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MHR 849 (14)

chapter 6

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Ryerson University
Human Resources
MHR 849
Rupa Banerjee

Chapter 6: The HR Forecasting Process - HR forecasting: the heart of the HR planning process, can be defined as ascertaining the net requirement for personnel by determining the demand for and supply of human resources now and in the future Forecasting Activity Categories Forecasting activity can be subdivided into three categories: 1. Transaction-based forecasting: forecasting that focuses on tracking internal change instituted by organization’s managers 2. Event-based forecasting: forecasting concerned with changes in the external environment 3. Process-based forecasting: forecasting not focused on specific internal organizational event but on the flow or sequencing of several work activities Benefits of HR Forecasting - Reduce HR costs – organizations less likely to have to react in costly last-minute crisis mode to unexpected developments in the internal or external labour markets - Increases organizational flexibility – increase number of viable policy options available to organization - Ensures a close linkage to macro business forecasting process – overall organizational objectives are input into HR forecasting process because ensures decision makers in organization (1) Are aware of key HR issues and constraints that might affect organizational plans for success (2) Ensure that the HR objectives are closely aligned with the organization’s operational business objectives - Ensure that organizational requirements take precedence over issues of resource constraint and scarcity o Human resources demand: the organization’s projected requirement for human resources o Human resources supply: the source of workers to meet demand requirements, obtained either internally (current members of the organization’s workforce) or from external agencies Key Personnel Analyses Conducted by HR Forecasters A. Specialist/Technical/Professional Personnel B. Employment Equity – Designated Group Membership - Designated groups: identifiable groups deemed to need special attention; in the case of Canadian HR these are people of aboriginal descent, women, people with disabilities, and members of visible minorities C. Managerial and Executive Personnel – CEP, president, vice presidents D. Recruits 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 HR Forecasting Time Horizons 1. Current forecast – one being used to meet immediate operational needs of the organization (up to one year) 2. Short-run forecast – extends forward from the current forecast and states the HR requirements (from one to two years) 3. Medium-run forecast – from two to five years 4. Long-run forecast – due to uncertainty and significant number and types of changes that can affect the organization’s operations, this forecast is by necessity extremely flexible and is statement of probably requirements given a set of current assumptions (for five or more years) Outcomes of forecasts - Prediction: a single numerical estimate of HR requirements associated with specific time horizon and set of assumptions - Projection: several HR estimates based on a variety of assumptions - Envelope: an analogy in which one can easily visualize the corners of an envelope containing the upper and lower limits or “bounds” of the various HR projections extending into the future - Scenario: a proposed sequence of events with its own set of assumptions and associated program details - Contingency plans: plans to be implemented when severe, unanticipated changes to organizational or environmental factors completely negate the usefulness of the existing HR forecasting predictions or projections Determining Net HR Requirements 1. Determine HR Demand - Forecast the net personnel requirements for each organizational sub-unit – role this up to net corporate requirements - Forecasts are created for each of the forecasting time horizons previously mentioned – current, short-run, medium run, long-run -
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