Edit Easily

6. Establish KPIs for your human resource planning objectives

Measurable results are important when it comes to your HR planning processes, because they indicate whether your strategy is working or not. 

Keeping those metrics in mind, your company can make adjustments and improve upon any future plans — AKA strategize for future success in business. That’s why your human resource plan should include info re: the specific key performance indicators (KPI) you’ll be measuring. 

KPIs are established to help determine if HR strategies and plans are working. Much like those used for evaluating the performance of  marketing  or  sales plan , KPIs for human resources are measurable results that indicate an organization’s success at achieving predetermined goals.

These may take the form of headcounts, turnover rates, demographic information, time to hire and employee satisfaction scores. 

Here’s one employee satisfaction survey you can use to understand your workforce better. 

When you’re ready to organize those HR KPIs in a document, the  recruiting template  below is perfect for keeping tabs at a glance. 

Related:  10+ Customizable HR Report Templates & Examples

How do I make an HR plan? 

After you’ve collected the data you need, you’ll want to convey this info in an engaging, professional manner for easy referencing and sharing amongst colleagues. Given this, using Venngage is the best route to go. 

Here are the simple steps to help you bring an actionable HR plan to life: 

• Outline the information you would like to include in your strategic hr plan
• Pick the human resource planning templates that best suits your needs 
• Customize the templates’ text and visual assets so they speak to your organization 
• Apply your company’s brand guidelines with a few clicks using Venngage’s automated branding feature,  My Brand Kit
• Download and share as desired

Note: sharing is available free-of-charge. However, the option to download your creations and access features like  My Brand Kit and Team Collaboration  are available with a  Business plan . 

FAQ about HR plans

How long should an hr plan be .

There are no hard and fast rules when it comes to the length of an HR plan. That being said, if you’re going to share it with colleagues, you probably don’t want to create a 20+ page document. One to five pages should suffice. 

Try to be as concise as possible when relaying the facts, and use  data visualizations  wherever possible to save room.

Do I need an HR contingency plan?

In the same way creating an HR plan is a proactive move that helps your organization account for future needs, it’s a good idea to devise an HR contingency plan. This ensures there’s a back-up plan in place should your initiatives not go as expected. 

For example, if you’ve identified that you need five new hires to keep up with consumer demand, but the talent pool is lacking, a contingency plan could house suggestions for restructuring your workforce to mitigate this. 

In other words, it’s best-practice to hope for the best, but prepare for the worst. 

Is an HR plan different from an employee development plan?

Yes. While an HR plan is a strategic document describing how an organization addresses its personnel-related needs at a high-level, an  employee development plan  outlines the processes needed to help an individual achieve their professional goals.

 Even though the human resource planning process may involve outlining some employee development tactics, it is not unique to each employee as in the case of an employee development plan.

Make your HR planning processes effortless 

You don’t need a crystal ball to feel confident about your people moving forward. With a solid HR plan and strategy in place, you’ll prime your workforce — and all business endeavors — to succeed in even the most competitive of markets. 

Just remember this: human resources planning, and creating strategic business plans in general, doesn’t have to be exhausting. 

With Venngage’s huge selection of  professionally-designed templates  and easy-to-use editor, all it takes is a few minutes to produce a polished document perfect for all your needs.  Sign up for free today ! 

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HR Business Plan Template: Everything You Need to Know

With an HR business plan template, you can help your company recruit new employees, retain existing employees, and guide the development of the workforce. 4 min read updated on February 01, 2023

With an HR business plan template, you can help your company recruit new employees, retain existing employees, and guide the development of the workforce so that you collectively meet your business objectives, regardless of any changes in the industry or economy.

When creating your HR business plan, you need to perform a needs analysis of your workplace to tailor the plan to your company's requirements. You'll also need to learn about the industry standards for your field to make sure you're competitive.

Without such a plan in place, your workers will feel unprepared and won't know how to work towards your company's overall goals.

Steps for Developing a Human Resources Department Business Plan

There are several steps to creating an HR business plan. They include:

• Clarify the requirements . While you might be tempted to create a detailed plan that encompasses the entire company's next 10 years, hold off. Always talk with your boss to see how much detail he or she would like in the plan. This will save you time and help streamline the process. However, there's no harm in creating your own personalized strategic plan for your specific department.
• Read through the HR job descriptions . The HR department typically has employees such as HR assistants, HR generalists, and an HR director . Read through the job descriptions for each worker in the department and see what kind of duties are missing. Brainstorm additional functions that each job role could provide to the company.
• Curate your list . Take the different functions you've brainstormed and compare them to what each member of the HR department is already doing. Are there functions you could add or subtract from each employee for more productivity? You don't have to go into detail here, but just think about how you could improve each role.
• Schedule a meeting with the executives . Before you make any changes, you'll obviously need to get input and approval from the company's executives. They may have more feedback on how the HR department can provide additional services and support the company's overall goals and mission.
• Create a feedback form . Come up with a list of questions to ask leadership about HR's role in the company and provide it to them in advance of the meeting so they have time to think it over and talk with their staff. You may even want to provide a rating and ranking format for the questions, as this will make their responses easy to understand and implement. Overall, this is a key process to understanding what management and employees want and need from the HR department.
• Look at external resources . While the internal information you're collecting is the most important, it also doesn't hurt to take a look at data from professional organizations and websites, such as the Society for Human Resource Management , The Balance , or HR Magazine . You can also ask colleagues from other local organizations for tips on creating your business plan.
• Use this information to make a plan . With your ideas, feedback from executives, and tips from external resources, you should have a clear idea of what your plan should look like. The things that are missing from the HR department should now be clear, and this should guide you on what to focus on to improve HR's contribution to the company.
• Identify goals for this year and next . While your plan can have long-term goals, keep the majority of them a little bit shorter in scope to see how things work out. This gives you the chance to reorganize and restructure if things aren't going right. Consider creating a list of accomplishments you can reach for the end of this year and into the next.

A Real Life Example

If you're seeking more guidance on how to create a successful HR business plan, look to Starbucks as an example.

As the world's largest coffee chain, Starbucks had $21.3 billion in sales in 2016.

Despite these massive numbers, Starbucks maintains the same approach to their human resources department. All of the HR planning is guided by the company's organizational strategy and brand.

Their strategy is to use specific interview techniques when hiring new employees. This lets them identify potential leaders and place them in a "New Partner Orientation and Immersion" training program. With this system, Starbucks has achieved the lowest employee turnover rate in the quick-service restaurant industry.

Starbucks also offers numerous employee perks and dedicates a lot of time to employee training through an online portal that teaches employees essential job skills.

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Use Human Resources Planning to Forecast for (Less) Risky Business

By Becky Simon | October 18, 2017 (updated July 21, 2021)

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No organization can afford the risk of a critical skills shortage. Human resource planning (HRP) helps to ensure that you have the right people on your team - those with the skills to compete, innovate, or grow your company.

How do you anticipate workforce needs in a business environment where the rate of change is increasing while the number of people with the right skills is shrinking? The answer is human resource planning. In this article, five experts share their perspectives on what’s needed to operate comfortably in rapidly changing times. While human resources (HR) forecasting isn’t an exact science, you’ll find ideas and processes, examples, and templates that you can use to forecast more confidently, manage operations, and take control to increase current and future profitability.

What Is the Meaning of Human Resource Planning?

Human resource planning, also known as workforce planning , helps organizations recruit, retain, and optimize the deployment of people needed to meet strategic business objectives and to respond to changes in the external environment. In order to proactively avoid talent shortages or surpluses and achieve a balance of talent based on need, effective human resource planning is an ongoing, systematic process.

Darrin Murriner is the author of Corporate Bravery , a field guide to eliminating fear-based decisions, and the Co-founder of Cloverleaf.me , a technology platform that helps business leaders and managers build thriving teams.

He says, “Human resource planning and organizational strategy connect at the hip. You can't deliver business strategy without making sure you have the right human capital you need in the right places for the task at hand.”

Smart companies get the human capital part right by implementing a tactical human resource plan that connects directly to organizational and human resource strategies.

Starbucks: Serving Up Human Resources Planning Derived from Mission and Strategy

Starbucks, the world’s largest coffee chain, recorded $21.3 billion in sales for 2016, ranking it at 131 on the 2017 Fortune 500. The company projects that it will reach $35 billion in sales by 2021 by opening 12,000 stores over the next five years , the majority of them in China. How do you plan human resources with such a massive growth goal? For Starbucks, their approach remains the same no matter where stores are located. Their human resource planning flows from its organizational strategy and its brand. People are Starbucks’ primary resource, as their mission clearly states: "Our mission: to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time." 

An important aspect of Starbucks’ human resource planning is its selection process, which uses specific interview techniques to determine if potential employees are ‘on brand’ and evaluate their skill sets. The company identifies capable company leaders and hires them using a program called "New Partner Orientation and Immersion." This human resources planning approach has led to the lowest employee turnover rate among quick-service restaurants. While most quick-serve restaurants range between 150 to 400 percent turnover, Starbucks’ rate is 65 percent . The company is always on the lookout for new employee perks and focuses energy on employee training, which includes an elaborate online portal that offers an instruction program imparting the necessary job knowledge.

The Difference Between Strategic Human Resources Planning and Human Resources Planning

“The war for talent around the world continues to grow.” says Matthew Burr, Moderator of the Upstate HR Podcast and Principal at Burr Consulting, LLC , a human resource consulting firm focused on small and medium organizations. To win the human capital competition, companies should use a strategic human resource plan as a roadmap to achieve three- to five-year goals. Strategic plans influence the development of tactical resource planning (Starbucks being a prime example). For example, a human resources strategic plan may include long-term aims to recruit and retain an excellent staff with a high-level of technical expertise. The tactical plan would include detailed action plans with completion due dates. For the strategic recruitment goals, the tactical program might consist of short-term goals, such as benchmarking salaries via survey data, or creating a social media campaign to identify and recruit technical professionals. The plan may also target filling IT positions through international recruiting.   

Both strategic and tactical human resource plans support the overall organizational strategy. To learn more about strategic human resources management, read Welcome to the HR Revolution: Strategic Human Resources Management .

Why Is It Important to Plan Human Resources?

Our world is increasingly one of swift technological change, constant product innovation, economic globalization, and generational and cultural shifts. Correspondingly, the life cycles of business designs and products are shortening. Companies must adapt. More than physical or financial capital, human capital efficiently adapts to this new reality. Simultaneously, human capital is at most significant risk of depreciation or obsolescence within a business — and that’s a risk that organizations can’t afford if they’re going to survive and thrive. In fact, only 12% of firms that were on the Fortune 500 list in 1955 remain on the list in 2016.

​“Talented people will always have options; Knowing succession plans, training, leadership development will be a tremendous asset to a growing firm,” adds Burr. “HR planning is critical to organizational strategy: We need subject matter experts and leaders to drive the strategy forward in evolving industries. HR planning plays a significant part in supporting strategy, as human resources are the biggest investment for any organization. Evolving laws and regulations also impact strategy internationally.  Staffing levels, recruitment and retention programs support scalability of any firm or organization.” 

Handrick says it’s all about planning for future growth. “Small businesses that are planning to open a physical or second location also need to think through their HR strategy. Most small businesses begin as sole proprietorships. They need to know when it makes sense to bring on staff, where that staff will work, their compensation, and how to offer benefits, perhaps by partnering with a professional employer organization (PEO).” 

• Improving Company Operations: Human capital management and resource planning is a driver for improved company operations and value creation. In July 2017, a group of institutional investors petitioned the Securities and Exchange Commission to disclose policies, practices, and performance of public companies’ human resources management . The petition signifies a move to use workforce analytics to measure the value of an organization’s most valuable asset in a knowledge-based economy .

“You need to work systemically,” says Adler. “Part of the operating plan has to be a workforce plan. HR has to make sure they have a place at the strategy and decision-making table. In my experience, I’ve seen that HR usually doesn’t get involved until it’s late. In this environment, you need to be moving at the speed of light and not the speed of sound.”

• The Talent Shortage and Demographic Change: In its 2016/2017 Talent Shortage Survey , the ManpowerGroup reported the highest worldwide talent shortage since 2007. Forty percent of employers are having difficulty filling positions, up from 38 percent in 2015. The Harvard Business Review article, Employers Aren’t Just Whining - the “Skills Gap” Is Real , states that “New technologies frequently require specific new skills that schools don’t teach and that labor markets don’t supply.”  At the same time, there’s a demographic change. In most developed economies, the ‘silver tsunami’ - the group of aging individuals that results from ebbing birth rates and graying baby boomers - is surging. The percentage of the U.S. workforce between the ages of 55 and 64 is growing faster than any other age group.
• Technological Change and The New Generation: Millennials now make up more than 50 percent of the current workforce — and will be 75 percent of the global workforce by 2020 . Human resources need to ride this rising tide and learn to welcome technological advancements to meet talent’s expectations and business requirements. Talent and workplace analytics will become customary, and organizations using the data will be far more competitive.
• Organizational Change: With technology driving change everywhere, organizations need to be nimble and often make significant changes in the way they do business. They also need to make changes with care. Research shows that change initiatives are more likely to fail because of poor communication, employee resistance, and failure to adequately prepare. Human resources are an integral part of change management , which is a systematic approach that applies tools, knowledge, and resources to deal with business transformation. The primary goal of change management is to successfully implement new processes, products, and business strategies while minimizing adverse outcomes. Effective change management includes and also goes beyond project management and involves leading the "people side" of the change equation. 
• Government/Legislative Changes: Each state has regulations that affect everything from employee criminal records checks, labor relations, records retention, and mileage reimbursements. Additional federal laws impact human resource management, too. Consequently, human resource professionals need to be conversant in dynamic employment law to minimize company liability. Not being on top of legislation can pose a significant risk to companies and expose them to expensive lawsuits or damage their brand, which can also be off-putting for potential hires.

