forecasting hr needs

MATCHING HUMAN RESOURCE REQUIREMENTS AND POTENTIAL HUMAN RESOURCE AVAILABILITY Matching human resources with the present and the future is one of the main problems faced by an organization. Human resources have a certain degree of inflexibility, both in terms of their development and their utilization. It takes months to recruit to select to place, and to train the average employee. In the case of upper management personnel in the organizations, the process may take up to years to nurture the candidate and making sure of the succession are being put in place.

Making decisions on recruitment and development are strategic and will produce long-lasting results given the right people are being chosen. Therefore, the management must forecast the demand and supply of human resource as part of the organization’s business and functional planning processes. Establishing long-term human resources requirements is inter-related to strategic business plans. Strategic business plans should provide a base of information on which human resources plans can be built.

Management should also consider the organizations’ labor availability before establishing strategic business plan because plans and decisions are being greatly affected by the employee as most of the saying goes. Employees are the ones that drives the business. The following figure illustrates the desired reciprocal relationship. [pic] (Alpander, 1982:79) FORECASTING LABOR DEMAND AND SUPPLY Upon Establishment of business plans, management needs to estimate future labor availability.

To assess the supply of labor, companies needs to see both within and outside of the organization. Also, they will need to determine the future demand of the numbers and types of employees they will require. Here’s a supply and demand analyses that should be conducted separately (Walker, 1980) internally and externally. The main reason for this is that internal supply forecasts tend to rely heavily on the organization’s variables such as turnover and retirement, transfers, and promotions.

Demand on the other hand depends on variations of the external factors out in the market. Demand forecasts are based with multiple uncertainties with the evolving consumer behavior, technology, general economic amd environment. Here are some techniques used to perform demand and supply forecasts and also classifies them into two broad categories: qualitative and quantitative techniques. Qualitative Forecasting Techniques

Qualitative forecasts are essentially guesses or estimates by individuals who have some knowledge of previous HR availability’s or utilization | |Technique Description | |Nominal Group |A group of four to five participants were to be asked to present their views regarding labor | | |forecasts.

These views will be written down, with no discussion until all of the members have | | |advanced from their positions. The group then discusses the information presented and | | |subsequently, a final ballot is taken to determine its judgment. | |Delphi Technique |This technique calls for a facilitator to solicit and collate Written, expert opinions on labor | | |forecasts.

After all answers are collected, a summary of the information will be developed and | | |distributed to the experts who will then be requested to submit a revised forecast. | | |The experts will never meet face-to-face, but rather communicate through the facilitator. | |Replacement Planning |Forecasting estimates are based on charting technique which identifies current job incumbents | | |and all relevant information about the employees.

This information typically includes a brief | | |assessment of performance and potential, age, length of time served in the current position, and| | |overall length of service in the organization. | |Allocation Planning |This technique involves judgments about labor supply and demand by observing the movement of | | |employees through positions at the same organizational level. (Duane, 1996: 4). Quantitative Forecasting Techniques There are several quantitative methods for determining labor supply and demand | |Technique Description | |Regression Model |Fluctuations in labor levels are projected using relevant variables, such as sales. |Time-Series Model |Fluctuations in labor levels are projected by isolating trend, seasonal, cyclical, and irregular| | |effects. | |Economic Model |Fluctuations in labor levels are projected using a specified form of the production function. | |Linear Programming Model |Fluctuations in labor levels are analyzed using an objective function as well as organizational | | |and environmental constraints. |Markov Model |Fluctuations in labor levels are projected using historical transition rates. | (Duane,1996: 8). CHOICE OF A FORECASTING TECHNIQUE Forecasters either uses the qualitative or quantitative techniques. Or, they can combine them by assumption that there is a pattern exists concerning the predictors of labor supply or demand. In choosing a forecasting technique, the following factors should be considered. Organization’s environment |organizations operating in fairly stable environments may be able to quantify the expected | | |values of variables in their business models. On the other hand, firms operating in unstable | | |environments will based on quantitatively predictions and data will likely to be highly | | |tentative.

