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How To Write the Management Section of a Business Plan

Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

Ownership Structure

Internal management team, external management resources, human resources, frequently asked questions (faqs).

When developing a business plan , the 'management section' describes your management team, staff, resources, and how your business ownership is structured. This section should not only describe who's on your management team but how each person's skill set will contribute to your bottom line. In this article, we will detail exactly how to compose and best highlight your management team.

Key Takeaways

• The management section of a business plan helps show how your management team and company are structured.
• The first section shows the ownership structure, which might be a sole proprietorship, partnership, or corporation.
• The internal management section shows the department heads, including sales, marketing, administration, and production.
• The external management resources help back up your internal management and include an advisory board and consultants.
• The human resources section contains staffing requirements—part-time or full-time—skills needed for employees and the costs.

This section outlines the legal structure of your business. It may only be a single sentence if your business is a sole proprietorship. If your business is a partnership or a corporation, it can be longer. You want to be sure you explain who holds what percentage of ownership in the company.

The internal management section should describe the business management categories relevant to your business, identify who will have responsibility for each category, and then include a short profile highlighting each person's skills.

The primary business categories of sales, marketing , administration, and production usually work for many small businesses. If your business has employees, you will also need a human resources section. You may also find that your company needs additional management categories to fit your unique circumstances.

It's not necessary to have a different person in charge of each category; some key management people often fill more than one role. Identify the key managers in your business and explain what functions and experience each team member will serve. You may wish to present this as an organizational chart in your business plan, although the list format is also appropriate.

Along with this section, you should include the complete resumés of each management team member (including your own). Follow this with an explanation of how each member will be compensated and their benefits package, and describe any profit-sharing plans that may apply.

If there are any contracts that relate directly to your management team members, such as work contracts or non-competition agreements, you should include them in an Appendix to your business plan.

While external management resources are often overlooked when writing a business plan , using these resources effectively can make the difference between the success or failure of your managers. Think of these external resources as your internal management team's backup. They give your business credibility and an additional pool of expertise.

Advisory Board

An Advisory Board can increase consumer and investor confidence, attract talented employees by showing a commitment to company growth and bring a diversity of contributions. If you choose to have an Advisory Board , list all the board members in this section, and include a bio and all relevant specializations. If you choose your board members carefully, the group can compensate for the niche forms of expertise that your internal managers lack.

When selecting your board members, look for people who are genuinely interested in seeing your business do well and have the patience and time to provide sound advice.

Recently retired executives or managers, other successful entrepreneurs, and/or vendors would be good choices for an Advisory Board.

Professional Services

Professional Services should also be highlighted in the external management resources section. Describe all the external professional advisors that your business will use, such as accountants, bankers, lawyers, IT consultants, business consultants, and/or business coaches. These professionals provide a web of advice and support outside your internal management team that can be invaluable in making management decisions and your new business a success .

The last point you should address in the management section of your business plan is your human resources needs. The trick to writing about human resources is to be specific. To simply write, "We'll need more people once we get up and running," isn't sufficient. Follow this list:

• Detail how many employees your business will need at each stage and what they will cost.
• Describe exactly how your business's human resources needs can be met. Will it be best to have employees, or should you operate with contract workers or freelancers ? Do you need full-time or part-time staff or a mix of both?
• Outline your staffing requirements, including a description of the specific skills that the people working for you will need to possess.
• Calculate your labor costs. Decide the number of employees you will need and how many customers each employee can serve. For example, if it takes one employee to serve 150 customers, and you forecast 1,500 customers in your first year, your business will need 10 employees.
• Determine how much each employee will receive and total the salary cost for all your employees.
• Add to this the cost of  Workers' Compensation Insurance  (mandatory for most businesses) and the cost of any other employee benefits, such as company-sponsored medical and dental plans.

After you've listed the points above, describe how you will find the staff your business needs and how you will train them. Your description of staff recruitment should explain whether or not sufficient local labor is available and how you will recruit staff.

When you're writing about staff training, you'll want to include as many specifics as possible. What specific training will your staff undergo? What ongoing training opportunities will you provide your employees?

Even if the plan for your business is to start as a sole proprietorship, you should include a section on potential human resources demands as a way to demonstrate that you've thought about the staffing your business may require as it grows.

Business plans are about the future and the hypothetical challenges and successes that await. It's worth visualizing and documenting the details of your business so that the materials and network around your dream can begin to take shape.

What is the management section of a business plan?

The 'management section' describes your management team, staff, resources, and how your business ownership is structured.

What are the 5 sections of a business plan?

A business plan provides a road map showing your company's goals and how you'll achieve them. The five sections of a business plan are as follows:

• The  market analysis  outlines the demand for your product or service.
• The  competitive analysis  section shows your competition's strengths and weaknesses and your strategy for gaining market share.
• The management plan outlines your ownership structure, the management team, and staffing requirements.
• The  operating plan  details your business location and the facilities, equipment, and supplies needed to operate.
• The  financial plan  shows the map to financial success and the sources of funding, such as bank loans or investors.

SCORE. " Why Small Businesses Should Consider Workers’ Comp Insurance ."

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Blog Human Resources

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

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 ensures you’ll be able 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 ! 

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.

If you need help with your HR business plan template, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

Hire the top business lawyers and save up to 60% on legal fees

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2.3: The Process of Human Resources Planning

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• Page ID 46989
• Nina Burokas
• Lumen Learning

Learning Outcomes

• Describe the process of human resource planning

On a functional level, human resource management is responsible for developing human capital strategies that align with the organization’s mission, goals and objectives. Human capital planning—often characterized as a roadmap—generally has a 3–5 year timeframe. Human Resource strategy sets the direction for all the key areas of HR, including hiring, performance management, compensation and training and development.

The U.S Office of Personnel Management describes human capital strategic planning as the method by which human resource management “designs a coherent framework of human capital policies, programs, and practices to achieve a shared vision integrated with the [organization’s] strategic plan.” [1]

Personnel Management’s planning guide identifies the following essential elements:

• A clearly understood strategic direction
• Customer and stakeholder human capital management outcomes/goals
• Strategies/objectives for accomplishing the goals
• An implementation plan
• A communication/change management plan, if needed
• An accountability system

Developing a strategic direction requires a detailed understanding of the organization’s strategic plan and objectives, budgetary constraints, current workforce characteristics, key senior management and stakeholder perceptions regarding human resource challenges and requirements and internal and external factors driving human capital needs. The conceptual objective is to develop a vision of the future workforce. The implementation plan is a roadmap as well as a framework for transforming culture and operations. The accountability system establishes how success will be measured and tracked, information that is essential for measuring and evaluating performance and for monitoring progress towards objectives.

The guide recommends that data collection support the identification of key themes associated with any gaps between the current and desired workforce and related human capital functions. These themes become the broad human capital goals and are the building blocks of the plan. For example, talent, performance management and leadership might be themes that will be translated into goals. Goals would be developed to address the gap and specific objectives would be identified to support achievement of the goal. Implementation plans are developed with varying levels of detail but at an operational level, should identify the specific actions required, who is responsible, what resources are required and the completion timeframe.

Practice Question

https://assessments.lumenlearning.co...essments/18112

U.S. Government Accountability Office

For perspective, here’s an excerpt from the U.S. Government Accountability Office’s (GAO) 2013–2015 Human Capital Plan: [2]

Performance Goal: Strengthen recruiting and hiring initiatives to attract a diverse workforce.

Human Capital Initiatives:

• Improve recruitment program by expanding efforts to maintain relationships with colleges, universities, and pipeline and professional organizations through participating in virtual outreach efforts, hosting representatives from partner institutions, and inviting candidates to visit GAO.
• Build annual recruitment plans based on analysis of data from prior years, with consideration to GAO’s workforce diversity plan, budget, and workforce planning needs.
• Monitor hiring process data and compare this data to established goals.
• Offer incentives where needed for positions that are hard to fill to help recruit and retain staff with critical skills.

Quantitative Measures (Accountability)

• Meet or exceed established benchmarks to maintain a diverse workforce.
• Meet the 80-day goal (+/− 1 percent) for the hiring process.
• Meet the new hire target established in GAO’s performance and accountability report
• " Human Resources Management in Agencies; Final Rule. " Office of Personnel Management. April 28, 2008. Accessed July 30, 2019. ↵
• " GAO's Human Capital Strategic Plan 2013-2015. " United States Government Accountability Office. 2013. Accessed July 30, 2019. ↵
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Human Resource Planning (HRP): A Step-By-Step Guide

In today’s rapidly evolving business landscape, having a plan in place for managing your human capital is key — and that’s where human resource planning (HRP) comes in. Human resource planning plays a critical role in making sure that your organization is well-equipped with the right talent at the right time.

Today, we’re walking through the intricacies of HRP so you can implement this practice in your organization.

What Is Human Resource Planning?