Seven Steps to Human Resource Planning

There are seven different steps in the human resource planning process, but the pivot point is forecasting demand. That means that today’s human resources professionals need to have a well-rounded picture of their own company and a grasp of multiple factors to put together a plan. “Understanding the three- to five-year business strategy provides what HR must have to forecast workforce needs within the firm,” says Burr. “But there’s also a need to understand the global economy and potential growth options, laws, and regulations to add value to any HR strategy and forecast.”  

The seven steps to creating a human resource plan provide a roadmap for companies, but one size does not fit all. The amount of detail and which factors to include are different for every organization. Startup sole proprietorships working in a single geographic area will need to create an entirely different plan than a multinational enterprise. 

Step One: Analyze Organizational Objectives

Aligning HR practices to strategic objectives is fundamental to an effective human resources plan. In a perfect world, human resources management works hand in hand with other top managers so there is a clear understanding of ultimate goals, and then they focus on the human capital needed to meet them. It’s vital that the human resources plan encompasses every part of the company from product development to sales and expansion plans. 

HR Strategic Plan Template

If your company hasn’t written a strategic human resource plan, this template will help you get started. Modify the template to suit your specific needs or to focus on target areas such as benefits or retirement. Stakeholders will appreciate the basic design when they want to review important aspects of your plan.

‌ ‌Download HR Strategic Plan Template

Need more strategic planning templates to clarify goals for your organization? You can find more free strategic planning templates here . 

Step Two: Inventory Current Human Resources

If you have one, use the updated human resource information storage (HRIS) sys­tem to analyze the number of people you currently employ, along with their skills, perfor­mance, and potential. Once you determine which jobs need to be filled based on your forecast, you can then decide whether you have enough internal candidates to fill the job requirements or if you need to go to external sources or strategies to add staff. 

Employee Evaluation Template

If you don’t have an HRIS system, you can use this performance evaluation template for performance reviews and as a first step in referencing your current human resource inventory.  Adapt this easy-to-use form to gain a better understanding of the duties for each position by identifying gaps in performance and staffing when you review information in the aggregate. This template documents performance against set goals, employee evaluation, and professional development plans for the upcoming year.

Download Employee Evaluation Excel Template

Excel | Smartsheet

Step Three: Forecast Demand

Forecasting human resource demand involves estimating the number of future employees of the right quality and quantity, with a view to the company’s strategic plan over a given period of time. Forecasting demand is the most crucial part of human resource planning and the most daunting. It’s challenging for many reasons, and even more so because there are no absolute answers on how to accomplish it. 

There are two categories of forecasting methods: quantitative and qualitative. You can use both methods to track the work performance of the workforce as a whole, individuals, or business units. Qualitative reports contain anecdotal observations, while quantitative data is statistical or more data-driven. Select the methods that make the most sense in your environment. For example, in a non-manufacturing company, the work-study method which calculates the necessary working hours to produce units may not make sense. By gathering both quantitative and qualitative information, you can identify issues that are impacting your business's productivity, and then develop a well-rounded forecast to increase the company's efficiency, ensure you’re not over or understaffed, and understand future needs.

SWOT Matrix Template

The classic SWOT layout provides a clear view of your compiled findings as they relate to your human resources plan. The template also includes a column for rating the importance of each item by category so you can have a clear understanding of how the analysis elements compare and which will need the most attention. You can add Excel worksheets to hold supporting data and clarify the basis of your findings. 

Download Basic SWOT Matrix Template

If you’re looking for different formats in Excel, PowerPoint, or Word, you can find free SWOT templates here . 

Step Four: Estimate Gaps

With your forecast completed, you’ll have an understanding of future needs and if you will need to fill them with external workers hired full-time, part-time, or as contractors. If you have the right number of employees that don’t have the right skills, you can use training and development to upgrade employee skills to fill the gaps, or you may need to deploy workers in another role.

Employee Training Plan Template

Training is relevant for both employee success and team member retention. Though training takes time and effort, it's essential to have a plan in place to ensure a productive ramp-up period for new employees or existing employees who are learning the tasks and responsibilities of a new role. With this adaptable employee training schedule template, you can create training activities lists, add details about which team members need help to complete each task, track status, and provide a way for the manager and employee to enter feedback.  

Download Employee Training Template

Transition Plan Template

Moving team members to fill different roles can be the ideal solution to filling workforce gaps. When making these changes, ensure that you maintain the information and knowledge the employee had in the initial role. An employee transition plan keeps the information accessible and easy to share. You can also use this transition plan template to assist the person previously in the role train any new team members. Input every aspect of the role that will be useful in the present and future.

Download Transition Plan Excel Template

Step Five: Formulate the Human Resource Action Plan

The human resource plan relies on identifying deficits or surplus in the company. You’ll need to determine if you need to begin recruiting or training, transition, or develop voluntary retirement processes and redeployment in case of a surplus. Include priorities and critical planning issues in your plan.

Action Plan Template

This action plan template provides sections for goals, but you can add more sections to customize it to complete your human resources plan. Goals are translated into actionable steps that you can track to check progress. Assign start and end dates for each action, and take notes about each part of the plan. 

Download Action Plan Template

Word  | Smartsheet

Step Six: Integrating/Implementing the Plan

This is the most challenging aspect of any human resources plan. The organization often invests time and money on plans that are shelved and not utilized. Company executives need to grant buy-in, embrace the plan, and bring the organization on board. Overcome any potential employee resistance to the process by rolling in one aspect of the plan at a time to help employees acclimate to changes.    Staffing or Recruiting Plan Recruitment is one of the top responsibilities of any human resources team. Searching for, vetting, and finding the right talent to join your team are all crucial steps to ensure the success of your organization. Having a staffing plan in place makes your team aware of the available recruitment sources, hiring goals, and budget. Use this staffing plan to organize all staffing details with columns for budgets, hiring goals, status, and comments. 

‌ ‌Download Staffing Plan Excel Template

Candidate Screening Tracker

If you don’t have an automated system, you can track and manage applicants’ cover letters,  resumes, applications, and details about job openings. Tracking this information can be a lot of work depending on the size of the company and current hiring plan. Use this candidate tracker template to organize candidate documentation and details, and ensure that you provide a positive experience for candidates and people involved in the interview process. Track candidate contact information, phone interview questions and answers, status, comments, next steps, and more using this template.

Download Candidate Tracker Excel Template

Onboarding Plan Template

Onboarding ensures proper training and enculturation for new team members, and is also a powerful retention tool for any organization. Develop your own onboarding plan by using this template to plan activities at each stage of the process. Since a full year of onboarding is a best human resources practice, this spreadsheet shows tasks assigned to individual contacts over a twelve-month period. Add or remove columns to create a comprehensive onboarding plan.

Download Onboarding Plan Template

For more best practice information and free templates to support your human resources planning, read Top Excel Templates for Human Resources . 

Step Seven: Monitoring, Control, and Feedback

Strictly monitoring progress helps identify sticking points in your plan and helps you avoid making changes too quickly. It’s essential to compare actions to how the plan is being implemented to ensure fidelity. The human resource plan is an evergreen document that takes changing circumstances into account. Ongoing measurement, reporting, and continuous improvement efforts will keep the company moving towards its stated strategic goals. 

Project Management Dashboard Template

Monitoring all the changes you need to while executing a complicated human resources plan can be time consuming. With this customizable project management dashboard, you can compile every aspect of the process, share status information with management and other team members, and view the big picture at a glance.

‌ Download Excel Project Management Dashboard

Forecasting Is an Ongoing Process

“HRP plans should be reviewed annually, just after the business completes its strategic planning and forecasting for the year,” says Handrick. “For example, if the business plans to open an additional manufacturing location, or offer additional services requiring tech skills not currently in place, then HR will come along and provide estimates as to how many FTEs, what roles, and what kind of skills will be needed. HRP helps with the budgeting for the next fiscal year, and once approved can get to work filling those roles. In a fast-moving environment, HRP may need to be updated with every major change. For example, let's say your organization is project based and you just won a huge contract. Right away your HRP team will need to work with project managers to estimate staffing needs, whether temp or permanent, contract or hire.”

Human Resource Planning Round-Up: Best Practices and Expert Insights

Our experts share their thoughts on some additional issues to keep in mind as you develop your own plan:

• The Importance of Policy Planning: Company policy supports your human resources plan. Policies such as employment classification, benefits, compensation, performance, and improvement are designed to target not only the selection, training, and support of team members, but also to provide guidelines for conduct in and out of the work environment and many other aspects of employment.
• Social Media as Friend and Foe: Social media sites like LinkedIn and Twitter can be powerful recruiting platforms and a friendly, fun way to communicate with team members. However, they can also potentially be an issue when disgruntled employees or competitors get into negative commentary. It’s important to be alert to your company’s social media profile and to take corrective action when the buzz may not be favorable to your goals. 

Sharon Margules, MA, CPC, ACC and CEO of Margules Leadership Consulting says, “The ability of a business to achieve its strategy is largely based on the talent it has to execute. While market and competitive forces can significantly impact the capacity of an organization’s pursuit of its strategy, the explicit capabilities of those doing the work will determine if the result is a success or failure.”

• The “New” Human Resources Professional: “Ultimately, a good HR person is a good business person,” says Adler. “The best HR professionals are system and integration project managers who understand deadlines and highly complex projects. A great candidate has business experience in something other than HR. In my consulting work, I’ve told CEOs that they should look for HR managers with a business background. I think it’s an important consideration, particularly for large firms.”
• More About Markov Predictive Analysis Modeling: One of the most difficult analyses to execute and potentially one of the most valuable tools in forecasting is the Markov model. It’s not a quick fix, but for most mid-to-large companies, it’s worth the time investment to learn how to execute it. For a detailed explanation, read A Markov Model for Human Resources Supply Forecast Dividing the HR System into Subgroups . 
• Leadership and Succession Planning: “HR plays a critical role in enabling leadership, in mature or scaling organizations, to anticipate and understand the talent capabilities that will be necessary to meet their strategic objectives,” says Margules. She lists four items: 
• HR should have a seat at the table when the strategy is being conceived to align on what capabilities are needed, and by when, to realize the strategy.
• HR needs to influence progressive and aggressive budgeting for resource acquisition, training, coaching, and development every year.
• HR must institutionalize effective succession and talent planning practices at all levels, and build an adaptive organization that can flex its structure to optimize performance.
• HR must use far-reaching ideas to retain its key talent and sustain a highly-engaged workforce in a diverse and driven culture. 
• Plan Implementation: “HR plans should align with business strategy and annual plans and should be adaptive to a volatile and uncertain business climate,” says Margules. “While many organizations take a reactive, in-service approach to HR planning and determine their priorities and plans largely in support of annual plans, the most effective organizations are proactive: They anticipate needs and build plans that achieve short term and long term objectives. They adopt progressive practices such as allocating a portion of the staffing budget and resources to recruit and hire key talent for future-focused work. And, they have enough foresight to invest in high potential programs at multiple levels, entry-level accelerated development programs and coaching to build pools of qualified talent for future growth plans.”
• Buy HR Planning Tools or Do It Yourself? “The problem with traditional human resource planning is that it often hasn't supported the scalability of a growing business,” says Burr. “This is precisely why we have to consider new models for talent management, organizational design, and learning and development to ensure that our human resource planning processes can be flexible to meet the scaling needs of the business. This is part of the reason why you have seen an explosion of people analytics tools in the HR marketplace. It is to fill the demand for flexible and scalable models that provide the needed tools for business leaders to plan their people needs as the business grows.”  Adler concurs and says: “I think a spreadsheet can often do a better job. Workforce planning has been around a long time. I think the main point is to be proactive and less reactive in the planning process.”

Five Challenges to Human Resources Planning and Implementation

“People are naturally change- and-risk-averse. Planning and proper support by HR and the people they hire need to happen 100 percent of the time,” says Adler. More often than not, there are some challenges involved in human resources planning and implementation. Here are the five main hurdles:

• Forecasting Is an Imperfect Art: Human resource planning relies on forecasting and supply, which can never be a 100 percent accurate process. 
• Resistant Workforce: Employees may feel that their workload will increase, so they resist the process, or they may be uncomfortable altering familiar patterns in their work life and tasks.
• Ambiguity and Rapid Change: Uncertainties such as labor absenteeism, employee turnover, seasonal employment, technological changes and market fluctuations all affect planning.
• Inefficient Information Systems: Human resource information systems need to be reliable, comprehensive, and up to date. It makes it difficult to plan without good data about current employees.
• Cost and Time Factors: With all of the work hours involved in completing and repeating the seven steps, human resource planning is a time consuming and expensive process, so companies sometimes avoid it altogether, despite the benefits. 

