Anticipating how much staff you'll need and in what functions is a critical part of strategic planning. Every business needs to hire the right people with the right skill sets to support the company's short-term and long-term goals. There are four key steps to human resource planning: analyzing your current labor resources, forecasting demand, balancing demand with supply and supporting the company's strategic goals.

Factors Affecting Human Resource Planning

Both external and internal factors affect human resource planning. Outside the business, pressures such as technological developments, population changes, labor laws and shortages/surpluses in the labor market can all impact how you plan your manpower requirements. For instance, new developments in automation may radically reduce the number of jobs available to humans in certain sectors.

Internally, such factors as the payroll budget, organizational changes, absenteeism rates, corporate planning, work schedules (for example, the number of employees who work part time) and the age structure of your workforce can all impact the number and type of staff needed. The business can exert only limited influence on the external factors affecting manpower planning, but the internal factors are fully within its control.

What's the Strategy?

Fundamentally, it's the corporate plan that defines the company's manpower needs. Is the company expanding into areas that require different job functions and competencies? Do you have the right balance between the production function and the managerial/supervisory function to support future growth? Do you need to flatten or stretch out the hierarchy? Manufacturing organizations are often more complex than service-based organizations in this regard.

Where businesses are pursuing a strategy of organic expansion, then additional employees must be hired. The HR team must carefully anticipate the company's staffing needs and systematically fill those spaces as soon as the need arises. Expansion through merger, on the other hand, probably means that the business must plan for layoffs to eliminate duplicate positions that could be handled more effectively by fewer staff.

Is the Business Growing or Shrinking?

Where the business is in its life cycle can have considerable influence on the human resource plan. In the early days, hiring may be sporadic and spontaneous, occurring when a role arises without the need for detailed planning. During the growth stage, careful manpower planning becomes much more critical. HR may plan to develop people internally as well as hire externally to support it through the growth phase.

Mature organizations may need more flexibility in terms of human resource planning. Growth slows down, and you may need to plan for layoffs and retrenchment. The nature of roles may change too as innovation gives way to "business as usual."

State of the Labor Market

The business has little control over the state of the labor market. Nonetheless, it must continuously monitor labor supply so the right skills can be tapped when the need arises. The fact is that shortages do occur in key areas. If you know you're looking for super-specialized skill sets, and those people are not generally available in the candidate pool, then your plan will have to include some new approaches to finding the right talent.

This is not a short-term approach. When it comes to finding the right workplace skills, it can take years for supply to adjust to demand. You may have to develop specific training programs to build the skills for which you are looking. You may develop strong partnerships with schools and training establishments to encourage the next generation to develop the skills of the future.

It's not a passive approach, but done properly, human resource planning can proactively optimize staff deployment, improve productivity and allow the business to adapt, compete and grow.