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Human Resource Management Process: Meaning, Importance, Steps and Tools

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24th Jun, 2023
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Human Resource Management Process: Meaning, Importance, Steps and Tools

Human resource planning (HRP) is the widely chosen path by many companies that aid in preventing workforce hurdles. This assists in the optimal utilization of current employee capacity. The HRM process not only involves utilizing the present employees but also focuses on forecasting the prospective HR requirements. Proper human resource planning involves retaining quality personnel and recruiting skilled individuals. This in turn results in employees working in roles that suit their capabilities and overall employee satisfaction. 

The human resource management process is indispensable for your company’s long-term success and proper planning and implementation is essential to achieve this. In this blog, know the HRM meaning, its importance, key HRM steps, essential HRM tools, and more. 

Understanding Human Resource Planning 

The human resource management process or shortly known as the HRM process is associated with employee payroll, talent acquisition, performance management, retention of quality workforce, employee management and more. The HRM process mainly focuses on two aspects: evaluating current employees of the company and calculating the future human resource requirement.

Accordingly, skill training is arranged for present, fresh and future employees by the HR department of the company which is concerned with human resource planning and staffing. This HR process contributes to the right talent procurement and benefits the various departments of the company that require fresh talent.  

Importance of Human Resource Planning

To uphold optimal effectiveness and business profits, hiring a suitable workforce is highly important. The right fit of personnel with the best talent and abilities brings your business growth and leverage over your competitors. This can be achieved through human resource planning and it comes with a wide range of advantages such as follows: 

Evaluates The Skills and Capabilities of Current Employees

The HR process comprehensively reviews the skills and abilities of present personnel so that each employee is assigned the role they are fit for. The human resource process also evaluates employee performance and the need for further training. Employees with the best performance can be promoted to higher positions with improved responsibilities that can expand their professional abilities. This cost-effective and time-saving HR process saves the need for interviewing and recruiting new employees. 

Anticipates And Adapts to Industry Developments

HRM process lets your company adapt to the dynamic changes and advancements in your industry resulting in the business prosperity in the long term. This can help you to decide whether there is any necessity for new roles in your company. If so, you could hire fresh personnel capable of handling business operations in new marketing niches.  

Assists The Company to Stay Competitive

Survival of business in the long term calls for maintaining competitiveness and gaining leverage over your competitors in the market. The HR process can contribute to this by hiring the right people at the right time by providing the right incentives. The human resource process designs the finest hiring techniques, attractive work terms, job training, reasonable remuneration, work-life balance, and more that are attractive to both current and future employees. 

Ensures The Company’s Long-Term Growth

The HR process also takes into account the inevitable future changes and allows you to design the hiring plans accordingly contributing to the company’s long-term success. As a responsible HR professional, if you are trying to accelerate your career growth along with your company’s growth, the Professional Certificate Program in HRM & Analytics from IIMK is the right course you are looking for. Learn more about this course from upGrad designed by honored IIM-K.

Evolution of Human Resource Management

The human resource management process evolved from personnel management constantly over the years. It all started to transform in 1920 when Elton Mayo, the father of human resources management, studied human relations and behavior from which he found the importance of work-life balance and its relation to employee productivity. Robert Owen, the father of personnel management and creator of several social and welfare practices, introduced various working conditions that produced better results including improved employee efficiency and work satisfaction.

The year 1929 also saw the greatest transformation in the human relations movement due to the great depression where old-age pensions, minimum wages, and labor standards were established. Currently, the U.S. Office of Personnel Management (OPM) is the world’s biggest HR department. 

Check out our free courses to get an edge over the competition.

Why Managers Must Know About Human Resource Management

HR managers are responsible to get familiar with the HRM process to achieve the following: 

  • Hire the right fit for the role
  • To allow every employee to work efficiently 
  • Assign the right tasks to the right people 
  • To only conduct the quality interviews 
  • To curb any unfair and unsafe labor practices 
  • To offer reasonable pay in comparison with competitors 
  • To conduct further training whenever necessary 

You can achieve all these and more as a growing HR manager by polishing your knowledge and skills. Executive PG Program in HRM from LIBA is one such best course offered by upGrad that could positively impact your career growth. 

Key Steps in Human Resource Planning

HR managers can follow these key HR process steps and design effective working business strategies. This organized six-step plan assists any HR and helps in achieving the best results for your company. 

1. Analyzing the Business Objectives of Your Company

It is an unwritten rule that every department of the company functions to achieve the overall business objectives including the HR department. So, the first HRM process requires the HR manager to thoroughly study the business objectives and needs. By studying these needs, you can figure out the required work to do. 

2. Taking an Inventory of Your Available Human Resources

The second HR process step involves you to conduct the inventory of your present workforce. This includes considering several employees, departments, and their job positions to evaluate their contribution, qualification, performance and benefits they are receiving. This helps to identify the employees that require additional training and employees that need to exit the office. 