A Look to the Future of Human Resources Planning

Here are some of the themes experts think will influence human resources professionals, their companies, and the people they hire in the near future:

• Going Global: Globalization, the export of U.S. jobs and the import of non-U.S. employees are already underway, as is offshoring (basing services or processes in different countries). “Globally planning can be complex for any HR professional,” says Burr. “It can be a stressful situation for offshoring and outsourcing of jobs within a firm. HR planning should involve a detailed assessment of the new location globally, the workforce demographics, industry competitors, laws and regulations and the potential impact on U.S. jobs. How do we communicate? How do we train? This will all vary by organization, but a strategic HR plan that communicates the information can lessen the impact. With a sound and detailed HR plan, recruiting, retaining and growing talent within the organization will be much easier.”   “Expect more offshore jobs, outsourcing and contract hiring because frankly they’re cheaper, and in many disciplines like finance, IT, marketing, can do the same work for less,” says Handrick. “Other than providing training for supervisors to manage off-site work teams, there's really no difference for HRP except where the line item goes on the plan. For instance, if you know you'll need 12 FTEs next year, and can get four of them offshore, that line item goes to 'expenses' rather than to 'salary' for the remaining eight.”
• More Technology: Social media will likely be in higher use to reach potential workers, particularly millennials who use Twitter, LinkedIn, and Facebook in their job hunts. Telecommuting and the use of social collaboration tools and video conferencing apps will keep people working and in touch with company culture. Emerging platforms will further streamline basic human resources functions to make onboarding and professional development more cost-effective and accessible from anywhere in the world for a virtual workforce.
• Big Data: Metrics and in-depth analysis of processes and people will become increasingly important in human resources as they are in other functional areas. Data- driven decision making is the future, as are metrics to show ROI in people and technology.  
• Security Issues: All this new technology brings up security concerns for employers and employee. Data breaches are a fact of life, and the threat to personal data security, company security, and supply chain risks will likely continue. 
• Health Care Costs: Costs are likely to continue increasing, since they have been rising steadily in the last several decades. New legislation will perhaps slow the costs of health care. In the meantime, strategies to lower employee healthcare costs will likely take the form of initiatives to improve employee health, and taking advantage of health reimbursement accounts (HRAs) that are consumer-driven or health savings accounts (HSAs).

Improve Human Resources Planning with Smartsheet

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How to Succeed with Human Resource Planning: A Step-By-Step Guide (+11 Free Templates)

“ The term planning is imbecilic; everything can change tomorrow. “

That was a quote made by a French manager , straight after the 1973 oil crisis.

He’s right, of course. Everything can change tomorrow. We’re living in a world where we see changes every day. Ground-breaking technology, product innovations, and medical breakthroughs.

But does that mean “ planning is imbecilic ” though?

The truth is that planning can be ineffective and damaging if it’s done badly.

Good planning, on the other hand, can minimize the uncertainty brought on by change.

Don’t believe me?

Take the 1911 race to the South Pole, for example. The race was between two explorers: Roald Amundsen and Robert Falcon Scott. They each had a similar amount of experience and were the same age. Both faced 1,400 miles of gale-force winds, blizzards, and minus temperatures on their expeditions.

Amundsen meticulously planned his trip for several years. Scott didn’t.

Guess which expedition tragically failed?

Amundsen was already sailing back to Norway when Scott’s team finally gave up hope.

So, now we’ve established that planning is sensible, and not ‘ imbecilic ’, let’s find out why human resource planning is one of the most valuable processes a company can follow.

To do this, I’ll cover:

What is human resource planning?

Why is human resource planning important, the 7 steps of human resource planning, how human resource planning is done, human resource planning in hrm.

Let’s get on with helping you to plan for success!

Corporate leaders often say employees are their most valuable asset . In fact, employees are so valuable that over 23% of businesses fail because they don’t have the right team.

That’s why investing in Human Resource Planning (HRP) is one of the most important decisions a company can make. It’s also why 80% of companies do HRP on a regular basis.

In simple terms, HRP is a process that manages employees within an organization .

No organization can afford the risk of a critical skills shortage and without HRP, companies face expensive losses. This can be seen with 90% of the UK’s larger organizations , which have all restructured in the last five years – nearly always involving job losses.

“ Human resource planning is the most important component of the entire human resource system. ” –  Dr. Rajendra Mishra

We’ve established what human resource planning is, let’s talk about why it’s important.

The success of a business is directly linked to the performance of those who work for that business. It’s therefore critical to make sure that the business has the skills and competencies that it needs to succeed.

The quality of human resources in an organization is solely dependent on the success of human resource planning.

Look at Starbucks.

Starbucks has the lowest employee turnover rate among quick-service restaurants. Most quick-serve restaurants have between a 150 to 400% turnover rate. Starbucks’ rate is at 65% , and it’s all down to their human resources planning approach.

Not only will its low turnover rate positively affect the culture, motivation, and morale of its staff , but it will also massively help its profit margins.

On average, companies spend 33% of an employee’s annual salary to replace them when they leave.

We know that human resource planning is a continuous process of planning ahead to make optimum use of an organization’s most valuable asset: its employees .

We also know that the process helps companies maintain a steady supply of skilled employees to meet their strategic objectives.

So we know what human resource planning is and why it’s important, now let’s look at how to do it.

There are seven steps to a good human resource planning process:

• Understand business goals
• Assess the current workforce
• Forecast demand
• Estimate gaps
• Formulate a plan
• Implement the plan
• Monitor the plan

Let’s dive into the detail of each step.

Step 1: Understand business goals

The first step in HRP involves analyzing the organizational strategy, goals, and objectives.

It’s important to understand where the organization wants to go and how it wants to get there so that HR practices can be aligned with the company’s strategic objectives .

Step 2: Assess the current workforce

The next step is to take stock of the current employees in the organization to see if they fit the organizational needs.

The inventory of current employees should capture data concerning ages, locations, capabilities, and skills. This will determine what jobs are required and if you can use internal candidates or if you need to look elsewhere.

Step 3: Forecast demand

The third step in the process is to forecast future staffing needs based on the company goals.

This process will establish if the company needs to grow its workforce , or if it can improve its current staff through training.

Step 4: Estimate gaps

Once the future resource needs and the current capability of the workforce have been identified, step four requires you to highlight the gaps between the two .

These questions will help you find out where the gaps are:

• Do you foresee a skill shortage in a specific occupational group?
• Will changes in program delivery require the acquisition of new skills?
• Do you have succession plans for critical positions?
• Have you conducted a risk analysis of the elements of the scan critical to the success of your organization?

Step 5: Formulate a plan

Step 5 is all about formulating a plan to close the gaps you found in step 4.

The plan should identify the skill shortages and surpluses within the company. It should determine HR priorities and list actions to be taken around recruitment, training, internal role transitions, retirements, and lay-offs.

Step 6: Implement the plan

This step involves integrating the HR plan into the company . It will require support from different departments and teams.

Step 7: Monitor the plan

This step often gets missed, but is a fundamental part of the HR planning process.

Ongoing measurement, reporting, and continuous improvement will keep the company moving toward its strategic goals. If everything is running smoothly, continue with the plan . If there are roadblocks, change the plan to suit your company’s needs.

And there you have it. Seven steps to the efficient management of human resources in an organization.

What’s next?

Lucky for you, this isn’t where your human resource planning journey ends.

Process Street has created  eleven super-powered checklists to help you with your human resource planning:

• Training plan template

Employee evaluation form

Employee transition plan.

• Gap analysis template

HR strategic plan

• Employee satisfaction survey

Workforce planning template

Employee development plan template, hipaa compliance checklist for hr, vacation request form, business needs assessment checklist.

These templates will enable you to:

• Analyze your current workforce;
• Establish future workforce requirements;
• Formulate, implement, and monitor a formidable human resource plan.

Use the following Process Street templates to really smash your human resource planning!

Training plan

The training plan aims to improve workforce competency to increase productivity and reach organizational goals. Preparing an annual, company-wide training plan is a detailed and complex process .

Our training plan template will make it easy for you. It will identify who needs to be trained, when they should be trained, and what they need to be trained in. It also ensures alignment with your organizational goals.

Click here to access our training plan template!

Employee evaluations exist to make sure there is clear communication between employers and employees about performance levels. The process boosts morale and identifies areas of weakness.  These can inform your HR strategy, gap analysis, and training plans.

Use this employee evaluation form to:

• Capture performance metrics;
• Analyze your workforce;
• Make decisions about what future resources are needed.

Click here to access our employee evaluation form!

Performance review

We also have this performance review template which you can use as an alternative.

Click here to access this performance review template!

This process is for the HR team to ensure that a transitioning employee moves into their new role, smoothly and at a minimal cost to the business. It’s important the employee, their current line manager and their new line manager are all clear about the transition arrangements.

Our employee transition plan will provide guidance on handover and orientation tasks. It will also minimize disruption and uncertainty for employees affected by the change.

Click here to access our employee transition plan!

Gap analysis

Gap analysis involves you considering current skills in your workforce. As times change, skills will change to suit the modern business market. The below template gives you the foresight to keep your team and company up to date with current skill trends.

Use this gap analysis template to help your organization plan for growth. Use it to project the hiring needs for your future workforce. It can also help you to understand the skills and experience of your current workforce. You can also use it to develop strategies for overcoming the gap between the two.

Click here to access our gap analysis template!

An HR strategic plan is a tool to help businesses align their HR capabilities with their organizational goals . It establishes how human resources can make a direct impact on a company’s growth.

Our HR strategic plan will assess the needs of your organization. It can help to determine appropriate initiatives for the HR department to pursue and support the business in meeting its goals.

Click here to access our HR strategic plan!

Employee satisfaction

An employee satisfaction survey is intended to understand how employees are feeling about the company.

Our employee satisfaction survey will help you understand the current dynamics of the workplace. Once completed, it will identify areas within the business that need to be improved to keep your employees satisfied.

Click here to access our employee satisfaction survey!

Workforce planning ensures that a business has the right staff in place with the right skill sets.

Our workforce planning template will highlight areas within the workforce that need attention .

Click here to access our workforce planning template!

The employee development plan template will help your employees improve in their current job. It will also help them acquire knowledge and skills for new roles and responsibilities within the organization.

Click here to access our employee development plan template!

HIPAA is a series of regulatory standards that health care organizations must implement in their business to protect the privacy, security, and integrity of protected health information .

The compliance program that healthcare organizations need to follow is complicated and can take a long time to complete. Use our HIPAA compliance checklist for HR to make sure you don’t miss any vital steps.

Click here to access our HIPAA compliance checklist for HR!

You can also use this HIPAA compliance checklist , which is specifically for hospitals.

Run this checklist to determine how compliant your hospital is with HIPAA standards and regulations.

Click here to access our HIPAA compliance checklist!

Our vacation request form is designed to make sure that the company doesn’t suffer as a result of the employee’s holiday .

Using this checklist, a line manager can approve or reject a holiday request and HR can keep track of the number of holiday days an employee has taken.

Click here to access our vacation request form!

Or, try this other holiday leave application form .

Click here to access our holiday leave application form!

Use our business needs assessment checklist to:

• Determine priorities;
• Make improvements;
• Allocate resources.

Click here to access our business needs assessment checklist!

So you’ve done your HR planning, now you need to put your plans into action.

We have thousands of HR-related articles and functional checklists to help you implement your HR plans. From refining recruitment processes, and interview techniques, building a strong work culture, and improving employee engagement.

Take a look at this list of insightful gems:

• The Essential Processes Your HR Team Needs Today (+60 Free Templates)
• 12 HR Management Tips to Run an Effective Business (and Prevent Total Chaos)
• A Beginner’s Guide to Setting up HR Software in the Cloud
• How to Choose the Best HRIS (Human Resources Information System)
• Why HRMS is Becoming a Must-Have & How to Get Started

And there we have it. Your complete guide to planning for success with human resource planning!

We’d love to hear what you think about human resource planning in the comments. Who knows? You may even get featured in an upcoming article!

Get our posts & product updates earlier by simply subscribing

Amanda Greenwood

Amanda is a content writer for Process Street. Her main mission in life is to write content that makes business processes fun, interesting, and easy to understand. Her background is in marketing and project management, so she has a wealth of experience to draw from, which adds a touch of reality and a whole heap of depth to the content she writes.

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Human Resource Planning: Definition & Top Strategies

Lucija Bakić

April 4, 2024

Human resource planning is a key strategy for ensuring long-term business sustainability and resilience.

In this guide, we’ll explore the essentials of human resource planning (HRP), why it’s so important, and the best practices to start your human resource planning process. To learn more about the broader process of resource management, read our guide to business resource planning . Key Takeaways

• HRP is a process that ensures that companies have enough capacity to meet customer demands and business goals.
• The main steps of the process include analyzing current availability, forecasting future demand, identifying capacity gaps, and developing and monitoring HRP strategies.
• Some of the main challenges include ensuring the accuracy of your forecasting with reliable data, maintaining the balance between billable work and capacity building initiatives, and promoting collaboration and transparency. 
• The right capacity planning solution can help you address the above with automation features, real-time data, and predictive analytics.

What Is Human Resource Planning (HRP)?

Human resource planning (HRP) is a process used to ensure that businesses have employees with the right skills, at the right time, and with the appropriate capacity to meet strategic goals.  Some practical examples of HRP workflows for various businesses include:

• An e-commerce business forecasting the need for IT capacity increases according to seasonal trends and scaling their infrastructure and support team.
• A design agency identifying higher demand for digital media through benchmarking and developing strategies to upskill and reskill its employee pool.
• A law firm initiating a succession planning strategy for the impending employee retirements by developing internal leadership candidates and recruiting external talent.

Why Is HRP Important? Top 4 Benefits

According to research by the Work Institute, 78% of the reasons for voluntary turnover could have been prevented by the employer if identified and addressed on time.  Human resource planning helps businesses increase employee engagement and drive various improvements by:

1. Maintaining a Qualified Workforce

HRP aligns talent capabilities with organizational goals through talent acquisition, training, and development initiatives. Ensuring you have a skilled workforce to meet future workforce requirements reduces the risk of inefficient workflows and supports daily business operations (learn more about the best operations strategy examples ). Investing in employee talent and skills can also help increase employee engagement and satisfaction.

2. Improving Risk and Change Management

HRP is a proactive approach that focuses on identifying issues before they occur. Analyzing trends and forecasting future needs helps businesses create contingency plans for various scenarios. This can include high-impact external changes, such as technological advancements, or internal disruptions, like leadership transitions.

