Workforce planning is incomplete without workforce forecasting and analytics. With workforce forecasting, you predict your organization’s future personnel needs based on historical data.
So if you’re a hotel on the Mediterranean seaside, you can expect more customers than in the middle of winter— you forecast that you’ll need more people to fill the needs of your customers during the summer time than in winter time.
However, that’s not the only thing you can do with it. This article will explain in great detail the techniques, benefits, and challenges of effective workforce planning forecasting and analysis.
Workforce management forecasting is a process by which a company prepares for future personnel. With workforce forecasting, the HR team uses historical data to predict future staffing needs.
There are two different types of workforce forecasting:
You do workforce forecasting quite differently for short-term and long-term forecasting.
For short-term forecasting, you focus on the next 12 months in the company. That usually means that you cover one (or more) of the following things:
Seasonal demand. If you’re a hotel on the seaside, you’ll expect a surge of customers coming to you during the summer months. So you plan to hire more people for the sunny season so you can effectively deliver the right service to your customers.
Internal initiatives. If you have an internal project that you’re delivering in the following three months, you’ll plan to hire additional people to help you successfully complete it.
Unplanned events. As a hotel, as soon as the borders opened up after COVID-19, you forecasted that people would travel as much as possible after being stuck at home for 2-3 years, so you prepared your team for it. There will always be unplanned events, but with the right data, you can get on top of them without falling behind.
Long-term forecasting focuses on strategic planning and delivers results in 1-5 years. With long-term workforce forecasting, you cover one (or more) of the following things:
Changed internal goals. How will you adapt your organizational goals in the next five years? What kind of projects will you tackle? According to that data, you will analyze and predict what kind of talent you need for the future and start working to acquire it either through internal upskilling/reskilling or external hires.
Competitor landscape. Your organization isn’t an island; it exists in an interconnected world where you have to notice what your competitors are doing and be able to adapt. If all of your competitors start paying for X role 30% more, that will affect your talent and they might leave for a higher salary. The solution? Adapt to the market.
Talent pool. Last but not least is the talent pool; for every project that you’re planning to take, you need to notice the talent pool trends and see if you’ll have enough qualified people to successfully deliver the project. That means adapting not only your recruitment strategy but also your onboarding/ retention/ learning & development processes to keep people invested (and employed) in your organization.
Quantitive forecasting methods focus on the (historical) data that you have to predict the company’s future needs. The more data that you have, the easier it is to predict future needs.
If you’re a hotel at the seaside and you have detailed historical data about the past twenty summers, you can expect most things to repeat themselves this summer as well. So you can plan accordingly.
However, you need to combine the quantitive data with the qualitative one to get the full picture.
If your people completely burn out every summer because they’re working 16-hour days to cover everything, then that causes turnover in later months as well as low productivity numbers after the summer. To gather qualitative data, you’ll conduct 1-2-1 meetings, pulse surveys, and engagement checks.
When you combine quantitive and qualitative data, you’ll get the full picture, and you’ll be able to forecast workforce changes with much greater accuracy.
When you collect data that enables you to analyze your workforce, you’ll become better at forecasting workforce trends. This will result in better performance in HR processes such as recruitment, retention, and productivity metrics across the board.
As an added benefit, you’ll also see the following:
To ensure that you do workforce forecasting and analysis the right way, you should use the following techniques:
Analytical Techniques. You should use the four analytical techniques in workforce forecasting; descriptive, diagnostic, predictive, and prescriptive. When analyzing data, you should be able to answer all the following questions about your data: What happened (descriptive), Why did it happen (diagnostic), What might happen in the future (predictive), and What should we do (prescriptive)?
Scenario planning and what-if analysis can also help you explore different future outcomes.
Data Integration. HR teams today collect a lot of data. There’s no reason why you should try to integrate this data manually; use applications and software to do this job for you. Importing and integrating data from various sources like HRIS, ATS, or ERP can allow you to achieve comprehensive forecasting. If you remember ELT (extract, load, transform), you’ll do a good job integrating your data and gaining valuable insights from it.
Forecasting using analytics. The more data you have, the better you can analyze it, and the more accurate your forecasts become. To stack the deck in your favor as much as possible, use any technology that you can that can make your job easier:
Automate collecting data
Use software that integrates that data
Deploy pre-given models that can help you gain insights from the data
Transform the insights into actionable plans with goal-planning frameworks
Workforce planning forecasting also faces common challenges and future trends that you need to be aware of.
Data accuracy, legal compliance, and employee acceptance are just some of them. To ensure that you “predict the future” accurately, you’ll first need to make sure that you have the correct (historical) data on which you base your forecasting.
On top of that, you’ll need to comply with laws and regulations that might prevent you from collecting and storing a lot of information (I’m looking at you, GDPR) so you’ll have to make some forecasting on partial data. And last but not least, you’ll have to implement the changes by achieving employee buy-in and accountability toward the plans.
Future trends can also affect workforce planning and forecasting, especially when the growing role of AI and machine learning is considered. The talent pool will adapt to the rise of Gen AI and you, as a business, will have to do the same to ensure long-term sustainability.
Workforce planning, forecasting, and analytics are fundamental processes that must be completed today to ensure that your business operates efficiently in the modern marketplace.
Workforce planning forecasting will be your best friend, whether you need to plan peak business cycles or need to create a strategic plan that would cover the organizational needs for the next five years. Using short-term, long-term, quantitive, and qualitative forecasting, you’ll start enjoying many of the benefits of accurate workforce planning forecasting such as increased efficiency, risk mitigation, and data-driven decision-making.
The best time to start with workforce planning forecasting was ten years ago; the second best time is today. Book a free demo with Agentnoon and learn how we can help you with workforce planning.