Many of you likely agree with Hale’s statement and, therefore, feel pressure to excel at forecasting workforce demand so that your company’s goals are met. But how do you forecast workforce demand effectively? Here are some practical, step-by-step workforce forecasting techniques that should help bring you the workforce planning success you seek.
Workforce Forecasting Step 1: Scan the External Job Market
Start developing a workforce strategy by looking outside of your company at what’s going on in work and employment in your community. There are key pieces of workforce data you can gather:
External Factors Affecting Labor Supply
- Unemployment rate
- Graduation rates
- Demographic make up of local market
- Knowledge of direct competitors
When reviewing these areas of the job market, you are looking for opportunities and threats. Is there an especially large number of college grads coming into the job market in your geographic area who can fill entry level office positions cheaply? Or, more specific to our current economic situation, is the job market saturated with highly-skilled employees looking for work who you could be snapping up before the economy improves?
Workforce Forecasting Step 2: Take an Internal Scan
Once you’ve taken a look at the workforce available to you, now is your chance to analyze the jobs that need to be done in your organization and the skills of your current employees available to do them.
It’s important to take a look at the whole business and get a sense for all of your human resources needs. Here’s a way to organize your research. Start with:
Jobs and Skills Required by the Organization
- Jobs that exist now
- Number of employees doing each job
- Importance of each job
- Characteristics of anticipated jobs
Once you’ve summarized your company’s human resource needs, take a look at the actual employees you have available to you to fill those needs. Review your:
- Detailed information about current employees and their capabilities (knowledge, skills and abilities)
- Information about special expertise, mobility restrictions and specialized job qualifications
Workforce Forecasting Step 3: Forecasting Workforce Demand
Now that you know what you have available to you both inside and outside of your organization, it’s time to take a guess at what human resources you’ll need down the line. And, before you head into this next step, keep in mind that workforce planning and forecasting is an art, not a science. Your best approach is to be as informed as possible and include others in the workforce planning process.
You will start by gathering some basic supply and demand information. First, gather information about the possible demand for replacement of positions.
Possible Causes of Employee Replacement
- Retirement trends
- Turnover rate
- Internal fill rates
Once you’ve gained a sense of which employees might be moving on or up in your organization over the coming years, you should then gather information about the possible demand for new or evolved positions. To research potential causes of new workforce demands in your company, go straight to the top. Meet with your leaders and let them know that your goal is to understand the business and understand the business’s objectives. This information will help you know what sort of new positions may be needed in the coming years.
Workforce Forecasting Step 4: Forecast Workforce Supply
At this point, you have a good idea of what resources are available to you and what needs may come up. Now you can drill down to the details of a plan for hiring for the coming years. Remember that workforce forecasting should be done for the short term, intermediate and long term. Here are the practical steps:
Set a Realistic Timetable That Includes
- Fill time for open positions.
- Economic conditions and availability of labor.
- Needed ramp time.
Take an Assessment of Internal Workforce Supply
- Who’s in line to step up?
- What are the training needs?
- Are there succession plans in place?
Adjusting to Unexpected Changes in Workforce Supply and Demand
Once you have completed the steps above for forecasting your workforce supply and demand, you cannot sit back and just hope that everything goes smoothly in the roll out of the plan. You next need to know how to deal with unexpected changes to your workforce plans and how to keep consistent, company-wide interest in following through with this HR plan.
In our future post, I will discuss dealing effectively with HR surplus, how to maintain support for your HR workforce plan and give you a list of things to keep in mind so that you achieve success with forecasting workforce supply and demand no matter what changes come.
Director of Customer Service and Education at PayScale.com
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