HR forecasting refers to the process of determining the net requirements for staff by ascertaining present and future HR requirements. It is the heart of the process of HR planning.
HR Forecasting Activity categories can be subdivided into three parts:
(1) Transaction-based forecasting- forecasting that focuses on tracking internal change instituted by the organization’s managers.
(2) Event-based forecasting- forecasting concerned with changes in the external environment.
(3) Process-based forecasting- forecasting not focused on a specific internal organizational event but on the flow or sequencing of several work activities.
HR Forecasting Activity categories serve with the following benefits:
- Decreases HR costs.
- Improves organizational flexibility.
- Assures a close or near linkage or connection to the macro business forecasting system or process.
- Assures that organizational or company requirements take priority over issues regarding resource limitation and scarcity.
HR Forecasting Activity categories include five stages in the forecasting process:
- Recognizing organizational objectives, goals, and plans.
- Determining total demand requirements for human resources.
- Assessing internal skills and other in-house supply characteristics.
- Determining the net requirements for the demand that must be fulfilled from external, environmental sources of supply.
- Developing HR programs and plans for ensuring that the appropriate people are in the appropriate places.