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Group-A
Ram Krishna Tiwari
MFC 2nd Semester
Trubhuvan University
What is Forecasting?
 Process of predicting a future event based on
historical data
 Educated Guessing
 Underlying basis of
all business decisions
 Production
 Inventory
 Personnel
 Facilities
Departments throughout the organization depend on
forecasts to formulate and execute their plans.
Finance needs forecasts to project cash flows and capital
requirements.
Human resources need forecasts to anticipate hiring
needs.
Production needs forecasts to plan production levels,
workforce, material requirements, inventories, etc.
Importance of Forecasting in Organization
Demand is not the only variable of interest to
forecasters.
Manufacturers also forecast worker absenteeism,
machine availability, material costs, transportation
and production lead times, etc.
Besides demand, service providers are also
interested in forecasts of population, of other
demographic variables, of weather, etc.
Importance of Forecasting in Organization
Forecasting During the Life Cycle
Introduction Growth Maturity Decline
Sales
Time
Quantitative models
- Time series analysis
- Regression analysis
Qualitative models
- Executive judgment
- Market research
-Survey of sales force
-Delphi method
1. Prevent understaffing and disruption to
operations.
2. Prevent overstaffing and subsequent
costs of employee layoff.
3. Allow efficient and effective use of other
HR functions.
1. Benefits of HR Forecasting
Forecasting hr demand
– Managerial Judgment
– Trend Analysis
– Ratio Analysis
– Scatter Plot
– Computerized Forecast
– Work Study Technique
– Delphi technique
– Regression Analysis
– Econometric Models
– Nominal Group Technique
– Scenario Forecasting
– Workforce Analysis
– Workload Analysis
– Job Analysis
Managerial Judgment
This techniques is very simple. In this, manager sit
together, discuss and arrive at a figure which would
be the future demand for labor. The technique may
involve a ‘bottom-to-top’ or ‘top-to-bottom’ approach.
1. Naive Approach
 Demand in next period is the same as demand
in most recent period
May sales = 48 →
 Usually not good
June forecast = 48
Trend Analysis
Method which forecast employments requirements on
the basis of some organizational index and is one of
the most commonly used approaches for projecting
HR demand.
1. Business Factor Annual Volume of Sales.
2. Total Number of Employees.
3. Compare the Productivity Ratio.
4. Calculate Human Resources demand.
5. Forecasted Human Resource Requirements.
Work Study Technique
Work study technique is based on the volume operation
and work efficiency of personnel. Volume of operation
is derived from the organizational plan documents and
increase/decrease in operation can be measured.
Planned output
Standard output per hour x standard hours per person
Delphi Technique
This technique calls for a facilitator to solicit and
collate written, expert opinion on labor forecast. After
answer are received, a summary of the information is
developed and distributed to the expert, who are than
requested to submit revised forecast. Expert never meet
face-to-face, but rather communicate through the
facilitator.
Regression Analysis
Regression analysis identifies the movement of two or
more inter-related series. It is used to measure the
changes in a variable as a result of changes in other
variables. Regression analysis determines the
relationship between Y variables such as the number of
employees and X variables such as service delivery by
actually measuring the relationship that existed in the
past. Use of the method begins with a series of
observation each costing of a value for the Y variable
plus a value for each X variable.
y = a + b x




 22
xnx
yxnxy
b xbya 
Econometric Models
Econometric models for estimation of manpower
requirement differ from the statistical methods. Past
statistical data are analyzed in the hope that it will
prove possible to describe precisely the relationships
between a number of variables in mathematical and
statistical terms.
Nominal Group Technique
The nominal group technique is a decision making
method for use among groups of many sizes, who want
to make their decision quickly, as by a vote, but want
everyone’s opinions taken into traditional voting.
I. Introduction and Explanation
II. Silent Generation of Ideas
III.Sharing Ideas
IV.Group Discussion
V. Voting and Ranking
Workforce Analysis
It means, to determine the rate of influx and out flow of
employee. It is through this analysis one can calculate
the labor turnover rate, absenteeism rate etc.
Workload Analysis
It is a method that uses information about the actual
content of work based on a job analysis of the work.
Workload analysis involves use of ratios to
determine HR requirement. Both the number of
employees and the kind of employees required to
achieve organizational goals are identified.
