What is Demand Forecasting?
HR demand forecasting is a process managers use to predict how much demand for their HR resources will be in the future. It’s used to plan staffing levels, determine budget allocations and make hiring and firing decisions. HR demand forecasting also helps companies avoid hiring too many resources in the short term and then being unable to find enough employees to fill open positions.
Types of HR Demand Forecasting
There are two types of demand forecasting you can do. Trend Forecasting – predicts the future demand for specific HR activities (like staffing levels and hiring/firing rates). Caution: This type of forecasting is more likely to happen accurately if you have an established system to collect data, like a hiring process. If you don’t have a consistent way to track HR activity, trend forecasting may be more difficult. Actual Forecasting – predicts the actual demand for HR resources at a point in the future.
Why is it important to know about HR Demand Forecasts?
HR demand forecasts are critical to the success of any company. To run a successful business, you need employees. And in order to attract and keep top talent, you need to forecast demand for HR resources like managers and HR specialists. HR is a critical function for every organization, and need for managers and HR specialists is expected to grow 13% over the next five years. This demand will be further fueled by the aging population, which will cause the need for more managers and HR specialists. The same factors that will drive the growth in demand for HR specialists will also cause a shortage of these professionals.
HR Demand Forecasting Strategies
HR demand forecasting can be a daunting task. The data gathered by HR departments is extensive, and it can be difficult to make sense of it all. And what data is available often has varying levels of reliability, depending on the kind of data being collected. Making sense of the data and then correctly forecasting demand can be a daunting challenge. The best way to begin is by taking a step back and looking at the overall picture. HR demand forecasting can begin with a better understanding of the needs of an organization. When trying to forecast demand, it helps to look at the organization as a whole and get a better idea of what’s required. First, it’s important to understand the overall current state of the organization. What are the current needs of the organization? What are the current functions? Which departments are understaffed, overstaffed, and where do they lack the necessary resources to function optimally? Knowing what’s required and where the organization is lacking is the first step towards demand forecasting. Once the current state of the organization is better understood, then it can be used as a launching point for demand forecasting.
HR Demand Forecasting Steps
In this section, we will take you through the key steps of HR demand forecasting. We will start with an overview of the process and then slowly drill down into the detail. We will start with a look at how to gather data and what data might be available, followed by a look at how to analyze the data. Once this analysis is complete, we will look at how to forecast demand and what might be the challenges associated with it.
HR demand forecasting techniques- pros and cons
There are many techniques for forecasting HR demand, but which approach is best for your organization depends on the specific needs of your industry, size, and type of business. For example, if you work in the healthcare industry and are experiencing a shortage of HR professionals, you might choose to forecast using actual rather than trend data. However, if you work in a large corporation and experience low but stable demand for HR resources, trend data might be more accurate.
Conclusion
HR demand forecasting can be a daunting task. The data gathered by HR departments is extensive, and it can be difficult to make sense of it all. And what data is available often has varying levels of reliability, depending on the kind of data being collected. Making sense of the data and then correctly forecasting demand can be a daunting challenge. The best way to begin is by taking a step back and looking at the overall picture. HR demand forecasting can begin with a better understanding of the needs of an organization. When trying to forecast demand, it helps to look at the organization as a whole and get a better idea of what’s required. First, it’s important to understand the overall current state of the organization. What are the current needs of the organization? What are the current functions? Which departments are understaffed, overstaffed, and where do they lack the necessary resources to function optimally? Knowing what’s required and where the organization is lacking is the first step towards demand forecasting. Once the current state of the organization is better understood, then it can be used as a launching point for demand forecasting.
Interesting Related Article: “Human Capital Management: How to Manage Your Most Valuable Resource“