Workforce forecasting is an important element of workforce management. Here are the basics that you need to know to get started.
Experienced business leaders are not just concerned with where their business is at today, but where it’s headed.
Workforce forecasting gives you the foresight to align your human resources with your strategic objectives, ensuring you have the right people, with the right skills, at the right time.
In this short guide, we’ll explore what workforce forecasting is, its benefits, and offer examples and tool recommendations to help you get started. Dive in to understand why forecasting is essential and how to begin.
Workforce forecasting is a part of workforce management that involves predicting future staffing needs. It's done by analyzing current or past staffing data and matching it to the volume of work in the pipeline.
When you forecast your workforce needs, you’re not just filling roles - you’re shaping the future of the company. By anticipating gaps in skills and headcount, you can proactively plan for growth, avoiding disruptions that could derail your strategy. This means you can focus on innovation and market expansion, rather than scrambling to cover critical roles.
It’s an important element for driving the most benefits of workforce planning that helps organizations determine whether:
It also helps you understand how diverse your staff and skills pool are. However, labor forecasting isn’t always long-term. It can also be short-term where the focus is on meeting seasonal demand instead of business goals.
Modern businesses understand a successful company is led not only by thoughtful leadership and a great product or service but also its talented staff. Managing your people, in turn, calls for the need for workforce forecasting to:
Keeping this in mind, the importance of workforce forecasting extends to the following:
To begin with, staff forecasting is crucial for improving workforce planning, optimizing, and hiring.
By showing you how diverse and capable your organization’s skill pool is and where it needs improving, personnel forecasting helps you:
In turn, ensuring staff is doing work that’s the best match for their skill set, improves productivity and employee engagement. Moreover, strategic staffing also saves you from hasty recruitment processes which can raise the cost per hire.
In doing so, you save hiring costs. Employee turnover costs also potentially go down.
Having an understanding of your staffing trends and future needs helps you:
All this helps optimize operations — contributing to significantly improving workforce management.
Further reading: How to Improve Operational Efficiency
By determining the skills your organization will need in the future, you strategically close skill gaps. Not only does this help a business meet its goals but it also gives it a competitive edge.
Since workforce forecasting optimizes resource allocation, it helps make sure staff is working on projects that align with their skills, interests, and growth perspectives. In turn, this boosts employee engagement and motivation.
Related: Empowering Your Workforce: A Guide to Workforce Development
The same can be said about the new staff you hire. For one, they're strategically hired based on need, which ensures their contribution doesn’t go undervalued. Similarly, when the right work is allotted to them, motivation jumps up.
Strategic workforce scheduling adds further to the mix — boosting not only staff productivity but also operational efficiency.
All this has a domino effect. With employee motivation going up, you retain staff better, which reduces turnover and associated costs.
A handful of risks come associated with under and overstaffing. With an accurate workforce forecast though, you can save the organization from the high costs of overstaffing and hasty hiring.
You also save costs related to understaffing that leads to avoidable consequences like employee burnout.
Say you work in a Dutch SaaS company with over 300 employees that wants to expand to Dubai. In this case, you’ll need a strategic workforce forecast to determine:
But workforce forecasting isn’t always long-term. It can help you on a much smaller magnitude too. For instance, to forecast and schedule staff to meet increased foot traffic during the holiday season in your area.
As you comb through staffing historical data, keep these best practices in mind:
Before you leave, here are some departing resources you’ll find helpful for nailing staff forecasting:
We also recommend you look for a powerful software that helps you build a skill inventory and plan workforce capacity. To this end, Runn is one platform you can explore. It gives you project and staff data to determine demand as well as helps you build a skills inventory to leverage and build your organization’s skill pool.
