human resource requirements business plan

HR Business Plan Template: Everything You Need to Know

With an HR business plan template, you can help your company recruit new employees, retain existing employees, and guide the development of the workforce. 4 min read updated on February 01, 2023

With an HR business plan template, you can help your company recruit new employees, retain existing employees, and guide the development of the workforce so that you collectively meet your business objectives, regardless of any changes in the industry or economy.

When creating your HR business plan, you need to perform a needs analysis of your workplace to tailor the plan to your company's requirements. You'll also need to learn about the industry standards for your field to make sure you're competitive.

Without such a plan in place, your workers will feel unprepared and won't know how to work towards your company's overall goals.

Steps for Developing a Human Resources Department Business Plan

There are several steps to creating an HR business plan. They include:

• Clarify the requirements . While you might be tempted to create a detailed plan that encompasses the entire company's next 10 years, hold off. Always talk with your boss to see how much detail he or she would like in the plan. This will save you time and help streamline the process. However, there's no harm in creating your own personalized strategic plan for your specific department.
• Read through the HR job descriptions . The HR department typically has employees such as HR assistants, HR generalists, and an HR director . Read through the job descriptions for each worker in the department and see what kind of duties are missing. Brainstorm additional functions that each job role could provide to the company.
• Curate your list . Take the different functions you've brainstormed and compare them to what each member of the HR department is already doing. Are there functions you could add or subtract from each employee for more productivity? You don't have to go into detail here, but just think about how you could improve each role.
• Schedule a meeting with the executives . Before you make any changes, you'll obviously need to get input and approval from the company's executives. They may have more feedback on how the HR department can provide additional services and support the company's overall goals and mission.
• Create a feedback form . Come up with a list of questions to ask leadership about HR's role in the company and provide it to them in advance of the meeting so they have time to think it over and talk with their staff. You may even want to provide a rating and ranking format for the questions, as this will make their responses easy to understand and implement. Overall, this is a key process to understanding what management and employees want and need from the HR department.
• Look at external resources . While the internal information you're collecting is the most important, it also doesn't hurt to take a look at data from professional organizations and websites, such as the Society for Human Resource Management , The Balance , or HR Magazine . You can also ask colleagues from other local organizations for tips on creating your business plan.
• Use this information to make a plan . With your ideas, feedback from executives, and tips from external resources, you should have a clear idea of what your plan should look like. The things that are missing from the HR department should now be clear, and this should guide you on what to focus on to improve HR's contribution to the company.
• Identify goals for this year and next . While your plan can have long-term goals, keep the majority of them a little bit shorter in scope to see how things work out. This gives you the chance to reorganize and restructure if things aren't going right. Consider creating a list of accomplishments you can reach for the end of this year and into the next.

A Real Life Example

If you're seeking more guidance on how to create a successful HR business plan, look to Starbucks as an example.

As the world's largest coffee chain, Starbucks had $21.3 billion in sales in 2016.

Despite these massive numbers, Starbucks maintains the same approach to their human resources department. All of the HR planning is guided by the company's organizational strategy and brand.

Their strategy is to use specific interview techniques when hiring new employees. This lets them identify potential leaders and place them in a "New Partner Orientation and Immersion" training program. With this system, Starbucks has achieved the lowest employee turnover rate in the quick-service restaurant industry.

Starbucks also offers numerous employee perks and dedicates a lot of time to employee training through an online portal that teaches employees essential job skills.

If you need help with your HR business plan template, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

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Blog Human Resources 6 Steps to Create a Strategic HR Plan [With Templates]

6 Steps to Create a Strategic HR Plan [With Templates]

Written by: Jessie Strongitharm Aug 25, 2022

The backbone of any successful business is the people and processes behind it — that’s why creating a human resources (HR) plan is key. This strategic document drives your business forward by evaluating where your workforce is at, and comparing it to future needs. 

Without an HR plan, organizations can suffer from issues that would have otherwise been avoided. From productivity pitfalls to costly employee turnover, there’s no shortage of risks you can sidestep if you do human resource planning in advance. 

Not sure where to start? No worries. I’ve outlined six steps you can take to create an effective HR plan that ensures your organization is well-staffed and well-served. You’ll also find a variety of  HR templates  that you can customize in just a few clicks — no design expertise required. 

Click to jump ahead:

What is human resource planning?

• Assess employees’ current skill levels
• Forecast your labor needs based on available information
• Revisit your organizational design
• Outline how you will manage, motivate and retain talent 
• Align your workforce planning with your budget 
• Establish KPIs for your human resource planning objectives

Human resource planning is the process of considering the current and future “people needs” of an organization.

This involves evaluating an organization’s workforce structure and protocols to ensure operational goals are met, productivity stays high and future demands for labor and talent can be fulfilled. 

The result of this process is the creation of an HR plan, which typically takes the form of a written document sometimes autogenerated using HR software . These documents tend to follow a similar structure to most  strategic business plans  and are created on an annual basis, by HR managers or company leaders.

Check out the template below for an example. 

This eye-catching, one-page  HR Strategic Plan Template  offers a concise summary of your human resource planning efforts, so you can easily share info with colleagues. 

Just swap out the text and visual assets for those of your choosing in  Venngage’s editor , and you’re off to the races. 

6 steps to create a strategic HR plan

Ready to create a strategic plan for the human resources that power your business? Here are six steps to help you succeed at the human resource planning process.

1. Assess current employees’ skill levels

The first step to creating a future-forward HR plan is to assess employees’ current skill sets, and compare them to your operational needs moving forward. This will help you identify gaps and inform any hiring of new employees.

Employees’ skill levels can be assessed by reviewing their work history, hard and soft skills and professional growth over time. 

Using a matrix is a great way to understand where the skill gaps in your current workforce exist. Below is an example that describes the skills needed for different marketing roles. 

Don’t need it for marketing specifically? No worries — you can fully customize this template by swapping in your own text to examine any human resource gaps. 

Another way to assess skills is by giving employees a questionnaire they can fill out. This  Employee Competency Assessment Template  does just that.

Based on the information collected, you’ll get a sense of what positions best suit each individual, and whether any upskilling or hiring is required. 

2. Forecast your labor needs based on available information

Next in your strategic strategic HR management plan, you’ll want to consider the future. This involves accounting for any upcoming changes to your workforce, so operations can continue without error.

When forecasting labor needs, the following should be considered: 

• Planned promotions
• Upcoming retirements 
• Layoffs 
• Personnel transfers 
• Extended leaves of absence (i.e. maternity/paternity leave) 

Beyond those, it’s a good idea to assess the impact of external conditions on your labor needs during your human resource planning. For example, new technological developments may decrease the amount of employees you require to operate your business. 

3. Revisit your organizational design

Organizational design is the process of structuring the way a business operates so it can best achieve its goals. This is hugely important when it comes to your human resource planning process! 

With a clear understanding of your organization’s strategic objectives in mind, reviewing your organizational design allows you to understand the staffing requirements you’ll need to succeed at them. This means taking into account your  organizational structure  and chains of command, as well as how work gets done and the way information flows.

 From there, you’ll be able to see which departments need more team members so it can accomplish the organization’s objectives. 

An easy way to get started is by using an organizational flow chart. 

With its color coding and layout, even a new manager can quickly look at this chart to identify the people responsible for leading teams and making decisions. 

And if there are any changes, it’s easy to to reflect them in the chart itself. All you need to do is customize the text and visual assets in  Venngage’s Chart Maker  as desired. 

Not quite your style? There’s plenty of other  organizational chart templates  to choose from. 

Here’s an organizational chart that’s perfect for small businesses that have limited employees. One quick look, and you’re good to go. 

The bottom line is, no matter how big or small your business may be, you should always revisit your organizational design to optimize your workforce management and business operations. 

Related:  Types of Organizational Structure [+ Visualization Tips]

4. Outline how you will manage, motivate and retain talent 

In this day and age, it’s a known fact that companies must provide more than just a paycheque to attract and retain talent, and encourage growth. 

It’s true —  studies have shown  employees are more engaged in their work when they feel it is meaningful, fulfilling and slightly challenging. So your human resource plan should consider how to inspire such feelings, and what actions you can take to motivate employees to stay. (Hint: a strong HR training and development program is key.)  

The  talent management infographic template  below is a great way to begin. 

Using this  process chart , you can detail the steps you’ll take to retain the talent you have. Reference it as needed in your human resource planning.

 Another great way to keep staff motivated and geared towards their professional growth is by coming up with  ideas for employee development . Facilitating a company culture that champions continuous learning guarantees your team will feel supported and challenged in all the right ways.

The two employee development plan templates below will help you do just that. 

Though both templates are geared towards healthcare organizations, it’s easy to customize their content in Venngage to promote the continuous learning and development of employees in any industry.

 As a result, your employees will be able to reach their full potential, while simultaneously supporting the long-term goals of your organization. 

Related:  6 Employee Development Ideas for Efficient Training

5. Align your workforce planning with your budget 

 Let’s face it, human resources ain’t cheap.

 Meaning, if you struggle at organizing and monitoring your HR budget, you’re bound to overspend on your initiatives —and no financially savvy business wants that. 

That’s why I recommend including financial information in your HR planning process, so you can reference your budget and expenses as needed. This includes not only hiring and training costs but also the complexities of managing a global payroll for diverse teams.

Ensuring this allows you to stay within range as you work towards achieving your strategic goals for human capital . Plus, you don’t need to use one that contains walls of text and wack-loads numbers. Check out the clean and cheery option below — it’s as easy to fill out as it is to understand. 

And if you’re looking to compare a forecasted budget to previous annual spending when strategizing your HR budget, the  Budget Comparison Infographic Template  below will help. 

The bar graph is a great  data visualization  of annual expenses, organized by category. Just add (or import) any values to Venngage’s editor, swap out the text, and you’re ready to compare with ease. 

Related:  10+ Expense Report Templates You Can Edit Easily

6. Establish KPIs for your human resource planning objectives

Measurable results are important when it comes to your HR planning processes, because they indicate whether your strategy is working or not. 

Keeping those metrics in mind, your company can make adjustments and improve upon any future plans — AKA strategize for future success in business. That’s why your human resource plan should include info re: the specific key performance indicators (KPI) you’ll be measuring. 

KPIs are established to help determine if HR strategies and plans are working. Much like those used for evaluating the performance of  marketing  or  sales plan , KPIs for human resources are measurable results that indicate an organization’s success at achieving predetermined goals.

These may take the form of headcounts, turnover rates, demographic information, time to hire and employee satisfaction scores. 

Here’s one employee satisfaction survey you can use to understand your workforce better. 

When you’re ready to organize those HR KPIs in a document, the  recruiting template  below is perfect for keeping tabs at a glance. 

Related:  10+ Customizable HR Report Templates & Examples

How do I make an HR plan? 

After you’ve collected the data you need, you’ll want to convey this info in an engaging, professional manner for easy referencing and sharing amongst colleagues. Given this, using Venngage is the best route to go. 

Here are the simple steps to help you bring an actionable HR plan to life: 

• Outline the information you would like to include in your strategic hr plan
• Pick the human resource planning templates that best suits your needs 
• Customize the templates’ text and visual assets so they speak to your organization 
• Apply your company’s brand guidelines with a few clicks using Venngage’s automated branding feature,  My Brand Kit
• Download and share as desired

Note: sharing is available free-of-charge. However, the option to download your creations and access features like  My Brand Kit and Team Collaboration  are available with a  Business plan . 

FAQ about HR plans

How long should an hr plan be .

There are no hard and fast rules when it comes to the length of an HR plan. That being said, if you’re going to share it with colleagues, you probably don’t want to create a 20+ page document. One to five pages should suffice. 

Try to be as concise as possible when relaying the facts, and use  data visualizations  wherever possible to save room.

Do I need an HR contingency plan?

In the same way creating an HR plan is a proactive move that helps your organization account for future needs, it’s a good idea to devise an HR contingency plan. This ensures there’s a back-up plan in place should your initiatives not go as expected. 

For example, if you’ve identified that you need five new hires to keep up with consumer demand, but the talent pool is lacking, a contingency plan could house suggestions for restructuring your workforce to mitigate this. 

In other words, it’s best-practice to hope for the best, but prepare for the worst. 

Is an HR plan different from an employee development plan?

Yes. While an HR plan is a strategic document describing how an organization addresses its personnel-related needs at a high-level, an  employee development plan  outlines the processes needed to help an individual achieve their professional goals.

 Even though the human resource planning process may involve outlining some employee development tactics, it is not unique to each employee as in the case of an employee development plan.

Make your HR planning processes effortless 

You don’t need a crystal ball to feel confident about your people moving forward. With a solid HR plan and strategy in place, you’ll prime your workforce — and all business endeavors — to succeed in even the most competitive of markets. 

Just remember this: human resources planning, and creating strategic business plans in general, doesn’t have to be exhausting. 

With Venngage’s huge selection of  professionally-designed templates  and easy-to-use editor, all it takes is a few minutes to produce a polished document perfect for all your needs.  Sign up for free today ! 

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HR For Small Businesses: The Ultimate Guide

Updated: Jun 28, 2024, 6:37am

Table of Contents

What is hr, why hr is important for small businesses, key hr functions in small businesses, how to set up hr for your small business, bottom line, frequently asked questions (faqs).

If you’re a small business owner, human resources (HR) is not an option but a necessity if you’d like your venture to thrive and grow. Through a sound HR strategy, you can hire and retain top talent, manage payroll, increase productivity and much more. No matter your industry or how many workers you have, this guide to HR for small businesses can come in handy.

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First and foremost, let’s define HR. According to the Society for Human Resource Management (SHRM), HR refers to “the process of managing an organization’s employees… to effectively meet an organization’s goals.” It usually encompasses a variety of functions that can help you meet your employees’ needs while ensuring federal and state compliance and growing your business. As a small business owner, you may handle HR independently, hire HR pros in-house or outsource it completely to a third party.

HR is essential for any small business, especially in today’s increasingly competitive marketplace. If you make it a priority, you can reap a variety of benefits that can set your business up for success, including.

1. Build and Maintain a Strong Company Culture

Since HR outlines and enforces policies and procedures while resolving conflicts and listening to employee feedback, it has the potential to foster a positive company culture. It can keep your employees engaged and motivated so that they continue to work for you, instead of a competitor.

2. Stay Compliant

Regardless of what products or services you offer, you must comply with a variety of ever-evolving federal and state regulations. By staying on top of your HR functions, you can ensure compliance and avoid steep fines and other penalties.

3. Attract and Retain Top Talent

At the end of the day, your people are your greatest assets. HR, which involves recruitment, onboarding, performance management and employee development can help you hire talented, hard-working employees and, hopefully, retain them for years to come.

HR is a broad term that encompasses several functions. Here’s a brief overview of each one.

There’s no denying that failing to comply with anti-discrimination laws, wage and hour laws, leave laws, immigration laws, benefits laws, safety laws and other important regulations can result in hefty penalties and damage your reputation. Those who handle your HR, whether they’re in-house employees or third-party professionals must stay up to date on all laws that affect your business and adhere to them at all times.

