Group-A

Ram Krishna Tiwari

MFC 2nd Semester
Trubhuvan University
 What is Forecasting?
 Process of predicting a future event based on
historical data
 Educated Guessing
 Underlying basis of
all business decisions
 Production
 Inventory
 Personnel
 Facilities
 Importance of Forecasting in Organization

Departments throughout the organization depend on

forecasts to formulate and execute their plans.

Finance needs forecasts to project cash flows and capital

requirements.

Human resources need forecasts to anticipate hiring

needs.

Production needs forecasts to plan production levels,

workforce, material requirements, inventories, etc.
Importance of Forecasting in Organization

Demand is not the only variable of interest to

forecasters.

Manufacturers also forecast worker absenteeism,

machine availability, material costs, transportation
and production lead times, etc.

Besides demand, service providers are also

interested in forecasts of population, of other
demographic variables, of weather, etc.
Forecasting During the Life Cycle

Introduction Growth Maturity Decline

Qualitative models Quantitative models

- Executive judgment
- Time series analysis
- Market research
- Regression analysis
-Survey of sales force
-Delphi method
Sales

Time
 1. Benefits of HR Forecasting

1. Prevent understaffing and disruption to

operations.

2. Prevent overstaffing and subsequent

costs of employee layoff.

3. Allow efficient and effective use of other

HR functions.
 Forecasting hr demand
– Managerial Judgment
– Trend Analysis
– Ratio Analysis
– Scatter Plot
– Computerized Forecast
– Work Study Technique
– Delphi technique
– Regression Analysis
– Econometric Models
– Nominal Group Technique
– Scenario Forecasting
– Workforce Analysis
– Workload Analysis
– Job Analysis
 Managerial Judgment

This techniques is very simple. In this, manager sit

together, discuss and arrive at a figure which would
be the future demand for labor. The technique may
involve a ‘bottom-to-top’ or ‘top-to-bottom’ approach.
 1. Naive Approach
 Demand in next period is the same as demand
in most recent period
 May sales = 48 → June forecast = 48

 Usually not good

 Trend Analysis

Method which forecast employments requirements on

the basis of some organizational index and is one of
the most commonly used approaches for projecting
HR demand.
1. Business Factor Annual Volume of Sales.
2. Total Number of Employees.
3. Compare the Productivity Ratio.
4. Calculate Human Resources demand.
5. Forecasted Human Resource Requirements.
 Work Study Technique

Work study technique is based on the volume operation

and work efficiency of personnel. Volume of operation
is derived from the organizational plan documents and
increase/decrease in operation can be measured.

Planned output
Standard output per hour x standard hours per person
 Delphi Technique

This technique calls for a facilitator to solicit and

collate written, expert opinion on labor forecast. After
answer are received, a summary of the information is
developed and distributed to the expert, who are than
requested to submit revised forecast. Expert never meet
face-to-face, but rather communicate through the
facilitator.
 Regression Analysis

b
 xy  n x y a  y  bx
y=a+bx
 x  nx
2 2

Regression analysis identifies the movement of two or

more inter-related series. It is used to measure the
changes in a variable as a result of changes in other
variables. Regression analysis determines the
relationship between Y variables such as the number of
employees and X variables such as service delivery by
actually measuring the relationship that existed in the
past. Use of the method begins with a series of
observation each costing of a value for the Y variable
plus a value for each X variable.
 Econometric Models

Econometric models for estimation of manpower

requirement differ from the statistical methods. Past
statistical data are analyzed in the hope that it will
prove possible to describe precisely the relationships
between a number of variables in mathematical and
statistical terms.
 Nominal Group Technique

The nominal group technique is a decision making

method for use among groups of many sizes, who want
to make their decision quickly, as by a vote, but want
everyone’s opinions taken into traditional voting.

