Internal and external labour market: TOWER OF LONDON

4.2

Task2 (e2)

Internal and external labour market

Internal labour market

The internal labour market deals with the Tower of London looking to employ people within the business. They can be done by employees get promoted to higher positions or move to different stores. It can also plan to its workforce. Weather the Tower of London can meet its future workforce requirement from existing employees may depend on a number of factors. An example of this is when the Tower of London promotes a member staff to a higher position.

External labour market

This is when the Tower of London look to plan to employ workers from outside the organisation. There are also local and national factors that have to be taken into account by the Tower of London when planning its external employee requirements. The Tower of London would be interested in the local unemployment rates. Unemployment is the internationally agreed definition of unemployment. The International Labour Organisation - an agency of the United Nations, recommends it. Under ILO guidelines, all people aged 16 and over can be classified into one of three states: in employment; ILO unemployed; or economically inactive.

Fig 1.1

Above you can see that the unemployment rate shows that, the unemployment is low.

The Tower of London would also look at the employment rates. Employment Statistics on employment tell us how many people are employed, the sorts of work they do, there working patterns, as well as the number of jobs and the industries

Fig 1.2

Above you can see that the employment rate by age is going high.

The Tower of London may also be interested in the pay and earning of people. Earnings are a measure of gross remuneration people receives in return for work done. It includes salaries and bonuses but does not include non-monetary perks such as benefits in kind.

Fig 1.3

On the graph whole average earning is show that it is average pay.

The Tower of London may also be interested in the vacancies that are available when they are looking to employ externally. A jobcentre vacancy is defined as a job opportunity notified by an employer to a jobcentre or careers office (including 'self-employed' opportunities created by employers).

Fig 1.4

Above you can see that there is an increasing amount of vacancies. This means that job opportunities are becoming more vacant.

The Tower of London also gives a short test in English and maths before they employ staff. The qualification required by the tower is usually GCSE Maths and English. In the Tower of London they can look at the government statistics of education in the local market.

Analysis of how relevant labour market trends relate to the ongoing human resources planning of the Tower of Loon.

The relevant labour market trends are very important in human resources planning; because the Tower of London has to plan they are able to get right people suitable in the labour market. The human resources planning have to forecast employees; so in the future the Tower of London may need more or less workers or worker with different skills. They use labour market trends, such as external labour market that show the amount of vacancies in a job centres this is shown in Fig 1.4 they can see if they are able to plan to recruit. By looking at the education level of people the Tower of London, can see weather they are able to plan to employ people with the skills. Once the Tower of London has decided on the number and type of employees it needs in future. The next step to ensure if they have the right people at the right time, to meet the work force planning requirements.

A starting point for the Tower of London to analyses the current position of employees. This is likely to involve calculating the number of employee working in a particular job and identifying their category and function. It may also mean gathering information on their age, length of service, qualification and performance results. If the Tower of London wanted to employ managers may look at the number of graduates on its staff or may look at the amount of graduates that are unemployed this is shown in Fig 1.1, so they can plan to forecast. It may also be useful to look at the amount of people leaving when planning to new staff; this may be done by the percentage wastage rate. This shows the amount of employees leaving as a percentage. When planning to recruit from external labour market the local employment of age trends in Fig 1.2 of the amount of people employed, will indicate how mush people are working age group in certain regions. The unemployment trends will help planning when it gives indication of the general availability of labour and suggest weather it will be easy or difficult to recruit. It is also important to find out more about similar business locality that have been laying off workers. Often when a major employer closes down or discards labour, this provides an opportunity for the Tower of London, which is able to employ the workers who have been made redundant. These employees might have the right sort of skills or transferable skills that can be applied.

Internal Supply

Before the Tower of London decides to recruit any employees externally it needs to consider whether it has the suitable candidates internally who could do the job efficiently. By doing this the Tower of London are saving money and recruiting internally takes less time than recruiting externally. However, if the job on offer is highly specialised then it is unlikely that there are any suitable candidates that match the criteria. The personnel can do this by sifting through employees’ documentation that may contain past experience, skills gained before joining the company and appraisal reports.

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Internal Supply

The Tower of London is one of many companies that ask employees to complete a ‘skills questionnaire’ to see whether they possess the required skills to take up a vacant job. A skills questionnaire may also be of help to the Human Resource Department to identify possible mentors and to plan training events if skills shortages are identified. This information is of use to the Human Resource Department when deciding whether to advertise internally.

