9.2: Human Resource Planning Process

How does Starbucks make sure that its worldwide retail locations are staffed with just the right number of committed employees? How does Norwegian Cruise Lines make certain that when the Norwegian Dawn pulls out of New York harbour, it has a complete, fully trained crew on board to feed, entertain, and care for its passengers? Managing these tasks is a matter of strategic human resource planning—the process of developing a plan for satisfying an organization’s human resources (HR) needs.

The human resource (HR) planning process is a strategic approach to ensuring that an organization has the right number of employees, with the right skills, at the right time to meet its goals. It involves analyzing and forecasting an organization’s human resource needs and aligning HR practices to support the overall business strategy.

Here are the key steps in the HR planning process:

• Analyze organizational objectives and strategy. Understand business goals to forecast future HR needs. HR must align its planning with the company’s short-term and long-term objectives. This could include expansion plans, new product launches, or entering new markets. Anticipate the workforce requirements based on business growth, market conditions, and other factors like technological changes and regulatory impacts.
• Assess the current workforce. Conduct an inventory of the current employees, assessing their skills, qualifications, experience, and potential for future roles. Determine where the organization has talent shortages, skill gaps, or excess capacity. Understand the strengths and weaknesses of the current workforce to guide future development and hiring needs.
• Forecast HR demand and supply. Predict future human resources needs based on business growth, turnover rates, retirements, and other factors. Assess the current and future availability of talent, considering internal talent, external labour markets, and potential new hires. Ensure the forecasted supply of talent meets the projected demand for skills, considering factors like employee retention and workforce trends.
• Develop HR strategies. Plan for hiring new talent or promoting from within to meet staffing needs. Identify training programs to develop employees and close skill gaps, ensuring employees are equipped to meet future demands. Prepare for key leadership roles by identifying potential internal candidates and creating development plans to groom them for future positions.
• Implement HR strategies. Put the HR strategies into practice, such as launching recruitment drives, rolling out employee development programs, or implementing workforce restructuring plans. Ensure that adequate resources are available to support the execution of the plan (budget, time, training materials, etc.).
• Monitor and evaluate HR plans. Regularly review the progress of HR initiatives, such as hiring, training, or retention efforts, to ensure alignment with organizational goals. Assess whether HR planning outcomes are achieving the desired results, such as improved workforce skills, reduced turnover, or increased productivity. Make adjustments based on feedback, changing business conditions, or unforeseen challenges to stay aligned with company goals.
• Revise and update plans. As business conditions and organizational goals evolve, HR plans must be revisited and updated to stay relevant and effective. Incorporate lessons learned from past HR planning cycles to refine future efforts.

A strategic HR plan lays out the steps that an organization will take to ensure that it has the right number of employees with the right skills in the right places at the right times. HR managers begin by analyzing the company’s mission, objectives, and strategies. Starbucks’s objectives, for example, include the desire to “develop enthusiastically satisfied customers” as well as to foster an environment in which employees treat both customers and each other with respect.^[1] Thus, the firm’s HR managers look for people who are “adaptable, self-motivated, passionate, creative team members.”^[2] The main goal of Norwegian Cruise Lines—to lavish passengers with personal attention—determines not only the type of employee desired (one with exceptionally good customer-relation skills and a strong work ethic) but also the number needed (one for every two passengers on the Norwegian Dawn).^[3]

Forecasting HR Needs

Once they’ve analyzed the jobs within the organization, HR managers must forecast future hiring (or firing) needs. HR forecasting is the process of predicting how a company’s staffing needs change with time so that it can remain prepared to operate successfully. Organizations use HR forecasting to decide whether to hire more people, reduce their staffing or adjust how they divide responsibilities. There are three steps to forecasting HR needs:

1. Identify the human resources currently available in the organization (supply).
2. Predict the human resources needed to achieve the organization’s mission and objectives (demand).
3. Measure the gap between the two (shortage or surplus).

Starbucks, for instance, might find that it needs three hundred new employees to work at stores scheduled to open in the next few months. Disney might determine that it needs two thousand new cast members to handle an anticipated surge in visitors. The Norwegian Dawn might be short two dozen restaurant workers because of an unexpected increase in reservations.

After calculating the disparity between supply and future demand, HR managers must draw up plans for bringing the two numbers into balance. If the demand for labour is going to outstrip the supply, they may hire more workers, encourage current workers to put in extra hours, subcontract work to other suppliers, or introduce labour-saving initiatives. If the supply is greater than the demand, they may deal with overstaffing by not replacing workers who leave, encouraging early retirements, laying off workers, or (as a last resort) firing workers.

By predicting future workforce needs, HR can strategically recruit, train, and develop employees to align with business objectives, ensuring the organization stays competitive and adaptable in an evolving market. Forecasting staffing requirements allows HR to implement focused recruitment efforts, succession planning, and professional development initiatives that promote employee growth and reduce turnover, ensuring key roles are filled with qualified individuals, which enhances organizational performance. HR planning also helps organizations optimize staffing levels, enabling better control over labour costs while reducing the risk of both understaffing and overstaffing. By accurately forecasting workforce needs, HR can effectively manage budgets, prevent staffing shortages, and ensure compliance with labour laws and regulations, thus mitigating operational risks.