We often encounter the concept of planning in our daily lives. Once a year, we meticulously and thoroughly plan our holidays, less frequently considering changing our workplace or celebrating anniversaries and wedding days. Of course, almost all of us plan how the monthly budget should be spent and how household funds are going to be distributed. Unfortunately, many business owners and senior employees overlook the necessity of predicting labour demand. What’s even more interesting is that there are CEOs who don’t utilise professional HR managers. They conduct interviews and manage employees all by themselves. This article will endeavour to explain what workforce demand forecasting is and demonstrate that this is an essential and crucial part of running any company.
We all understand that it is harder to achieve success without qualified personnel than it is with a team of experts. This is why a CEO or an HR manager must properly assess workforce demand, select the most efficient calculation methods, and find sources to meet this need before recruiting new employees. But before we get there, we need to start with the basics and understand what forecasting labour demand means.
Workforce demand forecasting is a part of a larger workforce planning process. Its main aim is to compile a list of necessary positions and experts that can 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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Ensuring the business is supplied with the right, professional workers in the shortest possible time;
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Workforce demand forecasting allows the reduction of unnecessary workforce segments or optimises their labour.
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The right planning and employee placement support the proper and highly effective use of any employee’s resources, based on their skills, knowledge, and abilities.
Factors that should be considered for proper workforce planning:
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What is your company’s financial situation, and what is the current general state of the economy?;
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Workforce reorganisation (plans on reducing, dismissing 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 amongst your competitors is another crucial point;
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The level of salary within the company;
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Perhaps one of the most important factors is having strategic plans and goals for the company.
Knowing at which stage of development your company currently is must be one of the factors to consider when forecasting labour demand. In most cases, effective planning can be achieved during periods of active growth and at the time of establishing the enterprise.
Before you tackle workforce demand forecasting, it is also vital to understand that it is a process of consecutive, thought-through actions and decisions that have clear goals in front of it. The main objective of planning is based on the idea that any enterprise or successful company directory must hire and employ fairly qualified personnel at all positions so that work can be done in a high-quality and effective manner.
Types of workforce demand forecasting:
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Strategic or long-term planning;
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Tactical (situational) planning.
When making strategic plans, it is critical to devise a programme aimed at discovering potential employees who may become required by the company in the future. This process also involves creating a strategic human resource development programme that simultaneously evaluates the necessity of these resources in the long run.
Tactical planning requires a careful analysis of demand in employee organisation during a period defined by the CEO. For instance, it may encompass a month, a quarter or a year. This necessity will depend on several factors: the level of employee turnover in a given period, the number of retirements, maternity leaves, as well as staff cuts.
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 — making plans for the next 5 years and beyond that.
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 in terms of workforce demand forecasting?
First, you must gather information on the results and milestones a company needs to achieve in the coming quarter or year. If you are an HR expert, obtain that information from your higher-ups. Then study all short- and long-term enterprise goals, tasks and plans.
In most cases, accountants and department directors will help clarify your understanding of the enterprise you are working at and its plans, whether you work in human resources or run the place.
Elements required for successful planning:
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First, you must carefully examine employee data. You will need to access personal case files, distribute questionnaires, and collect information concerning worker skills and abilities not related to work done in the enterprise;
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A work timetable or a schedule for all company employees;
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Data on the percentage of employee turnover at various positions across departments.
At this stage, a thorough analysis of workforce demand within the company is conducted for various positions for a certain period. That’s when you address a large number of questions crucial to the planning process: how many employees must be hired, how qualified they must be, and more importantly, when certain workers will be required to fill in particular positions.
During this process, you also decide whether you should bring in internal human resources, or if requalifying existing employees is going to be a more financially sound decision.
It doesn’t matter if you are a CEO or an HR professional. Remember that any process must be consecutive, based on deliberated decisions and a systemic approach. As soon as you start taking the job a bit more seriously, you will be able to approach any task, even as complex as workforce planning, with ease, passion, and enthusiasm.