Hiring and Recruitment

It takes more than a quick job description to find the best employees. That’s where hiring and recruitment comes in. It involves writing and posting compelling descriptions, conducting interviews, selling your business and coming up with an attractive hour. Fortunately, recruitment software can help automate these tasks.

Payroll and Benefits

Processing payroll also falls under the HR umbrella. Put simply, payroll is compensating employees for their work. To process payroll accurately and legally, you must adhere to complex deductions for taxes, retirement, healthcare and more.

Speaking of retirement and healthcare, these benefits are also important if you’d like to remain competitive. It’s up to you to design and implement a benefits package that may offer extras, such as paid time off (PTO), remote work, employee assistance programs and parental leave.

HR and onboarding go hand in hand. With a successful onboarding process in places, you can help new employees become familiar with your company and culture. In many cases, onboarding goes beyond the first day or initial few weeks on the job and lasts for months or even up to a year. A thoughtfully, designed structured onboarding process is vital as it can provide your workforce with the tools and resources they need to thrive.

Training and Development

Training and development is a great way to boost employee engagement and motivation. It may also help your workers enhance their knowledge and develop their skills so they can earn raises and promotions. Typically, training and development encompasses career development, a mentorship program and opportunities to attend internal and external conferences and events.

If you’re a startup or new business, these steps can help you design the ideal HR strategy for your company.

1. Understand Your HR Needs

To start, you need to determine what HR functions your particular organization requires. Meet with key stakeholders and figure out your current and future staffing needs. It’s also a good idea to discuss the culture you’d like to create, compensation and benefits packages you hope to offer and the regulations you must abide by.

2. Set Up Recruiting and Onboarding Procedures

Next, focus on how you’ll fill vacant positions and help new employees get acclimated with your company. During this step, you should compile the various documents you’ll need to hire your team. These include offer letters, employee payroll information, agreements, such as noncompete and intellectual property and I-9 employment verification. In addition to the required paperwork, explore and finalize ideas for your onboarding processes.

3. Choose an HR Solution

While this step is optional, it’s likely a good idea, especially if you’d like to automate some of your repetitive, tedious HR functions and save some time and money. Shop around and try out a few different options to zero in on the right solution. Make sure the platform you choose is within your budget yet scalable and flexible enough to meet future goals.

4. Study Up on Regulatory Compliance

As stated, compliance is key as it can ensure a healthy, safe work environment and help you avoid penalties. The Occupational Safety and Health Act (OSHA) and Equal Employment Opportunity Commission (EEOC) are two organizations with federal regulations that likely pertain to your business. If you’re unsure of which regulations apply to you, don’t hesitate to reach out to state and local authorities or hire an HR pro for guidance.

5. Determine Compensation and Benefits

Design a comprehensive compensation structure that allows you to make fair yet competitive offers that align with your budget. Also, figure out how you’ll handle payroll, what your time off policies are and which benefits you’d like to use. Note that some benefits, such as workers’ compensation may be mandatory while others such as medical insurance and 401(k) plans are voluntary.

6. Set Up Payroll

Unless you only have one or two employees, investing in payroll software is your best bet. It can allow you to streamline your payroll process, avoid mistakes and ensure your workers get paid on time, every time. Do your research and explore multiple payroll solutions to find one that checks off all your boxes.

7. Establish Policies and Procedures

It’s important to lay out your policies and procedures right off the bat. Don’t wait until an employee has an issue. Create an employee handbook that clearly outlines what you expect of your employees and what consequences they can expect if they ignore your policies. Go over the handbook during the onboarding process and answer questions so that everyone is on the same page.

8. Develop Training and Performance Management Initiatives

Training and performance management can improve your employees’ skills and open the doors to positive feedback as well as constructive criticism. You may provide employees with opportunities to attend industry conferences, set up quarterly reviews or host monthly lunch-and-learns. It all depends on your unique workforce, budget and goals.

It’s no easy feat to set up and run an effective HR department. The good news is many internal and external resources can simplify the process. With solid HR practices in place, you can increase your chances of success and create a workplace that your current and future employees appreciate.

What are important HR requirements for small businesses?

The HR requirements for your small business depend on your industry, size and goals. However, they likely include compliance with rules and regulations, compensation and benefits administration, payroll and training and development.

What is the golden rule in HR?

The golden rule in HR is “One should treat others as one would like others to treat oneself.” This reinforces the importance of putting your people first and treating them with the utmost respect.

How does HR play a role in small businesses?

HR is an essential part of any startup or small business. It’s what attracts and retains top talent, onboards new hires, establishes company policies and improves employee retention.

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Use Human Resources Planning to Forecast for (Less) Risky Business

By Becky Simon | October 18, 2017 (updated July 21, 2021)

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No organization can afford the risk of a critical skills shortage. Human resource planning (HRP) helps to ensure that you have the right people on your team - those with the skills to compete, innovate, or grow your company.

How do you anticipate workforce needs in a business environment where the rate of change is increasing while the number of people with the right skills is shrinking? The answer is human resource planning. In this article, five experts share their perspectives on what’s needed to operate comfortably in rapidly changing times. While human resources (HR) forecasting isn’t an exact science, you’ll find ideas and processes, examples, and templates that you can use to forecast more confidently, manage operations, and take control to increase current and future profitability.

What Is the Meaning of Human Resource Planning?

Human resource planning, also known as workforce planning , helps organizations recruit, retain, and optimize the deployment of people needed to meet strategic business objectives and to respond to changes in the external environment. In order to proactively avoid talent shortages or surpluses and achieve a balance of talent based on need, effective human resource planning is an ongoing, systematic process.

Darrin Murriner is the author of Corporate Bravery , a field guide to eliminating fear-based decisions, and the Co-founder of Cloverleaf.me , a technology platform that helps business leaders and managers build thriving teams.

He says, “Human resource planning and organizational strategy connect at the hip. You can't deliver business strategy without making sure you have the right human capital you need in the right places for the task at hand.”

Smart companies get the human capital part right by implementing a tactical human resource plan that connects directly to organizational and human resource strategies.

Starbucks: Serving Up Human Resources Planning Derived from Mission and Strategy

Starbucks, the world’s largest coffee chain, recorded $21.3 billion in sales for 2016, ranking it at 131 on the 2017 Fortune 500. The company projects that it will reach $35 billion in sales by 2021 by opening 12,000 stores over the next five years , the majority of them in China. How do you plan human resources with such a massive growth goal? For Starbucks, their approach remains the same no matter where stores are located. Their human resource planning flows from its organizational strategy and its brand. People are Starbucks’ primary resource, as their mission clearly states: "Our mission: to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time." 

An important aspect of Starbucks’ human resource planning is its selection process, which uses specific interview techniques to determine if potential employees are ‘on brand’ and evaluate their skill sets. The company identifies capable company leaders and hires them using a program called "New Partner Orientation and Immersion." This human resources planning approach has led to the lowest employee turnover rate among quick-service restaurants. While most quick-serve restaurants range between 150 to 400 percent turnover, Starbucks’ rate is 65 percent . The company is always on the lookout for new employee perks and focuses energy on employee training, which includes an elaborate online portal that offers an instruction program imparting the necessary job knowledge.

The Difference Between Strategic Human Resources Planning and Human Resources Planning

“The war for talent around the world continues to grow.” says Matthew Burr, Moderator of the Upstate HR Podcast and Principal at Burr Consulting, LLC , a human resource consulting firm focused on small and medium organizations. To win the human capital competition, companies should use a strategic human resource plan as a roadmap to achieve three- to five-year goals. Strategic plans influence the development of tactical resource planning (Starbucks being a prime example). For example, a human resources strategic plan may include long-term aims to recruit and retain an excellent staff with a high-level of technical expertise. The tactical plan would include detailed action plans with completion due dates. For the strategic recruitment goals, the tactical program might consist of short-term goals, such as benchmarking salaries via survey data, or creating a social media campaign to identify and recruit technical professionals. The plan may also target filling IT positions through international recruiting.   

Both strategic and tactical human resource plans support the overall organizational strategy. To learn more about strategic human resources management, read Welcome to the HR Revolution: Strategic Human Resources Management .

Why Is It Important to Plan Human Resources?

Our world is increasingly one of swift technological change, constant product innovation, economic globalization, and generational and cultural shifts. Correspondingly, the life cycles of business designs and products are shortening. Companies must adapt. More than physical or financial capital, human capital efficiently adapts to this new reality. Simultaneously, human capital is at most significant risk of depreciation or obsolescence within a business — and that’s a risk that organizations can’t afford if they’re going to survive and thrive. In fact, only 12% of firms that were on the Fortune 500 list in 1955 remain on the list in 2016.

​“Talented people will always have options; Knowing succession plans, training, leadership development will be a tremendous asset to a growing firm,” adds Burr. “HR planning is critical to organizational strategy: We need subject matter experts and leaders to drive the strategy forward in evolving industries. HR planning plays a significant part in supporting strategy, as human resources are the biggest investment for any organization. Evolving laws and regulations also impact strategy internationally.  Staffing levels, recruitment and retention programs support scalability of any firm or organization.” 

Handrick says it’s all about planning for future growth. “Small businesses that are planning to open a physical or second location also need to think through their HR strategy. Most small businesses begin as sole proprietorships. They need to know when it makes sense to bring on staff, where that staff will work, their compensation, and how to offer benefits, perhaps by partnering with a professional employer organization (PEO).” 

• Improving Company Operations: Human capital management and resource planning is a driver for improved company operations and value creation. In July 2017, a group of institutional investors petitioned the Securities and Exchange Commission to disclose policies, practices, and performance of public companies’ human resources management . The petition signifies a move to use workforce analytics to measure the value of an organization’s most valuable asset in a knowledge-based economy .

“You need to work systemically,” says Adler. “Part of the operating plan has to be a workforce plan. HR has to make sure they have a place at the strategy and decision-making table. In my experience, I’ve seen that HR usually doesn’t get involved until it’s late. In this environment, you need to be moving at the speed of light and not the speed of sound.”

• The Talent Shortage and Demographic Change: In its 2016/2017 Talent Shortage Survey , the ManpowerGroup reported the highest worldwide talent shortage since 2007. Forty percent of employers are having difficulty filling positions, up from 38 percent in 2015. The Harvard Business Review article, Employers Aren’t Just Whining - the “Skills Gap” Is Real , states that “New technologies frequently require specific new skills that schools don’t teach and that labor markets don’t supply.”  At the same time, there’s a demographic change. In most developed economies, the ‘silver tsunami’ - the group of aging individuals that results from ebbing birth rates and graying baby boomers - is surging. The percentage of the U.S. workforce between the ages of 55 and 64 is growing faster than any other age group.
• Technological Change and The New Generation: Millennials now make up more than 50 percent of the current workforce — and will be 75 percent of the global workforce by 2020 . Human resources need to ride this rising tide and learn to welcome technological advancements to meet talent’s expectations and business requirements. Talent and workplace analytics will become customary, and organizations using the data will be far more competitive.
• Organizational Change: With technology driving change everywhere, organizations need to be nimble and often make significant changes in the way they do business. They also need to make changes with care. Research shows that change initiatives are more likely to fail because of poor communication, employee resistance, and failure to adequately prepare. Human resources are an integral part of change management , which is a systematic approach that applies tools, knowledge, and resources to deal with business transformation. The primary goal of change management is to successfully implement new processes, products, and business strategies while minimizing adverse outcomes. Effective change management includes and also goes beyond project management and involves leading the "people side" of the change equation. 
• Government/Legislative Changes: Each state has regulations that affect everything from employee criminal records checks, labor relations, records retention, and mileage reimbursements. Additional federal laws impact human resource management, too. Consequently, human resource professionals need to be conversant in dynamic employment law to minimize company liability. Not being on top of legislation can pose a significant risk to companies and expose them to expensive lawsuits or damage their brand, which can also be off-putting for potential hires.

Seven Steps to Human Resource Planning

There are seven different steps in the human resource planning process, but the pivot point is forecasting demand. That means that today’s human resources professionals need to have a well-rounded picture of their own company and a grasp of multiple factors to put together a plan. “Understanding the three- to five-year business strategy provides what HR must have to forecast workforce needs within the firm,” says Burr. “But there’s also a need to understand the global economy and potential growth options, laws, and regulations to add value to any HR strategy and forecast.”  

The seven steps to creating a human resource plan provide a roadmap for companies, but one size does not fit all. The amount of detail and which factors to include are different for every organization. Startup sole proprietorships working in a single geographic area will need to create an entirely different plan than a multinational enterprise. 

Step One: Analyze Organizational Objectives

Aligning HR practices to strategic objectives is fundamental to an effective human resources plan. In a perfect world, human resources management works hand in hand with other top managers so there is a clear understanding of ultimate goals, and then they focus on the human capital needed to meet them. It’s vital that the human resources plan encompasses every part of the company from product development to sales and expansion plans. 

HR Strategic Plan Template

If your company hasn’t written a strategic human resource plan, this template will help you get started. Modify the template to suit your specific needs or to focus on target areas such as benefits or retirement. Stakeholders will appreciate the basic design when they want to review important aspects of your plan.

‌ ‌Download HR Strategic Plan Template

Need more strategic planning templates to clarify goals for your organization? You can find more free strategic planning templates here . 

Step Two: Inventory Current Human Resources

If you have one, use the updated human resource information storage (HRIS) sys­tem to analyze the number of people you currently employ, along with their skills, perfor­mance, and potential. Once you determine which jobs need to be filled based on your forecast, you can then decide whether you have enough internal candidates to fill the job requirements or if you need to go to external sources or strategies to add staff. 

Employee Evaluation Template

If you don’t have an HRIS system, you can use this performance evaluation template for performance reviews and as a first step in referencing your current human resource inventory.  Adapt this easy-to-use form to gain a better understanding of the duties for each position by identifying gaps in performance and staffing when you review information in the aggregate. This template documents performance against set goals, employee evaluation, and professional development plans for the upcoming year.

Download Employee Evaluation Excel Template

Excel | Smartsheet

Step Three: Forecast Demand

Forecasting human resource demand involves estimating the number of future employees of the right quality and quantity, with a view to the company’s strategic plan over a given period of time. Forecasting demand is the most crucial part of human resource planning and the most daunting. It’s challenging for many reasons, and even more so because there are no absolute answers on how to accomplish it. 

There are two categories of forecasting methods: quantitative and qualitative. You can use both methods to track the work performance of the workforce as a whole, individuals, or business units. Qualitative reports contain anecdotal observations, while quantitative data is statistical or more data-driven. Select the methods that make the most sense in your environment. For example, in a non-manufacturing company, the work-study method which calculates the necessary working hours to produce units may not make sense. By gathering both quantitative and qualitative information, you can identify issues that are impacting your business's productivity, and then develop a well-rounded forecast to increase the company's efficiency, ensure you’re not over or understaffed, and understand future needs.

SWOT Matrix Template

The classic SWOT layout provides a clear view of your compiled findings as they relate to your human resources plan. The template also includes a column for rating the importance of each item by category so you can have a clear understanding of how the analysis elements compare and which will need the most attention. You can add Excel worksheets to hold supporting data and clarify the basis of your findings. 

