Guide to Developing a Personnel Plan

A people plan is an essential component of your business strategy and Financial Planning. In addition to assisting you in budgeting for current and prospective employees, your personnel strategy allows you to consider who to hire and when to hire them.

What is a Personnel Plan?

A Personnel Plan is a document that details an organization’s staffing needs, goals, and workforce management practices. It is an essential component of human resource management and serves as a road map for employee recruitment, selection, training, development, retention, and management.

A Personnel Plan is an essential component of any start-up or entrepreneur’s business plan. It will aid you in your financial predictions, allowing you to anticipate the best periods to hire and expand.

When presenting for funding to angel investors or venture capitalists, they will want to see why your team is uniquely equipped to grow and scale your firm, as well as your hiring strategy.

Investors will be interested in learning:

What positions do you require?
When do you intend to fill them?
How much will it cost to assemble the team you require?

What should you put in your Personnel Plan section?

The people who execute the work—your team—are both the most expensive and most important asset for many startups and small businesses. It stands to reason that hiring the appropriate individual at the right moment can have a big impact on your company’s ability to accomplish milestones and goals, not to mention cash flow.

A healthy Personnel Plan includes strategic thinking about human resources, such as whether to expand roles, and salary levels, and whether to hire full-time or on a contract basis.

So, whether you’re looking for investment or not, developing a people plan and forecast is an important aspect of business planning and strategic planning for your company’s long-term success. Look at the 9 critical phases of developing an investor-ready Personnel Plan.

What is the composition of your management team?

Typically, the “team” portion of your business plan will include an overview of the main jobs in your organization as well as the backgrounds of the people who will fill those critical responsibilities. You will highlight each of your company’s executive positions before speaking more broadly about other departments and teams.

Keep it brief.

You do not need to submit whole resumes for each team member; a brief overview of why each person is qualified for the position is sufficient. Describe each individual’s talents and expertise, as well as what they will do for the company.

Highlight your team’s strengths. How do they bolster your group’s strength? What is their special knowledge and experience in your (or a related) industry? If your market research uncovered a fantastic opportunity, why are you the best team to capitalize on it?

This part helps potential investors understand why each team member is critical to the company’s success. It serves as the rationale for their wage and ownership stake in the company if they are part owners.

How is the organizational structure defined?

Your company’s organizational structure is typically portrayed as an “org chart” that indicates who reports to whom and who is accountable for what.

However, you do not need to construct a graphic org chart; simply defining your organization in the text is sufficient. Simply demonstrate that your organization has a well-defined structure.

Is authority divided fairly among the team members? Do you have the resources to do all of the tasks required to expand your business?

You should also explain the many teams that your organization will have in the future. Sales, customer service, product development, marketing, production, and so on are examples.

You don’t have to hire all of these employees right away. Consider this section to be an outline of what you intend to do with your firm in the future.

Compile a list of your advisors, consultants, and board members

External advisers, board members, and even consultants can play an important role in determining a corporate strategy for some organizations. These individuals may even temporarily fill crucial positions as your company grows. You should include a list of these individuals in your Personnel Plan if this is the case. Give a brief background on each main advisor that outlines the value they give, just like you would for your management team.

You don’t have to include your advisors if they don’t play essential roles or aren’t critical to your achievement. However, include anyone who adds significant value to the organization through advice, contacts, or operational skills.

Explain the gaps

It’s normal for your team to have gaps, especially if you’re a startup. You may not yet have identified all of the “right” team members, or you may not yet have the cash to hire for critical roles. That’s OK.

The trick is to recognize that you do have gaps on your team—this is how you determine who to employ and when to hire them. Furthermore, it is far better to describe and recognize team deficiencies than to pretend that you have all of the critical responsibilities that you require. Explain where your organization is weak and how you intend to address the issue as you develop in your business strategy.

Although it may be tempting to conceal potential weaknesses from investors, they will see right through you. It is far preferable to be open and honest about where you have management gaps and your Personnel Strategy to remedy those gaps. You want them to know you’ve identified and planned for dangers.

You should also bear in mind that your Personnel Plan may wear many hats in the early days of a company, but specialization will occur as the company expands.

