Group-A

Ram Krishna Tiwari

MFC 2nd Semester

Trubhuvan University

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

Departments throughout the organization 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

Demand is not the 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

Forecasting During the Life 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

1. Prevent understaffing and disruption tooperations.

2. Prevent overstaffing and subsequentcosts of employee layoff.

3. Allow efficient and effective use of otherHR functions.

1. Benefits of HR Forecasting

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

Managerial Judgment

This techniques is 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.

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

Trend Analysis

Method which forecast 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.

Work Study Technique

Work study 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

Delphi Technique

This technique calls 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.

Regression Analysis

Regression analysis identifies 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

yxnxyb xbya

Econometric Models

Econometric models for 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.

Nominal Group Technique

The nominal 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

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.

Workload Analysis

It is a 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.

Forecasting HR demand

• Judgmental Technique

– Replacement planning

– Succession planning

• Statistical techniques

– Markov Analysis

– Gain and loss Analysis

Replacement chart

• A chart used to estimate vacancies in higher level jobs andidentify how potential HR supply can fill these vacancies viainternal movements from lower levels jobs

• Replacement charts provide identification of potentialreplacements for vacancies within an organization

Replacement chart

• A comprehensive replacement chart will include informationregarding possible replacements for vertical or horizontalmovement.

• Generally, a replacement chart includes information aboutemployees’ performance, readiness to fill the position, andeducation.

Replacement chart

Succession Planning

• Succession planning 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.

Succession Planning

• Determining the internal labour supply callsfor a detailed analysis of how many people arecurrently in various job categories or havespecific skills within the organization.

• The planner then modifies this analysis toreflect changes expected in the near future asa result of retirements, promotions, transfers,voluntary turnover, and terminations.

Markov analysis

• Analysis that 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

Markov analysis

• To help predict internal employee movement from one yearto another by identifying percentages of employees whoremain in their jobs, get promoted or demoted, transfer, andexit out of the organization.

• By tracking and predicting employment movement within anorganization, the Markov analysis allows for the developmentof a transition matrix to forecast internal labour supply.

Markov analysis

• Markov Analysis is the statistical technique usedin forecasting the future behavior of a variable or systemwhose current state or behavior does not depend on its stateor behavior at any time in the past in other words, itis random.

• The technique is named after Russian mathematician AndreiAndreyevich Markov.

Markov analysis

• A transition matrix, or Markov matrix, can be used to model the internal flow of human resources.

• These matrices simply show as probabilitiesthe average rate of historical movement fromone job to another.

• To determine the probabilities of jobincumbents remaining in their jobs for theforecasting period.

For a line worker, for example, there is a 20% probability of being gone in 12 months, a 0% probability ofpromotion to manager, a 15% probability of promotion to supervisor, and a 65% probability of being a lineworker this time next year. Such transition matrices form the bases for computer simulations of the internalflow of people through a large organization over time.

CONCLUSION

• Forecasting is the 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.

REFERNCE

• Human Resource Planning: 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

REFERNCE

• http://highered.mcgrawhill.com/sites/dl/free/0070951772/846002/Bulmash_SampleChapter2.pdf Retrieved On: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

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

Bibilography

• Adhikari, D. R. (2010 A. D.). Fundamentals of HumanResource Management (3rd ed.). Kathmandu:Buddha Academic Enterprises Pvt. Ltd.

• Gary Dessler; Biju Varkkey. (2011 A. D.). HumanResource Management (12th ed.). Delhi, India:Pearson.