Human resource planning, or HRP, stands out as a strategic and methodical process designed to ensure that your organization fully leverages its human capital . It is not a one-time event but rather a continuous journey toward operational excellence and strategic alignment.

At its core, HRP aims to establish a seamless alignment between your employees and their respective roles, meticulously crafting a workforce that is both skilled and adequately sized to meet your organizational demands.

This proactive approach goes a long way in safeguarding your business against potential manpower shortages or surpluses, ensuring that you are well-prepared for the future.

Why Is HRP Important?

HRP is crucial for syncing your current workforce with your future needs. It entails a rigorous analysis of your existing staff, evaluating their skills, competencies, and performance.

This is where metrics come into play, providing a quantitative backbone to your workforce planning efforts. By leveraging data-driven insights, you can make informed decisions, ensuring that your team is not only talented but also aligned with your business objectives.

HRP doesn’t stop there, though — it’s a comprehensive approach that intertwines various facets of human resource management. Staffing, forecasting , performance management, and employee retention all fall under its umbrella. Each of these elements is crucial in building and maintaining a robust workforce.

In terms of staffing, HRP helps you decipher not just the number of employees you need, but also the types of skills and competencies they should possess. Forecasting, on the other hand, empowers your HR department to anticipate future demand, aligning your human resources with your company’s strategic direction.

Performance management is another vital cog in the HRP machine. It ensures that your employees are not just present but also productive and engaged. This, in turn, enhances employee retention, fostering a company culture that values growth, stability, and satisfaction.

HRP even plays a role in shaping your company culture . By aligning your human resources with your company’s needs and values, you create an environment where employees feel valued and aligned with the organization’s goals.

What Are the Advantages of Human Resource Planning?

At its core, human resource planning places the right talent in the right place at the right time, ensuring that your organization’s objectives align with your workforce’s capabilities. Now, let’s talk about the advantages of HRP and how it can lay the foundation for organizational success.

Ensures Effective Management of Current Employees

Strategic workforce alignment is at the heart of HRP. With effective human resource management, HR professionals can ensure that the current workforce is in sync with the company’s overarching goals.

This alignment can translate to better resource allocation, more informed decision-making, and enhanced overall performance.

Reveals Knowledge Gaps in the Workforce

The ever-evolving business landscape means organizations need to be adept at forecasting and adapting — and human resource planning plays a role here.

By examining current employees’ skill sets and comparing them with future needs, knowledge gaps can become more apparent. Addressing these gaps, whether through hiring new talent or upskilling existing employees, helps you ensure that your business stays competitive.

Balances HR Costs

Cost-effectiveness is crucial for the HR planning process. By anticipating future human resource needs, last-minute external recruitments — which often come with high costs — can be avoided.

Plus, recognizing surplus areas within your current workforce allows for internal reassignments to take place, cutting down on recruitment and onboarding expenses.

Keeps Companies Adaptable to Change

Change is constant, especially in today’s fast-paced business world, and human resource planning positions organizations to seamlessly navigate these changes.

From staying updated with industry trends to adapting to regulatory shifts, an HR department’s proactive planning ensures businesses remain resilient and agile. With Mosey , you can more effectively track, manage, and stay on top of changing regulations and requirements, making HR compliance a breeze.

Helps Secure Long-Term Growth

Another key component of HRP is succession planning. Identifying roles and preparing a talent pipeline ensures that your organization isn’t caught off-guard if leadership positions open up.

This planning not only opens the door to future leaders, but also ensures that institutional knowledge is retained, fueling your business’s long-term growth and stability.

Contributes to Organizational Goals

The nexus between human resource planning and organizational goals is undeniable. By streamlining the hiring process, ensuring employee satisfaction , and fostering employee retention, HRP contributes directly to the achievement of business objectives.

When employees see clear growth trajectories and development avenues, their commitment to the company’s vision intensifies, driving the organization closer to its goals.

What Are the Steps for Human Resource Planning?

HRP ensures that businesses are well-equipped, both in terms of the quantity and quality of their workforce, to meet their evolving goals and challenges. So, how can you actually navigate the intricacies of HRP? Here’s a step-by-step walkthrough of the essential phases that make up the human resource planning process.

Analyze Employee Skills and Performance

Human resource planning centers around an understanding of your company’s current workforce.

During this initial phase, the HR department dives into understanding the number of employees, their competencies, qualifications, positions, benefits, and performance levels. This skill inventory ensures that HR professionals have a clear picture of the strengths and areas for improvement in the present workforce.

Research Industry Trends and Forecasts

Effective human resource planning can also help you predict, and plan for, the future, so the next stage is to outline what your company will need in terms of human capital in the foreseeable future.

This forecasting phase requires the HR department to consider various factors, such as potential promotions, retirements, layoffs, and transfers. External conditions, like emerging technologies or industry shifts, can also have a significant impact on labor demand. Ensuring you stay ahead in terms of industry trends helps you align your staffing needs more effectively.

Conduct Demand Forecasting

Having a clear understanding of both the present workforce, potential employees, and future needs is vital to bridge the two through demand forecasting. This step in the HR planning process involves creating a gap analysis that points out discrepancies between the current workforce and future human resource demands.

This type of analysis leads to important questions like:

• Should current employees learn new skills?
• Is there a need for more managers?
• Are all employees fully utilizing their competencies in their present roles?

Answering these questions is key to crafting a strategic human resource plan that aligns with both the present and the future.

Determine Future Human Resource Needs

Once your demand forecasting has highlighted the shortages or surpluses in terms of competencies or number of employees, the next step is to determine the specific future human resource needs.

Whether it’s upskilling the current employees, succession planning for key roles, or identifying the need for new hires, this phase ensures that your business is poised for future growth without any HR hiccups.

Align HR Needs With Organizational Strategy

Human resource planning is intertwined with your broader business goals and strategies. Once your HR needs are identified, it’s important to make sure those needs align with your organizational goals.

This strategic planning phase ensures that every hiring process, training initiative, or retention effort contributes directly to your company’s overarching objectives.

Plan for Employee Development and Training

Once your future human resource needs are aligned with your company strategy, it’s time to implement plans for employee development. This might involve setting up training programs, workshops, or certifications to upskill current employees.

Ensuring your workforce is equipped with the right skills enhances employee satisfaction and retention and gives your business a competitive advantage.

Implement Plan for Forecasted HR Needs

The culmination of the human resource planning process is the implementation of your action plan. Taking cues from the gap analysis and strategic alignment, HR can now roll out a well-thought-out plan.

This could involve tweaking job descriptions, initiating new hiring processes, onboarding new employees, or even revisiting HR policies such as vacation, sick days, or overtime compensation. Collaboration with all departments is key here to ensure the successful execution of your plan, ensuring the HR strategies benefit the organization as a whole.

Support HRP Efforts With Mosey

From identifying when and where to open payroll accounts to managing workers’ compensation and paid family medical leave, Mosey simplifies the complex web of compliance and regulatory demands.

Why not explore how Mosey can streamline your HR processes and compliance management ? Our platform is designed to provide clarity, guidance, and ease, allowing you to focus on what matters most — nurturing and growing your most valuable asset, your employees. Try Mosey today .

Read more from Mosey:

• Compliance Automation: How It Works & Its Value
• Sole Proprietorship vs. LLC: Key Differences
• What Is a Foreign Corporation? FAQs Explained
• What Is a C Corporation (C Corp)?
• What Is Payroll? A Guide for Small Business Payroll
• What Is a Legal Entity? Definition & Examples
• What Is SUI? State Unemployment Insurance FAQs

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People Management

Human resource planning (hrp): a guide for hr professionals.

ClickUp Contributor

March 21, 2024

In the business world of sameness, your employees are your true differentiator.

And that’s where HR teams come in—meticulously planning every step of the employee lifecycle to ensure your business’ success. Whether you’re a seasoned HR professional or a new member of an HR team, brush up on the must-haves for optimal human resource planning (HPR).

What Is Human Resource Planning?

Understanding human resource planning, steps to effective human resource planning, the role of hrp in boosting organizational performance, challenges of human resource planning, utilizing technology in human resource planning, future trends in human resource planning.

Companies need to ensure their human resource goals match their business goals. Businesses use human resource planning to evaluate their current workforce and predict its alignment with future needs.

In this process, you and the rest of your HR team identify skill requirements and formulate recruitment, training, management, and succession planning. Meticulously planning for future needs enables companies to optimize staffing levels while staying prepared for upcoming challenges and opportunities.

Human resource planning is often the unsung hero in a company’s strategic framework—the behind-the-scenes MVP deserves a closer look.

HR planning must align human resources with the broader organizational strategy and business goals to be effective. To do this, the HR planning process must be comprehensive, accurately assessing current employees and forecasting future needs so that any gaps can be filled at the appropriate time.

Different roles of human resource planning

Because a strategic human resource plan aligns with organizational goals, it encompasses everything from workforce planning to employee retention. To fully appreciate the benefits of HR planning, let’s zoom in and see the different hats it wears in a company.

