Forecasting labour demand

As we said previously the firms can forecast labour demand both externally, based on product demand; Seasonal demand, rate forecast, interest rate, exchange rate, competition-based for. And internally (this is the point now) by using several methods such as Managerial judgement  ratio-trend analysis, scatter plots.

-          External information sources can help the firms to evaluate the business and economy trends, such as Seasonal demand, rate forecast, interest rate and exchange rate… evaluating the business and economy trends can determine the product demand volume. And this will tell whether we need more workers, or not.

Forecasting Internal-based Forecasting :

The basis of the Internal-based forecasting is the annual budget and longer-term business plan, translated into activity levels for each function and department or decisions on ‘downsizing’. In a manufacturing company the sales budget would be translated into a manufacturing plan giving the numbers and types of products to be made in each period. From this information the number of hours to be worked by each skill category to make the quota for each period would be computed.

Details are required of any organization plans that would result in increased or decreased demands for employees, for example increase the company staffing level to execute growth strategy, decrease the company staffing levels during a restructuring.

Managerial judgement

The most typical method of forecasting used is managerial judgement  This simply requires managers to sit down, think about their future workloads, and decide how many people they need. It might be done on a ‘bottom-up’ basis with line managers submitting proposals for agreement by senior management.

Ratio-trend analysis

Ratio-trend analysis is carried out by studying past ratios between, the number of direct (production) workers and indirect (support) workers in a manufacturing plant, and forecasting future ratios, having made some allowance for changes in organization or methods. Activity level forecasts are then used to determine, in this example, direct labour requirements, and the forecast ratio of indirect to directs would be used to calculate the number of indirect workers needed.

Scatter plots
 show graphically how two different variables are related. Scatter plot help determine if a factor as historically been related to staffing levels, accordingly will determine what staffing levels should be change.