HR Forecasting and Planning

Management

Brainstorm Management Consultants Ltd., 2018

Mr. Chris Kalecha
 HR Planning
 Should be aware of business strategy

 See that human resource programs satisfy the top

management

 Convert business objectives into hr objectives

 Strategy-linked HRP
• HRP is not the responsibility of HR managers only
• Has to be do done together with operating managers
-a close working relationship
• Hr managers provide with the structure and support
• Top Management support should be there
Forecasting HC Supply and Demand
Forecasting
o The use of information from the past and present to identify expected future
conditions.
Types of Forecasts
o HC Demand
o Internal Supply
o External Supply

Forecasting Periods
o Short-term: < 1 year
o Intermediate: 1-5 Years
o Long-range: > 5 years
 Time frame of HRP
• Short term : (0-2) years

• Intermediate : (2-5) years

• Long Range :(beyond 5 years)

 Short range

Number and Kinds of

• Demand: employees needed
 Individuals leave,
 lay-offs,
 technological expansion,
 new regulations
• Supply:
 Departmental
 Expected Promotions
 Intermediate

• Demand
 Needs from plans and budgets
 Any expansion or adjustment of plan
• Supply
NUMBER OF WORKERS
 Hr vacancies expected KINDS OF WORKERS
DATES WHEN NEEDED
 Managerial and supervisor development plan LEVELS OF NEEDS
 Long Range

• More focus on long term Environmental changes (technology or culture )

• Management expectations of changing characteristics of employees and

future available human resources
 Steps in HRP

1. Determining organizational Objectives

2. Determining the skills and required

3. Determining Additional(Net) Human Resource Requirements

4. Developing Action Plans

 Determining Organizational Objectives

• The main organizational objectives needs to be taken in making human

resource requirements
• Mission- goals and objectives of the organization needs to be determined
• There are both long term and short term objectives
• Long term objectives are based on the company’s mission statement
STATEMENT OF
ORGANIZATION’ TOP
S MISSION MANAGEMENT

LONG RANGE TOP

OBJECTIVES MANAGEMENT

SHORT RANGE MIDDLE

OBJECTIVES MANAGEMENT

DIVISION OR DEPARTMENT
OBJECTIVES
SUPERVISION

SUBUNIT OBJECTIVES
 Factors affecting organizational objectives
• Globalization
• Government influences
• General economic conditions
• Competition
• Changes in work force
 Determining the skills and expertise required
(demand)
• Future human resource needs can be determined by
some methods
• Forecasts are mathematical or judgemental
 Judgemental Methods

1. Managerial Estimates:
-future staffing needs based on past experience
-made by top level management or middle level and lower level
together
2. Delphi Technique:
-panel of experts
-each expert independently estimates future demand
-a mediator presents each expert’s forecast to the others
-experts can revise their comments
-process continues till agreement between all experts
• Scenario Analysis:
-scenarios are developed in brainstorming sessions (by operating and HR
managers)
-5 or more years scenario is done

• Benchmarking:
- Deeply examines the company’s internal practices and processes and measures
them against successful company practices
 Mathematical or statistical methods
• Time-series analysis:
-past staffing levels indicate future requirements (moving average,
exponential smoothing or regression technique)
• Regression analysis:
• -past study of work load indicators like sales, production levels are
studied
• -linked with staffing levels
• Productivity ratios:
Historical or past data are used to examine past levels of productivity index
P= Workload/ No. of People
Determining Additional Human Resources
Requirement

• Analysis of present employees

• Forecast of employees required in future

Done through
Skills inventory
Management Inventory
Expecting changes of people
 Skills Inventory

 Complete information about the organization’s basic information on all

employees
 Information are about:
a)Personal data: age, sex, marital status
b)Skills: education, job experience, training
c)Special qualifications: membership in professional groups, achievements
d)Salary and job history: present and past salary, dates of raises, different
jobs held
e) Company data: benefit plan data, seniority, retirement
information
f) Capacity of individual: test scores on psychological
and other tests, health information
g) Special preferences of the individual : geographic
location, type of job
 Management Inventory

• Specialized and expanded form of skills inventory

• Only for managerial employees
• Contains details of manager’s past performance, strengths, weaknesses
• Potential for growth and advancement
 Expecting People to Change

• Some changes can be forecasted easily

- Retirements
- Other changes like transfers and promotions (from how long in the job,
the need of the company)
• Changes difficult to forecast •PAST EXPERIENCE
•HISTORICAL RECORDS
-death, resignations and discharges
 DEVELOPING ACTION PLANS
• Done after the actual or net human resources requirements is found it
• Factors which affect the planning are:
ADDITION
-whether the requirement is permanent
-availability of the qualified recruits
-contingency hires
-outsourcing
REDUCING :
Downsizing
-lay-offs
-terminations
-early retirement incentives
-voluntary retirement inducement
Other approaches:- that do not result in employees
leaving the organization

-reclassification
-transfer
-work sharing
 Tools and Techniques of HRP
• Succession planning

• Commitment manpower planning

• Ratio analysis
 Succession Planning
• Identifies specific people to fill key positions
• Organizational replacement chart is used
- Shows incumbents
- Shows potential replacements
- Replacement charts needs to be updated from time to time
 Director -Marketing