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3. Ensuring Your Business Is Competitive

HRP keeps businesses competitive by helping them attract the right talent and ensuring that current employees are skilled and engaged in the workplace. It helps companies adapt to changes quickly and efficiently, fostering the agility and proactiveness needed to stay ahead of industry trends and competitors.

4. Optimizing Workforce Costs

HRP optimizes business costs by providing balanced employee utilization so that your agency isn’t spending excess money on non-productive labor costs. It also ensures that your business can do more work with adequate supply. Finally, HRP reduces the chance of unexpected resource gaps through effective forecasting, minimizing the need for last-minute hiring or overtime work. You can also check our guide to the capacity management process to learn more.

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The Main Steps of Human Resources Planning

The key steps of HRP include:

• Workforce analysis to determine your company’s current human resource capacity.
• Demand forecasting to future resource demand based on industry trends and internal needs.
• Gap analysis includes finding potential roadblocks in your HRP process and developing strategies to address them.
• Implementation and monitoring of your human resource strategies, usually by tracking key performance indicators.

Analyzing Current Availability

Workforce analysis involves a comprehensive evaluation of the current workforce’s size, skills, and capabilities. It assesses aspects such as:

• Employee productivity
• Job satisfaction
• Skill sets, including technical and soft skills
• Turnover rates

These metrics are used to identify your organization’s strengths and weaknesses. This is the foundation on which you’ll develop actionable steps to improve your HRP processes.

The utilization rate is the key metric for visualizing productivity — use Productive for real-time insights

Projecting Future Demand

Projecting future demand involves estimating the human resource requirements needed for an organization to meet its future goals. This forecast considers factors such as business growth, market expansion, technological advancements, and changes in operational processes. Three tools that are used in this process are:

• Ratio analysis , where historical data on the relationship between business metrics and workforce size is used to predict future staffing needs.
• Trend analysis , which examines patterns in the organization’s workforce data over time.
• Comparative analysis, whether by comparing internal resource planning practices across multiple projects or benchmarking your performance against competitors.

Another potential strategy is utilizing real-time data, such as forecasting charts that depict the impact of resource scheduling on agency analytics.

Productive’s forecasting charts let you predict your company’s revenue and profit margins

Gap Analysis

Gap analysis compares future human resource needs against the current workforce’s capabilities to identify discrepancies or gaps. A way to conduct gap analysis is to monitor where previous projects went wrong to pinpoint inefficiencies in your workflows, such as miscommunication or a deficit of specific skills. You can do this by checking estimated vs real completion times for various tasks — ERP solutions can deliver these insights with time tracking features.  Then, by examining your upcoming projects or initiatives, you can identify and forecast potential areas where similar imbalances may occur.

Developing and Implementing Strategies

The final step is developing and implementing HR strategies to cover your company’s specific needs and requirements. These strategies may include:

• Creating a resource plan:  A resource plan is an in-depth document that contains information on your employees, their availability, and their scheduled time. It helps businesses follow strategic objectives and monitor their ongoing processes.

Get an in-depth overview of your business resources and their availability

• Employee engagement and retention strategies:  For example, drafting career development plans, introducing new benefits packages and competitive compensation, and promoting a healthy organizational mindset.
• Implementing modern software: Resource planning tools can support various steps of the HRP process, with features such as time off management, billable hours tracking, financial forecasting, real-time reporting, workflow automations, and more.

Best Practices for Effective HRP

Once you’ve pinpointed potential gaps and developed strategies to drive improvements, what are some best practices to ensure they stick?

Monitoring Your Progress

Whichever initiatives you decide to implement, monitoring them through capacity management metrics is necessary to assess their effectiveness. However, keep in mind that while business metrics are important, some benefits of HRP may be hard to quantify. This includes better work-life balance and improved working environment.

Regular Review

HRP can take a long time to provide results. Agility and flexibility are needed to make sure that your strategies can stay aligned with changing business needs and priorities. Regular review helps identify where your strategies have gone off track to implement timely changes.

Continuous Improvement

HRP is an ongoing process. As such, your strategies will need to evolve alongside your business goals and circumstances. Incremental improvements are always better than sudden, expansive changes — consistently seeking feedback and analyzing outcomes is a way to ensure your HRP strategies remain effective over time.

Types of HR Planning 

There are different types or techniques associated with HR planning. Here are some common terms and how you can differentiate them:

Hard vs Soft HR Planning

• Hard HR Planning focuses on quantitative aspects of human resource management, such as headcount, costs, and labor allocation. This approach often involves in-depth data and forecasting for informed decision-making.
• Soft HR Planning  considers qualitative factors of workforce management, such as engagement, development, and well-being. It’s less focused on data and more on fostering a committed and resilient workforce.

Short-Term vs Strategic HRP

• Short-term HRP is more of a reactive approach that addresses immediate staffing needs and focuses on resolving urgent issues. It typically spans a timeframe of up to one year.
• Strategic HRP is a long-term approach that aligns workforce planning with the organization’s future goals and strategies. It involves forecasting workforce requirements, sustainable talent management, and other proactive strategies for business success.

Employee Reskilling vs Upskilling

• Reskilling involves training employees in new skills and capabilities to help them transition to different roles within the company.
• Upskilling focuses on enhancing the current skills and competencies to improve performance, stay competitive, and meet job requirements.

To learn more, check out our article on the topic: what is capacity building and the best strategies for maintaining a skilled and satisfied workforce.

Future Trends in HR Planning

• Remote work is here to stay. According to survey results, 63% of professionals are willing to take a pay cut to work remotely (FlexJobs). If possible, consider including it as one of your benefits to drive a competitive advantage.
• In general, employee well-being initiatives are becoming more and more popular. This can include more flexible hours, hybrid or remote work, health insurance plans, as well as various fitness and wellness programs (learn more about workload management ).
• 72% of professionals agree that all forms of skill-based hiring are more effective than resumes. While the resume is still used to filter the pool of applicants, work-related tasks and technical questions have proven to be the more efficient and cost-effective way of hiring candidates (Test Gorilla).
• When it comes to daily workflows, 60% of professionals believe that automation helps them fight burnout and work-related stress. It allows for a more flexible work schedule, helps them be more organized at work, frees up their tasks for work they enjoy, and more (Zapier). Consider tools that can provide no-code automations to streamline day-to-day work.

The Challenges of Human Resource Planning

Now that we’ve gone through the main steps of the HRP, it’s time to address some of its main challenges:

• Accurate forecasting:  Predicting future needs accurately can be a challenge in itself. Not only does it require having an in-depth understanding of your business circumstances, but it’s also sensitive to changes in market demand and economic conditions.
• Maintaining a flexible workforce: Maintaining a versatile and skilled workforce requires careful management of work hours. This ensures that profitability isn’t compromised, and at the same time, avoids situations where training is neglected entirely for billable work. This balance between billable vs non-billable time is crucial for sustainable organizational success.
• Aligning HR Strategy with Business Goals : Keeping track of the overarching business strategy in HRP can be hard, especially in large or rapidly evolving organizations. It requires transparent communication, cross-functional collaboration, and a deep understanding of the organization’s long-term objectives and the role of the workforce in achieving them.

The Solution: Utilizing Software for Enhanced HR Planning

A way to address these potential challenges is using tools with HR and resource management capabilities .  Modern software provides a way to visualize and forecast employee hours, activities, and their impact on business financials for more informed decision-making. It also helps businesses view project progress in real time to streamline stakeholder collaboration.

Adapt your project management to your working preferences with Productive

An example of such a tool is Productive , with key HRP features including:

• Time tracking
• Resource scheduling
• Workload balancing
• Time off management
• Financial forecasting

Book a demo today to discover how Productive can help drive efficient human resource management. You can also check this article to learn more about the benefits of ERP systems.

What is meant by human resource planning?

Human resource planning (HRP) is the strategic process of ensuring your business has the correct number of skilled employees to meet company goals. It involves talent management, employee performance and data analysis, needs forecasting, and more.

What are the 5 steps in human resource planning?

The five main steps of human resource planning include identifying current organizational availability, demand forecasting, capacity gap analysis, strategy development and implementation, and results monitoring and analysis.

What are the 3 key areas of human resources planning?

The 3 key areas of human resource planning (HRP) include workforce forecasting, talent management, and gap analysis. Workforce forecasting involves analyzing current availability and predicting the future needs of the workforce. Talent management encompasses various strategies, from recruitment, training, and development to succession planning. Gap analysis involves pinpointing areas of improvement by identifying where capacity fell short of meeting demand (skills, quantity, time, etc.).

Why is human resources planning important?

Human resource planning (HRP) is important because it ensures that the workforce is aligned with the organization’s strategic goals. It helps businesses get the most out of their human resources, both by improving acquisition strategies, developing current talent, and increasing retention. HRP also supports organization agility, flexibility, and resilience by building a well-skilled and satisfied workforce.

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Latest blog posts, the strategic human resource planning (hrp) guide.

Human resource planning lets you make the most of your company’s most important resource: people. Read on for our full guide to strategic HRP.

• 1 What is human resource planning (HRP)? 
• 2 What is the goal of human resource planning?
• 3 How do organisations make use of human resource planning? 
• 4 Four steps in the human resource planning process
• 5 Best practices for strategic human resource planning 
• 6 Finding time for strategic HR

What is human resource planning (HRP)? 

Human resource planning (HRP) is the process of assessing a company’s current workforce against its future needs. It allows organisations to ensure they’ll always have the people they need to meet their goals. 

What is the goal of human resource planning?

The goal of human resource planning is to ensure an organisation has the human resources it needs to meet its short and long-term objectives. 

HRP can help businesses to avoid both staffing shortages and expensive surpluses. It also enables them to make better use of their employees by ensuring everyone is working to their strengths. 

When done right, human resource planning allows HR teams to make smarter, data-driven HR decisions that are in line with their organisation’s core strategy. 

How do organisations make use of human resource planning? 

Here are some examples of how an organisation might use human resource planning to meet its future goals. 

Human resource planning example #1: Opening a new branch 

An organisation is planning to open an office in a new geographic region. This will involve hiring around 200 full and part-time employees to work in the new location — a big operation that will involve a lot of work for the HR team. 

First, they’ll need to work with the organisation’s leadership to determine exactly what roles they need to recruit for. They’ll also need to spend time learning about the labour laws and regulations that apply in the new location, and explore the local labour market to figure out the best ways of sourcing and attracting local talent. 

Lastly, the HR team will also need to plan to onboard a large number of employees at the same time — which will take some careful planning. They’ll likely need to coordinate with other departments, like IT and legal, to facilitate this mass onboarding and create the training and onboarding materials they’ll need. 

Human resource planning example #2: Preparing for upcoming retirements

An organisation’s HR team realises that a number of senior employees are approaching retirement age and will likely leave the workforce in the next few years. Because these employees hold a lot of important knowledge about the company and its operations, their departure could cause significant disruption. 

In this situation, one form of human resource planning that could be useful is succession planning . This is when an organisation identifies potential internal candidates for leadership roles and develops them so they’re ready to replace leaders when they leave. 

To do this, HR should work with department leaders to identify the key skills required for the roles and look for employees who share some of those skills. They could then fill any knowledge or skill gaps through training, mentoring and work shadowing. 

When the employees in question do retire, the company will have prepared successors who will be ready to step into their roles. 

Four steps in the human resource planning process

The human resource planning process can broadly be broken down into four key steps:

We’ll go into each of these steps in more detail below. 

1. Analysing your current workforce 

The first step in the human resource planning process is to analyse the current state of your workforce. This means considering factors such as: 

How many employees you have overall 

How many employees you have in each department 

How many employees hold each job title 

The age of your current workforce (how many employees are approaching retirement) 

Performance levels across the organisation 

The skills, qualifications and education level of your employees 

There are a number of ways to uncover this information. First, you could look into your HRIS data to gather basic information like the total number of employees in your organisation and how many work in each department. 

You could also look at data from past performance reviews, or conduct employee self-evaluations and interviews with managers or department heads. Lastly, building an organisational chart can be a good way to get a visual overview of what your organisation looks like. 

2. Forecasting the company’s future needs

You’ll then need to make predictions about the human resources your company will need in the future. There are a number of different internal and external factors to consider, including:

New products and services your company plans to launch 

Planned changes to your workforce through retirements, layoffs and transfers

Potential mergers, acquisitions, moves or expansions 

Projected turnover of employees based on current rates 

Increased labour costs 

Technological advancements that might change the way your company operates

You’ll need to work with your company’s leadership to predict how each of these factors will affect your organisation. Then, think about how many employees you’ll need (and the skills, knowledge and education levels they’ll need to have) in order to meet these future challenges as an organisation. 

3. Conducting a gap analysis to guide future actions 

The next stage is to analyse the gap between your organisation’s current resources and your future needs. For example, if you plan to introduce a new piece of technology but don’t yet have anyone qualified to manage it, you’ll need to fill that skills gap either by recruiting new employees or training the ones you have.

During this process, you might ask yourself questions like: 

Do we need to hire new employees? How many? Full-time or part-time? With what skills? 

Can we implement training to better prepare our current employees? What skills do we need to develop in house? 

Can we redeploy current employees to new positions? Which ones? 

Are our current employees working to their strengths? 

Do we need to adapt our HR processes to accommodate the organisation’s future needs? 

4. Developing and implementing an HR plan 

Lastly, you’ll need to develop a clear, step-by-step plan that will enable you to meet your goals as an organisation. The answers to the questions you asked yourself in the gap analysis stage will guide you as you create and roll out your plan. 

