Forecasting
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Transcript of Forecasting
Method & Technique of Forecasting the Demand & Supply of Manpower
Forecasting Demand for EmployeesThis phase of the process involves estimating:
How many employees will be needed
What kinds of employees will be needed
Quantitative tools can help with forecasting, but it involves a great deal of human judgment
The demand for employees is closely tied to the strategic direction that the organization has chosen
Growth
Reengineering
Reorganization
Forecasting Demand for Employees
Techniques to help reduce the uncertainty inherent in HR planning:
Expert estimates Trend projectionsStatistical modelingUnit-demand forecasting
Key to effective planning is accurately and freely sharing information
The Expert Estimate
One or more “experts” provide the organization with demand estimates based on:
ExperienceGuessesIntuitionSubjective assessments of available economic and labor force indicators
This is the least mathematically sophisticated approach
The Expert Estimate
The Delphi technique elicits expert estimates from a number of individuals in an iterative manner
Developed by the Rand CorporationEstimates 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
Trend Projection
This top-down technique:
Develops a forecast based on a past relationship between a factor related to employment and employment itself
Example: Sales levels are related to employment needs
Modeling & Multiple-Predictive Techniques
This top-down approach uses the most sophisticated forecasting and modeling techniques
Trend projections relate a single factor, such as sales, to employment Environmental factors could be gross national product or discretionary income Or, the organization may be mathematically modeled so that simulations can be run
Modeling & Multiple-Predictive Techniques
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
Modeling & Multiple-Predictive Techniques
Regression analysis is a mathematical procedure:
It predicts the dependent variable on the basis of factors (independent variables)
With simple linear regression, one dependent and one independent variable are studied
With multiple regression, more than one independent variable is studied
Unit Demand Forecasting
This is a bottom-up approachUnit managers analyze current and future needs person-by-person and job-by-job Headquarters totals the unit forecastsThe sum is the corporate employment forecast
If both bottom-up and top-down approaches are used, the forecasts may conflict
This can be resolved by averaging the variances The Delphi technique or NGT could also be used
Analyzing the Current Supply of Employees
This phase of HR planning should answer the question:“How many and what kinds of employees do I
currently have, in terms of the skills and training necessary for the future?”
This involves more than simply counting current employees
The smaller and more centralized the organization, the easier it is to conduct a skills inventory
The Skills Inventory
Both a skills inventory and a management inventory:
Identify the skills, abilities, experiences, and training employees currently haveAre useful for career planning, management development, and related activities
In its simplest form, a skills inventory is a list of:
NamesCharacteristicsSkills
The Skills Inventory
Skills inventories vary greatly in their sophistication
Some are as simple as a file drawer of index cards
Others involve expensive and complex computer databases
Contents of the Skills InventoryThe only data available to the organization for later use is what was designed into the system
Name Employee number
Present location Date of birth
Date of employment Job classification
Skills, knowledge, education Foreign language skill
Professional qualifications Publications
Licenses and patents Hobbies
Supervisory evaluations Salary range
Contents of the Skills Inventory
Often omitted, but increasingly important, are:
Employees’ stated career goalsGeographical preferencesIntended retirement date
The main categories within a skills inventory:
Data summarizing the employee’s past Data summarizing present skills Data that focus on the future
Today, many skills inventories are more complex
Maintaining the Skills Inventory
The two principal methods for gathering data: the interview and the questionnaire
The questionnaire is faster and cheaper, but can be inaccurate Some contend that a trained interviewer can complete questionnaires more quickly and accurately
Plans for keeping files updated must be made
The more often changes are made and the data is used, the more often updates should be performed
Maintaining the Skills Inventory
Should data be stored in a manual system or on a computer?