Forecasting HR demand
• Judgmental Technique
– Replacement planning
– Succession planning
• Statistical techniques
– Markov Analysis
– Gain and loss Analysis
Replacement chart
• A chart used to estimate vacancies in higher level jobs and
identify how potential HR supply can fill these vacancies via
internal movements from lower levels jobs
• Replacement charts provide identification of potential
replacements for vacancies within an organization
Replacement chart
• A comprehensive replacement chart will include information
regarding possible replacements for vertical or horizontal
movement.
• Generally, a replacement chart includes information about
employees’ performance, readiness to fill the position, and
education.
Replacement chart
Succession Planning
• Succession planning is a longer-term process
of grooming a successor (selected from a pool
of candidates on the basis of perceived
competency) for management or critical
positions.
Succession Planning
• Determining the internal labour supply calls
for a detailed analysis of how many people are
currently in various job categories or have
specific skills within the organization.
• The planner then modifies this analysis to
reflect changes expected in the near future as
a result of retirements, promotions, transfers,
voluntary turnover, and terminations.
 Techniques  for Forecasting   Human Resources
Markov analysis
• Analysis that helps to predict internal
employee movement from one year to
another by identifying percentages of
employees who remain in their jobs, get
promoted or demoted, transfer, and exit out
of the organization
Markov analysis
• To help predict internal employee movement from one year
to another by identifying percentages of employees who
remain in their jobs, get promoted or demoted, transfer, and
exit out of the organization.
• By tracking and predicting employment movement within an
organization, the Markov analysis allows for the development
of a transition matrix to forecast internal labour supply.
Markov analysis
• Markov Analysis is the statistical technique used
in forecasting the future behavior of a variable or system
whose current state or behavior does not depend on its state
or behavior at any time in the past in other words, it
is random.
• The technique is named after Russian mathematician Andrei
Andreyevich Markov.
Markov analysis
• A transition matrix, or Markov matrix, can be
used to model the internal flow of human
resources.
• These matrices simply show as probabilities
the average rate of historical movement from
one job to another.
• To determine the probabilities of job
incumbents remaining in their jobs for the
forecasting period.
For a line worker, for example, there is a 20% probability of being gone in 12 months, a 0% probability of
promotion to manager, a 15% probability of promotion to supervisor, and a 65% probability of being a line
worker this time next year. Such transition matrices form the bases for computer simulations of the internal
flow of people through a large organization over time.
CONCLUSION
• Forecasting is the process of making
statements about events whose actual
outcomes (typically) have not yet been
observed.
• Human resource forecasting is all about
estimating the future demand and supply of
human resources in an organization.
REFERNCE
• Human Resource Planning: an Introduction, Reilly P. Report 312, Institute
for Employment Studies, 1996. ISBN: 978-1-85184-238-4. Retrieved from
http://www.employment-studies.co.uk/pubs/summary.php?id=312
Retrieved On:15-7-2014
• IBS Center for Management Research. Human Resource Planning.
Retrieved from
www.icmrindia.org/courseware/Intro%20to%20Hrm/hrm-DS4.htm
Retrieved On:15-7-2014
REFERNCE
• http://highered.mcgrawhill.com/sites/dl/free/
0070951772/846002/Bulmash_SampleChapte
r2.pdf Retrieved On:5-3-2014,13:38
• Lunenburg, Fred C, Human Resource
Planning- Forecasting Demand Supply, IJMBA
V15 N1 2012 Retrieved On: 5-3-2014,13:40
Demand Exceeds
Supply (Shortage)
• Transfer and retrain.
• Promotion from within.
• Overtime.
• Subcontracting.
• Part time and temps.
• Recruit from outside.
Supply Exceeds Demand
(Excess)
• Reduced hours.
• Work sharing.
• Voluntary retirements.
• Inducement to quit.
• Pay freeze or cut.
• Layoffs.
Dealing with Imbalances
Bibilography
• Adhikari, D. R. (2010 A. D.). Fundamentals of Human
Resource Management (3rd ed.). Kathmandu:
Buddha Academic Enterprises Pvt. Ltd.
• Gary Dessler; Biju Varkkey. (2011 A. D.). Human
Resource Management (12th ed.). Delhi, India:
Pearson.
