A business’s long-term health depends on its productivity, and this means looking forward to future requirements is vital. Human resource changes are an essential part of this planning, and HR planning allows a business to assess its current HR talent and what may be needed in the future.
Simply put, HR forecasting is how a business tries to predict how it’s staffing requirements will change over time so they can retain or enhance their competitive edge and continue to operate successfully. HR forecasting is used by organisations to decide on whether to employ more people, reduce their workforce or change roles and responsibilities. Human resource departments are best equipped to conduct this process, as they are responsible for hiring, onboarding and training employees. HR forecasting may be conducted more frequently, or even as a continuous process, depending on the rate of staff turnover or changes in supply and demand (What Is HR Forecasting? (Importance and Strategies), 2023).
HR forecasting can help a business to operate effectively and to avoid the costs of over-staffing and lost productivity through lack of staff or untrained staff. All businesses will be affected by personnel changes or external events at one time or another, and HR forecasting is a tool to help them to mitigate these changes as much as possible.
HR forecasting can add significant value to employees by:
- Talent development opportunities
Training programmes can be developed for current employees to gain new skills and competencies - Career advancement
Employees suitable for promotion or advancement based on their skills, performance and potential can be recognised. - Retention
By recognising risks of potential attrition, HR can implement retention strategies such as competitive compensation, opportunities for advancement, improved work-life balance and fostering a positive working environment.
- Demand changes
As demand fluctuates (maybe seasonally or through consumer trends) HR forecasting can allow a company to adjust the number of employees to match that demand. For example, this could be a retail shop employing more staff for the busy Christmas period. - Supply changes
If critical components are unavailable or in short supply (e.g. a computer manufacturer during the recent microchip shortage), staffing adjustments may need to be made during that shortage. - Economic changes
Changes arising from economic sources may result in a company adjusting the size or composition of its workforce. For example, a government-mandated increase to the New Zealand legal minimum wage may result in fewer positions being made available in a company. - Internal changes
- The internal labour force is susceptible to change itself. Promotions, resignations, terminations and retirements can require an employer to may staffing changes. Generally speaking, organisations will know ahead of time which staff may be involved in this type of internal change.
- Increased company resources
Growing companies may need to expand in space and capacity and therefore need more staff to continue effective production.
HR forecasting and planning helps organisations to make strategic decisions when hiring and training staff. HR professionals are trained to understand what new hires may desire in terms of specific benefits, work-life balance or other factors and offering an attractive package may assure their company hiring the best talent available.
HR forecasting and planning encourages HR professionals to keep the company’s present and future requirements top of mind and anticipate hiring needs for years to come. This also allows them to budget for new hires, department expansions and retirements.
Case Study
As Bounce Fitness expands its operations and introduces new fitness programmes, the company must ensure it has the right mix of skilled instructors, trainers, and support staff to meet customer demand and drive business growth. With competition increasing in the fitness industry and member expectations evolving, Bounce Fitness recognises the importance of forecasting to anticipate future talent requirements and maintain its competitive edge.
Approach:
Bounce Fitness's HR department adopts a proactive approach to strategic workforce planning, employing advanced forecasting techniques and data-driven analysis to inform decision-making. The following steps outline the company's approach to forecasting:
- Data Collection: Bounce Fitness collects data on various workforce metrics, including instructor qualifications, class attendance, member demographics, and market trends. This data is gathered from internal systems, member surveys, industry reports, and competitor analysis.
- Analysis: HR analysts at Bounce Fitness analyse the collected data to identify trends, patterns, and potential future workforce needs. They utilise statistical methods such as trend analysis and demand forecasting to predict staffing requirements for different locations and fitness programmes based on historical data and projected business growth.
- Future Planning: Recognising the dynamic nature of the fitness industry, Bounce Fitness engages in scenario planning to anticipate different future scenarios and their potential impact on workforce requirements. This involves considering factors such as seasonal fluctuations, demographic shifts, new fitness trends, and changes in consumer behaviour.
- Stakeholder Engagement: HR collaborates closely with studio managers, fitness directors, and other key stakeholders to understand operational priorities and business objectives. By involving stakeholders in the forecasting process, Bounce Fitness ensures alignment between workforce planning initiatives and overall business strategy.
- Actionable Insights: The insights generated from the forecasting process inform various HR initiatives, including recruitment strategies, instructor training programmes, scheduling optimisation, and performance management. Bounce Fitness prioritises investments in critical skill areas and talent development initiatives to address identified gaps and enhance service quality.
Results:
By integrating forecasting into its strategic workforce planning process, Bounce Fitness has achieved several notable outcomes:
- Improved Member Satisfaction: Bounce Fitness has been able to match member preferences with the right instructors and fitness programmes, resulting in higher member satisfaction and retention rates.
- Enhanced Operational Efficiency: By accurately forecasting staffing needs and optimising schedules, Bounce Fitness has improved operational efficiency and reduced labour costs across its locations.
- Agility and Adaptability: Bounce Fitness's proactive approach to workforce planning has enhanced its agility and adaptability in responding to changing market conditions and member needs. By anticipating future workforce requirements, Bounce Fitness is better positioned to adjust staffing levels and programme offerings in real-time to meet demand.
Watch this video by Nutshell Brainery which explains more about what HR planning is and why it is useful. After the video, test your knowledge by answering some short questions on the topic.
Watch
Human Resources Forecasting and Planning
An explanation of what HR planning involves and why it is useful to a modern organisation. It also explains the roadblocks and difficulties possibly encountered when implementing HR plans.
Duration: 10:30
Questions
Pre-Watch Question: Look at the learning task activities below and note down the answers as you watch the video.
Post Watch Task: Complete the learning task activities related to information shown in this video.
You’ve come to the end of this topic, well done! Before moving on to the next section be sure to complete all the exercises related to the video above.
In this topic on Human Resources Forecasting, we have looked at
- What HR forecasting is and why it is important to most organisations
- How HR forecasting can benefit employees through:
- Talent development
- Career advancement
- Retention policies
- How HR forecasting can help an organisation through:
- Adapting to industry changes
- Helping maintain a competitive edge
- Helping to assure future growth and longevity
