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ADMS 3430 (6)
Chapter 6

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Department
Administrative Studies
Course
ADMS 3430
Professor
Len Karakowsky
Semester
Fall

Description
Chapter 6 HR PlanningDetermining HR DemandMethods of forecasting2 methods of forecasting are quantitative and qualitativeQuantitative methods include ration analyses trend analysis regression analysisQualitative methods include envelopescenario planning impact analysis the Delphi technique and the nominal group technique Organizations must consider demand for personnel not only for the current operational period but also well into the future to ensure that the right numbers of workers with the requisite skills and competencies are ready and available to work when the organization requires themTrendRatio analysis objective statistical techniqueTrend analysis is a quantitative approach that attempts to forecast future personnel needs by extrapolating from historical changes in one or more organizational indices A single index such as sales or ratio such as sales per employees might be used However more complex modelling or multiple predictive techniques used by professional planners reply on a combination of several factorsRatio analysis involves examining the relationship between an operational index and the demand for labour relatively straightforward quantitative demand forecasting technique commonly used by many organizations Other operational indices are 1 the number of units produced 2 The number of clients serviced 3 the production hours Some organizations use trend analysis to ascertain demand requirements for 1 direct labour and 2 indirect labourFive steps to conducting an effective trend analysis1Select the appropriate business and operational index HR forecaster must select a readily available business index such as sales level that is 1 known to have direct influence on the organizational demand for labour 2 subjected to future forecasting as a result of the normal business planning process 2Track the business index over time Necessary to go back in time for at least four to five most recent years but preferably for a decade or more to record the quantitative or numerical levels of index over time 3Track the workplace size over time Record the historical figures of the total number of employees or the alternatively the amount of direct and indirect labour for exactly the same period used for the business index 4Calculate the average ratio of the business index to the workforce size Obtain a ratio by dividing the level of sales and for each year of historical data by the number of employees required to produce that years level of sales Ratio is calculated for each year over the period of analysis so that an average ratio describing the relationship between the two variables over time can be determined 5Calculate the forecasted demand for labour Divide the annual forecast for the business index by the average employee requirement ratio for each future year to arrive at forecasted annual demand for labour Although trendratio analysis is widespread due to its ease of use remember that the analysis incorporates only the relationship between a single business variable and demand for labourRegression analysisRegression analysis is another Quantative demand forecasting techniqueRegression analysis is a very effective Quantative forecasting technique for shortmedium and longrange time horizons and can be easily updated and changed Regression is such a powerful technique for forecasting demandRegression analysis presupposes that a linear relationship exists between one or more independent causal variables which are predicted to affect the dependent target variables
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