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Demand and supply forecasting in HRP

Demand forecasting

Forecasting a companys future demand in human resources is a necessary procedure in light of organizational objectives and strategies.

Forecasting is based on information from the past and the present to identify expected future conditions. Such information may come from external environmental scanning and/or the assessment of internal strengths and weaknesses

There are different methods for forecasting human resources demand that range from a managers best guess to a complex computer simulation.

While simple assumptions may be sufficient in small-sized companies, complex models that combine subjective judgment and quantitative data are usually necessary for larger organizations.

Factors relevant for demand forecasting


i. ii. iii. iv. v. Employment trends Replacement needs Productivity, Growth and expansion Absenteeism Work study

Once human resources needs have been identified, the availability must be checked. The forecast of the availability of human resources is considering both internal and external supplies.

Supply forecasting
Supply of different types of personnel at the cut of date of human resource planning. Supply of manpower can be from internal and external sources

Internally, succession plans developed to identify potential personnel changes, due to promotion, retirement, resignation, etc for each department in an organization are examined. By the end of this analysis, the organization is able to know if there are employees to cover future demand from within its resources

The organization must take these factors into consideration to be able to know if ideal candidates can be located. such as the labor-force population estimates, trends in the industry, technological developments etc.

In order to estimate internal supply of personnel, it is necessary to conduct human resource audit and prepare replacement charts in advance.

Human resource audit gives a thorough idea of potential and capabilities of persons working in the organization. personal records of all the personnel should be updated periodically.

Replacement charts are meant for listing each key positions and indicating time when it is likely to be vacated. They also list the most likely candidates working in the organisation suitable to fill vacancies and also the time when they would be ready for promotion.

For supply forecasting the personnel planner must consider both internal supply and external supply. External supply is important because The normal separation of employees through voluntary turnover, retirement, illness ,death etc Organisational growth and diversification

Factors influencing internal supply of personnel


Existing manpower resources Potential loses to existing resources through labour wastage Potential changes to existing resources through internal promotion. Effect of changing conditions of work and absenteeism Sources of supply from with in the firm

Ref-TN Chabra and net