human resource management in business plan

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Management and Human Resources Business Plans

The management portion of your business plan, the hr portion of your business plan, frequently asked questions (faqs).

As a startup, it’s never easy to come up with a business plan, let alone the management and human resources sections of a business plan. Despite that, it’s important that you start your business plan for human resources as soon as possible. Doing so gives your management goals a plan that will guide you and keep your business on track as it grows. 

The key components of your human resources business plan should include your organizational structure, the philosophy and needs of your HR department, the number of employees you want to hire, how you plan to manage them, and all the estimated costs related with personnel.

You’ll want to start your HR business plan by outlining your own managerial experience and skills as well as those of your team. Highlight the roles of each member of your team, and any particular areas of strength or deficiency in your personnel lineup. For example, your HR team may be strong in compliance and conflict resolution but weak in hiring. 

Don't worry if you don’t have a complete team in place when you write your HR business plan. Simply use this section to outline the organizational structure along with job descriptions, how you plan to recruit key team members, and what their responsibilities will be.

This section should look like a pyramid with you at the top and will likely have lateral positions. Be as specific as possible when defining an employee's responsibilities because this is what will drive your business.

Do You Need an HR Manager?

If you’re a solo practitioner, you may not think of including an HR manager in your management business plan. However, if you expect to hire non-managerial employees (such as salespeople or clerical workers), you should consider recruiting a human resources manager.

If hiring a human resources manager can’t be done, consider a human resources consultant. Human resource management requires an immense amount of time and paperwork, and an experienced HR consultant will be able to quickly get your payroll and benefits program up and running, affording you more time to concentrate on growing the business. Human resource responsibilities should include:

• Handling FICA and unemployment taxes and paperwork
• Ensuring compliance with the Family and Medical Leave Act
• Staying on top of IRS filings

There are plenty of companies that offer HR management platforms tailored to each business's needs. Research these companies and be sure to include their estimated cost in your HR business plan.

When you develop the HR portion of your business plan, begin by including a brief overview of your HR strategy. Investors may be curious about how your payroll will be handled and the associated costs of administering it, as well as the type of corporate culture you plan to create. Specific items to highlight in the HR section include:

• Payscale: Show the salaries for managers and non-managers based on the market for those jobs.
• Vacation time: Describe your vacation-time policy. How much time do employees get? How quickly does it accrue? Vacation time is not required by law, but most firms offer vacation time to stay competitive and keep employees refreshed. 
• Insurance: Health insurance is a common staple benefit, although skyrocketing prices have forced many firms to cut back on this benefit. If you can’t afford a health plan, look into subsidizing one with employees paying the rest. Alternatively, inquire if a professional insurance representative can help you get a bulk rate.
• Additional benefits: Other things to consider include life insurance, a 401(k) and matching funds, bereavement leave, religious and floating holidays, and a bonus structure, if applicable.

In addition to the key elements above, it helps to have a framework from which to build your HR business plan. Here’s a basic outline that can help you get started: 

• Figure out what your human resources department would need. 
• Determine a strategy for recruiting talent.
• Formulate your hiring process. 
• Develop a training program for new employees. 
• Determine how much you want to pay your team (this is a good spot for payscale info)
• Create performance standards

It may be overwhelming to contemplate these benefits and their costs in the early stages of setting up your business, but in a competitive labor market, your firm needs to offer enough to entice qualified people and, more importantly, to keep them happy.

Consider revisiting your management and HR business plans every couple of years to see if you need to create action steps to refine your processes.

What should be in an HR business plan?

An HR business plan should include a mix of the steps you plan to take to launch an effective HR department, as well as specifics about how you plan to handle time off, insurance, and other benefits you plan to offer.

How do I write a human resources plan?

It helps to start with a simple framework. Try to break the plan down into sections: HR needs, recruitment, hiring, training, pay, and performance reviews. From there, incorporate other aspects of HR, like benefits and promotions.

U.S. Chamber of Commerce. " Does Your Small Business Need an HR Department? "

 University of Minnesota. “ Human Resources Management: 2.2 Writing the HRM Plan .”

Mecklenburg County, North Carolina. “ FY 2020-2022 Strategic Business Plan: Human Resources .”

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Blog Human Resources

6 Steps to Create a Strategic HR Plan [With Templates]

By Jessie Strongitharm , Aug 25, 2022

The backbone of any successful business is the people and processes behind it — that’s why creating a human resources (HR) plan is key. This strategic document drives your business forward by evaluating where your workforce is at, and comparing it to future needs. 

Without an HR plan, organizations can suffer from issues that would have otherwise been avoided. From productivity pitfalls to costly employee turnover, there’s no shortage of risks you can sidestep if you do human resource planning in advance. 

Not sure where to start? No worries. I’ve outlined six steps you can take to create an effective HR plan that ensures your organization is well-staffed and well-served. You’ll also find a variety of  HR templates  that you can customize in just a few clicks — no design expertise required. 

Click to jump ahead:

What is human resource planning?

• Assess employees’ current skill levels
• Forecast your labor needs based on available information
• Revisit your organizational design
• Outline how you will manage, motivate and retain talent 
• Align your workforce planning with your budget 
• Establish KPIs for your human resource planning objectives

Human resource planning is the process of considering the current and future “people needs” of an organization.

This involves evaluating an organization’s workforce structure and protocols to ensure operational goals are met, productivity stays high and future demands for labor and talent can be fulfilled. 

The result of this process is the creation of an HR plan, which typically takes the form of a written document sometimes autogenerated using HR software . These documents tend to follow a similar structure to most  strategic business plans  and are created on an annual basis, by HR managers or company leaders.

Check out the template below for an example. 

This eye-catching, one-page  HR Strategic Plan Template  offers a concise summary of your human resource planning efforts, so you can easily share info with colleagues. 

Just swap out the text and visual assets for those of your choosing in  Venngage’s editor , and you’re off to the races. 

6 steps to create a strategic HR plan

Ready to create a strategic plan for the human resources that power your business? Here are six steps to help you succeed at the human resource planning process.

1. Assess current employees’ skill levels

The first step to creating a future-forward HR plan is to assess employees’ current skill sets, and compare them to your operational needs moving forward. This will help you identify gaps and inform any hiring of new employees.

Employees’ skill levels can be assessed by reviewing their work history, hard and soft skills and professional growth over time. 

Using a matrix is a great way to understand where the skill gaps in your current workforce exist. Below is an example that describes the skills needed for different marketing roles. 

Don’t need it for marketing specifically? No worries — you can fully customize this template by swapping in your own text to examine any human resource gaps. 

Another way to assess skills is by giving employees a questionnaire they can fill out. This  Employee Competency Assessment Template  does just that.

Based on the information collected, you’ll get a sense of what positions best suit each individual, and whether any upskilling or hiring is required. 

2. Forecast your labor needs based on available information

Next in your strategic strategic HR management plan, you’ll want to consider the future. This involves accounting for any upcoming changes to your workforce, so operations can continue without error.

When forecasting labor needs, the following should be considered: 

• Planned promotions
• Upcoming retirements 
• Layoffs 
• Personnel transfers 
• Extended leaves of absence (i.e. maternity/paternity leave) 

Beyond those, it’s a good idea to assess the impact of external conditions on your labor needs during your human resource planning. For example, new technological developments may decrease the amount of employees you require to operate your business. 

3. Revisit your organizational design

Organizational design is the process of structuring the way a business operates so it can best achieve its goals. This is hugely important when it comes to your human resource planning process! 

With a clear understanding of your organization’s strategic objectives in mind, reviewing your organizational design allows you to understand the staffing requirements you’ll need to succeed at them. This means taking into account your  organizational structure  and chains of command, as well as how work gets done and the way information flows.

 From there, you’ll be able to see which departments need more team members so it can accomplish the organization’s objectives. 

An easy way to get started is by using an organizational flow chart. 

With its color coding and layout, even a new manager can quickly look at this chart to identify the people responsible for leading teams and making decisions. 

And if there are any changes, it’s easy to to reflect them in the chart itself. All you need to do is customize the text and visual assets in  Venngage’s Chart Maker  as desired. 

Not quite your style? There’s plenty of other  organizational chart templates  to choose from. 

Here’s an organizational chart that’s perfect for small businesses that have limited employees. One quick look, and you’re good to go. 

The bottom line is, no matter how big or small your business may be, you should always revisit your organizational design to optimize your workforce management and business operations. 

Related:  Types of Organizational Structure [+ Visualization Tips]

4. Outline how you will manage, motivate and retain talent 

In this day and age, it’s a known fact that companies must provide more than just a paycheque to attract and retain talent, and encourage growth. 

It’s true —  studies have shown  employees are more engaged in their work when they feel it is meaningful, fulfilling and slightly challenging. So your human resource plan should consider how to inspire such feelings, and what actions you can take to motivate employees to stay. (Hint: a strong HR training and development program is key.)  

The  talent management infographic template  below is a great way to begin. 

Using this  process chart , you can detail the steps you’ll take to retain the talent you have. Reference it as needed in your human resource planning.

 Another great way to keep staff motivated and geared towards their professional growth is by coming up with  ideas for employee development . Facilitating a company culture that champions continuous learning guarantees your team will feel supported and challenged in all the right ways.

The two employee development plan templates below will help you do just that. 

Though both templates are geared towards healthcare organizations, it’s easy to customize their content in Venngage to promote the continuous learning and development of employees in any industry.

 As a result, your employees will be able to reach their full potential, while simultaneously supporting the long-term goals of your organization. 

Related:  6 Employee Development Ideas for Efficient Training

5. Align your workforce planning with your budget 

 Let’s face it, human resources ain’t cheap.

 Meaning, if you struggle at organizing and monitoring your HR budget, you’re bound to overspend on your initiatives —and no financially savvy business wants that. 

That’s why I recommend including financial information in your HR planning process, so you can reference your budget and expenses as needed. This ensures you’ll be able to stay within range as you work towards achieving your strategic goals for human capital . 

Plus, you don’t need to use one that contains walls of text and wack-loads numbers. Check out the clean and cheery option below — it’s as easy to fill out as it is to understand. 

And if you’re looking to compare a forecasted budget to previous annual spending when strategizing your HR budget, the  Budget Comparison Infographic Template  below will help. 

The bar graph is a great  data visualization  of annual expenses, organized by category. Just add (or import) any values to Venngage’s editor, swap out the text, and you’re ready to compare with ease. 

Related:  10+ Expense Report Templates You Can Edit Easily

6. Establish KPIs for your human resource planning objectives

Measurable results are important when it comes to your HR planning processes, because they indicate whether your strategy is working or not. 

Keeping those metrics in mind, your company can make adjustments and improve upon any future plans — AKA strategize for future success in business. That’s why your human resource plan should include info re: the specific key performance indicators (KPI) you’ll be measuring. 

KPIs are established to help determine if HR strategies and plans are working. Much like those used for evaluating the performance of  marketing  or  sales plan , KPIs for human resources are measurable results that indicate an organization’s success at achieving predetermined goals.

These may take the form of headcounts, turnover rates, demographic information, time to hire and employee satisfaction scores. 

Here’s one employee satisfaction survey you can use to understand your workforce better. 

When you’re ready to organize those HR KPIs in a document, the  recruiting template  below is perfect for keeping tabs at a glance. 

Related:  10+ Customizable HR Report Templates & Examples

How do I make an HR plan? 

After you’ve collected the data you need, you’ll want to convey this info in an engaging, professional manner for easy referencing and sharing amongst colleagues. Given this, using Venngage is the best route to go. 

Here are the simple steps to help you bring an actionable HR plan to life: 

• Outline the information you would like to include in your strategic hr plan
• Pick the human resource planning templates that best suits your needs 
• Customize the templates’ text and visual assets so they speak to your organization 
• Apply your company’s brand guidelines with a few clicks using Venngage’s automated branding feature,  My Brand Kit
• Download and share as desired

Note: sharing is available free-of-charge. However, the option to download your creations and access features like  My Brand Kit and Team Collaboration  are available with a  Business plan . 

FAQ about HR plans

How long should an hr plan be .

There are no hard and fast rules when it comes to the length of an HR plan. That being said, if you’re going to share it with colleagues, you probably don’t want to create a 20+ page document. One to five pages should suffice. 

Try to be as concise as possible when relaying the facts, and use  data visualizations  wherever possible to save room.

Do I need an HR contingency plan?

In the same way creating an HR plan is a proactive move that helps your organization account for future needs, it’s a good idea to devise an HR contingency plan. This ensures there’s a back-up plan in place should your initiatives not go as expected. 

For example, if you’ve identified that you need five new hires to keep up with consumer demand, but the talent pool is lacking, a contingency plan could house suggestions for restructuring your workforce to mitigate this. 

In other words, it’s best-practice to hope for the best, but prepare for the worst. 

Is an HR plan different from an employee development plan?

Yes. While an HR plan is a strategic document describing how an organization addresses its personnel-related needs at a high-level, an  employee development plan  outlines the processes needed to help an individual achieve their professional goals.

 Even though the human resource planning process may involve outlining some employee development tactics, it is not unique to each employee as in the case of an employee development plan.

Make your HR planning processes effortless 

You don’t need a crystal ball to feel confident about your people moving forward. With a solid HR plan and strategy in place, you’ll prime your workforce — and all business endeavors — to succeed in even the most competitive of markets. 

Just remember this: human resources planning, and creating strategic business plans in general, doesn’t have to be exhausting. 

With Venngage’s huge selection of  professionally-designed templates  and easy-to-use editor, all it takes is a few minutes to produce a polished document perfect for all your needs.  Sign up for free today ! 

HR Business Plan Template: Everything You Need to Know

With an HR business plan template, you can help your company recruit new employees, retain existing employees, and guide the development of the workforce. 4 min read updated on February 01, 2023

With an HR business plan template, you can help your company recruit new employees, retain existing employees, and guide the development of the workforce so that you collectively meet your business objectives, regardless of any changes in the industry or economy.

When creating your HR business plan, you need to perform a needs analysis of your workplace to tailor the plan to your company's requirements. You'll also need to learn about the industry standards for your field to make sure you're competitive.

Without such a plan in place, your workers will feel unprepared and won't know how to work towards your company's overall goals.

