A Step-by-Step Guide to Human Resource Planning Process

Unlock effective Human Resource Planning (HRP) process with our Steps and Stages guide. Learn the process to strategically forecast & manage your workforce.

Human Resource Planning (HRP) Process: Steps and Stages

Human Resource Planning (HRP) is a crucial strategic process that involves developing strategies for acquiring, utilizing, improving, and retaining human resources within an organization. It considers future organizational objectives, human resource needs, current human resource availability, and ensures the future availability of the right talent.

HRP is a long-range and strategic decision, as a shortsighted approach can lead to manpower shortages or excesses. The primary purpose of HRP is to assess the organization’s direction, understand the demand and supply of personnel, and strive to balance these in the firm’s best interest.

The HRP process typically begins with a consideration of organizational objectives and strategies. It requires both external and internal assessments of HR needs and supply sources, leading to the development of forecasts. A key element for assessing internal human resources is robust, accessible information, often provided by a Human Resource Information System (HRIS).

The steps and stages of the Human Resource Planning process

Several frameworks outline the steps and stages of the Human Resource Planning process:

A. Logical Steps of Human Resource Planning

1. Human Resource Demand Forecasting: Predicting the future requirement of personnel.
2. Human Resource Supply Forecasting: Estimating the availability of personnel from internal and external sources.
3. Initiating Human Resource Actions: Taking steps to match demand and supply.

B. Major Stages of Human Resource Planning

1. Analyzing Organizational Plan: Understanding the organization’s goals and strategies.
2. Forecasting Demand: Predicting future human resource needs.
3. Forecasting Supply: Estimating future human resource availability.
4. Identifying Human Resource Gap: Comparing demand and supply to identify surpluses or deficits.
5. Future Course of Action: Developing plans to address identified gaps.
6. Controlling: Monitoring and adjusting the HRP process to ensure alignment with plans.

C. Steps of Human Resource Planning

1. Forecasting Demand: Projecting the number and type of employees needed.
2. Forecasting Supply: Determining the availability of human resources.
3. Developing HR Plans: Creating strategies to meet the organization’s HR needs.
4. Evaluation: Assessing the effectiveness of the HRP efforts.

D. Unique Steps in Human Resource Planning

1. Assessing Current Human Resources: Inventorying existing skills and capabilities.
2. Implications of Future Demand: Understanding the impact of growth plans on staffing.
3. Implications of Future Supply: Analyzing internal and external factors affecting personnel availability.
4. Matching Demand and Supply: Aligning projected needs with available resources.

E. Multi-Step Process of Human Resource Planning

1. Objective of Human Resource Planning: Defining the goals of the HRP process.
2. Analysis of Organizational Plans: Studying the organization’s strategic direction.
3. Demand Estimation: Quantifying future manpower needs.
4. Auditing Human Resource: Reviewing the current workforce.
5. Job Analysis: Defining job roles and required behaviors.
6. Estimating Gap between Demand and Supply: Identifying discrepancies between needs and availability.
7. Preparing Human Resource Plan: Formulating detailed strategies to address gaps.

Detailed Exploration of Key HRP Stages

The following sections provide a more in-depth look at the critical steps involved in the Human Resource Planning process.

Step 1: Human Resource Demand Forecasting

This initial step is crucial for identifying the future number and type of people required by the organization. Demand forecasting is often subdivided into long-range and short-range forecasts to address different planning horizons.

i. Long-Range Forecasting:

Forecasting long-term human resource needs, while challenging, requires considering several key factors:

• The Firm’s Long-Range Business Plans: Strategic shifts like automation or technological integration directly impact future manpower needs.
• Demographics: Changes in the age profile and growth rate of the labor force influence overall human resource availability.
• Economic Conditions: Economic fluctuations (prosperity to recession) significantly affect HR requirements.
• Technological Trends: Advances in technology alter job roles and the mix of skills required (e.g., increased computer programmers, decreased bookkeepers).
• Social Trends: Socio-cultural shifts, such as increased participation of women or minority groups in the workforce, affect labor supply and demand.

