2. Determining HR DEMAND
HRM 360
By Nabila Kamal Promy
Forecasting demand
HR demand refers to the
firm’s future need for human
capital, the types of jobs,
number of positions that
must be filled for the firm to
implement its strategy and
achieve goals
How to increase
3. accuracy of forecasting
• By including more factors
that
contribute to change in the
demand instead of relying
on
one factor
• However, complete set of
factors that predict the demand
for a particular job may never
be known
Types of forecasting method
4. Forecasting
Method
Quantitative
1.Trend/Ratio
Analysis
2. Time Series
Method
3. Regression
Analysis
4. Structural
Equation
Modeling
(SEM)
Qualitative
1.
Management Survey
2.
Scenario Planning
3.
Delphi Technique
4. Nominal
Group
Technique
Quantitative Method: Trend/Ratio Analysis
• Trend analysis: forecasting method that extrapolates from historical
trends (focuses on number of employees and an organizational
5. index)
• Ratio analysis: focuses on operational index and demand for labor or
number of employees. Examples of operation indexes: (1)no. of units
produced (2) no. of clients served (3) production hours etc.
Quantitative method:
Trend analysis
7. the appropriate business/operational index
2. Track the operational index over time
3. Track the workforce size over time
4. Calculate the average ratio of the operational index to the
workforce size
5. Calculate the forecasted demand for labor
Quantitative
method: 1. ratio
analysis
Year Operational Index Sales ($)
Number of Employees Employee Requirement Ratio
(Sales/Employee)
2014 2,800 (Actual Data) 155 (Actual Data) 18.06 (2800/155=18.06) Step 1 2015 3,050 (Actual Data) 171
(Actual Data) 17.83 (3050/171=17.83) Step 1 2016 3,195 (Actual Data) 166 (Actual Data) 19.25
8. (3195/166=19.25) Step 1 2017 3,300 (Actual Data) 177 (Actual Data) 18.64 (3300/177=18.64) Step 1
2018 3,500 (Expected Sales)
Step 3
2019 3,600 (Expected Sales)
Step 3
2020 3,850 (Expected Sales)
Step 3
188 (Forecasted)
(3500/18.64=188) Step 4
193 (Forecasted) (3600/18.64)
Step 4
207 (Forecasted) (3850/18.64)
Step 4
18.64 (Forecasted data) Step 2
18.64 (Forecasted data) Step 2
18.64 (Forecasted data) Step 2
In Step 2, we can either select the latest employee requirement ratio in this case
18.64 Or we could have taken the average of past few years ration)
In Step 3, we are declaring our expected sales
Quantitative method: 2. Time series analysis
Quantitative method:
3. Regression Analysis
• Extension of trend analysis
• Regression uses more data than the ratio analysis
9. • Dependent Variables and Independent Variables
• Labor is Demand in Dependent Variable and Organizational/
Operational Indexes are Independent Variables (e.g. Sales, no. of units
produced etc.)
• Derives Equation
• Can decided on which independent variables affect the most
Quantitative method:
4. Structural Equation Modeling
• Process similar to regression analysis
• Instead of single outcome (dependent variable), SEM can consider multiple
outcomes
Qualitative method:
10. 1. Management survey
• Using experts to arrive at a numerical estimate of future labor demand
• Formal qualitative process
• Examples of experts:
oOrganization’s own line managers
oHR managers
o business consultants
o financial analysts
o university researchers
o union staff members
o industry spoke person
o local government staff
Qualitative method:
2. scenario planning
12. 1. Propose forecasting question: How many households will own an electric car in
10 years?
2. Generate list of factors likely to influence the outcome in question (SWOT
analysis)
3. Sort the the factors into naturally occurring groups and rank the groups according
to the importance
4. Select the two group of factors likely to have the strongest and most
unpredictable impact (Create quadrants)
5. Name and describe in story form each of the 4 worlds in the four resulting
quadrants
6. Suggest the skills, competencies and other requirements in each of these 4
worlds
7. Generate a demand forecast necessary to fulfill the firm’s requirements in each of
the 4 worlds
Qualitative method:
2. scenario planning
Qualitative method:
14. 3. Delphi technique
• Process in which the forecast and judgments of a selected group of
experts are solicited an summarized to determine future HR demand
• Usually conducted through questionnaire
• Experts do not meet face to face
Qualitative method:
2. Delphi Technique
1. Define and refine the issue or question (project coordinator is assigned)
2. Identify the experts, terms and time horizon
3. Orient the experts
15. 4. Issue the first round questionnaire
5. Issue the first round questionnaire summary and the second round questionnaire 6.
Continue issuing questionnaire (Till majority or nth round questionnaire is summarized)
Qualitative method:
3. Delphi Technique
Advantages Disadvantages
Avoid issues related to face to
face groups
(1) Shyness (2) perceived lower status/authority (3)
communication deficiency (4) issues of individual
dominance and group thinking
Time and cost associated
16. Can elicit valid feedback from all experts Results can not be validated statistically (process
greatly dependent on individual knowledge)
Can use geographically dispersed experts Follow a single mental model
17. Qualitative method:
4. Nominal group technique
• Long run forecasting technique
• Unlike Delphi method, groups of
experts meet face to face , only
after individual written
preparatory work has been done
and all the demand estimates have
been publicly tabled
• Expert forecast is determined by
secret vote of all group members
(by ranking)
HR budget/staffing table