Download Basic SWOT Matrix Template

If you’re looking for different formats in Excel, PowerPoint, or Word, you can find free SWOT templates here . 

Step Four: Estimate Gaps

With your forecast completed, you’ll have an understanding of future needs and if you will need to fill them with external workers hired full-time, part-time, or as contractors. If you have the right number of employees that don’t have the right skills, you can use training and development to upgrade employee skills to fill the gaps, or you may need to deploy workers in another role.

Employee Training Plan Template

Training is relevant for both employee success and team member retention. Though training takes time and effort, it's essential to have a plan in place to ensure a productive ramp-up period for new employees or existing employees who are learning the tasks and responsibilities of a new role. With this adaptable employee training schedule template, you can create training activities lists, add details about which team members need help to complete each task, track status, and provide a way for the manager and employee to enter feedback.  

Download Employee Training Template

Transition Plan Template

Moving team members to fill different roles can be the ideal solution to filling workforce gaps. When making these changes, ensure that you maintain the information and knowledge the employee had in the initial role. An employee transition plan keeps the information accessible and easy to share. You can also use this transition plan template to assist the person previously in the role train any new team members. Input every aspect of the role that will be useful in the present and future.

Download Transition Plan Excel Template

Step Five: Formulate the Human Resource Action Plan

The human resource plan relies on identifying deficits or surplus in the company. You’ll need to determine if you need to begin recruiting or training, transition, or develop voluntary retirement processes and redeployment in case of a surplus. Include priorities and critical planning issues in your plan.

Action Plan Template

This action plan template provides sections for goals, but you can add more sections to customize it to complete your human resources plan. Goals are translated into actionable steps that you can track to check progress. Assign start and end dates for each action, and take notes about each part of the plan. 

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Step Six: Integrating/Implementing the Plan

This is the most challenging aspect of any human resources plan. The organization often invests time and money on plans that are shelved and not utilized. Company executives need to grant buy-in, embrace the plan, and bring the organization on board. Overcome any potential employee resistance to the process by rolling in one aspect of the plan at a time to help employees acclimate to changes.    Staffing or Recruiting Plan Recruitment is one of the top responsibilities of any human resources team. Searching for, vetting, and finding the right talent to join your team are all crucial steps to ensure the success of your organization. Having a staffing plan in place makes your team aware of the available recruitment sources, hiring goals, and budget. Use this staffing plan to organize all staffing details with columns for budgets, hiring goals, status, and comments. 

‌ ‌Download Staffing Plan Excel Template

Candidate Screening Tracker

If you don’t have an automated system, you can track and manage applicants’ cover letters,  resumes, applications, and details about job openings. Tracking this information can be a lot of work depending on the size of the company and current hiring plan. Use this candidate tracker template to organize candidate documentation and details, and ensure that you provide a positive experience for candidates and people involved in the interview process. Track candidate contact information, phone interview questions and answers, status, comments, next steps, and more using this template.

Download Candidate Tracker Excel Template

Onboarding Plan Template

Onboarding ensures proper training and enculturation for new team members, and is also a powerful retention tool for any organization. Develop your own onboarding plan by using this template to plan activities at each stage of the process. Since a full year of onboarding is a best human resources practice, this spreadsheet shows tasks assigned to individual contacts over a twelve-month period. Add or remove columns to create a comprehensive onboarding plan.

Download Onboarding Plan Template

For more best practice information and free templates to support your human resources planning, read Top Excel Templates for Human Resources . 

Step Seven: Monitoring, Control, and Feedback

Strictly monitoring progress helps identify sticking points in your plan and helps you avoid making changes too quickly. It’s essential to compare actions to how the plan is being implemented to ensure fidelity. The human resource plan is an evergreen document that takes changing circumstances into account. Ongoing measurement, reporting, and continuous improvement efforts will keep the company moving towards its stated strategic goals. 

Project Management Dashboard Template

Monitoring all the changes you need to while executing a complicated human resources plan can be time consuming. With this customizable project management dashboard, you can compile every aspect of the process, share status information with management and other team members, and view the big picture at a glance.

‌ Download Excel Project Management Dashboard

Forecasting Is an Ongoing Process

“HRP plans should be reviewed annually, just after the business completes its strategic planning and forecasting for the year,” says Handrick. “For example, if the business plans to open an additional manufacturing location, or offer additional services requiring tech skills not currently in place, then HR will come along and provide estimates as to how many FTEs, what roles, and what kind of skills will be needed. HRP helps with the budgeting for the next fiscal year, and once approved can get to work filling those roles. In a fast-moving environment, HRP may need to be updated with every major change. For example, let's say your organization is project based and you just won a huge contract. Right away your HRP team will need to work with project managers to estimate staffing needs, whether temp or permanent, contract or hire.”

Human Resource Planning Round-Up: Best Practices and Expert Insights

Our experts share their thoughts on some additional issues to keep in mind as you develop your own plan:

• The Importance of Policy Planning: Company policy supports your human resources plan. Policies such as employment classification, benefits, compensation, performance, and improvement are designed to target not only the selection, training, and support of team members, but also to provide guidelines for conduct in and out of the work environment and many other aspects of employment.
• Social Media as Friend and Foe: Social media sites like LinkedIn and Twitter can be powerful recruiting platforms and a friendly, fun way to communicate with team members. However, they can also potentially be an issue when disgruntled employees or competitors get into negative commentary. It’s important to be alert to your company’s social media profile and to take corrective action when the buzz may not be favorable to your goals. 

Sharon Margules, MA, CPC, ACC and CEO of Margules Leadership Consulting says, “The ability of a business to achieve its strategy is largely based on the talent it has to execute. While market and competitive forces can significantly impact the capacity of an organization’s pursuit of its strategy, the explicit capabilities of those doing the work will determine if the result is a success or failure.”

• The “New” Human Resources Professional: “Ultimately, a good HR person is a good business person,” says Adler. “The best HR professionals are system and integration project managers who understand deadlines and highly complex projects. A great candidate has business experience in something other than HR. In my consulting work, I’ve told CEOs that they should look for HR managers with a business background. I think it’s an important consideration, particularly for large firms.”
• More About Markov Predictive Analysis Modeling: One of the most difficult analyses to execute and potentially one of the most valuable tools in forecasting is the Markov model. It’s not a quick fix, but for most mid-to-large companies, it’s worth the time investment to learn how to execute it. For a detailed explanation, read A Markov Model for Human Resources Supply Forecast Dividing the HR System into Subgroups . 
• Leadership and Succession Planning: “HR plays a critical role in enabling leadership, in mature or scaling organizations, to anticipate and understand the talent capabilities that will be necessary to meet their strategic objectives,” says Margules. She lists four items: 
• HR should have a seat at the table when the strategy is being conceived to align on what capabilities are needed, and by when, to realize the strategy.
• HR needs to influence progressive and aggressive budgeting for resource acquisition, training, coaching, and development every year.
• HR must institutionalize effective succession and talent planning practices at all levels, and build an adaptive organization that can flex its structure to optimize performance.
• HR must use far-reaching ideas to retain its key talent and sustain a highly-engaged workforce in a diverse and driven culture. 
• Plan Implementation: “HR plans should align with business strategy and annual plans and should be adaptive to a volatile and uncertain business climate,” says Margules. “While many organizations take a reactive, in-service approach to HR planning and determine their priorities and plans largely in support of annual plans, the most effective organizations are proactive: They anticipate needs and build plans that achieve short term and long term objectives. They adopt progressive practices such as allocating a portion of the staffing budget and resources to recruit and hire key talent for future-focused work. And, they have enough foresight to invest in high potential programs at multiple levels, entry-level accelerated development programs and coaching to build pools of qualified talent for future growth plans.”
• Buy HR Planning Tools or Do It Yourself? “The problem with traditional human resource planning is that it often hasn't supported the scalability of a growing business,” says Burr. “This is precisely why we have to consider new models for talent management, organizational design, and learning and development to ensure that our human resource planning processes can be flexible to meet the scaling needs of the business. This is part of the reason why you have seen an explosion of people analytics tools in the HR marketplace. It is to fill the demand for flexible and scalable models that provide the needed tools for business leaders to plan their people needs as the business grows.”  Adler concurs and says: “I think a spreadsheet can often do a better job. Workforce planning has been around a long time. I think the main point is to be proactive and less reactive in the planning process.”

Five Challenges to Human Resources Planning and Implementation

“People are naturally change- and-risk-averse. Planning and proper support by HR and the people they hire need to happen 100 percent of the time,” says Adler. More often than not, there are some challenges involved in human resources planning and implementation. Here are the five main hurdles:

• Forecasting Is an Imperfect Art: Human resource planning relies on forecasting and supply, which can never be a 100 percent accurate process. 
• Resistant Workforce: Employees may feel that their workload will increase, so they resist the process, or they may be uncomfortable altering familiar patterns in their work life and tasks.
• Ambiguity and Rapid Change: Uncertainties such as labor absenteeism, employee turnover, seasonal employment, technological changes and market fluctuations all affect planning.
• Inefficient Information Systems: Human resource information systems need to be reliable, comprehensive, and up to date. It makes it difficult to plan without good data about current employees.
• Cost and Time Factors: With all of the work hours involved in completing and repeating the seven steps, human resource planning is a time consuming and expensive process, so companies sometimes avoid it altogether, despite the benefits. 

A Look to the Future of Human Resources Planning

Here are some of the themes experts think will influence human resources professionals, their companies, and the people they hire in the near future:

• Going Global: Globalization, the export of U.S. jobs and the import of non-U.S. employees are already underway, as is offshoring (basing services or processes in different countries). “Globally planning can be complex for any HR professional,” says Burr. “It can be a stressful situation for offshoring and outsourcing of jobs within a firm. HR planning should involve a detailed assessment of the new location globally, the workforce demographics, industry competitors, laws and regulations and the potential impact on U.S. jobs. How do we communicate? How do we train? This will all vary by organization, but a strategic HR plan that communicates the information can lessen the impact. With a sound and detailed HR plan, recruiting, retaining and growing talent within the organization will be much easier.”   “Expect more offshore jobs, outsourcing and contract hiring because frankly they’re cheaper, and in many disciplines like finance, IT, marketing, can do the same work for less,” says Handrick. “Other than providing training for supervisors to manage off-site work teams, there's really no difference for HRP except where the line item goes on the plan. For instance, if you know you'll need 12 FTEs next year, and can get four of them offshore, that line item goes to 'expenses' rather than to 'salary' for the remaining eight.”
• More Technology: Social media will likely be in higher use to reach potential workers, particularly millennials who use Twitter, LinkedIn, and Facebook in their job hunts. Telecommuting and the use of social collaboration tools and video conferencing apps will keep people working and in touch with company culture. Emerging platforms will further streamline basic human resources functions to make onboarding and professional development more cost-effective and accessible from anywhere in the world for a virtual workforce.
• Big Data: Metrics and in-depth analysis of processes and people will become increasingly important in human resources as they are in other functional areas. Data- driven decision making is the future, as are metrics to show ROI in people and technology.  
• Security Issues: All this new technology brings up security concerns for employers and employee. Data breaches are a fact of life, and the threat to personal data security, company security, and supply chain risks will likely continue. 
• Health Care Costs: Costs are likely to continue increasing, since they have been rising steadily in the last several decades. New legislation will perhaps slow the costs of health care. In the meantime, strategies to lower employee healthcare costs will likely take the form of initiatives to improve employee health, and taking advantage of health reimbursement accounts (HRAs) that are consumer-driven or health savings accounts (HSAs).

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HR Business Plan: What Is It And What Are Its Steps?

Every company that has an HR department needs an HR business plan. Without it, you will have inconsistencies when you deal with your employees.

Human resources manage the relationship between your company and its employees. Due to this, it is only natural for human resources to have their own plan of approach to their tasks.

Key Takeaways:

An HR business plan is the strategic approach of the human resources department.

The HR business plan should clarify responsibilities, organize its processes, and create performance standards in which to gauge its success.

First assess the current HR situation, then establish goals and strategies to enact those goals for the HR department.

Make sure your HR strategies comply with legal requirements.

What Is A HR Business Plan?

An HR business plan is a strategic approach your human resource department will follow to accomplish its goals.

Like all business plans, an HR business plan needs to define its objectives, organize systems of measured success, and incorporate a flexible framework. A robust plan can adapt to new scenarios and still focus on its long-term aims.

Though this will vary by company, in general, every HR business plan will want to:

Clarify roles and responsibilities. Focus on the roles and responsibilities of the department and its members. You want to understand the job descriptions of each member of the human resource department. Then decide what the overall purpose of the department is and connect it back to each member. Be aware of any conflicting or contradictory agendas and seek to streamline.

Design and organize processes. Human resources helps hire, train, onboard, and terminate staff. There should be well-detailed plans for each process that keeps the human resources department prepared for any scenario.

Address compensation and benefits. Human resources manages the implementation of benefits and compensation. Therefore, the department’s plan must discuss how this will be handled.

Comply with legal requirements. The human resource department needs to be well-versed in the legal requirements and protections of the employees. The plan should provide a clear compliance with the law.

Create performance standards. A business plan is useless unless it can be evaluated against measures of success. It helps to provide metrics with results to be more objective in analysis.

Tie in to overall business plan. The HR business plan needs to complement the overarching business plan of the company. Avoid any policies or procedures that conflict with the overall business plan.

A human resource business plan will develop these points into a coherent strategy.

Steps To Develop A HR Business Plan

Assess current human resource situation. Before a plan is made, the human resources department and the company executives need to know what they have already. Your company should evaluate the roles and responsibilities of its human resource staff. You will want to see if anything is missing or if there is anything that is expendable.

Establish goals for human resource department. Now that you know what you’re working with, it is time now to think about what you want the human resource department to accomplish. Use the roles and responsibilities you just clarified to arrange practical benchmarks you want the department to make. Make sure goals do not interfere with one another but build toward an overall objective.

Create strategies to enact goals. Once you have your goals in place, it is time to build strategies to accomplish those goals. These strategies should work in tandem, so make sure each one has a logical progression. Like the goals, you do not want your strategies to interfere with one another but instead build towards an overall objective.

Evaluate business plan. Once you enact the plan, you need to make sure you accomplish your goals. Have a feedback system put in place where you can measure the success and failures of your plan. Come up with contingency plans in case your initial plans need to be re-evaluated.

Why Have A Human Resource Business Plan

An HR business plan is needed to establish long-term success with your employees.

Your plan gives focuses on the roles and responsibilities of the department. Human resources play a critical role in the hiring, training, and retention of staff. A business plan will clarify these procedures.

A HR business plan also provides consistency in the implementation of benefits and managing the welfare of the employees.

The human resource business plan empowers the department to perform at its best. In turn, it will help employees be equipped and compensated to perform at their best.

Without a HR business plan, your company is at risk conflicted and contradictory procedures that impede growth and success.

