HR Forecasting 1.pptx

Presentation on HR forecasting

1. Human Resource Forecasting HR forecasting is the heart of the HR planning process by ascertaining the net requirements for staff by determining the levels of demand for, and supply of human resources now and in the future. Forecasting Activity Categories Transaction-based forecasting - focuses on tracking internal change instituted by the organizations managers Event-based forecasting - concern with changes in the external environment Process-based forecasting - not focused on a specific internal organizational event but on the flow or sequencing of several work activities 1

2. All three of these categories are important to have a comprehensive method for ascertaining HR requirements. This is only an approximation which strongly favors quantitative techniques. The most successful HR forecasting processes use both qualitative and quantitative data, as the accuracy has proven to be substantially higher (p. 143-144 Belcourt / McBey ) Benefits of HR Forecasting Reduces HR costs Increases organizational flexibility Ensures a close linkage to the Macro Business Forecasting Process Ensures that organizational requirements take precedence over issues of resource constraint and scarcity 2

3. Key Personnel Analyses Conducted by HR forecasters Specialist/ Technical / Professional Personnel Employment Equity-Designated Group membership Managerial and executive personnel Recruits Forecasting Process 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 3

4. External Factors Affecting HR Forecasting 1) Environmental Factors affecting the HR process include: Economy, labor markets and unions, governmental laws and regulations, industry and product life cycles, technological changes, competitor labor usage, global market for skilled labor, demographic changes 2) Organizational Factors Affecting HR Forecasting Corporate mission / strategic goals / Operational goals, production budgets/HR Policies/Organizational structure, restructuring/ Worker KSA's, competencies, expectations / HRMS level of development / Organizational culture, climate, job satisfaction, communications / Job analysis, workforce coverage, current data 4

5. HR Forecasting Time Horizons Current Forecast : The one being used to meet the immediate operational needs of the organization. (Up to the end of the current operating cycle, or a maximum of one year into the future.) Short-run Forecast : Extends forward from the current forecast and states the HR requirements for the next one-to-two year period beyond the current operational requirements. Medium-run Forecast: Typically, one that identifies requirements for two to five years into the future. Long-run Forecast: Typically extends five or more years ahead of the current operational period. Due to the number of changes that could affect an organization's operations, the long-run forecast is extremely flexible. 5

6. The outcome of forecasts derived from these four time horizons leads to predictions and projections Prediction: A single numerical estimate of HR requirements associated with a specific time horizon and set of assumptions. Projection: Several HR estimates based on a variety of assumptions Determining Net HR Requirements Determine HR Demand: each organizational subunit has to submit net personal requirements to the corporate forecasting unit, based on future needs for labor required to meet agreed-on objectives (e.g., market share/production level). HR demand figure must include individuals needed to maintain/replace personnel who retire/die/fired/terminated/long term care, replacements for those who are promoted/transferred. 6

7. This sub-unit labour demands are then aggregated and used as starting point for HR demand forecasts. Planned future changes in organizational design or restructuring issues that can make fluctuation in staffing levels must be incorporated into the equation to revise aggregated new departmental demand requirements Conduct a cost estimate (HR Budget) for the net HR demand figure to determine if forecasts are realistic under given financial considerations. 2. Ascertain HR Supply internal supply --> current members of the organizational workforce who can be retained, promoted, transferred, to fill anticipated HR requirements 7

8. external supply --> potential employees who are currently undergoing training, working for competitors, members of unions of professional associations, or currently are in a transitional stage between jobs or unemployment. There are several reasons many organizations use external labor to meet their HR demand: when their internal searches and job posting process fails to identify sufficient numbers of high-quality internal candidates focus is on expansion in terms of quantity in stead of labour efficiency, labor-saving technology. internal employees may be comfortable with the status quo, whereas external applicants can introduce the organization to competitive insights and creative operational techniques an internal candidate may be considered more expensive than an external candidate 8

9. the use of headhunters may enable the organization to lure away from competitive firms proven high performers if organizational objectives require a shift in operating techniques, culture, and past practices, hiring external candidates is often desirable for shaking up the organization. Other considerations– Hr policies, proper communication, appropriate media, etc. Determine Net HR Requirements HR Demand= external supply+ internal supply External supply= HR Demand-internal supply External supply requirements = replacement + change supply components Here, change supply = hiring to increase (or decrease) the overall staffing level replacement supply= hiring to replace all normal losses 9

10. External supply = current workforce size x (replacement % per year + change % per year) Example: Current workforce size 1000 workers, an annual historical replacement/loss rate of 11%, and a desired future growth of 7%. external supply = 1000 (.11 + .07) = 110 + 70 = 180 *110 new hires to replace departing workers and 70 workers are required for new growth. Institute HR Programs HR Deficit and HR Surplus HR deficit --> occurs when demand for HR exceeds the current personnel resources available in the organization's workforce (HR internal supply) 10

11. HR surplus --> occurs when the internal workforce supply exceeds the organization's requirement or demand for personnel When an HR surplus exists Employees might be laid off Employers might terminate employees if certain jobs are deemed redundant Job Sharing: when two or more employees perform the duties of one full-time position, each sharing the work activities on a part-time basis. Organizations can lends some of its excess workforce to community groups or permit those surplus workers to take educational leave or training away from the operational workplace 11

