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HR Forecasting techniques vary from simple to sophisticated ones. It may be stated that organizations generally follow more than one technique. The techniques are:
- Managerial Judgement
- Ratio Trend Analysis
- Work-Study Techniques
- Delphi Technique
- Flow Models
- Others.
HR Demand Forecast
The demand forecast is the process of estimating the future quantity and quality of people required. The basis of the forecast must be the annual budget and long term corporate plan, translated into activity levels for each function and department. Demand forecasting must consider several factors — both external as well as internal. The external factors are competition, economic climate, laws and regulatory bodies, changes in technology, and social factors. Internal factors include budget constraints, production levels, new products and services, organisational structure, and employee separations.
HR Supply Forecast
Personnel Demand analysis provides the manager with the means of estimating the number and kind of employees that will be required. The next step for the management is to determine whether it will be able to procure the required number of personnel and the sources for such procurement. This information is provided by supply forecasting. Supply forecasting measures the number of people likely to be available from within and outside an organisation, after making allowance for absenteeism, internal movements and promotions, wastage and changes in hours, and other conditions of work.
New Venture Analysis
New venture analysis will be useful when new ventures contemplate employment planning. This technique requires planners to estimate HR needs in line with companies that perform similar operations. For example, a petroleum company that plans to open a coal mine can estimate its future employment by determining the employment levels of other coal mines.
Other Forecasting Methods
The organisations follow more than one technique for forecasting their peoples’ needs. L&T, for example, follows ‘bottom-up’ of management judgment and work-study techniques for demand forecasting. The forecasting process in L&T begins in November of every year. The Department heads prepare their personnel estimates (based on details of production budget supplied to them) and submit the estimates to the respective personnel managers. The personnel heads will review the estimates with the departmental heads and will send final reports to the Bombay office where the centralized HR department is located. Estimates are reviewed by the HR department and final figures are made known to those personnel managers who initiate steps to hire the required number of people in the following year. The forecast is made once in Five years but is broken down to yearly requirements.
Practice Questions
Q1. What is the process of determining the future organizational capabilities and needs called?
a) HR forecasting
b) HR planning
c) HR strategy
d) HR budgeting
Correct Answer: b) HR planning
Q2. Which of the following is NOT a step in the HR planning process?
a) Assessing the current HR situation
b) Identifying future HR needs
c) Hiring new employees
d) Developing HR strategies to meet future needs
Correct Answer: c) Hiring new employees
Q3. Which of the following is NOT a factor that influences future HR needs?
a) Organizational strategy
b) Economic conditions
c) Technological advancements
d) Current HR policies
Correct Answer: d) Current HR policies
Q4. Which of the following is a common tool used to identify future HR needs?
a) Job analysis
b) Employee surveys
c) Performance appraisals
d) Compensation analysis
Correct Answer: a) Job analysis
Q5. Which of the following is NOT a potential HR capability need?
a) Leadership development
b) Diversity and inclusion training
c) Succession planning
d) Maintaining the status quo
Correct Answer: d) Maintaining the status quo
