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Chapter 5

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Administrative Studies
ADMS 3430
Len Karakowsky

CHAPTER 5 HR FORECASTING PROCESS What is HR forecastingHR forecasting constitutes the heart of the HR planning process can be defined as ascertaining the net requirement for personnel by determining the demand for supply of human resources now and in the future Environmental scanning is an important step before forecasting can take placeOnce the senior management team has decided on the organizational strategy the demand for and supply of workers can be determined and specific programs can be developed to reconcile the differences between the requirement for labour in various employment categories and its availability both internally and in the organizations environmentPrograms in such areas as training and development career planning recruiting and selection and managerial appraisal are all stimulated by means of the HR forecasting processForecasting activity categoriesForecasting activity can be subdivided into three categories 1 transactionbased forecasting 2 eventbased forecasting 3 processbased forecasting1Transaction based forecasting focuses on tracking internal change instituted by the organizations managers 2Event based forecasting concerned with change in the external environment3Process based forecasting is not focused on a specific internal organizational event but on the flow or sequencing of several work activities All three categories are important in order to have a comprehensive method for ascertaining HR requirements Forecasting is only an approximation of possible future states and is an activity that strongly favours quantitative and easily codified techniques More successful HR forecasting processes use both qualitative and quantitative data and a number of studies have shown that accuracy of prediction improves significantly when we use a variety of forecasting techniques Effective forecasting also hinges on obtaining a fine balance between global and local control of the process The strategic importance of HR forecastingFew of the more important advantages of HR forecasting are 1 reduces HR costs 2 increases organizational flexibility 3 ensures a close linkage to the macro business forecasting process 4 and ensures that organizational requirements take precedence over issues of resource constraint and scarcity1Reduces HR costsEffective HR forecasting focuses on a comparison between the organizations current stock of workforce KSAOs egexample experience and the numbers skill competencies and so on desired in the workplace of the future Organizations can reduce their HR costs as they take a longrun planning approach to HR issues Proper planning will ensure that any inefficiencies can be avoidance as much as possible consider a situation in which an organization does not have enough work for all its employees but still has to continue to pay wages and benefits or alternatively in which an organization faces as increase in work demands and will have to pay overtime for its current workers 2Increases organizational flexibility Advantage is that its proactive process increases the number of viable policy options available to the organization thereby enhancing flexibility Forecasting processes develop program options that can determine whether it is more advantageous and cost effective to retain or develop current members of the workforce to fill anticipated job openings or fill these openings with external recruits who already possess the required competencies and skills
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