When the labor market changes the supply of qualified workers may grow, shrink, or change in nature. To prepare for and respond to these challenges, organizations engage in human resource planning—identifying the numbers and types of employees the organization will require to meet its objectives. Human resource planning requires knowledge of recent trends and practices, including downsizing, employing temporary workers, and outsourcing. Recruiting is the process by which organizations look for people to fill job vacancies.

To meet business objectives and gain an advantage over competitors, organizations should carry out human resource planning. To do this, organizations need a clear idea of the strengths and weaknesses of their existing internal labor force. They also must know what they want to be doing in the future. Human resource planning compares the present state of the organization with its goals for the future, then identifies what changes it must make in its human resources to meet those goals.

The changes may include downsizing, training existing employees in new skills, or hiring new employees. The process consists of three stages: forecasting, goal setting and strategic planning, and program implementation and evaluation. In personnel forecasting, the HR professional tries to determine the supply of and demand for various types of human resources. The primary goal is to predict which areas of the organization will experience labor shortages or surpluses.