The demand side
The demand for labour will depend on plan on plans of the organisation for the future. J.D Wetherspoon is an organisation that continues to grow rapidly, planning to open another hundred public houses around the UK bringing them to a total of 700. When plans such as this are to take place, it is needed to recruit a great many more employees. A demand forecast needs to be made. One way to do this with the use of work studies. Work-study knows how long various jobs take and can calculate the number of employees needed and the hours they will need to work. This technique is used mainly within manufacturing companies who will need to produce a set amount of products in a given amount of time. J.D Wetherspoons would use a different techniques; management estimates. This involves looking at past employment records and estimating how many staff would be needed in future plans. The amount of staff would depend on many factors:
- Size of the establishment
- Amount of customers expected
- Location
- Number of hours worked
The forecast would also need to include how many people would need to be employed at each stage of the hierarchy. Current employees through promotions or placements would fill the majority of managerial jobs. J.D Wetherspoons has estimated that their 100 pubs would create an extra 3,000 jobs.
The supply side
The supply of employees can come from two different places: with the business, internally or externally. Taking employees from internal sources has befits, employees already know and understand how the business runs and operates and where it is heading. There is usually development needed in the employee, so it is important that the right person is chosen to keep costs down.
All the pubs within J.D Wetherspoons chain are run in the same way. This means that a member of staff has been trained they would have the right skills to work in any Wetherspoons. Or if for any reason they needed to be transferred from one pub to another, no extra training would be needed. Bar and kitchen staff in J.D Wetherspoons need to hold certain skills e.g. politeness and respect. Thoughs sort of skills are expected of staff through-out the Wetherspoons chain, man skills such as these are seen as part of a persons personality in a sense.
Most of the people who work within J.D Wetherspoons are temporary, part-time employees. Students often work in such pubs to earn some extra cash; they don’t see it as a career and they are unlikely to work there for long. The type of skills that they have gained while working at Wetherspoons would make them an internal asset but also an external asset to other, rival establishments.
It is important for all organisations to understand why an individual wants to work for them. This way they can be trained to the appropriate level and the business can plan ahead. All employers need to know; how many people work for them at each level, how long they plan to stay in the job, their aspirations for the job and their age. This way there can always be employees who have worked there for a while and understand how the business works. If there were too many older people in employment they would all reach retirement at the same time, leaving big gaps in the structure. Younger people tend to only have jobs as a way to gain money whilst studying. Because younger people don’t stay in a job for long they damage the amount of promotions that can occur. J.D Wetherspoon has to get their staff turnover right, if too many people are leaving it will cost the company more in recruiting and training. These costs are unnecessary and can be avoided if the right people are employed to start of with.
There are two ways to measure labour turn over:
Employee wastage rate
It is possible to calculate the number of staff leaving a business as a percentage of those who could have left. To find the wastage rate the number of staff leaving in a time period is divided by the average number of staff employed in time period and that is then multiplied by 100 to equal a percentage. This simple equation shows this:
Wastage rate = number of staff leaving in a time period x 100
Average number of staff employed in time period
For example, if Wetherspoons employed 100 people but found that 25 left during the year the wastage rate would be:
25 x 100 = 25%
100
This would then help them to predict future wastage rates. They are planning to recruit 3,000 people in the next year and would expect a waste rate of 25% according to this example, meaning that 750 people would leave. This is a large figure so HMR would have to look into of they are employing the right people as recruiting more people is wasting time and money.
Labour stability rate
This looks at those who have left after working there for some time. The stability rate is measured by dividing the amount of people who have left with more than one years service by the number employed one year ago. Then multiplying this by 100 to make a percentage.
Stability index = number of staff leaving with more than one years service x 100
Number employed one year ago
This method helps businesses to understand and predict what will happen within their own workforce. It also enables an organisation to make the most of the skill and potential already present within the organisation. For example if Wetherspoons had 88 employees who had been with the company for over one year and during the year 22 employees left, the labour stability index would be:
22 x100 = 25%
88
The external labour market
The external labour market is more of an irregular environment. It is made up of potential employees, locally, regionally or nationally; whom have the skills and experience required at a particular time. J.D Wetherspoons is located all over the UK, both national and local labour markets are important. There are a range of factors that effect the size and nature of these labour markets such as:
Trends in the size/characteristics of the working population
The UK has an ageing population. There are fewer school leavers and young workers available for employment. Businesses therefore may need to employee older people to meet their human resource requirements.
Competition for labour
When there is a demand for employees with certain skills, companies will be at competition with other firms who are looking for the same skills. For example ten years ago everyone wanted to employee those with I.T skills.
The overall level economic activity
The demand for goods and services in the economy and hence, for employed is determined by whether the economy is at a boom or recession. In a period of boom generally people will have more money to spend and therefore the demand for goods and services will rise. This therefore would lead to company increasing output and the demand for labour will also increase.
