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Human Resource Forecasting Techniques

Human resource forecasting is the process of estimating future staffing needs. It involves analyzing factors like productivity, growth, and replacement needs. Forecasting techniques include ratio trend analysis, regression analysis, work study, Delphi technique, and managerial judgment. Ratio and regression analysis use historical data on relationships between staffing levels and metrics like sales volumes. Work study calculates standard labor hours needed based on production budgets. Delphi technique surveys expert opinions iteratively until consensus is reached. Managerial judgment incorporates input from both top-down and bottom-up approaches within an organization. Accurate forecasting helps ensure appropriate staffing levels and prevents shortages.

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Hannah Vaniza Napoles
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146 views

Human Resource Forecasting Techniques

Human resource forecasting is the process of estimating future staffing needs. It involves analyzing factors like productivity, growth, and replacement needs. Forecasting techniques include ratio trend analysis, regression analysis, work study, Delphi technique, and managerial judgment. Ratio and regression analysis use historical data on relationships between staffing levels and metrics like sales volumes. Work study calculates standard labor hours needed based on production budgets. Delphi technique surveys expert opinions iteratively until consensus is reached. Managerial judgment incorporates input from both top-down and bottom-up approaches within an organization. Accurate forecasting helps ensure appropriate staffing levels and prevents shortages.

Uploaded by

Hannah Vaniza Napoles
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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HUMAN RESOURCE

FORECASTING
HUMAN
RESOURCE
FORECASTING
Human resources is more than just
hiring. Human resources departments
manage employer-employee
relationships while putting people in the
best position to succeed within the
organization. HR focuses on how to make
the organization better by increasing the
potential of the employees and selecting
new people with the right skills to fill
needed positions.
Human resource (HR) forecasting is the
process of estimating the future quantity
and quality of people required. This
process includes statistical analysis and
reviewing sales and production data. The
basis of the forecast must be the annual
budget and long-term corporate plan,
translated into activity levels for each
function and department.

In a manufacturing company, the sales


budget would be translated into a
production plan giving the number and
type of products to be produced in each
period. From this information, the
number of hours to be worked by each
skilled category to make the quota for
each period, would be computed. Once
the hours are available, determining the
quality and quantity of personnel will be
the logical step.
FACTORS AFFECTING HR FORECASTING

Human Resource Forecasting depends on several factors, some of which


are as follows:
• Employment trends
• Replacement needs
• Productivity
• Absenteeism
• Expansion and growth.
IMPORTANCE OF HR FORECASTING

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.
FORECASTING
TECHNIQUES
HR Forecasting techniques vary from
simple to sophisticated ones. Before
describing each technique, it may be
stated that organizations generally follow
more than one technique. The techniques
are:
• Ratio trend analysis
• Regression analysis
• Work study techniques
• Delphi techniques
• Managerial Judgments
1. RATIO TREND ANALYSIS
Ratio analysis uses historic information based on the relationship between staffing
needs and some other factor. Often that factor is either focused on the product, such as
goods produced or sales volume, or on past staffing levels. Generally, ratio analysis
premised on production are used for job related to producing a business's good or
service. Ratio analysis based on past employment are generally reserved for projecting
support or administrative staffing needs.

Moreover, this is the quickest HR forecasting technique. The technique involves


studying past ratios, say, between the number of workers and sales in an organization
and forecasting future ratios, making some allowance or changes in the organization or
its methods.
2. REGRESSION ANALYSIS
This is similar to ratio-trend analysis in that forecast is based on the relationship
between sales volume and employee size. However, regression analysis is more
statistically sophisticated. A firm first draws a diagram depicting the relationship
between sales and workforce size. It then calculates regression line – a line that cuts
right through the center of the points on the diagram. By observing the regression line,
one can find out number of employees required at each volume of sales.

Regression analysis is used to forecast demand for human resources at some point of
time in the future by using factors such as sales, production services provided etc. This
method is used when independent and dependent variable are functionally related to
each other. Nowadays, computers are used to solve regression equations for demand
forecasting.
3. WORK STUDY TECHNIQUES
Work-study techniques can be used when it is possible to apply work
measurement to calculate length of operations and the amount of labor
required. The starting point in a manufacturing company is the production
budget, prepared in terms of volumes of saleable products for the company as a
whole, or volumes of output for individual departments.

The budgets of productive hours are then compiled using standard hours for
direct labor. The standard hours per unit of output are then multiplied by the
planned volume of units to be produced to give the total number of planned
hours for the period. This is then divided by the number of actual working hours
for an individual operator to show the number of operators required.
EXAMPLE OF WORK
STUDY TECHNIQUES:

Planned annual production = 2,000,000 units


Standard man-hours required for each unit = 2 hours
Planned man-hours needed for the year = 2,000,000 units x 2
hours = 4,000,000 hrs.
Planned annual contribution of an employee = 2,000 hrs.
No. of employees required = 4,000,000 hrs. / 2,000 hrs. = 200
This method is useful for long term forecasting.
4. DELPHI TECHNIQUES
Delphi Technique was named after the ancient Greek Oracle at the city of Delphi, the Delphi
technique is a method of forecasting personnel needs. Delphi technique is also an important
technique used for estimating demand of human resources. This technique takes into
consideration human resources requirements given by a group of experts, usually the managers.
The human resource (HRP) experts act as intermediaries, they collect the manpower needs,
summarizes the various responses and prepare a report. This process is continued until all
experts agree on the estimated human resources requirement.

The experts are surveyed again after they receive this feedback. Summaries and surveys are
repeated until the experts’ opinions begin to agree. The agreement reached is the forecast of the
personnel needs. The distinguishing feature of the Delphi technique is the absence of interaction
among experts.
EXAMPLE:
5. MANAGERIAL JUDGMENTS
The managerial judgment technique includes the bottom up approach and top down approach. In the bottom
up approach, line managers communicate human resource requirements to top management.

Applying the information received directly from their line managers, top management forecasts human
resource requirements. The end result of the bottom up approach is a demand forecasting process that
incorporates input from various departments.

In the top down approach of the managerial judgment technique, top management begins the demand
forecasting process. After their human resource forecasting is completed, top management sends the
forecast to departments for them to analyze and accept.

A combination of the top down and bottom up approach is referred to as the participative approach. The
participative approach allows department heads and top management professionals to forecast human
resource requirements collectively. The participative approach is a human resource planning forecasting
technique that encourages collaboration while decreasing communication gaps. For this reason, the
participative approach is generally preferable to the top down and bottom up approach.
THANK YOU…
Napoles, Hannah Vaniza D.
BSMA 3A
May 12, 2022

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