HUMAN RESOURCE DEMAND FORECASTING

Time Scale of HRP Forecasts: ISSUES IN DEMAND FORECASTING Social Factors - It is common experience that a number of well-conceived project s either do not takeoff or get delayed due to social pressures. In such an event , the human resource demand forecasts made by the planners will undergo substant ial changes. Delays result in cost escalation, changes in technology to accommod ate the needs/sentiments of society, changes in the location of the project etc. Technological Factors -Rapid changes in technology many a times adversely affect human resources forecasts. From the time a project is conceived to the time is implemented, substantial time lag may occur during which, changes in technology may make the entire project unviable.

Political Factors -Unforeseen political factors might make considerable impact o n the business plans of enterprises. This is true especially for those organizat ions which depend mostly only on international markets either for the sourcing o f their raw materials or for selling of their products and services. Economic Factors -Economic factors often result in several planned activities be ing forced to undergo considerable change.

Demand Generation - The reasons for the creation of employee demands are: Growth - Growth, in traditional business, may lead to demand for higher levels o f production, sales volumes and services. Employee Turnover- Employee turnover or attrition is another reason for generati on of manpower demands in an organization. Technological Shifts-Changes in technology makes an impact on an enterprise in m ore than one fashion. This may change the methods of manufacturing, processes an d techniques, selling strategies could also become different and in the office, automation could bring about a major change in the nature of work. Such changes may result in a redundant and surplus workforce and might also bring about short ages in the new skills required to manage the technology.

There are several good reasons to conduct demand forecasting. It can help: quantify the jobs necessary for producing a given number of goods, or offering a given amount of services; determine what staff-mix is desirable in the future; assess appropriate staffing levels in different parts of the organization so as

to avoid unnecessary costs; prevent shortages of people where and when they are needed most; and monitor compliance with legal requirements with regard to reservation of jobs.

Trend Analysis Forecasts employment requirements on the basis of some organizational index and is one of the most commonly used approaches for projecting HR demand. It involves the following steps: Select an appropriate business factor. This should be the best available predic tor of human resources needs. Frequently, sales or value added (selling price mi nus costs of materials and supplies) is used as a predictor in trend analysis. Plot a historical trend of the business factor in relation to number of employee s. The ratio of employees to the business factor will provide a labor productivi ty ratio (for example, sales per employee). Compare the productivity ratio for at least the past five years. Calculate human resources demand by dividing the business factor by the producti vity ratio. Finally, project human resources demand out to the target year.

Time Series Analysis Employment data over a period of time are used under this method as a basis for manpower forecast. When we record employment levels over a time period, we observe the 5 elements in it: Trend Cyclical Effects Seasonality Step Random fluctuations Moving Average Method Average of the combined employment level data for the recent past is considered as the forecasted employment level for the next period. This technique is useful to guard against random fluctuations. After each period elapses , the figure for the oldest period is dropped and the figure for the newest period is added for our subsequent computation of manpow er requirements . Flow Models - Flow models are very frequently associated with forecasting person nel needs. The simplest one is called the Markov model. In this technique, the f orecasters will : Determine the time that should be covered. Shorter lengths of time are generally accurate than longer ones. However, the time horizon depends on the length of t he HR plan which, in turn, is determined by the strategic plan of the organizati on. Establish categories, also called states, to which employees can be assigned. Th ese categories must not overlap and must take into account every possible catego ry to which an individual can be assigned. The number of states can neither be t oo large nor too small. 3. Count annual movements (also called flows ) among states for several time periods. T hese states are defined as absorbing (gains or losses to the company) or non-abs orbing (change in position levels or employment status). Losses include death or

disability, absences, resignations and retirements. Gains include hiring, rehir ing, transfer and movement by position level. 4. Estimate the probability of transitions from one state to another based on pa st trends. Demands a function of replacing those who make a transition. Analysis of Work load factors Analysis of present and future workload depends on the possibility of quantifyin g the work content in every area of an organizational. Steps in workload analysis: Classification of work Forecasting the number of jobs Converting the projected jobs in man-hours Converting the man-hours into manpower requirement