For example, here are a few things you might decide to do as an HR team:

Find and attract new employees 

Deliver targeted training 

Reassess your benefits programmes 

Adapt your performance management process 

Work on the company culture 

Discover a New Partner in Workforce Planning

An HR software can be your greatest asset when it comes to planning out the future of your workforce, and your business. Speak with an expert today.

Best practices for strategic human resource planning 

Human resource planning can help you to ensure your organisation will always have the people it needs to meet its goals. Here are some best practices to follow for the best chance of success. 

Watch what your competitors are doing 

Your competitors are likely facing some of the same challenges and opportunities that you are. And many of them are also going through the same process of determining what their future needs will look like.

You can get an insight into what your competitors are doing by checking out their LinkedIn and job pages to find out what roles and skills they’re hiring for. You can also use LinkedIn to explore their current employees’ skills  — and find out if they have something you’re currently missing. 

Invest in employee retention 

Human resource planning is all about planning for the future. But your plans could be blown apart if your best employees leave and take their skills and knowledge with them. That means you’ll need to put strategies in place to boost retention and keep your people for longer. 

A good way to start is by conducting regular employee engagement surveys , which can help you spot problems before they go too far and leads to employees leaving. It’s also a good idea to conduct exit interviews whenever an employee does leave. This helps you to find out exactly why people are leaving, and find ways to prevent it in the future. 

For example, if large numbers of people are leaving because they feel they have no way to progress within the organisation, this might be something to address in your human resource plan going forward. 

Review and evaluate your plan regularly 

Human resource planning is all about planning for the future — but no one can predict everything. If circumstances change, you should be prepared to re-evaluate your plan.

You might also find that strategies you develop in the planning stage don’t have the impact you expected. In this case, it’s important to reassess and adjust your processes.

It’s also important to set key metrics by which you’ll measure the success of your plan early on in the process. That way, you’ll be able to tell if your strategy isn’t working as expected and adjust it accordingly.

Finding time for strategic HR

Human resource planning is a vital part of overall strategic human resource management. It helps organisations to stay ahead of market changes, new technology and other factors that can impact performance. But it also takes a lot of time and focus — which HR teams often don’t have. 

Personio is an all-in-one HR system that can simplify, automate and streamline repetitive tasks, giving your HR team the time they need to focus on strategic initiatives like HR planning. Plus, Personio’s analytics and reporting features give you access to the data you need to truly understand what your workforce looks like. 

In other words, Personio makes it easier to understand your workforce and make confident, data-driven HR decisions. Want to learn more? Book your free demo today . 

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Workforce Planning

Ivan Andreev

Demand Generation & Capture Strategist, Valamis

January 17, 2022 · updated April 5, 2024

11 minute read

Taking the time to plan and make decisions as part of a broader strategy improves every aspect of your business, including your workforce. Despite the size or type of company, workforce planning is a valuable HR process that ensures you have the staff to execute your business strategy.

Learn what workforce planning is, how it helps with goals and produces positive outcomes, the benefits it can offer, five key steps in workforce planning, and what it looks like in practice.

What is workforce planning?

Primary workforce planning criteria, the goal of workforce planning, how workforce planning affects hr processes, the benefits of workforce planning.

• The five core workforce planning steps

Workforce planning is the process of analyzing existing employees and planning for future staffing requirements through talent gap assessment, developing employee management procedures, and setting recruitment strategies.

With effective workforce planning, your business is always staffed with the necessary talent, knowledge, and experience to produce positive business results.

Workforce planning requires developing an appropriate and cost-effective strategy for retaining, recruiting, and training your workforce while also continually assessing employee performance.

A survey by the American Productivity & Quality Center (APQC) shows 89% of 236 organizations integrated workforce planning into their business operations.

The plan for your workforce, what it will look like moving forward, and how to strategize for specific goals are unique to your business and depend on many factors. Typical components that affect workforce planning include:

• Talent availability
• Business growth
• Age of the existing workforce
• Current knowledge/skill gaps
• And much more

Strategic workforce planning

Strategic workforce planning is a proactive approach to managing staffing needs and aligns HR processes to business-wide goals. It guides future employee plans and decisions, ensuring they adhere to the company’s long-term vision.

Strategic workforce planning tends to take place at the senior leadership level and focuses on big picture goals such as:

• Structural organization
• Employee redeployment
• Succession planning
• Staffing budgets
• Maintaining capacity
• Reducing risk

Operational workforce planning

In contrast to strategic workforce planning, operational workforce planning focuses on the business’s immediate priorities. For example, which staff level can efficiently meet the current deadlines and objectives?

How to conduct a skills gap analysis and what to do next

Start building your foundation for strategic workforce development.

Criteria to consider when planning for your company’s future workforce include:

• Employee numbers : getting the correct workforce size so the business is not overstaffed and inefficient but not too small to hinder growth and fail to match demand.
• Skillset : having the right mix of skills, capabilities, knowledge, and experience to perform effectively and achieve your goals.
• Budget : finding the optimal staffing expenditure to achieve a high return on investment from employees and maximize profits.
• Flexibility : developing your workforce to be agile and adapt quickly when changes in the market occur.

The primary goal of workforce planning is to create a strategy for your staffing needs that ensures you can meet strategic objectives both now and in the future.

To achieve this goal, workforce planning requires an in-depth understanding of your existing workforce, employee skills, experience, load capability, and potential talent gaps.

Through performance tracking and employee assessment, you can take a birds-eye view of your entire workforce and create actionable plans for the future.

Workforce planning allows companies to understand and design their workforce effectively and efficiently with long-term objectives in mind. It prevents problems from developing and allows management to spot issues early, creating plans to remedy them. Examples could include:

• Identifying understaffed departments and potential bottlenecks
• Staffing requirement to scale operations
• Excess employees for redeployment or termination

Recruitment and employee development

Workforce planning provides the game plan for your company’s recruitment and employee development .

With a clear understanding of your existing workforce and your future goals, you can profile the skills, experience, and knowledge required to meet your needs and develop hiring and training processes to match.

Companies are constantly competing for the same high-end talent. With appropriate workforce planning in place, you can better identify future top employees for your business and develop talent acquisition strategies to attract them to your company.

Plus, workforce planning analysis can help companies formulate proper training and employee development to fill talent gaps while also finding individuals capable of excelling with the correct professional development in place.

This leads us to succession planning and ensuring you maintain successful leadership across your company.

By recognizing the leadership positions currently open or soon to be available, companies can begin assessing existing employees for promotion or targeting outside hires with the right mix of skill and experience.

Workforce planning together with succession planning creates a smooth transition for the critical roles in your company so you can provide an uninterrupted, seamless service or product for your customers.

Performance management

A significant outcome of workforce planning is managing the performance of your employees to increase productivity and efficiency.

With workforce planning, you can understand and develop strategies that get the most out of your employees to increase output and get a higher return on investment from your staffing expenditure.

1. Preparing for the future

With workforce planning, you have a roadmap for your staffing requirements to prepare for the future.

This could mean increasing the number of employees to match growth forecasts or pivoting to a different business model and finding the staff you need to accomplish this.

2. Discovering workforce gaps

Understanding the gaps of your current workforce informs your future personnel strategy in terms of recruitment, redeployment, and training.

Read: Skills gap and skills gap analysis

3. Effective succession planning

By identifying and developing employees with the potential for future leadership roles, you can effectively plan for staff leaving with minimal disruption.

Succession planning can also have a positive effect on employee engagement:

• 62% of employees would be “significantly more engaged” if they had a succession plan at their company.
• 94% of employers said having succession plans in place positively impacted employee engagement .

Succession planning template

It can help you navigate crises and leadership transitions with ease.

4. Improved retention strategies

Effective workforce planning gives you a clear understanding of employee skills and where they can be the most successful in the business.

So rather than terminating employees, you can retain valuable staff through well-planned redeployment.

5. Flexibility

A clear workforce plan with recruitment and training structures in place can make your business more agile, with the ability to efficiently anticipate and react to change.

You can reduce your overall staffing costs by developing plans to:

• Increase your productivity and workforce ROI
• Retain talent and reduce costs associated with employee turnover
• Develop a flexible workforce that can meet customer demand in different circumstances

Labor costs can account for up 70% of total business costs . Workforce planning allows you to map talent to value and ensure you are getting the best results for the costs .

The 5 core workforce planning steps

Successfully implementing new workforce planning strategies is an extensive procedure. However, businesses can break down workforce planning into five core steps to simplify the process.

1. Deciding strategic direction and goals

Workforce planning is a top-down process requiring clear organizational direction and defined strategic goals to inform and guide future decisions.

• What direction do you see your business going in?
• What are you hoping to achieve through workforce planning?
• What are the primary goals/milestones you are targeting?
• Why does your business need new workforce planning structures?

These are vital questions to ask yourself before analyzing your workforce and implementing new employee management strategies.

It is also important to remember that every process in your business affects another. Therefore, your workforce planning must be an organization-wide endeavor and include effective communication between HR and other departments.

Your new workforce plan must be produced with a collaborative approach that generates a consensus amongst all invested parties. Without organizational buy-in and a rationale for new strategies, you cannot reap the benefits of workforce planning.

Consider this step setting the “soft” workforce planning framework that will define the overall strategy to assess future information rather than the plan’s specific details.

2. Analyze existing workforce

The next step is to properly assess your existing workforce.

Common strategies used in this step include:

• Demand planning – Determining the number of employees needed for each role required to reach your goal. Demand planning requires accurate business forecasts to determine your workforce’s future number, structure, and composition.
• Internal supply – Internal supply planning needs accurate talent evaluations, an understanding of the expected employee turnover rate (retirements, resignations, etc.), and the design of training and professional development programs.
• Gap analysis – Identifying the gaps in your workforce and making plans to close them through recruitment, redeployment, and training.

These strategies help to answer the following questions:

• Do you have the right-sized workforce?
• What skills, knowledge, and experience do your current employees have?
• Do your employees need additional training?
• What new resources can improve workforce performance?
• Is your workforce correctly structured? (This includes organizational design, departments, communication channels, etc.)
• What is your current employee turnover rate?

What you have now is the starting point for future workforce plans. You can begin developing workforce planning strategies when you know what you have (step 2) and where you want to be (step 1).

A common pitfall of workforce planning is ensuring it is based on high-quality information from within the organization and external sources. Workforce planning defined by inaccurate forecasts and undeliverable future goals cannot be successful.

3. Develop your plan

This is where companies must take their overall goal, input the assessment of their existing workforce and produce a concrete plan for the future.

Businesses must plan their workforce to reflect the value and revenue it produces. A simple example of workforce planning in action could be:

A company is manufacturing two models of cars. Model A is the business’ flagship car, selling the most and bringing in the most revenue. However, model B is showing significant growth, and the income from model A is beginning to stagnate.

The car company can produce a simple revenue table based on 2023 figures and 2024’s forecasts.

The revenue per employee for model A is $250,000, and the revenue per employee for model B is $300,000.

Based on growth forecasts, you can estimate that staff working on model B will need to increase by 57 to match increased demand. This process assumes the forecasts are accurate and there are no sudden changes in sales or production. At the same time, model A will likely begin to have a surplus of staff in 2024 and need a reduction of 8 employees.

With workforce planning structures in place, you can develop plans to retrain and redeploy staff from Model A to Model B during 2023. This kind of planning minimizes disruption and reduces employee turnover.

Of course, this is just a plan based on forecasts and does not mean you should immediately move eight employees from model A to model B and hire 49 more. Instead, the business should put redeployment, hiring, and training plans in place to execute when key revenue indicators are met and take a gradual approach that matches the shift in focus of their business.

4. Implement workforce planning

Successfully implementing workforce planning requires:

• HR personnel to clearly understand their new roles and responsibilities.
• Strategies and processes for recording all relevant data and information.
• Effective communication channels between all invested parties to support the plan.
• Defined measurement and evaluation criteria to assess the plan’s success.

While the future HR plans for managing your workforce are specific to your business, they will involve some or all of the following:

• Recruitment
• Redeployment
• Outsourcing
• Deploying new technology

With many new processes to implement, workforce planning does not transform your company overnight. Instead, it is a gradual endeavor that optimizes each procedure for the given circumstances to get your business closer to your long-term goals.

5. Monitor results

It is crucial to remember workforce planning is an iterative process whereby progress is monitored and measured against specific milestones and long-term goals.

Post-implementation, your workforce planning processes may need adjusting due to unexpected factors within your business or to meet new realities of your industry.

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Management and Human Resources Business Plans

The management portion of your business plan, the hr portion of your business plan, frequently asked questions (faqs).

As a startup, it’s never easy to come up with a business plan, let alone the management and human resources sections of a business plan. Despite that, it’s important that you start your business plan for human resources as soon as possible. Doing so gives your management goals a plan that will guide you and keep your business on track as it grows. 

The key components of your human resources business plan should include your organizational structure, the philosophy and needs of your HR department, the number of employees you want to hire, how you plan to manage them, and all the estimated costs related with personnel.

You’ll want to start your HR business plan by outlining your own managerial experience and skills as well as those of your team. Highlight the roles of each member of your team, and any particular areas of strength or deficiency in your personnel lineup. For example, your HR team may be strong in compliance and conflict resolution but weak in hiring. 

Don't worry if you don’t have a complete team in place when you write your HR business plan. Simply use this section to outline the organizational structure along with job descriptions, how you plan to recruit key team members, and what their responsibilities will be.

This section should look like a pyramid with you at the top and will likely have lateral positions. Be as specific as possible when defining an employee's responsibilities because this is what will drive your business.

Do You Need an HR Manager?

If you’re a solo practitioner, you may not think of including an HR manager in your management business plan. However, if you expect to hire non-managerial employees (such as salespeople or clerical workers), you should consider recruiting a human resources manager.