Statistics and information would be collected on employees already within the Tower of London, which would cover the following areas:

The number of employees in particular job categories
The skills available
Skills analysis
Performance results
Promotion potential
Age distribution and length of service
Staff turnover

The number of employees in particular job categories

This figure will give a broad overview of the numbers in the Tower of London who already possess certain broad category skills – e.g. in a Premier division football team this could be the number of strikers, midfielders, defenders goalkeepers etc. Or it could identify those who already have Premier division experience and those who are novices at that level.

The skills available

It may be helpful to identify the current skills held by the labour force and see how many of these are transferable (a skill used in one particular job may be transferable to another job).

Skills analysis

The tower of London needs to be sure it has the right number of people available at the right time but also with the right skills. The company, therefore, needs to assess its present supply of skills across the company’s workforces and to identify the sorts of skills it will require in the future.

A skills inventory of current employees will indicate those who have received recent training and those who will require training. It may be possible to meet the human resource requirements of the organisation by training and developing current staff rather than recruiting externally. (This is often a cheaper option and also helps to motivate people who are already working for the company).

Performance results

The Tower of London will want to gather information about the level of performance of various categories of current employees. This sort of information may be collected in a quantitative form (e.g. numbers of items produced of acceptable quality, number of rejected items because of poor quality etc). In addition information may be collected that is of qualitative nature (e.g. information from appraisal interviews).

Promotion potential

Internal promotions will change the availability of existing resources. It is useful to know how many employees have the skills and aptitude for promotion to more demanding roles. In addition, it is useful to know how many employees have the potential, with suitable training, for promotion.

Age distribution and length of service

This is a very important factor to any large or medium sized business because it is possible to have too many experienced workers and too many inexperienced workers within an organisation.

If the Tower of London has too many experienced workers there is a danger that they will retire at similar times leaving the organisation in a mess to sort out by recruiting more staff with no experience. It is therefore important for the Tower of London to have a workforce of mixed ages so that the danger of experienced workers retiring at the same time is avoided. If the organisation has too many inexperienced workers it may show a slow progress of advancement in the business objectives, which may influence employees to quit their job and look somewhere else offering them more job satisfaction.

Staff turnover.

Staff turnover should be analysed in order to identify the reasons people leave the Tower of London and to help it forecast future losses. A degree of staff turnover may be beneficial to the organisation, as fresh staff can be recruited, promotion channels may be opened up and it may allow for natural wastage when the Tower of London is trying to reduce its workforce. Too high a level of staff turnover will mean that there will be high additional costs of staff replacement and recruitment, additional training costs and disruption to the quality of service or to production.

If the Tower of London found that there was nobody suitable for the job of an Office supervisor within the organisation then it would need to consider the possibility of finding one within its locality.

Techniques for forecasting internal employee supply: labour turnover

There are two simple methods of measuring the rate at which employees leave or stay with an organisation, which are:

Employee wastage rate
Labour stability rate

Employee wastage rate – Below shows a simple diagram indicating how it is possible to calculate the number of staff leaving a business as a percentage of those who could have left:

Number of staff leaving in time period

Wastage rate = X 100

Average number of staff employed in time period

Labour stability rate – Some organisations make good use of the labour stability index as well as the wastage rate. This indicates to the organisation the tendency for employees with long service to stay with the company therefore linking the leaving rate with the length of service.

Number of staff leaving with more than 1 year’s service

Stability index = x 100

Number employed 1 year ago

The advantage of knowing about the current labour force of an organisation enables it to make the most of the skill and potential present within. But on the other hand, the availability of those from the local and national labour market statistics also has to be taken into consideration.

The effectiveness of employee organisation

The level of employee satisfaction can measure the effectiveness with which the Tower of London or any other organisation runs its human resource policies, and this is where stability indexes and, again, wastage rates are so important. If employees of the Tower of London are content with their work, they are most likely to turn up for work. Levels of stress and stress related absenteeism increase when there is poor human relations atmosphere.

Sickness and accident rates

It is most likely that the Tower of London keep a record of the following:

Notified absences. When employers are going to be absent from work (e.g. to attend a funeral, a hospital appointment, a wedding etc).
Absences due to sickness. Employees will need to produce a doctor’s note so that they are entitled to sickness benefits, etc.
Unauthorised absences. When employees simply do not turn up for work, without telling anyone.

As a result of these records, the Tower of London can record absences as a percentage of the hours/days etc, that could possibly have been worked. Absence records can be kept for individual employees, groups of employees and the workforce as a whole at the Tower.

