# Human Resource Planning (HRP): Meaning, Process, and Key Steps for Success

> **Definition**
>
> Human resource planning (HRP) is the process of determining the right number of skilled employees that an organization needs to meet current and future business needs.

## What Is Human Resource Planning (HRP)?

Human resource planning (HRP) is a strategic approach to workforce management. It's a continuous process of systematic planning to achieve optimum use of an organization's employees.

HRP serves three purposes: optimizing workforce use, preventing shortages or surpluses, and supporting organizational objectives.

There are four key steps to HRP: analyzing present labor supply, [forecasting](https://www.investopedia.com/terms/f/forecasting.asp) labor demand, balancing projected [labor demand](https://www.investopedia.com/terms/d/demand_for_labor.asp) with supply, and developing supportive organizational plans.

[Human resource](https://www.investopedia.com/terms/h/humanresources.asp) planning is important for business productivity and profitability. It ensures the best fit between employees and jobs while avoiding manpower shortages or surpluses.

### Key Takeaways

*   Human resource planning (HRP) involves a continuous and strategic approach to optimizing an organization's workforce through planning and development.
*   The four key steps in HRP are analyzing the current labor supply, forecasting future labor demand, balancing demand with supply, and implementing a comprehensive HR plan.
*   HRP is crucial for companies to maintain productivity and profitability by ensuring the right number and type of skilled employees are available to meet current and future organizational needs.
*   Challenges in HRP stem from unpredictable factors like technological advances or global events, requiring flexibility and regular revisions to HR strategies.
*   Effective HRP promotes a company’s competitive edge by aligning employee skills and company goals, fostering engagement and adaptability in a changing business environment.

![Human Resource Planning (HRP)](https://www.investopedia.com/thmb/MzSAZSMxWS_T14wYuSC6LuByCbM=/1080x0/filters:no_upscale():max_bytes(150000):strip_icc()/Human-resource-planning-8a994004eb0a44a29073e3ef283c36db.png)

*HRP needs to be flexible enough to meet short-term staffing challenges while adapting to long-term changing conditions in the business environment. — Michela Buttignol / Investopedia*

## Practical Applications of Human Resource Planning (HRP)

Quality employees are a business's most valuable asset. Without them, income can decrease and a company may fail. HRP is designed to prevent this from happening. Its mission is to identify current and future hiring and training needs.

HRP allows companies to plan ahead so they can maintain a steady supply of skilled employees. The process is used to help companies evaluate their needs and plan ahead to meet those needs.

HRP needs to be flexible enough to meet short-term staffing challenges while adapting to changing conditions in the business environment over the longer term. To help prevent future roadblocks and satisfy their objectives, HR managers should plan to:

*   Find and attract skilled employees
*   Select, train, and reward the best candidates
*   Keep employees motivated
*   Cope with absences and deal with conflicts
*   Succession planning
*   Promote employees or let some of them go
*   Keep tabs on trends that could impact future supply and demand

Identifying a company's skill set and targeting the skills a company needs to enable it to strategically reach business goals and be equipped for future challenges.

## Objectives of Human Resource Planning (HRP)

HR planning aims to maintain the right number of employees to maximize company profits. Staying on top of this and achieving effective HRP can ensure that the company:

*   Gets the best out of current employees and increases their value
*   Has a competitive advantage in its industry
*   Is better placed to respond to challenges and adapt to changes  
    

## Overcoming Challenges in Human Resource Planning (HRP)

HRP offers many advantages, but it isn't without challenges. Predicting the future is difficult. Technological breakthroughs or unexpected events can change everything. Issues such as employees getting sick and wealthier or more prestigious competitors poaching staff can also cause serious problems.

Additionally, as [globalization](https://www.investopedia.com/terms/g/globalization.asp) increases, HR departments will face the need to implement new practices to accommodate government labor regulations that vary from country to country. The increased use of remote workers by many corporations will also impact HRP and will require HR departments to use new methods and tools to recruit, train, and retain workers.

Companies can set themselves up to better deal with these types of challenges if they are adaptable and continuously keep tabs on the world around them. Companies that prepare for events affecting human resources handle them better and may benefit from them.

> **Important**
>
> HRP strategies must frequently be revised to match not only the company's changing needs but also external changes.

There's also the challenge of HRP being time consuming and potentially costly. HRP offers benefits, but it can take a while to reap them.

A high level of [employee engagement](https://www.investopedia.com/terms/e/employee-engagement.asp) can be essential for a company's success. If a company has the best employees and the [best practices](https://www.investopedia.com/terms/b/best_practices.asp) in place, it can mean the difference between sluggishness and productivity, helping to lead a company to profitability. However, like most important investments, it can take a while for these efforts to pay off. In the beginning, HRP will be a drag on profits.

## The Four Steps in the Human Resource Planning (HRP) Process

There are four general, broad steps involved in the HRP process. Each step needs to be taken in sequence in order to arrive at the end goal, which is to develop a strategy that enables the company to successfully find and retain enough qualified employees to meet its needs.

### 1\. Analyzing Labor Supply

Identify your current workforce and evaluate their skills, qualifications, and performance.

### 2\. Forecasting Labor Demand

Predict future workforce needs considering promotions, retirements, or new market conditions.

### 3\. Balancing Labor Demand with Supply

Conduct a [gap analysis](https://www.investopedia.com/terms/g/gap-analysis.asp) to address your future workforce needs.

### 4\. Developing and Implementing a Plan

Create and execute a strategic plan that integrates with your company's goals.

> **Fast Fact**
>
> Common HR policies put in place after this fourth step may include policies regarding vacation, holidays, sick days, overtime compensation, and termination.

## Why Is Human Resource Planning Important?

Human resource planning (HRP) allows a business to better maintain and target the right kind of talent to employ—having the right technical and soft skills to optimize their function within the company. It also allows managers to better train the workforce and help them develop the required skills.

## What Is Hard vs. Soft Human Resource Planning?

Hard HRP evaluates [various quantitative metrics](https://www.investopedia.com/ask/answers/013015/how-are-labor-demand-forecasts-made-human-resources-planning.asp) to ensure that the right number of the right sort of people are available when needed by the company. Soft HRP focuses more on finding employees with the right corporate culture, motivation, and attitude. These are often used in tandem.

## What Are the Basic Steps in HRP?

HRP begins with an analysis of the available labor pool from which a company can draw. It then evaluates the firm's present and future demands for various types of labor and attempts to match those demands with the supply of job applicants.

## The Bottom Line

Human resource planning (HRP) is crucial for optimizing the use of an organization's most valuable asset: its employees. It helps companies maintain a steady flow of skilled workers, preventing shortages or excess staff.

The four key steps in HRP are identifying current employee supply, forecasting future workforce needs, balancing supply and demand, and developing supportive company plans.

Human resource planning is important in maintaining the optimal number of staff and preparing the business to adapt to both immediate and long-term staffing challenges.

Not everything can be predicted, so HRP needs to be flexible and adaptable in case of unforeseen events like technological advancements and globalization impacts.

The ultimate goal of a human resource planning strategy is to help a company be both productive and profitable. Now that you know more about HRP, your business is equipped to adopt efficient HRP strategies.

> **Article Sources**
>
> 1.  Prashanthi, K. "[Human Resource Planning—An Analytical Study](https://www.ijbmi.org/papers/Vol%282%291/Version_3/H0216368.pdf)." _International Journal of Business and Management Invention_, vol. 2, no. 1, 2013, p. 64.