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Conor McMahon is a writer for Zippia, with previous experience in the nonprofit, customer service, and technical support industries. He has a degree in Music Industry from Northeastern University and in his free time he plays guitar with his friends. Conor enjoys creative writing between his work doing professional content creation and technical documentation.

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Strategic Human Resource Planning (SHRM): Guide to Human Resources & Management

Lucija Bakić

April 5, 2024

Strategic human resource planning (SHRM) is a proactive process that aligns human resource capabilities with long-term business goals.

In this guide, we’ll go through the basics of why this foward-thinking approach is so important for resource planning success . This includes its definition, the main steps, and best business practices. Key Takeaways

• Strategic HR management (SHRM) is a key step to ensuring that businesses are resilient and sustainable in the long run.
• Key steps of the process include: analyzing current capacity, forecasting needs, gap analysis, HR strategy implementation and monitoring.
• Many of the challenges of SHRM, such as resistance to change or tracking KPIs, can be addressed by implementing a modern ERP software solution .

What Is Strategic Human Resource Planning?

Strategic human resource planning is part of the broader human resource plan ning (HRP) strategy. This process targets long-term objectives, spanning from one to five years, and ensures that businesses have enough capacity to meet future needs. Strategic HR planning must be aligned with short-term resource planning, which handles daily concerns, such as employee schedules and workloads. Long-term strategies should also be aligned across departments, such as the finances or management, to ensure that initiatives contribute to shared organizational goals. See more : What Is Human Resource Planning ?

Why Businesses Need Strategic HRP

Some of the critical business questions that strategic HRP addresses can include:

• Will you have enough human resources for future needs?
• Which type of talent will you need (regarding skills, seniority, etc.)
• Which conflicts or gaps could appear in your business workflows?
• Do you have contingency plans for various risk factors?

Additionally, it can cover broader concerns, such as the need for organizational flexibility or continuous improvement. As an ongoing process, strategic management provides the perfect answer for businesses to tackle and address complex issues.

5 Main Steps of the Strategic HR Planning Process

The four main steps of strategic HRM include analyzing current capacity, needs forecasting, gap analysis, and strategy development and implementation.

1. Analyzing Current Capacity

This step involves analyzing both internal and external business circumstances that are important for future demand. Internal factors usually include details about your current employees, including their productivity, specific skills, availability, and engagement levels. External factors encompass market trends, economic conditions, and industry-specific demands that could influence future resource requirements. Learn more: Capacity Model Examples

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2. Needs Forecasting

Accurate needs forecasting is one of the most challenging parts of the developing workforce plans. It involves predicting the skills, overall capacity, and roles needed to keep a business relevant during changing market conditions and technological advancements. Therefore, it requires a thorough understanding of your human capital and the industry. Needs forecasting includes:

• Supply forecasting: Assesses the current workforce and external labor market trends to identify whether there will be an excess or shortage of talent in the future.
• Demand forecasting: Focuses more on demand, i.e., quantifying future labor requirements to ensure that business goals will be met.

3. Gap Analysis

Gap analysis takes the first two steps of the human resource management process to pinpoint specific areas of improvement — it compares the current workforce capabilities with future needs to identify conflicts or discrepancies. For example, a retail chain looking to expand its online presence might consider its current capacity, and realize that it has enough technical roles to go into e-commerce. However, by conducting needs forecasting of the competitors, it may recognize the need for marketing professionals skilled in SEO or digital marketing to drive more of their customer base to their website.

4. Strategy Development

The next step involves developing specific strategies to address resource conflicts and help your business reach its goals. Some of these may include:

• Talent management strategies can be developed to address issues with workforce management. It can include processes such as recruiting, retaining, and developing employees.
• Employee engagement strategies are usually developed to tackle low morale and productivity. Organizational strategies might include improving collaboration, manager-to-employee feedback, or other capacity building examples .
• Development programs are a specific part of talent management, aimed to address skill gaps through upskilling or reskilling employees. Strategies may include mentoring by senior employees, workshops, or other training opportunities.
• Succession planning is utilized to mitigate the risk of key positions becoming vacant unexpectedly. It usually involves identifying high-risk positions and then selecting and preparing potential employees to fill them in the future.

Learn more about workload management .

5. Implementation and Monitoring

To ensure that your strategies are effective across time, it’s necessary to closely monitor progress, usually by analyzing various key capacity performance indicators (KPIs). Setting desired targets can be a good way of determining if you’re on the right track — for example, an agency with low productivity might set its desired utilization rates at 80%.

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However, it’s equally important to keep in mind that some benefits of successful ERP can be difficult to quantify or determine in a short amount of time. This can include better workplace culture or increased employee satisfaction. See more: ERP benefits for businesses

Documenting Your Strategic HR Plan

The strategic HR document should include an outline of the organization’s human resource objectives, the strategies for achieving them, and the steps for implementation. Putting your initiatives into writing can help drive alignment across various teams and ensure that everything is progressing according to plan.

How and Where to Create Documentation?

According to research by Forrester, 97% of organizations have minimal or no digitally documented processes. While traditional documentation can be better than no documentation, consider the benefits of automating information gathering and sharing with ERP software solutions .

We used to have a project management tool, a time tracking tool, a support tool, a way we handled opportunities and sales-driven processes. Those were all separate tools that we had, and it wasn’t good. It also meant that all that data was being lost every time we switched between tools , or we had to find a way to normalize the data between them. And now, the fact that it’s all in one, it’s really a game changer.

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For example, the resource and agency management tool Productive can help you automate the work scheduling process with its resource planning model template, provide real-time reporting on utilization rates, manage employee availability and time off, and more. Another great feature you can consider is collaborative documentation with AI content creation. This can help you keep all essential project data on a single platform.  

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Challenges & Best Practices for Strategic HRP

Some of the main challenges of strategic HRP include ensuring buy-in at all organizational levels, handling resistance to change, efficiently monitoring performance, and fostering continuous improvement.

Getting Business-Wide Buy-In

Organizational changes need to be effected from the top to the ground-level staff. Getting buy-in for new initiatives from leaders and other key stakeholders is essential to get the most out of your HRP initiatives. Silos can cause issues for adoption and cause miscommunications across teams, where one part of the company may not be aware of the changes or understand their role in implementation.

Overcoming Resistance to Change

According to Deloitte, some of the biggest roadblocks to new initiatives include resistance to change (82%) and inadequate sponsorship (72%). Both can be addressed with clear communication and transparency, so that all employees understand why and how initiatives are being implemented. Asigning change ambassadors within teams can facilitate a smoother transition. Learn more: Efficient resource management for multiple projects

Reviewing and Analyzing Progress

Good initiatives can stumble and fall if there’s no way to measure actual performance. Selecting the right key performance indicators and implementing a way to analyze them is important for the success of HRP initiatives. For example, a consulting firm that has issues with turnover might implement additional benefits or hire more staff to balance workloads — the KPIs to be monitored would be employee satisfaction, the utilization rate , and the attrition rate.

Productive can forecast KPIs for professional services agencies, like revenue and profit margins

Incremental Changes and Continuous Innovation

Another reason why monitoring KPIs is so important is that incremental but timely improvements are always better than extensive changes. Smaller adjustments allow businesses to remain flexible and agile to adapt to market demands and internal changes without causing disruptions.

The Role of Analytics & HRP Software

Finally, most, if not all challenges mentioned above can be streamlined with the right tools for resource planning and HR management. The benefits of using such tools include:

• Improved timeline estimation (60%)
• More effective use of resources (55%)
• Enhanced team communication (49%)
• More accurate metrics (38%)

There are many potential options on the market, but consider using a comprehensive software for your strategic planning. These types of solutions can give you a competitive advantage with benefits such as centralized workflows, unified data, and reduced costs for tech stacks.

Get the most out of your agency’s resources with Productive

As an all-in-one solution tailored to agencies of all shapes and sizes, Productive can help you manage both day-to-day resource management and create strategic plans. Key features include: resource allocation, employee performance management, real-time reporting, project budgeting, agency workflow automations, and much more. Learn more about Productive by booking a demo today.

What are the 4 HR strategies?

The 4 HR strategies include talent acquisition and retention, learning and development, performance management, and workforce planning and forecasting (check out our workforce planning definition ). Each strategy addresses a part of the human resource planning process and contributes to achieving organizational success.

What is strategic resource planning?

Strategic resource planning is a part of human resource management that examines the capacity and needs of your future workforce for sustainable business growth. It’s focused on ensuring that your business has the critical skills for meeting business goals over a long period of time.

What are the 5 steps in human resource planning?

The 5 main steps in human resource planning include: analyzing current HR availability, forecasting future needs, gap analysis, developing strategies for human resource management, and implementing and monitoring your initiatives.

What is SHRM and its importance?

SHRM or strategic human resources management is a forward-looking approach to managing human resources and aligning HR practices with organizational goals. It allows businesses to remain competitive, sustainable, and flexible in dynamic market conditions.

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4 steps to strategic human resource planning

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4 steps to strategic human resources planning

• Assess current HR capacity
• Forecast HR requirements
• Develop talent strategies
• Review and evaluate

It’s easy to understand the importance of the human resource management planning process—the process by which organizations determine how to properly staff to meet business needs and customer demands. But despite its obvious importance, many organizations do not have a strategic human resource planning process in place, with many HR professionals reporting their departments need to improve strategic alignment.

If you’ve considered developing an HR planning process, you’re in the right place. This article will explain what human resource planning entails and how to document your strategic plan. With this knowledge under your belt, you’ll be filling positions and growing as a company in no time.

Introduction to strategic human resource planning

In order to improve the strategic alignment of staff and other resources, it’s essential to understand how to create a strategic HR planning process. At its most basic level, strategic human resource planning ensures adequate staffing to meet your organization’s operational goals, matching the right people with the right skills at the right time.

It’s important to ask where your organization stands currently and where it is going for your plan to remain flexible. Each company’s plan will look slightly different depending on its current and future needs, but there is a basic structure that you can follow to ensure you’re on the right track.

The strategic human resource planning process begins with an assessment of your current staff, evaluating whether it fits the organization’s needs. After that, you can move on to forecasting future staffing needs based on business goals. From there, you’ll need to align your organization’s strategy with employment planning and implement a plan to not only to hire new employees but also to retain and properly train the new hires—and your current employees—based on business changes.

Read on to understand human resource planning in more detail.

1. Assess current HR capacity

The first step in the human resource planning process is to assess your current staff. Before making any moves to hire new employees for your organization, it’s important to understand the talent you already have at your disposal. Develop a skills inventory for each of your current employees.

You can do this in a number of ways, such as asking employees to self-evaluate with a questionnaire, looking over past performance reviews, or using an approach that combines the two. Use the template below to visualize that data.

2. Forecast HR requirements

Once you have a full inventory of the resources you already have at your disposal, it’s time to begin forecasting future needs. Will your company need to grow its human resources in number? Will you need to stick to your current staff but improve their productivity through efficiency or new skills training? Are there potential employees available in the marketplace?

It is important to assess both your company’s demand for qualified employees and the supply of those employees either within the organization or outside of it. You’ll need to carefully manage that supply and demand.

Demand forecasting

Demand forecasting is the detailed process of determining future human resources needs in terms of quantity—the number of employees needed—and quality—the caliber of talent required to meet the company's current and future needs.

Supply forecasting

Supply forecasting determines the current resources available to meet the demands. With your previous skills inventory, you’ll know which employees in your organization are available to meet your current demand. You’ll also want to look outside of the organization for potential hires that can meet the needs not fulfilled by employees already present in the organization.

Need advice on calculating your staffing needs and developing a staffing plan?

Matching demand and supply

Matching the demand and supply is where the hiring process gets tricky—and where the rest of the human resources management planning process comes into place. You’ll develop a plan to link your organization’s demand for quality staff with the supply available in the market. You can achieve this by training current employees, hiring new employees, or combining the two approaches.

3. Develop talent strategies

Recruitment

In the recruitment phase of the talent development process , you begin the search for applicants that match the skills your company needs. This phase can involve posting on job websites, searching social networks like LinkedIn for qualified potential employees, and encouraging current employees to recommend people they know who might be a good fit.

Once you have connected with a pool of qualified applicants, conduct interviews and skills evaluations to determine the best fit for your organization. If you have properly forecasted supply and demand, you should have no trouble finding the right people for the right roles.

Decide the final candidates for the open positions and extend offers.

Bring clarity to the hiring process to find the best candidates for your company.

Training and development

After hiring your new employees, it's time to bring them on board. Organize training to get them up to speed on your company’s procedures. Encourage them to continue to develop their skills to fit your company’s needs as they change. Find more ideas on how to develop your own employee onboarding process , and then get started with this onboarding timeline template. 

Employee remuneration and benefits administration

Keep your current employees and new hires happy by offering competitive salary and benefit packages and by properly rewarding employees who go above and beyond. Retaining good employees will save your company a lot of time and money in the long run.

Performance management

Institute regular performance reviews for all employees. Identify successes and areas of improvement. Keep employees performing well with incentives for good performance.

Employee relations

A strong company culture is integral in attracting top talent. Beyond that, make sure your company is maintaining a safe work environment for all, focusing on employee health, safety, and quality of work life.

4. Review and evaluate

Once your human resource process plan has been in place for a set amount of time, you can evaluate whether the plan has helped the company to achieve its goals in factors like production, profit, employee retention, and employee satisfaction. If everything is running smoothly, continue with the plan, but if there are roadblocks along the way, you can always change up different aspects to better suit your company’s needs.

Why document your strategic HR plan

Now that you know the steps to strategic human resource planning, it's time to adapt those steps to your own organization and determine how to execute.

There are a number of reasons to document your strategic human resources plan, particularly in a visual format like a flowchart. Through documentation, you standardize the process, enabling repeated success. Documentation also allows for better evaluation, so you know what parts of your plan need work. In addition, a properly documented plan allows you to better communicate the plan throughout the organization, including how everyone, from the top down, can contribute to make sure the plan works. 

Document every step of the process, from beginning to end, and find room for improvement in your human resources process along the way.

Start creating your own strategic human resource plan with this template.

About Lucidchart

Lucidchart, a cloud-based intelligent diagramming application, is a core component of Lucid Software's Visual Collaboration Suite. This intuitive, cloud-based solution empowers teams to collaborate in real-time to build flowcharts, mockups, UML diagrams, customer journey maps, and more. Lucidchart propels teams forward to build the future faster. Lucid is proud to serve top businesses around the world, including customers such as Google, GE, and NBC Universal, and 99% of the Fortune 500. Lucid partners with industry leaders, including Google, Atlassian, and Microsoft. Since its founding, Lucid has received numerous awards for its products, business, and workplace culture. For more information, visit lucidchart.com.

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How to create a human resources plan

Benjamin Franklin is often quoted as saying, “If you fail to plan, you are planning to fail.” We can’t deny that there are few instances in life in which the result turns out better without preparation, especially when we’re talking about business. As a central component of any company, the HR department is no exception to this rule, meaning the human resources plan must be given the importance it deserves. 

If you’re still not sure what the purpose of human resources planning is , then this article is for you. We’ll explain in detail how to translate your department’s strategic thinking onto paper and put it into practice. 

