Decoding HR Planning: Significance, Process, Impact

Human resource planning (HRP) is about determining the needs of an organization, how many and which people are needed.

It is also known as human resources planning. It determines the current and future needs of a company in order to effectively achieve its goals.

Human resource planning (HRP) is about the basic economic principles of supply and demand in relation to a company's workforce. Similar to a recipe, workforce planning ensures that a company has the right amount of workers to meet its needs.

This article looks at the basic meaning of HRP and how scientists have defined it in the past and present. We'll also learn how important it is, how workforce planning has evolved to what it is today, and what processes are currently in use.

Importance of Human Resource Planning

HRP or workforce planning is the process of carefully and scientifically developing a strategy to ensure that the right people are available to the company at the right time, in the right place and at the right cost.

Employees are a company's best resources. So, workforce planning is about finding the ideal employees and ensuring they are placed in the right job, which benefits both the individual and the company.

Definition of Human Resource Planning

E.W. Vetter defines workforce planning as a process through which an organization should move from its current workforce to the desired workforce. Through planning, management strives to have the right number and the right type of employees in the right place at the right time, doing things that will provide maximum long-term benefit to both the company and the individual."

Robbins and Coulter say, "Workforce planning is the process by which managers ensure that they have the right number and the right type of capable employees in the right place and at the right time."

According to K. Aswathappa, "Human resource planning is the process of predicting a company's future need for the right type of employees, in the right number and in the right supply."

Importance of human resources planning

In a study conducted by Ogunrinde in 2001, it was found that companies that practice active human resource planning perform better than companies that do not engage in such planning.

Personnel planning is important in several ways for achieving company goals. It forms the basis for all functions related to human resources, such as: Recruitment, onboarding, screening, etc.

Their key features include:

1.Increase productivity

When it comes to workforce planning, maximizing productivity is crucial. Efficient use of resources and minimization of waste, achieved through human resources measures such as training, performance appraisals and fair compensation, leads to higher productivity.

Human resource planning ensures that employees are skilled, motivated and compensated appropriately, thereby increasing the overall efficiency and productivity of the company.

2.Implementation of leadership tasks

The success of management tasks such as planning, organizing, leading and controlling depends largely on having the right employees (human resources) available. Human resources play a crucial role in ensuring that these management activities function effectively.

Human resource planning, which involves having the right people in the right positions, is therefore essential to the success of all management functions. To put it more simply: the right employees are essential for the smooth functioning of a company.

3.Motivate employees

Workforce planning goes beyond simply placing the right employees in the right positions. It also includes motivating employees through programs such as incentives. These incentives are crucial because they encourage active participation and help retain employees.

As part of personnel planning, the design of effective incentive plans is of great importance. This not only ensures that suitable employees are hired, but also that they remain engaged and motivated to give their best to the company.

4.Improve employee relations

Strong human relationships are essential to the stability of a company. This strength is achieved through effective control, clear communication and strong leadership. Personnel planning plays a key role in this.

By focusing on workforce training and development, workforce planning ensures employees are skilled and cooperative. This in turn promotes better human relationships within the organization. Essentially, workforce planning helps create a positive work environment where employees understand their tasks, communicate well, and work together effectively.

5.Managing change

Human resource planning is important for organizations to cope with changes in the external environment. It enables the development and implementation of strategies to improve the performance of employees and companies.

6.Assessment of demand and supply of resources

Workforce planning ensures that there is the right number of employees (demand) to meet the needs of the business without causing over- or under-staffing. It's about finding the perfect balance and ensuring there are enough people to get the job done efficiently and without unnecessary costs or gaps.

7.Higher quality settings

Human resource planning impacts the quality of applicants a company attracts. Companies that do human resources planning know what qualities they need in applicants and can therefore make their hiring decisions more precisely and effectively. This results in them attracting candidates who are better suited to the company's needs.

8.Growing competitive advantage

As mentioned above, companies that invest in workforce planning can identify and develop the best talent. By putting the right people with the right skills in the right places, a company gains a competitive advantage.

You can adapt to changes more quickly, innovate more effectively and offer better products or services. Essentially, workforce planning helps companies stay ahead of the competition by ensuring they have the right team in place to overcome challenges and capitalize on opportunities.

History and development of human resource planning (HRP)

By examining how human resource planning has changed over time, we can better understand its principles, roles, and methods in different contexts. This understanding helps us develop appropriate HRP strategies for today's situations.

The term “human resource planning” was introduced only recently. In the past, the production of goods and services was typically managed by the same people. There were fewer problems between employers and employees. With the rise of industrialization, new problems in human resource management emerged.

In this section, we examine the evolution of HRP over time.

• Before 1900 (HRP as a science)

Modern human resource management or human resource planning goes back to Robert Owen, who was its founder in the early 19th century. Owen campaigned for better industrial relations, better working conditions and the abolition of child labor. His contemporaries, such as J.S. Mill and Andrew Yule, developed human resource management as a science and promoted ideas such as wage incentives and worker welfare.