If hiring a human resources manager can’t be done, consider a human resources consultant. Human resource management requires an immense amount of time and paperwork, and an experienced HR consultant will be able to quickly get your payroll and benefits program up and running, affording you more time to concentrate on growing the business. Human resource responsibilities should include:

• Handling FICA and unemployment taxes and paperwork
• Ensuring compliance with the Family and Medical Leave Act
• Staying on top of IRS filings

There are plenty of companies that offer HR management platforms tailored to each business's needs. Research these companies and be sure to include their estimated cost in your HR business plan.

When you develop the HR portion of your business plan, begin by including a brief overview of your HR strategy. Investors may be curious about how your payroll will be handled and the associated costs of administering it, as well as the type of corporate culture you plan to create. Specific items to highlight in the HR section include:

• Payscale: Show the salaries for managers and non-managers based on the market for those jobs.
• Vacation time: Describe your vacation-time policy. How much time do employees get? How quickly does it accrue? Vacation time is not required by law, but most firms offer vacation time to stay competitive and keep employees refreshed. 
• Insurance: Health insurance is a common staple benefit, although skyrocketing prices have forced many firms to cut back on this benefit. If you can’t afford a health plan, look into subsidizing one with employees paying the rest. Alternatively, inquire if a professional insurance representative can help you get a bulk rate.
• Additional benefits: Other things to consider include life insurance, a 401(k) and matching funds, bereavement leave, religious and floating holidays, and a bonus structure, if applicable.

In addition to the key elements above, it helps to have a framework from which to build your HR business plan. Here’s a basic outline that can help you get started: 

• Figure out what your human resources department would need. 
• Determine a strategy for recruiting talent.
• Formulate your hiring process. 
• Develop a training program for new employees. 
• Determine how much you want to pay your team (this is a good spot for payscale info)
• Create performance standards

It may be overwhelming to contemplate these benefits and their costs in the early stages of setting up your business, but in a competitive labor market, your firm needs to offer enough to entice qualified people and, more importantly, to keep them happy.

Consider revisiting your management and HR business plans every couple of years to see if you need to create action steps to refine your processes.

What should be in an HR business plan?

An HR business plan should include a mix of the steps you plan to take to launch an effective HR department, as well as specifics about how you plan to handle time off, insurance, and other benefits you plan to offer.

How do I write a human resources plan?

It helps to start with a simple framework. Try to break the plan down into sections: HR needs, recruitment, hiring, training, pay, and performance reviews. From there, incorporate other aspects of HR, like benefits and promotions.

U.S. Chamber of Commerce. " Does Your Small Business Need an HR Department? "

 University of Minnesota. “ Human Resources Management: 2.2 Writing the HRM Plan .”

Mecklenburg County, North Carolina. “ FY 2020-2022 Strategic Business Plan: Human Resources .”

• Human Resource Planning (HRP)

Written by True Tamplin, BSc, CEPF®

Reviewed by subject matter experts.

Updated on July 12, 2023

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Table of contents, what is human resource planning (hrp).

Human Resource Planning (HRP) is the process of systematically analyzing and forecasting an organization's current and future human resource needs, and developing strategies to meet those needs.

This involves identifying the right number of employees with the appropriate skills, knowledge, and experience to effectively accomplish the organization's goals and objectives.

HRP is a crucial component of business planning and finance, as it ensures that an organization's workforce is aligned with its strategic direction and can adapt to changes in the business environment.

HRP directly impacts an organization's ability to achieve its goals and objectives by ensuring that the workforce is well-prepared, skilled, and motivated.

HRP also contributes to the financial health of a company by optimizing workforce productivity, minimizing costs associated with hiring and training, and reducing employee turnover.

Additionally, effective HRP enables businesses to respond more quickly and efficiently to changes in the external environment, such as technological advancements, economic fluctuations, and shifting market demands.

This adaptability is crucial for maintaining a competitive advantage and achieving long-term success.

The HRP Process

Environmental scanning.

The HRP process begins with environmental scanning, which involves collecting and analyzing information about the internal and external factors that may impact an organization's workforce.

This can include examining economic trends, technological advancements, demographic changes, industry competition, and government regulations, as well as assessing the company's internal strengths, weaknesses, opportunities, and threats (SWOT analysis).

By conducting a thorough environmental scan, organizations can gain valuable insights into the factors that may affect their workforce and identify potential opportunities and challenges that need to be addressed through HRP.

Forecasting

Forecasting is a critical step in the HRP process, as it involves estimating the future demand for and supply of human resources within the organization.

This includes predicting the number of employees needed, the types of skills and competencies required, and the availability of internal and external talent to meet these needs.

Forecasting can be accomplished through various methods, such as trend analysis, regression analysis, or expert judgment.

Accurate forecasting is essential for developing effective HRP strategies and ensuring that the organization has the right people in the right roles at the right time.

Job Analysis

Job analysis is the process of collecting, analyzing, and documenting information about the tasks, duties, and responsibilities of each job within an organization.

This information is used to create detailed job descriptions and specifications, which are essential for HRP as they provide a clear understanding of the skills, knowledge, and abilities required for each role.

A thorough job analysis helps organizations identify the competencies needed to perform each job effectively and serves as a foundation for workforce planning, recruitment, training, performance management, and career development initiatives.

Supply Analysis

Supply analysis involves assessing the current workforce's skills, knowledge, and abilities to determine whether the organization has the necessary human resources to meet its strategic objectives.

This includes evaluating the number of employees, their skills and competencies, and their potential for growth and development.

By conducting a supply analysis, organizations can identify existing talent gaps and develop targeted strategies to address them, such as training and development programs, succession planning , or external recruitment.

Demand Analysis

Demand analysis focuses on estimating the organization's future human resource requirements based on its strategic goals and objectives.

This involves projecting the number of employees needed, the skills and competencies required, and the anticipated changes in workforce composition due to factors such as turnover, retirements, and promotions.

A comprehensive demand analysis enables organizations to develop targeted HRP strategies that align their workforce with their strategic direction and ensure they have the right people in place to achieve their goals.

Gap Analysis

Gap analysis is the process of comparing the organization's current human resource supply with its future demand to identify any discrepancies.

This includes evaluating the differences in the number of employees, skills, and competencies required to meet the organization's strategic objectives.

By conducting a gap analysis, organizations can determine whether they have a surplus or shortage of human resources and develop appropriate strategies to address these gaps.

This can include recruitment and hiring initiatives, training and development programs, or workforce restructuring efforts.

Action Planning

Action planning is the final step in the HRP process, which involves developing and implementing strategies to address the identified gaps between the current workforce supply and future demand.

This can include initiatives such as recruiting new employees, providing training and development opportunities for existing staff, implementing succession planning, or adjusting organizational structures to better align with strategic objectives.

Effective action planning requires ongoing monitoring and evaluation to ensure that the HRP strategies are achieving the desired results and that the organization remains well-prepared to respond to changes in its internal and external environment.

Benefits of HRP

Improved workforce productivity.

By ensuring that the organization has the right number of employees with the appropriate skills and competencies, HRP helps to optimize the use of human resources and enables employees to work more efficiently and effectively.

This increased productivity can lead to higher levels of employee engagement, job satisfaction, and overall organizational performance, ultimately contributing to the company's bottom line.

Cost Savings

HRP can result in significant cost savings for organizations by helping to minimize expenses associated with hiring, training, and retaining employees.

Through effective workforce planning, companies can reduce the costs of recruiting and onboarding new staff, as well as the expenses associated with high employee turnover, such as lost productivity and the need for additional training.

Additionally, HRP can help organizations identify opportunities for streamlining their workforce and eliminating redundancies, leading to further cost savings and improved operational efficiency.

Reduced Employee Turnover

Effective HRP can contribute to reduced employee turnover by ensuring that the organization has the right people in the right roles and that employees are provided with the necessary support and development opportunities to succeed in their positions.

By fostering a positive work environment and promoting employee engagement, HRP can help to improve job satisfaction and employee retention, ultimately reducing the costs associated with high turnover rates.

Increased Flexibility and Adaptability

HRP enables organizations to be more flexible and adaptable in the face of changing market conditions, technological advancements, and other external factors.

Through effective workforce planning, companies can quickly adjust their human resource strategies to respond to emerging trends and capitalize on new opportunities.

This increased agility is essential for maintaining a competitive advantage and ensuring long-term success in today's rapidly evolving business environment.

Better Risk Management

HRP plays a crucial role in risk management by helping organizations identify and address potential workforce-related risks, such as skill gaps, labor shortages, or an aging workforce.

By proactively addressing these risks through targeted HRP strategies, companies can mitigate potential negative impacts and ensure the continued success of their operations.

Challenges of HRP

Uncertainty.

Uncertainty is a significant challenge in HRP, as organizations must make predictions about future workforce needs based on a variety of factors, such as economic trends, technological advancements, and competitive pressures.

These factors are often unpredictable and subject to change, making it difficult for companies to accurately forecast their human resource requirements.

To address this challenge, organizations can leverage scenario planning techniques and continually update their HRP strategies as new information becomes available.

Resistance to Change

Employees may be reluctant to embrace new organizational structures, job roles, or training programs, which can impede the organization's ability to achieve its workforce planning goals.

To overcome this challenge, organizations should involve employees in the HRP process, clearly communicate the reasons for change, and provide adequate support and resources to help staff adapt to new roles and responsibilities.

Lack of Resources

The lack of resources, including time, funding, and personnel, can pose a significant challenge to implementing effective HRP strategies.

Organizations may struggle to allocate the necessary resources for workforce planning initiatives, particularly in times of financial constraints or competing priorities.

To address this challenge, organizations should prioritize HRP as a critical component of their overall business strategy and invest in the necessary resources to ensure its successful execution.

Inaccurate Forecasting

Inaccurate forecasting can undermine the effectiveness of HRP efforts by leading to imprecise estimates of future workforce needs. This can result in talent shortages or surpluses, which can negatively impact organizational performance and employee satisfaction.

To improve the accuracy of their forecasting efforts, organizations can leverage a variety of forecasting techniques, such as trend analysis, regression analysis, or expert judgment, and continually update their projections based on the latest available data.

Inadequate Data Analysis

Inadequate data analysis can hinder the effectiveness of HRP efforts by preventing organizations from identifying and addressing critical workforce gaps and opportunities.

This can result in suboptimal HRP strategies that fail to align the workforce with the organization's strategic objectives.

To overcome this challenge, organizations should invest in robust data collection and analysis tools, as well as develop the necessary skills and expertise within their HR teams to effectively analyze and interpret workforce data.

Best Practices in HRP

Involvement of top management.

Gaining the commitment and support of senior leaders is essential for the successful implementation of HRP initiatives, as it helps to ensure that workforce planning is prioritized and integrated into the organization's overall business strategy.

Collaboration Between HR and Other Departments

By working together, HR professionals and departmental leaders can share insights, resources, and expertise to develop and implement targeted HRP strategies that align the workforce with the organization's strategic objectives.

Use of Technology

Leveraging technology is a best practice in HRP, as it enables organizations to streamline and automate various aspects of the workforce planning process, such as data collection, analysis, and reporting.

By utilizing advanced HR software and analytics tools, companies can gain valuable insights into their workforce and make more informed decisions regarding their HRP strategies.

Regular Review and Update of HRP

Regular review and update of HRP strategies are essential for ensuring their ongoing effectiveness in the face of changing business conditions and workforce dynamics.

Organizations should continually monitor and evaluate their HRP efforts, making adjustments as needed based on new information, emerging trends, and shifting priorities.

Integration With Overall Business Strategy

Finally, HRP should be fully integrated with the organization's overall business strategy. This helps to ensure that workforce planning initiatives are aligned with the company's strategic objectives and that the organization has the necessary human resources to achieve its goals.

The Bottom Line

Human Resource Planning (HRP) is the systematic process of analyzing and forecasting an organization's current and future human resource needs and developing strategies to meet those needs.

It plays a critical role in aligning the workforce with the organization's strategic objectives and ensuring its long-term success.

The HRP process involves several key steps, including environmental scanning, forecasting, job analysis, supply analysis, demand analysis, gap analysis, and action planning.

Each of these steps plays a crucial role in identifying the organization's workforce needs and developing targeted strategies to address them.

To ensure the success of HRP initiatives, organizations should adhere to best practices, such as involving top management, fostering collaboration between HR and other departments, leveraging technology, regularly reviewing and updating HRP strategies, and integrating HRP with the overall business strategy.

By understanding and effectively implementing the HRP process, organizations can optimize their workforce, manage risks, and ensure their long-term success in today's competitive business environment.

Human Resource Planning (HRP) FAQs

What is human resource planning (hrp).

Human Resource Planning (HRP) is the process of forecasting future human resource needs and developing strategies to meet them.

Why is HRP important for business planning?

HRP helps businesses ensure that they have the right people with the right skills in the right positions at the right time to achieve their strategic objectives.

What is the HRP process?

The HRP process typically involves environmental scanning, forecasting, job analysis, supply and demand analysis, gap analysis, and action planning.

What are the benefits of HRP?

The benefits of HRP include improved productivity, cost savings, reduced employee turnover, increased flexibility, and better risk management.

What are some challenges associated with HRP?

Some challenges associated with HRP include uncertainty, resistance to change, lack of resources, inaccurate forecasting, and inadequate data analysis.

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide , a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University , where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon , Nasdaq and Forbes .

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Human resource management (HRM)

• Human Capital Management
• Human Resource Management

It’s often said that people are an organization’s greatest resource. Yet, until fairly recently, human resource  management was not considered as critical to success as other business operations, like marketing, finance or sales. This notion has been largely altered by new technology, globalized markets and changes in organizational hierarchies. Today, business leaders place great emphasis on hiring the right people and keeping them engaged.

