Labor forecasting can be the difference between growth or going out of business. Done right, it predicts the perfect number of employees needed for a business day. If done poorly, it leads to overspending, stressed employees, and unhappy customers.
Labor demand forecasting is especially important in industries that rely on shift work. Learn how to forecast labor demand while considering seven key factors that affect staffing plans in shift-based industries.
7 factors that affect forecasting planning
Here are seven common labor forecasting factors and the industries most affected by them.
1. Anticipated foot traffic
Anticipated foot traffic is the estimated number of people coming through a business. The higher the traffic, the higher the revenue. Company leaders can gather anticipated foot traffic numbers using previous data. Examples include door clickers, video footage, and POS statistics.
Most affected industries: This factor is crucial in retail and food service.
Level of predictability: Anticipated foot traffic is relatively predictable. Fluctuations may occur around seasonal and weather changes.
How much can you influence it? Ways to influence anticipated foot traffic include hosting in-store events and sales.
2. Occupancy levels
Occupancy levels refer to the number of people a business can serve with its resources. Examples include the number of tables and seats in a restaurant or beds in healthcare facilities.
Most affected industries: Occupancy levels affect hospitality, healthcare, and food service.
Level of predictability: Occupancy levels are fairly predictable. The most significant changes occur around seasonal shifts. For example, sick seasons occur in healthcare. Summers have more travelers, impacting hospitality.
How much can you influence it? Occupancy levels can change in response to advertising, weather, and available competitor options.
3. Seasonality and weather
Seasonality and weather involve business and consumer behavior changes due to external factors. For example, nightlife dies down when it’s cold outside. Activity-based businesses see more traffic in the summer when school is out.
Most affected industries: All industries can experience these effects.
Level of predictability: Historical data makes predicting seasonality easier.
How much can you influence it? You can’t influence this factor since it will happen no matter your actions — your best bet is to prepare for seasonality well in advance and plan for ways weather may affect your operations.
4. Employee availability and preferences
Acknowledging when employees can or want to work is crucial. Doing so helps a shift-based business run smoothly and ensures employee (and customer) satisfaction.
Most affected industries: This factor affects the hospitality, food service, and retail sectors.
Level of predictability: The level of predictability of this factor depends on you. Communicating with employees about availability and preferences improves predictability. By contrast, a lack of communication creates unpredictability.
How much can you influence it? You set the schedule, so you control how much you pay attention to this factor. Knowing your employees’ preferences allows you to calculate staffing needs that accommodate them.
5. Labor laws
Labor laws are rules and regulations that all businesses must follow. They influence wages, working hours, and breaks.
Most affected industries: Labor laws affect all industries.
Level of predictability: They have a high level of predictability.
How much can you influence it? Aside from advocating for laws to change, you can’t influence labor laws. Rather, you must know which laws apply to your business and workers and ensure you have dependable processes and systems for managing them.
6. Budget constraints
Budget constraints occur when businesses encounter challenges related to financial problems. Your business may need more staff but lacks the funds to pay them. This issue is a budget constraint.
Most affected industries: All industries can experience budget constraints.
Level of predictability: Budget constraints are highly predictable. However, something unexpected can happen and throw off a budget. An unexpected need for overtime is one example.
How much can you influence it? You can influence budget constraints by monitoring your budget and proactively managing elements like overtime. You can also positively influence it through actions like reducing staffing during slow periods.
7. Absenteeism and turnover rates
Absenteeism happens when people don’t show up for work. Turnover rates reflect how often employees resign or get fired from their positions.
Most affected industries: These factors frequently affect retail, food service, and hospitality.
Level of predictability: Absenteeism is fairly unpredictable. Employees could be absent for many reasons, often without warning. Turnover rates are more predictable if you have historical data to assess.
How much can you influence it? You can’t influence how often people have emergencies, but you can establish clear policies for getting shifts covered and enforce them when necessary. Many aspects can influence turnover rates, which you should discuss with employees.
The most important labor demand factors by industry
Here are the most common industries affected by the factors above:
Healthcare
This industry encompasses all aspects of providing care to individuals. Proper forecasting is crucial to keep patients safe while preventing employee burnout. Some factors that heavily influence the healthcare industry include:
- Absenteeism: Patient safety is at risk if a healthcare worker calls out and you can’t find a replacement.
- Turnover: Workers may leave a job in response to burnout.
- Availability: Within a healthcare facility, shifts must be filled by people with specific training and experience, which complicates how you find coverage for the needed roles during operating hours (which may be 24/7).
- Labor laws: In healthcare, it’s easy to lose track of time and miss breaks or allow workers to go into overtime.
- Occupancy levels: Increased need for care requires additional staff to support the load.
Retail
Retail stores sell a variety of products, from clothing to groceries. Factors like turnover and absenteeism are common in the retail sector. Other factors that play into labor forecasting in retail are:
- Anticipated foot traffic: A store may have an influx of customers or workers with nothing to do.
- Seasonality: Some holidays encourage more shopping than others. Examples include Black Friday, Christmas, and Valentine’s Day.
- Weather: Weather can affect anticipated traffic. It may influence whether employees can get to work safely as well.
- Labor laws: It’s difficult to juggle breaks for every worker within a single retail store.
Hospitality
Hospitality has a wide range of businesses under its umbrella. These include hotels, spas, and tourist attractions. Some of the labor forecasting influences for organizations in this industry include:
- Occupancy levels: Hospitality services have an occupancy level, but you also need to consider demand for services and pace of work as you forecast labor demand.
- Seasonality: Hospitality is especially vulnerable to seasonality. Depending on the season, a business can become overwhelmed or be completely empty.
- Budget constraints: Hospitality budgets need to encompass a variety of factors. Each factor can affect how much money goes towards labor.
- Labor laws: Employees who are busy with guests may forget to take breaks.
Food service
Like retail, food service is often an industry where newcomers to the workforce start. This factor can lead to high turnover and absenteeism. Other factors can also affect the food service staff planning, such as:
- Anticipated foot traffic: Knowing how to calculate staffing needs while balancing busy mealtimes and downtime is challenging.
- Weather: Weather plays a major role in anticipated traffic. It can also impact whether employees can come in.
- Labor laws: Labor laws affect all food service businesses. Employees must take regular breaks.
Call centers
Call centers often intersect with multiple industries. Employees provide customer support and handle inquiries. Labor forecasting in a call center must consider the effects of:
- Availability: Staffing a call center often means filling odd-hour shifts in order to provide round-the-clock customer service.
- Occupancy levels: A business needs space for its employees. A lack of space impacts whether employees can handle the workload.
- Turnover: Working in a call center can be stressful and repetitive, leading to higher turnover rates.
Entertainment
Entertainment is an umbrella term for any business providing fun or recreation, like bowling alleys, theme parks, and movie theaters. Factors influencing the entertainment industry include:
- Occupancy levels: Entertainment businesses must consider how long customers spend at their business and how quickly you can serve them. A lack of employees could lead to impatient customers and a poor reputation.
- Turnover: The entertainment industry is susceptible to employee turnover because employees can burn out on customer service, physical demands of the job, and night and weekend hours.
- Seasonality: Some businesses shut down or alter hours for seasonal fluctuations. Employee disruptions are often a result.
Manufacturing and logistics
Manufacturing and logistics are challenging industries for employees and company leaders. The physical demands are well known. Factors outside an organization’s control can derail the schedule. For example, late deliveries of essential materials can create issues.
This industry can also experience the impacts of:
- Labor laws: Additional laws may influence businesses in this market, such as workplace safety accommodations.
- Availability: Lack of employee availability can completely ruin a production schedule. Poor scheduling can create a snowball effect for all team members.
- Budget constraints: This factor can make getting things done on time difficult.
- Weather: If employees can’t work or deliveries don’t come because of weather, it’s nearly impossible to recover lost time.
Labor forecasting doesn’t have to be difficult
Running a business is already hard enough — make labor forecasting easier with Deputy. Our software can streamline the forecasting process across various industries. All pertinent information is in one place, including budgets, scheduling, and timesheets.
Learn how Deputy can make labor demand forecasting simple today.
