This HR forecasting technique is one of the most basic methods, because it uses the current staffing levels, as well as past staffing needs, to determine future staffing needs. This technique can be used when a company doesn’t plan on making major changes in the upcoming year and it plans on remaining at the same production needs. It could also be used if a company is planning to add a product line. For example, the HR department can note that the current customer service department has 20 employees and will need to add to the number when the new product line launches to handle call overflow.
Most human resources departments want to be strategic, rather than reactionary. This means that they want to plan for any foreseen, as well as unforeseen, staffing changes, rather than reacting to them on the spur of the moment. Internal and external circumstances affect a company’s workforce. In some cases companies need to ramp up hiring, while at other times businesses must lay off a large number of employees. To prepare for these changes, HR departments use forecasting techniques to figure out how their employment situation will need to adapt to meet strategic goals and plans.
In department-based forecasting, the HR department asks each department head to forecast the upcoming year’s staffing needs. The forecast typically is based on the division’s strategic plans and sales goals. For example, the sales manager can look at the next year’s sales budget and goals, compare them with the current year’s numbers and see that he’ll need additional salespeople to meet the goals. In this technique, managers generally are given their staffing budgets as well.
This forecasting method uses various scenarios, real or imagined, to see how the current staffing needs would be affected by external events. For example, financial companies must consider many scenarios around the stock market. Auto manufacturers must consider many external factors, such as the price of gasoline.
Some forecasting techniques use statistics and engineering formulas to figure out future staffing needs. They include linear forecasting, regression forecasting and goal-programming methods. These techniques utilize complex formulas and ratios that assist companies who plan on growing or downsizing significantly in the upcoming year. Some use work hours as one variable and then compare them to headcount as another variable. HR engineers simply plug in current and estimated production, sales and staffing numbers into the software program to come up with the forecast.