Essay on Labour Economics and Functional Flexibility

Submitted By kevin1152
Words: 1137
Pages: 5

The concept of flexibility is a major concern for human resource managers. Human resource flexibility refers to the capability to facilitate the organization’s ability to adapt effectively and in a timely manner to changing or diverse demands from its environment. According to Wright and Snell, human resource flexibility is “the extent to which the firm’s human resources possess skills that can give a firm options for pursuing strategic alternatives in the firm’s competitive environment, as well as the extent to which the necessary Human Resource Management practices can be identified, developed, and implemented quickly to maximize the flexibilities inherent in those human resources.” (Wright 772) The need for flexibility arises from the changing business environment, a change in social environment, and government policy environment. Changes in the business environment typically include highly competitive global product markets and changes in advancements in technology, while changes in the social environment can include certain patterns, such as male to female ratio or retirement trends. Strategic planning involves a set of procedures for making decisions about an organization’s long-term goals and strategies. In comparison, Human resource planning is the process of anticipating and providing for the movement of people into, within, and out of the organization. This is important for human resource managers because it lets them create and adapt to a more flexible environment. By analyzing the culture, competition and composition of the workforce, managers can establish quality, service, speed, and innovation goals. They can also reconcile supply and demand by hiring more employees, laying off short-term/temporary worker, and/or downsizing. Successful human resource planning helps to increase organizational capacity—which is the capacity of the organization to continuously act and change in pursuit of sustainable competitive advantage. Flexibility can be achieved in two primary ways. Coordination flexibility is the ability to rapidly reallocate resources to new or changing needs, while resource flexibility results from having resources that can be used in different ways and people who can perform different functions in different ways. According to Atkinson and Meager’s model of the “flexible firm”, there are four types of flexibility that is looked for by companies. Functional flexibility refers to a firm’s ability to adjust and deploy the skills of its employees to match the tasks required by its changing workload. This can be done by multi-skilling, dual skilling, or dismantling of traditional rigidities between occupational. By training employees to handle more than one task, they become more functional; this can improve efficiency as well as reduce costs. The next type of flexibility in Atkinson and Meager’s model is external numerical flexibility. External numerical flexibility refers to a firm’s ability to adjust the level of labor inputs to meet fluctuations in outputs. Human resource managers can adjust the level of labor by increasing/decreasing the use of part timers, temporary, or short-term contract staff. Increasing a mixture of non-standard employment forms will be more efficient and cheaper. The third type of flexibility is internal numerical flexibility. Instead of hiring part time or temporary workers, this flexibility is achieved by adjusting the hours or schedules of employees already employed at the firm. The advantage of this is that it saves the firm money and time. The final type of flexibility is financial flexibility. Financial flexibility refers to achievement of flexibility through the pay and reward structure. Intrinsic and extrinsic rewards are used to motivate and retain a qualified workforce. Pay raises, benefits, and vacation time are all examples of providing financial flexibility for employees. According to the model of flexibly, there are two separate divisions of the…