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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uantitative 9ethods of 1orecasting .uantitative 9ethods of 1orecasting .
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"
Method Description Advantages Disadvantages
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uantitative 9ethods of 1orecasting .uantitative 9ethods of 1orecasting .
Demand 7cont08Demand 7cont08
.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"
Method Description Advantages Disadvantages
&imulations
5robabilit
matrixes
First4orderMar'ov
model
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uantitative 9ethods of 1orecasting .uantitative 9ethods of 1orecasting .
Demand 7cont08Demand 7cont08
&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$uires
mathematical
sophistication"
Method Description Advantages Disadvantages
&emi4Mar'ov
model
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ualitative 9ethods of 1orecasting .ualitative 9ethods of 1orecasting .
Demand or ,upplyDemand or ,upply
A group of expertsexchanges several roundsof estimates of HRdemand or suppl)
normall !ithout meetingface to face" Feedbac'from other experts is usedb each individual to/fine4tune0 his or herindependent estimate"
A small group of expertsmeets face to face" After aprocedure that involvesopen discussion andprivate assessments) thegroup reaches a judgmentconcerning future HR
demand or suppl"
,an involve 'edecision ma'ers inprocess"
,an focus on !hat isexpected or desired infuture"
#ot bound to the past"
&ame as for Delphitechni$ue"
9roup discussionscan facilitateexchange of ideas andgreater acceptance ofresults b participants"
Highl subjective"
:udgments ma notefficientl use
objective data"
&ame as for Delphitechni$ue"
9roup pressure malead to less accurateassessments thatcould be obtainedthrough other means"
Method Description Advantages Disadvantages
Delphitechni$ue
#ominalgrouptechni$ue