What is s trategic human resource planning ?

The human resources plan outlines the general strategy for this business area . It includes measures to adapt to current and future supply and demand requirements relating to the workforce, as well as pay policies, wellbeing, etc. 

Generally, the document considers the following topics: 

• How many staff are required to fulfil the organisation’s needs . 
• Staff management strategies .
• Job descriptions for all posts.
• Channels and sources for attracting candidates.
• Recruitment and selection processes.
• Growth and development planning.

The importance of a human resources plan

A company human resources plan is essential if the staff and organisation are to operate effectively . This document is also key to achieving a company’s business objectives. 

It also serves to:

• Promote flexibility within the organisation : we are living in a constantly changing world. Effective planning helps companies adapt more easily to new situations and negotiate market volatility. 
• Improve the distribution and use of internal talent : by analysing and organising the human capital, companies can make better use of internal talent and distribute employees more coherently. 
• Facilitate growth for small to medium enterprises : HR planning is a fundamental aspect of growth strategies. It is important to know when to subcontract, how many people to hire, what benefits will it bring, etc.  

The objectives of a human resources plan

Why do companies design human resources management plans ? The main goals are as follows:  

• Supply information : the data acquired through a company’s human resources plan are hugely important to, for example, identify surplus, unused resources. Similarly, the information can also be used in other management functions.
• Analyse the current workforce : the document should also determine the workforce’s strengths and existing skills. 
• Use human resources effectively : Planning is the HR management’s primary responsibility, as their duty is to ensure efficient use of the current and future labour force. 
• Identify salary gaps : the document will also examine any potential salary gaps and, in turn, create more equal policies. 
• Ensure internal wellbeing : good planning and organisation almost automatically generate an improvement in the work environment, boosting productivity and employee satisfaction. 
• Retain talent : this, in turn, has a direct impact on talent retention. Employees who are content in their job are less likely to accept offers from other companies.
• Foresee potential department needs : all planning should include a forecasting section. Understanding when it will be necessary to incorporate new people into the team and what type of role is required is essential. 

6 steps to create a human resources plan

At this point you may be thinking, “but how do I do a human resources plan ?” If that’s the case, here are the steps you need to follow:

1. Define the plan’s objective

Any measures that are developed by a company must be aligned with the general business objectives. This goes for the human resources plan, too.  

Aside from this, the specific objectives of the plan will be targeted at a particular area: employee retention, attracting talent, promoting the business culture, etc. It is important to be clear and precise at this stage for the content to be useful and have a real impact on the organisation. 

2. Analyse the current human capital

The next key step is to analyse and evaluate the availability and resilience of the current resources. This will entail carrying out an exhaustive assessment of each member of the organisation in terms of skills, experience, performance, seniority, etc. 

3. Carry out a needs forecast

Analysing future labour requirements is an important step in human resources planning. Although there will always be fluctuations, it is critical to have a forecast in place of factors such as: redundancies, dismissals, retirements, promotions, etc.

4. Write the HR plan

Once you’ve gathered all the information, it’s time to create a solid plan that fulfils current needs and forecasted possibilities. For example, you will have to decide whether it is necessary to hire, train or subcontract labour to achieve the company’s objectives. 

In general, try to include the following information: 

• Definition of targets and goals.
• Required measures, expected results and resources used. 

5. Implement the plan 

Implementing the plan is probably the most challenging step. Many organisations, in fact, do not achieve what they have set out to do. To approach it successfully, trust your team and introduce changes gradually. Try to handle any incidents as they come along and make sure you are complying with the organisation’s general standards. 

6. Monitor and review the process

HR planning is an ongoing process. It is important to review the plan periodically to make sure the strategy is pointing in the right direction and achieving the objectives.

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Human Resource Planning Process: A Practitioner’s Guide

What is human resource planning?

Importance of human resource planning

• Foreseeing and being prepared for cultural shifts and evolutions of the business environment. 
• Anticipating and identifying job and skill changes to meet labor demands. 
• Hiring the right talent on a timely basis to support expanded, decreased, or diversified organizational plans.
• Adapting hiring techniques and benefits to source and hire the best candidates. 
• Ensuring your workforce has optimal technical and soft skills to increase productivity.
• Developing career paths for employees to increase their satisfaction and value.
• Building and maintaining effective key HR processes. (Recruitment and selection , training and development, compensation and benefits planning, performance management .)
• Making good use of your HR budget .
• Maintaining compliance with company policies and government regulations.
• Prolonged time and diligent effort are required.
• It will cost money.
• Needing to rely on forecasting, which is never completely accurate.
• Ambiguity and deviations in the market are inevitable.
• Technology/information systems may be inadequate and can’t provide all the data you need.
• Having to combine data from multiple sources.
• Internal changes are met with resistance from employees.

5 steps in the human resource planning process

1. analyze organizational objectives and plans, 2. evaluate the current state of your workforce and uncover gaps.

• What is your total number of employees?
• How many employees are in each department?
• How many employees hold each position?
• What are the education, skills, competencies, and qualifications of your employees?
• How do employees rank in the performance evaluation data?
• What are the ages of your employees? (How many are approaching retirement?)
• Meet with managers and department heads for their judgment of their employees’ abilities and where there is room for improvement.
• Conduct employee self-evaluations.
• Analyze HRIS data.
• Look at past performance reviews.

3. Forecast future HR requirements

• New products or services on the horizon
• Prospective mergers or acquisitions
• Labor costs
• Projected employee retirements/vacancies and turnover rates
• Technological advances and automation

• Recognizing the current workforce status.
• Ascertaining what the ideal situation looks like.
• Identifying where the current lapses exist.

• Do we need to add more employees for new roles? If so, where from? How many? Full-time or part-time?
• Does the market have an adequate supply of potential employees?
• Do we need to train and develop our existing employees for reallocation? Which ones?
• Are we drawing on the expertise of current employees sufficiently?
• Do we need to adapt any of our HR policies or practices to accommodate future human resources needs?  

4. Develop and implement a plan

5. Monitor, review, and reassess your plan

Breaking it down, weekly update.

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HR Business Plan: What Is It and Why Do You Need It?

As a business owner, it is not enough to only have a business plan in place. In order to have a business run smoothly from top to bottom, every department must have a business plan. One of the first departments to focus on is the Human Resources (HR) department. This is because many of the compliance functions and hiring decisions are made from this department. It is the heart of any business in many ways and, as such, it should be treated with importance.

Table of Contents

Why does every business need an hr business plan, why is your standard business plan not enough, steps to take to develop your hr business plan, the importance of examination and revision of your plan.

Just like a business needs a plan for success , so does the HR department. Real success for a business comes in the form of ensuring that all of the departments are working toward a common goal. The common goal is something that is outlined in the overall business plan. The department plan will look different for every department because they should all be working toward different goals, but at the end of the day, they should all still be working toward the ultimate goal of bringing the business together and making it better. Every business is different, and the HR business plan that is developed for one business may not be the exact same as it is for another business. As part of this process, it is important to analyze the needs of the specific business at hand. Another key component of this is that the Human Resources department should benchmark industry standards and requirements. Due to the heavy compliance requirements, this department is a bit different than many others within a business.

Another reason why it is so important to have an HR business plan is because every business wants to ensure compliance in all areas that require attention. The importance of this is that if this does not happen, the business could have a lot more trouble later on in the form of government fines or other penalties. Compliance is a big part of any business and HR department. If there is not a plan in place for things such as verifying that employees can legally work in the United States, minimum wage rules are met, and more, the business will be open to a lot of potential for risk. One way or another it will find you, and you will have to deal with it as a business if it is not kept up with from the beginning. By failing to take into account both the business and the regulatory needs of the department, you could be setting yourself up for failure before you even begin making your business profitable and successful. Do not make this mistake, like many other businesses have done, as it could end up costing you your business.

A common question during the process is, why is there a need for a separate plan for the HR department? A business plan is designed to outline the goals and processes for the business as a whole. It does not take into account how things should be managed by various departments. It is still important to have a business plan , but it should be understood that it is not a document that can take into account all of these other factors that are important to the growth of the business. If you take a look at your business plan, you will find that, most likely, aspects such as compliance requirements and regulations have not been included. There are many different parts of HR that need to be a priority for the department, and there should also be a plan in place to determine how the department will serve the business and the employees. This should not be included in the overall business plan because it would be out of place and it would not be directly tied to the department and the goals of that department. This is why it makes the most sense to ensure the two are separate with ties that bind them, and that the HR department has ownership of their plan.

Once the business plan is created, it is time to develop the HR business plan. To do this, it is important to ensure that all areas are examined and that the goals of the business plan are in line with the business. Use these steps to develop your own HR business plan for your business:

• Step One: Determine what is needed for the business from the HR department – It is imperative to know exactly what should come from the HR department. The following considerations should be outlined in your plan: the hiring needs for your employees, such as how many employees are needed at capacity and when to hire more people; onboarding schedules and orientation days to ensure employees are set up for success; employee performance reviews to document how employees are doing and when it is time to terminate (if applicable); payroll so everyone gets paid accurately and on time; and terminations. This is a good idea because there should not be a lot of time spent developing a plan for things that will not be handled by the HR department. As part of this process, it may be beneficial to develop a clear purpose and direction for the department. As part of the plan, there should be an outline for current requirements as well as a plan for future years and goals to work toward.
• Step Two: Understand and review all of the detailed job descriptions that are in place for employees in this department – Whatever the staff make-up is for the department, like an HR Assistant or an HR Manager, it is best to line up their job descriptions with the expectations of the department. As part of this examination process, if there are components of their job descriptions that are not being performed or are being underperformed that would add value to your company, they should be included in the HR business plan. Put it in writing that these are the goals of the roles and the department. It is also important to detail why they should be a part of the process. To ensure that there is nothing missing from this component of your HR business plan, it is also smart to review an HR department audit book or program.
• Step Three: Define specific HR functions – As part of this process, there may be some functions or action items that should be delegated to other departments because they make more sense. There may even be some that need to be added. Creating the right list of delegations within the department and the business helps to ensure that all departments are functioning to the best of their ability. If you have your HR department focusing on things such as providing the employee feedback, then you may want to delegate it to the department that makes more sense, such as management. There should not be any functions on the list that do not serve the needs of the business and the department.
• Step Four: Determine how other departments view the HR department – HR is the heart of a business and, as such, there should be a desire to gain an honest assessment of satisfaction of the department. This information can be gathered from other executives in the company as well as other employees. Find out what their experience has been with the department and how they perceive the actions of the department. As part of this feedback, there could be some services that are wanted by employees that are not currently offered by the department. Try to find out how the HR department can better support the mission, vision, and goals of the business. Develop some questions to go in a survey to all employees and then hold a meeting to discuss the results and encourage open and honest feedback. This feedback from the outside looking in can be very valuable to the department and will provide the added perspective needed to truly grow the company as well as the department simultaneously.
• Step Five: Get advice from other professionals in the field – While getting internal information and feedback is key, it can also be very beneficial to discuss the requirements of an HR department with other professionals in the field. There are entire organizations dedicated to HR and it can be easy to find recent published information from professional organizations in the field such as the Society for Human Resource Management (SHRM). Consider going to some local association meetings and talking to other professionals if you do not have connections with any in the area already. By looking at these things, it should be easy to develop a good scope of what the HR department should look like in terms of what the norms are in the field and assist with developing planning priorities.
• Step Six: Use the internal and external information to create an HR business plan that works for the business – Develop a list of priorities for the department and go into depth on some of these items. With everything laid out, the department can determine exactly what is a priority, what may need to be expanded in the department, and how to focus the efforts. With all of this information available there should be a lot to work with, but it is important to prioritize things so the plan is well organized and formulated. List the major functions, outline what is missing, and then go into detail. As part of the HR business plan, it is important to be very thorough in this process because there needs to be clear direction in all things that should be completed within the department.
• Step Seven: Re-delegate tasks – Now you have your HR business plan in place, re-delegate tasks to all members of the team to ensure that all components are captured and that you are moving in the right direction. It may take some time to get all of this down to a science in the department, but you will be on the right path in terms of how you want to run the department and the direction that you plan to go in over the next few years.

Once there is an HR business plan in place, the work is not over. Just like with a business plan, it is important to continue to revisit the HR business plan on a regular basis. As the business grows and as goals are met, there will be some components of the HR business plan that will need to be updated. The plan should outline how things will be run for a successful HR department, but it is not meant to be a static document. It is one that will grow with the company, meaning that it will need to be examined at least every two years. Sometimes there may be no need to make any changes while other times a lot of changes will need to be made. It will depend on a variety of factors such as whether or not the department has implemented new technology, whether or not employment laws have changed, and even how much the business has grown. As there are many factors that can play into this, it is important to ensure it remains a living document that is updated as needed.

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Human Resource Planning: Meaning, Process, Types, & Importance

Human Resource Planning (HRP) is a critical component of an organization’s strategic framework. It involves forecasting the organization’s future human resource needs and developing strategies to meet those needs. Effective HRP ensures that the organization has the right number of people, with the right skills, in the right places, at the right times. This comprehensive process helps organizations achieve their goals, improve efficiency, and maintain a competitive edge. This article delves into the meaning, process, types, and importance of Human Resource Planning.

Meaning of Human Resource Planning

Human Resource Planning, also known as workforce planning , is a systematic process aimed at ensuring that an organization has the necessary human capital to meet its objectives. It involves analyzing and forecasting the human resource requirements, considering both the internal and external factors that could affect the availability of people with the necessary skills and competencies.

HRP is a proactive process that helps organizations anticipate and manage their workforce needs. It aligns human resource management with the overall strategic plan of the organization. By doing so, HRP ensures that the organization can respond effectively to changes in the business environment and maintain a competitive advantage.

The Process of Human Resource Planning

The HRP process typically involves several key steps:

1. Analyzing Organizational Objectives

The first step in HRP is to understand the organization’s long-term goals and objectives. This involves analyzing the strategic plan and identifying the human resources needed to achieve these objectives. Understanding the direction in which the organization is headed helps in determining the type and quantity of workforce required.

2. Assessing Current Human Resources

The next step is to assess the current human resource inventory. This involves evaluating the existing workforce in terms of numbers, skills, competencies, qualifications, and performance levels. Tools such as skills inventories, performance appraisals , and employee databases are often used in this step.

3. Forecasting Future Human Resource Needs

Once the current human resources are assessed, the next step is to forecast future HR needs. This involves predicting the demand for various types of jobs and skills in the future. Factors such as business expansion, technological advancements, and market trends are considered in this forecast.

4. Identifying Gaps in Human Resources

After forecasting future needs, the next step is to identify the gaps between the current HR inventory and the future HR requirements. This involves determining the number and type of employees needed in the future and comparing it with the current workforce.

5. Developing HR Strategies

To address the identified gaps, organizations develop HR strategies. These strategies may include recruitment, training and development, succession planning, and workforce reduction plans. The aim is to ensure that the organization has the right people with the right skills at the right time.

