Human Resource Strategy and Planning

A strategy is a high-level plan designed to achieve one or more long-term or overall goals under
conditions of uncertainty. It involves setting objectives, identifying the means to achieve them, and
allocating resources to implement the actions required. In Human Resource Management, a strategy
refers to a systematic approach aimed at aligning the management of human capital with the
organization’s overall business objectives. It encompasses the development of policies, programs, and
practices that maximize the potential of the workforce and directly support the company’s mission and
goals.

On the other hand, Planning is the process of thinking about the activities required to achieve a
desired goal. It involves forecasting, setting objectives, determining the best course of action, and
organizing resources to ensure effective implementation. In HRM, planning involves the process of
forecasting an organization’s future human resource needs and developing strategies to fulfill those
needs. Human Resource Planning (HRP) includes identifying current and future workforce
requirements, analyzing gaps, and developing plans to recruit, develop, and retain the necessary
talent.

Human Resource Strategic Planning (HRSP) is the process of aligning HR policies and practices
with the strategic goals of an organization. Armstrong (2014) defines HRSP as “the process that
defines how the organization’s goals will be achieved through people by means of HR strategies and
integrated HR policies and practices”. Dessler (2015) similarly describes HRSP as a systematic
approach to aligning the HR function with the broader strategic direction of the organization, ensuring
that HR initiatives support overall business objectives.

According to Lumen Learning, HRSP helps organizations proactively

manage their human capital by anticipating future workforce needs
and developing strategies to meet those needs (Lumen Learning, n.d).
The Saylor Foundation emphasizes that HRSP not only focuses on
immediate staffing needs but also on long-term talent management,
leadership development, and organizational culture (Saylor
Foundation, n.d). This strategic alignment ensures that HR functions
contribute directly to the achievement of business goals, enhancing
organizational performance and competitive advantage.

Dessler’s HR Strategy Model

Gary Dessler’s HR strategy model provides a comprehensive

framework for aligning human resource practices with the
strategic goals of an organization. The model outlines key HR
functions that are essential in supporting organizational
success:

(1) Strategic and Legal Environment: This step emphasizes

understanding the external and internal factors that influence
HRM, including legal regulations, market conditions, and
 organizational strategy. HR professionals must navigate these factors to ensure compliance
and strategic alignment (Dessler, 2015).
(2) Planning, Recruitment, and Selection: This phase involves identifying staffing needs,
developing job descriptions, and sourcing the right candidates. Effective planning and
recruitment ensure that the organization attracts individuals with the necessary skills and fit
for the company culture (Dessler, 2015).
(3) Training and Development: Training and development focus on enhancing employees’ skills
and competencies to meet current and future job demands. This includes onboarding new
hires, providing ongoing training, and facilitating career development opportunities (Dessler,
2015).
(4) Compensation and Total Rewards: This element covers designing compensation packages
that are competitive and aligned with the company’s strategic goals. It includes base pay,
bonuses, benefits, and other rewards that motivate and retain employees (Dessler, 2015).
(5) Employee and Labor Relations: Managing employee relations involves fostering a positive
workplace environment, addressing grievances, and ensuring effective communication
between employees and management. This aspect also covers labor relations, including
negotiations with unions and handling disputes (Dessler, 2015).

Steps to Strategic Plan Creation (Saylor Foundation)

According to the Saylor Foundation, the creation of a strategic plan involves several critical steps,
each focusing on aligning HR strategies with broader organizational goals. The key steps include:

1. Conduct a Strategic Analysis:

o Understanding the Company Mission, Vision, and Core Values: This step involves
clearly defining what the organization stands for, its long-term vision, and the
principles guiding its operations.

o Understand the HRM Department’s Mission and Vision: Aligning the HR

department’s mission and vision with that of the overall organization ensures
coherence in strategic objectives.

o Understanding Challenges Facing the HR Department: Identifying the strategic

HR issues that may impact the department, such as skills shortages, technological
changes, or workforce demographics. This step often includes a SWOT analysis to
assess internal strengths and weaknesses alongside external opportunities and threats.

2. Prioritize Issues and Actions: Once the strategic HR issues are identified, they must be
prioritized based on their potential impact and urgency. This prioritization helps in focusing
resources on the most critical areas that align with strategic goals.

