What is Human Resource Planning (HRP)?

Human Resource Planning (HRP) is a strategic and ongoing process aimed at optimising the use of an organisation’s most valuable asset — its employees. By ensuring the right fit between employees and jobs, HRP helps prevent staffing shortages and surpluses.

The HRP process consists of four key steps: analysing the current labour supply, forecasting future labour demand, aligning this demand with supply, and supporting organisational goals. Investing in HRP is crucial for maintaining productivity and profitability.

Key points:

• HRP is a strategy to ensure a steady supply of skilled employees, avoiding staffing gaps or excesses.
• It addresses immediate staffing needs while adapting to long-term business changes.
• A well-executed HRP strategy contributes to a company’s productivity and profitability.
• The unpredictability of future events adds complexity to HRP.
• The four main steps in HRP are assessing current staff, forecasting future needs, balancing supply and demand, and aligning HR plans with company objectives.

Understanding HRP

Employees are essential to any business. Without a strong workforce, revenue can dwindle, leading to potential closure. Human Resource Planning (HRP) is designed to prevent this by identifying current and future hiring and training needs.

HRP helps companies plan to ensure a consistent supply of skilled employees, allowing them to evaluate and meet their staffing needs effectively.

HRP must be adaptable to short-term staffing challenges and long-term changes in the business environment. To prevent future obstacles and achieve their objectives, HR managers should focus on:

• Attracting and hiring skilled employees
• Training, rewarding, and retaining top talent
• Keeping employees motivated
• Managing absences and resolving conflicts
• Planning for succession
• Making decisions on promotions or layoffs
• Monitoring trends that could affect future supply and demand

By identifying and targeting the skills a company needs, HRP enables businesses to achieve their goals and prepare for future challenges.

The Goal of HRP

The objective of HRP is to optimise staff numbers for maximising the company’s profitability. Given the evolving goals and strategies of businesses, human resource planning necessitates continual adaptation. Moreover, with a globalised economy present, HR departments must adapt to varying government labour regulations across different countries.

The escalating implementation of remote workforce arrangements among corporations will further impact HR planning, demanding the adoption of novel approaches and tools for recruiting, training, and retaining employees.

Challenges of HRP

HRP encounters ongoing challenges due to perpetually changing forces, including employee illnesses, promotions, vacations, or resignations. Its objective remains securing an optimal match between workers and roles, averting imbalances in the employee pool.

To preempt potential hurdles and fulfil their aims, HR managers must strategise to:

• Identify and recruit skilled personnel for specific roles in the organisation.
• Assess, train, and recommend top candidates.
• Manage absences and resolve conflicts.
• Facilitate promotions or handle staff exits.

Committing to HRP stands as one of the most critical decisions for any company. Ultimately, a company’s calibre is contingent on its workforce, and heightened employee engagement plays a pivotal role in its success. Having top-tier employees and established protocols can demarcate the line between stagnation and productivity, steering a company toward profitability.

The Four HRP Steps

The HRP process comprises four overarching steps, each integral and sequential in achieving the ultimate objective: devising a strategy to effectively acquire and retain sufficient qualified personnel to meet the company’s requirements.

Assessing labour supply

The initial stage involves scrutinising the existing human resources within the company. Here, the HR department evaluates the organisation’s robustness based on employee count, skills, qualifications, roles, benefits, and performance levels.

Labour demand projections

The subsequent step necessitates outlining the future workforce landscape. This entails contemplating various factors such as promotions, retirements, layoffs, and transfers, all contributing to the company’s future needs. External factors like evolving technology that might influence workforce requirements also fall under consideration, such as deployment of AI tools that may aid work processes. 

Aligning labour supply and demand

The third phase revolves around forecasting employment requirements. HR conducts a gap analysis to identify specific needs, bridging the current labour supply with future demand. This analysis triggers inquiries such as the necessity for skill upgrades, managerial additions, and optimal management of employees’ strengths in their roles.

Plan Development and Execution 

The responses derived from the gap analysis guide HR in charting the course forward, culminating in the final stage of the HRP process. Here, HR must translate these insights into actionable steps integrated seamlessly with the company’s operations. This involves securing a budget, implementing the devised plan, and fostering collaborative efforts across departments to effectively execute the strategy.

“Hard” and “Soft” Human Resource Planning

Within HRP, the hard approach assesses quantitative metrics to ensure the availability of the appropriate personnel in sufficient numbers and types as per the company’s requirements. On the other hand, soft HRP emphasises identifying individuals aligned with the corporate culture, possessing motivation, and displaying the right attitude. Frequently, these approaches are employed in conjunction for comprehensive planning. 

Example: Human Resource Planning in an Australian Tech Startup

Imagine an Australian tech startup, “TechSprint Innovations,” known for developing cutting-edge ERP software solutions. The company’s CEO, Emma, recognises the importance of HRP in a rapidly changing industry.

Assessing Current Staff

Emma conducts a thorough assessment of her current workforce, identifying the skills and expertise within her team.

Forecasting Future Workforce Needs

She anticipates an increased demand for software developers as the company plans to expand its ERP product offerings, such as innovative AI-based SaaS solutions. Emma also forecasts a need for project managers to oversee larger and more complex projects.

Identifying Gaps and Developing Strategies

Emma identifies skill gaps in her team, particularly in project management. She and her partners identify existing employees with shown potential for project management and arrange training seminars for them and other employees. Experienced project managers may be tapped as needed to further lend expertise to the firm.

Implementing and Monitoring

Emma initiates the training programmes and begins the recruitment process for project managers. She monitors the progress of both initiatives to ensure they align with the company’s growth plans.

Conclusion

Human Resource Planning helps Aussie business operators navigate the complexities of the country’s diverse and dynamic economy. HRP’s Four Steps—assessing the current workforce, forecasting future needs, identifying gaps, and implementing strategies — provide a structured approach to ensure that organisations have the right talent to meet their objectives.

However, HRP in Australia is not without challenges, including economic volatility, skill shortages, regulatory changes, diversity and inclusion considerations, and the evolving nature of work. To succeed in this landscape, organisations must adapt their HRP strategies to address these challenges while remaining agile and responsive to changing market conditions.

DISCLAIMER: This article is for informational purposes only and is not meant as official labour management advice. BARTERCARD has no business relationships with any HR firm.