The Delphi technique, a questionnaire-based method involving expert opinions and iterative feedback, can be used for long-range projections, though results should be viewed with some caution.

ii. Short-Range Forecasting:

While long-range planning provides a strategic direction, short-range forecasting addresses immediate manpower needs.

• Production Schedules and Budgets: Specific sales forecasts translate into work plans, determining manpower needs across various departments (production, purchase, R&D, finance).
• Human Resource Objectives: Departmental goals, such as hiring specific percentages of Indigenous peoples or females, influence short-term HR plans.
• Relocations/Mergers/Acquisitions/Plant Closures: These significant organizational changes directly impact workforce size and necessitate careful HR planning for adjustments or terminations.

Effective demand forecasting, whether long-range or short-range, provides management with a clear understanding of future personnel requirements, forming the foundation of the HRP process.

Step 2: Human Resource Supply Forecasting

Predicting the availability of human talent, while seemingly straightforward, involves various complexities. The following factors are typically considered when projecting future availability:

• Current Inventory: Well-maintained personnel records are essential for identifying existing talent within the organization across different jobs, units, and divisions. This internal talent pool should be considered first to fill vacancies.
• Productivity Levels: Improvements in technology and workforce productivity can reduce the number of people required per unit of output, influencing future staffing needs.
• Turnover Rate: The rate at which employees leave the organization (due to separations, quits, discharges, retirement, death) directly impacts future supply and necessitates planning for replacements.
  • Formula: (Number of people leaving the organization / Average number of persons in the organization) × 100
• Absenteeism Rate: The percentage of scheduled work time lost due to employees not coming to work reduces the available workforce.
  • Formula: (Number of person-days lost / (Average number of persons) × (Number of working days)) × 100
• Movement among Jobs: Internal promotions and transfers (e.g., typists to secretaries, section managers to branch managers) need to be accounted for, as they impact the internal supply for various roles before external hiring is considered.

Considering these factors helps organizations accurately assess their future resource supply.

Step 3: Initiating Human Resource Actions

Once the projected human resource needs are compared with the projected human resource availability, various actions are undertaken to ensure that supply matches demand.

• Hiring: If the projected supply falls short of demand, new personnel need to be recruited, taking into account turnover, absenteeism, and internal movements.
• Training and Development: To enhance existing skills and prepare employees for future, higher-level positions, continuous training and development programs are essential.
• Career Management: Planning job assignments to form a career path benefits both employees and the firm. The HR department should track career moves within the organization.
• Productivity Programs: Initiatives to improve productivity levels can increase the effective supply of human resources without increasing the number of personnel. This can involve quality of work life programs and re-evaluating work rules.
• Reductions in Workforce: If projected human resource supply exceeds demand, the firm may need to consider measures such as plant closures and layoffs. These actions, while difficult, are sometimes necessary in a competitive economy and must be handled carefully.

Alternative Perspectives on HRP Stages

Human Resource Planning Process – 6 Major Stages

This framework emphasizes a more comprehensive approach to manpower planning, looking beyond immediate needs to anticipate future requirements.

1. Analyzing Organizational Plan: This initial step involves a thorough analysis of the organization’s objectives, plans (technology, production, finance), and future structure to understand the volume of future work activity and anticipate manpower needs.
2. Forecasting Demand for Human Resources: This stage focuses on predicting future HR needs based on factors like employment trends, education systems, mobility, production rates, and expansion plans. Techniques include:
   • Work Study Method: Uses time and motion studies to determine standard time per unit of work.
   • Managerial Judgement Method: Managers provide forecasts for their departments.
   • Ratio Trend Analysis: Calculates future ratios based on past data and organizational changes.
   • Delphi Technique: Expert group decision-making to understand changing job profiles and personnel needs.
   • Mathematical/Statistical Models: Express relationships between variables for large organizations.
   • Factors influencing demand: Productivity improvements, replacement needs (death, retirement), expansion/growth plans, absenteeism, and employment trends.
3. Forecasting Supply of Human Resources: This stage measures the number of people likely to be available from internal and external sources, accounting for factors like absenteeism, internal movements, promotions, wastage, and changes in work conditions. Internal factors include training facilities and company goodwill, while external factors include the working population and unemployment levels.
4. Identifying Human Resource Gap: This involves comparing demand forecasts with supply forecasts to identify future deficits (requiring recruitment or training) or surpluses (requiring redeployment or termination).
5. Future Course of Action: Plans are developed to address identified manpower gaps. This could involve redeployment or retrenchment for surplus, and recruitment, selection, promotion, transfer, or training for deficits.
6. Controlling: This stage involves checking, verifying, and regulating the HRP process to ensure conformity with adopted plans and minimize the gap between desired and actual performance. This includes auditing training programs and conducting morale surveys.