What is human resource management?

Human resource management involves creating personnel policies and procedures that support business objectives and strategic plans. Central to this mission is fostering a culture that reflects core values and empowers employees to be as productive as possible.

What are the functions of human resource management?

HR functions can vary depending on industry, businesses size and the types of workers employed. In most cases, the primary objectives are to acquire and cultivate talent and improve communication and cooperation among workforce members. Other key human resource management functions include:

• Job analysis Determining the skills and experience necessary to perform a job well may make it easier to hire the right people, determine appropriate compensation and create training programs.
• Workforce operations Creating health and safety policies, responding to employee grievances, working with labor unions, etc., can help support regulatory compliance.
• Performance measurement Evaluating performance is important because it not only fosters employee growth through constructive feedback, but also serves as a guide for raises, promotions and dismissals.
• Incentive programs Recognizing achievements and rewarding high performers with bonuses and other perks is a proven way of motivating employees to take ownership of business objectives.
• Professional development From orientation to advanced educational programs, employee training serves to improve productivity, reduce turnover and minimize supervisory needs.

HCM Buyer’s Guide: Evaluating integrated HCM solutions

What are the responsibilities of human resource management.

HR professionals generally are tasked with creating and administering programs that improve workplace efficiency and employer-employee relationships. Within this broad assignment are several different, but critical responsibilities, such as:

• Staffing Staffing a business or an individual department requires a number of key steps. Hiring managers must first determine how many new employees the budget can support, then find and interview qualified candidates, and finally, make selections and negotiate compensation.
• Developing workplace policies If it’s determined that a new or revised policy is needed, HR professionals typically consult with executives and other managers, write the supporting documentation and communicate it to employees. Policies may cover vacations, dress codes, disciplinary actions and other types of workplace protocol.
• Administering pay and benefits In order to attract and retain talent, compensation must meet industry standards and be comparable to what other employees in similar roles are being paid. Creating such a fair pay system requires careful consideration of an employee’s years of service with the business, experience level, education and skills.
• Retaining talent Compensation isn’t the only thing that retains talented employees. HR managers may need to proactively address issues with workplace environments, organizational culture and relationships between employees and supervisors.
• Training employees When employees develop new skills, they tend to be more productive and satisfied with their job. Some of the training programs typically run by HR departments include team-building activities, policy and ethics education, and on-the-job instruction and skills, e.g. how to run a machine or computer program.
• Complying with regulations Laws that affect the workplace – whether they’re related to discrimination, health care or wages and hours  – are constantly evolving. HR professionals are required to keep up with these changes and notify the rest of the organization in support of compliance.
• Maintaining safety Safety in the workplace means protecting not just the physical health of employees, but also their private information. To minimize workers’ compensation claims and data breaches, HR must implement security measures and ensure that all federal, state and union standards are met.

Human resource management and small business

While human resource management is important to all businesses, the stakes may be higher for smaller organizations. For example, one incompetent employee in an office of 10 people can be much more detrimental than one in a workforce numbering in the thousands. To improve their people processes, small business owners generally can:

• Assess current operations to determine if new hires are needed or if existing employees and production methods can be utilized more effectively.
• Take an active role in the recruitment process and write job descriptions that match prospective talent to business needs.
• Create an employee handbook or an official document that clearly outlines company policies.
• Provide continuing education opportunities as needed by the particular industry.
• Maintain a work environment where employees are treated fairly and can be productive.

HRM systems and software

Faced with rising numbers of contract-based workers and increasingly complex regulations, HR professionals have turned to HRM software to help them keep pace with changing workforce environments and people management needs. This technology is available with a variety of options to suit businesses of any size. Basic systems may offer recruitment services , payroll and benefits , while more robust solutions tend to include talent management, international compliance support  and advanced analytics.

Why use a human resource management system (HRMS)?

HRMS are designed to meet the core needs of HR and turn basic administrative functions into critical enablers of business value. With the aid of these people-centric, data powered solutions, HR managers may be able to:

• Improve their hiring processes
• Manage people more effectively
• Optimize workforce productivity
• Engage and retain employees
• Eliminate costly redundancies
• Make data-driven decisions
• Maintain regulatory compliance

How to choose a human resources management solution

Finding the right solution often requires a strategic evaluation process, such as the following:

• Identify what the organization would like to accomplish, change or improve and how technology can help achieve those goals.
• Ensure that the HRMS can keep pace with the rapidly changing regulatory and statutory requirements in all applicable jurisdictions (local, state, federal, international, etc.).
• Prioritize security and know exactly how sensitive data will be stored, transferred and backed up.
• Look for implementation models with a change management strategy  that will get the HRMS up and running efficiently.
• Address stakeholder questions, concerns and objections to drive widespread HRMS support.
• Ask about service plans to manage the hundreds of post-payroll tasks necessary for compliance .
• Inquire into the vendor’s financial history and investments in innovation.
• Get outside-in perspective by looking at peer reviews, industry analyst feedback and product demos.

Examples of HRM software

Business leaders and HR professionals who are looking for software to help them accomplish more with less resources generally have three options available to them:

• Human resource information systems (HRIS) – perform core HR functions , like applicant tracking, payroll and benefits administration
• Human resource management systems (HRMS) – offer the benefits of HRIS, plus talent management services
• Human capital management (HCM) solutions – provide a broad suite of HR capabilities, including global payroll and compliance support and in-depth analytics

Why choose ADP for your human resource management needs?

ADP’s HR management solutions automate and streamline key needs so that HR professionals can focus more time on their people and less on paperwork. We offer basic and customized packages with some of the following features:

• Powerful workforce reporting that turns data into a trusted source of decision-making
• Preconfigured new hire templates for a simplified onboarding process
• Self-service and mobile apps so time-sensitive tasks can be performed quickly
• Industry-recognized security to help safeguard sensitive information

Learn more about ADP Workforce Now® HR Management →

Frequently asked questions about HRM

What is human resource management and its functions.

Human resource management is the strategic approach to nurturing and supporting employees and ensuring a positive workplace environment. Its functions vary across different businesses and industries, but typically include recruitment, compensation and benefits, training and development, and employee relations.

What are the three major roles of human resources management?

The job of an HR manager can be broken out into three major roles:

• Administrator Running payroll , writing job descriptions, creating workplace policies and procuring benefits packages are typical of HR administration.
• Change manager HR professionals must monitor regulations and communicate policy or procedural changes with employees to help support compliance.
• Personnel manager Managing people entails resolving conflicts, overseeing training and development, and fostering employee engagement.

What are the five main areas of HR?

HR professionals perform many activities in the pursuit of employee well-being and organizational stability, but their responsibilities generally lie within five main areas:

• Recruitment and staffing – identifying talent gaps, acquiring applicants, arbitrating contracts, maintaining ethical hiring practices
• Compensation and benefits – determining pay scales, approving raises, negotiating benefits packages
• Training and development – onboarding new hires, making educational opportunities available
• Compliance and safety – monitoring legislative changes, implementing safety measures, processing workers’ compensation claims
• Employee relations – resolving employee conflicts, addressing harassment or abuse allegations, working with union leaders

What are seven functions of HR?

Over the years, HR has evolved from a personnel department engaged largely in administration to a strategic partner that works closely with management teams on organizational development. It’s seven key functions today include:

• Strategic planning
• Recruitment
• Training and development
• Compensation and benefits
• Policy creation
• Employee and labor relations
• Risk management

What is HR compliance?

HR compliance means keeping an organization from violating the growing number of employment laws enacted by federal, state and local governments. This responsibility requires HR professionals to monitor and understand regulatory requirements, enforce policies, classify workers correctly, practice fair hiring practices and provide a safe work environment, among other tasks.

This guide is intended to be used as a starting point in analyzing an employer’s HR obligations and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax advice or other professional services.

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Last updated: May 15th, 2024

Quality onboarding is crucial for new employees' long-term success and organizational productivity. Learn why a solid employee onboarding process can make a significant impact on employee experience and retention, plus innovative ideas to approaching welcoming new staff.

Onboarding Guide Navigation

> Definition & Overview

What Is Onboarding?

Onboarding is the process of integrating new employees into an organization. It includes the orientation process and opportunities for new hires to learn about the organization's structure, culture, vision, mission and values. Onboarding can span one or two days of activities at some companies; others offer a more extensive series of activities spanning months. 

Onboarding is often confused with orientation. While orientation is necessary for completing paperwork and other routine tasks, onboarding is a comprehensive process involving management and other employees and can last up to 12 months. 

Why Is It Important to Get Onboarding Right?

All new employees are onboarded—but the quality of the onboarding makes a difference. Too often, onboarding consists of handing a new employee a pile of forms and having a supervisor or HR professional walk the employee around the premises, making introductions on an ad hoc basis. When onboarding is done well, however, it lays a foundation for long-term success for the employee and the employer. It can improve productivity, build loyalty and engagement, and help employees become successful early in their careers with the new organization.

A study by  Gallup  showed that while only 12 percent of employees felt their company did a great job with onboarding, those employees were nearly three times as likely to say they have the best possible job. Overall, only 29 percent of new hires felt they were prepared and supported to excel in their new role. This leaves a lot of room for improvement.

Other studies consistently show a positive correlation between engaged employees and a company's profitability, turnover rate, safety record, absenteeism, product quality and customer ratings. An effective onboarding plan offers an ideal opportunity to boost employee engagement by, for example, fostering a supportive relationship between new hires and management, reinforcing the company's commitment to helping employees' professional growth and proving that management recognizes the employees' talent.   For further reading learn  how to optimize the onboarding process  and the importance of good onboarding . 

Relatedly, an  employee value proposition  (EVP) defines the value employees will get from working for a particular organization. It embodies the promises made during recruitment and is lived out every day through company culture. Onboarding gives employees their first look at how an organization's EVP may or may not be realized.

Onboarding Process Summary

While there are many ways to design an onboarding program, some components are integral to the process:

1. Preboarding

Consider inviting new employees to tour the facility, sending informational material, providing care packages, and assigning a buddy to help them integrate before their official start date.

2. Orientation

Introduce employees to the organization's structure, vision, mission, and values; review employee handbook and major policies; complete paperwork; cover administrative procedures; and provide other mandatory training.

3. Foundation Building

Ensure the onboarding process consistently embodies an organization's culture, mission, employee value proposition, brand, and other foundational elements, recognizing that assimilating these values takes time.

4. Mentoring and Buddy Systems

In partnership with hiring managers, enlist mentors or buddies to provide new employees with guidance, assistance, and insights into organizational nuances.

View our full guide on onboarding process steps.

Innovative Approaches to Onboarding

Various components of an onboarding program can be delivered using different approaches and methodologies combined to suit the organization and available resources.

Some employers are using innovative practices, such as games, video, and team-building exercises, to get new hires excited about joining the company. They're also working to make sure people can hit the ground running with functional workstations and equipment. Some examples of this include: 

Facebook has its "45-minute rule," which means all new employees can begin to work within 45 minutes of arriving because all of their systems and devices have been set up before they report for their first day.

Leaders at Suffolk Construction, a national construction firm based in Boston, invite entry-level hires to participate in a variety of team-building exercises, including rowing the Charles River. 

New employees at Bedgear, a Farmingdale, N.Y.-based manufacturer of performance bedding, take a walking tour of downtown Manhattan to visit other retailers that sell customized products, including Warby Parker and Samsung.

View more  original onboarding options, shared from 4 HR leaders . 

Continue Learning About Onboarding

Additional resources:.

• Checklist for Developing Onboarding/New Hire Practices
• New Hire Orientation Checklist
• New-Hire Orientation Process
• New Hire Survey
• New Hire Survey – Remote Employee
• Onboarding Companies and Vendors in the SHRM Vendor Directory  
• SHRM Store resources on  Onboarding

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Artificial intelligence in strategy

Can machines automate strategy development? The short answer is no. However, there are numerous aspects of strategists’ work where AI and advanced analytics tools can already bring enormous value. Yuval Atsmon is a senior partner who leads the new McKinsey Center for Strategy Innovation, which studies ways new technologies can augment the timeless principles of strategy. In this episode of the Inside the Strategy Room podcast, he explains how artificial intelligence is already transforming strategy and what’s on the horizon. This is an edited transcript of the discussion. For more conversations on the strategy issues that matter, follow the series on your preferred podcast platform .

Joanna Pachner: What does artificial intelligence mean in the context of strategy?

Yuval Atsmon: When people talk about artificial intelligence, they include everything to do with analytics, automation, and data analysis. Marvin Minsky, the pioneer of artificial intelligence research in the 1960s, talked about AI as a “suitcase word”—a term into which you can stuff whatever you want—and that still seems to be the case. We are comfortable with that because we think companies should use all the capabilities of more traditional analysis while increasing automation in strategy that can free up management or analyst time and, gradually, introducing tools that can augment human thinking.

Joanna Pachner: AI has been embraced by many business functions, but strategy seems to be largely immune to its charms. Why do you think that is?

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Yuval Atsmon: You’re right about the limited adoption. Only 7 percent of respondents to our survey about the use of AI say they use it in strategy or even financial planning, whereas in areas like marketing, supply chain, and service operations, it’s 25 or 30 percent. One reason adoption is lagging is that strategy is one of the most integrative conceptual practices. When executives think about strategy automation, many are looking too far ahead—at AI capabilities that would decide, in place of the business leader, what the right strategy is. They are missing opportunities to use AI in the building blocks of strategy that could significantly improve outcomes.

I like to use the analogy to virtual assistants. Many of us use Alexa or Siri but very few people use these tools to do more than dictate a text message or shut off the lights. We don’t feel comfortable with the technology’s ability to understand the context in more sophisticated applications. AI in strategy is similar: it’s hard for AI to know everything an executive knows, but it can help executives with certain tasks.

