We frequently encounter the concept of planning in our daily lives. Once a year we plan our trips with great care and attention, less often pondering over changing our job or celebrating anniversaries and wedding days. Almost everyone plans how the monthly budget should be allocated and how family funds are going to be managed. Regrettably, many business owners and senior employees overlook the importance of predicting labour demand. Surprisingly, some CEOs do not make use of professional HR managers. They conduct interviews and manage employees on their own. This article will attempt to explain what workforce demand forecasting is and demonstrate why it is an essential and crucial part of operating any company.
We all understand that achieving success without qualified staff is tougher than with a team of experts. This is why a CEO or an HR manager must accurately assess workforce demand, choose the most efficient calculation methods, and find ways to meet this need before recruiting new employees. But before we get there, we have to begin with the fundamentals and understand what forecasting labour demand means.
Workforce demand forecasting is a part of a larger workforce planning process. Its primary goal is to create a list of necessary positions and experts that can be crucial in growing the company, achieving goals, and milestones in the near future.
Workforce planning goals:
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Supplying the company with necessary employees while minimising time and financial expenses;
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Ensuring the business has proper, professional workers as quickly as possible;
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Workforce demand forecasting enables cutting unnecessary workforce segments or optimising their labour
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Proper planning and employee placement ensures effective and efficient use of any employee's skills, knowledge, and abilities.
Factors to consider for proper workforce planning:
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What is the financial situation like at your company, and what is the current overall state of the economy?;
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Workforce reorganisation (plans on reductions, layoffs 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 essential point;
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The salary level 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 is 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 crucial to understand that it is a process of sequential, well-thought-out actions and decisions with clear goals ahead. The main aim of planning is 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 efficient 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 identifying potential employees who may be required by the company in the future. This process also involves creating a strategic human resource development programme that evaluates the necessity of these resources in the long term.
Tactical planning requires careful analysis of the demand in employee organisation during a period established by the CEO. For instance, it may cover a month, a quarter, or a year. This necessity will depend on several factors: the level of employee turnover over that 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 — 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 concerning workforce demand forecasting?
First, you must collect information on the results and milestones a company needs to achieve in the coming quarter or year. If you are an HR expert, get 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 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 access to personal case files, distribute questionnaires and gather 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 percentage 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 many questions crucial for the planning process: how many employees must be hired, how qualified they need to be, and more importantly, when will certain workers be required to fill particular positions.
During this process, you also decide whether to opt for internal human resources or if retraining existing employees is a more financially viable decision.
It doesn’t matter if you are a CEO or an HR professional. Remember that any process has to be sequential, based on informed decisions and a systematic approach. As soon as you start taking the job seriously, you will be able to approach any task, even as complicated as workforce planning, with ease, passion, and dedication.
