HR Planning Class 3 Introduction to Forecasting (Ch.4) & Demand Forecasting (Ch PDF

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Download HR Planning Class 3 Introduction to Forecasting (Ch.4) & Demand Forecasting (Ch PDF

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HUMAN RESOURCES PLANNING CLASS 3: INTRODUCTION TO FORECASTING (CH. 4) & DEMAND FORECASTING (CH. 5) Chapter 4 Learning Objectives Understand what HR forecasting is, and its strategic importance to the firm Understand the value of human capital to the firm, and discuss the difference between generic human capital and firm-specific human capital Discuss the differences between stocks and flows of human capital, and comprehend the implications that stocks and flows have for HR planning Understand the rationale for giving special attention to specialist/technical workers, managers, recruits, and designated groups in the HR forecasting process Comprehend the forecasting process in general, and the categories of forecasting methods Outline the environmental and organizational factors affecting HR forecasting Understand Turnover Prepare Net HR Demand Activity Preview: This module’s activities include: Chapter 4: An introduction to Workforce Planning: Forecasting  Read Chapter 4 and the ppts.  Read the article Putting Forecasting in Focus: https://www.shrm.org/hr-today/news/hrmagazine/pages/0307cover.aspx  Read “Workforce Planning Practices in Canada. Human Resources Trends and Metrics, Fourth Edition,” The Conference Board of Canada (If you have time. Take a look, be prepared though it’s 96 pages, I’ve given you some highlights)

Chapter 4 & 5 Overview

Highlights:

Chapter 4: Introduces you to the forecasting process, aka as workforce planning. The article “Putting Forecasting in Focus” says it all. “Strategic workforce planning, is a practice that helps employers assess and predict gaps in employee head count and skills to determine what actions will support overall business goals. Jamie Hale, workforce practice leader at Bethesda, Md.-based consulting firm Watson Wyatt Worldwide, describes workforce planning as “the most strategic work HR can do. It’s really the umbrella over all the services HR delivers.” Done right, workforce planning gives HR that coveted role of strategic business partner. “That’s the seat at the table,” says Chris Hagler, global managing director of strategic services for Resources Global Professionals, a professional services firm based in Costa Mesa, Calif.” https://www.shrm.org/hr-today/news/hr-magazine/pages/0307cover.aspx Chapter 5 What is Demand? The question about demand starts with an understanding of Chapters 1-3. How does the company bring value to the customer, so that we can get an estimate of how the market will want to consume our product or service? From here we can start to make a determination of our future needs for human capital, the types of jobs, and the number of positions that must be filled for the firm to implement its strategy. There are a number of methods used to determine demand, some are quantitative, others qualitative and some a combination. Our focus will be to prepare a trend/ratio analysis along with a staffing table. Usually on the midterm exam, you will be preparing one question from the demand methods and one question from the supply methods. It is really important that you understand not only how to prepare these methods, but as well the story they tell. As we have our first live call, look at the trend/ratio analysis and as you look at the date, ask yourself some questions: Are there any issue(s) with the operational sales index? What about the number of employees that you identified? How about the employee requirement ratio? Are you comfortable with these calculations? Would you give these numbers to your recruiter? Why/Why not? Forecasting is about making projections; we don’t have a crystal ball. Remember there is an art that goes along with the science of these methods. Links/Resources:

Putting Forecasting in Focus “Workforce Planning Practices in Canada. Human Resources Trends and Metrics, Fourth Edition,” The Conference Board of Canada pages 22 – 32 (PDF)  Internet: Labour market and key economic indicators, 2020

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Intro & Objectives Ch. 5 Introduction & Learning Objectives Chapter 5 Learning Objectives On successfully completing this week's module, you will be able to: Understand the importance of demand forecasting in the HR planning process Recognize the linkages between the HR plan, labour demand forecasting techniques, and the subsequent supply stage Compare and contrast the advantages and disadvantages of various demand forecasting techniques, including quantitative, qualitative, and blended techniques Activity Preview: This module’s activities include: Read the Chapter and ppts Introduction to Demand forecasting: role play Review “Workforce Planning Practices in Canada. Human Resources Trends and Metrics, Fourth Edition,” The Conference Board of Canada pages 22 – 32  Look up the national labour force and key economic indicators, 2020 and check them against the forecasts made in 2016/17  Prepare: ◦ Index and Trend Analysis/Ratio Analysis ◦ Staffing Table   

