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Workforce Forecasting: 5 Steps To Predict Staffing Needs

By 15 Mins Read

Workforce forecasting is an essential part of a company’s overall workforce management process, as it’s critical for a business to know how many people it requires to meet its needs. Accurately forecasting workforce needs helps organizations avoid talent shortages, reduce turnover, and remain competitive.

This article discusses the importance of workforce forecasting, different methods you can use, and best practices to observe to ensure effective workforce planning.

Contents
What is workforce forecasting?
Why is workforce forecasting important?
How workforce forecasting works
5 steps to take for effective workforce forecasting
9 examples of workforce forecasting methods and models
Best workforce forecasting practices for HR
Tools and software for effective workforce forecasting


What is workforce forecasting?

Workforce forecasting is the process of estimating an organization’s future staffing needs to help ensure it has the right people with the right skills at the right time.

Forecasting involves looking at historical data and identifies trends over time, allowing you to see where and when your team needs help. It can also help align your company’s workforce capacity with its strategic goals.

Key aspects of workforce forecasting include forecasting workforce management, demand, and scheduling. Workforce management forecasting focuses on operational parts of the business (e.g., scheduling and shift planning), while workforce demand forecasting estimates future demand for specific roles, skills, or headcount.

Workforce scheduling involves the accurate, efficient distribution of resources and workload, such as assigning employees to certain shifts or schedules. This provides a balance between workforce supply and demand and can help prevent employee burnout by decreasing the amount of extra shifts or overtime.

HR’s top burning question: How does workforce forecasting differ from traditional workforce planning?

AIHR Subject Matter Expert, Dr Marna van der Merwe, says: Workforce forecasting and workforce planning differ in their focus, time horizon, objectives, and methodologies. These include:

  • Focus and objectives: Workforce forecasting focuses on anticipating and predicting future workforce needs, based on predominantly external factors like changes in labor demand and supply, market conditions, industry changes, technology advancements, and workforce demographics. Workforce planning focuses on aligning workforce strategies with anticipated forecasting, organizational strategy, and business goals. This informs strategies related to recruitment, retention, and talent management and development.
  • Time horizon: Workforce forecasting typically uses medium- to long-term projections (three to five years) to examine future trends and what they mean for the workforce. Workforce planning covers both short-term (e.g., annual budgeting and planning) and longer-term needs.
  • Methodologies: Workforce forecasting relies on forward-looking quantitative methods like scenario modeling, predictive analytics, and trend analysis. Workforce planning uses input from workforce forecasting and other quantitative data and analyses, as well as strategy input, employee feedback, and stakeholder input.

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Why is workforce forecasting important?

Workforce forecasting allows companies to anticipate future labor needs to keep business running without major disruptions. By understanding and forecasting staffing needs, management can allocate resources to staff in each department more effectively.

This is essential for strategic workforce planning, effective HR allocation, and minimizing operational slowdowns or interruptions. Work scheduling practices can also affect employees. Those with unpredictable schedules have up to a 42% likelihood of quitting in six months, compared to a 24% turnover rate among those with more stable schedules.

Other key benefits of workforce forecasting include:

  • Syncing staffing levels and long-term business needs: This ensures the right number of staff with the right skills at the right time to help achieve business objectives.
  • Supporting talent forecasting for long-term growth: More effective resource allocation can reduce excess hiring and training expenses, aiding in cost-effectiveness.
  • Preventing staffing shortages: Efficiently forecasting staffing needs can help companies avoid staffing shortages and operational disruptions. 
  • Improving job satisfaction: Through better resource allocation, effective workforce forecasting can increase job satisfaction, employee engagement, and retention. 
  • Ensuring legal compliance: Accurate workforce forecasting can minimize legal risks through proactive planning for workforce changes that might impact regulatory requirements.

HR top burning question: How does workforce forecasting influence Human Resources planning?