3. Draw Up an HRM Plan: The final step involves developing a comprehensive HRM plan
that outlines the strategic actions to be taken, responsible parties, timelines, and evaluation
criteria. The plan serves as a roadmap for implementing HR strategies that align with the
organization's broader objectives (Saylor Foundation, n.d).

The Human Resource Planning Process

A process is a systematic series of actions or steps taken to achieve a specific goal or outcome. It
involves a sequence of tasks or activities that are organized in a particular order to transform inputs
into outputs. Processes are fundamental to achieving efficiency, consistency, and effectiveness in any
organizational function. In Human Resource Management (HRM), a process refers to a strategic
function within human resource management aimed at forecasting and managing an organization’s
future workforce needs. It is an ongoing process that ensures the organization has the right number of
employees, with the right skills, in the right positions, at the right time.

Assess Current Workplace

Forecast Future HR Needs

Conduct a Gap Analysis

Develop Action Plans

Monitor, Evaluate, Adjust

(1) Assess Current Workforce

 The first step in HRP is to evaluate the current workforce to understand existing skills,
experience, and performance levels. This assessment helps identify strengths, weaknesses,
and areas that need improvement. Common methods include skills inventories, employee
performance reviews, and demographic analyses.

(2) Forecast Future HR Needs

 Forecasting is a crucial component of HR planning, where future workforce requirements are

predicted based on business goals, market trends, technological changes, and external factors
like economic conditions. This step estimates the number and types of employees needed to
meet future organizational demands.

(3) Conduct a Gap Analysis

 A gap analysis compares the current workforce against the forecasted needs. It identifies
discrepancies between the organization’s current capabilities and its future requirements. This
analysis helps HR professionals pinpoint specific skill shortages, potential overstaffing, or
other workforce misalignments that need to be addressed.

(4) Develop Action Plans

 Based on the findings from the gap analysis, HR professionals develop targeted action plans
to address identified gaps. Action plans may include:

o Recruitment and Selection: Strategies to attract and hire new employees with the
necessary skills and qualifications.

o Training and Development: Programs designed to upskill or reskill existing

employees to better match future needs.
 o Succession Planning: Identifying and preparing internal candidates to fill key
positions as they become available.

o Retention Strategies: Initiatives to keep valuable employees engaged and reduce

turnover, such as enhancing work conditions or adjusting compensation packages.

(5) Implement the HR Plan

 Implementation involves putting the developed action plans into motion. This step includes
detailed task assignments, resource allocation, setting timelines, and ensuring effective
communication throughout the organization. Proper implementation ensures that the
workforce is adjusted to align with strategic business goals.

(6) Monitor, Evaluate, and Adjust

 The final step in the HRP process is to monitor the effectiveness of the implemented action
plans continuously. Evaluation metrics such as employee performance, retention rates, and
overall workforce productivity are used to gauge success. Based on the results, adjustments
are made to refine the plans, addressing any new challenges or changes in business strategy.

Forecasting Demand for Manpower and Supply of Manpower

Forecasting of human resource 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 to hire more people, reduce their staffing, or adjust how they divide
responsibilities.

Strategically, HR forecasting is part of HR planning. HR planning is a major function of the

HR process that ensures the analyzation and identification of the needs for and availability of human
resources so that the organization can meet its intended goals and objectives at a required time.
Demand forecast

At a more practical level, forecasting demand involves determining the number and types of
personnel an organization will need at various points in the future. This process is critical for effective
human resource planning, ensuring that the right talent is available to meet future operational
requirements. Demand forecasting is typically approached through two main methods: the
quantitative approach, which relies on statistical and mathematical techniques to estimate future
manpower needs based on workload and workforce analyses, and the qualitative approach, which
focuses on assessing the specific skills required for different roles and often involves expert judgment.

The rationale behind demand forecasting is highly significant. In competitive market

conditions, making accurate decisions and planning for future events such as sales, production, and
staffing is essential for a business's success. The accuracy of these decisions directly impacts the
effectiveness of business strategies. Demand forecasting plays a role in achieving business objectives,
influencing key decisions related to production levels, sales strategies, and staffing requirements.

