2.6 HR Response and Plan for Supply and Demand

HR departments should be prepared and have strategies in place to meet workforce supply and demand needs. They can either: reduce the workforce due to over-supply, or increase the workforce in response to labour shortages. The Response Plan needs to align with change within the organization, both short and long term.  The Response Plan needs to include an assessment of the implications of change; and evaluate the risks of change.  The organization can then build Response Plan to lead the organizational change for supply and demand.

Plan for Reducing Employees 

Leaves Without Pay

Employee is offered a temporary leave of absence to save wages. The employee would not be paid during the temporary leave. Other leaves may be a sabbatical where the employee is offered time without pay for personal leave or to return to school.

Incentives to Leave

Employers may offer employees an incentive to leave the company. This is often called a buyout. There is a cash incentive offered to the employee ie. A year’s extra wages.

Termination

This is a permanent separation from the company due to a turndown in the economy. The company has no intention of re-hiring the employee.

Layoff

This is a temporary separation from the company because of a short term surplus of employees. The separation could last only a few weeks, or several months depending on the need of the company. Employees are generally on a recall list and when there is a job available, the employees are called back to work based on seniority or need.

Attrition

This is when an employee resigns, retires or dies. It is initiated by the employee. A position is created at the company and needs filled by a new hire.

Hiring Freeze

This process stops all hiring until further notice by the company.

Job Sharing

The number of hours is reduced by employees, however, the job is split, generally, two people. The job responsibilities are divided up between the employees. This helps to avoid layoffs, and keeps employees working, even if part time.

Early Retirement

The employee separates from the company through retirement. If the regular retirement age is 65 years old, the employer may offer the employee an incentive to retire before this age. Other employers offer a phased retirement which allows them to work fewer hours for a period of time, and then finally retire completely from the company.

Part-time Employment

Sometimes employers reduce the work force by eliminating full time jobs and replacing them with part time employees. This is a cost savings for the employer. Often, part time employees are paid less wages and receive fewer or no benefits. This is not always good for part time workers as it limits not only their pay cheques and high costs of health services, it also may reduce their entitlements to government sponsored programs ie. Employment insurance, disability insurance.

Plan for Labour Shortages

A labour shortage is not enough supply of employees to meet the demand for the company, and/or people do not have specific skills that company needs to operate the business. Good HR Planning through methods of tracking employees can avoid these situations.

Hiring New Employees

This approach is straight forward in that HR department attracts and retains new employees with the skills required for the job. The employer either hires full time or part time employees.

Contract Work

The employer does not want to hire full time or part time workers. Rather, they hire a contract worker for a specific amount of time at a specific rate of pay. They perform a specific job while employed. Sometimes they are called contingent workers. Contract workers are not considered employers. When the contract end date is reached, the contract worker no longer works for the company.

Outsourcing

Sometimes employers choose to or need skilled workers that are not employed by the company to perform specific work. A formal agreement is decided upon by the worker and the employer. Often these jobs required special knowledge or skills. The employer saves costs by not having long term employees, nor do they pay benefits. With international companies they may outsource work to a different country called Offshoring.

Crowdsourcing

This is when a company decides to take a function of the organization and send out an open call to help the organization solve some type of problem or provide a service to the company. It is generally advertised through social media and can attract a wide pool of people. If there are good results, the company may pay the people for their efforts. Or, the work might be volunteer. Often, through crowdsourcing many innovative ideas are shared at a reduced cost to the company. Ie. Waze subscribers report on traffic accidents.

Overtime

This is a method where existing employees are asked to work beyond their regular hours of work. Overtime pay is paid out to the employees. The employer does not have to hire new employees, and employees enjoy a higher level pay cheque. Too much overtime can lead to stress, burnout and accidents on the job as consequences for both the employee and employer.

“2.6 HR Response and Plan for Supply and Demand” from Human Resources Management – 3rd Edition by Debra Patterson is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.