HR Planning
HR Forecasting Step 3:
Analyzing Future HR Supply
Objectives
To know the main features of various
techniques to analyze future HR supply and be
able to identify which technique to use in
specific circumstances
To be able to apply the most common
techniques for analyzing future internal HR
supply
To identify appropriate sources of information
regarding future external HR supply
Lecture Outline
Review demand forecasting concepts
Reasons for analyzing future HR supply
Internal HR supply analysis techniques
External HR supply analysis
HR Forecasting Process
5. Implement and Evaluate Results
4. Develop Options to Balance Supply and Demand
3. Analyze Future Internal & External Workers(Supply)
2. Forecast Future HR Needs (Demand)
1. Analyze HR Impact of Strategic Plans, External Environment
Analyze Internal HR Supply
Knowing how many and what type of employees who
currently work for the organization will be available in
the future is a huge advantage for an organization.
Planning promotions
Organizing training/development programs
Setting procedures for internal recruitment for
vacancies
Preparing retention initiatives
Developing diversity plans
Making downsizing decisions
+++
Analyze Internal HR Supply
Information needed:
# and type of employees by unit and position
normal losses by type
basic employee data
the organization’s policies re promotion,
retirement, transfer, etc.
Use BEST data available
Forecasting Internal HR Supply
Sources of Data
HRMS
Paper files
Replacement summaries
Skills & management inventories
…..
Forecasting Internal HR Supply
5 most common techniques:
Simple turnover analysis
Movement analysis
Vacancy analysis
Markov analysis
Linear programming
Simple Turnover Analysis
The simplest technique to estimate future HR supply
If exits are not replaced…
Future HR supply = current HR demand minus normal
losses
E.g., if current HR demand is 1000 & normal losses
are 110, then future HR supply (if losses not
replaced), will be 890
If all exits ARE replaced and all positions are filled…
Future HR Supply = Current HR Demand
HR Supply Basics: Ripple Effect
When an organization fills all vacancies from external
labour market, the number of new hires will equal
the number of vacancies
When an organization fills vacancies from within, the
number of “movements” will be greater
Any one vacancy will produce additional vacancies
below as the ripple of subordinates moves up one
level
Ripple principle applies to internal transfers as well
as promotions
Impact of Promoting Internally
Employee Category #FT Positions Normal Losses Losses because of
Current Year Promotion
Director 1 0
Superintendent 10 1
Principal 91 8 +1
Vice Principal 81 7 +1
Teacher 3133 282 +1
Total 3316 298 +3
Techniques Vary
Type of organization structure
HR supply policy
Type of employee movements
Organizational size
Movement Analysis
Organization structure must be HIERARCHICAL to apply this
technique
Organization’s HR supply policy must require internal candidates
to fill upper level vacancies
Examples include: Canadian Armed Forces, most police
services, religious organizations, etc.
Do not include positions that cannot advance to level above
Clarify before starting whether #FTE’s will increase or decrease
next year
Complete tables one row at a time from highest level
Movement Analysis Technique
Level # Positions Staffing Personnel # Positions to
at Start Changes Losses be Filled
1 Director 1 0 0 0 Table 1 – HDSB
2 Superintendent 10 0 1 1 (With Growth)
3 Principal 91 +4 8 12 # Positions
4 V Principal 81 +4 7 11 to be Filled (next year!)
5 Teacher 3133 +52 282 334
Total 3316 +60 298 358
Level # Positions Total Ripple Personnel
to be Filled Movement
1 Director 0 0
Table 2 – HDSB
2 Superintendent 1 1
Personnel Movement
3 Principal 12 +1 13
(next year!)
4 V Principal 11 +1+12 24
5 Teacher 334 +1+12+11 358
Total 358 +3+24+11 396
Movement Analysis Technique
Level # Positions Staffing Personnel # Positions to
at Start Changes Losses be Filled
1 Director 1 0 0 0 Table 1 – HDSB
2 Superintendent 10 0 1 1 (With Reduction)
3 Principal 91 -4 8 4 # Positions
4 V Principal 81 -4 7 3 to be Filled (next year!)
5 Teacher 3133 -52 282 230
Total 3316 -60 298 238
Level # Positions Total Ripple Personnel
to be Filled Movement
1 Director 0 0
Table 2 – HDSB
2 Superintendent 1 1
Personnel Movement
3 Principal 4 +1 5
(next year!)
4 V Principal 3 +1+4 8
5 Teacher 230 +1+4+3 238
Total 238 +3+8+3 252
Vacancy Analysis
Also called renewal technique and sequencing model
Vacancy analysis models the inputs & outputs of staff
at each hierarchical level in order to identify patterns
among the vacancies
This technique can be used in organizations which
have a mix of internal and external recruits to fill
upper level vacancies, e.g., most!
Vacancy Analysis
Level # Personnel Annual Promotions Level External Promotion
@ Start Losses to Level Outflows Hires Rate
1 Mgr 1 1 1 1 0 None
2 Sup’r 4 0 1 1 0 .25
3 HK1 48 5 5 6 1 .02
4 HK2 77 12 13 17 4 .07
5 EA 165 74 0 87 87 .08
Total 295 92 20 112 92 .07
Vacancy Model, St. Patrick’s Hospital Housekeeping Dept., 2025
Markov Analysis
Technique can be applied in all types of
organizational structures
Examines patterns of employee movements through
promotions, transfers, demotions & exits
Uses “transitional probabilities” (the likelihood that
an individual in a specific job will exhibit one of the
five movements one year into the future)
Applies to internal & external HR supply
Only relevant in medium to large organizations
Markov Analysis
Steps:
1. Gather information on movements for previous time period.
Forecast HR demand for next year
2. Create Table 1. Calculate probabilities for each job category
3. Create Table 2 – note additional rows in example. Use last
year’s probabilities to compute numbers of employees in
each category for next year
4. Add each column to determine projected internal supply for
each job
5. Compare forecast demand with internal supply
6. Consider implications of demand/supply for each job
Linear Programming
Statistical technique that assumes linear
relationships between variables that influence
movement among positions
Fairly complex – need background in math &
stats + specific software
Best solution for reaching a quantitative goal
within a number of constraints
Forecasting External HR Supply
Knowing how many and what types of workers will be available
outside of the organization is critical
Techniques:
Delphi, nominal group, linear programming, regression
analysis, etc.
Sources of Data:
Statistics Canada
Provincial governments
Regional and municipal governments
Chambers of commerce & boards of trade
Private sector consultants & researchers (e.g., The
Conference Board, Towers Watson, Mercer, Hay Group)
Next Class
HR forecasting steps 4 & 5:
Develop options to balance future HR demand and
supply
Implement and evaluate options
