Many business owners prepare a business plan before starting their business. However, small business owners often do not include human resource planning as part of their over-all business plan. They may start out with only a few employees or none at all. Over time, it is important to properly forecast employment needs. Just as failing to address potential threats in the marketplace can jeopardize the viability of your business, failing to anticipate personnel needs can impact on overall business success.
The success of a business is directly linked to the performance of those who work for that business. Underachievement can be a result of workplace failures. Because hiring the wrong people or failing to anticipate fluctuations in hiring needs can be costly, it is important that you put effort into human resource planning. Planning for HR needs will help to ensure your employees have the skills and competencies your business needs to succeed. An HR plan works hand in hand with your business plan to determine the resources you need to achieve the business’s goals. It will better prepare you for staff turnover, recruitment, and strategic hiring – and alleviate stress when you have emergency/last-minute hiring needs.
Human Resource Planning Process Or Steps Of HR Planning
Human resource planning is a process through which the company anticipates future business and environmental forces. Human resources planning assess the manpower requirement for future period of time. It attempts to provide sufficient manpower required to perform organizational activities. HR planning is a continuous process which starts with identification of HR objectives, move through analysis of manpower resources and ends at appraisal of HR planning. Following are the major steps involved in human resource planning:
1. Assessing Human Resources
The assessment of HR begins with environmental analysis, under which the external (PEST) and internal (objectives, resources and structure) are
analyzed to assess the currently available HR inventory level. After the analysis of external and internal forces of the organization, it will be easier for HR manager to find out the internal strengths as well as weakness of the organization in one hand and opportunities and threats on the other. Moreover, it includes an inventory of the workers and skills already available within the organization and a comprehensive job analysis.
2. Demand Forecasting
HR forecasting is the process of estimating demand for and supply of HR in an organization. Demand forecasting is a process of determining future needs for HR in terms of quantity and quality. It is done to meet the future personnel requirements of the organization to achieve the desired level of output. Future human resource need can be estimated with the help of the organization’s current human resource situation and analysis of organizational plans an procedures. It will be necessary to perform a year-by-year analysis for every significant level and type.
HR planning must be tied to the overall business plan. You can start the process by assessing the current conditions and future goals of your company. Perform these assessments regularly. Consider some of the following questions:
What are the company’s goals and objectives?
Do these goals call for expansion into new markets?
Are new product lines planned?
Are changes in technology necessary to stay competitive?
Will new skills and/or training be required to meet the company’s goals and objectives?
The following three-step method is designed to help you
determine whether or not you are ready to hire:
1. Identify Business Strategy and Needs
2. Conduct a Job Analysis and Write a Job Description
3. Determine the Feasibility of Hiring
Human Resource Planning Checklist
Step 1: Identify Business Strategy and Needs
Identify pressures and opportunities
Clarify your business strategy and direction
Identify aspects of the business that need help
The following questions will help you determine how many people are required, and with what skills, to fulfill your business needs. What new positions are opening up?
What special skills (e.g. computer applications) will be needed? What work experience (e.g. in a particular area) will be required? When will new staff be needed?
When should hiring be scheduled to ensure a smooth transition?
Does the hiring plan also provide for employee turnover and attrition?
Step 2: Conduct a Job Analysis and Write a Job Description
Review your current workforce-
Describe the employees you now have in terms of their knowledge, skills, and experience and describe how they function together to get work done, At the same time, consider how the current work could be reorganized to make the best use of current and future employees.
Identify any skills and knowledge gaps-
Note any gaps between the skills and abilities your current employees have and the skills and abilities that your workforce needs to meet your business objectives in the future. Write a job description
Set an appropriate salary-
Start by adopting a general salary range to help you determine what you will need to budget – and whether potential candidates are within your budget. You may want to complete a job evaluation, whereby you rank jobs and their corresponding salaries. Weigh the importance of critical skills and knowledge for each position, compare positions, and rank the new position on the pay scale accordingly.
You will need to do a comparison between the new and existing positions.
Is the new position more junior/senior?
Will the new position require more specialized skills and knowledge? Will the position have more complex tasks and different working relationships? Will the new position have more or less responsibility?
Tips for Conducting a Job Analysis
* Ask employees about each position within the business and how they are (or are not) connected * Ask employees if they think hiring a new employee or creating a new position would be a good idea * Observe employees at work and earnestly ask for their ideas about better ways to operate; be prepared to put good suggestions into action * Talk to customers about which employees are easiest to deal with or provide the best service * Find out and understand why past employees have left – be truthful with yourself * Talk to customers about their needs
* Understand the needs of people the new employee will be working with * Differentiate between “nice to have” and “must have” skills and experiences * Look at employees who are performing at a superior level and try to assess the skills and behavior`s that distinguish them; look for evidence of these behavior`s during the interview * Look at similar positions in other companies and
the requirements they have
* Read books or articles about companies that may have found themselves in similar situations
Step 3: Determine the Feasibility of Hiring
Understand the costs of hiring-
Labor costs, such as salary and benefits, Recruiting costs, which may include advertising in addition to time spent on recruiting activities, orientation and training.
Understand the benefits of hiring-
* Improved morale of other employees, if a departing employee was a problem or if the area has been Under staffed for some time
* Improved morale of existing staff if the growth means new business and opportunities * Improved productivity if a departing employee was not productive or if employees believed that you have made the decision to hire as a result of their input
* Increased revenues once a new employee is performing at an acceptable level * A new employee who is more qualified than current employees can help train the existing employees * Increased customer satisfaction and potentially saved business.
Understand the risks of not hiring-
* Loss of revenues because of an inability to keep up with demand * Loss of employees because they are unwilling to continue being overworked or to do the work of a departed employee
* No new ideas or knowledge brought in through new employees
If you decide that hiring a new employee is feasible, you are ready to begin the recruitment process. If not, you might need to revisit your strategic plan or business objectives.
3. Supply Forecasting
Supply is another side of human resource assessment. It is concerned with the estimation of supply of manpower given the analysis of current resource and future availability of human resource in the organization. It estimates the future sources of HR that are likely to be available from within an outside the organization. Internal source includes promotion, transfer, job enlargement and enrichment, whereas external source includes recruitment of fresh candidates who are capable of performing well in the organization.
4. Matching Demand And Supply
It is another step of human resource planning. It is concerned with bringing the forecast of future demand and supply of HR. The matching process refers
to bring demand and supply in an equilibrium position so that shortages and over staffing position will be solved. In case of shortages an organization has to hire more required number of employees. Conversely, in the case of over staffing it has to reduce the level of existing employment. Hence, it is concluded that this matching process gives knowledge about requirements and sources of HR.
5. Action Plan
It is the last phase of human resource planning which is concerned with surplus and shortages of human resource. Under it, the HR plan is executed through the designation of different HR activities. The major activities which are required to execute the HR plan are recruitment, selection, placement, training and development, socialization etc. Finally, this step is followed by control and evaluation of performance of HR to check whether the HR planning matches the HR objectives and policies. This action plan should be updated according to change in time and conditions.