Summary After completing Chapter 4, you should be able to: Understand what HR forecasting is, and its strategic importance to the firm Understand the value of human capital to the firm, and discuss the difference between generic human capital and firmspecific human capital Discuss the differences between stocks and flows of human capital, and comprehend the implications that stocks and flows have for HR planning Understand the rationale for giving special attention to specialist/technical workers, managers, recruits, and designated groups in the HR forecasting process Comprehend the forecasting process in general, and the categories of forecasting methods Outline the environmental and organizational factors affecting HR forecasting Understand Turnover Prepare Net HR Demand By the end of Chapter 4 you should have completed the following: Read Chapter 4 and the ppts. Read the article Putting Forecasting in Focus: https://www.shrm.org/hr-today/news/hrmagazine/pages/0307cover.aspx  Read “Workforce Planning Practices in Canada. Human Resources Trends and Metrics, Fourth Edition,” The Conference Board of Canada (If you have time. Take a look, be prepared though it’s 96 pages, I’ve given you some highlights)

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After completing Chapter 5, you should be able to: Understand the importance of demand forecasting in the HR planning process Recognize the linkages between the HR plan, labour demand forecasting techniques, and the subsequent supply stage Compare and contrast the advantages and disadvantages of various demand forecasting techniques, including quantitative, qualitative, and blended techniques By the end of Chapter 5 you should have completed the following: Read Chapter 5 and ppts d h l l

Reviewed “Workforce Planning Practices in Canada. Human Resources Trends and Metrics, Fourth Edition,” The Conference Board of Canada pages 22 - 32 Look up the national labour force and key economic indicators, 2020 and check them against the forecasts made in 2016/17 Completed: ◦ Index and Trend Analysis/Ratio Analysis ◦ Staffing Table Next class: You will learn about supply forecasting (Ch. 6) You will still need your calculators! Upcoming:  Paired Forecasting Assignment: May 30th, at 11:59 p.m. NOTE: You have enough information to start this assignment!  Midterm: June 5th Chapter 4

The HR Forecasting Process

https://www.conferenceboard.ca/temp/086b7f6b-d459-4894-b59205daa5273223/8823_WorkforcePlanning_HRTM4_RPT.pdf *** Here's where we have been, and where we are going. A Scenario Hilbert, global leader of talent acquisition for the 23,000-employee oil refiner and gas retailer, Valero Energy Corp. After analyzing demographic data and five years of turnover rates for the San Antonio-based company’s core refinery operations, he projected turnover for the next five years. The picture was not pretty.  “We were projecting gaps of four to six times higher than any annual fill rate we had for multiple jobs in our refineries,” he says. “It brought home that the business was at risk. Workforce planning became a board-level concern.” *** Read the article https://www.shrm.org/hr-today/news/hr-magazine/pages/0307cover.aspx This situation pushed Hilbert to the cutting edge of strategic workforce planning, a practice that helps employers assess and predict gaps in employee head count and skills to determine what actions will support overall business goals. Jamie Hale, workforce practice leader at Bethesda, Md.-based consulting firm Watson Wyatt Worldwide, describes workforce planning as “the most strategic work HR can do. It’s really the umbrella over all the services HR delivers.” Done right, workforce planning gives HR that coveted role of strategic business partner. “That’s the seat at the table,” says Chris Hagler, global managing director of strategic services for Resources Global Professionals, a professional services firm based in Costa Mesa, Calif. Making Predictions https://www.shrm.org/hr-today/news/hr-magazine/pages/0307cover.asp *** The important thing to remember is that when you are forecasting, the numbers are a starting point - forecasting is both an art and a science. *** HR technology and an organization’s employees generate the information used in strategic workforce planning. The best planners mix current and historical human resource information systems data—head count, turnover rates, retirement eligibility and so on—with performance management data on skills to produce predictive models that can pinpoint trends such as an expected shortage of certain kinds of skills in certain locations.