Demand forecasting ensures that businesses are well-prepared to meet future challenges and
capitalize on opportunities. By accurately predicting future demand, organizations can make informed
decisions that align with their goals and adapt to changing market conditions. This foresight is crucial
both on an international scale and in domestic markets, helping businesses maintain a competitive
edge and effectively manage their resources. As such, demand forecasting is a fundamental aspect of
business planning, enabling companies to achieve their objectives and thrive in a dynamic
environment.

Quantitative approach

Concerned with determining the number of employees required in a future period, there are uses of
statistical or mathematical techniques that will be useful in estimating the quantity of manpower
through workload analysis and workforce analysis.

 Workload Analysis is the total workload of each department estimated based on sales
forecasts, work schedules, gross rate, and expansion plans.
  Workforce Analysis is concerned with all existing workers who are not likely to be available
for work throughout the year, due to absenteeism and turnover.

Qualitative approach (Skills analysis)

The quality of manpower required varies from job to job. Therefore, the quality of employees required
for a job can be determined only after determining the job requirements. This approach relies on fewer
statistical and mathematical calculations and more on experts who assist in preparing forecasts to
anticipate staffing requirements.

Example:

Imagine a tech company is launching a new AI product. Experts would determine that they need
employees with specialized skills in AI and machine learning. By consulting with industry
professionals, the company identifies that their current team lacks these specific skills. As a result,
they forecast the need to hire or train employees with expertise in AI to ensure the project’s success.

In summary, the quantitative approach uses data to estimate staffing numbers, while the qualitative
approach assesses the specific skills needed for various roles.

Supply forecast

Supply Forecasting measures the number of people likely to be available from within and outside the
organization- internal and external supply people already employed by the firm and those outside the
organization. It considers rates of absenteeism, internal movements and promotions, wastage and
changes in hours, and other conditions of work. The supply analysis covers the following areas:
existing number of people employed by occupation, skill and potential, source of supply from within
the condition, and effect of changing conditions of work and absenteeism.

Supply chain forecasting is important because it orchestrates logistics and inventory management and
directly influences businesses’ operational efficiency and financial health. It touches upon several
critical aspects of supply chain management, from mitigating risks associated with inventory levels to
enabling strategic decision-making and enhancing the overall agility of the supply chain.

Internal supply forecast is a succession planning or the career plans orchestrated by an organization
and is available by way of transfers, promotions, retired employees & recall of laid-off employees.
This step is vital, as it conveys an inventory of the firm’s current and projected competencies. These
internal factors include:

 Employee turnover rate refers to the movement of employees out of an organization. It is a

determinant of labor supply. As employees’ turnover, the supply of labor goes down.

 Skill inventories (Talent inventories) prepare a list of employees showing each employee’s
education, experience, vocational interests, specific abilities, and skills.

 Succession planning: the process of identifying, developing, and tracking key individuals so
that the May eventually assumes top-level position.
The process for developing such a plan includes setting a planning horizon, identifying replacements
for each key position, assessing current performance and readiness for promotion, and identifying
career development needs. The overall objective is to ensure the availability of competent executive
talent in the future.

The external supply consists of those individuals in the labor force who are potential recruits of the
firm. When an organization lacks an internal supply of employees for promotions, or when the
organization is staffing entry-level positions, managers must consider the external supply of labor.
Factors that influences external supply for labor include:

 Demographic changes in the population

 National and regional economic

 Education level of the workforce

HR forecasting empowers your company to do more than just balance labor demand and supply.
References

Armstrong, M. (2014). Armstrong's handbook of human resource management practice (13th ed.).
Kogan Page.
Dessler, G. (2015). Human resource management (4th ed.). Pearson.
Demand Forecasting: Meaning, Importance, Examples with Questions. (2019, December 9). Toppr-
guides. https://www.toppr.com/guides/business-economics/theory-of-demand/demand-
forecasting
Jeevan, S. (2024, June 3). Forecasting of human resource in an organization. Eaton Business School.
https://ebsedu.org/blog/forecasting-of-human-resource-in-an-organization
LibreTexts. (n.d.). Human resource management. Retrieved from https://libretexts.org
Lumen Learning. (n.d.). Introduction to human resource management. Retrieved from
https://courses.lumenlearning.com
Saylor Foundation. (n.d.). Human resource management. Retrieved from http://www.saylor.org