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We often face the notion of planning in our daily lives. Once a year we meticulously and thoroughly plan our trips, less often thinking 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 distributed. Unfortunately, many business owners and top position employees forget about the necessity of forecasting labor demand. What’s even more interesting is that there are CEOs who don’t utilize professional HR managers. They conduct interviews and manage employees all by themselves. This article will try to explain what workforce demand forecasting is and prove that this 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 of covering this need before looking for new employees. But before we get there, we have to start with the basics and understand what forecasting labor demand means.
Workforce demand forecasting is a 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 company business, achieving goals and milestones in the near future.
Providing the company with necessary employees while keeping low time and financial costs;
Keeping the business supplied with proper, professional workers in the shortest possible terms;
Workforce demand forecasting allows cutting unnecessary workforce segments or optimizes their labor
The right planning and employee placement maintain proper and highly effective use of any employee’s resources, based on their skills, knowledge, and abilities.
What is the financial situation like at your company and what is the current general state of the economy?;
Workforce reorganization (plans on cutting, firing or transferring employees to new positions. It is also necessary to consider retirements and maternity leaves);
Analyzing and understanding the situation in the employment market and among your competitors is another crucial point;
The level of salary in the company;
Perhaps one of the most important factors is having strategic plans and goals for the company.
Knowing at what is the current stage of development of your company has to be one of the factors you should be aware of when forecasting labor 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.
Strategic or long-term planning;
Tactical (situational) planning.
When making strategic plans it is critical to come up with a program aimed at discovering potential employees who can become required by the company in the future. This process also requires creating a strategic human resource development program that simultaneously evaluates the necessity of these resources in the long run.
Tactical planning requires a careful analysis of demand in employee organization during a period laid out by the CEO. For example, it may encompass a month, a quarter or a year. This necessity will depend on a couple of factors: the level of employee turnover in a given period, the number of retirements, maternity leaves as well as staff cuts.
Short-term planning - planning for up to 2 years;
Medium-term planning - a strategy for 2 to 5 years;
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?
Firs, you must collect information on the results and milestones a company has 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 make up your mind about the enterprise you are working at and its plans, whether you work in human resources or run the place.
First, you must carefully go through employee data. You will need to get your hands on personal case files, hand out questionnaires as well as collect information that concerns worker skills and abilities not related to work done in the enterprise;
A work timetable or a schedule of all company employees;
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 for a certain time period. That’s when you answer a big number of questions that are vital for the planning process: how many employees must be hired, how qualified must they be, and what’s more important, when will certain workers be required to fill in particular positions.
During this process, you also make a decision of whether or not you should bring in internal human resources or is requalifying existing employees going to 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 weighted decisions and a systemic approach. As soon as you start taking the job you have dedicated your whole life to a bit more seriously, you will able to approach any task, even as complicated as workforce planning, with ease, passion, and ardor.