Factors Considered In Forecasting Human Resource Requirements


Factors Considered In Forecasting Human Resource Requirements

The most carefully laid human resource plans can be affected by internal and external change anytime, so forecasting and flexibility are essential for effective planning and adapting as required. In order to do this, HR managers must be aware of what’s going on within the company, the industry and the wider market in relation to the factors that influence change.

Internal factors to consider in human resource planning

An organization’s internal policies, however, directly impact how it staffs its workforce and are controllable. Human resources planning consider these internal factors to ensure that the business gets the most talented employees at the right time. Aligning planning decisions with strategic goals helps the company maintain productivity. The internal factors that influence HR planning include;


A company’s mission summarizes its purpose, values and vision. The business sets a definitive direction by establishing clear goals and objectives. Then, when the HR department goes to fill staff positions, it can recruit, interview and hire individuals who possess similar values. For example, a company that wants to adopt sustainable business practices to protect the environment should seek individuals with similar interests.


Organizational culture defines how employees interact with each other. Small businesses with one location usually expect personnel to work in the office. Larger companies may permit employees to work at home. Therefore, new employees at this bigger business must be comfortable attending virtual meetings and dealing with co-workers over the telephone. In general, human resources planning needs to take into account the amount of flexibility in terms of hours, dress code and formality tolerated by the company. Additionally, it ensures staff coverage during all working hours defined by company operational policies. For example, if the company promises customer support 24 hours a day, human resources planning anticipates scheduling workers throughout the day.

  1. c) Structure

Organizational structure impacts human resources planning. Functional, divisional or matrix structures require different staffing. In a functional structure, employees perform specialized tasks. In a divisional structure, each department has representation from each required function, such as sales, marketing, development and support. In a matrix structure, an employee reports to two different bosses, one represents her function and the other managing the division. In each case, effective HR planning ensures positions get filled to ensure productivity and adhere to company, local, state and federal regulations for safety and security.


HR planning must occur within the budget allowed to maximize profitability. Seasonal demands for additional staff may impact hiring plans, so a business needs to anticipate this. The need for specialized skills may also impact planning. To meet short-term needs, companies may outsource non-core activities. Meeting long-term needs typically involves offering training and development opportunities to the workforce. Additionally, to maximize productivity, morale and loyalty, employers can plan events. If a business lacks the financial resources to offer comprehensive HR programs, it can provide lists of free resources related to professional development, workforce wellness and team-building. Adjusting to funding levels may make human resources plan challenging for a small business.

External factors affecting human resource planning


From a shift in local public opinion to a change in government or even a new industrial world superpower entering the market, politics influence how much funding is available, how much tax must be paid, minimum wage rates, how markets are controlled and the quality and quantity of staff available for hire. When planning ahead, you need to consider likely changes to markets, budgets and availability of suitable applicants as a result of recent or anticipated political influences. For example, if a change of government is possible in the coming year, understand the new administration’s priorities in relation to markets, industries and businesses.


How much money is available for salaries, training and equipment is the most immediate concern in human resource planning. However, external economics plays an equally critical role. For example, people don’t have as much money to spend in an economic downturn and tend to be much more selective in what they buy or services they use. This means some industries, such as those producing luxury items or non-essential services, sell less and may even have to lay off some staff. This, in turn, makes the local economy even more difficult. Building economic factors into the human resources plan helps to predict how many employees you will need and you can pay.


Several social factors may influence your HR planning, but you need to take into account equalities and diversity in particular. Where there is a clear discrepancy of one social group, it’s a good idea to build in ways of opening up new opportunities. For example, if there are few women people in your company compared to numbers in the wider community, determine why this is the case and what can be done to redress the balance.


New technology brings new skills requirements, so companies always need to be aware of proficiencies and training needs when planning human resources. New products and services also may require recruiting highly skilled employees or training existing employees to meet the need. It is therefore important to make sure HR managers are aware of new equipment or knowledge be needed so they can build the required skills, and most likely salary enhancements, into the plan.


Employment law is the most significant sector of the legal system that affects human resource planning, and it changes all the time. In most cases, there is plenty to time to implement changes to policy, as the law can take a while to take effect Employment law changes must be reflected in company policy and implemented on the ground by supervisors and managers, so it is good to incorporate another training need into the human resources plan.