AIHR Subject Matter Expert, Dr Marna van der Merwe, says: Workforce forecasting is a data-driven approach that helps HR align strategies and initiatives with the anticipated long-term needs of the business. It ensures HR is responsive to changes and future-proofs HR strategies. In particular, it is crucial for:

  • Budget and resource allocation for headcount, compensation and benefits, and investments in tools and technologies
  • Succession planning and talent pipelines ensure business continuity of critical roles in the future
  • Skills development and access through understanding the current capacity of the workforce, and what will be required in future
  • Mitigating and managing potential people risks that could impact the business.

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How workforce forecasting works

The process of workforce forecasting involves three primary components:

  1. Data analysis: Data analytics can help predict future workforce needs. Use and analyze historical data, market trends, and predictive analytics to assess previous staffing patterns and identify skills gaps and turnover trends.
  2. Technology tools: Where possible, software should integrate with HR systems and automate repetitive tasks. It should also offer simulation, scenario planning, and complex data analysis to help predict future issues and needs.
  3. Communication and collaboration: Include and communicate with cross-functional teams and key players in your workforce forecasting efforts to help align goals and strategies.

HR top burning question: What tools and techniques are commonly used in workforce forecasting?

AIHR’s Chief Scientist (HR & OD), Dr Dieter Veldsman, says: Various tools and techniques can help with effective workforce planning, and organizations must choose the approach best aligned with their unique needs and operating environment. Some larger ERP systems (e.g., Workday, SAP SuccessFactors, and Oracle) include workforce forecasting tools. Their primary benefit lies in their ability to integrate seamlessly with financial data, providing a holistic view of both costs and headcount predictions over time.

In addition to these, there are more specialized technologies focusing specifically on workforce planning. These systems often offer advanced functionality tailored for workforce forecasting purposes, with a strong emphasis on scenario-based forecasting. They enable organizations to develop and analyze various scenarios, assessing the impact of talent decisions on costs, talent supply, and workforce composition.

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5 steps to take for effective workforce forecasting

Here are five steps involved in workforce forecasting you can use in your organization:

Step 1: Assess the current workforce

Start by thoroughly analyzing your current workforce. This involves evaluating the number of employees, their skills, roles, and overall performance. Look for gaps in skills or knowledge, and identify areas where additional training or hiring may be necessary.

Regularly updating this assessment ensures your data remains accurate and reflective of your organization’s needs. Tools like skills inventories and performance management systems can streamline this process, giving you a clear picture of your workforce’s strengths and weaknesses.

Step 2: Identify business goals

Workforce forecasting should align with your company’s strategic objectives. Begin by defining your organization’s long-term and short-term goals—such as expanding into new markets, launching products, or increasing operational efficiency.

Use strategic planning sessions to map out how workforce needs fit into these objectives. Next, establish measurable Key Performance Indicators (KPIs) to guide your efforts, such as reducing turnover, improving employee productivity, or achieving specific revenue targets.

Step 3: Forecast demand

Anticipate future workforce needs based on historical data, market trends, and business growth projections. Data analytics tools can help you understand how factors like seasonal demand, technological advancements, or industry-specific trends might affect staffing.

Also, work closely with department leaders to gain insights into specific needs for roles, skills, or team sizes. Use predictive analytics and scenario planning to explore various future possibilities, ensuring your forecast considers both best- and worst-case scenarios.

Learn the skills you need for effective workforce forecasting

To conduct effective, accurate workforce forecasting, you need strong analytical skills, strategic alignment, data-driven decision-making, collaboration, and adaptability.

In AIHR’s Talent Management and Succession Planning Certificate Program, you will learn to use talent segmenting and demand forecasting to support your workforce planning.

This online, self-paced certificate program will also teach you Buy, Build, Borrow, and Bot strategies to manage talent supply and how to match these strategies to talent demands in your business.

Step 4: Analyze supply

Assess your current and future talent availability to identify any mismatches between supply and demand. This involves reviewing hiring pipelines, internal talent pools, and potential challenges like retirements or high turnover in certain departments.

Be sure to also consider economic factors, such as labor market conditions and industry competition, that might impact recruitment or retention. Flexible workforce plans, including strategies for upskilling, internal promotions, or using contingent workers, can help address gaps and prepare for unexpected changes.