Steps for Developing a Human Resources Department Business Plan

There are several steps to creating an HR business plan. They include:

• Clarify the requirements . While you might be tempted to create a detailed plan that encompasses the entire company's next 10 years, hold off. Always talk with your boss to see how much detail he or she would like in the plan. This will save you time and help streamline the process. However, there's no harm in creating your own personalized strategic plan for your specific department.
• Read through the HR job descriptions . The HR department typically has employees such as HR assistants, HR generalists, and an HR director . Read through the job descriptions for each worker in the department and see what kind of duties are missing. Brainstorm additional functions that each job role could provide to the company.
• Curate your list . Take the different functions you've brainstormed and compare them to what each member of the HR department is already doing. Are there functions you could add or subtract from each employee for more productivity? You don't have to go into detail here, but just think about how you could improve each role.
• Schedule a meeting with the executives . Before you make any changes, you'll obviously need to get input and approval from the company's executives. They may have more feedback on how the HR department can provide additional services and support the company's overall goals and mission.
• Create a feedback form . Come up with a list of questions to ask leadership about HR's role in the company and provide it to them in advance of the meeting so they have time to think it over and talk with their staff. You may even want to provide a rating and ranking format for the questions, as this will make their responses easy to understand and implement. Overall, this is a key process to understanding what management and employees want and need from the HR department.
• Look at external resources . While the internal information you're collecting is the most important, it also doesn't hurt to take a look at data from professional organizations and websites, such as the Society for Human Resource Management , The Balance , or HR Magazine . You can also ask colleagues from other local organizations for tips on creating your business plan.
• Use this information to make a plan . With your ideas, feedback from executives, and tips from external resources, you should have a clear idea of what your plan should look like. The things that are missing from the HR department should now be clear, and this should guide you on what to focus on to improve HR's contribution to the company.
• Identify goals for this year and next . While your plan can have long-term goals, keep the majority of them a little bit shorter in scope to see how things work out. This gives you the chance to reorganize and restructure if things aren't going right. Consider creating a list of accomplishments you can reach for the end of this year and into the next.

A Real Life Example

If you're seeking more guidance on how to create a successful HR business plan, look to Starbucks as an example.

As the world's largest coffee chain, Starbucks had $21.3 billion in sales in 2016.

Despite these massive numbers, Starbucks maintains the same approach to their human resources department. All of the HR planning is guided by the company's organizational strategy and brand.

Their strategy is to use specific interview techniques when hiring new employees. This lets them identify potential leaders and place them in a "New Partner Orientation and Immersion" training program. With this system, Starbucks has achieved the lowest employee turnover rate in the quick-service restaurant industry.

Starbucks also offers numerous employee perks and dedicates a lot of time to employee training through an online portal that teaches employees essential job skills.

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2. Developing and Implementing Strategic HRM Plans

2.2 writing the hrm plan, learning objective.

• Describe the steps in the development of an HRM plan.

As addressed in Section 2.1 “Strategic Planning”, the writing of an HRM strategic plan should be based on the strategic plans of the organization and of the department. Once the strategic plan is written, the HR professional can begin work on the HR plan. This is different from the strategic plan in that it is more detailed and more focused on the short term. The six parts described here are addressed in more detail in Chapter 4 “Recruitment”, Chapter 5 “Selection”, Chapter 6 “Compensation and Benefits”, Chapter 7 “Retention and Motivation”, Chapter 8 “Training and Development”, Chapter 9 “Successful Employee Communication”, Chapter 10 “Managing Employee Performance”, and Chapter 11 “Employee Assessment”.

How Would You Handle This?

Compensation Is a Touchy Subject

As the HR manager, you have access to sensitive data, such as pay information. As you are looking at pay for each employee in the marketing department, you notice that two employees with the same job title and performing the same job are earning different amounts of money. As you dig deeper, you notice the employee who has been with the company for the least amount of time is actually getting paid more than the person with longer tenure. A brief look at the performance evaluations shows they are both star performers. You determine that two different managers hired the employees, and one manager is no longer with the organization. How would you handle this?

As you can see from this figure, the company strategic plan ties into the HRM strategic plan, and from the HRM strategic plan, the HR plan can be developed.

The six parts of the HRM plan include the following:

• Determine human resource needs. This part is heavily involved with the strategic plan. What growth or decline is expected in the organization? How will this impact your workforce? What is the economic situation? What are your forecasted sales for next year?
• Determine recruiting strategy. Once you have a plan in place, it’s necessary to write down a strategy addressing how you will recruit the right people at the right time.
• Select employees. The selection process consists of the interviewing and hiring process.
• Develop training. Based on the strategic plan, what training needs are arising? Is there new software that everyone must learn? Are there problems in handling conflict? Whatever the training topics are, the HR manager should address plans to offer training in the HRM plan.
• Determine compensation. In this aspect of the HRM plan, the manager must determine pay scales and other compensation such as health care, bonuses, and other perks.
• Appraise performance. Sets of standards need to be developed so you know how to rate the performance of your employees and continue with their development.

Each chapter of this text addresses one area of the HR plan, but the next sections provide some basic knowledge of planning for each area.

Determine Human Resource Needs

The first part of an HR plan will consist of determining how many people are needed. This step involves looking at company operations over the last year and asking a lot of questions:

• Were enough people hired?
• Did you have to scramble to hire people at the last minute?
• What are the skills your current employees possess?
• What skills do your employees need to gain to keep up with technology?
• Who is retiring soon? Do you have someone to replace them?
• What are the sales forecasts? How might this affect your hiring?

These are the questions to answer in this first step of the HR plan process. As you can imagine, this cannot be done alone. Involvement of other departments, managers, and executives should take place to obtain an accurate estimate of staffing needs for now and in the future. We discuss staffing in greater detail in Chapter 4 “Recruitment”.

Many HR managers will prepare an inventory of all current employees, which includes their educational level and abilities. This gives the HR manager the big picture on what current employees can do. It can serve as a tool to develop employees’ skills and abilities, if you know where they are currently in their development. For example, by taking an inventory, you may find out that Richard is going to retire next year, but no one in his department has been identified or trained to take over his role. Keeping the inventory helps you know where gaps might exist and allows you to plan for these gaps. This topic is addressed further in Chapter 4 “Recruitment”.

HR managers will also look closely at all job components and will analyze each job. By doing this analysis, they can get a better picture of what kinds of skills are needed to perform a job successfully. Once the HR manager has performed the needs assessment and knows exactly how many people, and in what positions and time frame they need to be hired, he or she can get to work on recruiting, which is also called a staffing plan A detailed document that synthesizes information to determine how many people should be hired, when they should be hired, and what skills they should have. . This is addressed further in Chapter 4 “Recruitment”.

Recruitment is an important job of the HR manager. More detail is provided in Chapter 4 “Recruitment”. Knowing how many people to hire, what skills they should possess, and hiring them when the time is right are major challenges in the area of recruiting. Hiring individuals who have not only the skills to do the job but also the attitude, personality, and fit can be the biggest challenge in recruiting. Depending on the type of job you are hiring for, you might place traditional advertisements on the web or use social networking sites as an avenue. Some companies offer bonuses to employees who refer friends. No matter where you decide to recruit, it is important to keep in mind that the recruiting process should be fair and equitable and diversity should be considered. We discuss diversity in greater detail in Chapter 3 “Diversity and Multiculturalism”.

Depending on availability and time, some companies may choose to outsource their recruiting processes. For some types of high-level positions, a head hunter will be used to recruit people nationally and internationally. A head hunter A person who specializes in matching jobs with people and usually works only with high-level positions. is a person who specializes in matching jobs with people, and they usually work only with high-level positions. Another option is to use an agency that specializes in hiring people for a variety of positions, including temporary and permanent positions. Some companies decide to hire temporary employees because they anticipate only a short-term need, and it can be less expensive to hire someone for only a specified period of time.

No matter how it is done, recruitment is the process of obtaining résumés of people interested in the job. In our next step, we review those résumés, interview, and select the best person for the job.

After you have reviewed résumés for a position, now is the time to work toward selecting the right person for the job. Although we discuss selection in great detail in Chapter 6 “Compensation and Benefits”, it is worth a discussion here as well. Numerous studies have been done, and while they have various results, the majority of studies say it costs an average of $45,000 to hire a new manager. Susan Herman, Hiring Right: A Practical Guide (Thousand Oaks, CA: Sage, 1993), xv. While this may seem exaggerated, consider the following items that contribute to the cost:

• Time to review résumés
• Time to interview candidates
• Interview expenses for candidates
• Possible travel expenses for new hire or recruiter
• Possible relocation expenses for new hire
• Additional bookkeeping, payroll, 401(k), and so forth
• Additional record keeping for government agencies
• Increased unemployment insurance costs
• Costs related to lack of productivity while new employee gets up to speed

Because it is so expensive to hire, it is important to do it right. First, résumés are reviewed and people who closely match the right skills are selected for interviews. Many organizations perform phone interviews first so they can further narrow the field. The HR manager is generally responsible for setting up the interviews and determining the interview schedule for a particular candidate. Usually, the more senior the position is, the longer the interview process takes, even up to eight weeks. John Crant, “How Long Does an Interview Process Take?” Jobsinminneapolis.com, December 2, 2009, accessed October 28, 2010, http://www.jobsinminneapolis.com/articles/title/How-Long-Does-an-Interview-Process-Take/3500/422 . After the interviews are conducted, there may be reference checks, background checks, or testing that will need to be performed before an offer is made to the new employee. HR managers are generally responsible for this aspect. Once the applicant has met all criteria, the HR manager will offer the selected person the position. At this point, salary, benefits, and vacation time may be negotiated. Compensation is the next step in HR management.

Determine Compensation

What you decide to pay people is much more difficult than it seems. This issue is covered in greater detail in Chapter 6 “Compensation and Benefits”. Pay systems must be developed that motivate employees and embody fairness to everyone working at the organization. However, organizations cannot offer every benefit and perk because budgets always have constraints. Even governmental agencies need to be concerned with compensation as part of their HR plan. For example, in 2011, Illinois State University gave salary increases of 3 percent to all faculty, despite state budget cuts in other areas. They reasoned that the pay increase was needed because of the competitive nature of hiring and retaining faculty and staff. The university president said, “Our employees have had a very good year and hopefully this is a good shot in the arm that will keep our morale high.” Stephanie Pawlowski, “Illinois State University to Get Salary Bump,” WJBC Radio, July 11, 2011, accessed July 11, 2011, http://wjbc.com/illinois-state-university-faculty-to-get-salary-bump .

The process in determining the right pay for the right job can have many variables, in addition to keeping morale high. First, as we have already discussed, the organization life cycle can determine the pay strategy for the organization. The supply and demand of those skills in the market, economy, region, or area in which the business is located is a determining factor in compensation strategy. For example, a company operating in Seattle may pay higher for the same job than their division in Missoula, Montana, because the cost of living is higher in Seattle. The HR manager is always researching to ensure the pay is fair and at market value. In Chapter 6 “Compensation and Benefits”, we get into greater detail about the variety of pay systems, perks, and bonuses that can be offered. For many organizations, training is a perk. Employees can develop their skills while getting paid for it. Training is the next step in the HR planning process.

Develop Training

Once we have planned our staffing, recruited people, selected employees, and then compensated them, we want to make sure our new employees are successful. Training is covered in more detail in Chapter 8. One way we can ensure success is by training our employees in three main areas:

• Company culture. A company culture The organization’s way of doing things. is the organization’s way of doing things. Every company does things a bit differently, and by understanding the corporate culture, the employee will be set up for success. Usually this type of training is performed at an orientation, when an employee is first hired. Topics might include how to request time off, dress codes, and processes.
• Skills needed for the job. If you work for a retail store, your employees need to know how to use the register. If you have sales staff, they need to have product knowledge to do the job. If your company uses particular software, training is needed in this area.
• Human relations skills. These are non-job-specific skills your employees need not only to do their jobs but also to make them all-around successful employees. Skills needed include communication skills and interviewing potential employees.

Perform a Performance Appraisal

The last thing an HR manager should plan is the performance appraisal. While we discuss performance appraisals in greater detail in Chapter 11 “Employee Assessment”, it is definitely worth a mention here, since it is part of the strategic plan. A performance appraisal A method by which job performance is measured. is a method by which job performance is measured. The performance appraisal can be called many different things, such as the following:

• Employee appraisal
• Performance review
• Career development review

No matter what the name, these appraisals can be very beneficial in motivating and rewarding employees. The performance evaluation includes metrics on which the employee is measured. These metrics should be based on the job description, both of which the HR manager develops. Various types of rating systems can be used, and it’s usually up to the HR manager to develop these as well as employee evaluation forms. The HR manager also usually ensures that every manager in the organization is trained on how to fill out the evaluation forms, but more importantly, how to discuss job performance with the employee. Then the HR manager tracks the due dates of performance appraisals and sends out e-mails to those managers letting them know it is almost time to write an evaluation.

Human Resource Recall

Have you ever been given a performance evaluation? What was the process and the outcome?

Communication Is Key in Performance Evaluations

Communication is imperative in any workplace, but especially when giving and receiving a performance evaluation.

Key Takeaways

• Human resource planning is a process that is part of the strategic plan. It involves addressing specific needs within the organization, based on the company’s strategic direction.
• The first step in HR planning is determining current and future human resource needs. In this step, current employees, available employees in the market, and future needs are all analyzed and developed.
• In the second step of the process, once we know how many people we will need to hire, we can begin to determine the best methods for recruiting the people we need. Sometimes an organization will use head hunters to find the best person for the job.
• After the recruiting process is finished, the HR manager will begin the selection process. This involves setting up interviews and selecting the right person for the job. This can be an expensive process, so we always want to hire the right person from the beginning.
• HR managers also need to work through compensation plans, including salary, bonus, and other benefits, such as health care. This aspect is important, since most organizations want to use compensation to attract and retain the best employees.
• The HR manager also develops training programs to ensure the people hired have the tools to be able to do their jobs successfully.
• Of the parts of HR planning, which do you think is most difficult, and why? Which would you enjoy the most, and why?
• Why is it important to plan your staffing before you start to hire people?
• What is the significance of training? Why do we need it in organizations?

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• Original content contributed by Lumen Learning

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Aligning human resources and business strategy

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You have to consider many factors when you create a go-to-market or business strategy. From brand messaging to product roadmaps to sales processes, effective business strategies also rely on the input of lots of people across many departments. 

Few departments have a better bird’s-eye view of the entire organization than human resources. HR professionals can see both why a strategy exists and how it’s developed and implemented. Yet, too often, HR departments don’t have a seat at the strategy table. Let’s take a look at how HR can help shape business strategy and bring it to life. 

Why HR should get involved with setting corporate strategy

Today, business moves faster than ever—it’s a platitude, but it’s still true. Technologies, industries, and consumers themselves continually evolve in a digitally-driven market, and companies continuously shift their strategic focus to keep pace. 

This culture of change has a significant impact on people. Every business decision has a real-life impact, and HR departments are specially equipped to inform strategy and help employees navigate the resulting changes. 

Consider these reasons why it’s so important for HR to align with business strategy: 

• Move in lockstep with the rest of the company: Goals are always more achievable when there is universal buy-in and alignment across teams. 
• Give HR initiatives a strategic focus: In today’s changing economy, there are countless ways to recruit, train, attract, invest in, and support employees. But it’s impossible to tackle every initiative all at once. Aligning with business strategy gives HR a strategic focus and helps prioritize goals. 
• Secure the right talent: Good talent is always valuable, but companies may need to invest in different skill sets or roles at different times. Understanding the strategic goals of the business will help HR attract and retain the right talent at the right time. 

