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What is 'Human Resource Planning - HRP'

Human resource planning, or HRP, is the ongoing, continuous process of systematic planning to achieve optimum use of an organization's most valuable asset — its human resources. The objective of human resource planning is to ensure the best fit between employees and jobs while avoiding manpower shortages or surpluses. The four key steps of the human resources planning process are analyzing present labor supply, forecasting labor demand, balancing projected labor demand with supply and supporting organizational goals.

BREAKING DOWN 'Human Resource Planning - HRP'

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

Analyzing Present Conditions

The first step of human resource planning is to identify the company's strengths and weaknesses in the current labor pool. This is when a company performs a comprehensive audit of the skills, demographics, qualifications, experience and compensation of every worker. HR then has to determine if these statistics fit in line with the company's goals. Does the firm need to hire more staff to compete in a future marketplace, or are more automated tools necessary to capture more market share from competitors? Is the status quo acceptable, or should the company reorganize its staff so that it can make more money?

Forecasting Demand

HR forecasts demand based on the strategic goals of the company. HR managers may examine market trends, industry analyses and technological improvements to try to come up with ways to meet the company's goals. Forecasting possible retirements is also one major facet that needs to be considered when businesses assess future staffing levels. Do retired employees need to be replaced, or can new technology do the job? Does a company need more full-time workers, part-time help or outsourced labor?

Striking a Balance

The next step involves striking a balance between supply and demand. At this point, HR creates a gap analysis that lays out specific needs to narrow the supply of the company's labor versus future demand. Should employees learn new skills in the future? Does the company need more managers? Do all employees play to their strengths in their current roles?

Integrating the Plan

The answers to these questions let HR determine how to proceed, which is the final phase of the human resources planning process. HR must now take practical steps to integrate its plan with the rest of the company. The department needs a budget, the ability to implement the plan and a collaborative effort with all departments to make the plan happen.

The overall goal of HR planning is to have the optimal amount of staff to make the most money for the company. Because the goals and strategies of the company change over time, human resource planning is a regular occurrence.

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