The Human Resource Planning Process

A process is a systematic series of actions or steps taken to achieve a specific goal or outcome. It
involves a sequence of tasks or activities that are organized in a particular order to transform inputs
into outputs. Processes are fundamental to achieving efficiency, consistency, and effectiveness in any
organizational function. In Human Resource Management (HRM), a process refers to a strategic
function within human resource management aimed at forecasting and managing an organization’s
future workforce needs. It is an ongoing process that ensures the organization has the right number of
employees, with the right skills, in the right positions, at the right time.

Assess Current Workplace

Forecast Future HR Needs

Conduct a Gap Analysis

Develop Action Plans

Monitor, Evaluate, Adjust

(1) Assess Current Workforce

 The first step in HRP is to evaluate the current workforce to understand existing skills,
experience, and performance levels. This assessment helps identify strengths, weaknesses,
and areas that need improvement. Common methods include skills inventories, employee
performance reviews, and demographic analyses.

(2) Forecast Future HR Needs

 Forecasting is a crucial component of HR planning, where future workforce requirements are

predicted based on business goals, market trends, technological changes, and external factors
like economic conditions. This step estimates the number and types of employees needed to
meet future organizational demands.

(3) Conduct a Gap Analysis

 A gap analysis compares the current workforce against the forecasted needs. It identifies
discrepancies between the organization’s current capabilities and its future requirements. This
analysis helps HR professionals pinpoint specific skill shortages, potential overstaffing, or
other workforce misalignments that need to be addressed.

(4) Develop Action Plans

 Based on the findings from the gap analysis, HR professionals develop targeted action plans
to address identified gaps. Action plans may include:

o Recruitment and Selection: Strategies to attract and hire new employees with the
necessary skills and qualifications.
 o Training and Development: Programs designed to upskill or reskill existing
employees to better match future needs.

o Succession Planning: Identifying and preparing internal candidates to fill key

positions as they become available.

o Retention Strategies: Initiatives to keep valuable employees engaged and reduce

turnover, such as enhancing work conditions or adjusting compensation packages.

(5) Implement the HR Plan

 Implementation involves putting the developed action plans into motion. This step includes
detailed task assignments, resource allocation, setting timelines, and ensuring effective
communication throughout the organization. Proper implementation ensures that the
workforce is adjusted to align with strategic business goals.

(6) Monitor, Evaluate, and Adjust

 The final step in the HRP process is to monitor the effectiveness of the implemented action
plans continuously. Evaluation metrics such as employee performance, retention rates, and
overall workforce productivity are used to gauge success. Based on the results, adjustments
are made to refine the plans, addressing any new challenges or changes in business strategy.

Forecasting Demand for Manpower and Supply of Manpower

Forecasting of human resource is the process of predicting how a company’s staffing needs
change with time so that it can remain prepared to operate successfully. Organizations use HR
forecasting to decide to hire more people, reduce their staffing, or adjust how they divide
responsibilities.

Strategically, HR forecasting is part of HR planning. HR planning is a major function of the

HR process that ensures the analyzation and identification of the needs for and availability of human
resources so that the organization can meet its intended goals and objectives at a required time.
Demand forecast

At a more practical level, forecasting demand involves determining the number and types of
personnel an organization will need at various points in the future. This process is critical for effective
human resource planning, ensuring that the right talent is available to meet future operational
requirements. Demand forecasting is typically approached through two main methods: the
quantitative approach, which relies on statistical and mathematical techniques to estimate future
manpower needs based on workload and workforce analyses, and the qualitative approach, which
focuses on assessing the specific skills required for different roles and often involves expert judgment.

The rationale behind demand forecasting is highly significant. In competitive market

conditions, making accurate decisions and planning for future events such as sales, production, and
staffing is essential for a business's success. The accuracy of these decisions directly impacts the
effectiveness of business strategies. Demand forecasting plays a role in achieving business objectives,
influencing key decisions related to production levels, sales strategies, and staffing requirements.

