Human Resource Planning Process: The Complete Guide
A successful human resource planning process depends on strategic talent management, but 74% of employers globally are struggling to find the skilled talent they need. Taking a strategic approach to human resource planning process has the potential to proactively fill talent gaps.
An effective human resource planning process ensures your organization has the right talent to meet its current needs and is essential for building a future-ready workforce. Yet only 33% of HR leaders believe their organizations successfully utilize data in workforce planning, a key aspect of the HRP process.
This detailed guide outlines the benefits, challenges, and essential steps of the process of human resource planning to help you create an effective workforce strategy.
Contents
What is human resource planning process?
Benefits of an HR planning process
Challenges of an HR planning process
5 steps in the human resource planning process
What is human resource planning?
Human resource planning (HRP) describes an ongoing, data-driven process in which a company systematically plans for the future in terms of human resources to ensure that available jobs are suited to appropriately skilled employees. It identifies key HR initiatives for the time period ahead that will help the organization achieve its strategic goals and maintain its competitive advantage without staffing shortages or excesses.
Benefits of an HR planning process
A well-designed human resource planning process offers many advantages, from ensuring you have a well-equipped workforce to aligning talent management with key business objectives. Beyond these strategic advantages, here are additional benefits of an effective HR planning process:
- Streamlines HR processes: Establishing and maintaining key HR functions such as recruitment, selection, training, compensation, and performance management.
- Optimizes HR budgets: Allocating resources efficiently to support cost-effective workforce planning and maximize the return on human capital ROI.
- Leverages data: Utilizing technology and HR analytics to make better workforce planning decisions, such as predicting talent gaps and developing succession plans.
- Aligns talent acquisition with business goals: Ensuring the right hires are made at the right time to drive organizational growth.
- Address skills gaps: Identifying future skill needs and emerging job roles to meet evolving labor market demands.
- Upskills employees for business growth: Implementing targeted training programs to enhance technical and soft skills, improving overall productivity.
- Improves engagement and retention: Providing clear career paths and targeted professional development opportunities to increase engagement, job satisfaction, and retention.
- Strengthens DEIB initiatives: Assessing and improving DEIB efforts to broaden your talent pool, drive innovation, and boost competitive advantage.
Challenges of an HR planning process
As beneficial as the HRP process is, it does come with some disadvantages. Knowing the potential drawbacks can help you better prepare to tackle them when they arise. Here are a few to keep in mind:
- Requires access to accurate data: Anticipating future needs depends on forecasting, which is never completely accurate. Influences like market conditions, labor demand, supply, and industry changes can make it difficult to adequately predict future workforce changes and needs.
- Demands investment in advanced tools: For an HR planning process to be truly effective, HR teams will need to invest in robust tools for data analysis and forecasting, which may be difficult for those on tight budgets.
- Must integrate with organizational strategy: Ensuring HR plans align with business objectives can be difficult, particularly when dealing with frequent or unexpected changes. Misalignment can result in inefficient resource allocation and missed opportunities.
- Needs alignment across different business units and locations: Developing an HRP process in a globalized work environment may be more complex. It requires an in-depth understanding of specific workforce needs, organizational structures, and legal compliance requirements.
- May encounter resistance to change: The process of HRP can lead to new workforce policies, such as restructuring or role adjustments, that may create uncertainty among employees, leading to resistance.
5 steps in the human resource planning process
The actual process of human resource planning involves five general phases. Described below is a summary of each step to help you navigate the process:
1. Evaluate the current state of your workforce
Before moving forward with future workforce plans, HR teams and business leaders will need to assess the strengths, weaknesses, and potential gaps in the current workforce. It’s essential to understand whether you have the right amount of talent with the right skills in the right place.
To help answer this, you should consider these critical areas of your workforce:
- Structure and demographics: Analyze headcount, roles, and key demographics, like age – especially retirement projections.
- Capabilities and performance: Assess employee skills, competencies, and qualifications to understand any skills gaps and future needs. Analyze performance reviews to identify high performers and development areas.
- Engagement and retention: Use surveys and feedback to determine employee engagement and job satisfaction levels. Also, review employee turnover data to understand reasons and trends that may impact productivity and future talent needs.
Key methods and tools
There are several ways HR professionals can investigate these variables, such as:
- Meeting with managers and department heads for their assessment of their teams’ abilities, strengths, and areas for improvement or advancement
- Conducting employee surveys and self-evaluations
- Analyzing HRIS data to gain key insights such as employee skills, productivity, and turnover
- Looking at past performance reviews.
Determine which tools and HR metrics (turnover, time to fill, etc.) can help you design a roadmap for this step of the HR planning process. You could start with an organizational chart with a visual overview of your company’s workforce structure, outline roles, and reporting relationships.
Below is an example of an HR organization chart in a mid-sized organization: 
HR teams should also prepare a replacement chart, a diagram of potential candidates and their readiness to step into certain roles upon employee departures.
2. Forecast future workforce needs
Forecasting workforce demands is the next critical phase of the HR planning process. It should be directly linked to future organizational goals to effectively determine qualified employees’ upcoming demand and supply.
Demand forecasting
Demand forecasting involves determining the number of people needed and the level of talent required. HR teams can use several techniques (in combination), such as:
- Trend analysis: Analyze key workforce data (headcount, turnover, hiring rates, promotions) to project future staffing needs. For example, if you notice a headcount trend at certain times of the year, this can be used for future projections.
- Regression analysis: Use statistical models to examine the relationship between workforce size and key organizational data (financial performance, growth, market demand). If, for instance, there is a strong connection between revenue and headcount, these projections can be used to predict future staffing.