 Techniques  for Forecasting   Human Resources

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Techniques for Forecasting Human Resources

  • 1. Group-A Ram Krishna Tiwari MFC 2nd Semester Trubhuvan University
  • 2. What is Forecasting?  Process of predicting a future event based on historical data  Educated Guessing  Underlying basis of all business decisions  Production  Inventory  Personnel  Facilities
  • 3. Departments throughout the organization depend on forecasts to formulate and execute their plans. Finance needs forecasts to project cash flows and capital requirements. Human resources need forecasts to anticipate hiring needs. Production needs forecasts to plan production levels, workforce, material requirements, inventories, etc. Importance of Forecasting in Organization
  • 4. Demand is not the only variable of interest to forecasters. Manufacturers also forecast worker absenteeism, machine availability, material costs, transportation and production lead times, etc. Besides demand, service providers are also interested in forecasts of population, of other demographic variables, of weather, etc. Importance of Forecasting in Organization
  • 5. Forecasting During the Life Cycle Introduction Growth Maturity Decline Sales Time Quantitative models - Time series analysis - Regression analysis Qualitative models - Executive judgment - Market research -Survey of sales force -Delphi method
  • 6. 1. Prevent understaffing and disruption to operations. 2. Prevent overstaffing and subsequent costs of employee layoff. 3. Allow efficient and effective use of other HR functions. 1. Benefits of HR Forecasting
  • 7. Forecasting hr demand – Managerial Judgment – Trend Analysis – Ratio Analysis – Scatter Plot – Computerized Forecast – Work Study Technique – Delphi technique – Regression Analysis – Econometric Models – Nominal Group Technique – Scenario Forecasting – Workforce Analysis – Workload Analysis – Job Analysis
  • 8. Managerial Judgment This techniques is very simple. In this, manager sit together, discuss and arrive at a figure which would be the future demand for labor. The technique may involve a ‘bottom-to-top’ or ‘top-to-bottom’ approach.
  • 9. 1. Naive Approach  Demand in next period is the same as demand in most recent period May sales = 48 →  Usually not good June forecast = 48
  • 10. Trend Analysis Method which forecast employments requirements on the basis of some organizational index and is one of the most commonly used approaches for projecting HR demand. 1. Business Factor Annual Volume of Sales. 2. Total Number of Employees. 3. Compare the Productivity Ratio. 4. Calculate Human Resources demand. 5. Forecasted Human Resource Requirements.
  • 11. Work Study Technique Work study technique is based on the volume operation and work efficiency of personnel. Volume of operation is derived from the organizational plan documents and increase/decrease in operation can be measured. Planned output Standard output per hour x standard hours per person
  • 12. Delphi Technique This technique calls for a facilitator to solicit and collate written, expert opinion on labor forecast. After answer are received, a summary of the information is developed and distributed to the expert, who are than requested to submit revised forecast. Expert never meet face-to-face, but rather communicate through the facilitator.
  • 13. Regression Analysis Regression analysis identifies the movement of two or more inter-related series. It is used to measure the changes in a variable as a result of changes in other variables. Regression analysis determines the relationship between Y variables such as the number of employees and X variables such as service delivery by actually measuring the relationship that existed in the past. Use of the method begins with a series of observation each costing of a value for the Y variable plus a value for each X variable. y = a + b x      22 xnx yxnxy b xbya 
  • 14. Econometric Models Econometric models for estimation of manpower requirement differ from the statistical methods. Past statistical data are analyzed in the hope that it will prove possible to describe precisely the relationships between a number of variables in mathematical and statistical terms.
  • 15. Nominal Group Technique The nominal group technique is a decision making method for use among groups of many sizes, who want to make their decision quickly, as by a vote, but want everyone’s opinions taken into traditional voting. I. Introduction and Explanation II. Silent Generation of Ideas III.Sharing Ideas IV.Group Discussion V. Voting and Ranking
  • 16. Workforce Analysis It means, to determine the rate of influx and out flow of employee. It is through this analysis one can calculate the labor turnover rate, absenteeism rate etc.
