There are five methods for determining HR demand:
1. Index/Trend Analysis
2. Regression Analysis
3. Envelope/Scenario Forecasting
4. Delphi Technique
5. 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 them to.
Methods Quantitative Qualitative
Index/Trend Analysis Yes
Regression Analysis Yes
Envelope/Scenario Forecasting Yes Yes
Delphi Technique Yes
Nominal Group Technique Yes
• Demand for labour = number of employees in workforce
There are five steps to conducting an effective index/trend analysis:
1. Select the appropriate business/operational index that is:
a. Known to have a direct influence on the organizational demand for labour
b. Subjected to future forecasting as a result of the normal business
• Business/Operational index
o Level of sales
o Number of units produced
o Number of clients serviced
o Production hours (direct labour)
2. Track the business index over time
Once the business index is selected, it is important to record the quantitative or
numerical levels of the index over time. Data from at least the past four or five
year is necessary. Preferably data from the past decade or more should be used. 3. Track the workforce size over time
Record the historical figures of the total number of employees or the amount of
direct or indirect labour (HR Staff) for exactly the same period used for the
4. Calculate the average ratio of the business index to the workforce size
Employee Requirement Ratio = operational index/demand for labour
This is done for each year to describe the relationship between the two variables
5. Calculate the forecasted demand for labour
Divide the annual forecast for the business index by the average employee
requirement ratio for each future year to get the forecasted annual demand for
Y = (X) (R)
Y= business/operational index
X = demand for labour
R = requirement ratio for each
• Regression analysis presupposes that a linear relationship exists between
one or more independent (causal) variables, which are predicted to affect the
dependent (target) variable.
• Very effective quantitative forecasting technique for short, medium and long
range time horizons
• Can be easily updated and changed
• Projections or multiple predictor estimates, of future demand for personnel
based on a variety of differing assumptions about how future organizational
events will unfold.
• Because we have no certain knowledge of the future course of events, we
would be well served by developing several plausible sets of outcomes.
• Each scenario contains its own set of assumptions, resulting in an entirely
different estimate presented in a single staffing table for each specific course
• The organization’s HR staff are able to develop, future scenarios that are
optimistic (sales will increase by 20%) realistic (sales will increase by 10 %)
or pessimistic (sales will remain constant or increase by 5%) Delphi Technique
The Delphi technique is a qualitative method for deriving detailed assumptions of long-
run HR demand.
• A carefully designed program of sequential, individual interrogations (usually
conducted through questionnaires) interspersed with information feedback on
the opinions expressed by the other participants in previous rounds
• Key feature Once a group of experts are selected, they do not meet face
There are six steps associated with using the Delphi technique for HR demand
1. Define and Refine the issue or question
A project coordinator is assigned and he/she works with HR staff to determine the
specific personnel category or activity that will be the focus of the Delphi technique.
The group targeted for HR forecasting should be well defined so that relevant,
focused and detailed feedback based on a minimum of assumptions can be derived.
2. Identify the experts, teams and time horizon
The project coordinator along with the HR staff compile a team of individuals who are
deemed to be experts with respect to the specific personnel grouping that requires a
3. Orient the Experts
The orientation process of the experts includes an overview of the demand
forecasting decision process. The experts are told either that there will be a predetermined number of questionnaire iterations or that the sequence will continue
until a majority opinion exists among the experts.
4. Issue the First Round Questionnaire
The project coordinator sends each expert the questionnaire by courier, fax, mail or
email and includes a time frame for completing and returning it.
Typically, this first questionnaire focuses on defining both the explicit assumptions
made by each of the experts and the background rationale supporting his or her
particular demand estimate.