Only Few HR Professional knows the exact Technique of Human Inventory

Updated: 8 months ago
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We all know that the world has become a global village, which is giving a tough time for companies to survive against competitors. Now a firm can imitate your process, product, systems, only human capital is left behind with the company which is helping them in sailing through this competition.  Great HR professionals in first-world countries like the USA and Canada have fixed up processes to know their available Human Inventory and their upcoming requirements for the same. The majority of the companies in Canada and the USA are using Markov Analysis is a key technique to capture the current manpower and their movement from one job to another job over a period of time based on the companies requirement and employee succession planning. Markov Analysis tool also helps companies to know and get prepared for future requirements by calculating the manpower gap.

What is Markov Analysis Technique?

This technique shows the percentage and the actual number of staff who will remain in each company from one year to the next year, along with the proportion of those employees who will get promoted, demoted, transferred, or left the organization. This analysis can also, be used to track the movement of employees through various jobs and to develop a transition matrix for projecting internal labor supply.

Estimating Internal Labor Supply in a firm at any given point of time

History of Markov Analysis

This technique is named after one of Russian Mathematician – AndreyAndreyevich Markov (1856 – 1922). Markov studied Markov process in the early 20th century, publishing his very first paper related to this topic in 1906. He first used the process to predict the behavior of gas particles which got trapped in an enclosed container.

Applicability of Markov Analysis Tool

Great HR Professional needs to identify probability of movement of an employee from one position to another, as stated earlier; it can be because of any reason like exit, transfer or promotion. Probability of moving from one job to another can vary, but always remember the sum of these probabilities will remain 1 for an employee. Let’s try to understand this with the help of below mentioned Transition Probability Matrix:

Transition Probability Matrix

Time 1

Time 2











0.60 (30)

0.20 (10)

0.05 (2.5)




0.05 (2.5)



0.40 (30)

0.30 (22.5)

0.20 (15)

0.05 (3.75)

0.05 (3.75)







0.80 (80)

0.10 (10)

0.10 (10)




0.50 (100)




0.50 (100)





0.80 (240)



0.20 (60)

























We can see employees working in job A at time 1 have only 60% probability of moving to Job A in Time 2, 20% from Job A to Job B, similarly for all other jobs it is applicable. In the total column we can see the change, where in Job A, B & C, number of staff has increased whereas in Job D & E total number of employees has decreased. This shows the probability of change in the manpower requirement in various jobs over period of time.

Based on Markov Technique, HR Professionals can have fair idea how much internal manpower is available and how many they need to hire externally with various skills, this helps them in developing HR action plans.

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