6. Implementing HR Plans

Once the strategies are developed, they need to be implemented. This involves putting the plans into action and managing the changes required to achieve the desired workforce composition. Effective communication and collaboration across various departments are crucial during this phase.

7. Monitoring and Evaluation

The final step in the HRP process is to monitor and evaluate the effectiveness of the HR plans. This involves tracking the progress of the implemented strategies, assessing their impact on organizational performance, and making necessary adjustments. Continuous monitoring helps in ensuring that the HR plans remain aligned with the organizational objectives.

Types of Human Resource Planning

There are different types of HRP, depending on the scope and focus of the planning process. These include:

1. Strategic Human Resource Planning

Strategic HRP is a long-term approach that aligns human resource management with the overall strategic goals of the organization. It involves forecasting the future HR needs based on the strategic direction of the company and developing plans to meet those needs. Strategic HRP focuses on building a workforce that can support the organization’s long-term objectives and adapt to changes in the business environment.

2. Operational Human Resource Planning

Operational HRP is a short-term approach that focuses on the day-to-day management of human resources. It involves planning for immediate HR needs based on the current operations of the organization. This type of planning is more tactical and focuses on managing the existing workforce to ensure smooth operations. It includes activities such as scheduling, staffing, and addressing immediate HR issues.

3. Workforce Planning

Workforce planning is a subset of HRP that focuses specifically on the supply and demand of labor. It involves analyzing the current workforce, forecasting future labor needs, and developing strategies to ensure that the organization has the right number of employees with the right skills. Workforce planning is often used to address specific labor market challenges, such as skill shortages or high turnover rates.

4. Succession Planning

Succession planning is a type of HRP that focuses on identifying and developing internal talent to fill key leadership positions in the future. It involves assessing the potential of current employees, providing them with development opportunities, and preparing them for future leadership roles. Succession planning helps in ensuring a smooth transition of leadership and maintaining organizational stability.

5. Contingency Planning

Contingency planning is a type of HRP that focuses on preparing for unexpected events that could impact the workforce. It involves identifying potential risks, such as natural disasters, economic downturns, or sudden loss of key employees, and developing plans to address these risks. Contingency planning helps in ensuring business continuity and minimizing the impact of unforeseen events on the workforce.

Importance of Human Resource Planning

Human Resource Planning is essential for several reasons:

1. Aligning HR with Organizational Goals

HRP ensures that human resource management is aligned with the overall strategic goals of the organization. By understanding the long-term objectives, HR professionals can develop plans to meet the future workforce needs. This alignment helps in achieving organizational goals more efficiently and effectively.

2. Improving Workforce Utilization

Effective HRP helps in optimizing the utilization of the workforce. By accurately forecasting the demand and supply of labor, organizations can avoid overstaffing or understaffing situations. This leads to better utilization of human resources, improved productivity, and reduced labor costs.

3. Addressing Skill Gaps

HRP helps in identifying and addressing skill gaps in the workforce. By analyzing the current HR inventory and forecasting future needs, organizations can identify the skills that are lacking and develop training and development programs to address these gaps. This ensures that the organization has the necessary skills to achieve its objectives.

4. Enhancing Employee Development

HRP plays a crucial role in employee development. By identifying the future HR needs and the skills required, organizations can provide targeted development opportunities for their employees. This not only helps in building a skilled workforce but also enhances employee satisfaction and retention.

5. Ensuring Business Continuity

Effective HRP helps in ensuring business continuity by preparing for potential risks and uncertainties. By developing contingency plans and succession plans, organizations can minimize the impact of unexpected events on the workforce and maintain business operations.

6. Supporting Change Management

HRP is essential for managing change effectively. As organizations undergo changes such as mergers, acquisitions, or restructuring, HRP helps in managing the workforce transition smoothly. It involves planning for the new workforce requirements, addressing employee concerns, and ensuring that the organization has the necessary talent to support the changes.

7. Legal Compliance

HRP helps organizations comply with labor laws and regulations. By understanding the legal requirements related to employment, organizations can develop HR plans that ensure compliance with these laws. This helps in avoiding legal issues and maintaining a positive reputation.

8. Enhancing Organizational Agility

HRP enhances organizational agility by enabling organizations to respond quickly to changes in the business environment. By forecasting future HR needs and developing flexible HR plans, organizations can adapt to changes such as technological advancements, market trends, and competitive pressures. This agility helps in maintaining a competitive edge.

9. Promoting a Proactive Approach

HRP promotes a proactive approach to human resource management . Instead of reacting to workforce issues as they arise, HRP involves anticipating future needs and developing plans to address them. This proactive approach helps in minimizing workforce disruptions and improving organizational performance.

Human Resource Planning is a vital process that helps organizations align their human resource management with their strategic objectives. By forecasting future HR needs and developing strategies to meet those needs, HRP ensures that organizations have the right people, with the right skills, in the right places, at the right times. The process of HRP involves analyzing organizational objectives, assessing current human resources, forecasting future needs, identifying gaps, developing HR strategies, implementing plans, and monitoring and evaluating their effectiveness.

There are different types of HRP, including strategic HRP, operational HRP, workforce planning, succession planning , and contingency planning. Each type focuses on different aspects of human resource management and addresses specific organizational needs.

The importance of HRP cannot be overstated. It helps in aligning HR with organizational goals, improving workforce utilization, addressing skill gaps, enhancing employee development, ensuring business continuity, supporting change management, ensuring legal compliance, enhancing organizational agility, and promoting a proactive approach to HR management.

In an ever-changing business environment, effective HRP is crucial for organizations to maintain a competitive edge and achieve long-term success. By investing in HRP, organizations can build a skilled and adaptable workforce that can support their strategic goals and drive organizational growth.

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Human Resource Planning (HRP): A Step-By-Step Guide

In today’s rapidly evolving business landscape, having a plan in place for managing your human capital is key — and that’s where human resource planning (HRP) comes in. Human resource planning plays a critical role in making sure that your organization is well-equipped with the right talent at the right time.

Today, we’re walking through the intricacies of HRP so you can implement this practice in your organization.

What Is Human Resource Planning?

Human resource planning, or HRP, stands out as a strategic and methodical process designed to ensure that your organization fully leverages its human capital . It is not a one-time event but rather a continuous journey toward operational excellence and strategic alignment.

At its core, HRP aims to establish a seamless alignment between your employees and their respective roles, meticulously crafting a workforce that is both skilled and adequately sized to meet your organizational demands.

This proactive approach goes a long way in safeguarding your business against potential manpower shortages or surpluses, ensuring that you are well-prepared for the future.

Why Is HRP Important?

HRP is crucial for syncing your current workforce with your future needs. It entails a rigorous analysis of your existing staff, evaluating their skills, competencies, and performance.

This is where metrics come into play, providing a quantitative backbone to your workforce planning efforts. By leveraging data-driven insights, you can make informed decisions, ensuring that your team is not only talented but also aligned with your business objectives.

HRP doesn’t stop there, though — it’s a comprehensive approach that intertwines various facets of human resource management. Staffing, forecasting , performance management, and employee retention all fall under its umbrella. Each of these elements is crucial in building and maintaining a robust workforce.

In terms of staffing, HRP helps you decipher not just the number of employees you need, but also the types of skills and competencies they should possess. Forecasting, on the other hand, empowers your HR department to anticipate future demand, aligning your human resources with your company’s strategic direction.

Performance management is another vital cog in the HRP machine. It ensures that your employees are not just present but also productive and engaged. This, in turn, enhances employee retention, fostering a company culture that values growth, stability, and satisfaction.

HRP even plays a role in shaping your company culture . By aligning your human resources with your company’s needs and values, you create an environment where employees feel valued and aligned with the organization’s goals.

What Are the Advantages of Human Resource Planning?

At its core, human resource planning places the right talent in the right place at the right time, ensuring that your organization’s objectives align with your workforce’s capabilities. Now, let’s talk about the advantages of HRP and how it can lay the foundation for organizational success.

Ensures Effective Management of Current Employees

Strategic workforce alignment is at the heart of HRP. With effective human resource management, HR professionals can ensure that the current workforce is in sync with the company’s overarching goals.

This alignment can translate to better resource allocation, more informed decision-making, and enhanced overall performance.

Reveals Knowledge Gaps in the Workforce

The ever-evolving business landscape means organizations need to be adept at forecasting and adapting — and human resource planning plays a role here.

By examining current employees’ skill sets and comparing them with future needs, knowledge gaps can become more apparent. Addressing these gaps, whether through hiring new talent or upskilling existing employees, helps you ensure that your business stays competitive.

Balances HR Costs

Cost-effectiveness is crucial for the HR planning process. By anticipating future human resource needs, last-minute external recruitments — which often come with high costs — can be avoided.

Plus, recognizing surplus areas within your current workforce allows for internal reassignments to take place, cutting down on recruitment and onboarding expenses.

Keeps Companies Adaptable to Change

Change is constant, especially in today’s fast-paced business world, and human resource planning positions organizations to seamlessly navigate these changes.

From staying updated with industry trends to adapting to regulatory shifts, an HR department’s proactive planning ensures businesses remain resilient and agile. With Mosey , you can more effectively track, manage, and stay on top of changing regulations and requirements, making HR compliance a breeze.

Helps Secure Long-Term Growth

Another key component of HRP is succession planning. Identifying roles and preparing a talent pipeline ensures that your organization isn’t caught off-guard if leadership positions open up.

This planning not only opens the door to future leaders, but also ensures that institutional knowledge is retained, fueling your business’s long-term growth and stability.

Contributes to Organizational Goals

The nexus between human resource planning and organizational goals is undeniable. By streamlining the hiring process, ensuring employee satisfaction , and fostering employee retention, HRP contributes directly to the achievement of business objectives.

When employees see clear growth trajectories and development avenues, their commitment to the company’s vision intensifies, driving the organization closer to its goals.

What Are the Steps for Human Resource Planning?

HRP ensures that businesses are well-equipped, both in terms of the quantity and quality of their workforce, to meet their evolving goals and challenges. So, how can you actually navigate the intricacies of HRP? Here’s a step-by-step walkthrough of the essential phases that make up the human resource planning process.

Analyze Employee Skills and Performance

Human resource planning centers around an understanding of your company’s current workforce.

During this initial phase, the HR department dives into understanding the number of employees, their competencies, qualifications, positions, benefits, and performance levels. This skill inventory ensures that HR professionals have a clear picture of the strengths and areas for improvement in the present workforce.

Research Industry Trends and Forecasts

Effective human resource planning can also help you predict, and plan for, the future, so the next stage is to outline what your company will need in terms of human capital in the foreseeable future.

This forecasting phase requires the HR department to consider various factors, such as potential promotions, retirements, layoffs, and transfers. External conditions, like emerging technologies or industry shifts, can also have a significant impact on labor demand. Ensuring you stay ahead in terms of industry trends helps you align your staffing needs more effectively.

Conduct Demand Forecasting

Having a clear understanding of both the present workforce, potential employees, and future needs is vital to bridge the two through demand forecasting. This step in the HR planning process involves creating a gap analysis that points out discrepancies between the current workforce and future human resource demands.

This type of analysis leads to important questions like:

• Should current employees learn new skills?
• Is there a need for more managers?
• Are all employees fully utilizing their competencies in their present roles?

Answering these questions is key to crafting a strategic human resource plan that aligns with both the present and the future.

Determine Future Human Resource Needs

Once your demand forecasting has highlighted the shortages or surpluses in terms of competencies or number of employees, the next step is to determine the specific future human resource needs.

Whether it’s upskilling the current employees, succession planning for key roles, or identifying the need for new hires, this phase ensures that your business is poised for future growth without any HR hiccups.

Align HR Needs With Organizational Strategy

Human resource planning is intertwined with your broader business goals and strategies. Once your HR needs are identified, it’s important to make sure those needs align with your organizational goals.

This strategic planning phase ensures that every hiring process, training initiative, or retention effort contributes directly to your company’s overarching objectives.

Plan for Employee Development and Training

Once your future human resource needs are aligned with your company strategy, it’s time to implement plans for employee development. This might involve setting up training programs, workshops, or certifications to upskill current employees.

Ensuring your workforce is equipped with the right skills enhances employee satisfaction and retention and gives your business a competitive advantage.

Implement Plan for Forecasted HR Needs

The culmination of the human resource planning process is the implementation of your action plan. Taking cues from the gap analysis and strategic alignment, HR can now roll out a well-thought-out plan.

This could involve tweaking job descriptions, initiating new hiring processes, onboarding new employees, or even revisiting HR policies such as vacation, sick days, or overtime compensation. Collaboration with all departments is key here to ensure the successful execution of your plan, ensuring the HR strategies benefit the organization as a whole.

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The Easy Guide to Human Resource Planning with Tools & Templates

Updated on: 23 June 2022

It’s no secret that the key to the continued smooth operation of an organization is its employees – well, the right kind of skillful employees doing their job right. And the way to get that kind of employee working in your organization can only be made possible through proper human resource planning software . 

In this post, we have simplified the human resource process for you by breaking it down into four steps and providing you with ready-made templates to immediately execute those tasks.

What is Human Resource Planning 

Human resource planning is the process by which organizations assess the current human resources, forecast future requirements or necessities, identify the gaps and come up with a plan to fill them. 

Basically, human resource planning, also known as workforce planning and manpower planning, helps you ensure that you have the right number of people with relevant skills in the right kind of job position at the right time.   

Importance of human resource planning 

Human resource planning plays a major role in making sure that the necessary skills are made available to the organization whenever needed to meet its strategic goals. In addition, there are several more important reasons why human resource planning is crucial to an organization. 

• It helps make sure that the existing manpower is being used optimally 
• It supports achieving the organization’s strategic goals and objectives by ensuring that the right kind of people are hired to fulfill the demand for labor in a timely manner
• It provides information necessary to carry out other HR functions such as recruitment, selection, promotion, training and development , etc. and define HR policies
• It helps the organization adapt to the changes in the environment caused by competition, technology, government policies, etc. that may result in a need for new employees, new skills, etc.  
• It helps identify labor requirements needed to successfully implement expansion and diversification plans 
• It also assists with anticipating deficiencies or surpluses in manpower and take the necessary steps to handle the situation   
• It helps develop career plans for individual employees and determine the training and development they need

4 Steps in the Human Resource Planning Process 

There are 4 broad steps involved in the human resource planning process. 

Step 1: Identify the current supply of human resources   

The planning process starts by analyzing the current labor pool. Identify the strengths and weaknesses of your organization with regard to the number of employees, their skills, experiences, qualifications, positions, performance levels, age, benefits, salary levels, languages spoken, prior employment, etc. 

There are several ways you can go about this step. 

• Refer to the past performance reviews
• Gather data from your human resource information system
• Talk to the department heads to get an idea about the employees working under them
• Ask the employees themselves with a questionnaire 
• Get employees to do a self-evaluation of themselves with a SWOT analysis

Once you have collected an abundance of information on current employees, transfer them to a skills inventory report . A visual template for a skills inventory that is easier to refer to and understand is given below.

Step 2: Forecast future demand for human resources

This step requires you to understand the future goals of the organization first, as they would have a significant impact on the future human resource demands. 

