It goes without saying that quality employees are a necessary element in running a successful business. Through the help of a manufacturing staffing agency, it is easy to find qualified workers for any business, but labor planning does not end with the hiring process. Putting effort into developing an efficient labor schedule is key to making sure that your staff is working diligently when they are on the job.
It is important when scheduling staff members to be able to predict how many members will be needed and when, as the number of workers necessary could vary by day. Because of this, it is not always easy to efficiently plan for workforce staffing, which can lead to staff shortages or surpluses. Efficiency in human resource planning is necessary to avoid these staffing mistakes which can be detrimental to organizations and could even result in increased staff turnover and revenue loss.
To determine the future employment and scheduling needs for an organization, many businesses rely on the process of labor forecasting. Predicting your company’s staffing needs through accurate labor forecasting provides your business with optimal efficiency in workforce management. In this article we will be discussing the benefits and methods of developing a staffing forecast for your company.
What is Labor Forecasting?
Labor forecasting is a method of determining the necessary staffing hours that a business will require in the future. In the past managers would develop staff schedules by looking at their businesses’ current demand, which meant that they had little time to assign future shifts based on this assessment. However, this is no longer possible with the growing popularity of “just-in-time manufacturing” and new labor laws that require companies to post schedules two weeks in advance. In scheduling staff so much earlier, managers can no longer predict their future staffing needs by looking at their current demand, as more advanced notice provides ample time for their workforce climate and production volume to change.
Labor forecasting can benefit your business by increasing productivity while maximizing profits and revenue. Additionally, accurate planning through labor demand forecasting can save businesses from making costly scheduling mistakes. Understaffing can lead to critical errors in serving your customers, and overstaffed shifts can be expensive. No matter which way you look at it, poor labor planning leads to unacceptable productivity levels, and these mistakes can result in the failure of a business.
Benefits of Predicting Labor Demand
Predicting the labor demand through effective labor forecasting can have many benefits to your organization. Avoiding over-staffing means decreased labor costs and avoiding understaffing means increased production. Scheduling the correct necessary number of staff members can lead to benefits in the case of morale as well, resulting in reduced employee turnover and improved decision-making processes for managers.
There are many ways in which scheduling an appropriate number of staff members to each working role positively impacts business productivity. In cases where businesses are understaffed due to ineffective scheduling, workers often end up having to perform extra work to make up for the lack of help. Having to perform extra work means they cannot put as much focus on their tasks, which can lead to costly mistakes. Overstaffing is costly and can lead to issues with productivity as well, with idle employees more likely to distract their coworkers. Scheduling an appropriate number of workers means that each staff member can dedicate themselves completely to their assigned role, leading to higher work performance and increased manufacturing.
Higher Retention Rates
By scheduling workers according to the labor demand, workers are less likely to experience the negatives effects that come with over or understaffing. Understaffing puts more work on the shoulders of the working employees, which can lead to a high-stress work environment. Take warehouse staffing for example. If you were to look at any given warehouse worker job description, you would see that the worker’s responsibilities are primarily focused on packing and moving precious inventory. If there is an order involving multiple pieces of inventory that need to be packed and shipped, understaffing could result in stressed employees, missed deadlines, or potential damage to products or even people if regulations are disregarded for the sake of cutting corners.
Overstaffing on the other hand can cause employees to feel as though their skills are not being utilized. An example of this in the restaurant industry would be if a dining establishment’s kitchen were constantly overstaffed. A chef who enjoys practicing their craft may become disheartened to constantly find that there is not enough demand for cuisines and that other chefs have the food preparation under control, leaving them with less to do. This situation could cause the chef to consider leaving his position to find work at a different restaurant where he will have more opportunities to use his culinary skills. Both scenarios may result in employees seeking alternative job opportunities. Avoiding these staffing mistakes helps to keep workers happier under your management.
Improved Decision-Making Processes
Managers can also benefit from the effects of accurate labor forecasting when it comes to spending their energy on more long-term decisions. With their staff scheduled appropriately and working together efficiently as a result of accurate labor forecasting, managers can turn their focus toward more important matters, as they will no longer need to dedicate time toward solving staffing issues. Some areas where managers could dedicate their energy would be in product development, financial growth, and upskilling opportunities.
Best Labor Forecasting Methods
There are many different labor forecasting methods. Listed below are a few of the popular techniques that are used by professionals to predict labor needs with a high level of accuracy.
Historical analysis is the method of determining upcoming staffing needs based on past staffing needs. Managers do this by looking through their previous staffing data to find any trends in employment, which helps them to predict which of these patterns may be reoccurring. If for example, a food chain location may notice a history of increased demand around certain times of the day. They could therefore use historical analysis to predict that this is a regularly occurring “rush” time. Through this conclusion the managers could schedule more staff members to perform the increased volume of work during those specific times each day, and to ensure a better service experience for their customers.
Through market research, managers can gain perspective on future staffing needs based on customer demand and competitor’s scheduling trends. Managers can take this insight and use it to determine how it would apply to their business and scheduling needs. An example of this would be if a manager of a popular toy store wanted to schedule their staff in advance. Labor forecasting through market research would likely indicate seasonal trends, such as an increase in demand for products during the months before gift-giving holidays. Therefore, the manager of the store would be able to predict an increase in orders and during that time and would know to schedule enough staff to handle the tasks needed to meet greater manufacturing goals.
Quantitative analysis is the method of using statistics to gain insight from historical data, market conditions, and economic fluctuations. Forecasting software programs are available for businesses to implement advanced quantitative methods. These programs can track data for companies such as sales history and transactional data to help its users to identify patterns and gain helpful insight for determining future labor projection.
Final Thoughts on Effectively Forecasting Labor Demand
Workforce forecasting is the smartest approach to effective labor planning. Successful businesses cannot afford to arbitrarily schedule employees, as this could lead to over or understaffing. The number of employees necessary is subject to change based on factors like fluctuating work volume and the level of demand from customers. Scheduling mistakes can be detrimental to staff morale and wastes company finances. By analyzing employment trends and applying labor forecasting data to your business needs, you can create schedules that foster a productive and positive work environment for your employees while saving money. For more help with scheduling and forecasting your staffing needs contact Adia Solutions LLC, an organization focused on providing information and assistance with all business staffing needs.