Introduction
From its conception, there has been much debate amongst economists around forecasting the demand for and supply of labour. The lack of evidence of its usefulness (Rothwell 1995 cited in Storey 2007), problems with its application and the complexity of predicting the labour market has led many to take the view that forecasting is neither useful nor necessary (Taylor 2010).
Forecasting is a key aspect of Human Resource Planning (HRP); which can be a complex process especially during periods of economic uncertainty and fluctuation. This intensifies the pressures between the need for planning and the difficulties of prediction. Nevertheless, the fundamental purpose is simple: HRP is concerned with assessing and meeting an organisation’s current and future workforce needs. This ensures the right number of people with the appropriate skills and competencies are in the right jobs at the right time and at the right cost so as to achieve organisational objectives (Foot and Hook 2005).
In presenting a balanced view, this essay will analyse the argument for and against HRP in determining if it is unfeasible for organisations to accurately forecast the demand for and supply of labour. Furthermore, how HRP can inform other Human Resource (HR) activities such as recruitment and selection (R&S), succession planning, performance management and training and development amongst others. Specific reference where appropriate will be demonstrated to showcase links between theoretical and practical context.
Forecasting as a key element of HRP
As organisations continue to evolve and become more dynamic, it can be argued that effective planning of its most important resource (its workforce) in achieving strategic goals has never been more important. Organisations can achieve competitive advantage by having balanced staffing levels through workforce forecasting. HRP aids this both at the micro and macro levels in determining where and when there will be possible labour shortages or surpluses within its internal and external labour force. Utilising frameworks such as the Bramham model provides through results from analysis and investigation through to implementation and control (Beardwell and Claydon 2007). This however, is dependent on the organisation being able to accurately assess its current workforce situation.
Labour forecasting is defined by (Armstrong 2006) as a process of “estimating the future number of people and skills they will have to have in order to bring maximum outcome for the organisation”. To successfully forecast labour demand and supply, there are three key factors that need to be considered;

Forecasting can be achieved through quantitative, qualitative or supply methods (Turrner 2002). Some involve techniques such as extrapolation which relies on past occurrences and assumes past trends and ratios in employee movements are stable and indicative of future trends. Indexation is another which works through estimating future employment needs by matching growth with an index (Kramar and Syed 2012).

These techniques however have been accused of operating on crude approximations as they assume the causes of demand and supply remain constant which is rare and can sometimes, lead to inaccurate forecasting results/incorrect staffing levels. Correct staffing levels are important as too many employees will incur high and unnecessary labour expenses and possibly result in layoffs/redundancies. However, fewer employees could be problematic, resulting in increased overtime costs, lost contracts or having to increase staffing levels hurriedly.

The argument for HRP and its merits

Despite its perceived importance, (Taylor 2005) argues that more often than not, HRP has been “denigrated” and has received relatively little attention in terms of studies thus, “become less widely used in organisations”. In (Taylor 2010, p118), he further asserts that “the essence of the argument against HRP is based on the simple proposition that it is unfeasible to forecast the demand for and supply of labour with any accuracy”.
This argument is acceptable to a certain degree due to the different variables that can significantly impact on accurate forecasting; such as economic growth/downturn, government regulations, technological changes, environmental factors and changing customer trends amongst others. Although total accuracy may be unfeasible, it nevertheless remains true that organisations can benefit from being proactive rather than reactive through HRP in ensuring organisations have the right staff at the right time. As (Bramham 1988) asserts, it is both desirable and possible to plan for uncertainty.
Supporters of HRP, (Turrner 2002, p44) state that despite:

Authors such as (Taylor 1998) argue that HRP helps organisations to identify trends and anticipate changes in order to adopt plans that avoid problems. Also, that HRP should be regarded as a work-in-progress, where plans are fluid and flexible thus allowing regular reviews in order to be modified where required in response to environmental developments. He argues environmental changes seldom occur as suddenly as (Mintzberg 1994) claims. Furthermore, that Mintzberg’s arguments are directed towards business planning as a whole and not specifically towards people management or HRP.
A recent example of successful HRP can be seen through the London 2012 Olympics and Paralympic Games which required years of workforce planning to ensure they had the right people with the appropriate skills/training in the right positions at the right time (Phillips 2007).

