Top Management Systems for Forecasting and Monitoring Pay Costs and Staff Numbers

The size of the Department of Trade and Industry has mainly been controlled by a ceiling on the number of staff. Recently, the Government also introduced limits on running cost budgets, the largest component of which is pay cost. In 1986 these were delegated to 12 Deputy Secretaries. The budgets have to be set very tightly in order to remain within the Departmental limit on running costs; so it is essential that top management are able to forecast pay costs. Two models are described. One provides short term forecasts of staff numbers, the other forecasts their cost. The model forecasting staff numbers can be used to ensure that the ceiling on staff numbers is not exceeded. Its main use is as an input to the second model which forecasts pay costs. The models are now in use by top management; firstly, to allocate budgets throughout the Department, and secondly, to monitor the spend through the year.