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How to Implement Workforce Forecasting for Your Business
How to Develop a Strategic Plan for Workforce Forecasting
There are many questions to ask prior to starting any type of forecasting, and workforce-related items are often some of the most central questions. Companies will not be able to forecast reductions, increases, or changes accurately for the workforce without a strategic plan. Data varies, but the estimation is that approximately 90% of all organizations fail to execute their strategies successfully. There are many reasons for the failure and it includes lack of communication, not linking strategy to planning, top down approach only, and failed implementation strategy. Ensure that the organization has a clear strategy and communicate it clearly to the company that there is a well-defined execution path.Access to Data for Workforce Planning
The ability to access accurate and timely data for analysis is a necessity. The data must be accessible in order to build workforce demand forecasting models. There can be a lot of data and below is an example of some of the data by employee by month that would be beneficial in creating a model:- Salary
- Commissions
- Bonuses
- Promotions
- Taxes
- Benefits
- New Hires
- Title
- Terminations
- Overtime
- Headcount by Position
- Hours Worked
- Benefit Eligibility
How to Forecast Change in the Workforce
There are many ways to go through planning for changes in the workforce. First, as stated above, set a strategy to provide everyone using the model the clarity to make decisions that meet the strategic plans. If management expects production to increase by 50% in manufacturing, then typically there would need to be an increase in workforce or a plan about using more robotics, which may decrease workforce to meet the demand. However, without this information, the accuracy of the plan will not be accurate. Decide whether to use a top-down, a bottom-up , or a hybrid of the two approaches. A top-down approach is when senior management determines the plan and pushes it down to the rest of the company. A bottom-up approach is when line managers plan and then it rolls up to a consolidated plan. A hybrid is using both methods and then comparing as different versions. Executives can provide a top-down version as a guideline for the managers. The key to a top-down approach is a model that provides quick what-if scenarios based on adding new hires, modifying benefits, or terminating a percentage of the workforce as an example. The bottom-up approach typically has two methods and uses the approach that best fits your organization. One way is to forecast at the employee level. Managers would go in and enter in new hires, possibly terminations, raises, overtime, and any benefits that a manager would have information on. This method is very accurate but may have flaws if there is a lot of turnover. The second method is to plan by headcount by position. This method would list a job title and how much headcount along with an average salary. This is not as accurate as it uses an average salary, but works for large organizations that have many people in similar positions. Finally, it is important to understand how the organization has been in the past regarding their workforce. Ask questions such as the following:- Is the organization good at hiring or firing?
- Does it hire too early or too late?
- Does it usually run a very lean organization or does it get too large?
- Do certain departments get more budget than other departments?
Workforce Forecast - Reporting Process
Reporting is the last step and this comes down to two main parts. First, have reports to determine the variances of the workforce forecast against the actual by department. Next, analyze and document the variances. Determine if the variances were due to assumptions being incorrect and then modify the model so that it can be more accurate going forward. If the variances are due to changes in decisions, then document it so that it can be accessible in the future, in case questions come up. Second, determine the workforce metrics that are important for the organization. Below are some metrics that may be useful:- Revenue/Employee: tracks productivity of the organization over time.
- Employee Turnover: number of terminations divided by average number of employees. Note modify to separate out voluntary and involuntary terminations.
- Benefits Cost/Employee: determine trend by dividing all benefits by employee. A variation is dividing this by total payroll.
- Overtime Percentage: overtime divided by total payroll.
- Time Since Last Promotion: average time in months since last promotion. This can signify an issue if many top employees are leaving.
- Time to Hire: the number of days it takes from posting a position to signing the offer letter on average.
- Engagement: use a survey to ask questions of employees annually and compare over time.
Contact Solver to Learn More about Workforce Forecasting
Workforce forecasting is an imperative function for all organizations and it all starts with a good strategic plan. After that is complete and communicated, then provide data access and create models that can enable world-class decisions. Finally, analyze the reports, review the metrics, and make changes based on the analysis. Our team at Solver can help set you up for workforce planning and forecasting success. Contact our team today or request a demo for more information about our corporate performance management tools.TAGS: Planning, Forecasting, Budgeting
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QuickStart and Template Marketplace Overview (2 min) |QuickStart and Template Marketplace Setup (10 min)
Global Headquarters
Solver Suite
Core Subscription
Company and Resources
© Copyright 2024, Solver All rights reserved. Legal | Privacy
QuickStart and Template Marketplace Overview (2 min) |QuickStart and Template Marketplace Setup (10 min)
Global Headquarters
Solver Suite
Core Subscription
Company and Resources
© Copyright 2024, Solver All rights reserved. Legal | Privacy
QuickStart and Template Marketplace Overview (2 min) |QuickStart and Template Marketplace Setup (10 min)