Prior to determining the future needs, you also need to consider factors such as employee turnover rates, market or industry trends, technological advances that will help automate processes, retirements, promotions, layoffs, etc. 

Step 3: Analyze the gap between supply and demand for labor

Now that you have clarified what skills are available in your inventory and which you will need for the future, you can clearly see the gaps that exist.

Can the current supply of employees in the organization help fulfill future requirements?

Will you have to offer training and development programs to upgrade the current employees to meet company objectives?

If this is not sufficient, then you will have to recruit new employees with relevant skill sets to match the demand for manpower in the future. 

It’s important that you maintain the balance between demand and supply in human resource planning. 

Step 4: Develop and implement the plan to meet the gaps 

Then comes developing an action plan .

If there’s a deficit of employees, you can spend your efforts on hiring new employees, training existing ones, outsourcing or interdepartmental transfers.

On the other hand, if there’s a surplus of employees, you may need to consider layoff, voluntary retirement schemes, transfers, etc. 

Once a plan is devised, it should be integrated with the overall strategy of the organization. And it’s important to monitor the plan and evaluate its effectiveness throughout time.

Human Resource Planning Tools

You can use these tools throughout the different steps of the workforce planning process. They can assist you in analyzing the capability of your current staff, and determine future needs. The templates provided are editable online; simply click on the template to edit it online. 

SWOT Analysis 

SWOT stands for strengths, weaknesses, opportunities, and threats. It can be used as a tool for self-evaluation by individual employees, or as a strategic tool to assess the current state of the organization. 

Strengths and weaknesses are the factors that are internal. For example, a strength of your organization could be the presence of skilled employees, but a weakness could be the insufficient numbers of skilled employees. 

Opportunities and threats are external factors. For example, the availability of skilled employees in the market could be a great opportunity for you if you are hiring. On the other hand, your competitor poaching your employees with better salaries could pose a threat to you.  

 The SWOT analysis is one of the most popular tools used during a situation analysis. Some other situation analysis tools you can use with manpower planning are described in our guide to situation analysis . 

Organizational Chart 

An organizational chart is a visual representation of the hierarchy/ structure of an organization. It also highlights reporting relationships between employees, their roles and responsibilities. In human resource planning, it can be used in a number of ways,

• To record information about current employee roles, responsibilities, skills, experiences, etc. You can also add additional information such as their educational qualifications, and demographical data. This will help you quickly identify the right personnel for the job. 
• To create a roadmap of the staffing needs. You can mark labor deficiencies and surplusses on your company organizational chart as well.

RACI Matrix 

This is a chart, project managers use to assign roles and responsibilities to tasks in a project. It highlights who should be responsible, accountable, consulted and informed during a project.

9 Box Grid 

The 9 box grid, also known as the performance-potential matrix, is widely used in employee development and succession planning. It helps evaluate your existing employees against their current performance and their future potential performance.  

Rating your employees with the help of the 9 box grid helps you identify strong employees and those who are falling behind.

Scenario Planning 

There are many scenarios, like technological advancements, natural disasters, political or economic changes that could drastically alter the future direction of your company. Ordinarily, you may not see them coming or plan for them. 

By incorporating scenario planning in your strategic planning process, you can identify these different future scenarios, discuss how they will affect your organization and take precautionary measures.

You can incorporate scenario planning with human resource planning by examining scenarios that involve your changing future labor requirements. 

Refer to our resource on scenario planning to learn about this tool in more detail. 

Replacement Chart

This is a diagram that is similar to the organizational chart . It is used to identify potential candidates who can replace an employee who is retiring, transferring, etc. Individual replacement charts can be developed for each significant position in a company along with potential replacements.

Any Tips for Improving Manpower Planning? 

In this post, we’ve basically covered everything you need to know about human resource planning , especially if you are a newbie. And we believe the templates provided will help you kickstart your project. 

Already an expert in workforce planning? Do share the tips on tools and processes you swear by in the comments section below.

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Human Resource Planning (HRP) Meaning, Process, and Examples

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

What Is Human Resource Planning (HRP)?

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

There are four key steps to the HRP process. They include analyzing present labor supply, forecasting labor demand, balancing projected labor demand with supply, and supporting organizational goals. HRP is an important investment for any business as it allows companies to remain both productive and profitable.

Key Takeaways

• Human resource planning (HRP) is a strategy companies use to maintain a steady supply of skilled employees while avoiding staffing shortages or surpluses.
• HRP needs to meet short-term staffing challenges while adapting to changing conditions in the business environment over the longer term.
• Having a good HRP strategy in place can mean productivity and profitability for a company.
• HRP is made harder by the fact that not everything can be predicted.
• There are four general steps in the HRP process: identifying the current supply of employees, determining the future of the workforce, balancing between labor supply and demand, and developing plans that support the company's goals.

Michela Buttignol

What Is Human Resource Planning (HRP) Used For?

Employees are a key part of any business. Without a strong workforce, income will likely dry up and the company will go out of business. HRP is designed to prevent this from happening. Its mission is to identify current and future hiring and training needs.

HRP allows companies to plan ahead so they can maintain a steady supply of skilled employees. The process is used to help companies evaluate their needs and to plan ahead to meet those needs.

HRP needs to be flexible enough to meet short-term staffing challenges while adapting to changing conditions in the business environment over the longer term. To help prevent future roadblocks and 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
• Keep employees motivated
• Cope with absences and deal with conflicts
• Succession planning
• Promote employees or let some of them go
• Keep tabs on trends that could impact future supply and demand

Identifying a company's skill set and targeting the skills a company needs enables it to strategically reach business goals and be equipped for future challenges.

The goal of HR planning is to have the optimal number of staff to make the most money for the company. Staying on top of this and achieving effective HRP can ensure that the company:

• Gets the best out of current employees and increases their value
• Has a competitive advantage in its industry
• Is better placed to respond to challenges and adapt to changes

Challenges of Human Resource Planning (HRP)

HRP offers many advantages but it isn't without challenges. The future isn't easy to predict. A technology breakthrough can change everything, as can a black swan event. Issues such as employees getting sick and wealthier or more prestigious competitors poaching staff can also cause serious problems.

Additionally, as globalization increases, HR departments will face the need to implement new practices to accommodate government labor regulations that vary from country to country. The increased use of remote workers by many corporations will also impact HRP and will require HR departments to use new methods and tools to recruit, train, and retain workers.

Companies can set themselves up to better deal with these types of challenges if they are adaptable and continuously keep tabs on the world around them. The more prepared a company is for an event that impacts its human resources, the better it can handle and potentially take advantage of it.

HRP strategies must frequently be revised to match not only the company's changing needs but also external changes.

There's also the challenge of HRP being time consuming and potentially costly. HRP offers benefits but it can take a while to reap them.

A high level of employee engagement can be essential for a company's success. If a company has the best employees and the best practices in place, it can mean the difference between sluggishness and productivity, helping to lead a company to profitability. However, like most important investments, it can take a while for these efforts to pay off. In the beginning, HRP will be a drag on profits.

What Are the Four Steps to Human Resource Planning (HRP)?

There are four general, broad steps involved in the HRP process. Each step needs to be taken in sequence in order to arrive at the end goal, which is to develop a strategy that enables the company to successfully find and retain enough qualified employees to meet its needs.

1. Analyzing Labor Supply

The first step of HRP 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.

2. Forecasting Labor Demand

The second step requires the company to outline the future of its workforce. Here, the HR department can consider anything that factors into the future needs of the company, including promotions, retirements, layoffs, and transfers. The HR department can also look at external conditions impacting labor demand , such as new technology that might increase or decrease the need for workers.

3. Balancing Labor Demand With Supply

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. This analysis will often generate a series of questions, such as:

• Should employees learn new skills?
• Does the company need more managers?
• Do all employees play to their strengths in their current roles?

4. Developing and Implementing a Plan

The answers to questions from the gap analysis help 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.

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

Why Is Human Resource Planning Important?

Human resource planning (HRP) allows a business to better maintain and target the right kind of talent to employ—having the right technical and soft skills to optimize their function within the company. It also allows managers to better train the workforce and help them develop the required skills.

What Is "Hard" vs. "Soft" Human Resource Planning?

Hard HRP evaluates various quantitative metrics to ensure that the right number of the right sort of people are available when needed by the company. Soft HRP focuses more on finding employees with the right corporate culture, motivation, and attitude. Often these are used in tandem.

What Are the Basic Steps in HRP?

HRP begins with an analysis of the available labor pool from which a company can draw. It then evaluates the firm's present and future demand for various types of labor and attempts to match that demand with the supply of job applicants.

Quality employees are a company's most valuable asset. HRP involves the development of strategies to ensure that a business has an adequate supply of employees to meet its needs and can avoid either a surplus or a lack of workers.

There are four general steps in developing such a strategy: first, analyzing the company's current labor supply; second, determining the company's future labor needs; third, balancing the company's labor needs with its supply of employees; and fourth, developing and implementing the HR plan throughout the organization.

A solid HRP strategy can help a company be both productive and profitable.

International Journal of Business and Management Invention. K. Prashanthi. " Human Resource Planning-An Analytical Study ," Page 64.

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Human Resource Planning Steps in Your Business Plan

You may start out as a corporation of one- just you, by yourself at your dinner table: making sales, helping customers online, writing invoices, cutting checks. But that’s not the dream, is it? A small business you can run yourself may be the dream for some, but many entrepreneurs see something bigger. They see a bustling business with happy employees and happy customers exchanging plenty of money for plenty of products. But it has to start somewhere.

Even though you’re a corporation of one right now, and your growth may not necessarily include additional employees in the near future, here are the steps you’ll want to start taking to plan your HR needs. These steps will also work for a growing business that already has employees.

Step One: Prepare a forecast. – This is where you anticipate how many employees you’ll need in the future. The longer you’ve been in business, the more accurate your number will be because you can look at your growth in the past and forecast based on those numbers. For example, if your business has grown by 25% in the past three years, there’s a good chance that you’ll need at least one employee in the very near future. However, if your experience in the industry suggests that this could be a quiet year, you may include that in your planning, too. So your business’s history and your industry experience will be your guide in Step One as you consider the supply and demand of your product.

Step Two: Develop an HR inventory. – This is fairly easy for most small businesses: there’s just one of you! But if you’re a growing business with a couple of employees already, that should figure into your planning, too. Do you forecast a need for ten employees but currently have 2? Simple math suggests you need eight additional employees. As you grow, this step becomes more important as you factor employee turnover into the equation, too.

Step Three: Develop a job analysis. – This could be the hardest part of the process; you’ll need to figure out what each person will do even though you haven’t hired them yet. Of course, this level of planning isn’t going to be airtight and may change over time, but it will give you an idea about what you’ll be getting people to do and it can help you train your current employees if their job description doesn’t currently match the job description that they’ll have when you have more employees. Don’t forget that any current employees will be managing the ones hired after them so be sure to include in your job analysis some management-level tasks.

Step Four: Prepare a comprehensive plan. – This is going to be the most time consuming of the steps, but it is the most critical. This step will give you the path you’ll take in order to successfully integrate new employees into your business. It should include budgeting for future wages and it should include training techniques to bring current employees up to the skill level you want them to be at. For employees that you have yet to hire, prioritize to determine who you’ll hire first. For every anticipated position, include goal dates in which you’d like to have people hired by and work backwards by 3 to 6 months (or more, depending on the employment situation in your area) to start advertising and interviewing. Write down where you’ll advertise and the skill set you’re going to need.

These 4 steps will help you plan your way to HR success. Include this as part of your business plan and review it on a regular basis to see if your needs have changed.

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Business Plan Example and Template

Learn how to create a business plan

What is a Business Plan?

A business plan is a document that contains the operational and financial plan of a business, and details how its objectives will be achieved. It serves as a road map for the business and can be used when pitching investors or financial institutions for debt or equity financing .

A business plan should follow a standard format and contain all the important business plan elements. Typically, it should present whatever information an investor or financial institution expects to see before providing financing to a business.

Contents of a Business Plan

A business plan should be structured in a way that it contains all the important information that investors are looking for. Here are the main sections of a business plan:

1. Title Page

The title page captures the legal information of the business, which includes the registered business name, physical address, phone number, email address, date, and the company logo.

2. Executive Summary

The executive summary is the most important section because it is the first section that investors and bankers see when they open the business plan. It provides a summary of the entire business plan. It should be written last to ensure that you don’t leave any details out. It must be short and to the point, and it should capture the reader’s attention. The executive summary should not exceed two pages.

3. Industry Overview

The industry overview section provides information about the specific industry that the business operates in. Some of the information provided in this section includes major competitors, industry trends, and estimated revenues. It also shows the company’s position in the industry and how it will compete in the market against other major players.

4. Market Analysis and Competition

The market analysis section details the target market for the company’s product offerings. This section confirms that the company understands the market and that it has already analyzed the existing market to determine that there is adequate demand to support its proposed business model.

Market analysis includes information about the target market’s demographics , geographical location, consumer behavior, and market needs. The company can present numbers and sources to give an overview of the target market size.

A business can choose to consolidate the market analysis and competition analysis into one section or present them as two separate sections.

5. Sales and Marketing Plan

The sales and marketing plan details how the company plans to sell its products to the target market. It attempts to present the business’s unique selling proposition and the channels it will use to sell its goods and services. It details the company’s advertising and promotion activities, pricing strategy, sales and distribution methods, and after-sales support.

6. Management Plan

The management plan provides an outline of the company’s legal structure, its management team, and internal and external human resource requirements. It should list the number of employees that will be needed and the remuneration to be paid to each of the employees.

Any external professionals, such as lawyers, valuers, architects, and consultants, that the company will need should also be included. If the company intends to use the business plan to source funding from investors, it should list the members of the executive team, as well as the members of the advisory board.

7. Operating Plan

The operating plan provides an overview of the company’s physical requirements, such as office space, machinery, labor, supplies, and inventory . For a business that requires custom warehouses and specialized equipment, the operating plan will be more detailed, as compared to, say, a home-based consulting business. If the business plan is for a manufacturing company, it will include information on raw material requirements and the supply chain.

8. Financial Plan

The financial plan is an important section that will often determine whether the business will obtain required financing from financial institutions, investors, or venture capitalists. It should demonstrate that the proposed business is viable and will return enough revenues to be able to meet its financial obligations. Some of the information contained in the financial plan includes a projected income statement , balance sheet, and cash flow.

9. Appendices and Exhibits

The appendices and exhibits part is the last section of a business plan. It includes any additional information that banks and investors may be interested in or that adds credibility to the business. Some of the information that may be included in the appendices section includes office/building plans, detailed market research , products/services offering information, marketing brochures, and credit histories of the promoters.

Business Plan Template

Here is a basic template that any business can use when developing its business plan:

Section 1: Executive Summary

• Present the company’s mission.
• Describe the company’s product and/or service offerings.
• Give a summary of the target market and its demographics.
• Summarize the industry competition and how the company will capture a share of the available market.
• Give a summary of the operational plan, such as inventory, office and labor, and equipment requirements.

