Human resource is a vital driver of business success, and it’s crucial to have the right talent available when you need it. But how can you predict future recruitment needs and stay ahead of employee turnover?
The answer is Human Resource (HR) forecasting. HR forecasting helps you predict hiring needs and prepare for them in advance, helping your business stay competitive.
What is HR forecasting?
HR forecasting is the use of data, analytics, and occasionally expert opinions to predict future hiring needs. HR forecasting lays a blueprint for organizations to ensure they have the right talent available when necessary.
Whether you work at a fast-growing startup or an established enterprise, forecasting your staffing needs helps your business consistently meet goals and stay competitive.
Which factors influence hiring needs?
Staffing needs are influenced by both internal and external factors – the former of which you can control, to an extent. But external factors can unexpectedly hinder your recruitment efforts without warning, so human resource forecasting is essential to mitigate the risk.
Internal factors that can influence HR forecasting include your organization’s size, your talent and employer branding, and your talent sourcing channels. External factors are more volatile – and broad – such as the state of the labor market, laws and legal considerations, and the unemployment rate in your area.
The Types of HR Forecasting
There are various types of HR forecasts, including term, optimizing, policy conditional, etc. We will restrict ourselves to term and micro forecasts, as they’re most relevant to the needs of startups and enterprises.
Term forecasts
Term forecasts make predictions for a specified period. There are three types of term forecasts:
- Short-term, which are made for a maximum period of two years. These forecasts are ideal for micro-level hiring decisions, i.e. at the departmental or company level.
- Medium-term forecasts, which are for two-to-five years. These forecasts are useful for, say, offices where advisory ministers are needed.
- Long-term forecasts, which are for more than five years. These forecasts are ideal for large, education (learning and development) initiatives. For example, if your company plans to implement robust digital transformation, you’ll need to forecast human resources for highly specialized roles.
Micro vs. Macro forecasts
Macro forecasts are done typically at a higher level, e.g., national or at state level. Micro human resource forecasts take place at the departmental or company level. These forecasts are typically expressed by the numbers required for relevant occupations.
Micro HR forecasting accounts for your talent sourcing channels, stage of recruitment, training initiatives, and more.
How to plan and implement HR forecasting?
Before we begin, it’s important to keep in mind that HR forecasting is a complex process that varies depending on several factors. So, it’s best to treat these steps as guidelines and to adjust your forecasting strategy according to your organization’s specific nuances.
Now, let’s get to it.
Determine company goals and impact
The purpose of human resource forecasts is to help fulfill your organization’s talent supply. And so it is logical to start your forecasting process by first understanding your company’s short and long-term needs.
The simplest example of a forecast based on company goals is to consider revenue needs. Let’s say your organization relies on sales development representatives (SDRs) to bring in revenue, and that your yearly revenue should increase by X amount.
Now, you can determine how much each SDR brings in on average, which will help you determine how many representatives you’ll need to increase your revenue by X amount. If there is a discrepancy, you’ll have identified a potential hiring need.
Of course, this example is not practical because we’ve ignored several influencing factors and considerations. The purpose of sharing this instance is simply to communicate how company goals can drive hiring needs.
You can extend the same principles to a need to hire developers to meet product needs, or to recruit more PR professionals to expand your outreach. Determine the impact that each professional can potentially make and how far they’ll help you in reaching key objectives.
History is a great teacher
Provided your company isn’t new, your hiring history and previous human resource needs can help you forecast demand or at least give you an indication. So in your analysis, don’t overlook historical data.
However, a word of caution – if your organization’s needs have evolved rapidly, such as due to expansion, make sure you scale the insights accordingly. Previous hiring data won’t always translate linearly into future demand needs.
Collect and monitor both internal and external data
Restricting your HR analytics and forecasting to internal data can significantly harm the accuracy of your predictions. This is because, as we discussed earlier, several external factors can also influence your human resource needs.
So while collecting data for your forecast, don’t forget to include labor market insights, policy changes, and even demographic information.
Account for employee turnover
No organization has perfected employee retention, although some are better at it than others. When forecasting your company’s human resource demand, it’s important to account for turnover and attrition – you’ll need to fill the now open positions.