The most obvious role human resource planning plays is in determining how many employees are necessary for the company to operate. To do this, HRP must also rely heavily on performance management, where past reviews are assessed to understand the current workforce’s strengths and weaknesses. Employee self-evaluations can be helpful in this regard.

Next, human resource planning plays a critical role in gap analysis. It lets companies know when and where they lack specific skills, not only for the present but also for future needs. Through this gap analysis, a business can more effectively plan for training current employees and hiring new employees.

“Hard” vs. “soft” human resource planning

There are two approaches to HRP: “Hard” and “soft.”

In “hard” human resource planning, a quantitative approach is taken. The focus is on workforce capabilities and resource planning. Supply forecasting and skills inventory data is used to predict future workforce requirements. 

The sole mission is getting that sweet alignment between human resources and the business’s needs.

“Soft” human resource planning flips the script, prioritizing the qualitative side of the process. It’s all about company culture, employee satisfaction, and fine-tuning those essential soft skills. 

Soft HRP aims to create a supportive work environment that fosters employee retention while aligning with organizational objectives. It’s accomplished through employee training programs, building skilled employees from within who can meet the organization’s strategy.

To understand the process more deeply, let’s break down the key steps of human resource planning and unlock its secrets.

Analyzing organizational objectives and plans

The HR planning process must align with the overall business strategy for human resource planning to be effective. The organization must carefully lay out its long-term goals so the human resource department has a roadmap.

HR professionals must work closely with department leads to understand the business objectives comprehensively. Only through this collaboration can the human resource plan strategically align with where the company wants to go.

Evaluating the current state of the workforce and uncovering gaps

The current workforce status must be assessed in the second step of the HR planning process. This involves a detailed analysis of their skills, capabilities, and performance, vividly showing the team’s strengths and areas for improvement.

HR teams use tools like performance management systems to build a comprehensive skills inventory. Try conducting employee self-evaluations to get a broader picture of where gaps may be.

The next steps hinge on how effectively the current employees align with the present and future needs of the business.

Forecasting future HR requirements

Once the HR manager knows the company’s future goals and the workforce’s current state, they can begin forecasting future HR requirements. They’ll use the data to predict the need for new employees.

This is a complex process—changes to the business environment, company culture, and market trends must all be considered to forecast future demand accurately. As markets shift, the pool of available quality employees changes, too. Supply forecasting helps HR human resource planners factor this in and initiate the hiring process at an optimal time.

Developing and implementing a plan

Now that we understand the the gaps between current staffing and future needs, let’s move on to developing and implementing a strategic HR plan. 

The HR team should create talent strategies for recruiting and retaining new hires while developing the skills of existing employees to keep pace with changing business needs. Creating detailed job descriptions, refining the hiring process, and planning for benefits administration are vital during this step.

Monitoring, reviewing, and reassessing the plan

The final step is more of an ongoing HRP process. The team must continually monitor and reassess the needs of the company. 

HR software and analytics tools help track the effectiveness of human resource planning over time. Continuously monitoring employee performance and the impact of training programs ensures that strategic human resource management stays aligned with the changing business environment.

A company’s performance depends heavily on how well-staffed it is. It isn’t just about the number of employees on the payroll but how well those employees meet the organization’s needs. The human resource planning process is the best way to ensure that alignment.

Strategic human resource planning effectively identifies the number of employees required, their needed skills, and the optimal hiring times to maximize the chances of securing qualified individuals when they’re needed.

HR professionals identify gaps in the ability of current employees as they go through the HRP process. These gaps degrade the overall performance of the business. A good human resource plan will weigh the ability to train the existing workforce to meet demand vs. the need to hire new employees.

Because HR managers must work closely with department heads for this alignment to occur, they’re always acutely aware of where performance issues are arising and can adapt the planning process to mitigate those problems.

Another area where HRP can boost a company’s performance is by facilitating organizational innovation. A business must have a skilled and dynamic employee pool to be innovative. With a well-developed HR plan, the company can identify potential employees who can fulfill those needs.

While the human resource planning process is vital to organizational management, it doesn’t come without challenges. Without a plan to overcome these challenges, they can derail the plan’s effectiveness.  Strategic planning must anticipate the challenges an HR team will encounter during HRP, ranging from market fluctuations to internal workforce dynamics.

Business objective alignment

We’ve talked quite a bit about the need to balance a human resource strategy with the objectives of the business. This, essentially, is the core of HRP and one of the biggest challenges HR managers face when developing a plan. The ever-evolving market conditions and organizational priorities add a layer of complexity to the already challenging task of strategic human resource planning.

To counter this, HR departments must maintain a continuous approach to HRP and constantly consult with department heads to update the direction of the company and the needs of individual departments.

Accurate forecasting

A big part of human resource planning involves forecasting the demand for current employees and future talent. Business growth can be unpredictable, technological advancements can change needs rapidly, and economic changes can shift priorities.

Investing in HR software such as data analytics and forecasting tools will help HR plan more accurately for these changes. These tools used advanced machine learning and large amounts of data to create forecasts more accurately than humans alone can.

Maintaining balance

There’s a delicate balance to be maintained between the current workforce needs and future requirements. This planning process can be overwhelming, especially for small HR teams. Teams at larger companies may struggle to stay connected with the needs of frontline employees.

Smaller teams especially must rely on talent management software that will automate much of the work in predicting when new employees or skills will be needed. Larger companies must create and maintain a direct line of communication between HR and frontline employees so their concerns are always a part of the human resource planning process.

Integrating the planning processes

Human resource planning must not only consider the business’s goals but must be tightly integrated with the company’s overall planning process. This ensures that actions taken by HR aren’t just reactive but that a proactive approach to hiring and training employees is taken.

This requires a strategic approach to resource planning. HR managers should be a part of every discussion about the company’s future so they can provide input that shapes the company’s direction and receive input that shapes HR’s approach. 

We’ve seen several instances where HR planning software will help teams better prepare for the business’s staffing needs. Technology has evolved rapidly in recent years, making it a vital part of strategic human resources planning. Chief among these advancements has been the growth of artificial intelligence , revolutionizing how companies manage their workforce through machine learning.

The rise of remote work has further driven the adoption of new technologies. An HR department must emphasize a flexible and dynamic human resource planning process with a dispersed workforce. Innovative tools and workforce planning software can help support these growing HR needs.

ClickUp is an all-in-one productivity platform. In addition to comprehensive project planning tools , the software has useful features for human resources planning. Its capabilities extend to various HR functions but also work well for every department in the company, making it ideally suited to keeping HR departments on the same page as other departments and the overall company direction.

As you can tell, it’s obvious how vital performance management is for strategic human resource planning. ClickUp provides a robust set of performance management tools, helping HR staff give and receive continuous feedback and set employee goals. By taking advantage of these features, your company can foster a constant learning and development culture that better prepares it for changing needs.

One of ClickUp’s biggest strengths is the extensive set of available templates. For nearly any productivity task your company needs to accomplish, a template shows you exactly how to put the software’s features to work on it.

 ClickUp’s HR Standard Operating Procedures template is handy for identifying skill gaps and developing a plan to close them. To keep existing employees up-to-date and prepared for changing requirements, the ClickUp HR knowledge base template shines.  

Technology has rapidly changed the landscape of human resources and shows no signs of slowing down. Changing attitudes and shifting priorities will also affect how strategic human resource planning evolves over the coming years.

Companies will no doubt find that artificial intelligence and data analytics tools will emerge that further refine processes and increase the accuracy of forecasts. As these tools improve the ability of an HR team to forecast staffing needs and identify skill gaps, smaller HR teams will be able to better compete with their larger counterparts.

We’re also seeing significant shifts in the way companies approach employment. More focus than ever is being placed on employee well-being and work-life balance. These priorities pay dividends by reducing burnout and improving productivity. 

Human resources departments will increasingly shift from mere recruitment and training to working on building an inclusive and supportive workplace culture. 

The trend of remote work and the gig economy will likely continue. The gig economy could provide opportunities for HR teams to rely on independent contractors for temporary surges in staffing requirements to keep the in-house staffing optimized during slow times but not overwhelmed during the busy ones.

Wrapping It Up

While many challenges are involved in keeping a company’s workforce as tightly tuned to its actual needs as possible, doing so provides the most efficient use of human resources and a substantial competitive advantage.

Thankfully, there are many tools available to help companies achieve this. Several free HR planning templates can help keep your staff organized and their processes streamlined. By combining this with effective employee management software , like ClickUp, even small teams can develop comprehensive human resource plans.

ClickUp is free to try. Sign up today to see how this powerful productivity tool can benefit your company.

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Prepare Your Annual HR Plan for 2024

Each year, it is important to create an annual HR plan to guide your people team or human resources department. However, in 2024, it is even more important for HR departments to take into account recent changes , and develop a sound hr strategic plan to take their teams to the next level.