• 1900-1920 (efficiency and productivity)

Between 1900 and 1920 the emphasis was on efficiency and productivity, marked by the rise of scientific management led by Taylor. (Taylor's Scientific Management Thought) This period saw the emergence of larger organizations, scientific job analysis, cost standards, and improved selection and training of workers. Taylor spoke out against unions and emphasized a mental shift in work attitudes.

• 1920-1930 (era of welfare orientation and work psychology)

In the 1920s, human resource management took shape with the establishment of human resources management organizations. Workers' resistance to scientific management led to the emergence of industrial psychology. During this period, industrial psychologists introduced techniques such as psychological testing, interviews, employee training, and non-financial incentives. These developments led to the professionalization of human resource planning and management, making it a recognized field and a specialized role.

• After 1950 (Modern Era)

From 1950 to 1970, human resource management entered a new phase that emphasized workers' rights and industrial democracy. During this time, HR managers were given more responsibility and the concept of HR management as a separate discipline took hold.

• Post 1970 (transition to behavioral sciences and open systems)

After 1970, HRM evolved and became a behavioral science focusing on human elements and organizational behavior. The idea of "open social and industrial systems" gained popularity, solidifying HRM as a recognized profession concerned with the management of human resources and expanding its scope.

Human resource planning process

The process of human resources planning (HRP) includes systematic human resources planning steps that enable effective management of human resources. It is sometimes referred to as the human resources planning or workforce planning process.

This methodological approach involves careful analysis, forecasting and strategic allocation of human resources. When companies understand the workforce planning process, they can ensure the workforce remains a dynamic and responsive asset that is critical to long-term success.

Step 1: Analysis of the environment

The analysis of the environment forms the starting point of human resource planning (HRP). It examines both external and internal factors to identify potential problems, threats and opportunities that influence the company's strategic planning.

External environment:

• Competitors
• Legal environment

Internal environment:

• Strategy
• Technological factors

Step 2: Predict labor needs

Predicting labor needs is critical to avoiding labor shortages, which often hinder a company's expansion. Various methods are used to predict how business needs will impact staffing needs. There are two basic categories of methods:

• Qualitative methods: Qualitative methods such as the Delphi and nominal group techniques require the collaboration of experts to create predictive statements and assumptions. Although these methods are time-consuming, they allow for in-depth discussions and exchange of ideas among the experts.
• Quantitative methods: Quantitative methods, such as Some methods, such as trend analysis, rely on historical data to forecast future workforce needs. The critical steps in trend analysis include selecting appropriate business factors, charting historical records, calculating productivity metrics, identifying trends, and making necessary adjustments for future forecasts.

Step 3: Assess the labor supply

Labor supply assessment focuses on both internal (existing workers) and external (potential new employees) resources. These resources are crucial in determining the supply required now and in the future.

The internal and external labor supply can be explained as follows:

• Internal supply: The internal labor supply refers to the available people and positions within the company. Human Resource Information System (HRIS) data predicts future trends based on current patterns.
• External offer: The external offer includes people in the wider working population who are potential applicants. The relevant labor market varies depending on professional qualifications. High-skilled jobs may be a national or global market, while unskilled jobs typically focus on the local community.

Step 4: Bridging gaps

During the gap analysis, forecasts of labor demand and supply are brought together. This critical process identifies potential skills gaps or surpluses. By comparing environmental forecasts with supply and demand forecasts, human resource planners assess the company's readiness to pursue various business scenarios consistent with its goals.

Step 5: Implementation planning

Following the analysis, the necessary steps to implement the chosen solution are outlined in the implementation planning. This phase ensures that the decisions made in the previous steps are translated into actionable plans and the sequence of events is set in motion.

Step 6: Monitoring and Evaluation

Monitoring and evaluation involves checking the effectiveness of staffing plans over time. Any deviations from plans are identified and corrective action is taken if necessary. Feedback on the various results is used to measure the extent to which the personnel goals have been achieved.

Tools and techniques used in human resource planning

Structured. Using proven techniques also validates the process for employees and stakeholders.

All tools and techniques used in the HRP process are presented below, categorized according to different HR activities:

1.Determination of staffing needs

• Analysis of jobs
• Analysis of tasks during the working day
• Immediate observation
• Time tracking
• Filming on the working day
• Standard management times
• Determination of work standards
• Scenario planning
• Extrapolation
• Analysis of correlation coefficients
• Assessment of physical and/or value work productivity
• Critical Incident Method

2.Forecasting staffing needs

• Dynamics of market demand for company products
• Dynamics of the market offer for the company's products
• Forecasts about the company's field of activity
• Forecasts about the development of the national economy
• Dynamics of the company's sales
• Dynamics of production
• Analysis of productivity dynamics
• Analysis of trends
• Regression method
• Delphi method
• Business plan
• Gantt chart
• Staff turnover index
• Retirement index
• Investment value per workplace
• Investment value for the next period