Environmental factors might include where a business is located in relation to finding sufficient appropriate staff or changes to the environment that mean a need for more or fewer employees. A simple example of environmental factors affecting human resource planning is the consideration of how employees get to work safely during night shifts in an area with high crime rates which may require an inclusion of employee transport arrangements for those in night shift.

HR Planning Process

Human resource planning is a systematic analysis of HR needs to ensure the availability of the correct number of employees with the necessary skills at the right time. It involves several steps which are forecasting, assessing the inventory, estimating future demand and supply of labour, matching demand and supply as well as implementation, monitoring and control as discussed below.


HR Planning requires that we gather data on the Organizational goals objectives. One should understand where the Organization wants to go and how it wants to get to that point. The needs of the employees are derived from the corporate objectives of the Organization. They range from shorter and medium term objectives and their conversion into action. Therefore, the HR Plan should have a mechanism to express planned Company strategies into planned results and budgets so that these can be converted in terms of numbers and skills required.

Assessing Human Resources (Inventory)

After knowing what human resources are required in the Organization, the next step is to take stock of the current employees in the Organization. The HR inventory should not only relate to data concerning numbers, ages, and locations, but also an analysis of individuals and skills. Skills inventory provides valid information on professional and technical skills and other qualifications provided in the firm. It reveals what skills are immediately available when compared to the forecasted HR requirements.

The HR inventory analysis entails; Skill inventory, or keeping track of the number of employees, and the age, locations, qualifications, and skills of each employee to determine the specific role each employee would fill in the short term and long term ,Forecasting resignations and recruitment and understanding their impact on the skill inventory levels and Forecasting leaves, transfers, dismissals, sabbaticals, prolonged illness, and deaths of employees and their impact on inventory levels. The ways to forecast the internal supply of human resources include methods such as Markov analysis, transitional matrices, replacement schedules, succession planning, and the like.

Estimation of demand and supply of labour

HR forecasting is the process of estimating demand for and supply of HR in an organization. Demand forecasting is a process of determining future needs for HR in terms of quantity and quality. It is done to meet the future personnel requirements of the organization to achieve the desired level of output. Future human resource needs can be estimated with the help of the organization’s current human resource situation and analysis of organizational plans and procedures. It will be necessary to perform a year-by-year analysis for every significant level and type. Supply is another side of human resource assessment. It is concerned with the estimation of supply of manpower given the analysis of current resource and future availability of human resource in the organization. It estimates the future sources of HR that are likely to be available from within and outside the organization. Internal source includes promotion, transfer, job enlargement and enrichment, whereas external source includes recruitment of fresh candidates who are capable of performing well in the organization.

Matching Demand and Supply

The next step in HR Planning is developing action plans to bridge the gap between forecast and supply. . It is concerned with bringing the forecast of future demand and supply of HR. The matching process refers to bring demand and supply in an equilibrium position so that shortages and over staffing position will be solved. The various alternatives include to achieve this equilibrium is include developing strategies to recruit new employees, Retrenchment or downsizing strategy to shed excess workforce, Training and Development plans to right-size the workforce, Career Planning and Succession Planning to identify key personnel and making Changes in work regulations such as timings, overtime policy and the like. The basic considerations when undertaking the planning process is compliance and impact of labor legislation. Laws that govern overtime and retrenchment for instance can have a significant impact on the strategy adopted. The other consideration is the availability of resources such as financial, physical, and technical for implementation of the plans. Once approved, such plans become part of the company’s strategic objectives. Strategic HR Planning entails aligning such HR Plans with the overall strategic goals of the organization.

Action Plan

The HR plan is then executed through the designation of different HR activities. The major activities which are required to execute the HR plan are recruitment, selection, placement, training and development, socialization etc. Finally, this step is followed by control and evaluation of performance of HR to check whether the HR planning matches the HR objectives and policies. This action plan should be updated according to change in time and conditions.

Monitoring and Control.

This is the last stage of HR planning in the Organization. Once the programme has been accepted and implementation launched, it has to be controlled. HR department has to make a follow up to see what is happening in terms of the available resources.  This ensures implementation proceeds in accordance with the plan and taking timely course corrections. Since the external and internal environment of an enterprise always remains in a state of flux and a good HR Plan incorporates mechanisms to make timely revisions in accordance with such changes.

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