Human resource planning is critical for any company.  It is where an organization decides what parts of the business require staffing up and what parts of the business require staffing down in order to fulfill business objectives.  Considerations that are made during human resources planning include accounting for staff retirements and transitions, turnover, availability of skilled employees and business changes that may affect employee workloads.  Overall it is a constant and recurring process which ensures adequate resources are available to execute organizational activities.  Herein are the major steps involved in planning when it comes to human resources.

1. Evaluating Human Resources

Human resources evaluation begins with environmental analysis through which external labor availability and internal resources, objectives and structure are scrutinized to identify the organization's current human resources situation.  After the organization’s internal and external forces are analyzed, HR management should identify internal strengths and weaknesses on one side and available opportunities and threats on the other.  In addition this stage also involves understanding what direction the company overall is taking and the skills required to get the company to be successful in its future direction.

2. Projecting Demand

Creating a headcount demand projection is helpful in order to estimate demand for employees within the organization.  Projecting demand should be done by department, skill type and seniority level in order to understand exact headcount requirements in terms of number of staff required and seniority.  The headcount projection should be appropriate in realizing senior managements long term strategic plans and will generally be provided on a department by department basis.  Its beneficial to conduct such a headcount projection on a continuous basis with a major review at least annually by skill type and department.

3. Projecting Supply

Projecting supply is the other side of the human resources assessment.  It focuses on estimating the quality, cost and quantity of candidates that will be available to fill various positions by department, skill type and seniority.  Supply should be projected from both inside the organization and externally.  Internal supply can come from transfers, promotions, and enrichment and job retraining programs whereas external supply is usually filled by new candidates recruited via the local labor market.

4. Matching Demand and Supply

This stage focuses on matching projected future HR demand and supply.  Matching demand and supply requires bringing the two into an equilibrium position which identifies shortages and over-staffing situations.  In situations where there is a shortage of personnel, an organization would need to recruit new employees to curb the shortage.  Consequently, if an excess of staff was forecasted, then a reduction in staffing would need to be made to reach the equilibrium.

5. The Action Plan

This is the final phase of HR planning that deals with HR’s surpluses and shortages.  Through consultations with department heads, plans should be developed to either staff up to meet the shortages or transfer staff out of areas where there are planned surpluses of staff.  Developing this action plan would be a joint effort between the functional departments and HR and would need to be carefully monitored as the business grows and changes.