HR Demand Forecasting

8/10/2019 HR Demand Forecasting

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Forecasting as a Part of Human ResourceForecasting as a Part of Human Resource

PlanningPlanningDEMAND

FORECASTING

SUPPLY

FORECASTING

Determine

organizational

objectives

Demand

forecast for

each objective

Aggregatedemand

forecast

Doesaggregate

supply meet

aggregate

demand?

Go to feasibility analysis steps

Choose human

resource programs

External programs

ecruiting

External selection

Executive

exchange

!nternal programs

"romotion

#ransfer

Career planning

#raining

#urnover control

!nternal supply forecast External supply forecast

Aggregate supply

forecast$o

%es


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&ong ange

'bjectives

( "lans

'verall

e)uirements

for humanresources

*or+ force

e)uirements by

occupational categories

job s+ills etc

,hort terms goals-

plans- programes

( budgets

!nventory of

"resent .uman

esources

!nventory by

'ccupational

categories

s+ills-

Demographic

characteristics

"rocedure for

EvaluatingEffectiveness or

.uman

esources

$et $e/

.uman esource

e)uirement

&eading to

action planning0

1or ecruitment

( ,election

$eeded

$eeded

eplacement

or additions0

&eading to plans

for developing-

transferring-recruiting (

selecting

needed people

MAN POWER DEMAND FORECASTING


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Causes of Demand for HumanCauses of Demand for Human

ResourcesResources

EconomicEconomicdevelopmentsdevelopments

,ocial2,ocial2

political2legalpolitical2legalchallengeschallenges

#echnological#echnologicalchallengeschallenges

CompetitorsCompetitors

,trategic plan,trategic plan

3udgets3udgets

,ales (,ales (productionproductionforecastsforecasts

$e/ ventures$e/ ventures

'rganizational'rganizational( job design( job design

etirementsetirements

esignationsesignations

#erminations#erminations

DeathsDeaths

&eaves of&eaves ofabsenceabsence

E!erna"E!erna"Or#an$%a!$ona"Or

#an$%a!$ona" Wor&forceWor&force


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HRP and En'$ronmen!a" Scann$n#HRP and En'$ronmen!a" Scan

n$n#

Environmental ,canningEnvironmental ,canning4 #he systematic monitoring of the major external forces#he systematic monitoring of the major external forces

influencing the organization0influencing the organization0

Economic factors5 general and regional conditionsEconomic factors5 general and regional conditions

Competitive trends5 ne/ processes- services- andCompetitive trends5 ne/ processes- services- and

innovationsinnovations

#echnological changes5 robotics and office automation#echnological changes5 robotics and office automation

"olitical and legislative issues5 la/s and administrative"olitical and legislative issues5 la/s and administrative

rulingsrulings

,ocial concerns5 child care and educational priorities,ocial concerns5 child care and educational priorities

Demographic trends5 age- composition-and literacyDemographic trends5 age- composition-and literacy


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Scann$n# !(e In!erna" En'$ronmen!Scan

n$n# !(e In!erna" En'$ronmen!

Cultural AuditsCultural Audits4 Audits of the culture and )uality of /or+ life in anAudits of the culture and )uality of /or+ life in an

organization0organization0

.o/ do employees spend their time?.o/ do employees spend their time?

.o/ do they interact /ith each other?.o/ do they interact /ith each other? Are employees empo/ered?Are employees empo/ered?

*hat is the predominant leadership style of managers?*hat is the predominant leadership style of managers?

.o/ do employees advance /ithin the organization?.o/ do employees advance /ithin the organization?

3enchmar+ing3enchmar+ing

4 #he process of comparing the organization6s processes#he process of comparing the organization6s processes

and practices /ith those of other companies0and practices /ith those of other companies0


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Forecas!$n# HR Re)u$remen!sForecas!$n# HR Re)u$remen!s

Estimate of numbers and +inds of employees the organizationEstimate of numbers and +inds of employees the organization

/ill need to implement organizational strategies and attain/ill need to implement organizational strategies and attain

organizational objectives on future dates0organizational objectives on future dates0

Demand for firm6s goods or services must be forecast0Demand for firm6s goods or services must be forecast0