More important than the details of the plan itself is to make sure the company’s mission and vision are reflected within your annual HR plan for 2024. Without clear objectives and a path to achieve them, you may fall short in reaching your company’s goals.

A highly focused and clearly communicated annual HR plan helps to guarantee your HR objectives will be met.

In this article, we will cover the ins and outs of yearly HR planning and provide the key steps to reach your HR goals.

Table of Contents

What is Meant by HR Planning ?

The purpose of a human resources plan is to analyze and evaluate all the elements related to the human resources policy for the coming year.

Everything from staff dynamics, organizational structure , and working conditions to the hiring process and onboarding of new employees .

As there are many aspects of an HR annual work plan, it’s important to first understand the company environment within which you work, as this will greatly affect the HR plan you create. Once you evaluate the company environment, you can then move forward with creating a successful HR plan of action.

Prepare your annual business plan for HR in 2024 and reach all of your objectives.

Map Out Your Annual HR Plan: Evaluate the Company Environment

At the beginning of the year, companies establish a strategic plan, dependent heavily on the human resources department, where the key annual objectives are set.  In order to develop a successful annual HR plan, it’s important to take into consideration the company’s policies and procedures , as well as the employee handbook . That way, you can rest assured that the goals and plans of the company are aligned with those of HR.

To reach your HR objectives, you must first know the answers to the following questions:

What Can We Improve on From Last Year’s Annual HR Planning?

Success is simply the result of many failures and tried attempts, all put together. Identifying past struggles and using them as fuel to propel you forward is what leads to success and improvement.

What Expected Challenges Can I Include in My Yearly HR Plan?

When you know what’s coming, you can better adapt and take advantage of the changes, rather than let them take advantage of you. Consider learning about change management techniques to stay in control through the ups and downs. Analyzing the potential challenges is fundamental for preparing your team for what’s ahead. Also, knowing which changes, events and activities are taking place in the coming months, and how they will likely influence your team, allows you to better manage what lies ahead.

What Areas Within the Company Should I Plan to Improve?

Constant evaluation of the state of the company and its staff is crucial to coming up with solutions to improve. With Factorial, for example, you can create human resources reports that display a graphical vision of the company, outlining the required areas of improvement. If used correctly, these charts can also allow you to make visual conclusions about things such as the turnover rate or employee motivation.

Identifying key areas of improvement is one of the stepping stones to a successful large or small business HR plan.

As a result, reaching your yearly objectives is easy when you take the proper steps to first analyze the company’s environment and what you are working with . Clear communication between the human resources department and the company’s management is vital to creating a solid base for your annual human resources plan.

Define Your Annual HR Plan Goals & Objectives

The objectives of the company’s strategic plan are called long-term objectives . These types of objectives help measure the reach and success of the human resources plan.  Generally speaking, they can be divided into two categories:

• Explicit Objectives : Focus on attracting and retaining talent, employee motivation, and improving employee engagement. To set explicit objectives in your annual HR operating plan you have to consider employee experience, the onboarding process, career plans, etc.
• Implicit Objectives: Follow the company’s philosophy and help form the company culture. They show the power of the HR department and how it can help improve productivity. In addition, these objectives focus on the work environment and quality of life for the employees while maintaining all labor regulations.

Organize Your Annual HR Planning: Set Team Responsibilities

Once the objectives are clear, both for the company and for the human resources department, it’s time to create your HR plan by reviewing the team responsibilities. Keep in mind, a thorough analysis of what each department will do in order to contribute to achieving the 2024 HR goals is necessary before moving forward.

Following this, the first step in the HR action plan 2024, is to assign a person who will be in charge of creating and implementing the HR plan . For smaller companies, this person will probably be the CEO. In slightly larger businesses, the person responsible is normally the same one who handles all of the human resources-related tasks. Medium-sized companies will look to their HR team; with every member delegated to a specific task, each corresponding with a goal.

Human resources organizational charts are a great way to visually see who is responsible for what, and who reports to who in the company. Using this type of chart is incredibly helpful for your staff planning.  They can be also useful to ensure that the HR management to HR employee ratio is in check. Try using a free organizational chart template to have a clear picture of your company’s structure.

These charts are great for displaying the following:

• The structural hierarchy of the company : Directors, managers, intermediate profiles, employees, etc.
• The departments within the company : Marketing, sales, product, human resources, etc.
• Positions to fill : If there are any gaps in the company structure, the organizational chart will make them clear.

Annual HR Staff Planning: Identify Open Positions

Thanks to the organizational chart you can clearly see how many people you need to hire and for which positions. If you want to achieve your objectives for the coming year, you’ll need to have the right team in place.

In your HR plan you will define:

• Which positions are open – Write a detailed description of all the positions to be filled, including the corresponding department, responsibilities, functions, where they fit in the hierarchy, and their workload.
• Define the ideal profile – Here you’ll have to specify the profile of the candidate you are interested in hiring. Clearly outline the level of education you are looking for, the experience level, and the skills required. Based on this, you can decide whether to recruit from within the company if there is an employee that fits the desired profile.

Clearly defining the above details, are important steps to take in your HR plan. Therefore, allow yourself the time to study and analyze your company at each stage of the HR plan creation process.

Start Planning with a Defined HR Policy

Your updated human resources policy must meet the standards and demands of the general HR and strategic plan. The hr policy will also include guides for the HR department, including, but not limited to:

Hiring Guide

The main purpose of the hiring guide is to assist the HR manager in hiring and onboarding. This guide serves to outline the roles and responsibilities of the employees you are looking to hire. It should contain information on the types of contracts for each position as well. Also, including an HR annual training plan template in your hiring guide is beneficial.

Note: As an HR manager, you will need to decide whether the hiring process will be outsourced or handled within the company. If hiring is done from inside the company , a strategic onboarding process must be established to ensure successful recruitment and retention.

Compensation Guide

With every new contract you plan on offering, you need to state the details of each. For example, the salary amount, benefits, and economic bonuses. Make sure that what is offered in your compensation guide is in line with your overall Human Resources budget.

Workplace Satisfaction Guide Personal

Taking care of new hires is important, but don’t forget about your veteran employees. Long-term employees need to feel continually valued and supported as well. In your HR plan, you should invest part of your budget for the personal and professional development of each employee in the team.

Investing in employee wellbeing creates greater workplace satisfaction. Providing employees with the right personal development tools for success is key. Employees that feel supported display greater motivation for achieving their own goals and career aspirations.

Company Guide

Inside the HR policy, you should think about including a practical guide from the company. Contained in this guide, would be the company vision and mission, proper conduct guides, and conflict resolution codes

Build Your Annual HR Plan 2024

Now that you’ve gone through all the previous steps, you’re ready to build the best HR plan for 2024.

As you can see, creating the ideal HR plan for 2024 takes time and effort to compile . Unfortunately, a high percentage of small and medium-sized businesses simply don’t have the personnel to create a dynamic HR plan.

Save time creating your Annual HR plan with Factorial!

A solid HR plan is fundamental to achieving company goals. If you don’t have the correct tools to do the job, you’ll end up exhausting yourself creating a plan that will miss the mark in the end.

With Factorial, you can create your human resources plan for 2024 with ease. Build your organizational chart , fast and easy, and see who is in charge of what at a glance. Decide which departments need more assistance or restructuring.

Furthermore, Factorial gives you access to all kinds of human resources reports. These reports help you analyze the state of your company, allowing you to more effectively create the most successful HR plan for the coming year!

Are you looking for a little extra support to streamline your HR processes?

Simplify your HR processes with Factorial

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“Unfortunately, a high percentage of small and medium-sized businesses simply don’t have the personal to create a dynamic HR plan.”

‘personal’ should be ‘personnel’, unless I am mistaken?

A great article otherwise!

Thanks Trudy!

Post more! Seriously, I am really digging what you have written so far. I’ve scanned your blog right now for more things to read.

Thanks , this piece was indeed very useful.

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2.2 Writing the HRM Plan

Learning objective.

• Describe the steps in the development of an HRM plan.

As addressed in Section 2.1 “Strategic Planning” , the writing of an HRM strategic plan should be based on the strategic plans of the organization and of the department. Once the strategic plan is written, the HR professional can begin work on the HR plan. This is different from the strategic plan in that it is more detailed and more focused on the short term. The six parts described here are addressed in more detail in Chapter 4 “Recruitment” , Chapter 5 “Selection” , Chapter 6 “Compensation and Benefits” , Chapter 7 “Retention and Motivation” , Chapter 8 “Training and Development” , Chapter 9 “Successful Employee Communication” , Chapter 10 “Managing Employee Performance” , and Chapter 11 “Employee Assessment” .

How Would You Handle This?

Compensation Is a Touchy Subject

As the HR manager, you have access to sensitive data, such as pay information. As you are looking at pay for each employee in the marketing department, you notice that two employees with the same job title and performing the same job are earning different amounts of money. As you dig deeper, you notice the employee who has been with the company for the least amount of time is actually getting paid more than the person with longer tenure. A brief look at the performance evaluations shows they are both star performers. You determine that two different managers hired the employees, and one manager is no longer with the organization. How would you handle this?