  • 17. Workload Analysis It is a method that uses information about the actual content of work based on a job analysis of the work. Workload analysis involves use of ratios to determine HR requirement. Both the number of employees and the kind of employees required to achieve organizational goals are identified.
  • 18. Forecasting HR demand • Judgmental Technique – Replacement planning – Succession planning • Statistical techniques – Markov Analysis – Gain and loss Analysis
  • 19. Replacement chart • A chart used to estimate vacancies in higher level jobs and identify how potential HR supply can fill these vacancies via internal movements from lower levels jobs • Replacement charts provide identification of potential replacements for vacancies within an organization
  • 20. Replacement chart • A comprehensive replacement chart will include information regarding possible replacements for vertical or horizontal movement. • Generally, a replacement chart includes information about employees’ performance, readiness to fill the position, and education.
  • 22. Succession Planning • Succession planning is a longer-term process of grooming a successor (selected from a pool of candidates on the basis of perceived competency) for management or critical positions.
  • 23. Succession Planning • Determining the internal labour supply calls for a detailed analysis of how many people are currently in various job categories or have specific skills within the organization. • The planner then modifies this analysis to reflect changes expected in the near future as a result of retirements, promotions, transfers, voluntary turnover, and terminations.
  • 25. Markov analysis • Analysis that helps to predict internal employee movement from one year to another by identifying percentages of employees who remain in their jobs, get promoted or demoted, transfer, and exit out of the organization
  • 26. Markov analysis • To help predict internal employee movement from one year to another by identifying percentages of employees who remain in their jobs, get promoted or demoted, transfer, and exit out of the organization. • By tracking and predicting employment movement within an organization, the Markov analysis allows for the development of a transition matrix to forecast internal labour supply.
  • 27. Markov analysis • Markov Analysis is the statistical technique used in forecasting the future behavior of a variable or system whose current state or behavior does not depend on its state or behavior at any time in the past in other words, it is random. • The technique is named after Russian mathematician Andrei Andreyevich Markov.
  • 28. Markov analysis • A transition matrix, or Markov matrix, can be used to model the internal flow of human resources. • These matrices simply show as probabilities the average rate of historical movement from one job to another. • To determine the probabilities of job incumbents remaining in their jobs for the forecasting period.
  • 29. For a line worker, for example, there is a 20% probability of being gone in 12 months, a 0% probability of promotion to manager, a 15% probability of promotion to supervisor, and a 65% probability of being a line worker this time next year. Such transition matrices form the bases for computer simulations of the internal flow of people through a large organization over time.
  • 30. CONCLUSION • Forecasting is the process of making statements about events whose actual outcomes (typically) have not yet been observed. • Human resource forecasting is all about estimating the future demand and supply of human resources in an organization.
  • 31. REFERNCE • Human Resource Planning: an Introduction, Reilly P. Report 312, Institute for Employment Studies, 1996. ISBN: 978-1-85184-238-4. Retrieved from http://www.employment-studies.co.uk/pubs/summary.php?id=312 Retrieved On:15-7-2014 • IBS Center for Management Research. Human Resource Planning. Retrieved from www.icmrindia.org/courseware/Intro%20to%20Hrm/hrm-DS4.htm Retrieved On:15-7-2014
  • 32. REFERNCE • http://highered.mcgrawhill.com/sites/dl/free/ 0070951772/846002/Bulmash_SampleChapte r2.pdf Retrieved On:5-3-2014,13:38 • Lunenburg, Fred C, Human Resource Planning- Forecasting Demand Supply, IJMBA V15 N1 2012 Retrieved On: 5-3-2014,13:40
  • 33. Demand Exceeds Supply (Shortage) • Transfer and retrain. • Promotion from within. • Overtime. • Subcontracting. • Part time and temps. • Recruit from outside. Supply Exceeds Demand (Excess) • Reduced hours. • Work sharing. • Voluntary retirements. • Inducement to quit. • Pay freeze or cut. • Layoffs. Dealing with Imbalances
  • 34. Bibilography • Adhikari, D. R. (2010 A. D.). Fundamentals of Human Resource Management (3rd ed.). Kathmandu: Buddha Academic Enterprises Pvt. Ltd. • Gary Dessler; Biju Varkkey. (2011 A. D.). Human Resource Management (12th ed.). Delhi, India: Pearson.