Demand forecasting ensures that businesses are well-prepared to meet future challenges and
capitalize on opportunities. By accurately predicting future demand, organizations can make informed
decisions that align with their goals and adapt to changing market conditions. This foresight is crucial
both on an international scale and in domestic markets, helping businesses maintain a competitive
edge and effectively manage their resources. As such, demand forecasting is a fundamental aspect of
business planning, enabling companies to achieve their objectives and thrive in a dynamic
environment.

Quantitative approach

Concerned with determining the number of employees required in a future period, there are uses of
statistical or mathematical techniques that will be useful in estimating the quantity of manpower
through workload analysis and workforce analysis.

 Workload Analysis is the total workload of each department estimated based on sales
forecasts, work schedules, gross rate, and expansion plans.
  Workforce Analysis is concerned with all existing workers who are not likely to be available
for work throughout the year, due to absenteeism and turnover.

Qualitative approach (Skills analysis)

The quality of manpower required varies from job to job. Therefore, the quality of employees required
for a job can be determined only after determining the job requirements. This approach relies on fewer
statistical and mathematical calculations and more on experts who assist in preparing forecasts to
anticipate staffing requirements.

Example:

Imagine a tech company is launching a new AI product. Experts would determine that they need
employees with specialized skills in AI and machine learning. By consulting with industry
professionals, the company identifies that their current team lacks these specific skills. As a result,
they forecast the need to hire or train employees with expertise in AI to ensure the project’s success.

In summary, the quantitative approach uses data to estimate staffing numbers, while the qualitative
approach assesses the specific skills needed for various roles.

Supply forecast

Supply Forecasting measures the number of people likely to be available from within and outside the
organization- internal and external supply people already employed by the firm and those outside the
organization. It considers rates of absenteeism, internal movements and promotions, wastage and
changes in hours, and other conditions of work. The supply analysis covers the following areas:
existing number of people employed by occupation, skill and potential, source of supply from within
the condition, and effect of changing conditions of work and absenteeism.

Supply chain forecasting is important because it orchestrates logistics and inventory management and
directly influences businesses’ operational efficiency and financial health. It touches upon several
critical aspects of supply chain management, from mitigating risks associated with inventory levels to
enabling strategic decision-making and enhancing the overall agility of the supply chain.

Internal supply forecast is a succession planning or the career plans orchestrated by an organization
and is available by way of transfers, promotions, retired employees & recall of laid-off employees.
This step is vital, as it conveys an inventory of the firm’s current and projected competencies. These
internal factors include:

 Employee turnover rate refers to the movement of employees out of an organization. It is a

determinant of labor supply. As employees’ turnover, the supply of labor goes down.

 Skill inventories (Talent inventories) prepare a list of employees showing each employee’s
education, experience, vocational interests, specific abilities, and skills.

 Succession planning: the process of identifying, developing, and tracking key individuals so
that the May eventually assumes top-level position.
The process for developing such a plan includes setting a planning horizon, identifying replacements
for each key position, assessing current performance and readiness for promotion, and identifying
career development needs. The overall objective is to ensure the availability of competent executive
talent in the future.

The external supply consists of those individuals in the labor force who are potential recruits of the
firm. When an organization lacks an internal supply of employees for promotions, or when the
organization is staffing entry-level positions, managers must consider the external supply of labor.
Factors that influences external supply for labor include:

 Demographic changes in the population

 National and regional economic

 Education level of the workforce

HR forecasting empowers your company to do more than just balance labor demand and supply.
References

Armstrong, M. (2014). Armstrong's handbook of human resource management practice (13th ed.).
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Dessler, G. (2015). Human resource management (4th ed.). Pearson.
Demand Forecasting: Meaning, Importance, Examples with Questions. (2019, December 9). Toppr-
guides. https://www.toppr.com/guides/business-economics/theory-of-demand/demand-
forecasting
Jeevan, S. (2024, June 3). Forecasting of human resource in an organization. Eaton Business School.
https://ebsedu.org/blog/forecasting-of-human-resource-in-an-organization
LibreTexts. (n.d.). Human resource management. Retrieved from https://libretexts.org
Lumen Learning. (n.d.). Introduction to human resource management. Retrieved from
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