Forecasting Personnel Needs

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Forecasting Personnel Needs

The most common personnel planning approaches involve the use of simple techniques like trend analysis and ratio analysis to estimate staffing needs based on sales projections and historical sales to personnel relationships. The usual process is to forecast revenues first, and then estimate the size of the staff required to reach the sales volume. Several techniques used by Human Resource Managers:

Trend Analysis

Trend Analysis means studying variations in a firm’s employment levels over the last few years. You might compute the number of workers in a firm at the end of each of the last five years or maybe the number in each subgroup at the end of each of those years. The purpose is to identify trends that might continue into the future.

Ratio Analysis

Ratio Analysis means making forecast based on the ratio between some causal factor like sales volume and the number of workers required such as number of salespeople. Ratio analysis assumes that productivity remains about the same. If sales productivity were to increase or decrease, the ratio of sales to salespeople would change.

The Scatter Plot

Scatter plot shows how two variables such as a measure of business activity and firm’s staffing levels are related. If they are, then if you can forecast the level of business activity, you should be able to estimate personnel requirements