What role human resources plays in strategic planning

So how does HR become part of the broader business decision-making process? How do HR departments move from a reactive, service-oriented function to a more executive-level, strategic one? 

It starts with setting clear objectives for the department and strong values for the entire organization. Companies with documented values are less likely to ignore the real-life impact of any strategy shifts or big decisions. Consider these steps as you begin.

1. Align and set your HR goals

The main strategic role of HR is to create goals to help meet key business objectives. Goals may vary depending on the company’s strategic plan, but focusing on HR fundamentals is an excellent place to start. Here are some areas of HR most commonly affected by broader strategic business shifts. 

Organizational structure

The way companies are organized largely depends on their current strategic objectives and growth stages. If a company is in a high-growth stage, it may have a sales-driven culture with more sales employees and sales executives in decision-making roles. Mature companies with a retention-focused strategy may hire more customer success roles. 

See 7 types of organizational structures—along with pros and cons for each—to find one that fits your strategy.

Employee compensation

Maybe current business goals are more focused on employee retention or culture-building. Conversely, perhaps the company needs to cut costs. In either case, compensation structure may be an important consideration. When HR is aligned and informed on these goals, they can make strategic decisions to help the organization meet them. 

Employee development

Depending on the business goals and immediate initiatives, it may be necessary to train employees on new skill sets. Some employees may resist additional roles and responsibilities, so the role of HR in these situations is to both evangelize additional training and ensure teams are developed to keep pace with shifting needs. 

Performance reviews

Change management .

As a people-focused department, HR often has the best pulse on employee sentiment throughout the organization. HR departments can encourage employees to share their feedback on new business strategies or technology investments to ensure any changes or strategic shifts make sense from an operational perspective. 

2. Formulate specific actions to hit those goals

Once you’ve aligned and set goals, it’s time to develop action plans to execute your HR strategic vision. Focus on developing and improving processes for recruiting, hiring, employee development, and performance reviews. 

When you develop an action plan, you'll need to have a clear understanding of your organization’s current structure and identify any gaps or shortcomings in your processes. Where should you invest more in recruiting? If budgets are tight, what training or employee development programs could maximize the productivity and effectiveness of your existing talent?  The ability to visualize where every player fits into the larger organization can help HR departments align employees to business strategy, maximize efficiency, and see data in context to drive better decisions. Org charts and related visuals can help HR departments optimize organizational structure at every level and make better decisions, such as: 

• Assigning employees where their skills can make the most significant impact
• Making informed decisions about pay, equity, and performance
• Modeling current and future org structures to determine how best to scale your business

Does your organization needs to hire new talent to meet its strategic goals? See how to develop a staffing plan.

3. Track and measure performance

Historically, the role of HR has stayed in the “softer,” people-focused side of the business. However, people analytics are now the new HR, and HR departments are just as responsible for reporting on the performance of their initiatives as any other department. 

With human resource alignment around data-driven goals, HR leaders can ensure that decision-making not only aligns with strategic business objectives but also helps drive those goals. HR leaders can analyze data from sales, marketing, and accounting to break down departmental silos and better align with overall business goals.

According to a Bersin by Deloitte study, data-driven HR teams are four times more likely to be respected by their business counterparts, which can result in more input in strategic decision-making. By combining departmental data and HR data and visualizing it all in a single workspace, HR departments can better align their decisions to business strategy. Consider the ways these types of people analytics can impact the broader business:

Employee analytics

Measure the performance of all the HR initiatives in terms of cost, time, performance, then use a dashboard to track recruiting times, onboarding speed, employee satisfaction, and employee salaries. This data-driven approach to people management helps HR departments evaluate pay disparities, track employee retention, identify trends, and see critical employee metrics that will provide quick insights for better decision-making.  

All this gives you the chance to onboard new employees more efficiently, improve employee satisfaction, and reduce retention.

Talent analytics

Today, effective talent acquisition goes way beyond budget and headcount. HR departments can rely on algorithmic data to quickly sift through deep pools of qualified applicants to attract and retain top talent. 

Today, effective talent acquisition goes way beyond budget and headcount. HR departments can rely on algorithmic data to quickly sift through deep pools of qualified applicants to attract and retain top talent. This allows you to identify and attract high-quality employees and improve your workforce planning.  

Predictive analytics

Set up indicators to see when an employee is at risk of leaving the company. HR departments can use data to identify risk facts and predict employee churn and how this will affect the company. This leads to better retention and employee planning

Invest in better people planning 

Modern human resources departments manage much more than hiring, onboarding, and benefits. Aligning HR with business strategy can boost employee satisfaction and performance, ensure teams are aligned to help the business achieve its strategic objectives and increase their influence and decision-making power across the organization. 

Align teams, boost efficiency, and drive better decisions with Lucidchart.

Lucidchart, a cloud-based intelligent diagramming application, is a core component of Lucid Software's Visual Collaboration Suite. This intuitive, cloud-based solution empowers teams to collaborate in real-time to build flowcharts, mockups, UML diagrams, customer journey maps, and more. Lucidchart propels teams forward to build the future faster. Lucid is proud to serve top businesses around the world, including customers such as Google, GE, and NBC Universal, and 99% of the Fortune 500. Lucid partners with industry leaders, including Google, Atlassian, and Microsoft. Since its founding, Lucid has received numerous awards for its products, business, and workplace culture. For more information, visit lucidchart.com.

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Human Resource Planning (HRP): A Step-By-Step Guide

In today’s rapidly evolving business landscape, having a plan in place for managing your human capital is key — and that’s where human resource planning (HRP) comes in. Human resource planning plays a critical role in making sure that your organization is well-equipped with the right talent at the right time.

Today, we’re walking through the intricacies of HRP so you can implement this practice in your organization.

What Is Human Resource Planning?

Human resource planning, or HRP, stands out as a strategic and methodical process designed to ensure that your organization fully leverages its human capital . It is not a one-time event but rather a continuous journey toward operational excellence and strategic alignment.

At its core, HRP aims to establish a seamless alignment between your employees and their respective roles, meticulously crafting a workforce that is both skilled and adequately sized to meet your organizational demands.

This proactive approach goes a long way in safeguarding your business against potential manpower shortages or surpluses, ensuring that you are well-prepared for the future.

Why Is HRP Important?

HRP is crucial for syncing your current workforce with your future needs. It entails a rigorous analysis of your existing staff, evaluating their skills, competencies, and performance.

This is where metrics come into play, providing a quantitative backbone to your workforce planning efforts. By leveraging data-driven insights, you can make informed decisions, ensuring that your team is not only talented but also aligned with your business objectives.

HRP doesn’t stop there, though — it’s a comprehensive approach that intertwines various facets of human resource management. Staffing, forecasting , performance management, and employee retention all fall under its umbrella. Each of these elements is crucial in building and maintaining a robust workforce.

In terms of staffing, HRP helps you decipher not just the number of employees you need, but also the types of skills and competencies they should possess. Forecasting, on the other hand, empowers your HR department to anticipate future demand, aligning your human resources with your company’s strategic direction.

Performance management is another vital cog in the HRP machine. It ensures that your employees are not just present but also productive and engaged. This, in turn, enhances employee retention, fostering a company culture that values growth, stability, and satisfaction.

HRP even plays a role in shaping your company culture . By aligning your human resources with your company’s needs and values, you create an environment where employees feel valued and aligned with the organization’s goals.

What Are the Advantages of Human Resource Planning?

At its core, human resource planning places the right talent in the right place at the right time, ensuring that your organization’s objectives align with your workforce’s capabilities. Now, let’s talk about the advantages of HRP and how it can lay the foundation for organizational success.

Ensures Effective Management of Current Employees

Strategic workforce alignment is at the heart of HRP. With effective human resource management, HR professionals can ensure that the current workforce is in sync with the company’s overarching goals.

This alignment can translate to better resource allocation, more informed decision-making, and enhanced overall performance.

Reveals Knowledge Gaps in the Workforce

The ever-evolving business landscape means organizations need to be adept at forecasting and adapting — and human resource planning plays a role here.

By examining current employees’ skill sets and comparing them with future needs, knowledge gaps can become more apparent. Addressing these gaps, whether through hiring new talent or upskilling existing employees, helps you ensure that your business stays competitive.

Balances HR Costs

Cost-effectiveness is crucial for the HR planning process. By anticipating future human resource needs, last-minute external recruitments — which often come with high costs — can be avoided.

Plus, recognizing surplus areas within your current workforce allows for internal reassignments to take place, cutting down on recruitment and onboarding expenses.

Keeps Companies Adaptable to Change

Change is constant, especially in today’s fast-paced business world, and human resource planning positions organizations to seamlessly navigate these changes.

From staying updated with industry trends to adapting to regulatory shifts, an HR department’s proactive planning ensures businesses remain resilient and agile. With Mosey , you can more effectively track, manage, and stay on top of changing regulations and requirements, making HR compliance a breeze.

Helps Secure Long-Term Growth

Another key component of HRP is succession planning. Identifying roles and preparing a talent pipeline ensures that your organization isn’t caught off-guard if leadership positions open up.

This planning not only opens the door to future leaders, but also ensures that institutional knowledge is retained, fueling your business’s long-term growth and stability.

Contributes to Organizational Goals

The nexus between human resource planning and organizational goals is undeniable. By streamlining the hiring process, ensuring employee satisfaction , and fostering employee retention, HRP contributes directly to the achievement of business objectives.

When employees see clear growth trajectories and development avenues, their commitment to the company’s vision intensifies, driving the organization closer to its goals.

What Are the Steps for Human Resource Planning?

HRP ensures that businesses are well-equipped, both in terms of the quantity and quality of their workforce, to meet their evolving goals and challenges. So, how can you actually navigate the intricacies of HRP? Here’s a step-by-step walkthrough of the essential phases that make up the human resource planning process.

Analyze Employee Skills and Performance

Human resource planning centers around an understanding of your company’s current workforce.

During this initial phase, the HR department dives into understanding the number of employees, their competencies, qualifications, positions, benefits, and performance levels. This skill inventory ensures that HR professionals have a clear picture of the strengths and areas for improvement in the present workforce.

Research Industry Trends and Forecasts

Effective human resource planning can also help you predict, and plan for, the future, so the next stage is to outline what your company will need in terms of human capital in the foreseeable future.

This forecasting phase requires the HR department to consider various factors, such as potential promotions, retirements, layoffs, and transfers. External conditions, like emerging technologies or industry shifts, can also have a significant impact on labor demand. Ensuring you stay ahead in terms of industry trends helps you align your staffing needs more effectively.

Conduct Demand Forecasting

Having a clear understanding of both the present workforce, potential employees, and future needs is vital to bridge the two through demand forecasting. This step in the HR planning process involves creating a gap analysis that points out discrepancies between the current workforce and future human resource demands.

This type of analysis leads to important questions like:

• Should current employees learn new skills?
• Is there a need for more managers?
• Are all employees fully utilizing their competencies in their present roles?

Answering these questions is key to crafting a strategic human resource plan that aligns with both the present and the future.

Determine Future Human Resource Needs

Once your demand forecasting has highlighted the shortages or surpluses in terms of competencies or number of employees, the next step is to determine the specific future human resource needs.

Whether it’s upskilling the current employees, succession planning for key roles, or identifying the need for new hires, this phase ensures that your business is poised for future growth without any HR hiccups.

Align HR Needs With Organizational Strategy

Human resource planning is intertwined with your broader business goals and strategies. Once your HR needs are identified, it’s important to make sure those needs align with your organizational goals.

This strategic planning phase ensures that every hiring process, training initiative, or retention effort contributes directly to your company’s overarching objectives.

Plan for Employee Development and Training

Once your future human resource needs are aligned with your company strategy, it’s time to implement plans for employee development. This might involve setting up training programs, workshops, or certifications to upskill current employees.

Ensuring your workforce is equipped with the right skills enhances employee satisfaction and retention and gives your business a competitive advantage.

Implement Plan for Forecasted HR Needs

The culmination of the human resource planning process is the implementation of your action plan. Taking cues from the gap analysis and strategic alignment, HR can now roll out a well-thought-out plan.

This could involve tweaking job descriptions, initiating new hiring processes, onboarding new employees, or even revisiting HR policies such as vacation, sick days, or overtime compensation. Collaboration with all departments is key here to ensure the successful execution of your plan, ensuring the HR strategies benefit the organization as a whole.

Support HRP Efforts With Mosey

From identifying when and where to open payroll accounts to managing workers’ compensation and paid family medical leave, Mosey simplifies the complex web of compliance and regulatory demands.

Why not explore how Mosey can streamline your HR processes and compliance management ? Our platform is designed to provide clarity, guidance, and ease, allowing you to focus on what matters most — nurturing and growing your most valuable asset, your employees. Try Mosey today .

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HR Business Plan: What Is It And What Are Its Steps?

Every company that has an HR department needs an HR business plan. Without it, you will have inconsistencies when you deal with your employees.

Human resources manage the relationship between your company and its employees. Due to this, it is only natural for human resources to have their own plan of approach to their tasks.

Key Takeaways:

An HR business plan is the strategic approach of the human resources department.

The HR business plan should clarify responsibilities, organize its processes, and create performance standards in which to gauge its success.

First assess the current HR situation, then establish goals and strategies to enact those goals for the HR department.

Make sure your HR strategies comply with legal requirements.

What Is A HR Business Plan?

An HR business plan is a strategic approach your human resource department will follow to accomplish its goals.

Like all business plans, an HR business plan needs to define its objectives, organize systems of measured success, and incorporate a flexible framework. A robust plan can adapt to new scenarios and still focus on its long-term aims.

Though this will vary by company, in general, every HR business plan will want to:

Clarify roles and responsibilities. Focus on the roles and responsibilities of the department and its members. You want to understand the job descriptions of each member of the human resource department. Then decide what the overall purpose of the department is and connect it back to each member. Be aware of any conflicting or contradictory agendas and seek to streamline.

Design and organize processes. Human resources helps hire, train, onboard, and terminate staff. There should be well-detailed plans for each process that keeps the human resources department prepared for any scenario.

Address compensation and benefits. Human resources manages the implementation of benefits and compensation. Therefore, the department’s plan must discuss how this will be handled.

Comply with legal requirements. The human resource department needs to be well-versed in the legal requirements and protections of the employees. The plan should provide a clear compliance with the law.

Create performance standards. A business plan is useless unless it can be evaluated against measures of success. It helps to provide metrics with results to be more objective in analysis.

Tie in to overall business plan. The HR business plan needs to complement the overarching business plan of the company. Avoid any policies or procedures that conflict with the overall business plan.