How much does the computer system cost?How frequently the data will be used?A computer allows comparative analysis over time
Skills inventories are useful only if management uses the data to make significant decisions
Before accessing the data, managers must be trained to avoid abuse of the system
Action Decisions in HR Planning
After the supply of and demand for workers has been analyzed, the two forecasts must be compared
Whenever there is a gap between the two estimates, a course of action must be chosen
Action Decisions in HR Planning
If the supply of workers is less than the demand:
It can be filled with present employees who are willing to work overtime
If there is a shortage of skilled employees:
Train and/or promote present employees
Recruit less-skilled employees
Recall employees who were previously laid off
Action Decisions in HR Planning
Organizations are using more:Part-time workersSubcontractorsIndependent professionals
This is in response to: Intense global competition Rapid technological change Fears caused by recent workforce reductions
Over 5 million U.S. citizens are contingent workers
Action Decisions in HR Planning
Possible solutions to an employee surplus:
AttritionEarly retirementsDemotionsLayoffsTerminations
Employees who are considered surplus are seldom responsible for the conditions leading to the surplus
Action Decisions in HR Planning
Most organizations avoid layoffs by using attrition, early retirement, creation of work, and so on
Attrition can be accelerated by encouraging employees to leave early
Drawbacks to losing workers over the age of 50:
They tend to be healthier than younger workersThey have fewer work-related injuriesThey are less likely to change jobsThey take critical skills and experience with them
Action Decisions in HR Planning
By 2010, the median age of the U.S. workforce will be 40.6 years
Over half the workforce will be protected by the Age Discrimination in Employment Act
Promises should not be made that can’t be kept
Once promised, it may be illegal to change them
Action Decisions in HR Planning
If voluntary reductions don’t eliminate the gap between supply and demand, layoffs may be necessary
Corporations too frequently and quickly turn to layoffsThey fail to consider the consequences About one-third lay off too many workers Poorly designed workforce reductions can kill morale
Human Resource Information Systems
Information is the key to successful HR planning
A human resource information system (HRIS) is an integrated way to acquire, store, analyze, and control information flow through an organization
A highly developed HRIS can increase the efficiency and response times of:
Tracking applicantsSkills inventoryCareer planningEmployee service programs
Human Resource Information Systems
Computer technology makes it possible to integrate multiple HR needs into a single system:
Enrolling in benefits programsProcessing employee transactions (pay increases)Using learning modules
An HRIS developed for use by upper-level executives is called an executive information system (EISs)
Computerized HRISs have allowed organizations to broaden their view of succession planning
Human Resource Information Systems
Factors that make succession planning for executive level positions more important than ever:
Large numbers of aging executives Increasingly popular early retirement
Fortune 500 companies anticipate 33 percent turnover among their executives over the next five years
Many companies now realize the critical need for a comprehensive retention plan
This plan may include consulting and part-time assignments
Employee Privacy, Identity Theft, & HRIS
HRIS makes it easier to invade employee privacy
Danger lies both within and outside the organizationThe friendlier the system, the easier it can be for unauthorized access
Identity theft occurs when:Someone uses another’s name, address, social security number, or other information:
Without the person’s knowledgeWith the intent to commit fraud or other crimes
Employee Privacy, Identity Theft, & HRIS
Identity theft is fast becoming a national problem
Complaints from U.S. victims rose from 1,380 in 1999 to over 210,000 in 2003
Identify theft is a felony under the Identity Theft and Assumption Deterrence Act of 1998
The problem will continue to escalate
Employee Privacy, Identity Theft, & HRIS
The costs of identify theft to the employee are numerous:
Average 175 researching and tracking the crime
23 months correcting credit reports
$800 in out-of-pocket expenses to restore financial health and standing
Employee Privacy, Identity Theft, & HRIS
Safeguards to minimize privacy risks in an HRIS:
Determine the best way to collect data Limit the information collected to what is relevant Tell employees what information is kept on file and how it is used Let employees inspect and correct their information Keep sensitive information separateLimit internal use of personal information Only disclose personal information to outsiders with employee consent
Employee Privacy, Identity Theft, & HRIS
Organizations should carefully evaluate their policies regarding access to HRIS data to determine:
How much information, legally and ethically, should be disclosed How much control employees should have over the release of personal information
No federal legislation guarantees employees the right to inspect and amend data in an HRIS