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Techniques for Forecasting Human Resources
Forecasting is the process of predicting future events or trends based on historical or current data. It is important for business planning and decision making. There are various quantitative and qualitative techniques used for human resource forecasting, including regression analysis, trend analysis, managerial judgment, and the Delphi technique. Accurate HR forecasting helps organizations prevent understaffing or overstaffing and allows for efficient use of functions like production. Common variables forecasted include staffing needs, absenteeism, and costs. The document discusses different forecasting methods and their applications in HR planning.
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Techniques for Forecasting Human Resources
- 1. Group-A Ram Krishna Tiwari MFC2nd Semester Trubhuvan University
- 2. What is Forecasting? Process of predicting a future event based on historical data Educated Guessing Underlying basis of all business decisions Production Inventory Personnel Facilities
- 3. Departments throughout theorganization depend on forecasts to formulate and execute their plans. Finance needs forecasts to project cash flows and capital requirements. Human resources need forecasts to anticipate hiring needs. Production needs forecasts to plan production levels, workforce, material requirements, inventories, etc. Importance of Forecasting in Organization
- 4. Demand is notthe only variable of interest to forecasters. Manufacturers also forecast worker absenteeism, machine availability, material costs, transportation and production lead times, etc. Besides demand, service providers are also interested in forecasts of population, of other demographic variables, of weather, etc. Importance of Forecasting in Organization
- 5. Forecasting During theLife Cycle Introduction Growth Maturity Decline Sales Time Quantitative models - Time series analysis - Regression analysis Qualitative models - Executive judgment - Market research -Survey of sales force -Delphi method
- 6. 1. Prevent understaffingand disruption to operations. 2. Prevent overstaffing and subsequent costs of employee layoff. 3. Allow efficient and effective use of other HR functions. 1. Benefits of HR Forecasting
- 7. Forecasting hr demand –Managerial Judgment – Trend Analysis – Ratio Analysis – Scatter Plot – Computerized Forecast – Work Study Technique – Delphi technique – Regression Analysis – Econometric Models – Nominal Group Technique – Scenario Forecasting – Workforce Analysis – Workload Analysis – Job Analysis
- 8. Managerial Judgment This techniquesis very simple. In this, manager sit together, discuss and arrive at a figure which would be the future demand for labor. The technique may involve a ‘bottom-to-top’ or ‘top-to-bottom’ approach.
- 9. 1. Naive Approach Demand in next period is the same as demand in most recent period May sales = 48 → Usually not good June forecast = 48
- 10. Trend Analysis Method whichforecast employments requirements on the basis of some organizational index and is one of the most commonly used approaches for projecting HR demand. 1. Business Factor Annual Volume of Sales. 2. Total Number of Employees. 3. Compare the Productivity Ratio. 4. Calculate Human Resources demand. 5. Forecasted Human Resource Requirements.
- 11. Work Study Technique Workstudy technique is based on the volume operation and work efficiency of personnel. Volume of operation is derived from the organizational plan documents and increase/decrease in operation can be measured. Planned output Standard output per hour x standard hours per person
- 12. Delphi Technique This techniquecalls for a facilitator to solicit and collate written, expert opinion on labor forecast. After answer are received, a summary of the information is developed and distributed to the expert, who are than requested to submit revised forecast. Expert never meet face-to-face, but rather communicate through the facilitator.
- 13. Regression Analysis Regression analysisidentifies the movement of two or more inter-related series. It is used to measure the changes in a variable as a result of changes in other variables. Regression analysis determines the relationship between Y variables such as the number of employees and X variables such as service delivery by actually measuring the relationship that existed in the past. Use of the method begins with a series of observation each costing of a value for the Y variable plus a value for each X variable. y = a + b x 22 xnx yxnxy b xbya
- 14. Econometric Models Econometric modelsfor estimation of manpower requirement differ from the statistical methods. Past statistical data are analyzed in the hope that it will prove possible to describe precisely the relationships between a number of variables in mathematical and statistical terms.
- 15. Nominal Group Technique Thenominal group technique is a decision making method for use among groups of many sizes, who want to make their decision quickly, as by a vote, but want everyone’s opinions taken into traditional voting. I. Introduction and Explanation II. Silent Generation of Ideas III.Sharing Ideas IV.Group Discussion V. Voting and Ranking
- 16. Workforce Analysis It means,to determine the rate of influx and out flow of employee. It is through this analysis one can calculate the labor turnover rate, absenteeism rate etc.
