2.4 HR Demand Forecasting Method

Forecasting Methods:

• Nominal Group Method: a focus group of experts work face-to-face or virtually. They are presented with a problem such as “What will change our demand for employees?” They write down all their ideas and share them with each other. All the ideas are recorded. They rank the ideas by priority and vote for the top 3-5 ideas.
• Delphi Method: a group of experts predict specific future events through surveys and opinions (Ramachandran, 2023). Usually, HR summarizes the results and creates a report. The experts continue to use surveys  until they start to see where there is agreement on the responses. The process continues until there is agreement on future trends.
• Trend Projections: Two methods are used with trend projections. Extrapolation uses past information related to change. Example: We hired 10 carpenters last year, so we likely will need 10 more carpenters this year with the growth of the company. Indexation matches employment growth with specific indices (such as the ratio of sales to the number of pieces of production). Example: With 30 sales people, the company earned $1 million in sales. If the company’s profit margin increases by 20% next year, the company will need 36 sales people.

HR departments are responsible for ensuring the right and most appropriate methods are used for reliability and validity. In some cases, software programs can be purchases to gather the data using these methods. Other times, companies hire outside experts to gather the data and report the findings to the company.

Once the information is gathered, the results need to be converted to staffing tables. These tables are lists of project employees for each type of position in the company. Companies can then review the tables and make short and long term plans related to human resources demand. They also help HR departments to develop objectives.