Supply analysis in HR is the process of evaluating the current workforce and forecasting how it will change over time.
Understanding Supply Analysis
In the context of Human Resources, supply analysis is a fundamental part of strategic workforce planning. It focuses on the internal availability of talent within an organization. As the reference states, conducting a supply analysis involves understanding the current workforce and how it is projected to change over time, due to attrition and other trends.
This analysis answers critical questions such as:
- How many employees do we currently have?
- What are their skills, roles, and locations?
- How many employees are likely to leave the organization (due to retirement, resignation, etc.)?
- How will internal movements (promotions, transfers) affect different departments?
Why is Supply Analysis Important?
Supply analysis is crucial because it provides a realistic picture of the talent pool available within the company. By understanding your current and future internal supply, HR and business leaders can effectively plan for future talent needs.
Key benefits include:
- Identifying Potential Gaps: Comparing projected supply with projected demand (future talent needs) reveals where the organization will likely face talent shortages or surpluses.
- Informing Recruitment: Understanding internal supply helps determine how many roles will need to be filled externally.
- Driving Development: It highlights areas where internal training and development are needed to prepare employees for future roles.
- Improving Retention Strategies: Analyzing attrition trends helps identify root causes and develop programs to keep valuable employees.
- Enhancing Succession Planning: It provides data on the availability of internal candidates for leadership and critical roles.
How is Supply Analysis Conducted?
Conducting a thorough supply analysis involves gathering and analyzing various types of workforce data.
Typical steps include:
- Collecting Current Workforce Data: This involves details like head count, demographics (age, tenure), skills, qualifications, roles, and organizational structure.
- Analyzing Historical Trends: Examining past data on employee movements, such as:
- Hiring rates
- Attrition rates (voluntary and involuntary)
- Promotion and transfer rates
- Retirement eligibility
- Projecting Future Supply: Using historical trends and internal factors to forecast changes. This involves applying expected rates of attrition, promotion, retirement, etc., to the current workforce data over a specific time horizon.
- Considering "Other Trends": As mentioned in the reference, other trends can significantly impact the workforce supply. These might include:
- Changes in internal policies (e.g., new retirement incentives)
- Impact of automation or new technologies on existing roles
- Organizational restructuring
- Internal mobility programs
Data Points for Supply Analysis
Effective supply analysis relies on accurate and accessible HR data. Useful data points often include:
- Employee ID
- Start Date / Tenure
- Job Title / Role
- Department / Location
- Skills / Certifications
- Performance Ratings
- Eligibility for Retirement
- Historical Attrition Data (by role, department, manager, etc.)
- Historical Internal Movement Data
Collecting and maintaining clean data is a foundational requirement for accurate supply analysis.
Outputs of Supply Analysis
The output of a supply analysis is typically a quantitative forecast of the internal workforce availability over a future period. This can be presented in various formats, such as:
- Projected head count by department or role
- Forecasted number of employees eligible for retirement
- Expected number of internal vacancies due to attrition or promotion
This information is then used in conjunction with demand analysis (forecasting future talent needs) to identify potential talent gaps or surpluses, informing strategic HR initiatives.