I. Introduction and Explanation

II. Silent Generation of Ideas
III.Sharing Ideas
IV.Group Discussion
V. Voting and Ranking
 Workforce Analysis

It means, to determine the rate of influx and out flow of

employee. It is through this analysis one can calculate
the labor turnover rate, absenteeism rate etc.
 Workload Analysis

It is a method that uses information about the actual

content of work based on a job analysis of the work.
Workload analysis involves use of ratios to
determine HR requirement. Both the number of
employees and the kind of employees required to
achieve organizational goals are identified.
 Forecasting HR demand
• Judgmental Technique • Statistical techniques
– Replacement planning – Markov Analysis
– Succession planning – Gain and loss Analysis
 Replacement chart
• A chart used to estimate vacancies in higher level jobs and
identify how potential HR supply can fill these vacancies via
internal movements from lower levels jobs

• Replacement charts provide identification of potential

replacements for vacancies within an organization
 Replacement chart
• A comprehensive replacement chart will include information
regarding possible replacements for vertical or horizontal
movement.

• Generally, a replacement chart includes information about

employees’ performance, readiness to fill the position, and
education.
Replacement chart
 Succession Planning

• Succession planning is a longer-term process

of grooming a successor (selected from a pool
of candidates on the basis of perceived
competency) for management or critical
positions.
 Succession Planning
• Determining the internal labour supply calls
for a detailed analysis of how many people are
currently in various job categories or have
specific skills within the organization.
• The planner then modifies this analysis to
reflect changes expected in the near future as
a result of retirements, promotions, transfers,
voluntary turnover, and terminations.
 Markov analysis

• Analysis that helps to predict internal

employee movement from one year to
another by identifying percentages of
employees who remain in their jobs, get
promoted or demoted, transfer, and exit out
of the organization
 Markov analysis

• To help predict internal employee movement from one year

to another by identifying percentages of employees who
remain in their jobs, get promoted or demoted, transfer, and
exit out of the organization.

• By tracking and predicting employment movement within an

organization, the Markov analysis allows for the development
of a transition matrix to forecast internal labour supply.
 Markov analysis

• Markov Analysis is the statistical technique used

in forecasting the future behavior of a variable or system
whose current state or behavior does not depend on its state
or behavior at any time in the past in other words, it
is random.

• The technique is named after Russian mathematician Andrei

Andreyevich Markov.
 Markov analysis

• A transition matrix, or Markov matrix, can be

used to model the internal flow of human
resources.
• These matrices simply show as probabilities
the average rate of historical movement from
one job to another.
• To determine the probabilities of job
incumbents remaining in their jobs for the
forecasting period.
For a line worker, for example, there is a 20% probability of being gone in 12 months, a 0% probability of
promotion to manager, a 15% probability of promotion to supervisor, and a 65% probability of being a line
worker this time next year. Such transition matrices form the bases for computer simulations of the internal
flow of people through a large organization over time.
 CONCLUSION
• Forecasting is the process of making
statements about events whose actual
outcomes (typically) have not yet been
observed.
• Human resource forecasting is all about
estimating the future demand and supply of
human resources in an organization.
 REFERNCE

• Human Resource Planning: an Introduction, Reilly P. Report 312, Institute

for Employment Studies, 1996. ISBN: 978-1-85184-238-4. Retrieved from
http://www.employment-studies.co.uk/pubs/summary.php?id=312
Retrieved On:15-7-2014
• IBS Center for Management Research. Human Resource Planning.
Retrieved from
www.icmrindia.org/courseware/Intro%20to%20Hrm/hrm-DS4.htm
Retrieved On:15-7-2014
 REFERNCE
• http://highered.mcgrawhill.com/sites/dl/free/
0070951772/846002/Bulmash_SampleChapte
r2.pdf Retrieved On:5-3-2014,13:38

• Lunenburg, Fred C, Human Resource

Planning- Forecasting Demand Supply, IJMBA
V15 N1 2012 Retrieved On: 5-3-2014,13:40
 Dealing with Imbalances

Demand Exceeds Supply Exceeds Demand

Supply (Shortage) (Excess)

• Reduced hours.
• Transfer and retrain. • Work sharing.
• Promotion from within. • Voluntary retirements.
• Overtime. • Inducement to quit.
• Subcontracting. • Pay freeze or cut.
• Part time and temps. • Layoffs.
• Recruit from outside.
 Bibilography
• Adhikari, D. R. (2010 A. D.). Fundamentals of Human
Resource Management (3rd ed.). Kathmandu:
Buddha Academic Enterprises Pvt. Ltd.
• Gary Dessler; Biju Varkkey. (2011 A. D.). Human
Resource Management (12th ed.). Delhi, India:
Pearson.