A human resource business plan will develop these points into a coherent strategy.

Steps To Develop A HR Business Plan

Assess current human resource situation. Before a plan is made, the human resources department and the company executives need to know what they have already. Your company should evaluate the roles and responsibilities of its human resource staff. You will want to see if anything is missing or if there is anything that is expendable.

Establish goals for human resource department. Now that you know what you’re working with, it is time now to think about what you want the human resource department to accomplish. Use the roles and responsibilities you just clarified to arrange practical benchmarks you want the department to make. Make sure goals do not interfere with one another but build toward an overall objective.

Create strategies to enact goals. Once you have your goals in place, it is time to build strategies to accomplish those goals. These strategies should work in tandem, so make sure each one has a logical progression. Like the goals, you do not want your strategies to interfere with one another but instead build towards an overall objective.

Evaluate business plan. Once you enact the plan, you need to make sure you accomplish your goals. Have a feedback system put in place where you can measure the success and failures of your plan. Come up with contingency plans in case your initial plans need to be re-evaluated.

Why Have A Human Resource Business Plan

An HR business plan is needed to establish long-term success with your employees.

Your plan gives focuses on the roles and responsibilities of the department. Human resources play a critical role in the hiring, training, and retention of staff. A business plan will clarify these procedures.

A HR business plan also provides consistency in the implementation of benefits and managing the welfare of the employees.

The human resource business plan empowers the department to perform at its best. In turn, it will help employees be equipped and compensated to perform at their best.

Without a HR business plan, your company is at risk conflicted and contradictory procedures that impede growth and success.

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Conor McMahon is a writer for Zippia, with previous experience in the nonprofit, customer service, and technical support industries. He has a degree in Music Industry from Northeastern University and in his free time he plays guitar with his friends. Conor enjoys creative writing between his work doing professional content creation and technical documentation.

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Human Resource Planning (HRP) Meaning, Process, and Examples

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

What Is Human Resource Planning (HRP)?

Human resource planning (HRP) is the continuous process of systematic planning to achieve optimum use of an organization's most valuable asset—quality employees. Human resources planning ensures the best fit between employees and jobs while avoiding manpower shortages or surpluses.

There are four key steps to the HRP process. They include analyzing present labor supply, forecasting labor demand, balancing projected labor demand with supply, and supporting organizational goals. HRP is an important investment for any business as it allows companies to remain both productive and profitable.

Key Takeaways

• Human resource planning (HRP) is a strategy used by a company to maintain a steady stream of skilled employees while avoiding employee shortages or surpluses.
• Having a good HRP strategy in place can mean productivity and profitability for a company.
• There are four general steps in the HRP process: identifying the current supply of employees, determining the future of the workforce, balancing between labor supply and demand, and developing plans that support the company's goals.

Michela Buttignol

What Is Human Resource Planning (HRP) Used For?

Human resource planning allows companies to plan ahead so they can maintain a steady supply of skilled employees. The process is used to help companies evaluate their needs and to plan ahead to meet those needs.

Human resource planning needs to be flexible enough to meet short-term staffing challenges while adapting to changing conditions in the business environment over the longer term. HRP starts by assessing and auditing the current capacity of human resources.

Here, identifying a company's skill set and targeting the skills a company needs enables it to strategically reach business goals and be equipped for future challenges. To remain competitive, businesses may need advanced skills or to upskill their employees as the market environment evolves and changes.

To retain employees and remain competitive, HRP often looks at organizational design, employee motivation, succession planning, and increasing return on investment overall.

Challenges of Human Resource Planning (HRP)

The challenges to HRP include forces that are always changing. These include employees getting sick, getting promoted, going on vacation, or leaving for another job. HRP ensures there is the best fit between workers and jobs, avoiding shortages and surpluses in the employee pool.

To help prevent future roadblocks and satisfy their objectives, HR managers have to make plans to do the following:

• Find and attract skilled employees.
• Select, train, and reward the best candidates.
• Cope with absences and deal with conflicts.
• Promote employees or let some of them go.

Investing in HRP is one of the most important decisions a company can make. After all, a company is only as good as its employees, and a high level of employee engagement can be essential for a company's success. If a company has the best employees and the best practices in place, it can mean the difference between sluggishness and productivity, helping to lead a company to profitability.

What Are the Four Steps to Human Resource Planning (HRP)?

There are four general, broad steps involved in the human resource planning process. Each step needs to be taken in sequence in order to arrive at the end goal, which is to develop a strategy that enables the company to successfully find and retain enough qualified employees to meet the company's needs.

Analyzing labor supply

The first step of human resource planning is to identify the company's current human resources supply. In this step, the HR department studies the strength of the organization based on the number of employees, their skills, qualifications, positions, benefits, and performance levels.

Forecasting labor demand

The second step requires the company to outline the future of its workforce. Here, the HR department can consider certain issues like promotions, retirements, layoffs, and transfers—anything that factors into the future needs of a company. The HR department can also look at external conditions impacting labor demand , such as new technology that might increase or decrease the need for workers.

Balancing labor demand with supply

The third step in the HRP process is forecasting the employment demand. HR creates a gap analysis that lays out specific needs to narrow the supply of the company's labor versus future demand. This analysis will often generate a series of questions, such as:

• Should employees learn new skills?
• Does the company need more managers?
• Do all employees play to their strengths in their current roles?

Developing and implementing a plan

The answers to questions from the gap analysis help HR determine how to proceed, which is the final phase of the HRP process. HR must now take practical steps to integrate its plan with the rest of the company. The department needs a budget , the ability to implement the plan, and a collaborative effort with all departments to execute that plan.

Common HR policies put in place after this fourth step may include policies regarding vacation, holidays, sick days, overtime compensation, and termination.

The goal of HR planning is to have the optimal number of staff to make the most money for the company. Because the goals and strategies of a company change over time, human resource planning must adapt accordingly. Additionally, as globalization increases, HR departments will face the need to implement new practices to accommodate government labor regulations that vary from country to country.

The increased use of remote workers by many corporations will also impact human resource planning and will require HR departments to use new methods and tools to recruit, train, and retain workers.

Why Is Human Resource Planning Important?

Human resource planning (HRP) allows a business to better maintain and target the right kind of talent to employ—having the right technical and soft skills to optimize their function within the company. It also allows managers to better train the workforce and help them develop the required skills.

What Is "Hard" vs. "Soft" Human Resource Planning?

Hard HRP evaluates various quantitative metrics to ensure that the right number of the right sort of people are available when needed by the company. Soft HRP focuses more on finding employees with the right corporate culture, motivation, and attitude. Often these are used in tandem.

What Are the Basic Steps in HRP?

HRP begins with an analysis of the available labor pool from which a company can draw. It then evaluates the firm's present and future demand for various types of labor and attempts to match that demand with the supply of job applicants.

Quality employees are a company's most valuable asset. Human resource planning involves the development of strategies to ensure that a business has an adequate supply of employees to meet its needs and can avoid either a surplus or a lack of workers.

There are four general steps in developing such a strategy: first, analyzing the company's current labor supply; second, determining the company's future labor needs; third, balancing the company's labor needs with its supply of employees; and fourth, developing and implementing the HR plan throughout the organization.

A solid HRP strategy can help a company be both productive and profitable.

International Journal of Business and Management Invention. " Human Resource Planning-An Analytical Study ," Page 64.

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Human Capital Maximizers

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

Human Capital Maximizers (HCM) is a human resource consulting company located in Portland, Oregon.  HCM has expertise in a wide range of HR areas and is targeting the emerging company market.  HCM will offer this market the ability to compensate client’s employees with stock options from their company.  This will be especially appealing to many start-up companies that find capital scarce. 

Major Adversity, the founder and owner will be leveraging his past and current personal/professional relationships to generate business for Human Capital Maximizers.  Major will be the sole employee until month six when he will be hiring a human resource specialist/manager to help out with the consulting.  Human Capital Maximizers will show increasing profitability over the next three years.

1.1 Keys to Success

The keys to success are to provide a needed service while providing a flexible means of compensation.

1.2 Mission

Human Capital Maximizers’ mission is to provide human resource consulting for emerging companies.  We exist to attract and maintain customers.  When we adhere to this maxim, everything else will fall into place.  Our services will exceed the expectations of our customers.

1.3 Objectives

The objectives for the first three years of operation include:

• To create a service-based company whose primary goal is to exceed customer’s expectations.
• To increase our number of clients served by 20% per year through superior performance and word-of-mouth referrals.
• To develop a sustainable start-up consultancy firm that can survive off its own cash flow and has significant equity holdings in emerging companies.

Company Summary company overview ) is an overview of the most important points about your company—your history, management team, location, mission statement and legal structure.">

Human Capital Maximizers is a HR consultancy firm serving the Portland area market. HCM will be set up as an Oregon Corporation owned by Major Adversity and will focus on emerging companies.

2.1 Company Ownership

Human Capital Maximizers is a privately held Oregon corporation founded and owned by Major Adversity.

2.2 Start-up Summary

Human Capital Maximizers will incur the following start-up expenses:

• Two desks, two chairs, and two lockable file cabinets.
• Two computer systems including a CD-RW, printer and a third computer to serve as a server.
• DSL router and DSL connections.
• Two telephones, fax machine, and copier.

Please note that the following items which are considered assets to be used for more than a year will labeled long-term assets and will be depreciated using G.A.A.P. approved straight-line depreciation method.

Human Capital Maximizers provides human resource consulting to emerging companies in the Portland/Vancouver market.   Human Capital Maximizers will charge a below market rate and take stock options in the company.  Human Capital Maximizers will  provide consulting for the following service areas:

• Human resource management.
• Organizational management.
• Professional development.
• Employee relations.
• Labor relations.
• Benefits and compensation.
• HR policy and procedure.
• Executive search.
• Sexual harassment.
• Position classification.
• Personnel management systems.
• Performance evaluations.

The pricing structure will either be an hourly rate or a per project fee.  These options will be settled on in negotiation with the client.  In general, Human Capital Maximizers is willing to be as flexible as possible.

Market Analysis Summary how to do a market analysis for your business plan.">

Emerging companies will be the target market for several reasons:

• They are in need of HR services as they are growing rapidly.
• They often do not have a large enough in-house solution as they are increasing in size.
• Capital is a scarce resource for emerging companies so the ability to accept stock options in replace of cash is appealing.

The emerging company market can be further broken down into two categories, technology and non-technology.  The significance of the breakdown is not that significant because many of the networking activities are occurring in settings that do not differentiate between technology and non-technology.

4.1 Market Segmentation

Human Capital Maximizers market can be segmented into two different groups, emerging high-tech companies and emerging non-high tech companies.  The emerging high-tech companies are going to be the larger of the two segments.  Even with the Internet bubble bursting within the last year, there are still many different emerging high-tech companies proliferating.  This is evidenced by the Business Journal of Portland which in their annual list of fastest growing companies for this year, 18 of the top 25 were technology companies.

There are also non-technology companies that are emerging in the Portland area and Human Capital Maximizers will be able to serve them as well.

4.2 Target Market Segment Strategy

Human Capital Maximizers’ two markets will be primarily targeted through networking activities.  Some networking will be conducted through the Oregon Entrepreneur Association, an association that supports entrepreneurial ventures in the local area.   This organization has monthly meetings that are in round-table format, allowing members to socialize.

Human Capital Maximizers will also be networking from personal/professional contacts that Major has developed professionally in the last five years in the HR/start-up industry.  HCM will also be relying on word of mouth to grow its customer base.

Strategy and Implementation Summary

Human Capital Maximizers will use their competitive edge of compensation flexibility to attract emerging companies.  This competitive advantage is especially valuable to emerging companies who are typically struggling to find enough capital to grow their business.  Accepting stock options as compensation is useful because equity is one thing these companies have lots of (that is of course if they haven’t given it all away to the Venture Capitalists).

5.1 Milestones

Human Capital Maximizers will have several milestones early on:

• Business plan completion.  This will be done as a roadmap for the organization.  This will be an indispensable tool for the ongoing performance and improvement of the company.
• Set up office.
• HCM’s first five customers.
• Profitability.

5.2 Sales Strategy

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Major will also be able to speak about Human Capital Maximizers ability to accept options in lieu of cash.  This will be appealing to companies, particularly in the current capital market which is quite scarce.  Since capital is more difficult to come by now than in the last few years, emerging companies will be excited about this option.

5.2.1 Sales Forecast

The first month will be used to set up the office.  Additionally, during the first month Major will be working hard on developing contracts. The second month will see some activity, but it will not be until month six when business will be picking up at a higher rate.  Sales will continue to grow through year three.

5.3 Competitive Edge

Human Capital Maximizers competitive edge is their flexibility for compensation.  Most or all other companies require compensation to be in the form of cash, for them cash is king.  Human Capital Maximizers is able to take stock options in lieu of some cash.  While Human Capital Maximizers needs some cash to float the business, it can take up to 75% of its fees in equity.  Human Capital Maximizers is able to do this because they have secured an office space that is low in cost, helping them reduce their overhead.  In addition, Major’s wife contributes a significant portion of money to the household so Major is not in need of a lot of monthly compensation.  This allows him to accept options as payment in hopes of an upside to come several years for now. (Please note the the HR industry, unlike law firms and accounting firms do not run into conflict of interests situations regarding receiving equity as compensation.)

Web Plan Summary

The website will be used as a resource that prospective companies can view to gain more information about the company.  In essence it is Human Capital Maximizers’ brochure.  On the site there will be information about the management of the company and corresponding bios indicating all of their experience.  Also on the website will be a list of present and past clients and information regarding Human Capital Maximizers’ fee structure and willingness to accept stakes of option.

6.1 Website Marketing Strategy

The marketing of the website will consist of submitting it to the popular search engines.  The website will be used more as a information tool that prospective companies can be sent to for more information about Human Capital Maximizers as opposed to marketing the website in order for the website to develop new leads.

6.2 Development Requirements

The development requirements will entail hiring an individual (preferably a student for cost saving purposes) to develop and produce the site.

Management Summary management summary will include information about who's on your team and why they're the right people for the job, as well as your future hiring plans.">

Major Adversity, the founder and owner received his undergraduate degree in marketing from Reed College.  After completing college Major recognized that he would eventually need to go to graduate school but was not ready to yet. 

Major worked in a large bicycle store for four years after college.  Major started out as a mechanic but quickly moved up to manager where he was responsible for much of the operation.  Some of the new responsibilities that Major enjoyed was the interviewing, selection & hiring, compensation, and employee relations.  After fours years in the bike shop Major was looking for a new challenge so he entered the University of Portland to pursue his MBA. 

Major received his MBA within two years and went to work for Nike out of school in their HR department.  After a year and half Major left Nike to work for a HR consultancy boutique that worked primarily with technology companies, many of them start ups.  Major enjoyed this thoroughly because of the dynamic environment that his clients worked in.  Major stayed with this firm for a total of four years.  