As you can see from this figure, the company strategic plan ties into the HRM strategic plan, and from the HRM strategic plan, the HR plan can be developed.

The six parts of the HRM plan include the following:

• Determine human resource needs. This part is heavily involved with the strategic plan. What growth or decline is expected in the organization? How will this impact your workforce? What is the economic situation? What are your forecasted sales for next year?
• Determine recruiting strategy. Once you have a plan in place, it’s necessary to write down a strategy addressing how you will recruit the right people at the right time.
• Select employees. The selection process consists of the interviewing and hiring process.
• Develop training. Based on the strategic plan, what training needs are arising? Is there new software that everyone must learn? Are there problems in handling conflict? Whatever the training topics are, the HR manager should address plans to offer training in the HRM plan.
• Determine compensation. In this aspect of the HRM plan, the manager must determine pay scales and other compensation such as health care, bonuses, and other perks.
• Appraise performance. Sets of standards need to be developed so you know how to rate the performance of your employees and continue with their development.

Each chapter of this text addresses one area of the HR plan, but the next sections provide some basic knowledge of planning for each area.

Determine Human Resource Needs

The first part of an HR plan will consist of determining how many people are needed. This step involves looking at company operations over the last year and asking a lot of questions:

• Were enough people hired?
• Did you have to scramble to hire people at the last minute?
• What are the skills your current employees possess?
• What skills do your employees need to gain to keep up with technology?
• Who is retiring soon? Do you have someone to replace them?
• What are the sales forecasts? How might this affect your hiring?

These are the questions to answer in this first step of the HR plan process. As you can imagine, this cannot be done alone. Involvement of other departments, managers, and executives should take place to obtain an accurate estimate of staffing needs for now and in the future. We discuss staffing in greater detail in Chapter 4 “Recruitment” .

Many HR managers will prepare an inventory of all current employees, which includes their educational level and abilities. This gives the HR manager the big picture on what current employees can do. It can serve as a tool to develop employees’ skills and abilities, if you know where they are currently in their development. For example, by taking an inventory, you may find out that Richard is going to retire next year, but no one in his department has been identified or trained to take over his role. Keeping the inventory helps you know where gaps might exist and allows you to plan for these gaps. This topic is addressed further in Chapter 4 “Recruitment” .

HR managers will also look closely at all job components and will analyze each job. By doing this analysis, they can get a better picture of what kinds of skills are needed to perform a job successfully. Once the HR manager has performed the needs assessment and knows exactly how many people, and in what positions and time frame they need to be hired, he or she can get to work on recruiting, which is also called a staffing plan . This is addressed further in Chapter 4 “Recruitment” .

Recruitment is an important job of the HR manager. More detail is provided in Chapter 4 “Recruitment” . Knowing how many people to hire, what skills they should possess, and hiring them when the time is right are major challenges in the area of recruiting. Hiring individuals who have not only the skills to do the job but also the attitude, personality, and fit can be the biggest challenge in recruiting. Depending on the type of job you are hiring for, you might place traditional advertisements on the web or use social networking sites as an avenue. Some companies offer bonuses to employees who refer friends. No matter where you decide to recruit, it is important to keep in mind that the recruiting process should be fair and equitable and diversity should be considered. We discuss diversity in greater detail in Chapter 3 “Diversity and Multiculturalism” .

Depending on availability and time, some companies may choose to outsource their recruiting processes. For some types of high-level positions, a head hunter will be used to recruit people nationally and internationally. A head hunter is a person who specializes in matching jobs with people, and they usually work only with high-level positions. Another option is to use an agency that specializes in hiring people for a variety of positions, including temporary and permanent positions. Some companies decide to hire temporary employees because they anticipate only a short-term need, and it can be less expensive to hire someone for only a specified period of time.

No matter how it is done, recruitment is the process of obtaining résumés of people interested in the job. In our next step, we review those résumés, interview, and select the best person for the job.

After you have reviewed résumés for a position, now is the time to work toward selecting the right person for the job. Although we discuss selection in great detail in Chapter 6 “Compensation and Benefits” , it is worth a discussion here as well. Numerous studies have been done, and while they have various results, the majority of studies say it costs an average of $45,000 to hire a new manager (Herman, 1993). While this may seem exaggerated, consider the following items that contribute to the cost:

• Time to review résumés
• Time to interview candidates
• Interview expenses for candidates
• Possible travel expenses for new hire or recruiter
• Possible relocation expenses for new hire
• Additional bookkeeping, payroll, 401(k), and so forth
• Additional record keeping for government agencies
• Increased unemployment insurance costs
• Costs related to lack of productivity while new employee gets up to speed

Because it is so expensive to hire, it is important to do it right. First, résumés are reviewed and people who closely match the right skills are selected for interviews. Many organizations perform phone interviews first so they can further narrow the field. The HR manager is generally responsible for setting up the interviews and determining the interview schedule for a particular candidate. Usually, the more senior the position is, the longer the interview process takes, even up to eight weeks (Crant, 2009). After the interviews are conducted, there may be reference checks, background checks, or testing that will need to be performed before an offer is made to the new employee. HR managers are generally responsible for this aspect. Once the applicant has met all criteria, the HR manager will offer the selected person the position. At this point, salary, benefits, and vacation time may be negotiated. Compensation is the next step in HR management.

Determine Compensation

What you decide to pay people is much more difficult than it seems. This issue is covered in greater detail in Chapter 6 “Compensation and Benefits” . Pay systems must be developed that motivate employees and embody fairness to everyone working at the organization. However, organizations cannot offer every benefit and perk because budgets always have constraints. Even governmental agencies need to be concerned with compensation as part of their HR plan. For example, in 2011, Illinois State University gave salary increases of 3 percent to all faculty, despite state budget cuts in other areas. They reasoned that the pay increase was needed because of the competitive nature of hiring and retaining faculty and staff. The university president said, “Our employees have had a very good year and hopefully this is a good shot in the arm that will keep our morale high” (Pawlowski, 2011).

Determination of compensation systems is a balancing act. Compensation should be high enough to motivate current employees and attract new ones but not so high that it breaks the budget.

Nathan Rupert – Venice Beach Tightrope Walker – CC BY-NC-ND 2.0.

The process in determining the right pay for the right job can have many variables, in addition to keeping morale high. First, as we have already discussed, the organization life cycle can determine the pay strategy for the organization. The supply and demand of those skills in the market, economy, region, or area in which the business is located is a determining factor in compensation strategy. For example, a company operating in Seattle may pay higher for the same job than their division in Missoula, Montana, because the cost of living is higher in Seattle. The HR manager is always researching to ensure the pay is fair and at market value. In Chapter 6 “Compensation and Benefits” , we get into greater detail about the variety of pay systems, perks, and bonuses that can be offered. For many organizations, training is a perk. Employees can develop their skills while getting paid for it. Training is the next step in the HR planning process.

Develop Training

Once we have planned our staffing, recruited people, selected employees, and then compensated them, we want to make sure our new employees are successful. Training is covered in more detail in Chapter 8. One way we can ensure success is by training our employees in three main areas:

• Company culture. A company culture is the organization’s way of doing things. Every company does things a bit differently, and by understanding the corporate culture, the employee will be set up for success. Usually this type of training is performed at an orientation, when an employee is first hired. Topics might include how to request time off, dress codes, and processes.
• Skills needed for the job. If you work for a retail store, your employees need to know how to use the register. If you have sales staff, they need to have product knowledge to do the job. If your company uses particular software, training is needed in this area.
• Human relations skills. These are non-job-specific skills your employees need not only to do their jobs but also to make them all-around successful employees. Skills needed include communication skills and interviewing potential employees.

Perform a Performance Appraisal

The last thing an HR manager should plan is the performance appraisal. While we discuss performance appraisals in greater detail in Chapter 11 “Employee Assessment” , it is definitely worth a mention here, since it is part of the strategic plan. A performance appraisal is a method by which job performance is measured. The performance appraisal can be called many different things, such as the following:

• Employee appraisal
• Performance review
• Career development review

No matter what the name, these appraisals can be very beneficial in motivating and rewarding employees. The performance evaluation includes metrics on which the employee is measured. These metrics should be based on the job description, both of which the HR manager develops. Various types of rating systems can be used, and it’s usually up to the HR manager to develop these as well as employee evaluation forms. The HR manager also usually ensures that every manager in the organization is trained on how to fill out the evaluation forms, but more importantly, how to discuss job performance with the employee. Then the HR manager tracks the due dates of performance appraisals and sends out e-mails to those managers letting them know it is almost time to write an evaluation.

Human Resource Recall

Have you ever been given a performance evaluation? What was the process and the outcome?

Communication Is Key in Performance Evaluations

(click to see video)

Communication is imperative in any workplace, but especially when giving and receiving a performance evaluation.

