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METHODS AND TECHNIQUES OF

FORCASTING

INTRODUCTION
Human resource demand forecasting is the process of estimating the future
quantity and quality of people required. The basis of the forecast must be the
annual budget and long-term corporate plan, translated into activity levels for
each function and department. In a manufacturing company, the sales budget
would be translated into a production plan giving the number and type of
products to be produced in each period. From this information, the number of
hours to be worked by each skilled category to make the quota for each period,
would be computed.

OBJECTIVE
Forecasting is a systematic process of predicting demand and supply. Human
resources forecasting seeks to secure the necessary number and quality of
employees for a business to achieve strategic goals. Although forecasting
techniques can be complex and full of statistical calculations, a more practical
approach is just as effective and less difficult for a small business to implement.
Demand and supply forecasting techniques use sales or production projections for
the coming year as well as quantitative and qualitative assessments. Quantitative
assessments identify “how many” and “when,” while qualitative assessments
identify desired personal qualities and role-related qualifications.

Advantages of Forecasting Methods


Businesses employ a diverse array of forecasting methods to evaluate potential
results stemming from their decisions. The most notable advantage of
quantitative forecasting methods is that the projections rely on the strength of
past data. The chief advantage of qualitative methods is that the main source of
data derives from the experiences of qualified executives and employees. The
vast majority of business owners blend the hard data with personal impressions
to develop useful forecasts.

Disadvantages of Forecasting
The primary disadvantage of forecasting is the same as that of any other method
of predicting the future: No one can be absolutely sure what the future holds. Any
unforeseen factors can render a forecast useless, regardless of the quality of its
data. Also, some forecasting methods may use the same data but deliver widely
different forecasts. For instance, one forecasting method can show that interest
rates will rise, while another will illustrate that rates will hold steady or decline.

TECHNIQUES
There are several techniques use for forecasting
1. Managerial Judgment
2. Trend Analysis
3. Ratio Analysis
4. Scatter Plot
5. Computerized Forecast
6. Work Study Technique
7. Delphi technique
8. Regression Analysis
9. Econometric Models

10. Nominal Group Technique


11. H R Budget and Planning Analysis
12. Scenario Forecasting
13. Workforce Analysis
14. Workload Analysis
15. 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.
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.

Ratio Analysis

Another approach , Ratio analysis , means making forecasts based on the ratio
between.
1. Some causal factor (like sales volume)
2. The number of employees required

Computerized Forecast

The determination of future staff needs by projecting a firm’s sales, volume of


production, and personnel required to maintain this required volume of output,
using computers and software packages. Employers also used computerized
system to personnel requirements .
Scatter Plot
A graphical method used to help identify the relationship between two variables.
A scatter plot is another option. HR planner can use scatter plots to
determine whether two factors – measure of business activity and staffing levels
are related.

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 facil.

Regression Analysis

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.

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

H R Budget and Planning Analysis

There are several other ways by which planners can estimate the future demand
for human resources. One approach is through budget and planning analysis.
When new ventures complicate employment planning. Planners can use new
venture analysis.

Scenario Forecasting
Scenario techniques is used to explore the likelihood of possible future
developments and changes and to identify the interaction of uncertain future
trends and events.
 Preparation of Background
 Selection of Critical Indicators
 Establishing Past Behavior of Indicators
 Verification of Potential Future Events
 Forecasting the indicators
 Writing of scenarios

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.

Job Analysis

Job analysis helps in finding out the abilities or skills required to do the jobs
efficiently. A detailed study of jobs is usually made to identify the qualification
and experience required for them

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