12. Attrition is the process of reducing an HR surplus by allowing the size of the workforce to decline naturally due to the normal pattern of losses associated with retirements, deaths, voluntary turnover, and so on. A hiring freeze is a prohibition on all external recruiting activities When an HR Deficit exists Offer existing employees the opportunity to work overtime. The hiring of part-time and full-time employees. The use of temporary employment agencies and contract workers. Transfers and promotions of existing employees into areas of the business that are experiencing a shortage 12

13. 2 nd Chapter - Succession Management Succession Management refers too the process of ensuring that pools of skilled employees are trained and available to meet the strategic objectives of the organization. This is a process of identifying employees who have the potential to assume key positions in the organization and preparing them for those positions. Reasons for Succession Management Provide increased opportunities for high-potential workers. Identify replacement needs as a means of targeting necessary training, employee education, and employee development. Increase the talent pool of promotable employees. Contribute to implementing the organization’s strategic business plans. Help individuals realize their career plans within the organization. 13

14. 6. Tap the potential for intellectual capital in the organization. 7. Encourage the advancement of diverse groups. 8. Improve the employee’s ability to respond to changing environmental demands. 9. Improve employee morale. 10. Cope with the effects of voluntary separation programs. 11. Decide with workers can be terminated without damage to the organization. 12. Cope with the effects of downsizing. 13. Reduce headcount to essential workers only. Evolution of Succession Management Replacement planning can be defined as the process of finding replacement employees for key managerial positions: if the CEO dies, who will be prepared to take over that position? Formal and methodical replacement planning has existed over 30 years. 14

15. This section shows how replacement planning has evolved into succession management by- Broadening the focus, Expanding the time horizon, Creating a talent pool of replacements, and Improving the evaluation system. Succession Management Process Align Succession Management Plans with Strategy. Identify the skills and competencies needed to meet strategic objectives. Identify high potential employees Provide developmental opportunities and experiences. Monitor Succession Management 15

16. 1) Align Succession Management Plans with Strategy Management development has to be linked to business plans and strategies. If the business plan focuses on global markets, then managers have to be trained to manage global businesses. The strategic connection is important, so organizations must start with the business plan. Coupled with environmental scanning, managers try to predict where the organization will be in three to five to ten years. Identify the skills and competencies needed to meet strategic objectives. 2) There are al least two approaches to identify characteristics of successful managers: Job-Based Approach Competency-Based Approach 16

17. 3) Identify high potential employees Organizations use several approaches to identify managerial talent, including the following: Temporary replacements Replacement charts Strategic replacement Talent management culture 4) Provide developmental opportunities and experiences. We should first consider two issues: Are leaders born or made? Should organizations produce their own managerial talent or buy it on the open market? 17

18. Management Development methods: Promotions, Job Rotations, Special assignments, Formal Training and development, Mentoring and Coaching. Employee role in Succession Management By creating a process that invites employee participation, succession managers are more likely to gain employee commitment to and ownership of the plans 18

19. Abstract - Qualitative Forecasting Techniques Technique: Nominal group Description: A group of four or five participants is asked to present their views regarding labor forecasts. These views are written down, with no discussion until all of the members have advanced their positions. The group then discusses the information presented and subsequently, a final ballot is taken to determine its judgment. 2. Delphi Technique: This technique calls for a facilitator to solicit and collate written, expert opinions on labor forecasts. After answers are received a summary of the information is developed and distributed to the experts, who are then requested to submit revised forecasts. Experts never meet face-to-face, but rather communicate through the facilitator. 19

20. 3. Replacement Planning: Forecasting estimates are based on charting techniques, which identify current job incumbents and relevant information about each of them. This information typically includes a brief assessment of performance and potential age length of time in current position, and overall length of service. 4. Allocation Planning: This involves judgments about labor supply or demand by observing the movement of employees through positions at the same organizational level. Quantitative forecasting techniques: 1. Regression model: Fluctuations in labor levels are projected using relevant variables such as sales. 2. Time series model: Fluctuations in labor levels are projected by isolating trend, seasonal, cyclical and irregular effects. 3. Economic model: Fluctuations in labor levels are projected using a specified form of the production function. 20

21. 4. Linear Programming model: Fluctuations in labor levels are analyzed using an objective function as well as organizational and environmental constraints. 5. Markov Model: Fluctuations in labor levels are projected using historical transition rates. Miles and snow TYPOLOGY and FORECASTING According to the research conducted by Doty et al.(1993), the Miles and Snow typology is the best orga -on typology that orga -on can use to categorize their strategy, structure and process. It appears to be particularly well suited for the analysis of HRM functions. Indeed, this one reason why Olian and Rynes (1984) used it in their study of orga -al staffing. Moreover, as table 1 indicates, Miles and Snow(1984) specifically addressed the importance of fitting orga -al type with the appropriate HR system. 21

22. 22 HR systems Defender Prospector Analyzer Basic Strategy Building Human resources Acquiring human resources Allocating Human resources Recruiting and selection Little recruiting above entry level; selection based on low cost devices Sophisticated recruiting at all levels; selection based on high cost devices Mixed recruiting and selection approaches Training and development Skill building and training programs Limited training programs Mixed T & D approaches

23. HR systems Defender Prospector Analyzer Performance appraisal Process oriented(e.g. critical incidents or production targets); individual/group performance evaluations; time-series comparison(e.g. previous years performance) Results oriented(e.g. MBO or profit targets); division/corp. performance evaluations; cross-sectional comparisons(e.g. other companies during same period Mixed performance appraisal approaches Compensation Oriented toward position in organization ; internal consistency Oriented toward performance; external competitiveness Mixed compensation approaches 23