Managing such a world stage event could not have been successfully executed without utilising HRP in forecasting/managing demand and supply logistics of the different workforces that were needed, ranging from construction, catering to security workers.
Most organisations will be interested in knowing about staffing levels regardless of whether it is a balance, shortage or surplus. A merit of HRP is that it aids organisations in avoiding labour imbalances by anticipating shortfalls and surpluses for example, through a workforce audit. This examines and analyses current staffing levels and trends to help in management’s decision making as to whether to recruit, relocate or reduce staff in order to control costs (Bulmash, Chhinzer and Speers 2010).
With the current economic uncertainty, HRP can be useful in providing feasible options such as outsourcing labour or having a contingency workforce; taking on employees with zero hour contracts thereby “reducing the risk to the organisation and protecting staff from redundancy and redeployment” (Cooke et al 2004). In other words, HRP helps in correcting imbalances before they become unmanageable and expensive in the future. Support of this can be found in (Hedberg, Bystrom and Starbuck 1976) who argue that organisations should have balanced plans for its future but not solely rely on them.
Another merit is that HRP can provide scope in relation to “soft HR” by helping organisations manage employee training and development, advancement and succession programmes by anticipating the type of skills employees will need to have for the foreseeable future in order to remain competitive. There is constant need to train and develop employees due to changing environments which ultimately affects the requirements of the organisation. HRP helps in meeting the future needs of the organisation through ensuring that its current and potential employees have the required set of skills and competencies to adapt for example; to technological advancement.
HRP is especially essential to organisations with high staff turnover rates such as call centres. Utilising HRP within such organisations in relation to employee retention and replacement will be crucial in ensuring that the organisation continues to achieve its strategic objectives. Techniques such as the Markov analysis is helpful in forecasting employee movement from one year to another by identifying the percentage of employees who remain in their jobs, transfer or exit out of the organisation (Bulmash, Chhinzer and Speers 2010). Such analysis through HRP can better prepare organisations to deal with these transitions.
Furthermore, HRP aids talent management and has become an integral part of this process in charting out employee requirements for the organisation based on strategic objectives. Organisations often align retention and recruiting strategies with company objectives and use HRP to understand what they require from the workforce as well as what employees expect in return for their skills and contributions.
Supporters of HRP (Taylor 2010) advocate that in order for organisations to maximise their profit yields in times of uncertainty, they should plan for multiple possible outcomes by creating plans that cover different possibilities that can be updated as information about the future unfolds. As (Mazini 1984) states, planning will generally get organisations closer to their goals than if they had not planned at all.