3. Predicting Human Resource Demand and Supply Requirements

Following the current personnel inventory, you can draw out the supply and demand forecasting of the HR requirements. This step also involves evaluating the vacancies that could arise from future retirements, job changes, promotions and layoffs. As and when your company expands into newer domains, fresh professionals might be required to fulfill the specialized business needs.  

4. Undertaking Gap Analysis

As the name suggests, gap analysis refers to the comparison of the current performance of your company to the expected performance of your personnel. The present gap between the current and expected performance can be narrowed down by implementing necessary business strategies such as providing training to present employees, offering more employee benefits, or hiring more experienced professionals. 

5. Creating A Human Resource Action Plan

A human resource action plan is essential for any HR manager to implement the required changes in your company. This helps in dealing with talent deficit or surplus. Employee redistributions, transfers, or recruitment planning might be needed in the talent deficit. In the case of a talent surplus, voluntary retirement, voluntary transfers, or voluntary layoffs might be appropriate. 

6. Monitoring the Plan and Getting Feedback

Following the implementation of the human resource action plan, its time to monitor it and request feedback from the respective department heads. This helps you to figure out whether the developed plan is fulfilling your business requirements. There might also be deficiencies which require appropriate action. 

Human Resource Planning Tools

With the right human resource planning tools, you can design an effective human resource action plan and monitor its working accordingly. There are numerous ranges of HRM technological tools available in this digital world and here are a few of them as follows: 


To effectively identify the problem areas and resolve them, surveys are very useful in this regard. These HR surveys can range from collecting data regarding employee skill levels, performance, productivity levels, the usefulness of training sessions, work satisfaction, work environment and culture. 

HR Dashboards

The HR dashboards arrange all the employee-related data in a comprehensive way that includes employee performance levels, turnover rate, productivity, skill levels, etc. This data can be collected and displayed in an organized way that can be highly helpful in the human resource planning process. 

Scenario Plans

Scenario analysis or planning requires the HR manager to identify and take into account the probable situations, driving forces and possible outcomes. This involves making informed assumptions about the company’s future and planning accordingly for the anticipated changes in a business environment. For example, job analysis in HRM includes the gathering of employee information and analyzing it along with understanding how the jobs are performed. This might assist in the future placement of jobs when the company enters new markets and advanced domains. 

Performance Management System

Employee performance matters a lot which decides the speed of ongoing business operations. Here, the performance management system comes into the picture. This is a software program used by HR managers to provide performance ratings and feedback to the personnel. This system can assist you in deciding promotions and job role alterations. The need for further training programs to level up the employees’ skills can be decided by this program. 

Human Resource Management System

The automated HRM system makes the HR manager’s task easy, convenient and cost-effective. HRM system is a software program that includes several processes and systems to enable HR, data and business process management. This software program lets the HR manager automate most of the aspects such as HR planning, compensation, benefits, payroll management, hiring decisions, recruiting plans, productivity, performance, employee skills, promotions, work hours, and more. 

Compensation and Benefits Analysis Software

Compensation and benefits analysis software is an automated program that assists in planning, organizing, managing, and directing employee benefits and compensation packages. HR managers can use this program for the HR planning process including the selection process in HRM to update salary budgets on company level, bonuses, employee performance-based incentives and more. 


With the right planning and implementation of the human resource management process, your company can gain leverage over human resource capacity including current and prospective employees. By incorporating the above key HRM steps and tools, you will be able to design the best-tailored HRM that helps in creating a positive work culture in your company. 

If you are an HR professional interested in accelerating your HR analytics journey,  or you want to take key business decisions based on the pivotal insights derived from the HRM process, the Professional Certificate Program in HRM & Analytics from IIMK from upGrad is the right course awaiting your career success. Non-HR professionals can also boost their career growth with this comprehensive course carefully designed by the prestigious IIM-K. Take the right leap and accelerate your career like never before with this in-demand course by upGrad. 




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Frequently Asked Questions (FAQs)

1Why is the human resource management process important?

HRM process deals with the overall employee management including hiring, retaining quality personnel and rewarding them. A positive workforce environment is crucial to business growth that motivates both current and future employees to work efficiently. This can be achieved by the right planning and implementation of the HR process.

2What are the key steps involved in the HRM process?

The simple six-step HRM process involves analyzing business objectives, inventory of current personnel, HR demand and supply requirements, gap analysis, human resource action plan and monitoring the plan and getting feedback.

3Which HRM tools are necessary for developing business plans?

Some of the essential HRM tools that can facilitate business strategies include HR surveys, HR dashboards, performance management systems, scenario plans, human resource management systems and compensation and benefits analysis software.

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