Using the information from 2-6 (and the corresponding Figure 2-7), focusing on your chosen field of study explain what you believe are the major challenges in such forecasting over the next 5-10 years.

2-6 Forecasting HR Supply and Demand

Forecasting uses information from the past and present to predict future conditions. When fore- casting future HR conditions, the information comes from workforce availability and require- ments. Projections for the future are, of course, subject to error and to changing conditions. Fortunately, experienced people are usually able to forecast with sufficient accuracy to create usable long-range plans.

FIGURE 2-7 HR Forecasting Methods

Qualitative Methods

Estimates can be either top-down or bottom-up, but essentially people who are in a position to know are asked, How many people will you need next year?

The rule of thumb method relies on general guidelines applied to a specific situation within the organization. For example, a guideline of one operations manager per five reporting supervisors aids in forecasting the number of supervisors needed in a division. However, it is important to adapt the guideline to recognize widely varying departmental needs.

The Delphi technique uses input from a group of experts whose opinions of forecasted situations are sought. These expert opinions are then combined and returned to the experts for a second anonymous opinion. The process continues through several rounds until the experts essentially agree on a judgment. For example, this approach is used to forecast effects of technology on HR management and staffing needs.

Nominal groups, unlike the Delphi method, require experts to meet face to face. Their ideas maybe cited independently at first, discussed as a group, and then compiled as a report.

Quantitative Methods

Statistical regression analysis makes a statistical comparison of past relationships among various factors. For example, a statistical relationship between gross sales and number of employees in a retail chain may be useful in forecasting the number of employees that will be needed if the retailer's sales increase 15 percent or decrease 10 percent.

Simulation models are representations of real situations in abstract form. For example, an econometric model of the growth in software usage would lead to forecasts of the need for software developers. Numerous simulation methods and techniques are available.

Productivity ratios calculate the average number of units produced per employee. These averages can be applied to sales forecasts to determine the number of employees needed. For example, a firm could forecast the number of needed sales representatives using these ratios.

Staffing ratios can be used to estimate indirect labor. For example, if the company usually uses one clerical person for every 25 production employees, that ratio can be used to estimate the need for clerical employees.

Class of MGMT 0314

HUMAN RESOURCE MANAGEMENT