Human Resource Planning Process – 4 Step Process

This process emphasizes a proactive, strategic approach to HRP, linking it closely with corporate strategy for competitive advantage.

1. Forecasting Demand for Human Resources: This starting point analyzes organizational objectives and goals.
   • External Challenges: Globalization, competition, technology, and socio-political-legal conditions significantly impact HR forecasting.
   • Demand Forecasting Techniques:
     • Jury of Executive Judgment Method: Experts provide aggregated estimates (often used by small/medium organizations).
     • Delphi Method: Iterative process of expert opinions to reach a consensus.
     • Trend Analysis Method: Extrapolating past trends to project future demand.
     • Work Study Method: Quantifies manpower needs based on planned output and standard time per unit.
     • Work Force Analysis Method: Considers average manpower loss due to retirement, turnover, absenteeism, etc.
2. Forecasting Supply for Human Resources: This determines the availability of employees from internal and external sources.
   • Internal Supply: Utilizing existing employees (identified through management and skills inventories) for future positions.
   • External Supply: Recruiting new employees from the open market, requiring attractive employment conditions.
3. Developing HR Plans: Once supply and demand are determined, detailed HR plans are developed and implemented, covering recruitment, training/retraining, productivity programs, redeployment, and retention.
4. Evaluation of HRP: This crucial step assesses the effectiveness of HRP efforts in achieving organizational goals and identifies any necessary corrective actions. Evaluation focuses on how well HR needs are anticipated and met, the quality of relationships among stakeholders, and the perceived value of HRP.

Human Resource Planning Process – 4 Unique Steps

This framework focuses on a concise, strategic assessment to match demand and supply.

1. Assessing Current Human Resources: Involves creating an inventory of workers and skills, along with detailed job analysis to understand existing capabilities and job requirements.
2. Implications of Future Demand: Projecting future demand based on the firm’s growth plans, making these projections well in advance to allow for hiring and training.
3. Implications of Future Supply: Projecting future manpower availability, considering both internal factors (recruits, promotions, turnover) and external factors (availability of trained manpower, job preferences).
4. Matching Demand and Supply: Comparing demand and supply forecasts to identify shortages or excesses in both quantity and quality of human resources, enabling proactive measures to address these discrepancies.

Process of Human Resource Planning – Multi-Step Process

This comprehensive multi-step process covers the entire cycle of human resource planning from objective setting to plan preparation.

1. Objective of Human Resource Planning: Clearly defining the short, middle, and long-term manpower needs consistent with organizational plans.
2. Analysis of Organizational Plans: Studying organizational plans (expansion, diversification, mergers, downsizing) to understand their impact on manpower requirements.
3. Demand Estimation: Quantifying manpower needs at different levels and for various functional categories, considering factors like expected labor turnover. Techniques include managerial judgments, ratio method, and Delphi method.
4. Auditing Human Resource: Checking the current supply of manpower across all departments to identify the existing workforce.
5. Job Analysis: Conducting detailed analysis of jobs, including qualifications, skills, training, and experience required (job description and job specification).
6. Estimating Gap between Demand and Supply: Comparing demand and supply forecasts to determine if there is a surplus, deficit, or balance of human resources.
7. Preparing Human Resource Plan: Developing a detailed plan outlining the number and kind of people required, labor supply sources, human resource policy (internal vs. external recruitment), selection criteria, training and development needs, and plans for promotion, demotion, transfer, or dismissal.