Step 5: Develop and implement a plan

Bridge the gap between your workforce supply and demand with a clear, actionable plan—this involves outlining steps for hiring, training, and reallocating resources to meet future needs. Additionally, include initiatives like recruiting for hard-to-fill positions, offering cross-training opportunities, or creating rotational programs to expand employee skill sets.

Make contingency plans for fluctuations (e.g., a sudden increase in demand or a dip in the labor market). Finally, communicate the plan across teams and schedule regular checkpoints to track progress and make adjustments as needed.

HR top burning question: What are the most effective methods for forecasting staffing needs, and how do you decide which method to use?

AIHR’s Chief Scientist (HR & OD), Dr Dieter Veldsman, says: Workforce forecasting align with organizational context and business strategy. While there are various approaches to workforce forecasting, they all share a common foundation: using data to make informed decisions about future workforce needs. Below are two key approaches, with most organizations using a combination of both to get the best results:

  • Using historical data to identify workforce trends: This approach relies on historical company data analysis to identify patterns in workforce fluctuations. This method uses past periods as a baseline to estimate future workforce requirements. It’s particularly effective if the organization operates in a relatively stable, predictable environment. However, it may be less effective in dynamic or rapidly changing industries, where past trends do not reliably predict future needs.
  • Scenario-based workforce forecasting: This approach models workforce requirements using various scenarios that could impact organizational plans. Historical data serves as one input, complemented by predictive modeling and scenario planning techniques. This provides a more robust framework to address uncertainty by accounting for potential external events or changes, like economic shifts, technological advancements, or organizational restructuring. This method is especially valuable for organizations operating in volatile or rapidly evolving contexts.

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9 examples of workforce forecasting methods and models

There are a variety of workforce forecasting methods and models you can use to highlight and forecast staffing and scheduling patterns. These include:

Qualitative methods

  1. Delphi method: The Delphi method uses expert consultations or surveys to gather information about the current workforce and opinions on future labor demands, which it then aggregates to forecast needs. It involves soliciting expert opinions from senior leaders, subject matter experts, and other key players who offer qualitative insights.
  2. Scenario planning: By developing future scenarios based on specific assumptions, businesses can visualize a broad scope of potential workforce needs. HR can provide input on best- and worst-case scenarios to identify various possible outcomes. This helps organizations adapt and respond to different scenarios in a timely manner.
  3. Judgmental forecasting: This method ultimately relies on HR expertise, experience, and intuition, which contributes to more subjective forecasting. This kind of forecasting can sometimes be a part of scenario planning. 

Quantitative methods

  1. Time series analysis: This method examines past trends and historical data, such as headcount trends, to predict future needs.
  2. Regression analysis: This method examines how certain factors—such as financial performance, growth, market demand, and staffing—may impact workforce needs.
  3. Workforce analytics tools: Data analytics tools or software allow organizations to automate forecasting methods by analyzing datasets to predict staffing requirements. This helps analyze past employment numbers, turnover rates, and detect growth or decline patterns.

Hybrid models 

A hybrid technique can refine workforce forecasting by blending quantitative and qualitative methods. This approach uses both data and options to identify workforce patterns and trends. Some examples include:

  1. Integrating expert judgment with statistical analysis
  2. Blending AI forecasting with human oversight
  3. Using scenario planning alongside machine learning tools.

Effective forecasting relies heavily on good data insight into current and past workforce fluctuations, clarity about the business’s strategic goals and objectives, and monitoring labor market trends that will influence your planning.

Dr Dieter Veldsman, Chief Scientist (HR & OD), AIHR

Best workforce forecasting practices for HR

Observing the following best practices can help you maximize the effectiveness of your workforce planning and forecasting:

Start with clear goals and objectives

Understand key business goals, whether it’s filling specific skills gaps or managing seasonal workforce fluctuations. This critical first step acts as the foundation and main driver of your talent forecasting process.