When executives think about strategy automation, many are looking too far ahead—at AI deciding the right strategy. They are missing opportunities to use AI in the building blocks of strategy.

Joanna Pachner: What kind of tasks can AI help strategists execute today?

Yuval Atsmon: We talk about six stages of AI development. The earliest is simple analytics, which we refer to as descriptive intelligence. Companies use dashboards for competitive analysis or to study performance in different parts of the business that are automatically updated. Some have interactive capabilities for refinement and testing.

The second level is diagnostic intelligence, which is the ability to look backward at the business and understand root causes and drivers of performance. The level after that is predictive intelligence: being able to anticipate certain scenarios or options and the value of things in the future based on momentum from the past as well as signals picked in the market. Both diagnostics and prediction are areas that AI can greatly improve today. The tools can augment executives’ analysis and become areas where you develop capabilities. For example, on diagnostic intelligence, you can organize your portfolio into segments to understand granularly where performance is coming from and do it in a much more continuous way than analysts could. You can try 20 different ways in an hour versus deploying one hundred analysts to tackle the problem.

Predictive AI is both more difficult and more risky. Executives shouldn’t fully rely on predictive AI, but it provides another systematic viewpoint in the room. Because strategic decisions have significant consequences, a key consideration is to use AI transparently in the sense of understanding why it is making a certain prediction and what extrapolations it is making from which information. You can then assess if you trust the prediction or not. You can even use AI to track the evolution of the assumptions for that prediction.

Those are the levels available today. The next three levels will take time to develop. There are some early examples of AI advising actions for executives’ consideration that would be value-creating based on the analysis. From there, you go to delegating certain decision authority to AI, with constraints and supervision. Eventually, there is the point where fully autonomous AI analyzes and decides with no human interaction.

Because strategic decisions have significant consequences, you need to understand why AI is making a certain prediction and what extrapolations it’s making from which information.

Joanna Pachner: What kind of businesses or industries could gain the greatest benefits from embracing AI at its current level of sophistication?

Yuval Atsmon: Every business probably has some opportunity to use AI more than it does today. The first thing to look at is the availability of data. Do you have performance data that can be organized in a systematic way? Companies that have deep data on their portfolios down to business line, SKU, inventory, and raw ingredients have the biggest opportunities to use machines to gain granular insights that humans could not.

Companies whose strategies rely on a few big decisions with limited data would get less from AI. Likewise, those facing a lot of volatility and vulnerability to external events would benefit less than companies with controlled and systematic portfolios, although they could deploy AI to better predict those external events and identify what they can and cannot control.

Third, the velocity of decisions matters. Most companies develop strategies every three to five years, which then become annual budgets. If you think about strategy in that way, the role of AI is relatively limited other than potentially accelerating analyses that are inputs into the strategy. However, some companies regularly revisit big decisions they made based on assumptions about the world that may have since changed, affecting the projected ROI of initiatives. Such shifts would affect how you deploy talent and executive time, how you spend money and focus sales efforts, and AI can be valuable in guiding that. The value of AI is even bigger when you can make decisions close to the time of deploying resources, because AI can signal that your previous assumptions have changed from when you made your plan.

Joanna Pachner: Can you provide any examples of companies employing AI to address specific strategic challenges?

Yuval Atsmon: Some of the most innovative users of AI, not coincidentally, are AI- and digital-native companies. Some of these companies have seen massive benefits from AI and have increased its usage in other areas of the business. One mobility player adjusts its financial planning based on pricing patterns it observes in the market. Its business has relatively high flexibility to demand but less so to supply, so the company uses AI to continuously signal back when pricing dynamics are trending in a way that would affect profitability or where demand is rising. This allows the company to quickly react to create more capacity because its profitability is highly sensitive to keeping demand and supply in equilibrium.

Joanna Pachner: Given how quickly things change today, doesn’t AI seem to be more a tactical than a strategic tool, providing time-sensitive input on isolated elements of strategy?

Yuval Atsmon: It’s interesting that you make the distinction between strategic and tactical. Of course, every decision can be broken down into smaller ones, and where AI can be affordably used in strategy today is for building blocks of the strategy. It might feel tactical, but it can make a massive difference. One of the world’s leading investment firms, for example, has started to use AI to scan for certain patterns rather than scanning individual companies directly. AI looks for consumer mobile usage that suggests a company’s technology is catching on quickly, giving the firm an opportunity to invest in that company before others do. That created a significant strategic edge for them, even though the tool itself may be relatively tactical.

Joanna Pachner: McKinsey has written a lot about cognitive biases  and social dynamics that can skew decision making. Can AI help with these challenges?

Yuval Atsmon: When we talk to executives about using AI in strategy development, the first reaction we get is, “Those are really big decisions; what if AI gets them wrong?” The first answer is that humans also get them wrong—a lot. [Amos] Tversky, [Daniel] Kahneman, and others have proven that some of those errors are systemic, observable, and predictable. The first thing AI can do is spot situations likely to give rise to biases. For example, imagine that AI is listening in on a strategy session where the CEO proposes something and everyone says “Aye” without debate and discussion. AI could inform the room, “We might have a sunflower bias here,” which could trigger more conversation and remind the CEO that it’s in their own interest to encourage some devil’s advocacy.

We also often see confirmation bias, where people focus their analysis on proving the wisdom of what they already want to do, as opposed to looking for a fact-based reality. Just having AI perform a default analysis that doesn’t aim to satisfy the boss is useful, and the team can then try to understand why that is different than the management hypothesis, triggering a much richer debate.

In terms of social dynamics, agency problems can create conflicts of interest. Every business unit [BU] leader thinks that their BU should get the most resources and will deliver the most value, or at least they feel they should advocate for their business. AI provides a neutral way based on systematic data to manage those debates. It’s also useful for executives with decision authority, since we all know that short-term pressures and the need to make the quarterly and annual numbers lead people to make different decisions on the 31st of December than they do on January 1st or October 1st. Like the story of Ulysses and the sirens, you can use AI to remind you that you wanted something different three months earlier. The CEO still decides; AI can just provide that extra nudge.

Joanna Pachner: It’s like you have Spock next to you, who is dispassionate and purely analytical.

Yuval Atsmon: That is not a bad analogy—for Star Trek fans anyway.

Joanna Pachner: Do you have a favorite application of AI in strategy?

Yuval Atsmon: I have worked a lot on resource allocation, and one of the challenges, which we call the hockey stick phenomenon, is that executives are always overly optimistic about what will happen. They know that resource allocation will inevitably be defined by what you believe about the future, not necessarily by past performance. AI can provide an objective prediction of performance starting from a default momentum case: based on everything that happened in the past and some indicators about the future, what is the forecast of performance if we do nothing? This is before we say, “But I will hire these people and develop this new product and improve my marketing”— things that every executive thinks will help them overdeliver relative to the past. The neutral momentum case, which AI can calculate in a cold, Spock-like manner, can change the dynamics of the resource allocation discussion. It’s a form of predictive intelligence accessible today and while it’s not meant to be definitive, it provides a basis for better decisions.

Joanna Pachner: Do you see access to technology talent as one of the obstacles to the adoption of AI in strategy, especially at large companies?

Yuval Atsmon: I would make a distinction. If you mean machine-learning and data science talent or software engineers who build the digital tools, they are definitely not easy to get. However, companies can increasingly use platforms that provide access to AI tools and require less from individual companies. Also, this domain of strategy is exciting—it’s cutting-edge, so it’s probably easier to get technology talent for that than it might be for manufacturing work.

The bigger challenge, ironically, is finding strategists or people with business expertise to contribute to the effort. You will not solve strategy problems with AI without the involvement of people who understand the customer experience and what you are trying to achieve. Those who know best, like senior executives, don’t have time to be product managers for the AI team. An even bigger constraint is that, in some cases, you are asking people to get involved in an initiative that may make their jobs less important. There could be plenty of opportunities for incorpo­rating AI into existing jobs, but it’s something companies need to reflect on. The best approach may be to create a digital factory where a different team tests and builds AI applications, with oversight from senior stakeholders.

The big challenge is finding strategists to contribute to the AI effort. You are asking people to get involved in an initiative that may make their jobs less important.

Joanna Pachner: Do you think this worry about job security and the potential that AI will automate strategy is realistic?

Yuval Atsmon: The question of whether AI will replace human judgment and put humanity out of its job is a big one that I would leave for other experts.

The pertinent question is shorter-term automation. Because of its complexity, strategy would be one of the later domains to be affected by automation, but we are seeing it in many other domains. However, the trend for more than two hundred years has been that automation creates new jobs, although ones requiring different skills. That doesn’t take away the fear some people have of a machine exposing their mistakes or doing their job better than they do it.

Joanna Pachner: We recently published an article about strategic courage in an age of volatility  that talked about three types of edge business leaders need to develop. One of them is an edge in insights. Do you think AI has a role to play in furnishing a proprietary insight edge?

Yuval Atsmon: One of the challenges most strategists face is the overwhelming complexity of the world we operate in—the number of unknowns, the information overload. At one level, it may seem that AI will provide another layer of complexity. In reality, it can be a sharp knife that cuts through some of the clutter. The question to ask is, Can AI simplify my life by giving me sharper, more timely insights more easily?

Joanna Pachner: You have been working in strategy for a long time. What sparked your interest in exploring this intersection of strategy and new technology?

Yuval Atsmon: I have always been intrigued by things at the boundaries of what seems possible. Science fiction writer Arthur C. Clarke’s second law is that to discover the limits of the possible, you have to venture a little past them into the impossible, and I find that particularly alluring in this arena.

AI in strategy is in very nascent stages but could be very consequential for companies and for the profession. For a top executive, strategic decisions are the biggest way to influence the business, other than maybe building the top team, and it is amazing how little technology is leveraged in that process today. It’s conceivable that competitive advantage will increasingly rest in having executives who know how to apply AI well. In some domains, like investment, that is already happening, and the difference in returns can be staggering. I find helping companies be part of that evolution very exciting.

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Being there: designing a diabetes program to support Gurley Leep employees

Video transcript

[MUSIC PLAYING IN THE BACKGROUND THROUGHOUT VIDEO]

[Text On Screen – UnitedHealthcare]

[VIDEO OF JOEL QUE ON HIS COPMUTER]

[JOEL QUE SPEAKING ON SCREEN]

[Text On Screen – Joel Que, Salesperson, Gurley Leep Automotive]

JOEL QUE: I was on my computer and I received this email from the office. And since that day, my life changed.

[VIDEO OF BOBBI IMEL SPEAKING ON SCREEN]

[Text On Screen – Bobbi Imel, Director of Human Resources, Gurley Leep Automotive Family]

BOBBI IMEL: My name is Bobbi Imel. I'm the Director of Human Resources with the Gurley Leep Automotive Family.

[VIDEO OF THE GURLEY LEEP TEAM AND AERIAL VIEW OF THE GURLEY LEEP BUILDING AND PARKING LOT]

We are an automotive group with approximately 1,300 employees.

[Text On Screen – Being there: Gurley Leep]

[TERESA GRACE SPEAKING ON SCREEN]

[Text On Screen – Teresa Grace, Benefits Manager, Gurley Leep Automotive Family]

TERESA GRACE: It's a very diverse workforce. So it's important for us to offer a wide variety of benefits that meet all of their needs.

[VIDEO OF THE GURLEY LEEP AUTOMOTIVE SHOP]

On an annual basis, we do wellness screenings for all of our team members. And so the results of that wellness screening brought to light that we had a number of people who had type 2 diabetes.

[VIDEO OF BOBBI IMEL IN HER OFFICE]

BOBBI IMEL VOICEOVER: So we worked with UnitedHealthcare and came up with a diabetic program that we now rolled out to our team members.

[DEBBIE GLAZE SPEAKING ON SCREEN]

[Text On Screen – Debbie Glaze, Payroll Manager, Gurley Leep Automotive Family]

DEBBIE GLAZE: It's just been a life changer for me.

[VIDEO OF DEBBIE GLAZE ON A GLUCOSE MONITOR PHONE APP]

I have a coach, I have a dietician I can talk to. They tell me and help me know what to eat, what snacks to eat.

TERESA GRACE: They kind of get that specialized, individualized care that they might not normally receive just working without that program.

[VIDEO OF A CAR SALESMAN SHOWING CARS]

And it's been really great.

[VIDEO OF JOEL QUE ON A PHONE APP]

[VIDEO OF JOEL QUE SPEAKING ON SCREEN]

JOEL QUE: I have more energy, I don't feel tired, I'm in a better mood, and it changed my life completely.

DEBBIE GLAZE VOICEOVER: The program provides me a monitor that helps me monitor my glucose levels 24 hours a day, and that's awesome.

[VIDEO OF THE GURLEY LEEP TEAM]

BOBBI IMEL VOICEOVER: It matters to me and my HR team that our benefits provider care as much about our team members as we do.

DEBBIE GLAZE: I'm just grateful for that, for them to even think that way, to take care of their employees.

BOBBI IMEL VOICEOVER: I think when you hear back from an employee that the benefits that the company offers has really benefited them and their family, it does make you feel really good about the job that you do.

[Text On Screen – UnitedHealthcare There for what matters™, uhc.com]

[END MUSIC]

When the Gurley Leep Automotive Family in Indiana discovered that a number of their employees had Type 2 diabetes, they worked with UnitedHealthcare to offer a health plan to better serve their needs. With glucose monitors and access to specialized dietitians and coaches, they reported the program has completely transformed the way these employees are living with diabetes.

Offering personalized support to meet the health needs of a diverse workforce is just one of the many ways UnitedHealthcare is committed to being there for what matters.

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