Key Takeaways

• Human resource planning is a process that is part of the strategic plan. It involves addressing specific needs within the organization, based on the company’s strategic direction.
• The first step in HR planning is determining current and future human resource needs. In this step, current employees, available employees in the market, and future needs are all analyzed and developed.
• In the second step of the process, once we know how many people we will need to hire, we can begin to determine the best methods for recruiting the people we need. Sometimes an organization will use head hunters to find the best person for the job.
• After the recruiting process is finished, the HR manager will begin the selection process. This involves setting up interviews and selecting the right person for the job. This can be an expensive process, so we always want to hire the right person from the beginning.
• HR managers also need to work through compensation plans, including salary, bonus, and other benefits, such as health care. This aspect is important, since most organizations want to use compensation to attract and retain the best employees.
• The HR manager also develops training programs to ensure the people hired have the tools to be able to do their jobs successfully.
• Of the parts of HR planning, which do you think is most difficult, and why? Which would you enjoy the most, and why?
• Why is it important to plan your staffing before you start to hire people?
• What is the significance of training? Why do we need it in organizations?

Crant, J., “How Long Does an Interview Process Take?” Jobsinminneapolis.com, December 2, 2009, accessed October 28, 2010, http://www.jobsinminneapolis.com/articles/title/How-Long-Does-an-Interview-Process-Take/3500/422 .

Herman, S., Hiring Right: A Practical Guide (Thousand Oaks, CA: Sage, 1993), xv.

Pawlowski, S., “Illinois State University to Get Salary Bump,” WJBC Radio, July 11, 2011, accessed July 11, 2011, http://wjbc.com/illinois-state-university-faculty-to-get-salary-bump .

Human Resource Management Copyright © 2016 by University of Minnesota is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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Human Resources Consulting Business Plan

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Human Capital Maximizers

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

Human Capital Maximizers (HCM) is a human resource consulting company located in Portland, Oregon.  HCM has expertise in a wide range of HR areas and is targeting the emerging company market.  HCM will offer this market the ability to compensate client’s employees with stock options from their company.  This will be especially appealing to many start-up companies that find capital scarce. 

Major Adversity, the founder and owner will be leveraging his past and current personal/professional relationships to generate business for Human Capital Maximizers.  Major will be the sole employee until month six when he will be hiring a human resource specialist/manager to help out with the consulting.  Human Capital Maximizers will show increasing profitability over the next three years.

1.1 Keys to Success

The keys to success are to provide a needed service while providing a flexible means of compensation.

1.2 Mission

Human Capital Maximizers’ mission is to provide human resource consulting for emerging companies.  We exist to attract and maintain customers.  When we adhere to this maxim, everything else will fall into place.  Our services will exceed the expectations of our customers.

1.3 Objectives

The objectives for the first three years of operation include:

• To create a service-based company whose primary goal is to exceed customer’s expectations.
• To increase our number of clients served by 20% per year through superior performance and word-of-mouth referrals.
• To develop a sustainable start-up consultancy firm that can survive off its own cash flow and has significant equity holdings in emerging companies.

Company Summary company overview ) is an overview of the most important points about your company—your history, management team, location, mission statement and legal structure.">

Human Capital Maximizers is a HR consultancy firm serving the Portland area market. HCM will be set up as an Oregon Corporation owned by Major Adversity and will focus on emerging companies.

2.1 Company Ownership

Human Capital Maximizers is a privately held Oregon corporation founded and owned by Major Adversity.

2.2 Start-up Summary

Human Capital Maximizers will incur the following start-up expenses:

• Two desks, two chairs, and two lockable file cabinets.
• Two computer systems including a CD-RW, printer and a third computer to serve as a server.
• DSL router and DSL connections.
• Two telephones, fax machine, and copier.

Please note that the following items which are considered assets to be used for more than a year will labeled long-term assets and will be depreciated using G.A.A.P. approved straight-line depreciation method.

Human Capital Maximizers provides human resource consulting to emerging companies in the Portland/Vancouver market.   Human Capital Maximizers will charge a below market rate and take stock options in the company.  Human Capital Maximizers will  provide consulting for the following service areas:

• Human resource management.
• Organizational management.
• Professional development.
• Employee relations.
• Labor relations.
• Benefits and compensation.
• HR policy and procedure.
• Executive search.
• Sexual harassment.
• Position classification.
• Personnel management systems.
• Performance evaluations.

The pricing structure will either be an hourly rate or a per project fee.  These options will be settled on in negotiation with the client.  In general, Human Capital Maximizers is willing to be as flexible as possible.

Market Analysis Summary how to do a market analysis for your business plan.">

Emerging companies will be the target market for several reasons:

• They are in need of HR services as they are growing rapidly.
• They often do not have a large enough in-house solution as they are increasing in size.
• Capital is a scarce resource for emerging companies so the ability to accept stock options in replace of cash is appealing.

The emerging company market can be further broken down into two categories, technology and non-technology.  The significance of the breakdown is not that significant because many of the networking activities are occurring in settings that do not differentiate between technology and non-technology.

4.1 Market Segmentation

Human Capital Maximizers market can be segmented into two different groups, emerging high-tech companies and emerging non-high tech companies.  The emerging high-tech companies are going to be the larger of the two segments.  Even with the Internet bubble bursting within the last year, there are still many different emerging high-tech companies proliferating.  This is evidenced by the Business Journal of Portland which in their annual list of fastest growing companies for this year, 18 of the top 25 were technology companies.

There are also non-technology companies that are emerging in the Portland area and Human Capital Maximizers will be able to serve them as well.

4.2 Target Market Segment Strategy

Human Capital Maximizers’ two markets will be primarily targeted through networking activities.  Some networking will be conducted through the Oregon Entrepreneur Association, an association that supports entrepreneurial ventures in the local area.   This organization has monthly meetings that are in round-table format, allowing members to socialize.

Human Capital Maximizers will also be networking from personal/professional contacts that Major has developed professionally in the last five years in the HR/start-up industry.  HCM will also be relying on word of mouth to grow its customer base.

Strategy and Implementation Summary

Human Capital Maximizers will use their competitive edge of compensation flexibility to attract emerging companies.  This competitive advantage is especially valuable to emerging companies who are typically struggling to find enough capital to grow their business.  Accepting stock options as compensation is useful because equity is one thing these companies have lots of (that is of course if they haven’t given it all away to the Venture Capitalists).

5.1 Milestones

Human Capital Maximizers will have several milestones early on:

• Business plan completion.  This will be done as a roadmap for the organization.  This will be an indispensable tool for the ongoing performance and improvement of the company.
• Set up office.
• HCM’s first five customers.
• Profitability.

5.2 Sales Strategy

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Major will also be able to speak about Human Capital Maximizers ability to accept options in lieu of cash.  This will be appealing to companies, particularly in the current capital market which is quite scarce.  Since capital is more difficult to come by now than in the last few years, emerging companies will be excited about this option.

5.2.1 Sales Forecast

The first month will be used to set up the office.  Additionally, during the first month Major will be working hard on developing contracts. The second month will see some activity, but it will not be until month six when business will be picking up at a higher rate.  Sales will continue to grow through year three.

5.3 Competitive Edge

Human Capital Maximizers competitive edge is their flexibility for compensation.  Most or all other companies require compensation to be in the form of cash, for them cash is king.  Human Capital Maximizers is able to take stock options in lieu of some cash.  While Human Capital Maximizers needs some cash to float the business, it can take up to 75% of its fees in equity.  Human Capital Maximizers is able to do this because they have secured an office space that is low in cost, helping them reduce their overhead.  In addition, Major’s wife contributes a significant portion of money to the household so Major is not in need of a lot of monthly compensation.  This allows him to accept options as payment in hopes of an upside to come several years for now. (Please note the the HR industry, unlike law firms and accounting firms do not run into conflict of interests situations regarding receiving equity as compensation.)

Web Plan Summary

The website will be used as a resource that prospective companies can view to gain more information about the company.  In essence it is Human Capital Maximizers’ brochure.  On the site there will be information about the management of the company and corresponding bios indicating all of their experience.  Also on the website will be a list of present and past clients and information regarding Human Capital Maximizers’ fee structure and willingness to accept stakes of option.

6.1 Website Marketing Strategy

The marketing of the website will consist of submitting it to the popular search engines.  The website will be used more as a information tool that prospective companies can be sent to for more information about Human Capital Maximizers as opposed to marketing the website in order for the website to develop new leads.

6.2 Development Requirements

The development requirements will entail hiring an individual (preferably a student for cost saving purposes) to develop and produce the site.

Management Summary management summary will include information about who's on your team and why they're the right people for the job, as well as your future hiring plans.">

Major Adversity, the founder and owner received his undergraduate degree in marketing from Reed College.  After completing college Major recognized that he would eventually need to go to graduate school but was not ready to yet. 

