What is Human Resource Planning (HRP)?

If your business is suddenly short on key resources, is it prepared to fill that gap? If you answered no to this, you might need to improve your human resource planning. 

But what is human resource planning? Keep reading to find out, and learn how you can implement a human resource plan and improve your business. 

What is Human Resource Planning?

Human resource planning (HRP) is planning to achieve optimal use of an organisation’s workforce in a structured and systematic way that is simple for organisations to follow and put into action when necessary.

Proper HRP ensures the best fit with jobs and employees to allow the organisation to run smoothly. With good HRP, you can avoid shortages or surpluses in manpower that could be detrimental to your organisation.

Now that you know what human resource planning is, you’re ready to implement this process into your own small business. 

5 Ways Human Resource Planning Can Help Your Business

Every small business should take advantage of human resource planning to optimise their business processes and ensure that they’re prepared to overcome sudden changes. There are several ways that performance management and human resource planning can enhance your business and ensure that every employee works to full efficiency. 

To help you get started, here are five steps to implement HRP into your small business. 

  1. Analyse Your Organisational Plans and Strategic Objectives 

The first step towards good HRP is looking at your organisation’s current plans and strategic objectives. Determine whether you’re still in line with the current objectives or if it’s time to adjust your goals or how you reach them.

For example, look at each current employee and their skills. Is there room to add their current skills to meet anticipated future needs? Likewise, there may be opportunities to leverage other underused skills in other parts of your business. Talk to your employees to determine how you can work together towards your business and their personal objectives. 

1. Prepare a Human Resources Inventory

Once you’ve analysed your current organisational plans and taken a look at your employees, you should make sure to create an HR personnel or human capital inventory. This is a crucial part of HRP and keeping organised.

Create a list describing each current employee. Be sure to include details such as:

  • Skills
  • Experience
  • Education
  • Job preferences

Assess what skills your trade needs to give exceptional service to your customers. To help with this, ask yourself: what are your top competitors or industry leaders offering?

Match the talent and experience you need with your existing employees in your human capital inventory. If you find you’re missing some skills, determine whether there’s an opportunity to improve the skills of one of your employees or if you have to expand your workforce to close that gap. 

2. Assess Future Supply and Demand 

Another way that human resources planning can help your business is by encouraging you to be proactive and assess future supply and demand.

Predicting the future supply and demand of labour requires you to understand several key factors: 

  • Your business requirements
  • Your current resource capabilities
  • The current supply of talent in the market

These three elements will help you determine the current supply and demand and the future needs for your own business. 

For example, a plumbing business could look at its annual supply and demand to get an idea of the current market and ask their industry association for data.

3. Match Supply and Demand

Once you have an idea of the current supply and demand and what the future human resource needs may be, you can plan accordingly. Matching the current supply and demand to your HR planning is a key step in creating a robust and accurate plan.

Large buildings are one of the biggest types of projects that need to make use of good HRP and understand the supply and demand of current resources, as these projects often take several years. 

For example, private developer Built and Irongate Group have partnered to build a 6-star hotel on Phillip Street in Sydney. This large project started in 2017 when Built purchased the space and should be completed in 2024. Workforce planning and anticipation in the changes in resource supply and demand played a role in being on track to finish this development on time and enabling them to adjust the schedule as necessary.

4. Establish an Action Plan 

The last step towards optimal HRP is establishing a strategic plan of action, where surplus and shortages come into play.

For this phase, have an established set of activities to execute in your HR planning when necessary. What’s involved here is essentially several steps towards preparing a new employee, including:

  • Recruitment 
  • Resource selection
  • Placement of the resource
  • Training

To use an allied health business as an example, they would have a constant understanding of the supply and demand for health professionals. Once they realise there’s a gap in their manpower planning, they would typically go through a recruitment process involving interviews and reviewing experience. Once they select the right resource, an HR strategy should be in place to train the resource in a specific timeline.


HRP essentially allows a business to plan to maintain a steady supply of skilled workers. Hopefully, you now have enough of an idea of what human resources planning to get started on your own strategic plan.

If you’re stuck in the human resource planning process, consider an HR audit. Contact us to get started.

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