For example, the CEO may initially also be the VP of Sales. However, the job of VP of Sales should eventually be filled by a specialist to take on that task. Include modifications like these in your personnel plan to show investors that you understand how your company will expand and scale.

What are your personnel requirements?

Outline the company’s personnel requirements, including the number and types of people required to run the business successfully. The credentials and skills required for each post should also be included.

Here you may identify your team’s shortcomings and vulnerabilities, ensuring that you have a competent grasp of the roles and duties that will be crucial to the business in the future – even if they are not currently in existence. Investors are ready to highlight “perfect” people strategies, so you should embrace the fact that you have recognized staffing hazards.

For example, your head of customer service may also be your head of sales, but these two responsibilities will need to be split in the future.

How will recruitment and training be carried out?

This section should explain how the company intends to recruit and train personnel, including any training programs or on-the-job training.

What are the remuneration and benefits?

Outline the salary and benefits packages that will be provided to employees, including salaries, bonuses, health insurance, retirement plans, and any other perks or incentives.

Describe your Human Resources policies

Explain the company’s policies on topics such as employee performance reviews, disciplinary procedures, and termination procedures.

Estimate your personnel costs

Most Personnel Plans should include a personnel table to anticipate labor costs. Here are some expenses to keep in mind when forecasting.

Labor costs, both direct and indirect

You should include both direct expenses, which are often salary, and indirect expenses, which include:

Paid vacation
Benefits
Insurance and healthcare
Payroll expenses

As well as any extra fees you incur for each employee in addition to their compensation. Here’s an example of a personnel prediction:

Guide to Developing a Personnel Plan — Source: Liveplan

Employee-related expenses and the burden rate

The indirect costs of staff are known by various names. Still, Innovature BPO will refer to it as a “burden rate” or “employee-related expenses”, as it is an expense in addition to direct wages and salary. Payroll taxes, worker’s compensation insurance, health insurance, and other benefits and taxes are common examples of these costs.

Don’t worry about calculating the correct burden rate for company planning objectives. Estimate it instead as a proportion of total monthly compensation. A range of 15% to 25% is normally appropriate, but it depends on the type of benefits you intend to provide.

Individuals and groups of individuals can both be listed in your Personnel Plan. You should certainly mention key people and other highly paid employees but put other departments or groups of people together. For example, you may include your management team but then group departments such as marketing, customer service, and manufacturing together.

Then factor in your employee costs for benefits and insurance. In the example personnel table above, this is referred to as “Employee-Related Expenses.”

The whole quantity of your salary and personnel load will then be included as an item in your profit and loss prediction. Assume you’re using HR management software to create a Personnel Prediction. This software explains where you’ll see personnel costs on your cash flow statement, profit and loss (income statement), and balance sheet.

Is it necessary to Personnel Plan in a company strategy if you have no employees?

Even if you don’t currently have any employees, having a Personnel Plan is useful to your firm in the long run.

You may find it difficult to scale your firm or respond to changes in your sector or market if you do not have a Personnel Plan. For example, if you need to hire someone immediately to fill a key function, you may not know where to begin or what qualifications to search for.

Developing a Personnel Plan can also assist you in clarifying your company’s aims and objectives. You can better prioritize and focus on the critical tasks that must be completed by establishing the roles and responsibilities required to fulfill those goals.

As a result, even if you don’t currently have any employees, it’s a good idea to build a Personnel Plan to help you prepare for future growth and ensure that you have the correct team in place to support your business objectives.

Is there an easy approach to forecasting a Personnel Plan?

Personnel Plan is a time-consuming process that necessitates careful consideration of what needs to happen in your company and where you want it to go. Typically, this necessitates a lengthy process of spreadsheets and mathematics to determine who needs to work with you and at what expense.

A financial modeling tool can ensure that this component of your business strategy, along with other critical components, is easily constructed, requiring only a few data entries to be entered throughout the software. Currently, on the market, there are quite a few tools to support Personnel plans and personnel management. Let’s enjoy!

Personnel Plan is an important aspect of the business planning process because it forces you to consider what needs to be done in your company and who will do it. Take the time to work through this section of your financial plan, and you’ll have a lot better idea of what it will take to make your firm a success.

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