“It allows them to drill down deeper and discover relationships they didn’t know were there,” says Mary B. Young, a Conference Board senior research associate. This approach also integrates what otherwise looks like a lot of separate, unrelated numbers. Experts say to make sure your data are accurate, then focus on finding trends; don’t get so caught up in generating exact numbers that you miss the big picture. Large companies look at “job families,” not every last job. “If you’re going to do predictive modeling, you need a sample set [of at least 30 but preferably 50 to 100] so that your data is statistically valid,” Hale notes. Borrowed from the areas of finance and risk management, this wide-ranging data analysis allows HR professionals to build on their ability to design effective talent strategies, says Jacqueline Richardson, CNA Financial Corp.’s assistant vice president for central region HR. “The ability to combine the use of data and the core skills that HR people have as ‘people people’ … is really critical to the concepts of workforce planning,” she says. Putting Forecasting in Focus  The insights and knowledge gained from strategic workforce planning can help organizations decide, for example, where to locate new plants and offices, how to invest training resources, and whether to outsource certain work to meet business needs.  They also give HR a deeper understanding of workforce dynamics so that talent can be managed proactively to ensure that future business goals are met. Here is both the source of and the outcome of your forecasting!

https://www.sap.com/canada/products/workforce-analytics.html ***This is an example of a Manager's Dashboard from SAP SuccessFactors. This is the data that you will use and provide to your internal customers. This is what you will use for forecasting and developing your workforce plan.

https://www.sap.com/canada/products/workforce-analytics.html ***With an HRIS, we will be exploring Ceridian's Dayforce at the end of the semester, the manager through what we call MSS has access to the HR data relevant to their department. Thus, they have the tools they need to analyze, made decisions and take action to ensure they have the people to deliver on their strategies. Some glimpses into strategic workforce planning (nhìn thoáng qua - kếế ho ch ạ l ự c l ượ ng lao đ ng ộ chiếến l ược)  More than 85 per cent of respondents to the HR Trends and Metrics survey felt that their organization’s leaders connect workforce planning with business issues.  However, little more than a third agreed that their current business strategy is supported by a workforce plan.

https://www.conferenceboard.ca/temp/086b7f6b-d459-4894-b59205daa5273223/8823_WorkforcePlanning_HRTM4_RPT.pdf

***The “Workforce Planning Practices in Canada. Human Resources Trends and Metrics, Fourth Edition,” The Conference Board of Canada provides some great information on workforce planning. Throughout the deck, I'll be sharing with you some glimpses into the data. What is HR Forecasting? Process of ascertaining (determining) the net requirement for human capital by determining the demand for and supply of human resources now and in the future *** Simply put, how many people do you need (Demand) and where will they come from (supply which is both internal and external. Why is Forecasting Important?  Most beneficial when demand is high for jobs, particularly for specialized jobs  Can ensure that the necessary human capital is available to the firm, despite its scarcity in the labour market  Reduce HR costs as a long-run planning approach to HR issues is exercised  Enhance flexibility  Minimize HR gaps or surpluses ◦ HR gap: Insufficient human capital to meet operational needs ◦ HR surplus: Organization has more human capital than needed Human Capital Stock and Flows  Human capital stock: The amount of any specific form of human capital that is available to the firm at any given time  Human capital flow: The change in the stock of human capital over time. Factors that affect the flow of human capital include terminations, promotions, lateral movements, and demotions *** It's not just about "how many" but the KSAO's: (knowledge, skills, abilities, and other characteristics that are necessary for a person to perform well in a job) Human capital enters the organization as generic human capital: Competencies, knowledge, skills, and abilities that are held by individual employees and that are useful to the firm. IF the company uses seasonal or part time workers, little training, jobs require few specialized skills then the focus is on STOCK. Over time generic human capital may become firm-specific human capital: Competencies, knowledge, skills, and abilities that employees possess based on their tacit knowledge, and learned from experience and through mentorship in the organization. Where a company is focused on jobs that deal with integrating processes or complex social networks the focus is on FLOW. What is the Forecasting Process? 1. Determine the staffing needs by skills, skill levels, or jobs 2. Perform the analyses to determine the number of required employees 3. Create a budget to determine the costs involved in fulfilling the stated organizational requirements 4. Put HR programs and policies into place to ensure that the demand and supply requirements are met then track the results 1. Determine the staffing needs by skills, skill levels, or jobs. This macro-level activity begins with a thorough understanding of the organization’s strategy and environmental scanning in order to determine the relevant pieces of information and types of analyses that are most suited to what is being forecast. 2. Perform the analyses to determine the number of required employees. This involves an assessment of in-house skills and other internal supply characteristics as well as determining the demand requirement that must be met from external sources. The type of analysis can be qualitative or quantitative, and the focus of the analysis can range from simple headcounts to strategic scenario planning 4. Put HR programs and policies into place to ensure that the demand and supply requirements are met, and track the results. Measures of production, efficiency, employee performance, or group performance may be used to assess the results of the forecasting process. There are two key elements to consider in forecasting:  Demand forecasting: The process of determining the organization’s requirement for specific forms of human capital