- 17. Workload Analysis It isa method that uses information about the actual content of work based on a job analysis of the work. Workload analysis involves use of ratios to determine HR requirement. Both the number of employees and the kind of employees required to achieve organizational goals are identified.
- 18. Forecasting HR demand •Judgmental Technique – Replacement planning – Succession planning • Statistical techniques – Markov Analysis – Gain and loss Analysis
- 19. Replacement chart • Achart used to estimate vacancies in higher level jobs and identify how potential HR supply can fill these vacancies via internal movements from lower levels jobs • Replacement charts provide identification of potential replacements for vacancies within an organization
- 20. Replacement chart • Acomprehensive replacement chart will include information regarding possible replacements for vertical or horizontal movement. • Generally, a replacement chart includes information about employees’ performance, readiness to fill the position, and education.
- 21.
- 22. Succession Planning • Successionplanning is a longer-term process of grooming a successor (selected from a pool of candidates on the basis of perceived competency) for management or critical positions.
- 23. Succession Planning • Determiningthe internal labour supply calls for a detailed analysis of how many people are currently in various job categories or have specific skills within the organization. • The planner then modifies this analysis to reflect changes expected in the near future as a result of retirements, promotions, transfers, voluntary turnover, and terminations.
- 25. Markov analysis • Analysisthat helps to predict internal employee movement from one year to another by identifying percentages of employees who remain in their jobs, get promoted or demoted, transfer, and exit out of the organization
- 26. Markov analysis • Tohelp predict internal employee movement from one year to another by identifying percentages of employees who remain in their jobs, get promoted or demoted, transfer, and exit out of the organization. • By tracking and predicting employment movement within an organization, the Markov analysis allows for the development of a transition matrix to forecast internal labour supply.
- 27. Markov analysis • MarkovAnalysis is the statistical technique used in forecasting the future behavior of a variable or system whose current state or behavior does not depend on its state or behavior at any time in the past in other words, it is random. • The technique is named after Russian mathematician Andrei Andreyevich Markov.
- 28. Markov analysis • Atransition matrix, or Markov matrix, can be used to model the internal flow of human resources. • These matrices simply show as probabilities the average rate of historical movement from one job to another. • To determine the probabilities of job incumbents remaining in their jobs for the forecasting period.
- 29. For a lineworker, for example, there is a 20% probability of being gone in 12 months, a 0% probability of promotion to manager, a 15% probability of promotion to supervisor, and a 65% probability of being a line worker this time next year. Such transition matrices form the bases for computer simulations of the internal flow of people through a large organization over time.
- 30. CONCLUSION • Forecasting isthe process of making statements about events whose actual outcomes (typically) have not yet been observed. • Human resource forecasting is all about estimating the future demand and supply of human resources in an organization.
- 31. REFERNCE • Human ResourcePlanning: an Introduction, Reilly P. Report 312, Institute for Employment Studies, 1996. ISBN: 978-1-85184-238-4. Retrieved from http://www.employment-studies.co.uk/pubs/summary.php?id=312 Retrieved On:15-7-2014 • IBS Center for Management Research. Human Resource Planning. Retrieved from www.icmrindia.org/courseware/Intro%20to%20Hrm/hrm-DS4.htm Retrieved On:15-7-2014
- 32. REFERNCE • http://highered.mcgrawhill.com/sites/dl/free/ 0070951772/846002/Bulmash_SampleChapte r2.pdf RetrievedOn:5-3-2014,13:38 • Lunenburg, Fred C, Human Resource Planning- Forecasting Demand Supply, IJMBA V15 N1 2012 Retrieved On: 5-3-2014,13:40
- 33. Demand Exceeds Supply (Shortage) •Transfer and retrain. • Promotion from within. • Overtime. • Subcontracting. • Part time and temps. • Recruit from outside. Supply Exceeds Demand (Excess) • Reduced hours. • Work sharing. • Voluntary retirements. • Inducement to quit. • Pay freeze or cut. • Layoffs. Dealing with Imbalances
- 34. Bibilography • Adhikari, D.R. (2010 A. D.). Fundamentals of Human Resource Management (3rd ed.). Kathmandu: Buddha Academic Enterprises Pvt. Ltd. • Gary Dessler; Biju Varkkey. (2011 A. D.). Human Resource Management (12th ed.). Delhi, India: Pearson.