THE HR FORECASTING PROCESS

BY: Aaditya Arora.

200098434

HR FORECASTING

It is defined as the establishing the net requirement for employees by determining the demand and supply of HR now and in future.

It is said that HR forecasting the heart of HR planning process.

FORECASITNG ACTIVITY CATEGORIES:

The forecasting activity is subdivided into three categories: Transaction-based forecasting Event-based forecasting Process-based forecasting

focuses on tracking internal change set up by the Organizations Managers

concern with changes in the external environment

Does not focused on a specific internal organizational event but on the flow of several work activities
All three of these categories are important to have a comprehensive method for determining HR requirements.

This is only an approximation which strongly favor's quantitative techniques. The most successful HR forecasting processes use both qualitative and quantitative data.

BENEFITS OF HR FORECASTING

Reduces HR Costs:

The HR forecasting focuses on a comparison between the organizations current stock of KSAs and number of skill competencies, and so on anticipated in the workforce of the future.

This characteristic comparison facilitates a proactive and sequential approach to developing internal workers.

In this manner organizations can reduce their costs, as they are less likely to react in a costly
last minute crisis.

Cont.

Increase in Organizational Flexibility:

The advantage of HR forecasting is that its proactive process increases the number of viable policies option available to the organization thereby enhancing flexibility.

Ensures a close Linkage to the Macro Business Forecasting:

A serious problems develop in some organizations when the personnel planning process becomes divorced and disconnected from the overall business of the organization.

The implementation of an HR forecasting process helps to eliminate the possibility that personnel policies will deviate away from the overall operating and production policies.

Cont.

Ensures that organizational requirements take precedence over issues of resource and constraint.

The first step in the HR forecasting process is to calculate the organization requirements. Determining the source of personnel that is the availability or the supply of workers is done only once the process of evaluating the personnel requirements for current and future time horizons had been finalized.

This sequence reinforces the fact that completion of the desired organizational goals and objectives must take priority over all issues concerning resource scarcity and implementation

issues.

Key Personnel Analyses Conducted by HR Forecasters

-Specialist/Technical/Professional Personnel - These employees tend to be in high demand due to trade qualifications that are in demand. -Employment Equity-Designated Group Membership - Should be a proportional representation of each grouping

Designated Groups - identifiable groups deemed to need special attention; in the case of Canadian HR,
these are people of Aboriginal descent, women, people with disabilities and members of visible minorities -These groups typically receive the most discrimination within an organization -Managerial and Executive Personnel - To be successful, organization must have Good management and executives . The key leadership skills are essential so as they are able to interact with stakeholder groups on the behalf of organization .

-Recruits for the success of organization HR policies it is very important to decide whether internal or
external recruits be used.

5 Stages of the Forecasting Process

Identify organizational goals, objectives, and plans Determine overall demand requirements for personnel Assess in-house skills and other internal supply characteristics Determine the net demand requirements that must be met from external, environmental

supply sources

Develop HR plans and programs to ensure that the right people are in the right place

HR Forecasting Time Horizons

Current Forecast: The one being used to meet the immediate operational needs of the organization. (Up to the end of the current operating cycle, or a maximum of one year into the future.) Short-run Forecast: Extends forward from the current forecast and states the HR requirements for the next one-to-two year period beyond the current operational requirements. Medium-run Forecast: Typically, one that identifies requirements for two to five years into the future. Long-run Forecast: Typically extends five or more years ahead of the current operational period. Due to the number of changes that could affect an organization's operations, the long-run forecast is extremelyflexible.

The outcome of forecasts derived from these four time horizons leads to predictions and projections.

Prediction: A single numerical estimate of HR requirements associated with a specific time horizon and set of assumptions. Projection: Several HR estimates based on a variety of assumptions.

Determining Net HR Requirements

1. Determine HR Demand: Each organizational subunit has to submit net personal requirements to forecasting unit, based on future needs for labor required to meet agreed objectives (e.g., market share/production level).

HR demand figure must include individuals needed to maintain/replace personnel who retire/die/fired/terminated/long term care, replacements for those who are promoted/transferred. Subunit demands are then aggregated and used as starting point for HR demand forecasts.

Planned future changes in organizational design or restructuring with varied staffing levels must be incorporated into the equation to revise aggregated new departmental demand requirements.

1.

Broken down into the forecasting time horizons and containing The number of employees required by each subunit and by the organization in total

2.

The employee skill sets, competencies or specifications required for each of the positions .

Finally Conduct a cost estimate (HR Budget) for the net HR demand figure to determine if forecasts are realistic given financial considerations.

2. Ascertain HR Supply internal supply : current members of the organizational workforce who can be retained, promoted, transferred, to fill anticipated HR requirements external supply : potential employees who are currently undergoing training, working for competitors, members of unions of professional associations, or are I. A transitional stage between jobs or unemployment

Determine net HR Requirements

external supply requirements = replacement + change supply components

change supply = hiring to increase (or decrease) the overall staffing level
replacement supply= hiring to replace all normal losses external supply = current workforce size x (replacement % per year + change % per year)

Example: Current workforce size 1000 workers, an annual historical replacement/loss rate of
11%, and a desired future growth of 7%.

external supply = 1000 (.11 + .07) = 110 + 70 = 180 *110 new hires to replace departing workers and 70 workers are required for new growth.

Institute HR Programs: HR Deficit and HR Surplus

When an HR surplus exists, a number of policy options can be considered, including:

Employees might be laid off. Employers might terminate employees if certain jobs are considered redundant.

Job Sharing: when two or more employees perform the duties of one full-time position, each sharing the work activities on a part-time basis.
Secondments or leaves occur when the organization lends some of its excess workforce to community groups or permits those surplus workers to take educational leave or training away from the operational workplace. Attrition : It is the process of reducing an HR surplus by allowing the size of the workforce to decline naturally due to the normal pattern of losses associated with retirements, deaths, voluntary turnover, and so on.

A hiring freeze: It is a prohibition on all external recruiting activities .

When an HR Deficit exists, a number of strategies that can be considered include:

Offer existing employees the opportunity to work overtime. The hiring of part-time and full-time employees. The use of temporary employment agencies and contract workers.

Transfers and promotions of existing employees into areas of the business that are experiencing a shortage.