Toward the end of Major’s four years he got married and his wife, as a professional, was contributing large amounts of salary to the household.  This led Major to consider opening his own HR consultancy because he would be able to undertake some risk since the household was supported to a large degree by his wife.  Additionally, Major was could consider taking equity as compensation because a monthly salary was not a necessity.

7.1 Personnel Plan

Major will work full time for Human Capital Maximizers.  By month six Major will have developed more work than he will be able to manage himself and he will hire an additional HR consultant to help him out.  The employee will receive a straight salary and will have no future equity options in the client’s companies.  This employee will be given HR projects and will do the research and sometimes present the findings to the client, other times will allow Major to present to the client.

Financial Plan investor-ready personnel plan .">

The following sections will outline important financial information. Please note that the stock options granted in lieu of compensation are not entered into the financial plan as they are not yet of value.  Upon exercising the options there will be tax consequences (because one of the realizing events has occurred) as well as assets to be accounted for.

8.1 Important Assumptions

The following table details important financial assumptions.

8.2 Break-even Analysis

The Break-even Analysis is shown below.

8.3 Projected Profit and Loss

The following table will indicate projected profit and loss.

8.4 Projected Cash Flow

The following chart and table will indicate projected cash flow.

8.5 Projected Balance Sheet

The following table will indicate the projected balance sheet.

8.6 Business Ratios

The following table outlines some of the more important ratios from the Management Consulting Resources industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 8742.

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• 5 Steps To Creating An Effective HR Business Plan

5 steps to creating an effective HR business plan May 3, 2018

5 steps to creating an effective HR business plan

A basic business plan will involve creating goals to start a business, expand an existing business or implement a project, and developing ways to achieve the goals. Human resources generally refers to an internal department that handles the hiring, training and paying of employees. Without adequate staff, in terms of quantity and quality, a business will be unprepared to execute its plan.

Small business owners often face setbacks without a written HR business plan, such as, costly employee turnover, procedural bottlenecks and inconsistent productivity. A HR plan is a practical and tactical tool that can help you determine exactly where you're going and drive your business forward.

Here are five critical steps to creating an effective HR plan for your company:

Assess current hr capacity.

The first step in the human resources planning process is to assess your current staff. Before making any moves to hire new employees for your company, it’s important to understand the talent you already have at your disposal.

Develop a skills inventory for each of your current employees. You can do this in a number of ways, such as asking employees to self-evaluate with a questionnaire, looking over past performance reviews, or using an approach that combines the two.

Have a Succession Plan 

Eventually your business will face changes in management; this is an unavoidable part of the natural growth of any organisation. Managers will come and go and positions will be created and dissolved as you continue to expand and re-organise.

You'll want to be ready for this when it happens by having a succession plan already in place. It will be up to you whether you want to include your employees in the creation of this succession plan or not. Either way, be aware of their career goals and what their plans are for the future - don’t hesitate to inform them when changes are taking place.

By doing this you’ll be aware of what the most important positions in your company are and who may have the skills to fill those positions.

Outline how you will motivate and retain employees

You need the right people to stay on board to take your company further. A HR plan will outline your key strategies to motivate employees and maintain their loyalty.

Being creative with employee perks, rewards and compensation is one of the first steps. For example, your HR plan can clearly address motivational strategies such as profit-sharing or short-term rewards that involve personal or family life, such as entertainment vouchers.

Matching demand and supply

Matching the demand and supply is where the hiring process gets tricky—and where the rest of the human resources management planning process comes into place. You’ll develop a plan to link your organization’s demand for quality staff with the supply available in the market. You can achieve this by training current employees, hiring new employees, or combining the two approaches.

Conduct a Gap Analysis

A gap analysis is a formal study comparing the resources your company currently has to what they may need as they grow and develop in the future. If your HR services are outdated, or in danger of becoming outdated, a gap analysis will reveal this and allow you to make the necessary improvements to keep your company going strong for years to come.

HR planning is an ongoing process. Your strategy should be reviewed regularly and updated as your organisation changes.

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The new possible: How HR can help build the organization of the future

Business leaders watching their organizations experience profound upheaval because of the COVID-19 crisis may find it difficult to understand what it all means until the dust settles.

But the pandemic hasn’t afforded them, or any of us, that luxury. It has created profound and immediate changes to how societies operate and how individuals interact and work. We have all witnessed an at-scale shift to remote work, the dynamic reallocation of resources, and the acceleration of digitization and automation to meet changing individual and organizational needs.

Organizations have by and large met the challenges of this crisis moment. But as we move toward imagining a postpandemic era , a management system based on old rules—a hierarchy that solves for uniformity, bureaucracy, and control—will no longer be effective. Taking its place should be a model that is more flexible and responsive, built around four interrelated trends: more connection, unprecedented automation, lower transaction costs, and demographic shifts.

To usher in the organization of the future, chief human-resources officers (CHROs) and other leaders should do nothing less than reimagine the basic tenets of organization. Emerging models are creative, adaptable, and antifragile . 1 Nassim Nicholas Taleb, Antifragile: Things That Gain from Disorder , New York, NY: Random House Trade Paperbacks, 2012. Corporate purpose fuels bold business moves. “Labor” becomes “talent.” Hierarchies become networks of teams . Competitors become ecosystem collaborators. And companies become more human: inspiring, collaborative, and bent on creating an employee experience that is meaningful and enjoyable .

After the pandemic erupted last year, we spoke with 350 HR leaders about the role of uncertainty in their function. They told us that over the next two years they wanted to prioritize initiatives that strengthen their organization’s ability to drive change in leadership, culture, and employee experience.

How are they doing? In this article, we discuss ways that CHROs can continue to meet the moment by rethinking processes in three fundamental areas: identity, agility, and scalability.

How HR fits in the big picture

McKinsey has recently conducted research on how businesses can best organize for the future . The experimentation underway suggests that future-ready companies share three characteristics: they know what they are and what they stand for; they operate with a fixation on speed and simplicity; and they grow by scaling up their ability to learn and innovate.

HR can help propel this transformation by facilitating positive change in these three key areas, as well as with nine imperatives that radiate out from them (Exhibit 1).

Identity: HR can clarify the meaning of purpose, value, and culture

Companies that execute with purpose have greater odds of creating significant long-term value generation , which can lead to stronger financial performance, increased employee engagement, and higher customer trust.

Home in on the organization’s purpose

What is your company’s core reason for being, and where can you have a unique, positive impact on society? Now more than ever, you need good answers to those questions—purpose is not a choice but a necessity.

CHROs play a vital role in making sure the organization is living its purpose and values . HR can articulate and role-model desired individual mindsets and behaviors linked to purpose by identifying “moments that matter” in the company’s culture and translating purpose into a set of leadership and employee norms and behaviors.

For instance, commercial-vehicle manufacturer Scania holds an annual “Climate Day,” during which the company stops operations for one hour to hold sustainability training, in line with its purpose to “drive the shift toward a sustainable transport system.” 2 Scania Annual and Sustainability Report 2019 , Scania, scania.com.

HR can also ensure that clear changes are made to recruitment and capability-building processes by determining the characteristics of a “purpose driven” employee and embedding these attributes within recruitment, development, and succession planning.

HR can also incorporate purpose-driven metrics into compensation and performance decisions. Companies across industries have embarked on these metrics lately. For example, Seventh Generation, a maker of cleaning and personal-care products, recently built into its incentive system sustainability targets for the company’s entire workforce, in service of its goal of being a zero-waste company by 2025. Shell has plans to set short-term carbon-emissions targets and link executive compensation to performance against them.

Think deeply about talent

Organizations that can reallocate talent in step with their strategic plans are more than twice as likely to outperform  their peers. To link talent to value, the best talent should be shifted into critical value-driving roles. That means moving away from a traditional approach, in which critical roles and talent are interchangeable and based on hierarchy.

Getting the best people into the most important roles requires a disciplined look at where the organization really creates value and how top talent contributes . Consider Tesla’s effort to create a culture of fast-moving innovation, or Apple’s obsessive focus on user experience. These cultural priorities are at the core of these companies’ value agendas. The roles needed to turn such priorities into value are often related to R&D and filled with talented, creative people.

To enable this shift, HR should manage talent rigorously by building an analytics capability to mine data to hire, develop, and retain the best employees. HR business partners, who articulate these staffing needs to the executive management team, should consider themselves internal service providers that ensure high returns on human-capital investments. For example, to engage business leaders in a regular review of talent, they can develop semiautomated data dashboards that track the most important metrics for critical roles.

Create the best employee experience possible

Companies know that a better employee experience means a better bottom line. Successful organizations work together with their people to create personalized, authentic, and motivating experiences that tap into purpose to strengthen individual, team, and company performance.

The HR team plays a crucial role in forming employee experience. Organizations in which HR facilitates a positive employee experience are 1.3 times more likely to report organizational outperformance, McKinsey research has shown . This has become even more important throughout the pandemic, as organizations work to build team morale and positive mindsets .

HR should facilitate and coordinate employee experience. Organizations can support this by helping HR evolve, strengthening the function’s capability so that it becomes the architect of the employee experience. Airbnb, for instance, rebranded the CHRO role as global head of employee experience. PayPal focused on HR’s capability and processes to create a better experience for employees, including coaching HR professionals on measuring and understanding that experience, and using technology more effectively.

Strengthen leadership and build capacity for change

Culture is the foundation on which exceptional financial performance is built. Companies with top-quartile cultures (as measured by McKinsey’s Organizational Health Index ) post a return to shareholders 60 percent higher  than median companies and 200 percent higher than those in the bottom quartile.

Culture change should be business-led, with clear and highly visible leadership from the top, and execution should be rigorous and consistent. Companies are more than five times more likely to have a successful transformation  when leaders have role-modeled the behavior changes they were asking their employees to make.

To strengthen an organization’s identity, HR should ask the following questions:

• How can we develop an energizing sense of purpose that has a tangible impact on our strategic choices and ways of working?
• How can we identify key talent roles and focus them on creating value?
• How can we build a data-driven, systemic understanding of our organizational health?

Agility: HR’s role in flattening the organization

Organizational agility improves both company performance and employee satisfaction . HR can be instrumental in shifting an organization from a traditional hierarchy to a marketplace that provides talent and resources to a collection of empowered small teams, helping them to achieve their missions and acting as a common guiding star.

Adopt new organizational models

For instance, as a part of a multiyear agile transformation, a large European bank worked to establish an in-house agile academy led jointly by coaches and the HR function to drive capability building for the transformation.

To be successful, a transformation should touch every facet of an organization—people, process, strategy, structure, and technology. HR can help create an iterative approach by developing core elements of the people-management process, including new career paths for agile teams, revamped performance management, and capability building. It should lead by example as well, by shifting to agile “flow to work” pools  in which individuals are staffed to prioritized tasks.

Create a flexible—and magnetic—workforce

Because many roles are becoming disaggregated and fluid, work will increasingly be defined in terms of skills . The accelerating pace of technological change is widening skill gaps, making them more common and more quick to develop. To survive and deliver on their strategic objectives, all organizations will need to reskill and upskill significant portions of their workforce over the next ten years.

According to a 2018 McKinsey survey , 66 percent of executives said that “addressing potential skills gaps related to automation/digitization” within their workforces was at least a “top ten priority.” HR should help prioritize these talent shifts.

In a more recent survey McKinsey conducted with global executives  about the postpandemic workforce, more than a third of respondents said that their organizations were unprepared to address the skill gaps exacerbated by automation and digitization. The shift to digitization has accelerated during the pandemic: 85 percent of companies have picked up the pace of their digitization (including a 48 percent rise in the digitization of customer channels). In light of these trends and the need to shift skills, there is a clear business rationale behind workforce strategy and planning.

HR should be a strategic partner for the business in this regard, by ensuring that the right talent is in place to deliver on core company objectives. HR can also drive workforce planning by reviewing how disruptive trends affect employees, identifying future core capabilities, and assessing how supply and demand apply to future skills gaps.

Moving to a skills focus also requires innovative sourcing to meet specific work-activity needs (for example, the gig economy and automation), and changing which roles companies need to source with traditional full-time-equivalent positions and which can be done by temporary workers or contractors. In the survey with global executives, about 70 percent said that two years from now they expect to use more temporary workers and contractors than they did before the COVID-19 crisis.

During the pandemic, we’ve seen how organizations have come together to utilize talent with transferable skills. For instance, McKinsey has supported Talent Exchange , a platform that uses artificial intelligence to help workers displaced by the crisis.

Make better decisions—faster

Companies that make decisions at the right organizational level  and that have fewer reporting layers are more likely to deliver consistently on quality, velocity, and performance outcomes and thus outperform their industry peers. The pandemic has trained the spotlight on the power of fast decision making, as many organizations have had to move dramatically more quickly than they had originally envisioned. For example, one retailer had a plan for curbside delivery that would take 18 months to roll out; once the COVID-19 crisis hit, the plan went operational in just two days.

HR can help with strong decision making by empowering employees  to take risks in a culture that rewards them for doing so. McKinsey research revealed that employees who are empowered to make decisions and who receive sufficient coaching from leaders were three times more likely to say that their companies’ delegated decisions were both high quality and speedy .

Introduce next-generation performance management

Companies are experimenting with a wide variety of approaches to improve how they manage performance. According to a McKinsey Global Survey , half of respondents said that performance management had not had a positive effect on employee or organizational performance. Two-thirds reported the implementation of at least one meaningful modification to their performance-management systems.

We identified three practices—managers’ coaching, linking employee goals to business priorities, and differentiated compensation—that increase the chances that a performance-management system will positively affect employee performance. HR plays an important role in embedding these practices in performance management by supporting the goal-setting process, decoupling the compensation and development discussion, investing in manager’s capability building, and embedding technology and analytics to simplify the performance-management process.

To strengthen an organization’s agility, HR should ask the following questions:

• Can we enable more effective decision making by pushing decisions to the edges of the organization, creating psychological safety  that empowers people, and building capabilities?
• How do we accelerate the shift to a more diverse and deeply motivated talent base, one that is supported through a human-centric culture that enables outperformance and superior experience?
• Which organizational areas or end-to-end value-creation streams would most benefit from a shift to new ways of working and organizing?

Scalability: How HR can drive value creation

The new normal of large, rapidly recurring skills gaps means that reskilling efforts must be transformational, not business as usual or piecemeal.

Lean into a learning culture by reskilling and upskilling

Effective reskilling and upskilling will require employees to embark on a blended-learning journey that includes traditional learning (training, digital courses, job aids) with nontraditional methods (enhanced peer coaching, learning networks, the mass personalization of change , “nudging” techniques).

For instance, Microsoft shifted from a “know it all” to a “learn it all” ethos, incorporating open learning days, informal social learning opportunities, learning data for internal career paths, and new platforms and products for its partner network.