Major worked in a large bicycle store for four years after college.  Major started out as a mechanic but quickly moved up to manager where he was responsible for much of the operation.  Some of the new responsibilities that Major enjoyed was the interviewing, selection & hiring, compensation, and employee relations.  After fours years in the bike shop Major was looking for a new challenge so he entered the University of Portland to pursue his MBA. 

Major received his MBA within two years and went to work for Nike out of school in their HR department.  After a year and half Major left Nike to work for a HR consultancy boutique that worked primarily with technology companies, many of them start ups.  Major enjoyed this thoroughly because of the dynamic environment that his clients worked in.  Major stayed with this firm for a total of four years.  

Toward the end of Major’s four years he got married and his wife, as a professional, was contributing large amounts of salary to the household.  This led Major to consider opening his own HR consultancy because he would be able to undertake some risk since the household was supported to a large degree by his wife.  Additionally, Major was could consider taking equity as compensation because a monthly salary was not a necessity.

7.1 Personnel Plan

Major will work full time for Human Capital Maximizers.  By month six Major will have developed more work than he will be able to manage himself and he will hire an additional HR consultant to help him out.  The employee will receive a straight salary and will have no future equity options in the client’s companies.  This employee will be given HR projects and will do the research and sometimes present the findings to the client, other times will allow Major to present to the client.

Financial Plan investor-ready personnel plan .">

The following sections will outline important financial information. Please note that the stock options granted in lieu of compensation are not entered into the financial plan as they are not yet of value.  Upon exercising the options there will be tax consequences (because one of the realizing events has occurred) as well as assets to be accounted for.

8.1 Important Assumptions

The following table details important financial assumptions.

8.2 Break-even Analysis

The Break-even Analysis is shown below.

8.3 Projected Profit and Loss

The following table will indicate projected profit and loss.

8.4 Projected Cash Flow

The following chart and table will indicate projected cash flow.

8.5 Projected Balance Sheet

The following table will indicate the projected balance sheet.

8.6 Business Ratios

The following table outlines some of the more important ratios from the Management Consulting Resources industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 8742.

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• 5 Steps To Creating An Effective HR Business Plan

5 steps to creating an effective HR business plan May 3, 2018

5 steps to creating an effective HR business plan

A basic business plan will involve creating goals to start a business, expand an existing business or implement a project, and developing ways to achieve the goals. Human resources generally refers to an internal department that handles the hiring, training and paying of employees. Without adequate staff, in terms of quantity and quality, a business will be unprepared to execute its plan.

Small business owners often face setbacks without a written HR business plan, such as, costly employee turnover, procedural bottlenecks and inconsistent productivity. A HR plan is a practical and tactical tool that can help you determine exactly where you're going and drive your business forward.

Here are five critical steps to creating an effective HR plan for your company:

Assess current hr capacity.

The first step in the human resources planning process is to assess your current staff. Before making any moves to hire new employees for your company, it’s important to understand the talent you already have at your disposal.

Develop a skills inventory for each of your current employees. You can do this in a number of ways, such as asking employees to self-evaluate with a questionnaire, looking over past performance reviews, or using an approach that combines the two.

Have a Succession Plan 

Eventually your business will face changes in management; this is an unavoidable part of the natural growth of any organisation. Managers will come and go and positions will be created and dissolved as you continue to expand and re-organise.

You'll want to be ready for this when it happens by having a succession plan already in place. It will be up to you whether you want to include your employees in the creation of this succession plan or not. Either way, be aware of their career goals and what their plans are for the future - don’t hesitate to inform them when changes are taking place.

By doing this you’ll be aware of what the most important positions in your company are and who may have the skills to fill those positions.

Outline how you will motivate and retain employees

You need the right people to stay on board to take your company further. A HR plan will outline your key strategies to motivate employees and maintain their loyalty.

Being creative with employee perks, rewards and compensation is one of the first steps. For example, your HR plan can clearly address motivational strategies such as profit-sharing or short-term rewards that involve personal or family life, such as entertainment vouchers.

Matching demand and supply

Matching the demand and supply is where the hiring process gets tricky—and where the rest of the human resources management planning process comes into place. You’ll develop a plan to link your organization’s demand for quality staff with the supply available in the market. You can achieve this by training current employees, hiring new employees, or combining the two approaches.

Conduct a Gap Analysis

A gap analysis is a formal study comparing the resources your company currently has to what they may need as they grow and develop in the future. If your HR services are outdated, or in danger of becoming outdated, a gap analysis will reveal this and allow you to make the necessary improvements to keep your company going strong for years to come.

HR planning is an ongoing process. Your strategy should be reviewed regularly and updated as your organisation changes.

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HR Consulting Business Plan Template

Written by Dave Lavinsky

Human Resources Consulting Business Plan

Over the past 20+ years, we have helped over 1,000 entrepreneurs and business owners create business plans to start and grow their human resources consulting businesses. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through an HR consulting business plan template step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What is an HR Consulting Business Plan?

A business plan provides a snapshot of your human resources consulting business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for an HR Consulting Firm

If you’re looking to start an HR consulting business or grow your existing business, you need to write your own business plan. A business plan will help you raise funding, if needed, and plan out the growth of your HR consulting business in order to improve your chances of success. Your business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Human Resources Consulting Businesses

With regards to funding, the main sources of funding for a human resources consulting business are personal savings, credit cards, bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the lender will not only want to confirm that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings is the most common form of funding for a human resources consulting business. Personal savings and bank loans are the most common funding paths for HR consulting businesses.

Finish Your Business Plan Today!

If you want to start an HR consulting business or expand your current one, you need a business plan. Below we detail what should be included in your own business plan for an HR consulting firm.

Executive Summary

Your executive summary provides an introduction to your own business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of HR consulting business you are operating and its status. For example, are you a startup, do you have an HR consulting firm that you would like to grow, or are you operating human resources consulting firms in multiple markets?

Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the HR consulting industry. Discuss the type of HR consulting business you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.  

Company Analysis

In your company analysis, you will detail the type of HR consulting business you are operating.

For example, you might operate one of the following types of human resources consulting businesses:

• Human Capital Strategy : this type of business focuses on strategic matters such as corporate culture, diversity, and organization design.
• Compensation & Benefits: this type of business involves analyzing and consulting on all aspects of employee compensation, from base pay to secondary benefits, as well as pension and retirement.
• Talent Management: this type of business focuses primarily on recruitment and retention of talent, as well as on talent development.
• Professional Development: this type of business offers services ranging from leadership coaching and development to developing learning management systems.

In addition to explaining the type of HR consulting business you will operate, the Company Analysis section of your business plan needs to provide background on the business.

Include answers to questions such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include the number of websites launched, the types of sites developed, etc.
• Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry analysis, you need to provide an overview of the HR industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the HR industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your strategy, particularly if your research identifies market trends.

The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your HR consulting business plan:

• How big is the human resources industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential market for your human resources consulting business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your HR consulting business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: financial services companies, government entities, healthcare institutions, and technology companies.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of human resource consulting business you operate. Clearly, government entities would respond to different marketing promotions than technology companies, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations, and income levels of the customers you seek to serve. Because most HR consulting businesses primarily serve customers living in the same city or town, such demographic information is easy to find on government websites.

Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.  

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other human resource consulting firms.

Indirect competitors are other options that customers have to purchase from that aren’t direct competitors. This includes more generalized management consultants or dedicated in-house HR teams.

With regards to direct competition, you want to describe the other HR consulting businesses with which you compete. Most likely, your direct competitors will be human resource consulting businesses located very close to your location.

For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:

• What types of customers do they serve?
• Do they specialize in specific industries (i.e. healthcare, technology, etc.)?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you provide either a wider range or more specialized range of services?
• Will you offer virtual service options?
• Will you provide superior customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For an human resource consulting business, your marketing plan should include the following:

Product : In the product section, you should reiterate the type of HR consulting company that you documented in your Company Analysis. Then, detail the specific products you will be offering. For example, in addition to strategic consulting, will your HR consulting business provide compliance consulting?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the services you offer and their prices.

Place : Place refers to the location of your company. Document your location and mention how the location will impact your success. For example, will you operate from a physical office, or will you primarily interact with clients online and/or at their place of business? In this section, discuss how your location will affect the demand for your services.

Promotions : The final part of your marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:

• Advertising in local papers and magazines
• Reaching out to local websites
• Signs and billboards
• Social media marketing
• Local radio advertising

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your HR consulting business, including marketing, providing consultations, building analytics processes, developing and presenting recommendations, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to sign your 50 th consulting contract, or when you hope to reach $X in revenue. It could also be when you expect to open an HR consulting business in a new location.  

Management Team

To demonstrate your HR consulting business’ ability to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow your business.

Ideally you and/or your team members have direct experience in human resources and/or managing HR consulting businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in Human Resources, or successfully running small businesses.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.