Use workforce forecasting tools

Instead of relying on manual processes, use workforce management and scheduling software to help develop a strong and reliable forecasting process in a shorter amount of time. This will ensure the process is not only less time-consuming but also more efficient, effective, and accurate.

HR top burning question: What challenges does HR face when implementing workforce forecasting, and how can they be overcome?

AIHR Subject Matter Expert, Dr Marna van der Merwe, says: The business strategy and longer term organizational goals must be in place to enable accurate and value-adding workforce forecasting. If this is unclear or evolving, workforce forecasting may lack contextual relevance. Workforce forecasting requires data and technology to make accurate predictions about the future. If this is not available, workforce forecasting can become time-consuming and resource intensive and could lead to inaccuracy.

HR requires data and digital skills to effectively use technologies such as AI to do workforce forecasting and interpret complex data. Where skills gaps exist in these domains, workforce forecasting could be difficult to execute. Workforce forecasting requires collaboration between HR, finance, operations and other departments and therefore an integrated approach is critical to success.

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Monitor data regularly

Ensure your predictions remain current and accurate by revisiting your forecasting on a regular basis. Adjust forecasts as needed based on real-time data. This will lead to more accurate predictions about future hiring needs, skills gaps, or areas where attrition might spike.

Promote cross-departmental collaboration

Partner with other departments to obtain critical input and information to help align forecasts with organizational strategies. This can help foster a more integrated approach to talent management and allow you to better anticipate workforce needs, identify potential challenges, and develop strategies aligned with the broader organizational goals.

Train HR teams

HR plays an integral role in the overall workforce forecasting process, so make sure to train your HR teams to have the skills and knowledge to use forecasting methodologies and tools effectively.

HR tip

Brainstorm different scenarios. Make it a priority to conduct brainstorming sessions and use scenario planning tools to test various future business conditions. You can then determine the best staffing solutions for your organization. Being proactive can save you time if one of your tested scenarios does end up becoming a reality.

There are many options for workforce forecasting tools and software—be sure to choose tools that will make your forecasting process simple and effective. Using unsuitable tools or software can create more work for you and fail to produce the desired results. Some workforce forecasting software and system options include:

  • ADP Workforce Now: This comprehensive workforce forecasting tool has forecasting capabilities to help streamline functions like talent management scheduling.
  • Ceridian Dayforce: This workforce management platform offers real-time data capabilities for predictive analytics you can use for staffing forecasting.
  • PeopleFluent Talent Management: This system focuses on optimizing the talent management process and includes integrated forecasting and scheduling features. 
  • SAP SuccessFactors Workforce Analytics: This system provides historical and predictive data that you can use to forecast staffing needs.
  • UKG Dimensions: Formerly called Kronos Workforce Dimensions, this platform focuses on workforce scheduling and forecasting and can help optimize labor costs and staffing needs.

HR tip

Considering the many workforce forecasting software/system options available, you can request demos for them. This allows you to review them thoroughly to ensure they meet your company’s specific needs. Once you’ve selected a software or system, run a pilot program with it to make sure it has all the necessary capabilities and include key players in the process.

To sum up

Workforce forecasting is necessary for companies to remain competitive. By using data, technology, and collaboration, you can anticipate your organization’s staffing needs and align them with long-term goals. Effective workforce forecasting supports operational stability and growth by helping to reduce turnover and improve employee satisfaction.

Best practices and the right tools also allow businesses to make workforce forecasting a proactive advantage instead of a reactive process. Whether you need to fill immediate skills gaps or plan for future growth, workforce forecasting ensures you have the right people in the right roles at the right time.


Andrea has 20+ years of human resources experience, including career coaching, employee relations, talent acquisition, leadership development, employment compliance, HR communications, training development and facilitation. She consults and coaches individuals from diverse backgrounds, including recent school graduates, union employees, management, executives, parents returning to the workforce, and career changers. Andrea holds a B.A. degree in communications and is certified facilitator of various HR training programs. She’s worked in the utility, transportation, education, and medical industries.
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