Mr. X
Incumbent

Backup Mr. Y

Position Sr Manager(Marketing)/Marketing Manager

Potential/ Promotability PN HP
Commitment Manpower Planning
• Systematic approach
• Managers and subordinates get involved in HRP
Ratio Analysis
• Measures the organization’s human resource vitality
- People with potential who can be promoted
• Measures organization’s stagnancy
-people who are not promotable and needs to be replaced
END PRODUCT OF RATIO ANALYSIS IS ORGANIZATIONAL
VITALITY INDEX (OVI)
 Why is Strategic HR Planning important
to Organizations?
• Because it attempts to balance between the work that needs to be
done and the workforce that performs the tasks to do the work
• Insufficient work and too many employees lead to inefficiencies
and lower productivity
• Employees may become bored and unmotivated and engage in
counterproductive behavior
 Why is Strategic HR Planning important
to Organizations?
• On the other hand, too much work and an insufficient number
of employees lead to higher overtime and wages expenses,
while at the same time increases the stress and fatigue of the
overworked employees
• Both scenarios will result in an ineffective organization that
might compromise its ability to meet its goals and objectives
 Forecasting Activity Categories
There are three forecasting categories:
1.Transactional-Based forecasting: Focuses on tracking internal
change instituted by the organization’s managers
2.Event-Based forecasting: Concerned with changes in the external
environment
3.Process-Based forecasting: Not focused on a specific internal
organization event, but on the flow or sequencing of several work
activities
 Benefits of HR Forecasting
1. Reduces HR Cost
2. Increases organizational flexibility
3. Ensures a close linkage to the macro business forecasting
process
4. Ensures that organizational requirements take precedence
over issues of resource constraint and scarcity (HR Supply
and HR Demand)
Human Resource Supply and Demand
Human Resource Supply: The source of workers to meet demand
requirements, obtained either internally (current members of
the organization’s workforce) or from external agencies
Human Resource Demand: The organization’s projected
requirement for human resources
Key Personnel Analyses conducted by HR
Forecasters
1. Specialist/Technical/Professional personnel
2. Employment equity-designated group membership
3. Managerial and executive personnel
4. Recruits
 5 Stages of the Forecasting Process
1. Identify organizational goals, objectives and plans
2. Determine overall demand requirements for personnel
3. Assess in-house skills and other internal supply characteristics
4. Determine the net demand requirements that must be met from
external, environmental supply sources
5. Develop HR plans and programs to ensure that the right people
are in the right place.
 Organizational Factors affecting HR
Forecasting
• Corporate mission, strategic goals
• Operational goals, production budgets
• HR policies
• Organizational structures, restructuring
• Worker KSAOs, competencies, expectations
• HRMS level of development
• Organizational culture, climate, job satisfaction, communications
• Job Analysis: workforce coverage, current data
 HR Forecasting Time Horizons
1. Current Forecasts: up to to one year
2. Short-run Forecasts: From one to two years
3. Medium-run Forecasts: From two to five years
4. Long-run Forecasts: For five or more years
 Outcomes of Forecasts
Prediction: A single numeric estimate of HR requirements
associated with a specific time horizon and set of
assumptions
Projection: Incorporates several HR estimates based on a variety
of assumptions
 Outcomes of Forecasts
Scenario: A proposed sequence of events with its own set of
assumptions and associated program details
Contingency Plans: Implemented when severe, unanticipated
changes to organizational or environmental factors
completely negate the usefulness of the existing HR
forecasting predictions or projections; like a backup plan
 Steps in Determining net HR
Requirements
1. Determine HR demand
2. Ascertain HR supply (includes internal supply and external
supply) and skills inventory-personal database record on each
employee
3. Determine Net HR requirements
4. Institute HR programs: HR shortage and HR surplus
 HR Shortage or HR Surplus
HR Shortage: Demand > Supply

HR Surplus: Supply > Demand

 Dealing with Surpluses
1. Job Sharing: Occurs when two or more employees perform
the duties of one full-time employees
2. Attrition: The process of reducing an HR surplus by
allowing the size of the workforce to decline naturally
3. Hiring Freeze: A prohibition on all external recruiting
activities
 Dealing with Shortages
External Recruitment: Finding employees from outside the
organization
Managing a Labour Shortage
 Shortage of Workers Forecasted
• Creative recruiting
• Compensation incentives – premium pay is one
method
• Trainingprograms – prepare previously
unemployable people for positions
• Different selection standards – alter current
criteria
Model of HC Forecasting
HC Demand Forecasting Techniques
TREND ANALYSIS of HC Demand
(Hypothetical)
The Delphi Technique
The Nominal Group Technique
HC Internal Supply Analysis
Tools of HC Supply Analysis
Staffing Table (Partial)
MARKOV ANALYSIS (Hypothetical)
HC Skill Inventory Template
Estimating Internal Labor Supply for a
Given Unit
 HUMAN RESOURCE INFORMATION
SYSTEM Goal: Integrate Core Processes into
Seamless System
 HUMAN RESOURCE INFORMATION
SYSTEMS (HRIS)
PERSONAL DATA
Age, Gender, Dependents, Marital status,
etc
EDUCATION & SKILLS
Degrees earned, Licenses, Certifications
Languages spoken, Specialty skills
Ability/knowledge to operate specific
machines/equipment/software
JOB HISTORY
Job Titles held, Location in Company,
Time in each position, etc.
Performance appraisals, Promotions
received, Training & Development
MEMBERSHIPS & ACHIEVEMENTS
Professional Associations, Recognition
and Notable accomplishments
PREFERENCES & INTERESTS
Career goals, Types of positions sought
Geographic preferences
CAPACITY FOR GROWTH
Potential for advancement, upward
mobility and growth in the company
 Emerging Trends in Employment
• A shrinking talent pool
• An increase in outsourcing
• A more intense focus on work/life balance
• Changing workplace demographics
• Greater need for talent management
• Ethics requirements
• Globalization
Thank you

Q&A