Memo to HR: Look in the mirror

To drive and facilitate these workforce initiatives, HR must transform itself first. Talent is consistently ranked as a top three priority for CEOs, yet many lack confidence in HR’s ability to deliver. 3 Dominic Barton, Dennis Carey, and Ram Charan, “People before strategy: A new role for the CHRO,” Harvard Business Review , July– August 2015, Volume 93, Number 7–8, pp. 62–71, hbr.org. The HR function is often overburdened with transactional work and not well equipped to create value for the enterprise.

Yet people-first organizations look at business problems from the perspective of how talent creates value, and HR is well positioned to bring data-driven insights to talent decisions. HR can arm itself with data-driven insights and people analytics to support talent-driven transformation, and HR business partners can then consistently make talent decisions based on data.

Create a value-enhancing HR ecosystem

McKinsey analysis has shown that a preponderance of executives recognize how much external partnerships help companies differentiate themselves. Increased value can be created through ecosystems where partners share data, code, and skills. Success now requires “blurry boundaries” and mutually dependent relationships to share value. The need of the hour is for HR to collaborate on and leverage the landscape of HR tech solutions across the employee life cycle—from learning, talent acquisition, and performance management to workforce productivity—to build an effective HR ecosystem.

To strengthen an organization’s scalability, HR should ask the following questions:

• How can we set up platforms spanning multiple players in the ecosystem and enable new sources of value and employee experience through them?
• How can we become the best company to partner with in the ecosystem? How can we set ourselves up for fast partnering and make the ecosystem accessible?
• What are the critical skills that drive future value creation and how can we upskill our talent base accordingly?

Looking ahead: How transformation happens

As the organization of the future takes shape, HR will be the driving force for many initiatives: mapping talent to value; making the workforce more flexible; prioritizing strategic workforce planning, performance management, and reskilling; building an HR platform; and developing an HR tech ecosystem. For other initiatives, HR can help C-suite leaders push forward on establishing and radiating purpose, improving employee experience, driving leadership and culture, and simplifying the organization.

Given the magnitude of the task and the broad portfolio of value-creating HR initiatives, prioritization is critical.

In May of 2020, HR leaders attending a McKinsey virtual conference indicated that over the next two years, they wanted to prioritize initiatives that strengthen agility and identity. That included 27 percent who said that they would focus on responding with agility and 25 percent who prioritized driving leadership, culture, and employee experience. Next came mapping talent to value and establishing and radiating purpose, each at 13 percent (Exhibit 2).

At a second conference for HR leaders, 4 Survey of human-resources leaders at “Reimagine: Organizing for the future,” a McKinsey virtual conference held in June 2020. about half of the assembled CHROs said that they were focusing on reimagining the fundamentals of the organization and rethinking the operating model and ways of working in the next normal.

We see organizations making this shift. Throughout the pandemic, HR has played a central role in how companies build organizational resilience and drive value . CHROs and their teams can continue on this path by connecting talent to business strategy and by implementing changes in the three core areas of identity, agility, and scalability, as well as the nine imperatives that flow from them.

A more flexible and responsive model will also help organizations meet coming demographic shifts and other workforce changes. Millennials are becoming the dominant group in the workforce (with Gen Z close behind), creating novel challenges for organizations to meet their needs. The prominence of the gig economy and alternate models of working will only grow, with 162 million workers in the European Union and the United States working independently— 70 percent of them by choice . And the rapid spread of digital technology and automation is dramatically reshaping the global economy, with half the tasks people perform already automatable today.

These trends are not new, but they are approaching tipping points, placing organization at the top of the CEO agenda. CHROs can help leadership by transforming their own HR organizations: developing and reinforcing clear priorities; embracing new ways of working, including rapid iteration and testing with the business and seeking explicit feedback; and revamping the HR skill set by embracing agility and digital capabilities.

While clearly a trial by fire, the pandemic also provides an opportunity for HR to accelerate its shift from a service to a strategic function, helping to shape a more dynamic organization that is ready to meet the postcrisis future.

Asmus Komm is a partner in McKinsey’s Hamburg office, Florian Pollner is a partner in the Zurich office, Bill Schaninger is a senior partner in the Philadelphia office, and Surbhi Sikka is a consultant in the Gurugram office.

The authors wish to thank Talha Khan for his contributions to this article.

This article was edited by Barbara Tierney, a senior editor in the New York office.

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What Is Human Resource Management? Definition + Career Guide

Learn about human resource management roles, responsibilities, salary, and how to get started in this field.

Human resource management , or HRM, involves coordinating, managing, and allocating human capital , or employees, in ways that move an organization’s goals forward. HRM focuses on investing in employees, ensuring their safety, and managing all aspects of staffing from hiring to compensation and development. 

HRM careers may specialize in compensation , training , or managing employees . Most HRM professionals hold a bachelor’s degree and some go on to pursue a master's degree. HRM professionals at all levels can also earn professional certifications to help build knowledge and increase earning potential. HRM’s goal is to build a company culture and carry out its mission and overall goals through the management of employees. 

Keep reading to learn more about a career in human resource management, or start learning now with these popular HR courses on Coursera:

University of Minnesota's Human Resource Management: HR for People Managers Specialization

HRCI's Human Resource Associate Professional Certificate

Macquarie University's Leading: Human Resource Management and Leadership Specialization

Definition of Human Resource Management (HRM) 

Human resource management is organizing, coordinating, and managing an organization's current employees to carry out an organization’s mission, vision, and goals. This includes recruiting, hiring, training, compensating, retaining, and motivating employees. 

HRM staff also develops and enforces policies and procedures that help ensure employee safety. The HRM team manages adherence to federal and state laws that may work to protect employees’ private information and ensure their physical safety and mental and emotional well-being. Organizations of varying sizes and industries rely on HRM to keep business running smoothly and efficiently. 

Learn more: What Is Human Resources? (Jobs, Areas, Skills, and More)

Purpose of human resource management (HRM)

The methodology behind HRM recognizes the value employees bring to an organization, also known as human capital. Investing in employees and strategically supporting their needs can improve employee satisfaction and employee motivation. Employees who are well trained, competent, valued, and supported by their employers will likely have the skills and incentive necessary to carry out the organization’s goals.

Let's look at the purpose behind HRM in more depth:

Develop employees' skills.

HRM aims to create a highly skilled workforce and boost confidence and competence so that employees are motivated to contribute. A human resource manager or department might provide:

Tuition reimbursement programs

On-the-job training

Mentorships within an organization

Career development programs to help employees explore their potential

Foster a productive workplace culture.

HRM has a strong focus on company culture and job satisfaction. Much of what motivates employees comes from the culture in which they work. Employee engagement programs can foster an inclusive and collaborative workplace culture. Although culture can be challenging to measure and quantify, it’s an important function of HRM to retain and recruit employees. 

Protect employees.

HRM also protects employees. Human resource (HR) professionals manage legal documents, policies, and regulations, identify what applies to their organization, and find effective ways to educate employees and enforce company policy. HRM aims to be an ally or partner to employees. HRM emphasizes employee development while protecting employees from discrimination, workplace hazards, and unfair compensation. 

Basic elements of Human Resource Management (HRM)

The human resource management field includes recruiting new hires, evaluating employee performance, ensuring fair compensation and benefits, training employees and supporting education and development, and protecting the health and safety of all employees. These are critical cornerstones of the work of HRM professionals. From crafting a job posting to providing continuing education options, HRM functions at all stages of an employee's journey with an organization. To be an effective HRM professional, you will need a mix of personal and technical skills like recruitment strategies, creating compensation plans, and communication and team building. 

Recruitment 

An effective recruitment process is at the foundation of HRM. If you can recruit good talent, you can build on their skills and invest in employees for years to come as they add value to the organization. Equally important is company culture. You want employees that add to the culture of the organization. Some common recruiting tools HRM may use include job aggregators like Indeed or SimplyHired, video interviewing, or even social media sites like LinkedIn. 

Related course: Recruiting, Hiring, and Onboarding Employees from University of Minnesota

Evaluation and performance management  

HRM uses data to track employee performance to ensure a highly trained and capable workforce. The data compiled can also be used to change staff training methods, implement a merit-based system for raises, and more. HRM professionals use formal measures like performance reviews and informal methods like interviews or surveys. 

Related course: Managing Employee Performance from University of Minnesota

Compensation 

Compensation can mean salary, commission, benefits, time off, and other non-monetary benefits. HRM looks to the industry standard to set salary rates, commission rates, and benefits. This ensures fairness and allows for a consistent company standard. Some organizations may use performance reviews to adjust an employee’s salary, among other measures. 

Related course: Compensation and Benefits from HRCI

Employee development and learning 

Engaged employees are effective employees. HRM understands the importance of a workforce that is challenged but also supported. Most employees want opportunities for advancement and to feel competent and valued in what they bring to an organization. Part of HRM is providing these learning opportunities to employees. This might include tuition reimbursement programs, on-the-job training options, conferences, conventions, or certification programs. Aside from individual learning, HRM can also use employee development and learning to help employees adapt to organizational changes, such as system upgrades, technology shifts, and new policies. 

Related course: Learning and Development from HRCI

Employee health and safety

The safety and well-being of an organization’s employees are critically important aspects of HRM. Employee health and safety covers a lot, such as safety against harassment, discrimination, or bullying in the workplace. It can mean physical safety that would involve building fire code compliance. It can also mean adherence to labor laws that protect an employee's rights in the workplace. Safety in the workplace means cybersecurity or safeguarding an employee’s personal information. A lot goes into protecting all aspects of employees’ health and safety, and it is the job of HRM professionals to ensure that protection. A few ways HRM professionals may go about this is by installing security cameras, enforcing internet usage rules, implementing a zero-tolerance policy, or creating restricted access areas.

Related course: Compliance and Risk Management from HRCI

Careers in human resource management (HRM)

You can find many different careers in HRM , with varying points of entry into this field. Most positions in HRM require at least a bachelor’s degree in human resources or a related field. You can also earn certifications to help you find the best position within the vast field of HRM. HRM professionals have important jobs that can be both rewarding and fulfilling. According to the US Bureau of Labor Statistics (BLS), the human resources management field is expected to grow 7 percent from 2021-2031, or about 12,600 new jobs, on par with the national average [ 1 ]. The BLS cites an average annual US salary of $126,230 as of 2021. Read on to explore specific roles, salaries, and job descriptions.   

*All US salary averages are sourced from Glassdoor, July 2023, and include base pay and additional compensation.

Payroll specialist

Salary: $50,730 

Payroll specialists gather employee information, ensure its accuracy, and administer compensation based on hours worked. This role usually works with a team of other payroll specialists and other departments to approve expenses, manage budgets, and process payroll. A degree in accounting or experience in payroll or accounting is common. 

Training and development manager 

Salary: $88,431 

A training and development manager, who may also be called a training coordinator, oversees employment training and implements training initiatives to build employee competence. Other responsibilities of this role may include communicating an organization's mission statement or company values and creating training programs. Training coordinators typically hold a bachelor’s degree and relevant certifications, and have experience in HR.

Human resources manager 

Salary: $79,987 

An HR manager oversees an entire HR department or portion of an HR department, depending on the company’s size. This role manages the hiring of staff, implementing policies, overseeing payroll and benefits, and advising managers or other supervisors from other departments. Qualifications typically include a bachelor’s degree in human resources or a related field, experience in HR, and possibly certifications. 

Benefits manager 

Salary: $114,196

Benefits managers oversee the payroll department, ensuring all functions related to compensation and benefits are carried out and accurate. This job ensures employees are paid based on an organization’s pay structure, and benefits are granted per employee contracts. As a benefits and compensation manager, you also meet with other departments to discuss financial matters. Qualifications typically include a bachelor’s degree in accounting or related field, experience in payroll or management, and possibly certifications depending on your employer. 

Learn more: HR Entry-Level Job Guide: Jobs, Salaries, and Strategies to Get Hired

Who's hiring?

Glassdoor reports that the top-rated companies, with more than 10,000 employers, that are hiring HR managers include Intuit, NVIDIA, ServiceNow, TaskUs, the Church of Jesus Christ of Latter Day Saints, and NASA [ 3 ].

How to get started in human resources management

There are different options for launching a career in human resources management. They often include a combination of education, experience, certification, and networking. Read on to discover ways you can begin preparing for a career in HRM. 

Consider degree opportunities.  

Sixty-seven percent of HRM professionals hold a bachelor’s degree in human resources, business, psychology, or a related field, and 14 percent have a master’s [ 2 ]. Common HR degree coursework includes workplace diversity, business ethics, labor relations, strategic HR, and workforce planning. Some programs may also require internship experience. 

As you gain an HR education, be sure to build important skills like performance management, customer service , payroll processing, communication , leadership, and organization. In addition, familiarize yourself with popular HR software programs like ADP Workforce Now , Bamboo HR , and Workday .

Read more: What Can I Expect from a Human Resources Degree?

Gain HR experience.

You can stand out as an HRM job candidate with some experience in the HR field. There are opportunities to gain experience at all levels, whether you’re a new graduate or a seasoned professional.  One way to get experience is through internships and entry-level positions such as human resources assistant or associate. In these entry-level roles, you’ll assist in the major duties of HR and build experience to move forward. Joining professional organizations and attending networking opportunities like conferences and conventions is another way to gain experience, knowledge, and connections in HRM. 

Read more: How to Use LinkedIn: A Guide to Online Networking

Earn professional certifications. 

Consider professional certification to improve your chances of getting hired into an upper-level or senior-level position in HRM. Your human resource management salary may also be positively affected if you gain certifications. There are many professional certification options offered by national HR and business organizations. Choose the one that fits your long-term career goals and eligibility. Select from certifications specifically designed for individuals new to HR up to senior-level employees. 

HR Certification Institute offers eight different certifications. The Associate Professional in Human Resources does not require any educational prerequisites, and you do not need any prior experience in HR to be eligible. This certification is ideal for entry-level candidates who want to advance in HRM. Its professional and senior certifications have both educational and experience requirements and would be suitable for someone who has already worked in HR. International and global options are available for anyone who works with companies outside of the US. 

Society for Human Resource Management (SHRM) offers two different certifications for HRM professionals. These are the SHRM Certified Professional (SHRM-CP) and the SHRM Senior Certified Professional (SHRM-SCP). You don’t need previous experience in HR, and there are no educational requirements for the SHRM-CP. The SHRM-SCP does have requirements for both experience and education. 

WorldatWork provides certifications specifically designed for individuals who work in payroll or benefits. Any HR professional could benefit from these certifications, as most HRM professionals handle finances, payroll, and budgets. You can earn a Certified Compensation Professional (CCP) certification, Certified Executive Compensation Professional (CECP) certification, Certified Benefits Professional (CBP) certification, and more.

