It is important that labour turnover at Next is continuously measured to warn of potential problems so that management can take appropriate action. Replacing employees disrupts efficiency and creates recruitment and training costs. In order for Next to meet the objectives of its manpower plan, it is important that it minimises labour turnover.
It is important for Next to maintain their employees because that would mean that they have got stability and comfortable workers.
The labour turnover ratio is a rather general measure. A subtler indicator is the Labour stability index which is calculated using the formula:
Number employed with more than 12 months service
Labour stability =_________________________________________ x 100
Total number of staff employed one year ago
This index denotes stability because it emphasises those employees that stay rather than leave.
Next doesn’t have a very impressive stability rate, which means it hasn’t managed to retain a much higher proportion of its experienced staff. However the new recruits are trained well enough to continue the expectations.
- Sickness and accident rates:
It is important for Next to keep a record of its sickness rates. It needs to ascertain whether staffs are on sick leave for work-related or non-work reasons. Overall disruption can be minimised by identifying the cause of illness and its likely short — term and long - term effect on employees’ ability to carry out their tasks. Sickness rate is measure by the formula:
Number of working days lost per year due to illness
Sickness rates = ______________________________ x 100
Total number of available working days
Under the Health and Safety at Work Act 1974 an organisation is required by law to investigate and keep a detailed record of its accident rates. Accidents can be caused by factors such as insufficient safety training, stress, a lack of safety equipment or poor motivation. All of these factors can result in ineffective working practices and reduced efficiency. Keeping records enables Next to protect itself from legal action and to identify and deal with the causes of accidents before problems escalate.
Next take care in making sure that they don’t break any rules by doing everything by the book and everything is done by care.
- Age, Skills and training:
The information on the age structure of the workforce is normally analysed by different categories of employees is useful for Next for several reasons. It will highlight a potential staff shortage problem that might be caused by a large number of employees all reaching retirement age during a relatively short period of time in the near future. It might show that a particular age group dominates certain positions within the company, frustrating the promotional aspirations of other employees.
A detailed analysis of the age structure of the workforce, when linked to the skills audit, can also be of considerable value when deciding upon the allocation of training opportunities because Next’s short-term objective might be to train all its employees to use a new form of computer technology by the end of the year. When deciding who should receive training, the HR department of Next often are aware of which employees already possess the required skills and which employees are nearing retirement age, as training people who are shortly to leave the company would not be cost effective and most definitely time consuming.
At Next they believe it is important to have experienced staff as well as young motivated staff because it freshens up the atmosphere and a give them a future to look towards as well as a present.
The Human Resources inventories also allow plans to be made that cater for the effects of retirement or possible resignation among supervisory and managerial staff at Next. This gives rise to what is known as succession requirements. It is essential for Next to know if it has the right staff to promote or transfer into the vacant managerial positions. It requires information on employees that can be lined up as potential replacements. Some may already display the qualification necessary for promotion and can therefore fill positions arising in the immediate future; others may have been identified as potential replacements after undergoing further training and development and, in this case, can fill positions arising over the next few years.
The succession requirements also have to take account of the additional staff transfers and promotions arising from the downward chain reaction caused by a single replacement further up the organisation’s hierarchy. If, for example, a regional sales manager of Next is promoted to fill a vacancy arising from the retirement or resignation of the national sales director then this has a knock-on effect; the regional sales manager position needs to be filled, with the result that the company has to plan and organise several other promotions and/or transfers.
Succession analysis identifies any managerial and supervisory posts that face a weak replacement position and, for this reason, the assessment of staff must be a continuous process.
Next’s Human Resources feel it is important to plan ahead and are therefore often quite fast to react and identifying any danger ahead.
- External labour market information:
The human resources manger of Next needs to understand about the labour market and the effects that it could have. The external labour market for any business is made up of potential employees, locally, regionally or nationally; who have the skills and qualifications required at that time.
Next needs to know the figures of supply trends for past, present and the future. The figures of supply are important as they show an understanding to the local or national supply conditions. Local wage rate and income are also important to employers too, in order for businesses to attract the right employees.
There are a number of different factors that affect the size and nature of the labour market. There are four factors, which need to be taken into a lot of consideration by the human resources manager: -
The local unemployment figures are very important to Next; these figures of the unemployment give us the indication of the general labour availability and whether it would be difficult or not to recruit new staff. Looking at the local unemployment is also a good factor to look at because you are able to see which organisations have been laying off workers.
This can be seen as an advantage to some firms, having the choice of people who have been made redundant, as they may have the right skills, or even have skills that are occupational or that can be transferable towards similar work within the business. The study of local trends can show whether there is a demand for a particular type of job or not.