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Supply forecasting: The process of determining the source or sources of human capital to satisfy the organization’s demand *** Demand Forecasting: how many do we need and where will they come from (Supply - internal and external). Chapter 5 and 6 deal specifically with demand and supply forecasting methods There are a variety of forecasting methods:  Survey the business line for their anticipated needs. This method includes subjective decisions such as personal rules of thumb (for example, a line manager may have a seasonal forecast rule of thumb that sales staff requirements double in the summer months).  Norm-based rules. This is a very common method of forecasting in which existing assumptions based on historical data are used to create ratios of production or sales amounts to human capital needs. This category includes trend analysis, which will be discussed more in Chapter 5.  Time series– and regression-based models. These types of models are largely based on objective data such as sales levels, marketing efforts, and seasonality or historical demand , and are able to incorporate more information than norm-based rules in determining the forecast.  Mathematical and econometric models. While these types of models can be relatively simple and straightforward, they can also become quite complex including Markov models, simulations, and structural equation modelling. These models are highly data-driven, and can incorporate a large number of assumptions and variables. This allows for very sophisticated modelling, but requires a relatively high degree of expertise in constructing the analysis, and is dependent on the quality of the data that are used in the model. A primary benefit of artificial intelligence such as IBM’s Watson is that complex models, such as these will eventually become easier to construct, so that little or no specialized mathematical or statistical knowledge will be necessary to perform these types of analyses.  Qualitative models. This category of models is based on human judgment, and includes methods such as the Delphi Technique, focus groups, Nominal Group Technique, and scenario planning. A primary benefit to qualitative models is that human judgment may be best suited when a high degree of uncertainty exists or if the data or expertise is not available to construct a quantitative model. HR Forecasting Time Horizons

https://www.conferenceboard.ca/temp/086b7f6b-d459-4894-b59205daa5273223/8823_WorkforcePlanning_HRTM4_RPT.pdf

Current forecast: is the one being used to meet the immediate operational needs of the organization. The associated time frame is up to the end of the current operating cycle, or a maximum of one year into the future. Short-run forecast: extends forward from the current forecast and states the HR requirements for the next one- to twoyear period beyond the current operational requirements. Medium-run forecast: Most organizations define the medium-run forecast as the one that identifies requirements for two to five years into the future. Long-run forecast: Due to uncertainty and the significant number and types of changes that can affect the organization’s operations, the long-run forecast is by necessity extremely flexible and is a statement of probable requirements given a set of current assumptions. The typical long-run forecast extends five or more years ahead of the current operational period. The outcome of forecasts from the time horizons leads to the following:  Prediction: A single numerical estimate of HR requirements associated with a specific time horizon and set of assumptions  Projection: Several HR estimates based on a variety of assumptions  Envelope: The range of plausible values of a prediction based on a given set of assumptions,  Scenarios: Proposed sequence of events with their own set of assumptions and associated program details  Contingency plans: Implemented when severe, unanticipated changes to organizational or environmental factors completely negate the usefulness of the existing HR forecasting predictions or projections

https://www.conferenceboard.ca/temp/086b7f6b-d459-4894-b59205daa5273223/8823_Work...