Human resources walks a budget tightrope as it strives to maintain a workforce that suits the organization’s staffing needs. Over-staffing wastes funds and drains profitability. Under-staffing jeopardizes production capability and sales. In order to strike the right balance, HR forecasts labor demand in terms of the skills and headcount needed to execute the strategic plan. One forecasting tool, the trend analysis, examines past employment levels against business variables to predict future staffing requirements.
Forecasting the organization's talent needs is the second step in preparing the HR plan. To perform a trend analysis, HR selects the factor or factors that most influence labor levels and charts them for a four-to-five-year period. HR then compares headcount for the same time period against the historic data to arrive at a ratio to calculate future staffing needs.
The value of a trend analysis depends on the operational factor selected. For example, sales history tracked against employment levels may tell HR it needs 15 workers for every $25,000 in sales. When the strategic plan calls for weekly sales of $50,000 during the holiday shopping season, HR can predict a 30-employee staffing requirement. For hotels, the number of rooms a maid can clean per day would be an appropriate factor for housekeeping staff projections. At 10 rooms per day, a 100-room hotel needs 10 housekeepers when fully booked, but only five during the slow season when it operates at half capacity.
Turnover and Attrition
HR can use trend analyses to identify internal patterns that have an impact on staffing levels. Turnover, retirement and seniority affect the availability of key skills and experience and may highlight shortcomings in training, succession planning or career development. For example, tracking turnover might reveal that new hires in the marketing department leave within nine months of employment or that employees are opting to retire at age 62 instead of age 65. HR may discover that it terminates 3 percent of the workforce each year or that 5 percent resigns, two patterns it can use to predict average attrition.
Recruitment and Employee Support
According to "Strategic Planning for Human Resources," a trend analysis can prove useful when HR has concerns about education levels of entry-level candidates, population movement and ethnic makeup -- outside influences that affect recruitment strategy, training programs and language accommodation policy.
The results of the various trend analyses set the stage for preparation of the HR budget. Knowing how many positions it must fill or eliminate, HR can realistically estimate costs associated with staff changes such as recruitment, training, equipment such as uniforms or personal safety protection gear, severance packages and relocation. Wages and other direct employment expenses, such as paid time off, also become easier to allocate across the budget year.
- An Introduction to Human Resource Management; Nick Wilton
- McGraw-Hill Management Tutor Series: Stages of the Strategic HRM Planning Process
- Managing Human Resources: Scott A. Snell and George W. Bohlander
- McGraw-Hill Higher Education: Strategic Planning for Human Resources; Chapter 2; Forecasting Demand and Supply
Trudy Brunot began writing in 1992. Her work has appeared in "Quarterly," "Pennsylvania Health & You," "Constructor" and the "Tribune-Review" newspaper. Her domestic and international experience includes human resources, advertising, marketing, product and retail management positions. She holds a master's degree in international business administration from the University of South Carolina.