Techniques for Forecasting of Human Resources

There are many techniques so far developed to forecast the demand for human resources.

Techniques for Forecasting of Human Resources are;

  1. Delphi technique.
  2. Nominal technique.
  3. Brainstorming.
  4. Ratio Analysis.
  5. Trend Analysis.
  6. Scatter plot.

These are discussed below;

Delphi technique

Delphi technique is based on the principle that forecasts (or decisions) from a structured group of individuals are more accurate than those from the unstructured group.

Delphi is a structured approach for reaching a consensus judgment among experts about future developments in any area that might affect a business, for example, a firm’s future demand for labor.

In the Delphi technique, a panel of relevant people is chosen to address an issue. It facilitates group decision making.

Experts are chosen on the basis of their knowledge of internal factors that might affect a business (e.g., projected retirement), their knowledge of the general business plans of the organization, knowledge of the external factors that might affect demand for the firm’s product and service and hence its internal demand for labor.

Experts may range from first-line supervisors to top-level managers. Sometimes, outside experts are also used.

The main objective of the Delphi technique is to predict future developments in a given area by integrating the independent opinions of experts.

Face-to-face group discussion among the experts is avoided to eliminate criticism and compromise on good ideas.

To avoid these problems, an intermediary is used. The job of the intermediary is to pool, summarize and then feedback to the experts the information generated independently by all the other experts during the first round of forecasting.

The cycle is then repeated so that the experts are given the opportunity to revise their forecasts and the reasons behind their revised forecasts.

The following are the key characteristics of the Delphi method: the anonymity of the participants, structuring of information flow, regular feedback and the role of the facilitator.

Guidelines to make the Delphi process most useful:

  • Give the experts enough information to make an informed judgment.
  • Do not require precision.
  • Keep the exercise as simple as possible.
  • Be sure that the classification of employees and other definitions are understood in the same way by all experts.
  • Enlist top management’s an expert’s support of the Delphi process by showing how good forecasts will benefit the organization and how they will affect profitability and workforce productivity.

The Delphi technique produces a few important benefits such as a) elimination of interpersonal problems among panelists, b) efficient use of experts’ time, c) adequate time for reflection & analysis by respondents, d) diversity & quantity of ideas generated and e) accuracy of predictions & forecasts made.

Delphi technique is not without limitations. It must be realized that an area such as human resource forecasting, the degree of uncertainty is so great that exact and always correct predictions are impossible, so a high degree of error is to be expected. Another particular weakness of the Delphi method is that future developments are not always predicted correctly by the consensus of the experts. Another problem is the inability of the experts to make complex forecasts with multiple factors.

Nominal technique

A nominal group exists in name only with members having minimal interaction prior to producing a decision. Participants are asked to write their ideas anonymously. Then the facilitator collects the ideas and the group votes on each idea. The group should be prepared and encouraged to embrace the process.

Here are the steps that nominal groups often follow:

  1. Individuals are brought together & presented with a problem.
  2. They develop solutions independently, often writing them on cards.
  3. Their ideas are shared with others in a structured format,
  4. Brief time is allotted so that questions can be asked – but only for clarification ask the kinds of questions a unit manager can answer.
  5. Group members individually designate their preferences for the best alternatives by secret ballot.
  6. The group “decision” is announced.

Advantages of the nominal technique

  • There is an opportunity for equal participation by all members. Participation is broad, not limited to a few powerful members.
  • It allows tighter control of time. Thus, it quickens the decision-making process. It is a time-saving process.
  • A single member cannot dominate in the decision process. There is little chance of occurring group thinking.
  • Because of wider participation, members can come up with new ideas.

Disadvantages of nominal technique

  • Group members are frustrated by the rigidity of the procedure,
  • Gain no feelings of cohesiveness,
  • Do not have the opportunity to benefit from the cross-fertilization of ideas.
  • The success of the nominal technique depends on each member’s capacity.

Brainstorming

Brainstorming is a popular method for encouraging creative thinking in groups of about five to eight people (Ivanceivich, 1998).

Brainstorming is a group or individuals creativity technique by which efforts are made to find a conclusion for a specific problem by gathering a list of ideas spontaneously contributed by its member(s).

Good ideas may be combined to form a single better idea, as suggested by the slogan “1+1=3”. It is believed to stimulate the building of ideas by a process of association. It is built around four basic guidelines for participants:

  • Generate as many ideas as possible.
  • Be creative, freewheeling & imaginative
  • Build upon extending or combine earlier ideas,
  • Withhold criticism of others’ ideas.

The success of this technique depends on: each member’s capacity, willingness to hear thoughts, use the thoughts as a stimulus, to spark new ideas of their own and to feel free to express them.

Advantages of Brainstorming

There are many advantages of brainstorming such as

  1. group members are enthusiastic,
  2. broad level participation,
  3. group members maintain a strong task orientation,
  4. new ideas are built upon & extended and
  5. combined and improved ideas.

Disadvantages of Brainstorming

The major disadvantages of brainstorming are:

  1. Members typically feel that the final product is a team solution, not individual,
  2. Residual fear among some members,
  3. Creative thoughts are looked down upon,
  4. Less contribution to group cohesion.
  5. Only one person can speak at a time, k

Trend Analysis

Trend analysis means studying of a firm’s past employment needs over a period of years to predict future. The purpose is to identify trends that might continue into the future. It provides an initial estimate.

Ratio Analysis

It is a forecasting technique for determining future staff requirements by using ratios between, for example, sales volume and number of employees needed.

It means making forecasts based on the ratio between any causal factor and the number of employees required. Ratio analysis assumes that productivity remains the same.

Scatter plot

A scatter plot is a graphical method used to help identify the relationship between two variables. If an HR manager can forecast the level of business activity, he should also be able to estimate personnel requirements.

Managerial judgment will play a big role, whichever forecasting technique HR managers use. It is rare that any historical trend or relationship will simply continue unchanged into the future.

HR managers have to modify the forecast based on factors- such as projected turnover or a desire to enter new markets. It is sometimes difficult to take a long term perspective, particularly when market conditions change dramatically.

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