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.
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 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.
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.
Murriner says that in the new economy, the importance of having the right people in place has increased, as has their value. “It’s even more apparent, as we move to more knowledge-based work. Historically, our economy has focused on the creation of goods, with an emphasis on materials and equipment. But now more than ever, people costs are the dominant aspect of financial models that support business strategy,” he explains.
“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).”
“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.”
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.
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.
Need more strategic planning templates to clarify goals for your organization? You can find more free strategic planning templates here.
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
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.
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
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.
Download Action Plan Template
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.
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.
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.
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.”
Our experts share their thoughts on some additional issues to keep in mind as you develop your own plan:
It’s important to build a set of assumptions about the drivers of work and how growth or contraction in the business would impact the number of people needed and how those should be deployed.”
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.”
“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:
Here are some of the themes experts think will influence human resources professionals, their companies, and the people they hire in the near future:
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