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human resource planning for business

The war of talent is ever-growing. At the times when the need for superior talent is a necessity, no organization can stand manpower shortages. The employees are more empowered today with the choices to say  “yes” or “no” to a certain job and have substantial say in the company’s growth strategy. Jobs are many, yet employable talent is limited. So greater the challenge to find out unicorns who can contribute towards attaining your business goals. A well-built policy and strong Human Resource Planning ensures to forecast and develop a competitive workforce that meets current business needs meanwhile making it future-ready.

“In a future-ready organization, ‘talent’ is increasingly a metaphor for capability—at the right place, at the right time and equally, at the right price.”  – Gyan Nagpal (Author)

What is Human Resource Planning?

Human Resource Planning is a process of forecasting and strategizing to meet the organization’s demand and supply of manpower needs in the present and future. It is a process to ensure that you have the right people with the right skillset in your team thereby building a strong workforce capability in your organization. 

No business strategy can succeed without an abled workforce that innovates and competes to grow your organization. Human resource Planning helps to take care of any critical shortages in manpower hence mitigating business risks. 

Why we need Human Resource Planning?

Human Resource Planning is no science but an approach based on ideas and processes that help to forecast and manage operations effectively. Before we study how we can create a robust Human Resource Plan, let us understand and answer why we need it and the benefits thereof.

human resource planning

Building Resilience to the dynamic economic environment

Our world is going through metamorphic changes in technology. Globalization and cultural shifts are a reality. Consequently, product shelf life is shortening and the skill gaps are rising high. Not just the physical or financial capital, human capital needs to adapt to this new reality. The world’s socio-economic structure has changed to a knowledge-based economy and having talent superheroes is fundamental to survival.

An effective Human Resource Planning enables us to build resilience in combating volatile business situations like mergers and acquisitions, increased offshore jobs, industry competition, changes in government legislature, etc.

Improving Operations

Workforce analysis and planning helps to streamline various business functions as you can plan the right deployment of the workforce according to need. You know well in advance potential shortages in any discipline of business and are prepared to take care of it. This avoids any potential operational danger that may result due to the shortage or surplus of manpower. 

Good HR planning also supports the distribution of talent across geographies and culture in a planned way hence creating a positive value proposition. Introducing training and proper succession plans reduces risks of talent void thereby increasing productivity.

Adept to technology changes

Millennial is a huge 50 percent of the workforce distribution and the future belongs to a technologically advanced human resource team that can learn and adapts to meet the expectations of these millennials. Data-driven analysis has become imperative for future-ready businesses. A correct Human resource plan is instrumental in introducing and distributing talent across diverse business functions and technology groups thereby supporting growth.

Also,  technology changes require organizations to keep evolving the way you do business. Current skills may become obsolete in the future. New technology requires a new skill set that is not readily available in the labour market. A proper plan to scout and hire for the required skillset is vital. 

Here it is also important to note that technology change initiatives fail due to employees’ resistance towards it and poor communication. Change management is effective in minimizing adverse effects only when it involves people’s plans in it.

Enable growth phase for small and mid-size businesses

Small businesses’ growth is often sudden and dynamic. They get impacted by the external environment the most.HR planning for small businesses is not just an additional adjustment but an integral part of the overall growth strategy. Often small businesses need to plan when to outsource, how many people to recruit, what are the compensation benefits on offer etc.

A small business may initially start with 2-3 people, but their business strategy needs to involve the human plan to know how they are going to grow in team size to meet business goals.

Anticipating changes in the labour market

As per Deloitte’s 2017 report on Global Human capital trends, the digital age is changing the skill requirements constantly. Acquiring the right talent has become quite a challenge and pose a growth risk for many companies. The economy has become Knowledge-based and the expectations of the employees have changed manifold. They have become equal opportunity stakeholders and have their voice in defining the growth strategy.

Hence it is an advantage to create a sound strategy involving talent management, team management, succession planning, training, etc to cater to the ever-changing staffing demands.

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An HR Planning process involves the following steps

You can’t deliver business strategy without the right human capital in the right places for the task at hand. After you are ready with your reasons to have effective Human Resource Planning, create a planning process which will act as a roadmap to add value to your strategy and forecast. 

Though there is no one size fit all strategy, you can customize and build your own strategic process to plan your HR goals in the most efficient and cost-effective way.

Define the HR Planning Goal

It is fundamental to align the HR practices to the business goals at large. Human resource planning that does not encompass the holistic vision and mission of the business function is unstructured and unreliable. 

So the best practice involves setting out a clear objective guideline to know what are your Human Resource Planning goals. This may include:

A SWOT analyzing your organization’s employee capability is also a beneficial exercise at the beginning to map your Human Resource Plan accordingly.

Analyze the current HR Supply

The foremost step in an effective Human Resource Planning is to analyze and assess the current resource availability and strength. It involves an exhaustive study of the human resource of the organization in terms of skills, qualifications, experience, age, tenure, performance, designations, compensation, benefits, etc. 

Extensive meeting sessions with managers and top leaders can help you identify the critical HR issues that they face and the impact on the business growth consequently.

Forecast the HR Demand

Analyzing the future manpower requirements of the business is a significant step in HR Planning. There are no absolute and objective conclusions to it but a forecast can be built around known factors like attrition, lay-offs, retirements, promotions, etc. Further, there could also be uncertain factors and situations like resignations, abrupt transfers, etc affection your employee retention rate, which are integral to study from the scope of analysis.

There are broadly two types of forecasting analysis that can help understand the future workforce demands.

