If you're on a Galaxy Fold, consider unfolding your phone or viewing it in full screen to best optimize your experience.
Having the right people with the right skills to ensure the smooth running of the company and enable growth is key to success. So why, then, do so many companies and HR departments not have a process in place to analyze and forecast their future needs? The U.S. unemployment rate has fallen to a 50-year low, making it even harder for companies to hire workers to fill their skills gaps.
Planning for the here and now is not enough. You need a proper human resource planning process to make sure you’ll be well equipped to meet the demands of the workplace of the future.
Human resource planning -- also known as workforce planning -- means ensuring you have the right staffing levels to meet current and future business needs. This involves:
We will look at each of these steps in more detail below.
The HR department has often been seen as a cost center rather than an area that can help drive business growth. One of the most important overall goals of human resource planning is to help better prepare the company for the future and to ensure it’s adequately staffed to meet any challenges.
By delivering the benefits below, HR professionals can start to take a key strategic role in the company’s future plans.
When you analyze the performance of your current workforce, you might find out that you have additional capacity or that your employees have other skills you’re not currently using.
For example, your content manager might also have web design and development skills, or one of your salespeople could also have experience in email marketing.
Instead of hiring new workers to carry out these tasks, you can invest in some training to make sure your current employees can take on the additional work, or you can plan to hire someone more junior to take over the more menial parts of their job.
One thing that can throw a spanner in the works when it comes to human resource planning is when your leaders leave unexpectedly. That’s why succession planning -- identifying and training employees to step up to fill leadership roles -- is so important.
When you’re putting together human resource plans, you can identify who would be the best fit to fill current and future leadership gaps. This means you’ll be better prepared if and when your leaders leave. This same process can be applied to anyone who has unique skills or is particularly good at their jobs.
The skills that are most needed in the workplace have changed dramatically in the past 20 years, and they will undergo another major change in the next 20 years. You need to be prepared for these changes or you’ll fall behind, because often, these skills take time to develop, and there might be a skill shortage in years to come.
HR and employment planning involves identifying these skills and drawing up plans for how you’re going to start developing them now. You can work out who would be best placed to learn these new skills and find training courses to develop them in-house instead of having to hire external talent.
Part of the process of HR planning involves using workforce analytics to track certain HR metrics, such as performance and talent management information, and procedures and processes. This data, also known as hr analytics, can help the HR department make better decisions -- based on concrete information rather than a gut feeling -- that improve business development and support a company’s overall strategy.
As human resource planning takes into account the company’s current and future plans, any decision you make as an HR professional is linked to business performance and growth and is more strategic.
There are a number of different steps that make up the HR planning process, which we will explain in detail below.
There is no one-size-fits-all approach to strategic human resource management, so your business may need to undertake additional steps depending on the industry in which you operate and the product or service you offer.
The first step in effective HR planning is to assess the current situation. There are a number of questions you need to find the answers to if you want to get a good idea of the current landscape:
If you want to be able to accurately assess your current workplace performance and be able to use this important data later in the process, there are a number of steps you need to take.
Once you’ve assessed your current workforce skills and performance, you need to look to the future and forecast what skills you’ll need and how many employees of all levels it’ll take to match this demand.
To assess future needs, you need a clear picture of your company’s five-year and ten-year plans so you know which direction they’re headed in.
Take Instagram, for example. The company started life as Burbn, a Foursquare-style app that allowed users to check in to places, post plans, and share photos. It decided to go down the photo-sharing route, which meant it needed the skills to develop that kind of platform, rather than a check-in app.
You need to gather as much information as you can on your business and your industry if you want to be able to accurately forecast future needs. Here’s how you can do that.
Now that you’ve looked at what you have and what you need, the next step is to identify any gaps. This process is known as supply and demand. This is a difficult process that relies on having accurate and comprehensive data from steps one and two, as well as the people analytics tools and skills to carry out the assessment.
Once you can identify your supply of skills and the future demand for skills, it will be easier to see if there’s a gap between the two.
When you’ve carried out an assessment of your skills gap, then you need to put a plan into place to start closing that gap. This plan needs to be fully integrated with your business strategy, goals, and budget.
For example, you need to ensure that you have a sufficient training budget to upskill staff, or approval to hire highly skilled employees.
There are a number of steps you need to take to ensure you’re fully prepared to fill skills gaps and make sure you remain competitive in the future.
HR software can help you streamline human resource planning by automating the manual processes of collecting and analyzing data and getting actionable insight that can form the basis of your plan.
Here is our pick of the best HR software to help you improve your workforce planning.
Workday's comprehensive HR planning functionality helps not only provide the data you need to make better decisions, it also analyzes that data and displays it in the form of visual representations.
For example, you can see the overall cost of your workforce, including freelance workers, so you can understand whether you can (and should) hire full-time, part-time, or contract workers.
Other useful insights include a breakdown of compensation per company, department, and project, as well as information on contract length, and overall cost. You can also see how well you’re doing in terms of succession planning.
Zenefits provides the insight you need to analyze and measure the performance of your current workforce and find areas where you can make improvements. This HR software provides data on areas such as headcount and compensation by department, company and department turnover, use and cost of freelancers, and cost per department and project.
You can also build your own reports to focus on specific aspects of your business.
BambooHR lets you get an overview of individual employee details and performances. By centralizing all employee data in one place, HR professionals can understand more about each worker’s employment status, benefits package, training details, time-off requests, and IT assets.
BambooHR also creates detailed reports based on department and company data. These reports include:
Once you’ve completed the four-step HR planning process, your work is not done. In fact, your work is never really done. You need to track the success of this plan over the short and long term. To do that, you need to set goals and then track HR metrics that will reflect the success of this goal.
For example, you could aim to have recruited two external workers with artificial intelligence skills and retrained two marketers to work as data analysts. Then you need to collaborate with the rest of the business and the executive team to ensure you’re meeting the needs of the business.
The last step is to be agile. If the direction of the business changes, your plan will go out the window, and you’ll need to regroup and make adjustments. Using the right HR software can help you get back on track thanks to its data collection and analysis functionality.
Our Small Business Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent, a Motley Fool service, does not cover all offers on the market. The Ascent has a dedicated team of editors and analysts focused on personal finance, and they follow the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands.