Why do you need Labour Demand Forecasting?

Jun 1, 2023

As a business leader, it’s vital to accurately understand your labour demand, and in this article, we will explain why do you need labour demand forecasting and the benefits. This is why labour demand forecasting is such an important tool for businesses. Labour demand forecasting helps business leaders understand their labour needs and make decisions regarding staffing, employee scheduling and other essential resources.

2 Step Approach To Delivering Labour Demand

Modern AI-powered systems tend to take a two-step approach to deliver a labour demand curve.

  • Step 1: Create forecasts of all factors that correlate with staffing levels. This could include sales revenue, visitors, item sales, number of transactions and tasks such as unloading a delivery. A good labour demand forecast will probably need multiple forecasts, which will need to consider multiple factors such as weather and local events.
  • Step 2: A second AI is fed all of the relevant forecasts along with historical staffing data and creates a labour demand forecast for every role required, including the number of staff required each hour (or possibly 15 minute or 30 minute blocks) during the week.

What does a labour demand forecast look like?

Here is an example of a labour demand forecast from the ShopWorks Workforce Management platform:

Why do you need labour demand forecasting

Each blue graph relates to a job role, and you can see why it is called a demand curve. It is normal to have one of these demand curves for each role. The blue bars represent the number of staff required per hour for that role. This one is for dealers in a casino, and you can see that on Monday the peak demand is for 7 dealers.

The top row you can see the whole week’s demand curve, 7 graphs and by highlighting Monday, for example, we can see Mondays in a more readable scale in the bottom pain.

Why do Businesses Need Labour Demand Forecasting?

Labour demand forecasting helps businesses to make better decisions regarding their resources, including labour. This helps companies increase their revenue, reduce their overheads and improve efficiency.

For instance, labour demand forecasting helps businesses to identify areas that require more staff and those that need less staff. This helps businesses to utilise their resources better and ensure the optimum allocation of their resources to the areas that will generate the most revenue.

The Top 4 Benefits of Labour Demand Forecasting

Labour demand forecasting has several benefits for businesses:

1. Increased Revenue: With an accurate understanding of labour demand, businesses can better allocate their resources to areas that will generate the most revenue. This helps businesses optimise their staff and ensure they allocate their resources to the areas that will yield the most returns. 

2. Increased Customer Satisfaction: If you can work out when customers are going to want your service and deliver those services without a queue and by correctly skilled staff, then it stands to reason that your customers will be happier than with the alternative approach.

3. Reduced Overheads: Labour demand forecasting helps businesses to reduce their overheads and improve their efficiency. By understanding their labour needs, businesses can identify areas that require fewer staff and those that require more staff. This helps businesses to reduce their overheads by avoiding overstaffing during quiet periods.

4. It may remove your labour shortages: Many businesses have been suffering from staff shortages post-pandemic, and the traditional methods to solve this have been to focus on retention and recruiting. But what if your shortages are based on the wrong labour model? Over time, labour models evolve to include managers’ input which can often be biased towards the “safety net” of having a few extra staff. We have seen several businesses where a new AI-powered (and unbiased) labour demand forecasting system has come up with a lower number of total hours than the previous spreadsheet-based model that a business was using. Often the demand curve redistributes hours from quiet times to peak, and your auto-scheduling tool will always prioritise peak as this is the greater opportunity for revenue growth. If your previous model was “carrying a lot of fat” then you may not have a labour shortage at all

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The Role of Workforce Management in Labour Demand Forecasting

A good workforce management software will include the three key elements required to optimise a demand curve. They are:

A good solution will be using AI and data engineering to ensure that each forecast and demand curve is built specifically for that venue and role. It will use an updated model and learn from its errors each time. The whole process should be automated from start to finish, and a manager should simply have to press a button to start the auto-scheduling process, and an optimal rota that matches demand should be available for them within minutes.


Labour demand forecasting is an essential tool for businesses. It helps them increase their revenue, reduce their overheads, understand staffing shortages and improve their efficiency. Furthermore, workforce management solutions help businesses to automate their forecasting processes, streamline their data collection, enhance the accuracy of their forecasts, and optimise their staff to fill the demand curve. By understanding their labour needs, businesses can ensure they are investing their resources in the right areas and generating the maximum revenue for the resources they have.

We hope that we have answered the question of why do you need labour demand forecasting and given you a good understanding of the benefits that can bring to a business. Below are a few more related articles should you wish to learn more about the topic.

What is labour demand forecasting?
What are the different methods for Labour Demand Forecasting?


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