  • Qualitative: This includes analyzing behavioral and performance-related issues and impacts. Forecasting through manager discussions and perspectives around employee engagement and involvement.
  • Quantitative: This is more statistical and objective analysis. e.g demand as the ratio of production achieved divided by the number of workers deployed, work-study analysis, etc. 

Here, it is also essential to understand the business strategy and objectives in the long run so that the workforce demand forecast is aligned to the organizational goals.

Know the Gaps

Once the demand forecast is complete and you are ready with the blueprint of future needs, you will be able to identify the gaps against the previous study of the availability of resources. Study the gaps and identify if you need to fulfill the manpower needs through hiring full time, part-time or contractual labors according to the business goal strategy. Map the forecast with the currently available resources to create a suitable implementation strategy.

Human Resource Planning Strategy and Implementation

Planning Stage

After reviewing the existent gaps between the demand and supply, it is time to create a sound plan of action that determines to fill the needs and meet the forecasts. Determine whether to hire, train or outsource manpower to meet the requirement and also create a buffer. To manage surplus, you can consider voluntary retirement, internal transfers, relocation or redeployment. 

Training and up-gradation can also be used as an additional strategy to build internal capability resource. Training is not only an effective retention strategy but also serves your purpose to create a future-ready workforce with the required skill set.

A Simple Plan will include:

  • Defining goals and objectives 
  • Action required with desired outcomes and the resources to be used.
  • Defining timelines to achieve the outcomes.
  • Scope of periodic review of the plan to know the progress.

Implementation Stage

 Implementing any strategy from paper to practice is the most challenging and daunting task. Many organizations fail to deliver when it comes to execution. Take your managers into confidence to make the implementation process smooth. Follow one step at a time to absorb and handle any unexpected resistance or challenge that you may face from employees. Give gradual conditioning to the execution plan so that your employees get to acclimate to the changes. 

Also, ensure that all necessary legal compliances and regulations are taken into consideration while implementing the Human Resource planning strategy to avoid any glitches.

Review, Feedback, and Control

The process of successful Human Resource Planning is ongoing. It is important to have a frequent review of the actionable plan to know if your strategy is moving in the right direction and meeting the goals and objectives. Monitor the progress of your plan regularly to mitigate any risks of failure. Create a handy and objective project management sheet to analyze and monitor the action plan to achieve this.

Proactively avoiding talent shortages and manage surpluses to achieve the best talent pool based is an ongoing, systematic process. Any major change in the business function or any new contract won will require you to re-align the Human Resource Planning. 

Also, there could be different planning models within the same organization to meet different departmental needs. A strong and detailed eye on coordinating all the factors put together can help you develop a robust plan.

With all the essential requirements that you may ensure to meet, there would be some challenges and hurdles involved.

  • Resistance from the workforce

The most permanent thing in the world is CHANGE. Yet humans are mostly change-averse. Any altercations in the regular course of life are uncomfortable. Employees may feel extra workload due to the change in plan and may resist it.

  • Rapidly changing environment

Uncertainties like employee attrition, resignations, market dynamics or technological changes influence and impact  Human resource Planning.

  • Cost and Time Investment

Completion of all stages of Human Resource Planning is time- consuming and involves huge manpower and facility cost. Mid-Size companies at times do not possess the required budget or resources to engage in proper planning.

  • Incomplete data and information:

Lack of accurate data around employee information especially with unstructured small size organizations pose a hurdled in creating a concrete plan.

Tips to create a robust plan

The whole idea of Human Resource Planning is about the value proposition and how to build world-class leadership capabilities. There is no final version of a perfect team and it is a constant process of evolution. However, a few approaches in establishing correct value culture at the workplace can help resource your manpower with best results.

1. Participative HR Model

HR is key to the success of any strategic goal for the organization and should actively participate to institutionalize effective talent management plan. HR plays a proactive role in building enabled leadership and hence should be involved in strategic business decisions.

2. Proper Policy Framework

The Importance of structured policies in any organization is inevitable. A defined policy structure gives a roadmap to the HR and also the management to direct the right action forces in building the talent pool.

Proper policies on Performance mapping, training, succession planning helps to recruit and retain the right talent and lessen talent crunch. 

3. Employer Branding

Recruitment and retention of good talent is a challenge these days. The Company’s brand value plays a crucial role in attracting the right talent. With social media playing an integral communicating tool, sites like LinkedIn, indeed, etc does facilitate hiring. But they can pose potential threats as disgruntled employees can spread negative words about your company as well. Be alert about such negativity on social media to avoid any dangerous impacts. 

4. Fostering a positive work culture

The Business environment will always be volatile and uncertain. Fostering a positive work culture will help you boost productivity amongst your teams and create a loyal force of unicorns. It helps challenge talent shortages and hence avoids operational risks for your business.

5. Investing in proper HR Tools

Traditional approaches and methods of HR Planning can be daunting and may overlook the scale of issues or challenges. It is always wise to invest in proper HR Tools that help you make accurate decisions. Technology markets are exploded with enumerable analytics tools that can solve your business needs. New and upgraded tools for talent management, performance management, learning, and development supports and caters to flexibility.

Final Thought

The future of Human Resource planning is quite complex thanks to globalization and greater emphasis on outsourcing and offshoring. The companies have to be agile in responding to changing market trends and this is only possible through sound HR planning that can lessen the impact of change. In the end, as we understand, data-driven decision making in the future is as critical as other business functions. ROI is essential and can be secured through a strong Human Resource Plan based on an analytical viewpoint.

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