When it comes to figuring out how many people a company might need in the future—and where they’re going to come from—that’s where HR supply forecasting comes into play. It’s all about looking at who’s already inside the company and who might be available outside. But before any of that, the first thing an organization needs is a clear picture of the current workforce.
This means collecting and organizing details like employee performance, qualifications, skills, and even things like age and location. Two common methods used for this are: Human Resource Inventory and Markov Chain Analysis.
Human Resource Inventory
The idea here is pretty simple—it’s like a giant file that has all the important details about every employee. Things like:
- Their age
- What degrees or certificates they have
- Past job performance
- How long they’ve worked
- What they’re good at
- What roles they might be ready for next
When it comes to middle managers, this inventory becomes even more specific—often referred to as management inventory. It helps figure out who’s ready for promotions or internal moves by looking at their skills, experience, and leadership potential.
But here’s the catch—this whole system only works if it’s kept up to date. If you don’t regularly update it, you might promote the wrong person, or worse, miss out on someone who’s actually the perfect fit just because their record wasn’t refreshed in time.
What Needs to Be Tracked in the Inventory?
Let’s break down the types of information that should be updated regularly:
• Head Count
Just a count of how many people are working, broken down by department, gender, designation, skill set, and whether they’re on the company payroll.
• Job Family Inventory
This one groups employees into categories—like office staff, marketing team, production workers, engineers, quality control people, etc.
• Age Inventory
A snapshot of how old the workforce is. Companies need a mix of both young folks who bring energy and creativity, and older employees who bring experience and sound judgment.
• Skill, Experience, and Capabilities Inventory
This takes note of who knows what—like who has 10+ years of experience, who’s trained in what area, and what kind of values and work ethic they carry.
• Qualifications and Training Inventory
Here you’re looking at who has what degrees, certifications, and any kind of special training they’ve gone through.
• Salary Inventory
Basically, who’s earning how much, broken down by pay grade and total compensation.
• Gender-wise Inventory
A look at the number of male vs. female employees in the company.
• Local vs. Non-local Inventory
This notes who’s local to the area and who’s working from a different state or region.
• Performance and Potential Inventory
Tracks how well employees have performed in the past and how likely they are to grow into bigger roles in the future.
Markov Chain Analysis
This method is more on the numbers side of things. It’s a way to predict how employees will move around internally—whether they’ll be promoted, transferred, demoted, or leave the company altogether.
The model looks at how employees have moved across roles in the past, and then uses that pattern to predict what might happen next. Think of it like a transition map based on history.
It builds a matrix—basically, a grid—that shows the probability of employees moving from one role to another. This includes leaving the company too. Once you’ve got that, you can start forecasting things like:
- Who might be promoted next year
- How many people will probably leave
- Where internal gaps might show up
This is super useful, especially for big companies with lots of departments and levels. It helps HR teams understand internal talent flow and plan ahead more confidently.
What Makes It Tricky?
The hardest part? Estimating those transition probabilities. You need solid past data to do that right. But once you’ve figured those out, you can even use them to predict what might happen with new hires down the line.
And the best part—you don’t have to keep those probabilities fixed. If a company knows it’s going to change its promotion or hiring policies soon, it can tweak those probabilities accordingly and get more accurate forecasts.
Wrapping It Up
So yeah, when it comes to HR supply forecasting, both the Human Resource Inventory and the Markov Chain model have their own roles to play. The first gives you a clear picture of who you’ve got and what they’re capable of. The second tells you how those people are likely to move around within the company.
Together, they help organizations stay prepared, make smarter staffing decisions, and avoid last-minute surprises.
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