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HR Assignment-Factors Affecting HR Forecasting

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Yared Ashagre

External factors like the economic situation, labor markets, government regulations, technological changes, and demographic shifts can all impact HR forecasting. A strong economy increases demand for human resources while a weak economy decreases it. Labor unions and market conditions must be considered. Government policies on issues like industry, labor pay, and worker protections also shape forecasting needs. Technological innovations can both help processes and replace some jobs, requiring adjustments. As populations age, available workers will too.

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HR Assignment-Factors Affecting HR Forecasting

Uploaded by

Yared Ashagre
562 views3 pages
External factors like the economic situation, labor markets, government regulations, technological changes, and demographic shifts can all impact HR forecasting. A strong economy increases demand for human resources while a weak economy decreases it. Labor unions and market conditions must be considered. Government policies on issues like industry, labor pay, and worker protections also shape forecasting needs. Technological innovations can both help processes and replace some jobs, requiring adjustments. As populations age, available workers will too.

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HR Assignment-Factors affecting HR Forecasting

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External factors like the economic situation, labor markets, government regulations, technological changes, and demographic shifts can all impact HR forecasting. A strong economy increases demand for human resources while a weak economy decreases it. Labor unions and market conditions must be considered. Government policies on issues like industry, labor pay, and worker protections also shape forecasting needs. Technological innovations can both help processes and replace some jobs, requiring adjustments. As populations age, available workers will too.

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562 views3 pages

HR Assignment-Factors Affecting HR Forecasting

Uploaded by

Yared Ashagre
External factors like the economic situation, labor markets, government regulations, technological changes, and demographic shifts can all impact HR forecasting. A strong economy increases demand for human resources while a weak economy decreases it. Labor unions and market conditions must be considered. Government policies on issues like industry, labor pay, and worker protections also shape forecasting needs. Technological innovations can both help processes and replace some jobs, requiring adjustments. As populations age, available workers will too.

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External Factors affecting HR Forecasting

HR Forecasting, and HR planning in general, can be affected by external as well as internal

factors. The external factors are those factors outside the concerned organization or company that

impact its business environment, planning and forecasting processes in general. Since no

business is an island, these environmental factors need to be considered whenever HR

forecasting is in view.

The following are some of the external factors that affect HR Forecasting:

1. Economic Situation:

As we know, the more an economy grows, the higher the need for human resource supply. An

economy with high GDP and a thriving market will demand more HR. If the economy is weak,

there will be a decrease in HR need because a company cannot afford investing its limited

resources on too much human resource while the company is not thriving. “The general business

cycle of economic recessions and economic booms…affects HR planning.”1

2. Labor Markets and Unions

Human resource planning is also affected by labor market and trade unions. Trade unions are the

real demonstrations of how unity is strength. Whatever trade unions decide concerning working

hours or pay level will have a direct impact on HRP and forecasting needs to put that into

consideration.

1
Robert L. Mathis and John Harold Jackson, Human Resource Management, 12th ed (Mason, OH: Thomson/South-
western, 2008).p.48
3. Government Law and Regulation

Government drafts various policies to protect the labor. Besides, there may be some policies

related to the industry or amount of labor pay. Such policies affect HR planning and forecasting

has to consider that too.

4. Technological Changes:

Technological innovations will have an impact on the human resource needed. The positive side

of technological advancement is that it facilitates a company’s needs by improving internal

processes. Technological advancement can have a huge impact on the HR department of an

organization. It allows the company to improve its internal processes, core competencies,

relevant markets and organizational structure as a whole. These strategies must be led to

incorporate an IT strategic plan for the organization.

However, technologies replacing human labor will have a negative impact on HR management

and planning. A lot of companies have reduced their workforce by significant percentages due to

technological advancements that have made human power almost irrelevant. Hence forecasting

must put this also into its consideration.

5. Demographic Changes

As the demography of a society changes, ageing of the population will indirectly influence

“ageing of resources found in the labor market.” (Mendryk and Dylon, 2013). As population

ageing increases, older people increase and the younger ones decline. That means the retiring

part of the society is high and the working one is low. Hence, Mathis and Jackson advice that
aging of the workforce should be one of the variables that should be considered when scanning

the workforce in planning. 2

Internal Factors affecting Human Resource Planning and Forecasting

1. Organizational Structure:

One of the duties of the HR is establishing the organizational structure. If the structure of an

organization is not flexible enough to fit into the external business competition and business

demands, the organization will be negatively affected. Hence organizational structure and

strategy have a great influence on its human resource practices. (Tahemina Pathan)

2. Organizational Culture: As there is a social culture, there is also an organizational culture

customized to the internal working environment of an organization which includes issues such as

dressing code, performance expectation, and the like. Organizational culture may have a positive

or negative impact on labor attraction or retention.

2
Mathis and Jackson.

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