Topic 2

Methods and Techniques

Forecasting of Manpower Demand
and Supply

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 Human Resource Forecasting
 Process of projecting the organization’s future HR
needs (demand) and how it will meet those needs (supply)
under a given set of assumptions about the organization’s
policies and the environmental conditions in which it operates.

 Without forecasting, we cannot assess the disparity

between supply and demand nor how effective an HR
program is in reducing the disparity.

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Forecasting : A Critical Element of
Planning
 Internal Analysis of three C’s:
1. Culture
2. Competencies
3. Composition

They help to deal about where the organization is today

with changing world.

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Managers must continually forecast both the
needs & capabilities of the firm for the future in
order to do an effective job at strategic planning
Managers focus on (at least) three key elements :
(a) Forecasting the demand for labour
(b) Forecasting the supply of labour
(c) Balancing supply and demand consideration

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(A) Demand Forecasting for Labour
 It is the process of estimating the requirement of
different kinds of personnel in future

 The basis of manpower forecasts should be the annual

budget and long term corporate plan translated into
activity levels for each function an department

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 Qualitative Techniques
1. Nominal Group Technique (NGT)
2. Delphi Technique
3. Expert Estimate
4. Managerial Judgment
5. Work Study

Quantitative Techniques
1. Regression Analysis
2. Productivity Ratio
3. Personnel Ratio
4. Time Series Analysis
5. Computer Analysis

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1. The Nominal Group Technique
A small group of 4-5 people gathers around a table. Leader
identifies judgment issue and gives participants procedural
instructions.

Participants write down all ideas that occur to them, keeping

their lists private at this point. Creativity is encouraged during
this phase.

Leader asks each participant to present ideas and writes them on

a blackboard or flipchart, continuing until all ideas have been
recorded.

Participants discuss each other’s ideas, clarifying, expanding,

and evaluating them as a group.

Participants rank ideas privately in their own personal order and

preference.

The idea that ranks highest among the participants is adopted as

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 The Delphi Technique
Leader identifies judgment issues and develops questionnaire.

Prospective participants are identified and asked to cooperate.

Leaders send questionnaire to willing participants, who record their

judgments and recommendations and return the questionnaire.

Leaders compiles summaries and reproduces participants’ responses.

Leader sends the compiled list of judgment to all participants.

Participants comment on each other’s ideas and propose a final

judgment.

Leader looks
for consensus

Leader accepts consensus judgment as group’s choice.

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3. The Expert Estimate
• The Delphi technique elicits expert estimates from
a number of individuals in an iterative manner
– Developed by the Rand Corporation
– Estimates are revised by each individual based
on knowledge of the other individuals’
estimates

• With the nominal group technique (NGT),

individual estimates are followed by group
brainstorming
– The goal is to generate a group decision that is
preferred over any individual decision
4. Managerial Judgement
 The most typical method for smaller company
 In this method the managers simply sit down, think
about their future work load and how many people
they need
 It adopt both the ‘bottom-up' and ‘top-down’ approach.

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5. Work Study Technique
 It is technique can be used when it is possible to apply
work measurement to know how long operations
should take and the amount of labour required.
 It calculated in two type

 Work-load Analysis
 Work-force Analysis

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Work-load Analysis
 In work load analysis the manpower expert need to
find out sales forecasts, work schedules and thus
determine the manpower required per unit of
product.

Work-force Analysis
 In work-force analysis they keep a sufficient margin
for absenteeism, labour turn over and idle time on
the basis of past experience

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 Quantitative / Statistical Techniques
It is the technique of using high speed
computers and new mathematical techniques
The main statistical tools are
 Regression analysis
 Productivity Ratio
 Ratios and Trend analysis
 Bureks-smith model
 Personnel Ratio
 Time Series Analysis
 Computer Analysis

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 Quantitative Techniques
Description
Name
Past levels of various work load indicators, such as sales,
Regression production levels, and value added, are examined for statistical
relationships with staffing levels. Where sufficiently strong
analysis
relationships are found, a regression (or multiple regression)
model is derived. Forecasted levels of the retained indicator(s)
are entered into the resulting model and used to calculate the
associated level of human resource requirements.

Historical data are used to examine past levels of a productivity

index (P):

P = Work load / Number of People

Where constant, or systematic, relationships are found, human

Productivity resource requirements can be computed by diving predicted work
ratios
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Ratios and Trend analysis
 Ratios, which are calculated for the basis of past data
relating to number of employees
 The data are collected in different levels
 Future manpower requirement is calculated on the
basis of established ratios
 The value depend upon accurate records and realistic
estimate of future activity levels and the effect of
improved performance

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Bureks-Smith Model

 In this method a mathematical model developed for

personnel forecasting
En = (Lagg+G)1/x
Y
 En – it is estimated level of personnel demand in n planning
period.
 Lagg- it is overall turnover or aggregate level of current
business activity n rupees.
 G- is the total growth in business activity anticipated through
period n in terms of rupees.
 X-it is the average productivity improvement
 Y-is conversion figure relating today’s overall activity

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 Quantitative Techniques (cont’d)
Description
Name Past personnel data are examined to determine historical
relationships among the employees in various jobs or job
Personnel categories. Regression analysis or productivity ratios are then used
ratios to project either total or key-group human resource requirements,
and personnel ratios are used to allocated total requirements to
various job categories or to estimate for non-key groups.

Time series Past staffing levels (instead of work load indicators) are used to
analysis project future human resource requirements. Past staffing levels
are examined to isolate and cyclical variation, long-tem terms, and
random movement. Long-term trends are then extrapolated or
projected using a moving average, exponential smoothing, or
regression technique.

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 (B) HR Supply Forecast

It is the process of estimating future quantity and

quality of manpower available internally &
externally to an organisation.

Supply Analysis

 Internal Sources of Supply

 External Sources of Supply

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Factors affecting external hr supply

 Supply and demand of jobs or skills

 Educational attainment levels within a
 region
 Compensation patterns based on experience,
education, or occupation
 Immigration and emigration patterns
 within an area
 Forecasts of economic growth or decline

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 Factors affecting internal hr supply

 Organizational features (e.g., staffing

capabilities)

 Productivity - rates of productivity, productivity

changes

 Rates of promotion, demotion, transfer and

turnover

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 Analysing Current Supply
 “How many and what kinds of employees do I
currently have in terms of the skills and training
necessary for the future?”
 Are resources available – internally or externally – to
fill those needs?

Internal
 Replacement Charts
 Skills inventory
 Transition Matrix (Markov Analysis)
External
 availability of qualified labor; surplus? shortage?

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 1. Employee Replacement Chart for Succession
Planning

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 2. Skills/Capability Inventory using HR Information System

General Information -
Name: Present Address: Department:
Sex: Designation:
DOB: DOJ:
Marital Salary:
Status: Permanent Address: Grade:

Qualification -
Degree/Diploma Institution Class Year of Pass

Experience/Skills -
Job Title/ Organisation Brief Skill/
Appointment Responsibilities Specialisation

Outstanding Achievement / Additional Information -

Awards Performance Disciplinary Action
Promotions Merit Rating Absenteeism
Achievements
Career Plans:

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3. Markov chain analysis
 Markov chain analysis involves:

 Developing a matrix to show the probability of an

employee’s moving from one position to another or
leaving the organization
 The process begins with an analysis of staffing levels from
one period to another
 Markov analysis can identify the probability of lower
employee retention
 It does not suggest a solution to the problem

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 (C) Balancing supply and
demand consideration

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Managing Employee Surpluses

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Managing Employee Shortages

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