Copyright © 2019 by Nelson Education Ltd. 1 Determining HR Demand Copyright © 2019 by Nelson Education Ltd. 2 Understand the importance of demand forecasting in the HR planning process Recognize the linkages between the HR plan, labour demand forecasting techniques, and the subsequent supply stage Compare and contrast the advantages and disadvantages of various demand forecasting techniques, including quantitative, qualitative, and blended techniques Copyright © 2019 by Nelson Education Ltd. 3 Firm’s future need for human capital, the types of jobs, and the number of positions that must be filled for the firm to implement its strategy Copyright © 2019 by Nelson Education Ltd. 4 Trend analysis Ratio analysis Time series models Regression analysis Structural equation modelling (SEM) Copyright © 2019 by Nelson Education Ltd. 5 Forecast future human capital needs by extrapolating from historical changes in one or more organizational indices Copyright © 2019 by Nelson Education Ltd. 6 Select the appropriate business/operational index Track the business index over time Track the workforce size over time Calculate the average ratio of the business index to the workforce size Calculate the forecasted demand for labour Copyright © 2019 by Nelson Education Ltd. 7 A straightforward method of examining the relationship between an operational index and the demand for labour • Can be used to calculate demand requirements for direct labour and indirect labour Copyright © 2019 by Nelson Education Ltd. 8 Use past data to predict future demand Can be a simple moving average or a weighted moving average, or use exponential smoothing Copyright © 2019 by Nelson Education Ltd. 9 Presupposes that a linear relationship exists between one or more independent (causal, or predictor) variables, which are predicted to affect the dependent (criterion) variable, future HR demand for human capital Copyright © 2019 by Nelson Education Ltd. 10 Regression models help HR planners to use large amounts of organizational data These models can be easily adapted to reflect organizational changes or new assumptions, and are a good choice for short-term, medium-term, and longterm forecasts Copyright © 2019 by Nelson Education Ltd. 11 Copyright © 2019 by Nelson Education Ltd. 12 Copyright © 2019 by Nelson Education Ltd. 13 Copyright © 2019 by Nelson Education Ltd. 14 Copyright © 2019 by Nelson Education Ltd. 15 Y = A + BX Y = dependent (target) variable A = constant (y intercept) B = slope of linear relationship between X and Y X = independent (causal) variable Copyright © 2019 by Nelson Education Ltd. 16 A statistical technique that permits the testing of multiple relationships simultaneously in a theoretically derived model Forecasters can develop a model of labour demand based on their own theory as to what factors may be driving demand Copyright © 2019 by Nelson Education Ltd. 17 Copyright © 2019 by Nelson Education Ltd. 18 Scenario planning • Method most often used to develop organizational strategy • Participants envision possible future conditions in which the organization might operate • Requires participants to challenge existing assumptions and to generate vivid pictures of possible future states Copyright © 2019 by Nelson Education Ltd. 19 1. 2. 3. Propose the forecasting question about the future state of the firm or environment Generate a list of factors that are likely to influence the outcome in question Sort the factors into naturally occurring groups and rank the groups according to their importance to the main question and the ability of the firm to control the factor Copyright © 2019 by Nelson Education Ltd. 20 4. 5. 6. 7. Select the two groups of factors that are likely to have the strongest and most unpredictable impact on the question and create four quadrants Name and describe in story form each of the resulting quadrants Suggest the skills, competencies, and organizational requirements that would be necessary for the firm to be able to operate in each of these four worlds Generate a demand forecast necessary to fulfill the firm’s requirements in each of the four worlds Copyright © 2019 by Nelson Education Ltd. 21 Copyright © 2019 by Nelson Education Ltd. 22 A process in which the forecasts and judgments of a selected group of experts are solicited and summarized in an attempt to determine the future HR demand Copyright © 2019 by Nelson Education Ltd. 23 Avoids many of the problems associated with face-toface groups including reluctance on the part of individual experts to participate Copyright © 2019 by Nelson Education Ltd. 24 Time and costs Results cannot be validated statistically Selection of experts can skew the results Potentially insufficient attention given to developing criteria due to having too narrow a scope of experts Copyright © 2019 by Nelson Education Ltd. 25 1. 2. 3. 4. 5. 6. Define and refine the issue or question Identify the experts, terms, and time horizon Orient the experts Issue the first-round questionnaire Issue the first-round questionnaire summary and second round of questionnaires Continue issuing questionnaires Copyright © 2019 by Nelson Education Ltd. 26 Long-run forecasting technique utilizing expert assessments Copyright © 2019 by Nelson Education Ltd. 27 Quantitative, operational, or short-run demand estimates that contain the number and types of jobs required by the organization as a whole and for each subunit, division, or department Copyright © 2019 by Nelson Education Ltd. 28 HR budget process produces a staffing table Information about a set of operational assumptions or levels of activity Total HR demand requirement for operational or short-run time periods Copyright © 2019 by Nelson Education Ltd. 29 Two basic methods can both be used in order to test the reliability of the forecast Copyright © 2019 by Nelson Education Ltd. 30 TYPE OF DATA Quantitative Qualitative Economic Outlook Economic Outlook Labour-force growth Demographics Labour-force projections Political and regulatory environment Industry projections Technological change Occupational projections Societal change TYPE OF RESULTS Quantitative Detailed, numeric estimates Qualitative More specific information that can easily be used to produce HR system development plans Copyright © 2019 by Nelson Education Ltd. 31 A blend of qualitative and quantitative modelling that incorporates a set of assumptions about relationships among variables in a mathematical algorithm Can simultaneously model demand and supply, and is very useful for testing the impact of assumptions on the outcome of the model Can aid in the development of a better understanding of what factors influence demand and supply, and what processes may be causing bottlenecks in the flow of human capital Copyright © 2019 by Nelson Education Ltd. 32 1. 2. 3. 4. 5. Using qualitative methods, collect the relevant variables Describe how these variables interact together by developing a process model to map the relationships between variables Use simulation software and develop the algorithms to estimate the model Test the model using historical data to validate the assumptions used in its development Different assumptions can be easily tested in the model by inputting new scenarios and re-running the simulation Copyright © 2019 by Nelson Education Ltd. 33 This chapter examined various quantitative, qualitative, and blended techniques that organizations use to forecast future requirements for HR demand Copyright © 2019 by Nelson Education Ltd. 34
