Forecasting of Human Resource for Organizational Success

Forecasting of human resource is the process of predicting how a company’s staffing needs change with time so that it can remain prepared to operate successfully. Organizations use HR forecasting to decide to hire more people, reduce their staffing, or adjust how they divide responsibilities.

Strategically, HR forecasting is part of HR planning. HR planning is a major function of the HR process that ensures the analyzation and identification of the needs for and availability of human resources so that the organization can meet its intended goals and objectives at a required time.

Forecasting of human resource in an organization includes both demand and supply forecasts. Demand forecasting (Manpower Forecasting) is the process of estimating the future numbers of people required and the likely skills and competences they will need. Forecasting human resource demand is the process of estimating the future human resource requirement of right quality and right number.

Demand forecast

At a more practical level, forecasting demand involves determining the numbers and kinds of personnel that an organization will need at some point in the future. Forecasting demand has two approaches in explaining human resource planning in the organization:

Quantitative approach

Concerned with determining the number of employees required in a future period, there are uses of statistical or mathematical techniques that will be useful in estimating the quantity of manpower through workload analysis and workforce analysis. 

• Workload Analysis is the total workload of each department estimated based on sales forecasts, work schedules, gross rate, and expansion plans. 
• Workforce Analysis is concerned with all existing workers who are not likely to be available for work throughout the year, due to absenteeism and turnover. 

Qualitative approach (Skills analysis)

The quality of manpower required varies from job to job. Therefore, the quality of employees required for a job can be determined only after determining the job requirements. This approach relies on fewer statistical and mathematical calculations and more on experts who assist in preparing forecasts to anticipate staffing requirements.

Supply forecast

Supply Forecasting measures the number of people likely to be available from within and outside the organization- internal and external supply people already employed by the firm and those outside the organization. It considers rates of absenteeism, internal movements and promotions, wastage and changes in hours, and other conditions of work. The supply analysis covers the following areas: existing number of people employed by occupation, skill and potential, source of supply from within the condition, and effect of changing conditions of work and absenteeism.

Internal supply forecast is a succession planning or the career plans orchestrated by an organization and is available by way of transfers, promotions, retired employees & recall of laid-off employees. This step is vital, as it conveys an inventory of the firm’s current and projected competencies. These internal factors include:

• Employee turnover rate refers to the movement of employees out of an organization. It is a determinant of labor supply. As employees’ turnover, the supply of labor goes down.
• Skill inventories (Talent inventories) prepare a list of employees showing each employee’s education, experience, vocational interests, specific abilities, and skills.
• Succession planning: the process of identifying, developing, and tracking key individuals so that the May eventually assumes top-level position.

The process for developing such a plan includes setting a planning horizon, identifying replacements for each key position, assessing current performance and readiness for promotion, and identifying career development needs. The overall objective is to ensure the availability of competent executive talent in the future.

The external supply consists of those individuals in the labor force who are potential recruits of the firm. When an organization lacks an internal supply of employees for promotions, or when the organization is staffing entry-level positions, managers must consider the external supply of labor. Factors that influences external supply for labor include: 

• Demographic changes in the population
• National and regional economic
• Education level of the workforce

HR forecasting empowers your company to do more than just balance labor demand and supply.