Apply for HRM positions. 

Once you’ve honed the skills you’ll need to work in HRM and acquired any certifications or training, it’s time to polish your resume and apply for positions in HRM. Work on your resume as you go, gathering personal and professional references. Join professional organizations, take online courses, and attend conferences—all of which would be included on your resume and illustrate your dedication and drive.

Read more: 10 Ways to Enhance Your Resume 

When you prepare your resume, include credentials, all related previous professional experience, internships, your education, professional organizations of which you’re a member,  achievements, qualifications, and skills relevant to HRM. One important tip, especially for HR resumes: Optimize your resume with targeted keywords that could be picked up by applicant tracking systems (ATS) , which you will also likely use in your career as an HRM professional. 

Explore human resource management with Coursera

Taking online courses can be a great way to enhance your performance in your current role and prepare for career advancement. Consider taking one of Coursera's top-rated courses in HR:

To learn a data-driven approach to managing people, take the University of Pennsylvania's People Analytics course. This course takes about eight hours to complete and covers staffing, talent management, and more. It's part of the Business Analytics specialization.

To delve deeper into HRM, sign up for the University of Minnesota's Human Resource Management: HR for People Managers Specialization . This five-course program takes about two months to complete and covers such processes as recruiting, managing performance, and managing compensation.

To delve deeper into leading teams, creating culture, and strategizing business growth, consider the Strategic Leadership and Management Specialization . This seven-course program takes about two months to complete and can count towards a degree or graduate certificate from the University of Illinois.

Article sources

US Bureau of Labor Statistics. “ Occupational Outlook Handbook: Human Resources Managers , https://www.bls.gov/ooh/management/human-resources-managers.htm.” Accessed July 13, 2023. 

Zippia. “ Human Resources Manager Education Requirements , https://www.zippia.com/human-resources-manager-jobs/education/.” Accessed July 13, 2023.

Glassdoor. " Company ratings by category , https://www.glassdoor.com/Explore/browse-companies.htm?overall_rating_low=4.5&page=1&occ=Hr%20Manager&filterType=RATING_OVERALL." Accessed July 27, 2023.

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This content has been made available for informational purposes only. Learners are advised to conduct additional research to ensure that courses and other credentials pursued meet their personal, professional, and financial goals.

10+ SAMPLE HR Business Plan in PDF

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2.1 Strategic Planning

Learning objectives.

• Explain the differences been HRM and personnel management.
• Be able to define the steps in HRM strategic planning.

In the past, human resource management (HRM) was called the personnel department. In the past, the personnel department hired people and dealt with the hiring paperwork and processes. It is believed the first human resource department was created in 1901 by the National Cash Register Company (NCR). The company faced a major strike but eventually defeated the union after a lockout. (We address unions in Chapter 12 “Working with Labor Unions” .) After this difficult battle, the company president decided to improve worker relations by organizing a personnel department to handle grievances, discharges, safety concerns, and other employee issues. The department also kept track of new legislation surrounding laws impacting the organization. Many other companies were coming to the same realization that a department was necessary to create employee satisfaction, which resulted in more productivity. In 1913, Henry Ford saw employee turnover at 380 percent and tried to ease the turnover by increasing wages from $2.50 to $5.00, even though $2.50 was fair during this time period (Losey, 2011). Of course, this approach didn’t work for long, and these large companies began to understand they had to do more than hire and fire if they were going to meet customer demand.

More recently, however, the personnel department has divided into human resource management and human resource development, as these functions have evolved over the century. HRM is not only crucial to an organization’s success, but it should be part of the overall company’s strategic plan, because so many businesses today depend on people to earn profits. Strategic planning plays an important role in how productive the organization is.

Table 2.1 Examples of Differences between Personnel Management and HRM

Most people agree that the following duties normally fall under HRM. Each of these aspects has its own part within the overall strategic plan of the organization:

• Staffing. Staffing includes the development of a strategic plan to determine how many people you might need to hire. Based on the strategic plan, HRM then performs the hiring process to recruit and select the right people for the right jobs. We discuss staffing in greater detail in Chapter 4 “Recruitment” , Chapter 5 “Selection” , and Chapter 6 “Compensation and Benefits” .
• Basic workplace policies. Development of policies to help reach the strategic plan’s goals is the job of HRM. After the policies have been developed, communication of these policies on safety, security, scheduling, vacation times, and flextime schedules should be developed by the HR department. Of course, the HR managers work closely with supervisors in organizations to develop these policies. Workplace policies will be addressed throughout the book.
• Compensation and benefits. In addition to paychecks, 401(k) plans, health benefits, and other perks are usually the responsibility of an HR manager. Compensation and benefits are discussed in Chapter 6 “Compensation and Benefits” and Chapter 7 “Retention and Motivation” .
• Retention. Assessment of employees and strategizing on how to retain the best employees is a task that HR managers oversee, but other managers in the organization will also provide input. Chapter 9 “Successful Employee Communication” , Chapter 10 “Managing Employee Performance” , and Chapter 11 “Employee Assessment” cover different types of retention strategies, from training to assessment.
• Training and development. Helping new employees develop skills needed for their jobs and helping current employees grow their skills are also tasks for which the HRM department is responsible. Determination of training needs and development and implementation of training programs are important tasks in any organization. Training is discussed in great detail in Chapter 9 “Successful Employee Communication” , including succession planning. Succession planning includes handling the departure of managers and making current employees ready to take on managerial roles when a manager does leave.
• Regulatory issues and worker safety. Keeping up to date on new regulations relating to employment, health care, and other issues is generally a responsibility that falls on the HRM department. While various laws are discussed throughout the book, unions and safety and health laws in the workplace are covered in Chapter 12 “Working with Labor Unions” and Chapter 13 “Safety and Health at Work” .

In smaller organizations, the manager or owner is likely performing the HRM functions (de Kok & Uhlaner, 2001). They hire people, train them, and determine how much they should be paid. Larger companies ultimately perform the same tasks, but because they have more employees, they can afford to employ specialists, or human resource managers, to handle these areas of the business. As a result, it is highly likely that you, as a manager or entrepreneur, will be performing HRM tasks, hence the value in understanding the strategic components of HRM.

HRM vs. Personnel Management

Human resource strategy is an elaborate and systematic plan of action developed by a human resource department. This definition tells us that an HR strategy includes detailed pathways to implement HRM strategic plans and HR plans. Think of the HRM strategic plan as the major objectives the organization wants to achieve, and the HR plan as the specific activities carried out to achieve the strategic plan. In other words, the strategic plan may include long-term goals, while the HR plan may include short-term objectives that are tied to the overall strategic plan. As mentioned at the beginning of this chapter, human resource departments in the past were called personnel departments. This term implies that the department provided “support” for the rest of the organization. Companies now understand that the human side of the business is the most important asset in any business (especially in this global economy), and therefore HR has much more importance than it did twenty years ago. While personnel management mostly involved activities surrounding the hiring process and legal compliance, human resources involves much more, including strategic planning, which is the focus of this chapter. The Ulrich HR model, a common way to look at HRM strategic planning, provides an overall view of the role of HRM in the organization. His model is said to have started the movement that changed the view of HR; no longer merely a functional area, HR became more of a partnership within the organization. While his model has changed over the years, the current model looks at alignment of HR activities with the overall global business strategy to form a strategic partnership (Ulrich & Brockbank, 2005). His newly revised model looks at five main areas of HR:

• Strategic partner. Partnership with the entire organization to ensure alignment of the HR function with the needs of the organization.
• Change agent. The skill to anticipate and respond to change within the HR function, but as a company as a whole.
• Administrative expert and functional expert. The ability to understand and implement policies, procedures, and processes that relate to the HR strategic plan.
• Human capital developer. Means to develop talent that is projected to be needed in the future.
• Employee advocate . Works for employees currently within the organization.

According to Ulrich (Ulrich, 2011), implementation of this model must happen with an understanding of the overall company objectives, problems, challenges, and opportunities. For example, the HR professional must understand the dynamic nature of the HRM environment, such as changes in labor markets, company culture and values, customers, shareholders, and the economy. Once this occurs, HR can determine how best to meet the needs of the organization within these five main areas.

To be successful in writing an HRM strategic plan, one must understand the dynamic external environment.

HRM as a Strategic Component of the Business

(click to see video)

David Ulrich discusses the importance of bringing HR to the table in strategic planning.

Keeping the Ulrich model in mind, consider these four aspects when creating a good HRM strategic plan:

• Make it applicable. Often people spend an inordinate amount of time developing plans, but the plans sit in a file somewhere and are never actually used. A good strategic plan should be the guiding principles for the HRM function. It should be reviewed and changed as aspects of the business change. Involvement of all members in the HR department (if it’s a larger department) and communication among everyone within the department will make the plan better.
• Be a strategic partner. Alignment of corporate values in the HRM strategic plan should be a major objective of the plan. In addition, the HRM strategic plan should be aligned with the mission and objectives of the organization as a whole. For example, if the mission of the organization is to promote social responsibility, then the HRM strategic plan should address this in the hiring criteria.
• Involve people. An HRM strategic plan cannot be written alone. The plan should involve everyone in the organization. For example, as the plan develops, the HR manager should meet with various people in departments and find out what skills the best employees have. Then the HR manager can make sure the people recruited and interviewed have similar qualities as the best people already doing the job. In addition, the HR manager will likely want to meet with the financial department and executives who do the budgeting, so they can determine human resource needs and recruit the right number of people at the right times. In addition, once the HR department determines what is needed, communicating a plan can gain positive feedback that ensures the plan is aligned with the business objectives.
• Understand how technology can be used. Organizations oftentimes do not have the money or the inclination to research software and find budget-friendly options for implementation. People are sometimes nervous about new technology. However, the best organizations are those that embrace technology and find the right technology uses for their businesses. There are thousands of HRM software options that can make the HRM processes faster, easier, and more effective. Good strategic plans address this aspect.

HR managers know the business and therefore know the needs of the business and can develop a plan to meet those needs. They also stay on top of current events, so they know what is happening globally that could affect their strategic plan. If they find out, for example, that an economic downturn is looming, they will adjust their strategic plan. In other words, the strategic plan needs to be a living document, one that changes as the business and the world changes.

A good HRM strategic plan acknowledges and addresses the use of software in HRM operations.

Howard Russell – Lefroy House – CC BY-NC-ND 2.0.

Human Resource Recall

Have you ever looked at your organization’s strategic plan? What areas does the plan address?

The Steps to Strategic Plan Creation

As we addressed in Section 2.1.2 “The Steps to Strategic Plan Creation” , HRM strategic plans must have several elements to be successful. There should be a distinction made here: the HRM strategic plan is different from the HR plan. Think of the HRM strategic plan as the major objectives the organization wants to achieve, while the HR plan consists of the detailed plans to ensure the strategic plan is achieved. Oftentimes the strategic plan is viewed as just another report that must be written. Rather than jumping in and writing it without much thought, it is best to give the plan careful consideration.

The goal of Section 2 “Conduct a Strategic Analysis” is to provide you with some basic elements to consider and research before writing any HRM plans.

Conduct a Strategic Analysis

A strategic analysis looks at three aspects of the individual HRM department:

Understanding of the company mission and values. It is impossible to plan for HRM if one does not know the values and missions of the organization. As we have already addressed in this chapter, it is imperative for the HR manager to align department objectives with organizational objectives. It is worthwhile to sit down with company executives, management, and supervisors to make sure you have a good understanding of the company mission and values.

Another important aspect is the understanding of the organizational life cycle. You may have learned about the life cycle in marketing or other business classes, and this applies to HRM, too. An organizational life cycle refers to the introduction, growth, maturity, and decline of the organization, which can vary over time. For example, when the organization first begins, it is in the introduction phase, and a different staffing, compensation, training, and labor/employee relations strategy may be necessary to align HRM with the organization’s goals. This might be opposed to an organization that is struggling to stay in business and is in the decline phase. That same organization, however, can create a new product, for example, which might again put the organization in the growth phase. Table 2.2 “Lifecycle Stages and HRM Strategy” explains some of the strategies that may be different depending on the organizational life cycle.

Understanding of the HRM department mission and values. HRM departments must develop their own departmental mission and values. These guiding principles for the department will change as the company’s overall mission and values change. Often the mission statement is a list of what the department does, which is less of a strategic approach. Brainstorming about HR goals, values, and priorities is a good way to start. The mission statement should express how an organization’s human resources help that organization meet the business goals. A poor mission statement might read as follows: “The human resource department at Techno, Inc. provides resources to hiring managers and develops compensation plans and other services to assist the employees of our company.”

A strategic statement that expresses how human resources help the organization might read as follows: “HR’s responsibility is to ensure that our human resources are more talented and motivated than our competitors’, giving us a competitive advantage. This will be achieved by monitoring our turnover rates, compensation, and company sales data and comparing that data to our competitors” (Kaufman, 2011). When the mission statement is written in this way, it is easier to take a strategic approach with the HR planning process.

• Understanding of the challenges facing the department. HRM managers cannot deal with change quickly if they are not able to predict changes. As a result, the HRM manager should know what upcoming challenges may be faced to make plans to deal with those challenges better when they come along. This makes the strategic plan and HRM plan much more usable.

Table 2.2 Lifecycle Stages and HRM Strategy

Source: Seattle University Presentation , accessed July 11, 2011, http://fac-staff.seattleu.edu/gprussia/web/mgt383/HR%20Planning1.ppt .

Identify Strategic HR Issues

In this step, the HRM professionals will analyze the challenges addressed in the first step. For example, the department may see that it is not strategically aligned with the company’s mission and values and opt to make changes to its departmental mission and values as a result of this information.

Many organizations and departments will use a strategic planning tool that identifies strengths, weaknesses, opportunities, and threats (SWOT analysis) to determine some of the issues they are facing. Once this analysis is performed for the business, HR can align itself with the needs of the business by understanding the business strategy. See Table 2.3 “Sample HR Department SWOT Analysis for Techno, Inc.” for an example of how a company’s SWOT analysis can be used to develop a SWOT analysis for the HR department.

Once the alignment of the company SWOT is completed, HR can develop its own SWOT analysis to determine the gaps between HR’s strategic plan and the company’s strategic plan. For example, if the HR manager finds that a department’s strength is its numerous training programs, this is something the organization should continue doing. If a weakness is the organization’s lack of consistent compensation throughout all job titles, then the opportunity to review and revise the compensation policies presents itself. In other words, the company’s SWOT analysis provides a basis to address some of the issues in the organization, but it can be whittled down to also address issues within the department.

Table 2.3 Sample HR Department SWOT Analysis for Techno, Inc.