In developing your income statement, you need to devise assumptions. For example, will you focus on one client at a time, or will you have teams working on multiple projects at once? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets : Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing an hr consulting business:

• Office build-out
• Cost of buying or leasing a company vehicle
• Cost of office supplies such as computers and software
• Payroll or salaries paid to staff
• Business insurance
• Taxes and permits
• Legal expenses

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your office lease, any notable clients you’ve served, or an overview of the services you offer.  

Putting together a business plan for your HR consulting business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will have an expert HR consulting business plan; download it to PDF to show banks and investors. You will really understand the HR industry, your competition, and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful HR consulting business.  

HR Consulting Business Plan FAQs

What is the easiest way to complete my hr consulting business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily complete your HR Consulting Business Plan.

What is the Goal of a Business Plan's Executive Summary?

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of HR consulting business you are operating and the status; for example, are you a startup, do you have an HR consulting business that you would like to grow, or are you operating a chain of HR consulting businesses?

Don’t you wish there was a faster, easier way to finish your HR Consulting business plan?

OR, Let Us Develop Your Plan For You

Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.   Click here to learn about Growthink’s business plan writing service .

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The Role of Human Resources in Business Continuity Planning

Business continuity planning (BCP) is a critical component of any organization’s risk management strategy. It is the process of identifying and addressing potential risks that could disrupt business operations. While many organizations have a BCP in place, few have considered the role of human resources in this process. However, HR plays a vital role in BCP, as they are responsible for the safety and well-being of employees. In this blog post, we will explore the role of human resources in business continuity planning. We will discuss how HR can help identify potential risks, develop policies and procedures to mitigate those risks, and support employees during and after a disruption.

What is Business Continuity Planning?

Business continuity planning (BCP) is a process that helps organizations ensure that critical business functions will continue to be performed during and after an emergency. A well-designed BCP can help minimize the disruption to operations and ensure that employees, customers, and other stakeholders are able to remain safe and connected.

The role of human resources in business continuity planning is to ensure that the people who make up the organization are considered in all aspects of the plan. This includes ensuring that adequate staffing levels are maintained, employee safety is a priority, and communication lines are kept open. HR also plays a key role in training and education initiatives related to business continuity planning.

Also Read:  The Importance of Information Technology in Business Today  

The Importance of Human Resources in Business Continuity Planning

Human Resources play a vital role in Business Continuity Planning (BCP). The purpose of BCP is to ensure that an organization can continue to function in the event of a disaster. Human resources are responsible for planning and implementing the policies and procedures that will keep the organization running during a crisis.

There are many potential disasters that could disrupt business operations, such as natural disasters, power outages, or cyberattacks. BCP helps organizations be prepared for these types of events by creating plans for how to continue operations.

Human resources play a key role in developing and implementing BCP plans. They are responsible for identifying which functions are critical to the organization and need to be kept running during a crisis. They also develop policies and procedures for how employees should work during a disruption. Additionally, human resources train employees on what to do in the event of a disaster.

BCP is essential for businesses to maintain the continuity of operations during a crisis. Human resources play a crucial role in developing and implementing BCP plans. By doing so, they help ensure that businesses can keep running even when faced with difficult circumstances.

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How to Create a Business Continuity Plan

Human resources play a critical role in business continuity planning. Here are some tips on how to create a business continuity plan:

• Assess your risks: What could happen that would disrupt your business? Consider things like fires, floods, power outages, and pandemics.
• Create a plan: Once you know what risks you face, you can start putting together a plan for how to keep your business running in the event of an interruption.
• Make sure your employees are aware of the plan. They need to know what to do in an emergency, so make sure they’re familiar with the procedures you’ve put in place.
• Test your plan regularly: You never know when you’ll need to use it, so it’s important to make sure it’s up to date and effective. Review it regularly and update it as needed.
• Be prepared to adapt: Things change, and your business continuity plan should change with them. Stay flexible and be ready to adjust your plans as needed to keep your business running smoothly no matter what happens.

The Different Types of Business Continuity Plans

There are three types of business continuity plans: prevention, response, and recovery.

Prevention plans focus on avoiding disruptions in the first place. This might include things like having a good insurance policy, investing in robust systems and infrastructure, and maintaining a healthy cash reserve.

Response plans are designed to help you deal with disruption if it does occur. This might include things like having a clear communication plan so everyone knows what to do in an emergency, making sure you have backup systems and data and having contingency plans for key suppliers.

Recovery plans are all about getting your business back up and running as quickly as possible after a disruption. This might include things like setting up alternative production sites, establishing new supplier relationships, and providing training for staff on new systems.

Human resources play an important role in all three types of business continuity plans.

1.For prevention plans, HR can help by conducting risk assessments and developing policies to minimize potential disruptions.

2. For response plans, HR can help by coordinating communication and managing the deployment of resources.

3. And for recovery plans, HR can help by assisting with the retraining of staff and sourcing new talent to replace any lost employees.

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Testing and Maintaining Your Business Continuity Plan

As the department responsible for employee safety and well-being, human resources plays a vital role in business continuity planning. Here are some key ways HR can contribute to an effective BCP:

• Developing and maintaining employee emergency procedures: HR should develop comprehensive emergency procedures for employees to follow in the event of a business interruption. These procedures should be regularly reviewed and updated to ensure they remain relevant and effective.
• Facilitating employee communication: In the event of a business interruption, it is crucial that employees stay informed and have access to accurate information. HR can help facilitate this by developing communication plans and ensuring employees have access to the latest information.
• Coordinating employee evacuation: If evacuation is necessary, HR should coordinate with other departments to ensure all employees are safely evacuated from the premises. Employees should be aware of evacuation routes and procedures ahead of time so they know what to do in an emergency situation.
• Managing employee health and safety: During a business interruption, employee health and safety is paramount. HR should work with occupational health and safety professionals to ensure employees are kept safe and healthy during an incident.
• Assisting with recovery efforts: Once the immediate crisis has passed. HR can play a role in helping employees recover emotionally and psychologically from the experience. This may include providing counseling services or assisting with return-to-work planning.

Also Read:  Importance of Information Technology in Today’s World

Business continuity planning is an essential part of any business, and human resources play a vital role in making sure that the plan is executed effectively. By working with other departments to develop a comprehensive plan and ensuring that employees are aware of their roles and responsibilities, human resources can help to ensure that businesses are able to bounce back from even the most devastating disruptions.

If you have any concerns about technology, you can contact Aeologic Technologies!

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HR’s New Role

• Peter Cappelli
• Ranya Nehmeh

Though the human resources function was once a strong advocate for employees, in the 1980s things changed. As labor markets became slack, HR shifted its focus to relentless cost cutting. Because it was hard for employees to quit, pay and every kind of benefit got squeezed. But now the pendulum has swung the other way. The U.S. unemployment rate has been below 4% for five years (except during the Covid shutdown), and the job market is likely to remain tight. So today the priorities are keeping positions filled and preventing employees from burning out. Toward that end HR needs to focus again on taking care of workers and persuade management to change outdated policies on compensation, training and development, layoffs, vacancies, outsourcing, and restructuring.

One way to do that is to show leaders what the true costs of current practices are, creating dashboards with metrics on turnover, absenteeism, reasons for quitting, illness rates, and engagement. It’s also critical to prevent employee stress, especially by addressing fears about AI and restructuring. And when firms do restructure, they should take a less-painful, decentralized approach. To increase organizational flexibility and employees’ opportunities, HR can establish internal labor markets, and to promote a sense of belonging and win employees’ loyalty, it should ramp up DEI efforts.

In this tight labor market, cost cutting is out. Championing employee concerns is in.

Idea in Brief

The pendulum swing.

For decades, when U.S. labor markets were slack, HR focused on cost cutting, which meant squeezing employees’ pay, benefits, and training. But now that labor markets are tight, the challenge is to retain workers.

The New Priorities

HR must focus on keeping positions filled and preventing employees from burning out or becoming dissatisfied.

The HR function must educate leaders about the true costs of turnover, address employee anxiety about AI and restructuring, lobby for investments in training, rethink how contract workers and vendors are used, and strengthen diversity, equity, and inclusion efforts.

From World War II through 1980 the focus of the human resources function was advocating for workers—first as a way to keep unions out of companies and later to manage employees’ development in the era when all talent was grown from within. Then things changed. Driven by the stagflation of the 1970s, the recession of the early 1980s, and more recently the Great Recession, HR’s focus increasingly shifted to relentless cost cutting. Decades of slack labor markets made slashing HR expenses easy because it was hard for people to quit. Pay and every kind of benefit, including training and development, got squeezed. Work demands went up, and job security fell.

• Peter Cappelli is the George W. Taylor Professor of Management at the Wharton School and the director of its Center for Human Resources. He is the author of several books, including Our Least Important Asset: Why the Relentless Focus on Finance and Accounting Is Bad for Business and Employees (Oxford University Press, 2023).
• Ranya Nehmeh is an HR specialist working on topics related to people strategy, human capital, leadership development, and talent management and is the author of The Chameleon Leader: Connecting with Millennials (2019).

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