An organization can determine how many employees it will require in the future to achieve its strategic goals by using a process called human resource forecasting. HR forecasting entails identifying the positions that the company will need to fill, the competencies needed for those positions, and the difficulties the company will encounter in trying to fill those positions. Identification and planning for a company’s shifting personnel needs now rely heavily on human resource planning. Check out the four steps HR uses to forecast future requirements.
Why is HR forecasting important?
Because it helps organizations run responsibly and prevents costs related to lost productivity or overstaffing, HR forecasting is crucial. Both large and small businesses undergo personnel changes or external events that have a significant impact on their capacity to satisfy customers’ needs, produce enough product, or finish particular tasks. HR forecasting protects company bottom lines by limiting the financial and operational effects of these occurrences.
Here are some instances where HR forecasting serves business interests:
What is HR forecasting?
The process of HR forecasting involves foreseeing how a company’s staffing requirements will change over time so that it can stay ready to run successfully. HR forecasting helps businesses decide whether to expand their workforce, cut back on staff, or reorganize how duties are delegated. Since they handle hiring, onboarding, and training, HR departments are best suited to carry out this project. If their business model involves frequent turnover or changes in supply and demand, businesses may conduct HR forecasting on a periodic or ongoing basis.
Strategies for effective HR forecasting
Here are a few tactics your HR division can use for accurate forecasting:
Delphi method
Several experts’ opinions are gathered through the Delphi method when analyzing a problem. It employs a middleman to enable idea exchange without individual prejudices or pointless discussion The Delphi method can be a useful tactic in organizations with sizable HR departments for balancing opposing viewpoints on staffing needs. In order to apply this strategy, your business chooses the HR managers most qualified to foresee how internal and external factors will impact your team. Each person privately offers the intermediary their thoughts on how to get ready for the future.
After everyone has voiced their opinions, the middleman shares each one while maintaining anonymity for the contributor, and the process is repeated. Each HR manager modifies their proposal in light of fresh information. Any significant areas of disagreement are brought up by the facilitator, and the group discusses them until an agreeable consensus is reached.
Trend analysis
A trend analysis strategy makes predictions about your company’s future staffing needs based on historical data. It contrasts your employee count over time with key performance indicators for your business model. A car dealership, for instance, might research its historical data to determine the number of salespeople that corresponded with the highest average number of cars sold per employee. While not always precise, spotting such patterns aids companies in ensuring that they only pay for the labor that is actually required to deliver top-notch service and sell inventory.
Ratio analysis
Ratio analysis performs similarly to trend analysis in that it creates a link between important metrics and overall staffing. Ratio analysis, however, places more emphasis on determining the precise ratio that enables a business to operate successfully and then applying it to the future.
For instance, a resort might check the number of servers it employed in prior years and compare it to the number of guests it served as it gets ready for the busy summer season. When the next busy season arrives, the HR department will hire as many servers as necessary to maintain the ratio of one server for every 25 guests.
Supply forecasting
Supply forecasting is the process by which companies evaluate their internal and external candidate access. Companies evaluate their teams internally to identify potential candidates for promotions or lateral moves into open positions. They consider an employee’s qualifications and performance ratings before deciding how to replace a departing or resigning employee.
In order to ascertain how these elements will affect hiring, HR departments conduct research on the current labor market and pertinent laws. They then update their calculation of the cost of hiring new employees. For instance, the business might decide to hire one fewer new marketers than originally planned if research indicates that entry-level marketers are making significantly more money recently.
Tips for effective HR forecasting
Here are some tips to improve your companys HR forecasting:
Capitalize on hiring opportunities
HR forecasting prepares you to make responsible and practical hires. However, it’s also a chance to bolster your team’s talent by identifying applicants with abilities that no one else in your company currently possesses. Meet with other managers in your organization to better understand the skills and capabilities they feel are lacking from their teams while gathering data and making future projections. HR forecasting can be a chance to reenergize your business and boost its capacity for innovation rather than just being a process of replacement.
Consider multiple employee types
Sometimes, companies develop habits that prematurely determine hiring decisions. Make sure to conduct research on the employee types that would actually meet your labor needs as you create your HR forecast. Your business may find that using part-time employees instead of full-time ones or paid interns in place of salaried workers allows it to achieve the same production goals or serve the same number of customers.
Considering various employee types when creating a hiring strategy can help your company spend less on payroll-related expenses like benefits. As you experiment with different hiring practices, you might learn things that fundamentally alter the way you think about the development of your team and the future of your organization.
Review your organizational chart
Check to see if your company has distributed responsibilities as wisely as possible before committing to a hiring plan. Your organizational chart depicts the workflows and reporting structures that are essential to your business, but as it expands, those structures might need to be reexamined. Your HR department may suggest creating a new position to help with a department’s heavy workload or suggesting positions you could combine rather than hire separately.
Survey your employees
Even if you only do HR forecasting occasionally, you can still take steps to increase your preparedness because every company approaches it slightly differently. To collect information that could have a significant impact on your HR forecasts, think about surveying your employees. It can be challenging to stay on top of all significant personnel developments and take them into account when planning, especially in larger organizations. An employee might publicly announce his intention to retire, but without data collection, you might wait to act until you receive the formal notice from the employee two weeks prior to their departure.
Try to comprehend the indicators that could subtly affect your forecasts whether you’re conducting a formal survey or just having regular conversations with your employees about their plans. For instance, increased employee retention may result in fewer hires than usual during a busy season if employee satisfaction or productivity are exceptionally high.
HR Forecasting
FAQ
What are HR forecasting techniques?
Utilizing historical data to forecast future staffing needs is a typical component of human resource forecasting techniques. Additionally, organizations can estimate workforce staffing numbers by using survey, benchmarking, and modeling techniques.
How does Human Resources Use forecasting?
The process of forecasting human resources entails estimating the need for labor and the impact that will have on a company. Based on anticipated sales, office growth, attrition, and other factors that affect a company’s need for labor, an HR department forecasts both short-term and long-term staffing needs.
What steps would you take for HR forecasting process?
There are three fundamental categories: causal models, time series analysis and projection, and qualitative techniques.
