We often encounter the concept of planning in our everyday lives. Once a year, we meticulously and thoroughly plan our holidays, less often considering changing our job or celebrating anniversaries and wedding days. Naturally, almost all of us plan how the monthly budget should be allocated and how family funds are going to be distributed. Unfortunately, many business owners and senior employees forget about 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 all by themselves. This article will attempt to explain what workforce demand forecasting is and demonstrate 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 of fulfilling this need before looking for new employees. But before reaching that point, we have to begin with the basics and understand what forecasting labour demand means.
Workforce demand forecasting is part of a larger workforce planning process. Its primary aim is to create a list of necessary positions and experts that can become vital in growing the company’s business, achieving goals, and reaching 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 appropriate, professional workers in the shortest possible timeframe;
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Workforce demand forecasting allows the elimination of unnecessary workforce segments or optimises their labour
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Proper planning and employee 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 the financial situation like in your company and what is the current general state of the economy?;
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Workforce reorganisation (plans on cutting, dismissing or transferring employees to new positions. It is also necessary to consider retirements and maternity leave);
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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 your company is at 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 must hire and employ fairly qualified personnel at all positions so that work can be completed 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 develop a programme aimed at identifying 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 term.
Tactical planning requires a careful analysis of demand for employee organisation during a period specified by the CEO. For example, it may cover a month, a quarter, or a year. This necessity will depend on a few factors: the level of employee turnover in a given period, the number of retirements, maternity leave 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 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 collect information on the results and milestones a company must 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 form your opinion about 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 go through employee data. You will need to acquire personal case files, distribute questionnaires, and collect information that concerns 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 a large number of questions that are vital for the planning process: how many employees need to be hired, how qualified must they be, and more importantly, when will certain workers be required to fill particular positions.
During this process, you also decide whether or not you should bring in internal human resources or if retraining existing employees is 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 well-considered decisions and a systematic approach. As soon as you start taking your job a bit more seriously, dedicating your whole life to it, you will be able to tackle any task, even as complicated as workforce planning, with ease, passion, and enthusiasm.
