Group-A
Ram Krishna Tiwari
MFC 2nd Semester
Trubhuvan University

What is Forecasting?
 Process of predicting a future event based on
historical data
 Educated Guessing
 Underlying basis of
all business decisions
 Production
 Inventory
 Personnel
 Facilities

Departments throughout the organization depend on
forecasts to formulate and execute their plans.
Finance needs forecasts to project cash flows and capital
requirements.
Human resources need forecasts to anticipate hiring
needs.
Production needs forecasts to plan production levels,
workforce, material requirements, inventories, etc.
Importance of Forecasting in Organization

Demand is not the only variable of interest to
forecasters.
Manufacturers also forecast worker absenteeism,
machine availability, material costs, transportation
and production lead times, etc.
Besides demand, service providers are also
interested in forecasts of population, of other
demographic variables, of weather, etc.
Importance of Forecasting in Organization

Forecasting During the Life Cycle
Introduction Growth Maturity Decline
Sales
Time
Quantitative models
- Time series analysis
- Regression analysis
Qualitative models
- Executive judgment
- Market research
-Survey of sales force
-Delphi method

1. Prevent understaffing and disruption to
operations.
2. Prevent overstaffing and subsequent
costs of employee layoff.
3. Allow efficient and effective use of other
HR functions.
1. Benefits of HR Forecasting

Forecasting hr demand
– Managerial Judgment
– Trend Analysis
– Ratio Analysis
– Scatter Plot
– Computerized Forecast
– Work Study Technique
– Delphi technique
– Regression Analysis
– Econometric Models
– Nominal Group Technique
– Scenario Forecasting
– Workforce Analysis
– Workload Analysis
– 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.

1. Naive Approach
 Demand in next period is the same as demand
in most recent period
May sales = 48 →
 Usually not good
June forecast = 48

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.

Work Study Technique
Work study technique is based on the volume operation
and work efficiency of personnel. Volume of operation
is derived from the organizational plan documents and
increase/decrease in operation can be measured.
Planned output
Standard output per hour x standard hours per person

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
facilitator.

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.
y = a + b x




 22
xnx
yxnxy
b xbya 

Econometric Models
Econometric models for estimation of manpower
requirement differ from the statistical methods. Past
statistical data are analyzed in the hope that it will
prove possible to describe precisely the relationships
between a number of variables in mathematical and
statistical terms.

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

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.

Workload Analysis
It is a method that uses information about the actual
content of work based on a job analysis of the work.
Workload analysis involves use of ratios to
determine HR requirement. Both the number of
employees and the kind of employees required to
achieve organizational goals are identified.

Forecasting HR demand
• Judgmental Technique
– Replacement planning
– Succession planning
• Statistical techniques
– Markov Analysis
– Gain and loss Analysis

Replacement chart
• A chart used to estimate vacancies in higher level jobs and
identify how potential HR supply can fill these vacancies via
internal movements from lower levels jobs
• Replacement charts provide identification of potential
replacements for vacancies within an organization

Replacement chart
• A comprehensive replacement chart will include information
regarding possible replacements for vertical or horizontal
movement.
• Generally, a replacement chart includes information about
employees’ performance, readiness to fill the position, and
education.

Replacement chart

Succession Planning
• Succession planning is a longer-term process
of grooming a successor (selected from a pool
of candidates on the basis of perceived
competency) for management or critical
positions.

Succession Planning
• Determining the internal labour supply calls
for a detailed analysis of how many people are
currently in various job categories or have
specific skills within the organization.
• The planner then modifies this analysis to
reflect changes expected in the near future as
a result of retirements, promotions, transfers,
voluntary turnover, and terminations.

Markov analysis
• Analysis that helps to predict internal
employee movement from one year to
another by identifying percentages of
employees who remain in their jobs, get
promoted or demoted, transfer, and exit out
of the organization

Markov analysis
• To help predict internal employee movement from one year
to another by identifying percentages of employees who
remain in their jobs, get promoted or demoted, transfer, and
exit out of the organization.
• By tracking and predicting employment movement within an
organization, the Markov analysis allows for the development
of a transition matrix to forecast internal labour supply.

Markov analysis
• Markov Analysis is the statistical technique used
in forecasting the future behavior of a variable or system
whose current state or behavior does not depend on its state
or behavior at any time in the past in other words, it
is random.
• The technique is named after Russian mathematician Andrei
Andreyevich Markov.

Markov analysis
• A transition matrix, or Markov matrix, can be
used to model the internal flow of human
resources.
• These matrices simply show as probabilities
the average rate of historical movement from
one job to another.
• To determine the probabilities of job
incumbents remaining in their jobs for the
forecasting period.

For a line worker, for example, there is a 20% probability of being gone in 12 months, a 0% probability of
promotion to manager, a 15% probability of promotion to supervisor, and a 65% probability of being a line
worker this time next year. Such transition matrices form the bases for computer simulations of the internal
flow of people through a large organization over time.

CONCLUSION
• Forecasting is the process of making
statements about events whose actual
outcomes (typically) have not yet been
observed.
• Human resource forecasting is all about
estimating the future demand and supply of
human resources in an organization.

REFERNCE
• Human Resource Planning: an Introduction, Reilly P. Report 312, Institute
for Employment Studies, 1996. ISBN: 978-1-85184-238-4. Retrieved from
http://www.employment-studies.co.uk/pubs/summary.php?id=312
Retrieved On:15-7-2014
• IBS Center for Management Research. Human Resource Planning.
Retrieved from
www.icmrindia.org/courseware/Intro%20to%20Hrm/hrm-DS4.htm
Retrieved On:15-7-2014

REFERNCE
• http://highered.mcgrawhill.com/sites/dl/free/
0070951772/846002/Bulmash_SampleChapte
r2.pdf Retrieved On:5-3-2014,13:38
• Lunenburg, Fred C, Human Resource
Planning- Forecasting Demand Supply, IJMBA
V15 N1 2012 Retrieved On: 5-3-2014,13:40

Demand Exceeds
Supply (Shortage)
• Transfer and retrain.
• Promotion from within.
• Overtime.
• Subcontracting.
• Part time and temps.
• Recruit from outside.
Supply Exceeds Demand
(Excess)
• Reduced hours.
• Work sharing.
• Voluntary retirements.
• Inducement to quit.
• Pay freeze or cut.
• Layoffs.
Dealing with Imbalances

Bibilography
• Adhikari, D. R. (2010 A. D.). Fundamentals of Human
Resource Management (3rd ed.). Kathmandu:
Buddha Academic Enterprises Pvt. Ltd.
• Gary Dessler; Biju Varkkey. (2011 A. D.). Human
Resource Management (12th ed.). Delhi, India:
Pearson.