We often encounter the idea of planning in our everyday lives. Once a year, we carefully and thoroughly organise our trips, less frequently contemplating switching jobs or celebrating anniversaries and wedding days. Naturally, almost all of us plan our monthly budget and how household finances will be allocated. Regrettably, many business owners and senior employees overlook the need to forecast labour demand. Interestingly, some CEOs do not employ professional HR managers. They conduct interviews and manage staff themselves. This article will try to explain what workforce demand forecasting is and demonstrate that it is an essential and crucial part of running any company.
We all understand that achieving success is harder without qualified personnel than with a team of experts. This is why a CEO or an HR manager must correctly assess workforce demand, select the most efficient calculation methods, and find sources to meet this need before recruiting new employees. But before we reach that point, we need to begin with the basics and understand what forecasting labour demand entails.
Workforce demand forecasting is a component of a larger workforce planning process. Its primary goal is to list the necessary positions and experts that may become vital in growing the company's business, achieving goals and milestones in the near future.
Workforce planning goals:
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Providing the company with necessary employees while keeping time and financial costs low;
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Supplying the business with proper, professional workers as quickly as possible;
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Workforce demand forecasting allows the reduction of redundant workforce segments or optimisation of their labour
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Proper planning and staff placement ensure the appropriate and highly effective use of any employee’s resources, based on their skills, knowledge, and abilities.
Factors that should be taken into account for proper workforce planning:
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What is your company's financial situation like, and what is the current general state of the economy?;
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Workforce reorganisation (plans on reducing, terminating or transferring employees to new positions. It is also necessary to consider retirements and maternity leaves);
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Analysing and understanding the situation in the employment market and among your competitors is another crucial point;
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The level of salary in the company;
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Perhaps one of the most significant factors is having strategic plans and goals for the company.
Knowing what stage of development your company is at must be a factor when forecasting labour demand. Effective planning is usually achieved during periods of active growth and when establishing the enterprise.
Before tackling workforce demand forecasting, it is also crucial to understand that it is a series of consecutive, well-thought-out actions and decisions that have clear objectives. The primary goal of planning lies in the notion that any enterprise or successful company directory must hire and employ suitably qualified personnel at all positions so that work is performed in a high-quality and efficient manner.
Types of workforce demand forecasting:
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Strategic or long-term planning;
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Tactical (situational) planning.
When formulating strategic plans, it is critical to develop a program aimed at identifying potential employees who may be needed by the company in the future. This process also involves creating a strategic human resource development program that evaluates the necessity of these resources in the long term.
Tactical planning requires a careful analysis of employee organisation demand during a designated period set by the CEO. For instance, this may involve a month, a quarter, or a year. This necessity will depend on several factors: the rate of employee turnover in a given period, the number of retirements, maternity leaves, as well as staff reductions.
Workforce planning periods
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Short-term planning — planning for up to 2 years;
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Medium-term planning — a strategy for 2 to 5 years;
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Long-term planning — planning for the next 5 years and beyond.
So let’s imagine for a moment that you are a new head of the company or an HR expert. What should you start with first concerning workforce demand forecasting?
First, you must collect information on the results and milestones a company is expected to achieve in the coming quarter or year. If you are an HR expert, obtain that information from your superiors. Then examine all short and long-term enterprise goals, tasks, and plans.
In most cases, accountants and department heads will assist in shaping your understanding of the enterprise you work at and its plans, whether you handle human resources or oversee the place.
Things required for successful planning:
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First, you must thoroughly review employee data. You will need access to personal case files, distribute questionnaires, as well as gather information on worker skills and abilities not related to work done in the enterprise;
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A work timetable or schedule of all company employees;
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Data on the percentage of employee turnover at various positions across departments.
At this stage, an in-depth analysis of workforce demand in the company is conducted for various positions over a defined time period. It’s when you answer numerous critical questions necessary for the planning process: how many employees need to be hired, how qualified they must be, and more importantly, when specific staff will be required to fill particular roles.
During this process, you also make the decision of whether to rely on internal human resources or if retraining existing staff will be a more financially viable option.
Whether you're a CEO or an HR professional, remember that any process should be systematic, based on well-considered decisions and a structured approach. Once you begin to dedicate yourself a bit more seriously to your role, you will approach any task, even as complex as workforce planning, with ease, enthusiasm, and dedication.
