Manpower forecasting helps in preventing shortage of manpower by assessing the current staffing levels across the organization and quantifying how many people and positions are expected. In the absence of systematic manpower planning, organizations cannot be prepared for human resource requirements and will find themselves unable to cope with forthcoming business challenges. To meet the desired business goals, manpower forecasting is critical.
In the absence of appropriate demand forecasting, there can be long gestational lags in the production of skilled professionals. Also, there are short lags on the demand side and longer lags on the supply side for quality manpower. Manpower planning facilitates the design of skilling programs to ensure that there is no gap and the right quantity and quality of manpower is available as and when required. Without appropriate manpower forecasting, there could also be distortions in the labor market wherein either unemployment rises in the educated population or people take up jobs for which they are inadequately trained.
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Manpower forecasting essentially means making an educated guess about how much manpower will be required over a period of time keeping in view the organization’s business plans. There are several factors involved in forecasting like analysis of employment trends, employee replacement needs due to resignation, retirement, decline in productivity, absenteeism, labor turnover etc. The two approaches that are primarily used for demand forecasting are qualitative and quantitative.
The quantitative forecasting methods use statistical and mathematical techniques and are mainly based on the assumption that future is an extension of the past. However, major inaccuracies can occur when the variables differ. Most organizations do not have a data- driven approach to manpower planning because the HR data is scattered across HRIS, ERP, payroll, applicant tracking system and a lot of spreadsheets. While there is a lot of data that HR deals with on a day- to-day basis, it is not organized enough for them to do manpower forecasting accurately.
Qualitative methods of demand forecasting are less statistical and attempts to align the interests, abilities and aspirations of individual employees with the current and future staffing needs of the organization. It involves methods like Managerial Judgement and Delphi techniques. Manpower planning process must involve both quantitative and qualitative approaches for providing a holistic forecast by bringing the expertise of scholars as well as practitioners.
As the business environment is becoming increasingly dynamic, business forecasting and a robust knowledge of imminent trends are also becoming critical for effective manpower planning. Organizations need to move from a budget-driven workforce planning approach to one that is focused on achieving business results. It requires cross-functional teams that include members from HR, finance and business units to convert loose data into actionable knowledge for successful manpower forecasting.
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Manpower forecasting is essentially about ensuring that the right talent is available when needed. For most organizations, manpower planning is an annual exercise where it is looked at as a cost without considering the skills required to meet the business objectives. The HR department has little insight into whether the number of employees and their capabilities are sufficient for the organization to achieve their revenue and goals. It has long been a blind spot that prevents businesses from achieving their goals. However, it is time that organizations realize the need for appropriate manpower forecasting for thriving in this highly dynamic business environment and meet the organizational goals successfully.
References:
- Need For Manpower Forecasts Finance Essay- November 2013
- Tackling Talent Strategically: Winning with Workforce Planning- A Harvard Business Review Analytic Services Report
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