!nvolves consideration of alternative /ays of organizing!nvolves consideration of alternative /ays of organizing jobsjobs7job design- organizational design or staffing jobs87job design- organizational design or staffing jobs8

Example 2 "ea+ production could be handled by temporaryExample 2 "ea+ production could be handled by temporary/or+ers or assigning overtime0 9achine brea+do/ns assigned/or+ers or assigning overtime0 9achine brea+do/ns assigned

to maintenance department or handled by machine operatorsto maintenance department or handled by machine operators 1orecast is then converted into people re)uirements1orecast is then converted into people re)uirements


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DEMADF!RE"A#$%&

Assum'tions of

Political

en(ironment

Assum'tions of

#ocial en(ironment

)usiness Plans

Assum'tions of

$ec*nolog+

"on,itions

Assum'tions of

-a.or mar/et

Assum'tions of

Economic $ren,s

Assumptions at the Time of demand Forecasting


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Soc$a" Fac!ors * !t is common experience that a numberof /ell2conceived projects either do not ta+eoff or getdelayed due to social pressures0 !n such an event- thehuman resource demand forecasts made by the planners/ill undergo substantial changes0 Delays result in costescalation- changes in technology to accommodate theneeds:sentiments of society- changes in the location ofthe project etc0

Tec(no"o#$ca" Fac!ors *apid changes in technologymany a times adversely affect human resources forecasts01rom the time a project is conceived to the time is

implemented- substantial time lag may occur during/hich- changes in technology may ma+e the entireproject unviable0

0


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Po"$!$ca" Fac!ors *;nforeseen political factors

might ma+e considerable impact on the business

plans of enterprises0 #his is true especially forthose organizations /hich depend mostly only on

international mar+ets either for the sourcing of

their ra/ materials or for selling of their products

and services0

Econom$c Fac!ors *Economic factors often

result in several planned activities being forced toundergo considerable change0

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Demand Generation -The reasons for the creation ofemployee demands are:

Gro+!( * Gro/th- in traditional business- may lead to demand forhigher levels of production- sales volumes and services0

Em,"o-ee Turno'er* Employee turnover or attrition is another

reason for generation of manpo/er demands in an organization0

Tec(no"o#$ca" S($f!s*Changes in technology ma+es an impact on anenterprise in more than one fashion0 #his may change the methods ofmanufacturing- processes and techni)ues- selling strategies could

also become different and in the office- automation could bring abouta major change in the nature of /or+0 ,uch changes may result in aredundant and surplus /or+force and might also bring aboutshortages in the ne/ s+ills re)uired to manage the technology0

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!0 )uantify the jobs necessary for producing a given

number of goods- or offering a given amount ofservices0 Determine the time that should be covered0 ,horter lengths of time

are generally accurate than longer ones0 .o/ever- the time horizondepends on the length of the . plan /hich- in turn- is determined bythe strategic plan of the organization0

0 Establish categories- also called states- to /hich employees can beassigned0 #hese categories must not overlap and must ta+e intoaccount every possible category to /hich an individual can beassigned0 #he number of states can neither be too large nor too small0

@0 Count annual movements 7also called flo/s68 among states forseveral time periods0 #hese states are defined as absorbing 7gains orlosses to the company8 or non2absorbing 7change in position levels oremployment status80 &osses include death or disability- absences-

resignations and retirements0 Gains include hiring- rehiring- transferand movement by position level0

0 Estimate the probability of transitions from one state to another basedon past trends0 Demands a function of replacing those /ho ma+e atransition0

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Analysis of present and future /or+loaddepends on the possibility of )uantifying the/or+ content in every area of an organizational0

,teps in /or+load analysis5

Classification of /or+

1orecasting the number of jobs

Converting the projected jobs in man2hours Converting the man2hours into manpo/er

re)uirement

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or/stu,+ $ec*niueor/stu,+ $ec*niue

or+2study techni)ues can be used /hen it is possible to apply

/or+ measurement to calculate the length of operations andthe amount of labor re)uired0

#he starting point in a manufacturing company is theproduction budget- prepared in terms of volumes of salable

products for the company as a /hole- or volumes of output forindividual departments0

#he budgets of productive hours per unit of output are thenmultiplied by the planned volume of units to be produced to

give the total number of planned hours for the period0

#his is then divided by the number of actual /or+ing hours foran individual operator to sho/ the number of operatorsre)uired0


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Allowance will have to be made forabsenteeism and idle time.

