HR Planning

Organizations need to know how many people and what sort of people they should have to meet present and future business requirements. This is the function of human resource planning, or workforce planning.

Reilly (2003) defined workforce planning as: ‘A process in which an organization attempts to estimate the demand for labour and evaluate the size, nature and sources of supply which will be required to meet the demand.’

As defined by Scott (1994), human resource planning is ‘the process for ensuring that the human resource requirements of an organization are identified and plans are made for satisfying those requirements’.

Human resource planning is the process of analyzing and identifying the need for and availability of human resources so that the organization can meet its objectives. The focus of HR planning is to ensure the organization has the right number of human resources, with the right capabilities, at the right times, and in the right places. In HR planning, an organization must consider the availability and allocation of people to jobs over long periods of time, not just for the next month or even the next year.

Aims of HR Planning

Human resource planning aims to ensure that the organization has the number of people with the right skills needed to meet forecast requirements.

Farnham (2006) explained that human resource planning is important because it encourages employers to develop clear and explicit links between their business and HR plans and to integrate the two more effectively. It allows for better control over staffing costs and numbers employed, and it enables employers to make more informed judgements about the skills and attitude mix in organizations.

Human resource planning also provides a profile of current staff in terms of age, sex, disability, etc so as to move towards being an equal opportunity organization. But he commented that organizations give little time to it because of lack of resources and skills, the time and effort required and the absence of relevant data to do so.

The aims of human resource planning in any organization will depend largely on its context but in general terms, the typical aims might be to:

• Attract and retain the number of people required with the appropriate skills, expertise and competencies;
• Anticipate the problems of potential surpluses or deficits of people;
• Develop a well trained and flexible workforce, thus contributing to the organization’s ability to adapt to an uncertain and changing environment;
• Reduce dependence on external recruitment when key skills are in short supply by formulating retention, as well as employee development strategies;
• Improve the utilization of people by introducing more flexible systems of work.

Reasons for Engaging in HR Planning

Planning for substantive reasons, that is, to have a practical effect by optimizing the use of resources and/or making them more flexible, acquiring and nurturing skills that take time to develop, identifying potential problems and minimizing the chances of making a bad decision.

Planning because of the process benefits, which involves understanding the present in order to confront the future, challenging assumptions and liberating thinking, making explicit decisions that can later be challenged, standing back and providing an overview and ensuring that long-term thinking is not driven out by short-term focus.

Planning for organizational reasons, which involves communicating plans so as to obtain support/adherence to them, linking HR plans to business plans so as to influence them, (re)gaining corporate control over operating units, and coordinating and integrating organizational decision making and actions.

Activities in HR Planning

Human resource planning involves the activities listed below:

Scenario Planning – making broad assessments of future environmental factors and their likely impact on people requirements.

Demand Forecasting – estimate future needs for people and competences by reference to corporate and functional plans and forecasts of future activity levels.

Supply Forecasting – estimate the supply of people by reference to analyses of current resources and future availability, after allowing for wastage. The forecast will also take account of labour market trends relating to the availability of skills and to demographics.

Forecasting Requirements – analyse the demand and supply forecasts to identify future deficits or surpluses with the help of models, where appropriate.

Action Planning – prepare plans to deal with forecast deficits through internal promotion, training or external recruitment. If necessary, plan for unavoidable downsizing so as to avoid any compulsory redundancies, if that is possible. Develop retention and flexibility strategies.

Process of HR Planning

The steps in the HR planning process are shown in figure. Notice that the process begins with considering the organizational strategic planning objectives.

Then the possible available workforce must be evaluated by identifying both the external and internal workforce.

Once those assessments are complete, forecasts must be developed to identify both the demand for and supply of human resources. Management then formulates HR staffing plans and actions to address imbalances, both short term and long-term. One means of developing and measuring HR planning is use of a team of subject matter experts (SMEs) to increase the validity and reliability of the HR planning results.7 Specific strategies may be developed to fill vacancies or deal with surplus employees. For example, a strategy might be to fill 50% of expected vacancies by training employees in lower-level jobs and promoting them into more advanced anticipated openings.

Finally, HR plans are developed to provide specific direction for the management of HR activities related to employee recruiting, selection, and retention. The most telling evidence of successful HR planning is a consistent alignment of the availabilities and capabilities of human resources with the needs of the organization over shorter or longer periods of time.

HR Planning – Key Learning Points

Aims of human resource planning

Human resource planning aims to ensure that the organization has the number of people with the right skills needed to meet forecast requirements.

Human resource planning activities

Scenario planning, demand and supply forecasts, action planning

Action planning

Action plans are derived from the broad resourcing strategies and the more detailed analysis of demand and supply factors.