Why Human Resource Planning is Everybody's Business

Human resource planning connects your people to business goals. We've outlined the reasons why it's so important to nail it in a service delivery business.
Iryna Viter

People are the greatest asset of every knowledge-heavy business. As leaders try to capitalize on it, some succeed and others don’t. One reason why so many fall behind is because they haven’t mastered the art and science of human resource planning yet. 

Human resource planning (HRP) is at the core of efficient operations in any company selling people’s time and expertise. A resource plan is key to being able to maximize the efficiency of your team members, and therefore the business as a whole.

Planning allows businesses to motivate and challenge current team members, while forecasting personnel needs enables businesses to scale. Without a proper resource planning process in place that engages employees, businesses risk losing their seasoned professionals. 

In fact, the Center for American Progress found employee turnover can cost a business up to 213% of a lost employee’s salary, particularly when it’s a senior member. This makes it important to encourage team members to stay with the business, and to have steps in place to minimize the cost of losing people when it does inevitably happen. 

A well-rounded human resource plan is one of such steps. Learn more about what it is and why every company needs it. 

What is human resource planning? 

Human resource planning (HRP), also known as workforce planning, is an ongoing cycle of strategic planning. Its objective is to ensure that an organization's greatest asset—employees—is used to its best ability.

Human resource planning guarantees that employees and jobs are a good match while preventing workforce shortages or scarcities.

The HRP process consists of four important steps: 

- analyzing current labor supply,

- projecting demand

- balancing demand with supply, and 

- assisting in the achievement of organizational objectives. 

HRP is a crucial investment for any company since it allows them to remain productive and profitable.

Essentially, human resource planning is all about two things:

  • Making sure you have the best possible people in the best possible jobs. 
  • Making sure you have the right number of resources to meet the demand.

Looking at it like that, it seems fairly simple. But managing people and making plans that can be affected by people’s decisions is anything but.

The reason human resource planning is so important is it’s a huge contributor to the efficiency of your business. Consider again the two aims of planning.

If you have the best possible people in the best possible jobs, you have the most capable employees working in a capacity where they can make the biggest impact.

If you DON’T have the right number of resources in your business, you can be spending too much in wages, or spending too little, not making the progress you could, and over-working the staff you do have.

What are different roles of human resource planning? 

1. Identifying future personnel needs

Whether it’s through employees moving on or hiring new people, it’s inevitable that the situation in your business will change. People come and go! How you manage that change can make a huge impact on the business performance.

Your human resource plan can include likely growth areas of the business, or contingencies for if certain people decide to leave. In both cases, you can identify and even grow a relationship with potential replacements before you look to start the hiring process. 

This is a fantastic way of ensuring that you can hire someone who can really add value to your business, and one reason why planning should be part of your human resource capacity.

2. Providing wider scope on the investment in resources

People are commonly one of the most valuable resources in a company, and having a human resource plan provides hugely important context for managing them.

Your plan allows you to refer to strategic thinking about the people you hire and the positions you hire them in. This is particularly advantageous when you’re looking to appoint a new position to grow your business. 

Without a human resource plan, you’d be guessing as to what area of the business you need to hire in and what the scope of that position would be.

Your HR plan also helps to inform you if there are roles that could be changed in order to maximize their contribution to your business.

3. Helping retain top talent

People are most likely to stay in jobs that are challenging, motivating and rewarding. When, in your HR planning process, you’ve identified how to structure a role so that it enables someone to maximize their contribution to the business, you give them those three things.

Your HR plan can also help to identify key employees with the greatest potential to impact the company in the future. Knowing that, you can take steps to ensure that top talent is satisfied and retained. 

It’s not always easy to attract the best people, so it’s important to do everything you can to keep them. 

4. Assisting with expansion and diversification of resources

Workplace diversity is increasingly being recognized as hugely beneficial for businesses. Diversity promotes fresh opinions, different ideas and new ways of looking at things. Having an HR plan can guide the way you expand and diversify your staff. 

For example, in putting a human resourcing plan together you may realize that 90% of your team all fits within a very similar demographic. That doesn’t mean you should straight away fire a bunch of those people, but it can show you that you can place a higher value on making your next hire someone who comes from a more diverse background.

5. Analyzing employee turnover

Employee turnover is a natural phenomenon in running a business, and it’s not always a bad thing. However, as mentioned previously, replacements can be expensive, especially if it takes a new joiner some time to get up to speed in their role.

Human resource planning can help you to recognize how your attrition rate compares to similar businesses in your space. It provides valuable context to your turnover rate.

If you see your turnover is lower than your competitors, that’s a good sign that the people are engaged and satisfied. If it’s much higher, it could be an indication that they don’t enjoy their jobs as much as they’d like.

6. Helping with business expansion

If your business is looking to diversify and expand into new areas, you’re going to need the right people to help you succeed. Human resource planning gives you a roadmap for the types of role you need in order to make your new focus work as well as possible.

For example, say you are an e-commerce menswear retailer, and you want to start selling women’s clothes too. 

Without an HR plan, you might be able to come up with a few roles that you need to expand into that new area, but that would only be based on your instincts. When you take the time to come up with a plan, you’ll have much more insight into the specific roles that are needed, including some that you may not otherwise have thought of.

7. Training and developing the employees

Training and professional development is another tool you can use to keep your team challenged and motivated. Not only does it engage employees by adding to their skill sets, but you get the benefit of those new skills too.

Having a proactive approach to training really helps to retain people, and it’s also a good way of allowing employees to progress their careers within your business. 

It can mean you have a ready-made replacement for when someone decided to leave. Being able to promote someone internally is an advantage because they already know how your business works, so it’s worth developing the capabilities so they’re ready to take on more responsibility when the time comes.

How to choose the right human resource planning tool for your business 

Having a dedicated approach to people management is a core function of your human resources team. HR departments spend a lot of time ensuring everyone is efficient and productive.

Runn people management software makes this huge task much easier, quicker and more understandable. Benefits include:

  • Insights into resources to understand how well they’re being utilized and if they’re being overworked.
  • Visibility over the capacity of individuals and teams.
  • Simplified team messaging.
  • Customized, searchable people reports.
  • Analysis of people costs and profitability to the business.

People management software is a core component of HRP, and provides automated, in depth insights that allow you to maximize the benefit you get from your plans.

Final thoughts

Human resource planning can really help you to get the most out of your people, and minimize the impacts of unsatisfied members.

A good HR plan helps you mitigate the effect of staff turnover and anticipate future hiring needs, among other things. 

It can be hard to know where to start in making a plan for your business, which is where people management tools such as Runn become valuable. You’ll get people insights at the touch of a button, including useful areas that you may not consider if you were doing it manually. Most of all, you’ll understand the current state of your resources and see where you can look to improve.

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