HR Forecasting: It's About Reading Data, Not Guessing

By: Nadzua Putri Sahila

JurnalPost.com - How many employees will a company need next year? What competencies must they possess? These two questions may seem simple, but the answers can determine whether a company is capable of executing its business strategy effectively or if it will face a labor shortage.

If labor requirements are determined solely by estimation or gut feeling, a company is essentially taking a risk. Unfortunately, human resources (HR) issues often only receive attention when the need for labor becomes urgent. In reality, these needs should be prepared for well in advance through HR forecasting.

In the Human Resource Planning material I studied, HR planning is described as a systematic forecasting process. This process connects labor requirements with the company's strategic plan so that the organization has a sufficient number of workers who are high-quality and possess the competencies required.

Effective planning provides several benefits. Companies can maintain a competitive advantage, reduce employee turnover rates, and ensure the right people are available at the right time and place.

Thus, HR planning is not just about recruitment activities. It involves the process of reading organizational needs before those needs actually arise.

Forecasting Is More Than Just Estimation

The term "forecasting" sometimes leads people to assume this process is the same as guessing what will happen in the future. In fact, HR forecasting has a much more systematic foundation.

Forecasting is an effort to estimate how future conditions will affect organizational activities, human behavior, and the desired outcomes. In the context of HR, forecasting is used to answer at least three critical questions: what kind of labor is needed, what skills must be possessed, and how many employees are required.

The answers to these questions then become the basis for compiling short-, medium-, and long-term workforce planning.

It is not surprising that projecting labor demand is one of the most important yet challenging aspects of HR management. Companies must make decisions today to meet needs that may only arise months or years later.

Therefore, HR forecasting cannot be done based on intuition alone. The process requires information, projections, analysis, and accountable data.

In my opinion, this is where the major difference between guessing and forecasting lies. Guessing can be done without a strong foundation, whereas forecasting seeks to produce predictions through available facts.

However, there is one thing that must not be forgotten: the quality of the forecast depends heavily on the quality of the data used. Predictions made from incomplete or inaccurate information will certainly lead to suboptimal decisions.

Reading Factors from Inside and Outside the Company

When conducting labor forecasting, it is not enough for a company to only look at internal conditions. The environment outside the organization can also significantly change HR needs.

From the external environment, companies need to pay attention to economic, social, political, and legal conditions, as well as technological developments and competitor movements.

Technological change, for example, can cause a skill that was previously not very necessary to become essential. The ability to use digital technology or proficiency in foreign languages, particularly English, can be a consideration when a company develops its workforce.

Meanwhile, from the internal side, companies need to look at operational plans, business strategies, organizational structure, job design, and various staffing dynamics.

Changes in the number of personnel can occur due to retirement, promotions, transfers, layoffs, deaths, or employee absenteeism. All these factors can affect the availability of HR in the future.

Companies that only look at internal conditions risk being late in responding to environmental changes. Conversely, companies that focus too much on external conditions may ignore the changes occurring within their own organization.

Yet, no matter how well a business strategy is structured, its execution still requires HR with the appropriate number and competencies.

Do Not Forget the Existing Workforce

Before looking for labor outside the company, an organization should first understand the HR supply it already possesses.

In my opinion, this is often overlooked. When a new need arises, companies sometimes immediately open recruitment without first checking whether there are internal employees who could be developed or transferred to fill the position.

Workforce mapping can be done by looking at the number of workers in each job group, the percentage of employees who possess certain skills, and the possibility of personnel changes due to promotions, transfers, retirements, or layoffs.

One tool that can be used is a transition matrix. This matrix helps companies see the movement of employees from one job group to another and identify where the labor for a position originates.

Through this information, companies can obtain a clearer picture of the strengths and weaknesses of their internal workforce before deciding to recruit from the outside.

Counting the Number of Employees Is Not Enough

HR forecasting should also not stop at questions regarding the number of personnel.

A company might have a number of employees that appears sufficient in terms of figures. However, if their skills do not match the job requirements, the company will still face problems.

This is where job analysis plays an important role.

Job descriptions can help an organization estimate the number of HR needed. Meanwhile, the breakdown of tasks, authority, and responsibilities of a job can be used to determine the competencies, abilities, education, and experience a person must have to perform that job.

This means that HR planning must pay attention to two aspects simultaneously: quantity and quality.

Having a hundred workers will not mean much if most of them do not have the competencies required by the company. Conversely, highly competent workers will not be enough if their numbers are too small to carry out all the organization's activities.

Five Steps to Conducting HR Forecasting

HR planning material explains several stages that companies can use when conducting labor forecasting.

The first stage is to set the forecasting objective. This objective must be aligned with the company's goals. Errors in determining the objective from the start can make the forecast results less relevant to the organization's needs.

The second stage is to collect, analyze, and assess the necessary data. Data becomes the primary foundation in the forecasting process, so the quality of the information used must be considered.

The third stage is to select several forecasting techniques deemed most appropriate. Companies can compare two or three methods with previous business data to determine which method produces predictions closest to the actual conditions.

The fourth stage is to create the forecast using the selected method.

The fifth stage is to record the actual conditions that occur. These actual results are then compared with previous forecasts to determine their level of accuracy.

This process is important because forecasting is not a one-time activity. The results must be continuously evaluated so that the company can improve its HR planning methods for the next period.

Methods Must Also Adapt

Forecasting techniques that were successfully used a few years ago may not necessarily provide equally good results in the future.

The business environment is constantly changing. Technology evolves, consumer needs shift, job structures change, and organizational strategies may also undergo adjustments.

Therefore, forecasting methods must be flexible.

Companies need to be willing to update the techniques used when data characteristics or organizational conditions change. No single method is always correct for every situation.

Furthermore, management's openness to data is also very decisive. Workforce analysis can only be done well if the parties responsible obtain sufficient information regarding the company's condition.

If important data is unavailable or kept hidden, forecasting will ultimately return to being mere guesswork.

Preparing for the Future with Data

Ultimately, HR forecasting is not just an activity of counting how many people need to be recruited.

Forecasting is part of a company's effort to ensure that people with the right abilities are available when the organization needs them.

Companies that are diligent in collecting data, mapping their workforce, observing environmental changes, and evaluating their prediction results have a stronger foundation for making decisions regarding HR.

The future cannot be known with certainty. However, companies can still prepare themselves by reading the various information available today.

Therefore, before asking, "Who will we recruit?", companies should first answer two more fundamental questions: how many workers will be needed and what competencies must they possess?

HR forecasting is not an attempt to guess the future. Forecasting is an effort to read today's data so that the company is better prepared to face tomorrow's labor needs.

Bibliography

Danang. 2013. Human Resource Management. Jakarta: CAPS (Center for Academic Publishing Service).

Dessler, Gary. 2015. Human Resource Management. Jakarta: Salemba Empat.

Flippo, Edwin B. Personnel Management. McGraw-Hill Book Company.

Hasibuan, Malayu. 2005. Human Resource Management. Jakarta: PT Bumi Aksara.

Nawawi, Hadari. 2010. HR Planning. Yogyakarta: Gadjah Mada University Press.

Pratama, A. 2022. Human Resource Management (For Government from Theory to Practice). Widina Publisher.