The argument against HRP and its limitations
Critics of the idea of HRP as a process (most notably Henry Mintzberg), have raised concerns about the feasibility of planning and implementing plans in uncertain environments. Authors like (Hussey 1982) argue that from a practical point of view, HRP is complex and stresses the differences between individuals, the difficulty of moving people around, costs of over-staffing and the importance of treating employees as people rather than inanimate resources.
Furthermore, (Mintzberg 1994) argues that most of the literature about HRP focuses on the importance of accurately forecasting the demand for and supply of labour. That short of the ability to control the environment, HRP relies on being able to forecast where that environment will be during the implementation of its plans. The difficulty he argues is to predict what kind of change will come let alone foresee the change itself.
It appears that Mintzberg’s assumption is that HRP has to achieve total accuracy with no room for error rather than viewing it as a process that seeks to inform organisations about how to achieve optimal use of its workforce. Additionally, whether it’s short or long term planning it can be argued that the decision and process will differ from one organisation to another based on its industry and size. Besides, there is always the option to review long term plans as appropriate.
The HRP process can be difficult and sometime erroneous due to the rapid growth of new technologies as well as the difficulty of forecasting social and economic changes correctly especially in unstable times. Further to this, reliable data and information relating to HR trends in the labour market are not always easily available. In light of this, (Mintzberg 1976) argues that most forecasts tend to be wrong and can sometimes be an impediment in achieving competitive advantage.
His assertion has some degree of accuracy due to the increasingly turbulent environments that organisations now operate in compared to the 1970’s and 1980’s which were relatively stable. However, it can be argued that Mintzberg’s view is somewhat one-sided. In some situations where forecasts turn out to be an impediment, this may not be a result of an inaccurate forecast, but possibly the lack of timely reactiveness from management in taking an emergent approach in being robust and adapting their plans to suit their changing environment.
Regardless of this, (Jiff 2000, p96 cited in Beardwell and Claydon 2007, p181) argue that even though “the rapidly changing environment makes the planning process more complex and less certain, it does not make is less important or significant”. Critics of HRP argue that competitive advantage results from organisations being able to react to fast-changing occurrences in ways that are more innovative and quicker than their competitors and that HRP can stifle this (Smith 1996). However, having an existing plan which can be modified accordingly in response to environmental changes is surely better than having to formulate a plan whilst the event is occurring which could result in missed opportunities.
A major drawback of HRP is the cost and time involved especially during uncertain economic climates. Where HRP is utilised and unexpected environmental and financial factors affect plans negatively, the consequences can be devastating. For example, after years of planning and construction, the Millennium Dome in London opened in 2000 with a forecast that it would attract millions of tourists which would boost the economy.

Events such as the outbreak of the 2001 foot and mouth disease, the rise of the pound against other currencies and the World Trade Centre attack all contributed to the fall in tourist numbers to the UK resulting in recurring financial problems for the tourist industry. Such events are ones that no amount of planning or forecasting could have foreseen (BBC News 2001).
Another key criticism by (Mintzberg 1994) is that it is difficult not only to forecast changes but also the type of change that will occur and that the reliability of forecasts reduce as the timescale of projections increase.
How HRP can inform and benefit other Human Resource activities
Authors such as (Mullins 1996) and (Bramham 1987) argue that effective HRP can help organisations plan for possible future problems whilst they still have a choice of action. In other words, HRP can inform and benefit other HR activities towards achieving strategic goals.
Planning enables organisations to develop effective strategies relating to other HR activities such as R&S by providing comprehensive insight into not only future workforce numbers but also the type of skills and competencies potential employees will need. This can be beneficial to recruiters when developing competency frameworks and job specifications as well as during planning for career advancements.
Furthermore, HRP can provide information about what gaps there are between the demand for and supply of labour of employees with particular skills (Mullins 1999 and Bramham 1987). HRP also informs and benefits training and development by indicating where skills are lacking to ensure that employees are developed to gain the relevant skills at the appropriate time.
Budget cuts have become a reality of late especially within Local Authorities. HRP is a key instrument in anticipating prospective redundancies and therefore, allows for counteractive action to be taken such as early retirement, recruitment embargos etc. so as to reduce workforce numbers and protect staff (Taylor 2010).
HRP’s aids collective bargaining especially in organisations that have a strong union presence. It provides information that can be used during “long-term negotiations to improve productivity and efficiency” (Taylor 2010).
Conclusion
Irrespective of the type of organisation or size, the fundamental purpose of HRP is facilitating the process of having the right employees with the right skills in the right place at the right time at the right cost. Although accurate forecasts may not be achievable due to the many different variables that affect forecasting, planning for possible future conditions is more desirable and cost effective than having to hastily fix problems.
As environmental uncertainties continue to occur, HRP continues to aid organisations by integrating plans that cover most HR activities in preparing for future developments and changes irrespective of their nature. Overall, HRP was never intended to produce blueprints that cover all possible scenarios that occur in the process of forecasting. Rather, its main objective is being the fundamental element in supporting people management in order to add value, help organisations gain competitive advantage and thrive.