Such detailed statistical analysis enables the Tower to keep an eye on where problems lie – with an individual, with a particular section of workers or with the Tower as a whole. Comparisons can then be made with other workers and past records (for the individual employee), with other teams/sections (for teams/sections) in the workplace and with comparable organisations. Breaking down the statistics further highlights whether the problem lies with sickness or with unauthorised absence. And by keeping these records for a number of years, it is possible to establish trends.

Absences should be measured as a percentage of total time. For example, if an employee from the Tower is due to work for 40 hours in the week, but turns up for work for 32 hours only, then his/her absence level is:

x 100 = 20%

If the total hours people in the Tower of London work in a week is 10, 000 but they work only 9, 500 of these then the absence rate is:

500

x 100 = 2.5%

10, 000

Statistics for age, skills and training

As earlier explained in the report, the Tower will have a range of employees who have worked for different lengths of time and who have different levels of skills and training. The human resource planner will seek to have a balance of new people entering the Tower of London in order to cover those who are leaving. The human resource planner will also want to make sure that skill levels are rising within the Tower of London and that training programmes are devised to make sure people have the skills to meet the job requirements. If all of the Tower of London skilled workers are just about to retire, then the company is quickly going to have to spend money on training to build up a new pool of expertise.

Succession

Succession is the way in which one person follows another into a particular job or role within a company. The Tower of London needs to make sure it is grooming people to take on the responsibilities required. If it does not do this, it will suddenly find itself with a vacuum where it has not developed the appropriate positions of responsibility and the company will be missing the right people in key positions to hold the organisation together.

The external labour market

This is a market of potential employees for the Tower of London or any particular organisation to choose from when recruiting more workers. The employees are usually listed locally, regionally or nationally whom have the skills and experience required at a particular time.

The national labour market

When the tower of London examine the supply of the labour market, a number of factors need to be taken into consideration:

Trends in size/characteristics of the working population
Competition for labour
The overall level of economic activity
Education and training opportunities
The effect of government policies

Trends in the size/characteristics of the working population

The one factor that will definitely affect the human resource department of the tower of London is the changes in the age distribution of the UK population. To meet their human resource requirements, the company now have to look further a field when recruiting new staff, as there is now fewer school leavers and young workers available for employment. This may involve recruiting more women to balance out the organisations male to female ratio or more elderly employees to gain that further experience into the workforce.

Competition for labour

Persons of specific qualifications such as ICT may be offered more attractive wage packages than other members of the Tower of London workforce, as the competition for recruiting these rare potential employees is high. In other words – Organisations compete with each other by offering potential employees with rare qualifications high wage packages.

The overall level of economic activity

The demand for employees can be determined by whether the economy is in a boom or recession period. If there is a high demand for goods and services the tower of London’ productivity will increase along with sales and profit. More demand for the products or services leads to a higher demand rate for employees. If the unemployment rate is at a low, the economy will be at a high. However, this factor can make it extremely difficult for human resource planners to recruit the right sorts of employees with the correct sorts of skills.

Education and training opportunities

With higher education opportunities evermore increasing – young people are seeking to gain more qualifications in order to advance to a higher paid occupation. Because over recent years the level of higher education opportunities has grown the level of skilled workers coming into the labour market has decreased. Young people appreciate the need for higher skill levels in order to compete in the job market.

Local skills shortages

Within any area at one time, there will be jobs that are going into decline because the skills required for those jobs are becoming redundant. At the same time, new skills and capabilities will be emerging, and demand for these will be rising faster than supply. As a result, skills shortages will arise and these will cause considerable frustration for local employers. The wages of people in the skills shortages areas will be rising and there will be competition to recruit and retain these scarce employees.

Where a local shortage occurs, employers will often seek to advertise and recruit in other areas, regions or even countries. This is why, for example, there are many doctors from over seas working in both private practice and for the National Health Service in the UK.

The tower of London need to be aware of local skills shortages so they can develop their own training programmes to make sure there are enough people coming through with the skills required. They will also work together with local employers in the same industry to support local school, college and university courses that train people the skills required for these specific industries.

Competition for employees

The Tower of London will be interested to know whether its competitors are expanding and, therefore, increasing the demand for labour, or whether local redundancies mean labour is more readily available. See below:

Availability of labour

The amount of labour in a particular area depends on the number of people available for work. With modern transport systems it is usually quite easy for people to travel to work, but an organisation such as the tower of London may need to develop its own systems to make sure it is easier for people to undertake the journeys, e.g. a work bus. With modern employers locating on the outskirts of towns, the issue of getting the right numbers of the right sorts of people to work is an important one.

The availability of labour will depend on such factors as the age distribution of the local population (although this tends to follow national patterns), attitudes to women working and the extent to which young people stay on at school, college or go on to higher education.