We often encounter the concept of planning in our daily lives. Once a year, we meticulously and thoroughly plan our holidays, less often think about 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 family funds are going to be allocated. Unfortunately, many business owners and top-level employees overlook the necessity of forecasting labour demand. What’s even more interesting is that there are CEOs who don’t employ professional HR managers. They conduct interviews and manage employees on their own. This article will try to explain what workforce demand forecasting is and show that it is a necessary 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 estimate workforce demand, select the most efficient calculation methods and find sources to cover this need before seeking 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 part of a bigger workforce planning process. Its main goal is making a list of necessary positions and experts that can become vital in growing the company 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 the right, professional workers in the shortest possible time;
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Workforce demand forecasting allows for cutting unnecessary workforce segments or optimising their labour
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The right planning and employee placement ensure the proper 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 the financial situation at your company and what is the current general state of the economy?;
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Workforce reorganisation (plans on cutting, firing 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 important factors is having strategic plans and goals for the company.
Knowing the current stage of development of your company has to be one of the factors you should be aware of 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 lies in the idea that any enterprise or successful company directory has to 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 come up with a programme aimed at discovering potential employees who may be required by the company in the future. This process also requires 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 for employee organisation during a period laid out by the CEO. For example, it may cover 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 has 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 form your understanding of the enterprise you are working at and its plans, whether you work in human resources or run the place.
Things required for successful planning:
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First, you must carefully review 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 of all company employees;
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Data on the percent of employee turnover at various positions across departments.
At this stage, a thorough analysis of workforce demand in the company is conducted for various positions over a certain time period. That’s when you answer a large number of questions that are vital for the planning process: how many employees must be hired, how qualified they must be, and what’s more important, when will certain workers be required to fill particular positions.
During this process, you also decide whether or not to bring in internal human resources or if requalifying existing employees will be a more financially reasonable decision.
It doesn’t matter if you are a CEO or an HR professional. Remember that any process has to be consecutive, based on balanced decisions and a systematic approach. As soon as you start taking your job just a bit more seriously, you will be able to approach any task, even ones as complicated as workforce planning, with ease, passion, and dedication.
