Quantitative aspect of human resource planning
Quantitative aspect of human resource planning involves demand forecasting and supply forecasting.
1. Demand forecasting: as discussed above demand forecasting means estimating the future requirement of the employees. It can be done on the basis of estimating sales, number of proposals company get or on the basis of estimating the number of orders the company has.
The main three methods of demand forecasting are:
a) Statistical techniques: it is one of the reliable source for long range forecasting of employees. The important tools for forecasting are:
i) Regression analysis: it is used to estimate the future requirement of the employees on the basis of sales, output, etc., when dependent and independent variable are related to each other.
ii) Burkes- smith model: this model uses the equation
En = [ (Lagg+G)1/X]/Y
where En is the estimated demand of employees in n planning period
Lagg is overall turnover of business
G is total growth of business
X is the average productivity improvement
Y is conversion figure relating today’s overall activity to personnel required
iii) Ratio and trend analysis: in this method the ratio is calculated on the basis of past data. Future ratios are calculated on the basis of changes expected in the human resources.
b) Managerial judgment: in small companies generally this method is used where the managers sit down, think about the future work load and decide how many people they need. It can be done on bottom up basis where managers give the proposal to the top management and can be done on the top down basis where top management make the forecast and give it to the departmental managers for review.
c) Work load forecasting: it means how long the operation would take and how much labor is required.
For example annual production of the company is 400000 units. The standard time required to complete the task is 2 hours. Past records show that workers contribute 4000 hours per year. So planned man-hours for year=400000* 2= 800000 hours.
Number of workers required= 800000/ 4000= 200
So 200 workers are needed to meet the target of 400000 units
But due to absenteeism and labor turnover 20% margin is required which means 200*20%= 40. 200+40=240 workers are required in a year.
2. Supply forecasting: Supply forecasting is another quantitative aspect of human resource planning. It is concerned with estimating the supply of manpower by analyzing the current resources and future availability. For this purpose the external supply and internal supply of manpower must be considered by human resource planner.
a) Simulation technique: it means alternative flows which are examined for effects on future manpower supplies.
b) Renewal analysis: this technique measures future flow and supplies of manpower by calculating vacancies created by the organization.
c) Goal programming: here the planner tends to optimize the goal.
d) Markov analysis: in this method the likelihood of a person in a particular job is estimated.
Thus, the above discussed are the Quantitative aspect of human resource planning.