Education and training opportunities
Over recent years many people have decided to either continue into higher education or return to it. This has put a strain on many businesses as it has limited the amount of people that are available to work full time for tem. For J.D Wetherspoons it can be viewed as an advantage. There are more people willing to work part-time in an easy, uncomplicated environment that allows flexible hours. Plus there are also more people who have completed degrees and gained higher qualifications allowing them to enter the hierarchy at a managerial level, this would cut down on costs of training managers.
The effect of government policies
The government tries to entice employers to train people by reducing the cost of labour and increasing the proposal of HRM. They have introduced new qualifications, NVQ’s and AVCE’s as an attempt of increasing the quantity of those who hold the right skills for the real world. They have also planned ahead in preparing school children for the world of work by changing the curriculum, stressing an importance on numeracy, literacy and ICT. On this graph the S1 represents the current labour supply situation, in a few years when al of those in education have left the supply of labour will be greater, represented by S2. As the supply is greater the demand (D) will be less and employers will be able to lower salaries, reducing costs. Salaries have to be monitored to check people are being fairly treated. The government may decide to increase the minimum wage. If the minimum amount a person can earn increases the supply will decrease, as many employees. The green line shows this and how the demand for labour would rise.
Wage
Level S1
S2
D
Quantity of Labour
Labour markets
For all businesses they must also identify and understand the characteristics of their local employment market. Information can be gained from local employment offices or job agencies. I found these examples on the Internet. This first one is ‘average gross weekly pay, by area’ this is useful to Wetherspoons as it gives them actual government statistics of how much the average wage is in certain areas. It splits it into different areas because the pay is obviously not the same throughout the country. For example London has the highest paid people mainly because it is so expensive to live in London. This graph doesn’t look at London, as it is only pacific for the Southwest region. For Wetherspoons to look at this before setting a wage is useful as it will set out an average wage so they don’t set theirs far too high or far too low. This would attract either too many people to apply for a certain job or no one would apply.
Under the average gross weekly pay by area, is the average gross weekly pay by occupation. This is also very useful as Wetherspoons can look at this and cross-reference it with the pay by area to see how much they should be paying their employees.
As you can see the information from this could come in very useful to a business such as Wetherspoons when having to recruit new employees. As they would need to know the wage rates and income level of the area in which their pub or hotel is located, this will then allow them to set the right salary and attract the type of people they want.
By observing local unemployment levels companies are able to judge whether it would easy or not to employ enough people in new businesses. This is something J.D Whetherspoons would have to consider when planning the new pubs they want to open. Local employment trends can radically change in a short space of time. Large companies may be forced to close or make large numbers of employees redundant, creating huge unemployment figures, a benefit to many others.
I was able to gather some secondary information from labour market review, which covered the whole of the UK but also highlighted the Southwest area. This means that if Wetherspoons was to use this information to see how employment patterns and average wages were different throughout the country. This data can greatly the recruitment process.
Within all local areas there will be times when a new skill is needed in the workplace and the demand for these skills will rapidly grow, faster than the supply. This can produce many problems and companies would be forced to raise wages in an attempt to beat competitors in recruiting those that have the same scarce skill. When shortages like this appear employers often start to recruit those from further a field, nationally and sometimes internationally.
Without this valuable data the J.D Wetherspoons chain could find themselves falling behind the rest of the market. This data can be used to identify if their business is operating at the same level as the rest of the country. If this is not taken into account then they could find themselves loosing employees through poor wages or even not looking for the right employees in the right areas.
For HRM to be efficient a business must have the right amount of employees performing the right jobs at the right time. Therefore it is important that employers and the HRM team know if an employee is not at work and their reason why. A notified absence is when the employee knows in advance that they will not be able to attend work and inform their superior. If the employer were ill they would be entitled to any sickness benefit a doctor’s note would be requested. Unauthorised absence are those that need to be monitored closely. When an employee simply doesn’t show for their shift it lets the team down and can leave others in the lurch, plus the business would be less able to run efficiently.
An accident rate is determined by the amount of accidents that have happened in the work place. All businesses have to have the equivalent of a health and safety committee. It is their job to –
- Investigate and report on all accidents
- Construct safety rules
- Oversee health and safety training
- Uphold connections with health and safety bodies
- Keep up to date with the relevant national statistics and reports
- Recommend any updates the company may need
- Advise on any approaching legislation and relevant publicity campaigns
Human resources planning help to maintain a steady flow of new people into the organisation to cover any that maybe leaving. Planning also helps to organise training programmes so each member of staff has the right skills to for fill their specific job requirements. The level of skills in any organisation should rise each year effectively making the business as a whole consistently develops.