3.Talent recruitment and selection

• Personnel selection model
• General knowledge tests
• Specific knowledge tests by area, position, etc.
• Competency tests (attention, communication, negotiation skills, etc.)
• Personality tests
• Practical exams
• Development of projects
• Assessment of case studies
• Interview techniques
• Questionnaires
• Review of personnel files
• Analysis of the CV (C.V.)
• Verification of degrees
• Recommendations from former managers

4.Onboarding new employees

• Drawing up an individual employment contract
• Orientation meeting between manager and new employee
• Explanation of the job description
• Understanding internal regulations
• Introducing the new employee to colleagues
• Issuing specific work instructions
• Explanation of the methods in the new employee's work area

5.Training and development

• Individual study
• Bachelor's degree programs
• Master's degree programs
• Doctoral programs
• Attending vocational schools
• Company training
• Panel discussions
• Analyzes of case studies
• Specialized training sessions
• Job rotation experiences
• Participation in research projects
• Manager simulations
• Participation in simulation games
• Attending information seminars
• Recommendations for specialties
• Quality, competence and knowledge tests

6.Communication strategies

• Dissemination of information through various means (e-mail, written communication, etc.)
• Balanced Scorecard Review
• Instructions for specific activities
• Use of the organization's internal means of communication (e.g. "newspaper")
• Panels with top performers within the organization
• Annual letters from CEOs or managers to employees

7.Human resources assessment

• 360 degree assessment
• Assessment discussions
• Assessment of labor productivity
• Management by Objectives (MBO)
• Diagnostic analysis procedures
• Notation systems
• Overall ratings
• Functional assessments
• Self-assessment tests
• Assessment tests
• Graphical scales for classifying human characteristics
• Various assessment methods (essay, critical incidents, behavioral checklist, etc.)
• Participation in the Human Resource Assessment Center

8.Professional development

• Job analysis for career planning
• Creating a career plan
• Understanding the organizational chart for growth opportunities
• Mentoring sessions
• Tutoring programs
• Coaching sessions

Manual application of the above-mentioned tools and techniques makes human resource planning a tedious task. A solution to this problem would be to automate such tasks. Companies around the world use HRMS software to support HRP processes.

Below are some tools that IceHrm's dashboard includes to make workforce planning easier for HR professionals:

1.Employee database

IceHrm HR allows you to seamlessly manage your employee database. It digitizes every aspect of your employees' documentation processes - storing documents, company policies, issuing letters and collecting signatures, all in a digital format.

Also see: Employee profile.

2.Recruitment and talent acquisition

IceHrm's applicant management system enables easy talent acquisition from recruiting to onboarding. You can manage the entire recruitment process from the dashboard while selecting the perfect candidates. Here are some of the features the system offers:

• Pre-employment testing: Assess applicants' skills and competencies using specialized tests.
• Scorecards: Access aggregated test results and feedback to make more informed hiring decisions.
• Job boards: Post and track your open positions on various platforms.
• Reports and Analytics: Leverage measurable data and analytics from your hiring processes to improve decisions and strategies.

3.Performance management

IceHrm performance management software keeps an eye on employee performance, analyzes and tracks it to ensure goals are met and desired results are achieved. 3 of the most important features are:

• 360 degree assessment
• 1-on-1 meetings
• Employee scorecards

4.Automation of workflows

IceHrm's Professional Services Automation Software smoothly automates workflows for service companies. It enables efficient project management, optimized resource allocation and improved profit margins in tough competition.

The most important features are:

• People-centered platform
• Calculate and track sales
• Intelligent resource planning
• Predictive analysis

5.Data security and compliance

IceHrm attaches great importance to the security of your data and follows industry best practices. We cover everything from storage to monitoring to ensure a secure environment for your subscription data. Our approach focuses on data privacy and access and uses careful strategies to maintain your trust.

We comply with the EU General Data Protection Regulation (GDPR) and ensure that our product features, company protocols and legal documents help users and customers comply with the regulations.

6.Communication and collaboration

IceHrm Wall helps employees interact with each other in the company-wide portal and gain insights into the company's best employees or the performance of different departments. Additionally, features like one-on-one meetings simplify the entire mechanism of giving and receiving feedback.

Summary

In summary, workforce planning is akin to creating a roadmap for a successful journey in the business world. Just as travelers consider external factors such as weather and road conditions, companies must adapt to external influences such as laws and market trends.

Internally, it's about aligning company policies, promoting a positive work culture and ensuring employees have the necessary skills. By carefully considering these factors, companies can overcome challenges, foster a motivated workforce, and ultimately achieve their desired goals and success.

Workforce planning promotes innovation and creativity by cultivating a diverse and skilled workforce. Additionally, thoughtful planning paves the way for a thriving and harmonious workplace.

Effective Human Resource Planning ensures strategic alignment and fosters a motivated workforce. Explore IceHrm's tools for streamlined HR management.