12 Methods of Forecasting the Demand for Manpower

Manpower planning has two aspects quantitive and qualitative. The quantitative aspect is concerned with determining the number of employees required in a future period of time. Qualitative aspects are related to the skills, competencies, and quality of manpower required.

major techniques of human resource forecasting
major techniques of human resource forecasting

The various methods and approaches employed in manpower forecasting can be divided into two categories judgemental and mathematical.

What are the Human Resource Forecasting Techniques?

Some important methods of forecasting the demand for manpower are discussed below:

1. Bottom-Up Forecasting

This is the simplest judgmental method. In this approach, each unit, branch, or department estimates its own future need for employees.

Ideally, managers receive some guidance and information, which they combine with their own perspective to reach the estimates.

The sum of the estimated unit needs is the demand forecast for the whole organization.

2. Top-Down Forecasting

It involves forecasting by experienced top managers and executives.

These experts meet to discuss how trends, business plans, the economy, and other factors will affect the need for human resources at various levels of the organization.

Besides, predicting the most likely future demand, these experts also may make separate forecasts based on best and worst-case scenarios.

Related: Must-Have Skills and Qualities of Effective Corporate Trainer.

3. Delphi Technique

One highly structures judgemental method of expert forecasting utilizes the Delphi technique to achieve group consensus on a forecast.

In using this technique, the experts do not meet face to fade.

This is more economical if they are assigned to different locations. It also can improve the quality of decision making by minimizing disruptive personality conflicts and preventing the loudest group member from dominating the decision process.

The first step in the Delphi process is to develop an anonymous questionnaire that asks the experts for an opinion and the reasons why they hold that opinion.

The results of the questionnaire are compiled and returned to the experts, along with a second anonymous questionnaire.

4. Nominal Group Technique

This is similar to the Delphi method. However, experts join at a conference table and independently list their ideas in writing. The experts then share their ideas with groups in turn.

As the ideas are presented, a master list of the ideas is compiled so that everyone can refer back to them.

The ideas are discussed and ranked by members vote.

5. Productivity and Staffing Ratios

Ratio analysis is a simple mathematical method. It uses only one factor to predict demand for manpower.

For example, to predict the need for labor, one could examine staffing levels during the last few years, note the trend, and extend this trend to the upcoming year.

A better method would be to use forecasts for the coming year’s sales, production, or another business factor is known to be related to the need for labor.

This information would then combined with productivity ratios to predict the number of direct labor employees needed.

Direct to indirect labor staffing ratios are using to calculate the number of individuals required in other jobs.

6. Trend Analysis

This method incorporates certain business factors ( like units produced, revenues).

There are six steps in trend analysis:

  1. Find the appropriate business factor that relates to the size of the workforce.
  2. Plot the historical record of the factor in relation to the size of the workforce.
  3. Compute the productivity ratios (average output per worker per year).
  4. Determine the trend.
  5. Make necessary adjustments in the trend, past, and future.
  6. Project to the target year.

The use of the approaches business factor is critical to the success of trend analysis. It is futuristic and actuarial.

7. Regression Analysis

This method uses information from the past relationship between the organization’s employment level and some important success criteria known to be related to employment.

For example, companies can establish a statistical relationship between a sale for work output and level of employment. Such a relationship, however, also is influenced by the learning curve.

Things to Know When Designing an Employee Training Program.

8. Mathematical Models

A mathematical model expresses the relationship between independent variables like investment, production, etc. and dependent variables like the number of employees required.

Several types of models like optimization models, probabilistic models can be used.

9. Workload Analysis

Under this method, the total workload of each department is estimated on the basis of sales forecasts, work schedules, growth rates, expansion plans, etc.

The workload is estimated intangible units so that it can be translated into manpower.

Workstudy technique is used to estimate how long a time operation would take and the manpower required per unit of output.

10. Skills Analysis

After determining job requirements, the quality of employees can be determined.

methods of forecasting the demand for manpower
methods of forecasting the demand for manpower

To know the requirements of skill for a particular job, a job analysis is made.

A job is analyzed in terms of duties, responsibilities, skills, and competencies required to perform the job.

Roles and Responsibilities of Employee Training Manager.

11. Group Brainstorming

This technique use experts who discuss the issues face to face.

They make some assumptions about future business direction.

They first examine the strategic plans of the firm and predict the future market demand basing on certain factors.

The estimates are generated based on these multiple assumptions.

12. Salesforce Estimate

It is used when the need for additional employees arises consequently to the introduction of new products by the firm.

When the new products are launched, sales personnel are asked to estimate the demand for the product (expected volume of sales) on the basis of their familiarity with customer needs and interests.

This information is used to estimate the number of employees that will be needed to meet the demand.

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