No mater what area of the world you are in there is always a decline in a particular area of a job, because skills for that particular job are becoming redundant. At the same time as that there are new skills and capabilities that are emerging, and the demand for these skills will be rising faster than supply. Due to this factor, skills shortages occur and this can cause a considerable frustration for local employers. Wages of people in that area of skills shortages will increase, and can cause a competition to recruit and keep hold of these scare workers. When a local skills shortage occurs, employees tend to seek and recruit in other geographical areas. Many organisations need to be conscious of any local skills shortages, and take actions, like development of training programmes to make required skilled workers come through. This is also beneficial to local schools, colleges and university courses that train people in the specific industries, as it support local employers.
- Competition for employees:
Many organisations will be concerned to know whether their competitors are growing and, therefore causing an increase demand for labour, or whether local redundancies mean labour is more readily obtainable.
The amount of labour in an area depends upon the number of people who are able to work. Modern transport systems make it much easy for users to travel to and from work, but many organisations may need to make it much more easier for individuals to carry out the journey. Many of the modern organisations tend to locate themselves on the outskirts of towns, its important that they gain the right number of the right sorts of people. The availability of labour will depend on factors such as age distribution of the local population, attitudes to women working and the degree to which young people continue on at school, college or go on to higher education.
Skill shortages have become increasingly evident during the 1980s and 1990s as the labour market has changed.
The main features now of the labour supply are:
- greater female participation
- fewer young people
- more older workers
- more part-time workers
- Greater demand for skills.
As production has become more automated with a large amount of capital equipment being used, the role of workers has changed. Fewer people are required for routine assembly line jobs, and there has been a move away from unskilled manual work into more highly skilled and specialised checking and monitoring tasks. This shift has also been accompanied by a move towards multi-skilling, where one worker now does a number of separate tasks. For example, whereas previously it would have needed at least two skilled people to cut (a fitter) and join (a welder) steel pipes, today it is likely that both jobs would be completed by the same person.
- Where do skill shortages occur?
- Small companies tend to have more difficulty than large companies in recruiting skilled workers, possibly because they do not pay enough or there is insufficient internal training.
- Rapidly growing industries tend to have the most difficulty in recruiting employees, particularly when new production methods or new technologies are developed.
- The greatest shortfall appears to be in the Engineering and Craft sectors, along with Professional and Technical occupations.
- Within Europe, countries have different problems, for example, in Greece, companies are short of marketing and clerical staff. Spain, is reporting shortages of staff to work in the tourist industry.
What is not clear is whether the skill shortages experienced by different companies are due to a lack of trained personnel or poor recruitment policies. For example, poor pay and working conditions will deter people from applying. Similarly, many companies do not give enough attention to human resource planning, with the consequence that future skill needs remain unsatisfied.
However this not the case with Next because they believe that the success they have experienced in the past and the success they are going to achieve in the future is all down to the hard work done by their employees that is why they believe in rewarding their employees to make them aware that they are important to the company.
C1
-
Interpretation of labour market information:
- Making the labour market more competitive
The labour market has been made more competitive by the introduction of employment legislation to reform the trade unions. Market forces have become more important and any imbalance in the labour market, such as an excess demand or excess supply of labour should eventually correct itself without the need for the government to intervene.
The government policy on unemployment has been to:
- cut direct taxation (income tax) making it more attractive to work;
- reduce welfare benefits, making it less attractive to be unemployed or making work more attractive;
- Increase vocational and personal skills by improving education and training and giving retraining incentives, ‘so that the unemployed should become more employable’.
These are some of the measures in the 1994 Budget to help the unemployed:
- employers get a National Insurance rebate if they employ people who have been out of work for more than two years;
- work trials: unemployed people are able to try out a new job for three weeks without losing benefits; 150,000 new job opportunities could be expected over the next three years;
- speeding up of family credit so that people got some help with rent and council tax during the first four weeks in a new job;
- making more money available with the Job Finders Grant;
- a Job Match scheme, which helps people build up full-time jobs by putting together a number of part-time jobs;
- Unemployment benefit will be called the job seeker’s allowance.
Al
- Judgments on the effectiveness of human resources planning:
- Trends in female employment
These are figures for male and female employment for the last 44 years between 1950 and 1994:
Male Female
1950 13,722 7,035
1977 13,383 9,280
1990 12,076 10,775
1994 10,815 10,644
(Figures are in thousands)
Female employment has risen by 50 per cent. Male employment has fallen by 21 per cent.
The majority of female workers are single, although married women are increasingly entering the labour market. A number of suggestions have been made to account for these trends.
- Changes in economic expectations — households now expect a higher standard of living which can only be achieved with a higher level of household income.
- Changes in social attitudes — the number of female single parents is increasing, therefore there is a greater need for women to work.
- It has become socially more acceptable for women to work — this trend is evident across social groups, although the greatest increase in female activity rates has been in regions where traditionally women have not gone out to work.
- Changes in the types of job available — the growth in the service sector of the economy, which has traditionally employed women, and the decline in the manufacturing sector which has almost exclusively employed men, has given greater opportunities to women.
- Equal opportunities legislation has helped to change social conditions, and improve employment prospects.