Work-study techniques for directworkers can be combined with ratio-trend analysis to forecast for indirect

workers, establishing the ratio betweenthe two categories. The same logic can be extended to any

other category of employees.

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Forecasting Deman,Forecasting Deman,

Quantitative MethodsQuantitative Methods

Qualitative MethodsQualitative Methods

Forecasting DemandForecasting Demand


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uantitative 9ethods of 1orecasting .uantitative 9ethods of 1orecasting .

DemandDemand

Moving

average

Exponential

smoothing

Trends

projections

Averages data about HR

demand from recent

periods and projects

them into the future

Forecasters can var

!eights for HR demand

assigned to different

past time periods used

to project future HR

demand"

#umbers of peoplehired or re$uestedplaced on one axis%time is placed on theother axis" A straightline is plotted from pastto future to predict HR

demand"

&implicit"

Data easil available"

Ma be used to ta'e

into account factors

ignored b the moving

average method (for

example) cclical

patterns*"

Easil explained to

managers"

Easil prepared b HR

planners"

&implicit"

Data easil available"

Ma be used to ta'e

into account factors

ignored b the moving

average method (for

example) cclical

patterns*"

Easil explained to

managers"

Easil prepared b HR

planners"

Method Description Advantages Disadvantages


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Demand 7cont08Demand 7cont08

Regression

+inear

programming

Actuarial

models

Mathematical formula

used to relate staffing

to several variables (for

example) output)

product mix) per capitaproductivit*"

Assesses re$uired

staffing level that

matches desired output

levels) subject to

certain constraints (forexample) budget) cost*"

Relate turnover to such

factors as age and

seniorit"

,an include man

variables"

Efficient use of all

available data"

Assesses !hat should

be in the future) not

!hat probabl !ill be"

Reflect past"

Mathematical

complexit"

Re$uires large sample

si-es" Relies on past data"

Managers are

s'eptical of highl

sophisticated

methodolog"

#umerous

assumptions must be

made"

Ma not be accurate in

individual cases"



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.ses scenarios to test theeffect of variouspersonnel policies"

Define /states0 in the

organi-ation1such asstrateg levels)performance ratings"

2dentif time period"

Multipl number of peoplein each job categor bthe probabilit ofmovement bet!eenjob3position categories"Model assumes thatcurrent job3positioncategor is the chief

determinant of movement"

.seful for consideringalternative HRprograms"

Help identif career

patterns"

Help perform turnoveranalsis"

Ade$uate forconsidering alternative

effects of various HRstrategies"

Accurac varies"

Re$uire some

mathematicalsophistication"

Accurac varies"

#ot ade$uate for long4term forecasts"

Re$uiresmathematicalsophistication"


&imulations

5robabilit

matrixes

First4orderMar'ov

model


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&ame as first4order

Mar'ov model except that

probabilit of movement

is determined b (6*job3position categor and

(7* the individual8s length

of sta in the job class"

More inclusive than a

first4order Mar'ov

mode"

#ot ver useful for

considering alternative

effects of various HR

strategies"

Re$uires

mathematical

sophistication"


&emi4Mar'ov

model


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ualitative 9ethods of 1orecasting .ualitative 9ethods of 1orecasting .

Demand or ,upplyDemand or ,upply

A group of expertsexchanges several roundsof estimates of HRdemand or suppl)

normall !ithout meetingface to face" Feedbac'from other experts is usedb each individual to/fine4tune0 his or herindependent estimate"

A small group of expertsmeets face to face" After aprocedure that involvesopen discussion andprivate assessments) thegroup reaches a judgmentconcerning future HR

demand or suppl"

,an involve 'edecision ma'ers inprocess"

,an focus on !hat isexpected or desired infuture"

#ot bound to the past"

&ame as for Delphitechni$ue"

9roup discussionscan facilitateexchange of ideas andgreater acceptance ofresults b participants"

Highl subjective"

:udgments ma notefficientl use

objective data"

&ame as for Delphitechni$ue"

9roup pressure malead to less accurateassessments thatcould be obtainedthrough other means"


Delphitechni$ue

#ominalgrouptechni$ue

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HR Demand Forecasting

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