What Is Human Resource Planning (HRP)?

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

There are four key steps of the HRP process. They include analyzing present labor supply, forecasting labor demand, balancing projected labor demand with supply, and supporting organizational goals.

HRP helps companies is an important investment for any business as it allows companies to remain both productive and profitable.

Understanding Human Resource Planning (HRP)

Human resources planning allows companies to plan ahead so they can maintain a steady supply of skilled employees. That's why it is also referred to as workforce planning. The process is also used to help companies evaluate their needs and to plan ahead to meet those needs.

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

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

To satisfy their objectives, HR managers have to make plans to do the following:

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

Investing in HRP is one of the most important decisions a company can make. After all, a company is only as good as its employees. If it has the best employees and the best practices in place, it can mean the difference between sluggishness and productivity and can lead to profitability.

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Human Resource Planning

Steps to Human Resources Planning

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

The second step requires the company to outline the future of its workforce. Here, the HR department can consider certain issues like promotions, retirements, layoffs, and transfers—anything that factors into the future needs of a company.

The third step in the HRP process is forecasting the employment demand. HR creates a gap analysis that lays out specific needs to narrow the supply of the company's labor versus future demand. Should employees learn new skills? Does the company need more managers? Do all employees play to their strengths in their current roles?

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

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

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

Key Takeaways

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