Explosion in the Forecasting Function in Corporate America
Jain, Chaman L., The Journal of Business Forecasting Methods & Systems
In recent years probably no business function grew as rapidly as recasting function. In fact, it has just exploded. About ten years ago, only utility companies including telecom, gas an and electric had a forecasting department, staffed by full time forecasting people. Now most of the large corporations including Coca-Cola, Eastman Kodak, Hewlett Packard, Johnson and Johnson and Pfizer have a full time forecasting staff - something unheard of ten years ago.
Most of the companies not only now have dedicated forecasters on their staff but also their number is growing. According to the IBF (Institute of Business Forecasting) survey conducted in 1998, 77% of the companies hired one or more full time forecasting persons only during the last ten years. The growth has been even stronger in recent years. More than half of the respondents (62%) indicated that they hired full time forecasting persons only during the last five years.
Levi Strauss started a separate forecasting department only in November 1995. Now it has a full time forecasting staff of 30 people. It has even the Vice President of Forecasting. Duracell recognized the need of forecasting function in mid 1970's. At present, it has a staff of 8 full time forecasters- 5 in operational forecasting and 3 in strategic forecasting. Reckitt & Colman has a forecasting department headed by the Director of Forecasting with a full time staff of nine people. Mary Kay Cosmetic has a full time staff of 8 persons. According to the IBF survey, 32% of the companies have 5 or more and 15% of them have 12 or more full time forecasters on their staff.
Another way of observing the growth in the forecasting function is to look at its job market. There is a significant growth in listing in the newsletter, Job Opportunities in Forecasting and Planning, which is geared toward this function. The Spring 1998 issue listed 29 jobs in the area, and the Summer 1999, 51 jobs-76% increase. A good number of jobs remain unfilled over a long period. In this newsletter, about 13% of the jobs are repeated from one issue to the next because companies fail to find the right person. A few years ago, a Connecticut based company, advertised the forecasting job in New York Times. The company received 55 responses, but none of them had any background in forecasting, according to its forecasting manager.
The survey of US Labor Department also shows growth in jobs in this area. The 1998-99 Occupational Outlook Handbook, published by Bureau of Labor Statistics, states, "Those skilled in quantitative techniques and their application to economic modeling and forecasting, using computers, coupled with good communications skills, should have the best opportunities." The 1996 Spring issue of Occupational Outlook Quarterly states, "for economists and marketing research analysts, faster than average growth is expected ... due to increased reliance on quantitative methods of analyzing business trends, forecasting sales, and planning."
Salaries offered for positions in the area of forecasting are quite competitive. The median salary of Forecast Analyst, Sr. Forecast Analyst, Manager of Forecasting, Director of Forecasting, and Vice President of Forecasting are $45,000, $56,000, $71,000, $100,000 and $153,000 respectively. These numbers are also based on the IBF survey conducted in 1998. The position of a Forecast Analyst is merely an entry level position. The median salary for this position in forecasting is much higher than of a marketing major, $45,000 vs. $29,000. The median salary of Vice President of Forecasting is also much higher than its counterpart in marketing, $153,000 vs. $133,000. (Keep in mind that the salaries of forecasting positions are of 1998 because the survey was conducted in 1998, but of marketing are of 1997, the latest figures available.)
CONFERENCE AND SEMINAR ATTANDANCE
The large attendance in the forecasting conferences/seminars also reflects the growth in the forecasting function. …