In general, it’s best to leverage historical data to determine past turnover, helping you make more accurate predictions. You should also pay attention to churn by department. Is Sales losing more people annually than, say, Products?
Engage your people
Human resource is about your…human resources. And yes, that’s painfully vague, but I’ll elaborate.
Hiring managers are on the ground. They’re actively engaged with departments and they can anticipate hiring needs. So when preparing your forecasts, engage hiring managers and ask them about their needs and future predictions.
You don’t need to stop engaging hiring managers, either. You can potentially increase the HR forecast’s accuracy by surveying employees to better predict turnover.
Choose your forecasting model
There are various models for HR forecasting, including ones that use expert opinions and others that use statistical modeling. We will not cover these models in this article, as that would invite a tangent.
However, we advise you to explore different methodologies, such as the Delphi model, regression analytics, supply forecasting, and ratio analysis. Then, apply whichever forecasting model best suits your organization’s human resource structure.
Sometimes, applying a combination of different forecasting methods can yield more accurate results.
Monitor and optimize
HR forecasting is not an exact science. The accuracy of your forecast largely depends on the reliability and quality of the input data, and on your selection of an appropriate model(s).
So after completing your forecast, monitor its accuracy by observing how well it stands the test of time. Do your predictions prepare you to anticipate and get ahead of human resource demand?
Turning HR analytics and forecast data into action
The data you collect, and your HR forecast itself, will help you proactively plan and meet human resource needs. However, the data may also reveal weaknesses in your internal and external HR.
For example, is high employee turnover heavily influencing your forecast? If so, you might need to investigate the cause of turnover and attrition, and invest in retention initiatives.
Or, are your talent sources not delivering the right human resources? If so, you might need to consider alternate recruitment channels and strategies.
Here are some of the best practices to help you meet human resource demands.
Create, and nurture, a talent pool
Talent pools help recruiters form strong relationships with top talent, so when the time comes to recruit, your company has a go-to pool of viable candidates. It takes time and patience to build a talent pool, but the results are rewarding; you can fill roles faster, with better talent.
When building your talent pool, be sure to focus on your ideal talent persona. The goal is to create a pipeline of the right talent – not just any potential candidates.
Invest in talent demand generation
Talent demand generation is a methodology used to ‘activate’ talent that isn’t actively searching for a job. This includes talent that is unemployed/in between jobs, and other organizations’ employees.
Talent demand generation widens your pool of available talent and helps you focus on your ideal talent persona, wherever they may be.
Take steps to reduce your time to fill
Your time to fill and time to hire influence how quickly you can meet fluctuating HR demands. By reducing your time to fill, you can recruit candidates faster and stay on top of your HR needs.
Thanks to digital transformation in HR and recruiting, you can leverage HR technology to streamline your recruitment process and reduce hiring times. For example, at WeCP (We Create Problems), we’ve helped companies reduce their time to hire by as much as 90%.
Retention strategies require your attention
If your employee retention numbers are below the industry benchmarks, it’s wise to explore retention strategies. Whether you choose to invest in an employee loyalty program or implement upskilling and L&D initiatives, retention strategies are a key driver in meeting HR needs.
Moreover, hiring a new employee can be much costlier than retaining an existing one. So retention strategies can be kinder to your HR budgets, too.
The primary reasons for employees that employees cite for planning to leave their employer, or considering other options, are (source: Achievers):
- Compensation (52%)
- Career advancement (43%)
- Lack of recognition (19%)
Keep these reasons in mind when planning your retention initiatives.
How WeCP help you meet HR demand?
WeCP is a tech recruitment solution that helps you keep up with HR demand and hire the right people when needed. Our solution lets you.
Build your talent pool with a single click
WeCP lets you integrate universities, ATS, job sites, and social media in a single click. Create and nurture talent pools with your ideal candidates.
Hire at scale
WeCP is purpose-built for recruitment at scale. You can design custom skills tests and assess thousands of candidates simultaneously.
Reduce hiring times and costs
We’ve helped leading tech companies reduce their hiring costs by 65% and their live interview times by 95%.
Conclusion
Look no further; leverage sourcing integrations with one only one click and reduce hefty hiring costs using our coding assessments. WeCP is here to help you conduct and hire the best talents with analytics and data-driven information.
Contact us for more information.
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