Section 2: Industry Overview

• Describe the company’s position in the industry.
• Describe the existing competition and the major players in the industry.
• Provide information about the industry that the business will operate in, estimated revenues, industry trends, government influences, as well as the demographics of the target market.

Section 3: Market Analysis and Competition

• Define your target market, their needs, and their geographical location.
• Describe the size of the market, the units of the company’s products that potential customers may buy, and the market changes that may occur due to overall economic changes.
• Give an overview of the estimated sales volume vis-à-vis what competitors sell.
• Give a plan on how the company plans to combat the existing competition to gain and retain market share.

Section 4: Sales and Marketing Plan

• Describe the products that the company will offer for sale and its unique selling proposition.
• List the different advertising platforms that the business will use to get its message to customers.
• Describe how the business plans to price its products in a way that allows it to make a profit.
• Give details on how the company’s products will be distributed to the target market and the shipping method.

Section 5: Management Plan

• Describe the organizational structure of the company.
• List the owners of the company and their ownership percentages.
• List the key executives, their roles, and remuneration.
• List any internal and external professionals that the company plans to hire, and how they will be compensated.
• Include a list of the members of the advisory board, if available.

Section 6: Operating Plan

• Describe the location of the business, including office and warehouse requirements.
• Describe the labor requirement of the company. Outline the number of staff that the company needs, their roles, skills training needed, and employee tenures (full-time or part-time).
• Describe the manufacturing process, and the time it will take to produce one unit of a product.
• Describe the equipment and machinery requirements, and if the company will lease or purchase equipment and machinery, and the related costs that the company estimates it will incur.
• Provide a list of raw material requirements, how they will be sourced, and the main suppliers that will supply the required inputs.

Section 7: Financial Plan

• Describe the financial projections of the company, by including the projected income statement, projected cash flow statement, and the balance sheet projection.

Section 8: Appendices and Exhibits

• Quotes of building and machinery leases
• Proposed office and warehouse plan
• Market research and a summary of the target market
• Credit information of the owners
• List of product and/or services

Related Readings

Thank you for reading CFI’s guide to Business Plans. To keep learning and advancing your career, the following CFI resources will be helpful:

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• Business Plans

Resource Planning For Your Business Plan

Identifying the resources you need to grow your business

Why Is Resource Planning Important

How to start resource planning, the bottom line, frequently asked questions (faqs).

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A business plan helps you organize your goals and growth plans for your business. Identifying business resources you'll be starting your business with already, and accounting for the resources you'll need to acquire after launching the business, is a crucial step in business planning.

Key Takeaways

• A business plan helps you organize your goals and growth plans for your business.
• Resource planning help you account for resources you have, plan for resources you need and ways to optimize their use
• You can plan for physical, people and technical resources in your business plan

Resource planning help you account for resources you have, plan for resources you need and ways to optimize their use. Among other things, even the most simple business plans are designed to walk you through the activity of describing every source and the exact dollar amount of your initial equity capital, as well as account for the equipment necessary to produce your products or services.

It can be difficult to accurately estimate your future resource needs, which is why this startup mistake is one of the most frequent contributors to young businesses running out of cash early on.

A very important section in your business plan is about the finances of your business, and that includes how much you hope to spend on resources you need to acquire and maintenance expenses on assets you own. Your plans for obtaining the necessary personnel, equipment, and cash to meet your capital expenses will need to be detailed throughout your business plan.

You may need financing from a bank or investors or will invest your personal savings in the business, and resource planning will come in handy for that too.

Resource allocation plans are what your potential investors and business partners are going to need to see before jumping on board with your new company.

There are different types of resources and you need to budget and plan for them accordingly. In describing each of the resources that you have and need for your business to reach profitability, position each of them in terms of the value it will bring to the company, both in the near term and down the road.

To figure out exactly which resources your business is going to need, and account for those in your business planning process, ask yourself these two crucial questions:

• Does starting and growing your business require having staff on hand? If your business relies upon output from people other than yourself and your business partners, you're going to need to allocate resources for hiring staff at fair market rates. 
• What type of equipment or fixed assets will your business need to get going? If your business is dependent upon purchasing or leasing equipment or other fixed assets like retail and office space, these are major considerations as you plan out your resource allocation.

Physical Assets

Depending on the nature of your business, you may have varying need for physical assets. However, in all likelihood you'd need some sort of office furniture and definitely some computers. Physical assets could also include office space, storefronts, manufacturing facilities and equipment necessary for your business. For example, if you own a baked good business, baking equipment like mixers and ovens would be physical assets you'd need to plan for.

Personnel and People

There are different types of people that can be a part of your business. People you hire, for example, can be employees or independent contractors and there are different cost implications for your business depending on whether you hire the former or the latter.

Investing in skills and capacities for people in your business is also an important part of resource planning.

How about mentors, key advisors, supplier connections, and other intangible resources for your business? These types of relationships whose value to your business can be immense, also need to be accounted for within your business plan as they'll have a very large impact on the future growth of your company.

Think of the massively positive effect your company would experience if you had a friend or family member that was a decision-maker at a large company who'd be your perfect first customer. It would undoubtedly be one of your key strategies for driving the early growth of your company. So, as you're planning your resource allocation, you'd naturally be spending in areas that make your young business more appealing to the target customers you want to serve.

Technical Resources

It is a good time to evaluate your technical resources and requirements as well. Some businesses rely more heavily on technology or intellectual property than others. Technology-dependent companies will need a strong IT network to get started. If building your own website won't be any trouble, then that's one major cost you'll be able to avoid as you get started with your company. Otherwise, you may need to allocate for web design, development, and other website-related expenses.

Regardless of your situation, don't be intimidated by the upfront costs of starting a business. Instead, keep in mind that in today's age, your product or service will only be as good as the technology that supports it, and if you buy or build low-grade gear, you’ll probably have to replace it in a few years anyway.

Clearly, there are a lot of different expenses to take into account as you allocate the resources for your new business. However, forcing yourself to go through this activity in extreme detail while building your business plan will save you a lot of headaches and potential failures in the future.

What are assets and resources in a business plan?

Resources can be anything that helps you operate or run your business. Assets are a type of resources that help you achieve you business. Assets can be cash, or physical assets such as equipment or intangible assets such as the brand of your business. In a business plan, you talk about the resources you have and the resources you need to acquire to help your business grow. You also account for your assets on your balance sheet. A strong balance sheet presented in your business plan can be appealing to potential investors.

Which components of a business plan are most useful to attract investors?

Each section of a business plan is important to potential investors. An executive summary gives your investors an elevator pitch to your business. Company description explains to them how your business is solving a market need, while market analysis shows investors you understand your industry and competition. Sections on organization, product details and marketing plans dig deeper into your vision for your business and how its organized. And the financial information component helps them see if you idea is worth putting their money into.

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Resource Requirements in Project Management: A Quick Guide

When a project is planned, a set of steps are outlined to deliver a product or service. Resource requirements need to be identified and allocated for those steps to be executed. Think of resource requirements as the fuel that drives all project activities.

Once one understands what resource requirements are in project management, next there is estimating what those resources will be and managing them. To help with this process, we’ll define resource requirements and link to a free resource plan template.

What Are Resource Requirements in Project Management?

Resources are anything you need to complete a project including teams, equipment, raw materials and so on. These are called the resource requirements. Being able to know ahead of initiating the project which resources you’ll need is essential.

Resource requirements in project management allow project managers to know what they’ll need to execute their tasks and deliver the project on time and within their budget. Knowing one’s resource requirements will also help project managers to get the most out of their resources.

This can be done more effectively with project management software. ProjectManager is award-winning project and portfolio management software that allocates and schedules project resources through multiple views. Managers can use our robust Gantt charts to schedule resources and their costs. The sheet view gives you a customizable grid to track individual project resources or a portfolio of projects. Get started with ProjectManager today for free.

How to Estimate & Manage Project Resource Requirements

Resource requirements differ from project to project, of course, but also on how productive your team can be and even project switching, which is as team members pass tasks to one another. There’s also the feedback loop as comments or changes come from stakeholders, clients, etc. That’s a lot of variables. The following steps will help you narrow the forecast to be as accurate as possible.

1. Define Your Project Scope

The first step is to understand the scope of your project. That is knowing the project’s goals, deadlines and deliverables. There are many ways to determine the scope of a project. Using the project teams to mine their knowledge of the work and historical data can also play a role in estimating the project scope. More time-consuming, but accurate, is a work breakdown structure, or a hierarchical tree diagram that helps you to identify the project deliverables and tasks.

2. Write a Scope of Work

The scope of work is a project document that defines all the work that’s done over the project’s life cycle. That includes the project deliverables, timeline, milestones, how reporting will be done and more. The importance of this step goes beyond estimating your project resource requirements and helps manage them to avoid scope creep, such as adding tasks to the project during its execution. A scope of work document will help you have a more accurate idea of the project and, in so doing, its resource requirements.

3. Make a Resource Breakdown Structure

Just as you use a work breakdown structure to identify deliverables, a resource breakdown structure can help you identify the project resource requirements. It’ll help you to identify resource types, such as people and tangible and intangible assets before the start of the project. This will not only help estimate your resource requirements but also help with scheduling and managing them, such as resource allocation.

4. Estimate the Costs Related to Your Project Resources

Resources aren’t just team members, raw materials, equipment and so forth. It’s also money. One must consider costs when estimating and managing project resource requirements. This means you must forecast the cost for each resource that will be used in your project. This will also inform your budget. Accurately forecasting the related costs for your project resources helps to save money without negatively affecting the project quality of your deliverables.

5. Create a Resource Schedule

Identify resource requirements for the project and allocate them on a timeline to create a resource schedule . To do this, you’ll need to know the availability of your team members and the start and end dates of their assigned tasks. This will make your project more efficient and save money by having the right resources allocated at the right time.

6. Create a Resource Management Plan

The next step is to develop a resource management plan that details the acquisition, development, usage, management, control and release of the project resources. This will provide a guide or roadmap for the project manager and project team to allocate, manage and control resources needed to complete the project as efficiently as possible.

7. Use Resource Tracking Tools

Anyone who’s made a resource management plan knows that there will be changes during execution. Therefore, a project manager must use resource-tracking tools to monitor and control resource requirements. Whatever resource tracking tool you use should provide a clear view of where and how those resources are being used. This will enhance the resource management plan and allocation of those resources as you can adjust to respond to changes in your project.

Types of Resource Requirements in Project Management

We’ve mentioned resource requirements and have briefly written about what project resources are, but to better understand them and their place in project management it’s important to define what we’ve been talking about. Below we list the main categories that make up resource requirements in project management and define each with examples.

• Labor: These are the people who work on the project’s production and deliver its goods and services. They can be part-time or full-time employees and anyone on the project team with the various skills required to deliver the project.
• Materials: This is what’s used to assemble the product or in the creation of whatever deliverables are being made in the project. Included in this category are supplies and other consumable items, such as wood, metal, glue, etc.
• Equipment: Sometimes bunched together with materials in defining resource requirements, equipment is what machinery is used to complete the project on schedule . This can be tools or software and heavy machinery.
• Property, Land or Infrastructure: This is another category that some fold into equipment, but deserves its distinct definition. Here we’re talking about the place where the work is happening or the underlying framework of features of a system or organization. That might be the job site on a construction project or roadways, sewers, railways and powerlines.
• Cash/Funding: Lastly, are the financial resources that pay for the project. This includes the budget, funding sources and cost allocations.

Resource Requirements vs. Resource Constraints

Resource requirements, as noted above, are the people, materials and equipment necessary to complete the project. Resource constraints are factors that can limit the supply of those resources to the project. Therefore, resource requirements are what you want to complete the project and resource constraints are anything that might prevent that from happening.

Resource constraints are a kind of risk associated with the resources you have allocated to the project. It’s something you’ll have to factor in as you create your resource requirements plan. Some examples of a resource constraint include inadequate financial capital, unavailability of needed resources and a new deadline for completion of the project due to a request from the client.

Resource Plan Template

Identifying your resource requirements will inform your resource plan , which then lists and organizes those resources over the life cycle of your project. It also helps one determine the amount of resources and their cost.

Use our free resource plan template for Excel to schedule your resources. With it, you can list all your human resources, which department they work in, their total effort, rate and the cost of that resource for your project. There’s even a weekly calendar to schedule them.

More Free Resource Requirements Management Templates

The free resource plan template is only one of over 100 free project management templates for Excel and Word that you can download right now. They cover every aspect of managing a project across several industries. Here are a few that relate to resource requirements.

Work Breakdown Structure Template

A work breakdown structure (WBS) is essential in identifying all your resource requirements. Our free work breakdown structure template for Excel has two sheets. One is a WBS list that’s broken down into phases of the projects and the deliverables due, the other is a WBS tree diagram that visually shows the breakdown of the project deliverables from top to bottom.

Scope of Work Template

A scope of work document is also important when determining the resource requirements for a project. It includes deliverables, but also what’s in and out of scope for the project, a timeline, milestone and project costs.

Project Estimate Template

Another part of resource requirements is estimating their cost to the project. Our free project estimate template for Excel will help you make a more accurate forecast of those costs. With this free template, you can estimate labor costs, but also materials, for each phase in your project.

ProjectManager Helps You Manage Project Resource Requirements

While all of our free resource requirement templates can help you identify and plan your project resources, they’re not an efficient tool to manage and track them throughout the life cycle of your project. Templates are static documents that must be manually updated and are not great for collaboration. ProjectManager is award-winning project and portfolio management software that helps you track and allocate resources in real time.

Track Resource Utilization With Real-Time Dashboards

If you’re not monitoring your project resource requirements throughout the project, you’re in danger of going over budget or not having the resources you need when you need to allocate them. To optimize resource utilization, use our real-time dashboards , which track your costs, time, workload and more so you can catch issues and respond to them quickly to stay on schedule and keep to your budget.

Use Workload Charts to Allocate Resources Effectively

Teams are a project’s most valuable resource. Without a project team, no amount of raw materials, equipment, etc., will deliver your project. The ability to keep teams productive without eroding morale is critical to a successful project. First, you can set your team’s availability, such as vacation time, PTO and even global holidays for remote workers, which makes it easier to assign them to tasks. Then toggle over to the color-coded workload chart and balance their workload to keep them working at capacity.

Related Resource Management Content

Resource management is a topic much bigger than just resource requirements. If you’re interested in learning more about resources as they relate to project management our site is an online hub for that and much more. We publish weekly blogs, tutorial videos and, of course, free templates. Here are some of the pieces we’ve published on resource management.

• What Is Resource Optimization? Techniques & Best Practices
• Best Resource Management Software: Free & Paid Options Ranked
• 5 Must-Have Resource Management Tools
• Identifying and Overcoming Resource Constraints
• Resource Forecasting in Project Management: A Quick Guide

ProjectManager is online project and portfolio management software that connects teams in the office, out in the field and anywhere in between. They can share files, comment at the task level and stay updated with email and in-app notifications. Join teams at Avis, Nestle and Siemens who are using our software to deliver successful projects. Get started with ProjectManager today for free.

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