While both methods are relying on historical data, the results will not be accurate. | | |(Jackson and Schuler (1990: 22)) | |Organization size |larger organizations tend to use more sophisticated, quantitative techniques than do smaller | | |ones.

The relationship between the particularly strong among government, mining, forestry, | | |transportation, communications, and utilities organizations, which traditionally have had high | | |internal stability due to low turnover among their employees (Duane, 1996:13). |Perceived uncertainty in labor markets and |In particular, “more sophisticated” techniques will not be used if perceived uncertainty | |economy |increases to a point whereby techniques are no longer feasible (Stone and Fiorito, 1986: | | |639;Rowland and Summers, 1983). | |Competition |Organizations that are regulated operates within predictable product markets and acquire | | |resource slack tend to use similar forecasting techniques (Doeringer et al. 1968; Fiorito et | | |al. , 1985; Moore and Reichert, 1983; Vatter, 1967). | To summarize, these factors suggest that different types of organization approach. Considering these factors, organization’s environment and size, perceived uncertainty in labor markets and economy, and competition, the Miles and Snow typology can be used to determine appropriate forecasting techniques in an organization. MILES & SNOW TYPOLOGY AND FORECASTING According to the research conducted by Doty et al. (1993), the Miles and Snow typology is the one of the best organizational typology that organizations can adopt.

It helps to categorize organizational strategy, structure and process. It is suitable for the analysis of HRM functions and this is one reason why Olian and Rynes (1984) used it in their study of organizational staffing. Table 1 indicates that Miles and Snow (1984) specifically address the importance of fitting organizational type with the appropriate HR systems. Table 1. The Miles & Snow Typology [pic] HR SYSTEMS DEFENDER PROSPECTOR ANALYZER Forecasting in defender organizations. Environmental conditions for the defender are stable and simple.

It can be generally characterized as having a predictable product market, high barriers of entry, and little product variation, allowing it to engage in less environmental scanning and more long-range forecasting and planning. This industry allows organizations to use sophisticated or quantitative techniques, such as regression analysis, to forecast labor demand and supply. There is an emphasis on internal labor-market forecasts and this explains the ability of defenders to pursue low-cost operations to remain on a defensive stance.

The production efficiency and tight business controls are at the heart of the success of the defenders. The jobs within a defender organization tend to be highly specialized, with vertically differentiated units. Coordination of work is brought about by formalization and specialization, thereby creating the defender a stereotypical bureaucratic structure. Forecasting in prospector organizations. The prospector is at the opposite extreme from the defender. It competes in a dynamic environment with a rapid rate of advanced technologies, product development, and market shifts.

As a result, long-range forecasting and planning in this organizational configuration are very difficult as the market are evolving into a very dynamic pace and the demands changes with advancement of technology and economy. The environmental constraints on prospectors limit demand-forecasting process in short-term method. Forecasting labor supply is equally as difficult therefore, labor demand and supply forecasts are based on qualitative techniques, such as nominal groups and Delphi technique.

The emphasis on innovation and adaptation forces prospectors to be inefficient particularly when compared with defenders. Prospectors therefore hinges on investments in research and development, with the ultimate objective of earning large profit margins on uniquely design products. To accomplish this, prospectors must assume an organic structure, avoiding rigidities and inflexibility associated with formalization. Forecasting in analyzer organizations. The analyzer configuration combines characteristics of both the defender and prospector.

Like the defender, this configuration seeks efficiency of operation, but at the same time, it is like the prospector, with an interest in new products and markets. This dual focus may results in increased size because the organization must engage in both mass production and R&D. The analyzer also has an ability to closely monitor competitors for new ideas and then to promptly react by developing efficient production methods for those ideas that appear to be most promising. In coordinating its work, the analyzer adapts a unique problem of separating the innovative activities from the formalized ones.

One way that it resolves this dilemma is by establishing two separate organizations, one structured around the characteristics of the prospector, with the other structure similar to that of the defender. As mentioned, the analyzers are generally large organizations, governed by headquarters and grouped into distinctive sub units or divisions. Some divisions take on defender characteristics, while others act as prospectors. The duties of people at headquarters are anything but routine they require innovative responses to comparatively complex and dynamic conditions.

