HR Planning

HR Forecasting Step 3:
Analyzing Future HR Supply
 Objectives
 To know the main features of various
techniques to analyze future HR supply and be
able to identify which technique to use in
specific circumstances
 To be able to apply the most common
techniques for analyzing future internal HR
supply
 To identify appropriate sources of information
regarding future external HR supply
 Lecture Outline
 Review demand forecasting concepts
 Reasons for analyzing future HR supply
 Internal HR supply analysis techniques
 External HR supply analysis
 HR Forecasting Process

5. Implement and Evaluate Results

4. Develop Options to Balance Supply and Demand

3. Analyze Future Internal & External Workers(Supply)

2. Forecast Future HR Needs (Demand)

1. Analyze HR Impact of Strategic Plans, External Environment

 Analyze Internal HR Supply
Knowing how many and what type of employees who
currently work for the organization will be available in
the future is a huge advantage for an organization.
 Planning promotions
 Organizing training/development programs
 Setting procedures for internal recruitment for
vacancies
 Preparing retention initiatives
 Developing diversity plans
 Making downsizing decisions
 +++
 Analyze Internal HR Supply
 Information needed:
 # and type of employees by unit and position
 normal losses by type
 basic employee data
 the organization’s policies re promotion,
retirement, transfer, etc.
 Use BEST data available
Forecasting Internal HR Supply
Sources of Data
 HRMS
 Paper files
 Replacement summaries
 Skills & management inventories
 …..
Forecasting Internal HR Supply
5 most common techniques:
 Simple turnover analysis
 Movement analysis
 Vacancy analysis
 Markov analysis
 Linear programming
 Simple Turnover Analysis
The simplest technique to estimate future HR supply
If exits are not replaced…
 Future HR supply = current HR demand minus normal
losses
 E.g., if current HR demand is 1000 & normal losses
are 110, then future HR supply (if losses not
replaced), will be 890
If all exits ARE replaced and all positions are filled…
 Future HR Supply = Current HR Demand
 HR Supply Basics: Ripple Effect
 When an organization fills all vacancies from external
labour market, the number of new hires will equal
the number of vacancies
 When an organization fills vacancies from within, the
number of “movements” will be greater
 Any one vacancy will produce additional vacancies
below as the ripple of subordinates moves up one
level
 Ripple principle applies to internal transfers as well
as promotions
 Impact of Promoting Internally
Employee Category #FT Positions Normal Losses Losses because of
Current Year Promotion
Director 1 0
Superintendent 10 1
Principal 91 8 +1
Vice Principal 81 7 +1
Teacher 3133 282 +1
Total 3316 298 +3
 Techniques Vary
 Type of organization structure
 HR supply policy
 Type of employee movements
 Organizational size
 Movement Analysis
 Organization structure must be HIERARCHICAL to apply this
technique
 Organization’s HR supply policy must require internal candidates
to fill upper level vacancies
 Examples include: Canadian Armed Forces, most police
services, religious organizations, etc.
 Do not include positions that cannot advance to level above
 Clarify before starting whether #FTE’s will increase or decrease
next year
 Complete tables one row at a time from highest level
 Movement Analysis Technique
Level # Positions Staffing Personnel # Positions to
at Start Changes Losses be Filled
1 Director 1 0 0 0 Table 1 – HDSB
2 Superintendent 10 0 1 1 (With Growth)
3 Principal 91 +4 8 12 # Positions
4 V Principal 81 +4 7 11 to be Filled (next year!)
5 Teacher 3133 +52 282 334
Total 3316 +60 298 358

Level # Positions Total Ripple Personnel

to be Filled Movement
1 Director 0 0
Table 2 – HDSB
2 Superintendent 1 1
Personnel Movement
3 Principal 12 +1 13
(next year!)
4 V Principal 11 +1+12 24
5 Teacher 334 +1+12+11 358
Total 358 +3+24+11 396
 Movement Analysis Technique
Level # Positions Staffing Personnel # Positions to
at Start Changes Losses be Filled
1 Director 1 0 0 0 Table 1 – HDSB
2 Superintendent 10 0 1 1 (With Reduction)
3 Principal 91 -4 8 4 # Positions
4 V Principal 81 -4 7 3 to be Filled (next year!)
5 Teacher 3133 -52 282 230
Total 3316 -60 298 238

Level # Positions Total Ripple Personnel

to be Filled Movement
1 Director 0 0
Table 2 – HDSB
2 Superintendent 1 1
Personnel Movement
3 Principal 4 +1 5
(next year!)
4 V Principal 3 +1+4 8
5 Teacher 230 +1+4+3 238
Total 238 +3+8+3 252
 Vacancy Analysis
 Also called renewal technique and sequencing model

 Vacancy analysis models the inputs & outputs of staff

at each hierarchical level in order to identify patterns
among the vacancies

 This technique can be used in organizations which

have a mix of internal and external recruits to fill
upper level vacancies, e.g., most!
 Vacancy Analysis
Level # Personnel Annual Promotions Level External Promotion
@ Start Losses to Level Outflows Hires Rate
1 Mgr 1 1 1 1 0 None
2 Sup’r 4 0 1 1 0 .25
3 HK1 48 5 5 6 1 .02
4 HK2 77 12 13 17 4 .07
5 EA 165 74 0 87 87 .08
Total 295 92 20 112 92 .07

Vacancy Model, St. Patrick’s Hospital Housekeeping Dept., 2025

 Markov Analysis
 Technique can be applied in all types of
organizational structures
 Examines patterns of employee movements through
promotions, transfers, demotions & exits
 Uses “transitional probabilities” (the likelihood that
an individual in a specific job will exhibit one of the
five movements one year into the future)
 Applies to internal & external HR supply
 Only relevant in medium to large organizations
 Markov Analysis
Steps:
1. Gather information on movements for previous time period.
Forecast HR demand for next year
2. Create Table 1. Calculate probabilities for each job category
3. Create Table 2 – note additional rows in example. Use last
year’s probabilities to compute numbers of employees in
each category for next year
4. Add each column to determine projected internal supply for
each job
5. Compare forecast demand with internal supply
6. Consider implications of demand/supply for each job
 Linear Programming
 Statistical technique that assumes linear
relationships between variables that influence
movement among positions
 Fairly complex – need background in math &
stats + specific software
 Best solution for reaching a quantitative goal
within a number of constraints
 Forecasting External HR Supply
Knowing how many and what types of workers will be available
outside of the organization is critical
Techniques:
 Delphi, nominal group, linear programming, regression
analysis, etc.
Sources of Data:
 Statistics Canada
 Provincial governments
 Regional and municipal governments
 Chambers of commerce & boards of trade
 Private sector consultants & researchers (e.g., The
Conference Board, Towers Watson, Mercer, Hay Group)
 Next Class
 HR forecasting steps 4 & 5:
 Develop options to balance future HR demand and
supply
 Implement and evaluate options