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Why is Forecasting Important in Human Resource Planning?

4 min read

A lot of unknowns come with running a small or mid-sized business. Business owners face tough questions such as:

“When will my company find its footing?“
“How many employees do I need on my team?” 

“How fast will my business grow?”

If these questions bounce around your head as you get your business up and running, you may benefit from human resource forecasting.

Human resource forecasting, or HR forecasting, helps predict a business’s growth trajectory. However, it’s done easier when you have HR experts by your side. By partnering with a seasoned professional employer organization, or PEO, you can receive valuable HR support and better anticipate your business’ evolving needs. Our experts at are ready to match you with the right PEO for your organization. However, before we can find your perfect fit, let us share more on HR forecasting and how it can benefit your business. 

What is HR Forecasting?

HR forecasting involves predicting and preparing for a business’s evolving labor needs. Typically performed by a PEO or in-house HR department, HR forecasting requires data, insights, analytics, and experience to estimate a business’s growth trajectory. Generally, a growing business will use HR forecasting to make informed decisions on new hires, staff reductions, and employee task distribution. The need for HR forecasting depends on your business’s unique needs and goals. While some companies may only perform HR forecasting periodically, others might do it more consistently if their business model involves a lot of turnover or supply and demand fluctuations. 

Why is HR Forecasting Important?

HR forecasting is important because it helps you stay on top of your staffing needs and maintain steady growth for your business. By using effective forecasting techniques, you can prepare yourself for personnel changes or external events that could hinder your business’ productivity. Keeping your best interests in mind, your PEO or HR team will use HR forecasting to limit any operational or financial hiccups brought on by staffing changes and protect your business’s bottom line. The following factors are surveyed in the HR resourcing process:

Demand changes

HR forecasting will benefit your business if your demand fluctuates. For example, if you run a holiday sweater store, you may need to hire more employees during the holiday season when demand is at its peak. 

Supply changes

HR forecasting benefits businesses whose operation depends on specific goods or materials. For example, if you run an automobile manufacturing business that relies on certain parts, you may make staffing adjustments if these parts are in shortage. 

Market changes

HR forecasting helps businesses adapt to market changes. For example, if your state increases its minimum wage, you might reduce your staff to stay within your company budget. 

Internal staff changes

Internal staff changes are inevitable for any business. Whether an employee is retiring, earning a promotion or getting terminated, HR forecasting accommodates for any internal staff change and arranges necessary replacements. 

Resource availability changes

When a company’s resource availability changes, so does its staffing capacity. For example, if your company expands and you purchase an additional office space, HR forecasting will help you determine how many new hires you’ll need to fill it.

How can a PEO Help with HR Forecasting?

Partnering with a PEO helps you take better control over your business’ HR functions. From payroll processing to benefits administration, a PEO will take HR responsibilities off your plate, giving you more time to focus on your business’s core operations. If you already have an in-house HR team, a PEO can offer substantial support to your department that will benefit your team strategically and administratively. If you’re considering strengthening your HR support and implementing HR forecasting, a PEO might be just what you need.

Simplify Your Business with 

At, we make it easier to find the perfect PEO provider for your business. With access to some of the largest PEOs in the country, our agents provide high-performing options that will unlock your business’s true potential. If you’re ready to take your business to new heights, connect with our team today to shop PEO quotes and receive competitive pricing within 24-72 hours!

Ready to take your business to the next level?

Contact us today to learn more about how we can help you achieve your goals.

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