- Delphi method: Conduct multiple rounds of expert feedback through the Delphi method, from senior leaders, subject matter experts, and other key stakeholders to get information about future labor demands. These insights are later aggregated to forecast workforce needs. This method is very useful when you don’t have enough historical data available.
Be sure to include factors such as:
- New products or services on the horizon
- Prospective mergers or acquisitions
- Labor costs
- Projected employee retirements/vacancies and turnover rates
- Technological advances and automation.
Talent supply forecasting
Supply forecasting estimates future internal sources of talent (promotion, transfers, position expansion) and external sources (job boards, recruitment agencies, employee referrals) and their ability to meet your needs.
- Internal supply: Consider a skills inventory to review the availability and preparedness of current employees to move into lateral or higher-level roles. This process will also help you uncover any skills gaps or deficiencies. It’s a valuable tool for creating development plans and succession charts.
Here is how you can use an employee’s skills inventory to identify opportunities for development:
| Skill | Opportunity for development | Formal training | Coaching and mentoring | On the job |
| Advanced Excel | Work on an upcoming project on training via LinkedIn Learning. | x | x | |
| Digital Marketing | A book on digital marketing, learn from a colleague and get involved in social media activities at work. | x | x | x |
| Video editing | Edit a video for the workplace onboarding program and attend the ‘Introduction to video editing seminar.’ | x | x |
- External supply: Assess the current state and quality of available talent in the job market. Conduct an analysis using recent labor market data, leading HR research and surveys, industry trends, as well as competitor workforce data.
Scenario planning
Scenario planning is a way to brainstorm situations that may affect your organization’s direction and labor requirements in the future. Consider technological advancements, economic changes, new government regulations, and new product launches. Develop different scenarios (e.g., most-likely, best-case, and worst-case) to create workforce plans. This can help you be flexible and take certain precautionary measures. 
The insights from these different forecasting techniques will make the next step of determining talent and skill gaps.
3. Identify gaps and future opportunities
The next essential step in the HRP process is a gap analysis, which involves comparing current workforce capabilities with future projections of organizational needs. By the end of this process, you will be able to identify any misalignment between talent supply and demand. This method involves these key steps:
Identifying the gaps
First, compare the following:
- Current workforce profile: Skills, competencies, qualifications, demographics (including retirement projections), performance levels, engagement, and satisfaction metrics (see the data gathered from Step 1).
- Future staffing needs: Projections of specific talent needs (based on demand and supply forecasting in Step 2).
As a result, you should be able to determine and quantify the gaps:
- The amount of additional employees needed for certain roles
- Specific skills or qualifications missing
- Potential succession gaps or future leaders.
Analyzing the gaps
To fully understand the nature of these gaps, analyze them by asking the following:
- Which gaps are the most important to close (e.g., those most related to organizational goals)?
- What are the reasons behind these gaps (e.g., turnover, lack of training, changing job requirements)?
- What can HR do to address these gaps (e.g., learning and development programs)?
Finding potential solutions
Then, based on your analysis, determine potential solutions to close identified gaps:
- 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?
With these key findings of your gap analysis, you’ll be fully prepared for the next step of developing action plans to close talent gaps.
4. Develop and implement a plan
Now, it’s time to design a human resource action plan that aligns with your key organizational objectives. The plan should take into account all the analyses you’ve completed so far and include identified talent strategies.
Defining objectives and strategies
Start with the theoretical concept of transforming the company from X to Y and then transform these high-level goals into specific, measurable objectives. For each objective, determine the step-by-step approach that HR will facilitate, such as:
- Recruiting and onboarding strategies
- Training & development programs
- Performance management
- Salary structures & benefits packages
- Remote/flexible work arrangements
- Employee engagement initiatives.
There is no one-size-fits-all content for a strategic HR plan. Each organization’s strategy will be unique, depending on its goals and business focus. One company may need to start with an enhanced recruitment program to find highly skilled employees with specialized skills. Another company might be able to begin by training its current staff.
Here is a template of what an action plan could look like:
Developing the action plan
In addition to your core objectives, ensure your action plan includes these core components:
- Key performance indicators (KPIs)
- Specific timelines for each planned activity
- Clearly defined roles and responsibilities
- Budget and staffing allocation
- Contingency plans.
Implementation and communication
Once your plan is set, you must focus on integrating it with strong company-wide communication. Be prepared for some resistance to change that may occur within frontline employees and management. Integrating will be easier if you are hiring new employees because they will be more accepting of a new way.
HR can counter potential resistance by:
- Including employees and other key stakeholders in the planning process
- Offer training and support for managers and senior leaders
- Providing transparent updates on progress.
5. Monitor, review, and reassess your plan
The final step in the human resource planning process is to determine whether it is yielding results. This involves tracking progress, assessing its effectiveness, and making necessary adjustments.
Analyze workforce data regularly to measure key metrics such as hiring rates, employee turnover, and performance improvements. Workforce analytics tools can help identify trends and areas for improvement. It’s also important to gather employee feedback through performance reviews, surveys, or focus groups to understand how changes are impacting the workforce.
Periodically conduct formal reviews—whether quarterly or annually—to assess the plan’s impact on business objectives such as productivity, retention, and overall job satisfaction. Based on these insights, update your action plan as needed to address emerging challenges, skills gaps, or shifts in organizational strategy.
An effective human resource planning process is never truly completed. It’s a cyclical process of planning, implementing, monitoring, and adjusting talent strategies to ensure they meet the evolving needs of your organization and business environment.
To sum up
Before you start human resource planning, reflect on whether your HR team has the right data analytics, tools and technology, and key stakeholders to reap the strategic benefits. A well-designed HR planning process has the potential to not only proactively fill talent and skill gaps but also drive future business growth.
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