For this reason, forecasting tools at this level cannot depend on standardized data that are necessary for quantitative estimations. As a result, demand and supply forecasts conducted by managers at headquarters and within prospector divisions are likely to involve qualitative techniques within defender divisions use quantitative ones. While prospector divisions emphasize external labor-market forecasts, defender divisions focuses on internal markets; to some degree, headquarters conduct analyses of both internal and external markets. CONCLUSION

Forecasting has an important role in successful human resource management of a company. By predicting the number of employees to be hired, and also by estimating and knowing their quality. A company would get the best people for the right places and at the right time and this is essential for a company that wants to compete in the global market. The typology suggested by Miles and Snow allows a company to understand itself and then, the company could apply a certain forecasting method in order to match requirements and availabilities afterward. REFERENCES Alpander, G. G. , 1982. Human Resources Management Planning.

New York: Amacom. Cascio, W. , 1991. Applied Psychology in Personnel Management. (4th ed. ) Englewood Cliffs, NJ: Prentice Hall. Duane, M. J. , 1996. Customized Human Resource Planning. Westport: Quorum Books. Doeringer, P. B. , Piore, M. J. , & Scoville, J. G. , 1968. “Corporate manpower forecasting planning”. The Conference Board Record, 5, pp. 37-45. Doty, D. H. , Glick, W. H. , & Huber G. P. , 1993. “Fit, equifinality, and organizational effectiveness: A test of two configurational theories”. Academy of Management Journal, 36, pp 1196-1250. Fiorito, J. , Stone, T. H. , & Greer, C. R. 1985. “Factors affecting choice of human resource forecasting techniques”. Human Resource Planning, 8, pp. 1-17. Jackson, S. , & Schuler, R. , 1990. “Human resource planning: Challenges for industrial/organizational psychologists”. American Psychologists, 45, pp. 223-239. Miles, R. E. , & Snow, C. C. , 1984. “Designing strategic human resources systems”. Organizational Dynamic, 13, pp. 36-52. Moore, J. S. , & Reichert, A. K. , 1983. “An analysis of the financial management techniques currently employed by large U. S. corporations”. Journal of Business Finance & Accounting, 10, pp. 623-645.

Jurnal Manajemen & Kewirausahaan Vol. 2, No. 1, Maret 2000: 1 – 8 Jurusan Ekonomi Manajemen, Fakultas Ekonomi – Universitas Kristen Petra http://puslit. petra. ac. id/journals/management/ Olian, J. D. , & Rynes, S. L. , 1984. “Organizational staffing: Integrating practice with strategy”. Industrial Relations, 23, pp. 170-183. Rowland, K. M. , & Summers, S. L. , 1983. Current Practice and Future Potential in Human Resource Planning. Stone, T. H. , & Fiorito, J. , 1986. “A perceived uncertainty model of human resource forecasting techniques use”. Academy of Management Review, 11, pp. 635-642. Vatter, W. , 1967. The use of operations research in American companies”. The Accounting Review, 42, pp. 721-730. Walker, J. W. , 1980. Human Resource Planning. New York: McGraw-Hill. Ward, D. , Bechet, T. P. , & Tripp, R. 1994. , Human Resource Forecasting and Modeling. NY: The Human Resource Planning Society. ———————– Forecasting HR needs [Type the document subtitle] In the age of competition Human resource management has a critical role to play in supporting and implementing the corporate strategic plan. The main task of human resource management is to support other departments to have the best people.

Therefore, it is a need to get the best people in the right place at the right time and with the right skill. Forecasting helps to match the requirements and the availabilities of employees in the organization. There are two kinds of forecasting methods adopted by most of the companies: qualitative and quantitative methods. On the other hand, the Miles and Snow typology can be used by companies as a tool to identify their positions. This essay discusses how typology and forecasting are important and essential for successful human resource management to function in a company. Zen Tan Jeanne Cynthia Tan

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