Forecasting Techniques

FORECASTING TECHNIQUES
Managerial judgement method.

This is the most commonly practiced and conventional method of forecasting human resource needs. Here the managers prepare the forecast of human resource needs of various categories in their respective departments based on their past experience. This method can be applied in two alternative ways: Top-down approach or Bottom-up approach
Delphi Technique.
This technique is used in group decision making in the present world. In a conventional Delphi technique a small group designs questionnaire about the problem under study. This is then sent out to experts in that field to be filled by them independently. The filled questionnaires are analysed by the designer, and if any divergence in opinions of experts, a revised questionnaire is prepared and sent to a larger group. This exercise is repeated till some consensus is reached.
Nominal group technique

A small group format, strategist generate their individual HR strategy preferences, discuss their assumptions about jobs, people ,and HR department. Individual predictions about positive and negative consequences or advantages and disadvantages of HR grand strategies are shared and then they vote on an HR strategy and thereby reach consensus on action.
Cross-impact analysis
Results generated by using Delphi techniques and the Nominal group technique, strategists estimate the probability of various consequences such as increased turnover , for example growing out of an HR grand strategy , assess interrelationships between consequences that is ,the chances that one action will create numerous reactions in the HR system, - and compile results.
Work Study Technique.

Work study technique is based on the volume of operation and work efficiency of personnel.
Volume of operation is derived from the Organizational plan documents. Work efficiency or productivity is measured by time and motion study which specifies standard output per unit of time
(Planned output)/(standard output per hour * standard hours per person)
Work Study Technique

Forecasting of manpower requirement by work study technique at constant productivity at increased productivity (10%)
Standard output per annum Standard output per hour Standard hours per person per annum (300*8) No of persons required
10,00,000 5 2400 83
10,00,000 5.5 2400 75
Ratio Trend Analysis.

In a Ratio Trend analysis the main emphasis is on the ratios between production/sales level and direct operatives, direct operatives and other personnel ,say supervisory and managerial personnel.
no of operative Actual 3 years ago 1,000 2 years ago 1,200 Last year 1,500 Forecast Next year 1,800 After 2 years 2,000 After 3 years 2,200
Year
no of supervisors 100 120 125 150 154 157
operatives supervisor ratio 10:1 10:1 12:1 21:1 13:1 14:1
Statistical and Mathematical Models.

Besides the above techniques, there are certain statistical and mathematical models which may be used for forecasting human resource needs.
Burack-Smith model: Burack-Smith model for personnel forecasting is based in the selected key variations that affect an organizations overall human resource needs.
En = (Lagg + G)/ X Y
Burack-Smith model En = (Lagg + G)/ X Y

En= estimated level of human resource needed in n plan period. Lagg= total business activity in n period based on current prices. G = total growth in business activity in n period based on the current prices. X = average productivity improvement in n period over the current period.
(if X =1.08, it means average productivity improvement of 8 %) Y = business activity personnel ratio in the current year. (business activity divided by number of personnel). The main purpose of this model is to calculate EN that is the personnel required in future (n period) and for this purpose ,Lagg , G , X and Y variables have to be measured.
Statistical and Mathematical Models.

Regression Analysis: Regression analysis identifies the movement of two or more interleaved series. It is used to measure the changes in a variable (dependent variable) as a result of changes in the other variable (independent variable). Regression models involve the following variables: The unknown parameters, denoted as , which may represent a scalar or a vector. The independent variables, X. The dependent variable, Y. In various fields of application, different terminologies are used in place of dependent and independent variables. A regression model relates Y to a function of X and . Y ~ f(X, )
Econometric Model : Refers to the science of economic measurement. An econometric model expresses relationship among different variables ,both dependent and independent , and based on those relationships , economic growth of an economic system is measured. Example : assume that monthly spending by consumers is linearly dependent on consumers' income in the previous month. Then the equation will be Ct = a +b Yt-1 + et where Ct - consumer spending in month t Yt-1 is income during the previous month, et is an error term measuring the extent to which the model cannot fully explain consumption. model's equation, enable predictions for future values of consumption to be made contingent on the prior month's income.
Then the objective of the econometrician is to obtain estimates of the parameters a and b; these estimated parameter values, when used in the
Replacement Charts.
In case of managerial personnel, some firms use separate inventory system usually in the form of replacement charts , as they are sometimes called manning tables. These charts generally contain: The age Years of service put in the organization Current performance and past performance Promotion potential and how soon Possible replacements
Scenario analysis
Strategists are furnished with a narrative description of the
organization as it exists at a future time.

They are then asked for opinion about the likelihood that the future will come to pass, what kinds of jobs , people and HR department practice area initiatives will be needed , and what HR grand strategy is likely to be most instrumental in creating the desired future.
Questionnaires or interviews.
Strategists are asked about their HRP strategy preferences ,likely outcomes, and relative value of each strategic alternative. A management committee then receives the results, where they are deliberated and a strategy is chosen.

Forecasting Techniques

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FORECASTING TECHNIQUES

Managerial judgement method.

Nominal group technique

Work Study Technique.

Work Study Technique

10,00,000 5.5 2400 75

Ratio Trend Analysis.

no of supervisors 100 120 125 150 154 157

operatives supervisor ratio 10:1 10:1 12:1 21:1 13:1 14:1

Statistical and Mathematical Models.

Burack-Smith model En = (Lagg + G)/ X Y

Statistical and Mathematical Models.

organization as it exists at a future time.

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