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HR Staffing | Forecasting and planning labor demand and supply

An increased demand has a direct affect on the labor needs for any business company. If the company is experiencing growth and demand from customers, there is a need to hire more people to meet the demands. If the company plans to automate the processes (like in manufacturing), the demands can be fulfilled up to a certain extent. The company would still need to hire people with different talents even in the case of automation to handle new machinery or technology. On the other hand, if the products and business demands for a company are decreasing, then the staff may become redundant resulting in the need for downsizing or layoff.

Forecasting business activity accurately requires the identification of key business operations factors, the quality of sources for relevant information that are compiled for accurate and timely data. This improves the company’s ability to make more accurate projections about its staffing needs. The forecasting timeframe solely depends on the discretion of the organization. For organization’s that are stable, forecasting is done even 5 years or even 10 year periods. Companies that operate in dynamic and unpredictable environments may not be able to forecast accurately beyond 12 months. Forecasting exercise is normally treated as a dynamic activity and should be revised and updated regularly as business assumptions and quality factors change.

There are many factors that indicate the changing demand for an organization’s products and services. The other factors that affect forecasting are: the increase or decrease in consumer spending; unemployment rates; income of consumers; purchase of durable goods and housing purchases. Companies start hiring as economic conditions tends to expand, so new employees are trained to be productive by the time the increased economic growth generates increased business activity for the business. Companies mostly generate its forecasts based on its own internal business needs.

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