The human resources department performs vital functions for employers, including setting hiring budgets, creating benefits packages, posting jobs and recruiting top talent. One major, yet poorly understood, aspect of HR involves workforce planning. This emerging concept is part of a trend to create a different image for HR due to changes in the way companies hire workers.
The Next Generation
Human resources manages an enormous amount of money with respect to a firm's overall spending. Labor costs amount to as much as 70 percent of an employer's overhead. Therefore, workforce planning can save on business expenses with the proper strategy. The first aspect of this strategy comes from knowing the labor market's basic statistics.
Fewer and fewer Americans are participating in the labor pool. This creates shortages across industries such as transportation, health care and energy. Two main drivers, including retiring baby boomers and automated technology that replaces some types of labor, may cause these worker shortages to increase by 2025. That's where human resources comes into play, as companies should develop plans to combat fewer workers looking for jobs.
Data, Data and More Data
HR can use data and analytics that connect talent and hiring to actual business results. When human resources has more data and knows how to analyze it, staffers can make better hiring decisions that lead to higher profits. Better programs, faster computers and the right type of analytics makes the jobs of HR staffers easier and more efficient. Company leaders should invest in the right tools because when HR saves money by making the right hires, the firm lowers its expenses.
Utilizing the data for hiring should align with the goals of company executives. The organization must have the optimal amount of employees trained with the right knowledge if it intends to grow. Human resources can assess whether the firm should hire more people or train the ones it has on hand. HR runs cost analyses and projections and assesses the amount of time it takes to achieve these goals to determine what course of action to take. It might be faster to hire five new people with the right skills, even though this option is more expensive compared to providing a six-month training course for employees. However, those factors depend on when the company needs those skilled workers to come on board.
Traditionally, finance departments come up with strategic funding plans for companies. Firms might consider switching that role to HR because finance departments crunch numbers to determine if staffing budgets can cope with a firm's labor shortages versus cost overruns without taking into account human capital. Leaders need to train or hire HR staff familiar with finance so employers can combine elements of onboarding the right talent with the expenses associated with moving the company forward in the right direction. This makes the right analytics software even more vital as HR personnel seek ways to make the proper hiring decisions.
The role of human resources is no longer just about hiring, firing and benefits packages. This department plays a crucial part in how firms derive revenue and profits through a combination of data analyzing, knowing what types of people to hire and planning several years down the road.
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