Sachidanand R. Kulkarni
Sr. Manager – Human Resource
It’s vitally necessary to invest considerable time for Human Resource (HR) professionals to understand and analyze the business environment, customer demand, labor market conditions and balance the ‘Demand/Supply’ of talent.
Today, in the knowledge-led economy the attrition among top performers is increasing day-by-day. In the other hand business demand is sporadically dynamic; it’s difficult to meet the desired level of business expectations in short time. The ultimate focus for recruitment function must be to build the ability to ramp-up fast with right people on board at right time in order to balance the demand and supply.
“Human Capital Forecast” can prove to be competitive advantage for an organization to achieve its business objectives. However this seeks focused approach and humongous collaboration across functions such as Human Resources, Sales & Marketing, Project delivery and Finance.
How “Human Capital Forecast” can be a competitive advantage, one of my HR friend asked me during our casual conversation. It is essential for HR function to make sure that ‘HR Strategy’ communicates with ‘Business Strategy’ of the organization. Now the whole question is around where is the ‘Business Strategy’? Has HR been involved when ‘Business Strategy’ was being designed and finalized? Same applies to ‘HR Strategy’…!. It’s the demand of the dynamic business environment that the traditional way of corporate working won’t lead to desired results. People got to come together, seat across the table and collectively decide on what we want to achieve, how do we achieve and agree on accountabilities, acceptable results and processes. Unless the ‘Why’ is established, ‘How’ can’t be explored!
Let’s park strategy issue at senior management’s level to think and bring rationality, but focus on actions that are under control of HR Manager.
I am categorically using ‘Human Capital’ phrase than “Human Resource’ with reference to the intense research happening around HR function and its future. ‘Resource’, anything which is referred as resource is supposed to be exhaustible by its natural characteristics, at one point it loses its potential to grow, however it’s ‘Capital’ where we intend to invest for long term and gain value out of it. Hence it is imperative to treat employees as ‘Capital’ to be invested with long term vision than ‘Resource’ for gaining short term benefits.
‘Human Capital Forecast’ is representation of various levels of analysis that reflects the consolidated view of manpower.
- Attrition Analysis, Retention Analysis & Attrition Forecast
- Demand Analysis
- Supply Analysis
a. Internal capacity / Capability matrix
b. External/Recruitment pipeline
4. Potential Investments / R & D
Let’s look at in details the expected outcome from each analysis listed above:
Attrition Analysis, Retention Analysis & Attrition Forecast:
· Attrition Analysis:
o Consolidate list of employees resigned/separated in the specific month, quarter and year.
1. How many employees have been separated in a month
2. How many employees have been separated in a quarter
3. And how many employees have been separated in a year
4. Convert each outcome in percentage %
E.g. Attrition % = Number of employees separated in a month
Total number of employees in the month
Though there are few other ways to calculate attrition but in general this is the widely used method to analyze gross level attrition.
· Retention Analysis:
o Calculate average retention rate i.e.
Number of employees retained in particular month/quarter/year from number of employees resigned/separated
E.g. Retention % = Number of retained employees
Number of resigned employees
· Attrition Forecast:
o Based on attrition % calculated for a particular month, prepare attrition forecast template (monthly, quarterly and for a year)
o This forecast must reflect expected number of employees moving out in each month, quarter & year ahead.
o Analysis must capture skills wise/level wise expected deficit in employee headcount.
. Demand Analysis:
· Sales Pipeline
o Work closely with sales operations team and analyze business demand for a month/quarter and if visible at high level for a year
o Demand must be analyzed in two perspectives:
1. Capability (Skills):
· What kind of skills, technology and experience is required
· Categorize the specific demand as “Opportunity based demand” & “Capacity fulfillment demand”
· Opportunity based demand would give some breathing space for planning and onboarding required talent
· Capacity fulfillment demand is just in time need
· Volume required
· Timelines for fulfillment
· Demand - Trend Analysis
o Consolidate sales pipeline and prepare trend analysis report that reflects:
· Kind of skills/technologies in highest to lowest demand (define skill range array)
· Frequently requested profiles
· Client wise skill demand trend
o Outcome of this analysis must reflect the skill demand trend, frequently requested skills over the period of 3 months, 6months etc.
a. Internal capacity / Capability matrix:
· Consolidate employee data with their primary skills and experience level.
· Categorize employees as those who are utilized on projects and those who are available for next opportunity (with their tentative available date/month)
· Arrive at the summarized view that reflects number of employee’s skills wise and experience level wise available in-house.
· Further analyze list of employees available for next opportunity with possible dates of availability.
· The outcome of this analysis must give clear picture of number of employees that are available skills wise/experience wise to take up new opportunities.
b. External/Recruitment pipeline:
· On the similar lines of internal supply, analyze External/Recruitment pipeline.
· Review with Recruitment team, prepare list of candidates in offer given status, number of candidates that have confirmed joining and categorize these in to skills and experience level.
· Further analyze possible date of joining for candidates that have accepted offer.
· Outcome of this analysis must reflect the number of candidates skill wise/experience level wise expected to join in due course.
Potential Investments / R & D:
· Organizational technology roadmap and business strategy are key input sources to plan potential manpower investment.
· HR manager must work closely with R&D team and CTO to understand potential areas that organization is likely to invest and what kind of skills sets it requires and by when.
· This analysis must reflect number of people skill wise/experience level wise required by specific time.
I trust this article may be helpful for HR professionals. I request readers to post their feedback to improve this further.