Prioritize Issues and Actions

Based on the data gathered in the last step, the HRM manager should prioritize the goals and then put action plans together to deal with these challenges. For example, if an organization identifies that they lack a comprehensive training program, plans should be developed that address this need. (Training needs are discussed in Chapter 8 “Training and Development” .) An important aspect of this step is the involvement of the management and executives in the organization. Once you have a list of issues you will address, discuss them with the management and executives, as they may see other issues or other priorities differently than you. Remember, to be effective, HRM must work with the organization and assist the organization in meeting goals. This should be considered in every aspect of HRM planning.

Draw Up an HRM Plan

Once the HRM manager has met with executives and management, and priorities have been agreed upon, the plans are ready to be developed. Detailed development of these plans will be discussed in Section 2.2 “Writing the HRM Plan” . Sometimes companies have great strategic plans, but when the development of the details occurs, it can be difficult to align the strategic plan with the more detailed plans. An HRM manager should always refer to the overall strategic plan before developing the HRM strategic plan and HR plans.

Even if a company does not have an HR department, HRM strategic plans and HR plans should still be developed by management. By developing and monitoring these plans, the organization can ensure the right processes are implemented to meet the ever-changing needs of the organization. The strategic plan looks at the organization as a whole, the HRM strategic plan looks at the department as a whole, and the HR plan addresses specific issues in the human resource department.

Key Takeaways

• Personnel management and HRM are different ways of looking at the job duties of human resources. Twenty years ago, personnel management focused on administrative aspects. HRM today involves a strategic process, which requires working with other departments, managers, and executives to be effective and meet the needs of the organization.
• In general, HRM focuses on several main areas, which include staffing, policy development, compensation and benefits, retention issues, training and development, and regulatory issues and worker protection.
• To be effective, the HR manager needs to utilize technology and involve others.
• As part of strategic planning, HRM should conduct a strategic analysis, identify HR issues, determine and prioritize actions, and then draw up the HRM plan.
• What is the difference between HR plans and HRM strategic plans? How are they the same? How are they different?
• Of the areas of focus in HRM, which one do you think is the most important? Rank them and discuss the reasons for your rankings.

de Kok, J. and Lorraine M. Uhlaner, “Organization Context and Human Resource Management in the Small Firm” (Tinbergen Institute Discussion Papers 01-038/3, Tinbergen Institute, 2001), accessed August 13, 2011, http://ideas.repec.org/s/dgr/uvatin.html .

Kaufman, G., “How to Fix HR,” Harvard Business Review , September 2006, accessed July 11, 2011, http://hbr.org/2006/09/how-to-fix-hr/ar/1 .

Losey, M., “HR Comes of Age,” HR Magazine , March 15, 1998, accessed July 11, 2011, http://findarticles.com/p/articles/mi_m3495/is_n3_v43/ai_20514399 .

Ulrich, D., “Evaluating the Ulrich Model,” Acerta, 2011, accessed July 11, 2011, http://www.goingforhr.be/extras/web-specials/hr-according-to-dave-ulrich#ppt_2135261 .

Ulrich, D. and Wayne Brockbank, The HR Value Proposition (Boston: Harvard Business Press, 2005), 9–14.

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HR’s New Role

• Peter Cappelli
• Ranya Nehmeh

Though the human resources function was once a strong advocate for employees, in the 1980s things changed. As labor markets became slack, HR shifted its focus to relentless cost cutting. Because it was hard for employees to quit, pay and every kind of benefit got squeezed. But now the pendulum has swung the other way. The U.S. unemployment rate has been below 4% for five years (except during the Covid shutdown), and the job market is likely to remain tight. So today the priorities are keeping positions filled and preventing employees from burning out. Toward that end HR needs to focus again on taking care of workers and persuade management to change outdated policies on compensation, training and development, layoffs, vacancies, outsourcing, and restructuring.

One way to do that is to show leaders what the true costs of current practices are, creating dashboards with metrics on turnover, absenteeism, reasons for quitting, illness rates, and engagement. It’s also critical to prevent employee stress, especially by addressing fears about AI and restructuring. And when firms do restructure, they should take a less-painful, decentralized approach. To increase organizational flexibility and employees’ opportunities, HR can establish internal labor markets, and to promote a sense of belonging and win employees’ loyalty, it should ramp up DEI efforts.

In this tight labor market, cost cutting is out. Championing employee concerns is in.

Idea in Brief

The pendulum swing.

For decades, when U.S. labor markets were slack, HR focused on cost cutting, which meant squeezing employees’ pay, benefits, and training. But now that labor markets are tight, the challenge is to retain workers.

The New Priorities

HR must focus on keeping positions filled and preventing employees from burning out or becoming dissatisfied.

The HR function must educate leaders about the true costs of turnover, address employee anxiety about AI and restructuring, lobby for investments in training, rethink how contract workers and vendors are used, and strengthen diversity, equity, and inclusion efforts.

From World War II through 1980 the focus of the human resources function was advocating for workers—first as a way to keep unions out of companies and later to manage employees’ development in the era when all talent was grown from within. Then things changed. Driven by the stagflation of the 1970s, the recession of the early 1980s, and more recently the Great Recession, HR’s focus increasingly shifted to relentless cost cutting. Decades of slack labor markets made slashing HR expenses easy because it was hard for people to quit. Pay and every kind of benefit, including training and development, got squeezed. Work demands went up, and job security fell.

• Peter Cappelli is the George W. Taylor Professor of Management at the Wharton School and the director of its Center for Human Resources. He is the author of several books, including Our Least Important Asset: Why the Relentless Focus on Finance and Accounting Is Bad for Business and Employees (Oxford University Press, 2023).
• Ranya Nehmeh is an HR specialist working on topics related to people strategy, human capital, leadership development, and talent management and is the author of The Chameleon Leader: Connecting with Millennials (2019).

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Human Resource Management Plan Template [Free Download]

Editorial Team

Download this free Human Resource Management Plan template and use it for your new project. Scroll down to the bottom of the page for the download link.

1          Introduction

Effective human resource management is a critical component of any project.  The Human Resource Plan explains how project processes will be used to make the most effective use of the people assigned to the project.

This section of the Human Resource Plan should provide a general description of what the plan includes and explains how the project manager and project team can use the plan to help manage project resources effectively.

The purpose of the  Human Resource Plan is to achieve project success by ensuring the appropriate human resources with the necessary skills are acquired, resources are trained if any gaps in skills are identified, team building strategies are clearly defined, and team activities are effectively managed. If used effectively, this plan will serve as a tool to aid in the management of human resource activities throughout the  until closure.

This plan includes information regarding the following topics:

• Roles and responsibilities of team members throughout the project
• Project organization charts
• How resources will be acquired
• Timeline for resources/skill sets
• Training required to develop skills
• How performance reviews will be conducted
• Recognition and rewards system

2          Roles and Responsibilities

The roles and responsibilities of team members and stakeholders must be clearly defined in any project.  Depending on the organizational structure, project team members may represent many different groups/departments and may have varying degrees of authority and responsibility.  In these circumstances, it is common for multiple roles to be assigned to the same position.  For this reason, this section is not meant to contain job descriptions, but rather a summary of responsibilities for each role.  When listing roles and responsibilities, the following should be included:

• Role – description of the portion of the project for which the member is accountable
• Description – detail of duties and definition of the roles, as they relate to the project
• Responsibility – the work a team member must perform
• Name – the name of the specific individual holding the project role

2.1                 Project Team Roles and Responsibilities

Listed below are the roles and responsibilities for the  project team:

Senior Project Director

• Plans, directs and oversees the project, and ensures that deliverables and functionality are achieved as defined in the Project Charter, funding documentation, and subsequent project plans
• Maintains accountability for the management of all resources assigned to the project
• Serves as the primary liaison between the project and the Project Sponsor and the Steering Committee

Quality Manager

• Manages both product and process quality activities for the project
• Maintains the requirements management traceability matrix
• Provides insight into project health by reviewing process and product activities for adherence to standards and plans

Technical Lead

• Manages day-to-day activities of technical staff who are engaged in the technical management aspects of the project
• Leads in the technical disciplines of the project, unlike the Senior Project Director and Project Manager who will focus on the overall project management of the project
• Partners with other IT areas to acquire appropriate technical assistance for such areas as enterprise architecture, database, software development, security, testing, configuration management, change management , release management, and other technical areas of the new system
• Provides leadership and support to technical staff that are augmented to the project throughout the project life cycle
• Provides technical support to the Senior Project Director, Project Manager, and to Enterprise Architecture to establish and execute technical policies, processes, and procedures 

   Implementation Lead

• Manages for the implementation portion of the project
• Provides implementation management leadership through planning, organizing, coordinating, and monitoring implementation activities
• Effectively manages all information technology resources assigned by the project manager
• Interfaces directly with contractors to ensure technical obligations satisfy all objectives and expectations

Application Support Lead

• Oversees and coordinates the change request process for installed software and for ensuring the change requests adhere to specified quality and configuration standards
• Manages application design sessions and walkthroughs, application change management processes and acceptance testing of application changes
• Monitors consultant performance of application support and ensures that the consultant maintains quality control
• Coordinates the testing of the new system
• Works with the Quality Management staff to design test cases and data that will best represent “real-life” scenarios for the system
• Coordinates interface tests with other organizations (county, state, federal) as needed
• Plans, monitors, and evaluates consultant and agency test plans, problem reporting, and resolution process

Configuration Lead

• Supports the Technical Lead by administering the Configuration Management process
• Coordinates the control of all non-product related configuration items
• Manages and coordinates the product related configuration items
• Conducts configuration audits
• Works with Change and Release Management teams for approval to release programs and configuration modifications into the production environment

Operations Lead

• Coordinates and oversees the operations of the new system
• Monitors contractor management of operations and resolution of operations support problems

2.2                 Project Stakeholders Roles & Responsibilities

Listed below are the roles and responsibilities for the  project stakeholders:

Project Sponsor

• Provides vision, direction, and policy leadership for the project
• Assists in removing barriers and supports change management initiatives
• Participates in the Steering Committee, and provides support to this group as needed
• Has overall authority for the project 
• Responsible for ensuring that deliverables and functionality are achieved as defined in the Project Charter and subsequent project plans

Steering Committee

• Acts as the Project stakeholders group
• Ensures that the deliverables and functionality of the project are achieved as defined in the project initiation documents and subsequent project management plans
• Provides high-level project direction, receives project status updates, and addresses and resolves issues, risks, or change requests

Independent Verification and Validation (IV&V)

• Provides independent, technical review and verification of project deliverables, as well as independent testing and auditing of project deliverables against requirements
• Performs deliverable quality assurance and information security control reviews

Department of Finance & Administration Representative

• Provides oversight and approval of funding for state planned IT projects

3          Project Organizational Charts

This section should provide a graphic display of the project tasks and team members.  The purpose of this information is to illustrate the reporting structure and responsibilities of team members as they relate to the project tasks. 

Tools such as the Responsible/Accountable/Consulted/Informed (RACI) matrix or Responsibility Assignment Matrix (RAM) may be used to aid in communicating roles and responsibilities for the project team.  Additionally, organizational or resource breakdown structures may be used to show how responsibilities are assigned by department or by type of resource respectively.  The level of detail may vary depending on project complexity.

The graphic below provides a representation of the reporting structure for .

Table 1: Reporting structure

The following RACI chart shows the relationship between project tasks and team members.  Any proposed changes to project responsibilities must be reviewed and approved by the Project Manager.  Changes will be proposed in accordance with the project’s change control process.  As changes are made, all project documents will be updated and redistributed accordingly.

Table 2: RACI chart

R – Responsible for completing the work

A – Accountable for ensuring task completion/sign off

C – Consulted before any decisions are made

I – Informed of when an action/decision has been made

4          Staffing Management

Staffing management relates to all of the reasons staffing is needed, timing of adding and releasing staff as well as training and gap assessment of current staff.  This section should contain samples of the following: how human resources will be acquired; the timeline for resource additions and releases; training solutions for any resources with identified skill gaps; how performance reviews will be performed; rewards and recognition systems to be used.  It is important to note that, depending on the scope of the project, there may be other circumstances to consider such as government and/or regulatory compliance issues, organizational health and safety, etc. 

Day-to-day management of the project staff for  is the responsibility of the Senior Project Director and designated functional managers.  Performance evaluations, performance issues and recognition, promotions, and disciplinary actions are the responsibility of the state staff respective organizational chain of command.

Staff Acquisition

The Senior Project Director, with support from the Executive Sponsor, will negotiate with functional and department managers to identify and assign resources in accordance with the project organizational structure approved in the project charter.  This plan shall also identify various external sourcing mechanisms to hire new project resources.  All resources and their anticipated project assignment timeframe must be approved by the appropriate functional/department manager before the resource may begin any project work.  The project team must be co-located at the  site.

Resource Calendars 

The  Project will last for {insert timeline}.  The chart below provides an estimate of the number of resources required per month for the project.

Figure 1: Resource calendar

Vendor/State Partnering Approach

For  the team will implement a model in which the agency project team is expected to work side by side with the vendor to deliver the project.  This partnership will facilitate the training & knowledge transfer process to prepare the agency project team to operationalize and own the solution after the solution implementation. 

Though vendors are important and are used to implement project products, the State has responsibility for overall review and approval for work produced by vendors.  Additionally, knowledge transfer of vendor expertise to State staff is required on all projects throughout the project lifecycle, rather than waiting to transition information at the end of a project.

5          Project Team Training

This section should highlight training needs specific to this project, and should include a high-level project team training plan.  If applicable, this section may also include information such as training topics and delivery mechanisms, schedule, cost, expectations, etc.

Staff Training

When new staff joins the project, the Senior Project Director (or delegated project staff) will provide a project orientation.  The orientation should include discussions related to the following topics:

• Background of the Project
• Current Status of the Project
• Specific Job Duties and Expectations
• Introduction to the Staff and Consultants
• Overview of the Facility and Infrastructure
• Overview of the Project Processes, including time reporting, attendance, and status meetings

Performance Reviews

The functional manager will review each team member’s assigned work activities at the onset of the project and communicate all expectations of work to be performed.  The functional manager will then evaluate each team member throughout the project to evaluate their performance and how effectively they are completing their assigned work. Prior to releasing project resources, the project manager will meet with the appropriate functional manager and provide feedback on employee project performance. The functional managers will then perform a formal performance review on each team member.

Recognition and Rewards

Although the scope of this project does not allow for monetary rewards, there are several planned recognition and reward items for project team members.  The Senior Project Director will work with appropriate agency executive staff to identify potential opportunities and tools for creative recognition and rewards.

Suggested Rewards:

• Upon successful completion of the Project, celebration of the success of each team member
• Upon successful completion of the project, any team member who satisfactorily completed all assigned work packages on time will receive a certificate of thanks from the Executive Sponsor
• Team members who successfully complete all of their assigned tasks will have their photo taken for inclusion in the company newsletter

Click  here  to download Human Resource Management Plan template.

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