1. DEMAND AND SUPPLY IN HUMAN RESOURCE FORECASTING

This process estimates the number and type of employees an organization will need (demand) and the number and type of employees it will have available (supply) in the future.

Human Resource Demand Forecasting (What we need)

  • Definition: Estimating the future quantity and quality of employees required to achieve organizational goals.

  • Techniques:

    • Managerial Judgment/Expert Opinion: Subjective estimates from managers (e.g., Delphi technique, Nominal Group Technique).

    • Statistical/Quantitative Methods:

      • Trend Analysis: Analyzing past staffing levels and their relationship with business factors (e.g., sales volume).

      • Ratio Analysis: Determining the ratio between production volume and the number of employees required (e.g., sales staff per $1 million in sales).

      • Regression Analysis: Statistically examining the relationship between staffing levels and key business indicators.

Human Resource Supply Forecasting (What we have)

  • Definition: Estimating the future availability of employees both internally (current staff) and externally (the labor market).

  • Internal Supply Techniques:

    • Staffing Tables/Personnel Records: Basic count of employees by job level, skills, and demographic data.

    • Skills/Management Inventories: Detailed records of employees' skills, experience, training, and development potential.

    • Markov Analysis (Transition Matrix): Tracks the percentage of employees who remain in a job, move to another job, or leave the organization over a period.

    • Succession Planning: Identifying and developing employees for key positions.

  • External Supply Techniques: Assessing the external labor market, competitor practices, economic conditions, and demographic shifts.

Bridging the Gap

  • The difference between demand and supply reveals a shortage (demand > supply) or a surplus (supply > demand).

  • Shortage Strategies: Recruitment, training, overtime, temporary workers, outsourcing.

  • Surplus Strategies: Hiring freeze, early retirement, reduced hours, layoffs, demotion, severance.