The Implications of Labor Flexibility in International Management of Human Resources - Literature review Example

The implications of labor flexibility in international management of human resources Insert Insert Insert Insert supervisor name Insert date of submission. Introduction Total employment of the global workforce has been growing since the economic crisis. By 2011, International Labor Organization estimated that there are approximately 3.1 billion employees in the global workforce (ILO, 2011, p.4). This workforce has however been affected by the continuous growth in global population. The ration of employed workers has been decreasing thus leading to bigger population of vulnerable workers. As many people get unemployed, the level of innovation on creating new job opportunities for the growing number of youths has been faced by challenges. This has led to youth unemployment rate to increase with every increase in population size. Vulnerable workers include those working as own-account workers as well as unpaid family workers who are in informal work arrangements. These workers are exposed to poor working conditions, poor pay, and lack of social protection and dialogue mechanisms. The workers’ rights to this group of the global workforce are not respected thus exposing them to even more dangers that could even lead to death. This population defines the working poverty level of the global workforce since majority of them live below recommended poverty line. It is estimated that women make the biggest population of these vulnerable workers. ILO Equality at Work (2011, p xi) estimated that there are 829 million women living in poverty. Globalization has eased the burden of unemployment and vulnerable worker effect by allowing migration of workers in search for “greener pastures.” With globalization, there has been emergence of new international business blocks, increased competition in an international framework, and increased foreign investment ventures created (Kharroubi, 2006, p. 2). This has raised the need for increased labor mobility across borders hence increasing global convergence and interdependence that was not there before globalization. However, globalization has had both positive and negative effects. Among the negative effects has been creating uneven distribution of resources both geographically and gender wise. Globalization has been the main driver of international competition. Every player in the market tries to meet the market demands and supply. This calls for flexibility in the work force if a firm has to keep up with the growth in the market. According to Atkinson (1984), a flexible firm has more flexible working hours, contract assignments, offers opportunities to trainees, and job sharing (Chatterjee, 2012, p. 7). However, it is faced with the challenge of delayed recruitment where one can work for many years without being confirmed n permanent basis. There are two types of flexibilities that a firm can adopt in the global market. These are Internal and external flexibility. Internal flexibility involves implementing changes in the functionality, financial, temporal and numerical dimensions of an organization and external flexibility involve in-sourcing and outsourcing of services. Insourcing is a dimension of migration, globalization, and liberalization. This type of flexibility has greatly grown in the international arena as countries open up to international trade. Migration of workers across international boundaries has increased with every demand for international insourcing of labor (Kosnik, 2006, p.675). This is in response to changing economic conditions. With migration, the size of skilled labor decrease as more workers find reasons to migrate to other countries in search for employment, better standards of living, develop language skills, training and experience, and job promotion. However, the immigrants are faced by the challenges of isolation, bullying, drop in status, cultural differences, communication barriers, and discrimination while in foreign land. This has led to development of international labor policies that protect the migrant workers in foreign countries. This challenges impact international management of human resources in that temporary workforce has grown; comparison of skills and qualifications, expectations on pay, promotion, permanency, language differences and equality as well as consideration of ethical considerations (Conley, 2008, p. 731). This essay discusses implications of labor flexibility in international management of human resources by first addressing the history of flexibility, the types of flexibility, an argument on the support of insourcing as an external flexibility and the implication of insourcing to international management of human resources. The history and what reasons led to the need for flexibility Labor flexibility as a concept started with the publication Atkinson’s (1984). The publication explored the structure of labor which was basically full-time permanent and periphery. At that time, full-time permanent was the core structure where employees had job security while periphery was made up of workers with minimum job security like part-time workers. The two labor structures needed to be reviewed with the new job insecurity in the UK after the global recession. During the recession, industrial and manufacturing labor that was being outsourced to countries with cheap labor suffered decline. For example, prominent US companies migrated call center services to India (Taylor & Bain, 2005, 264). This aspect ensured that firms were not able to compete in the global market during the recession period. The unit labor cost had decreased managerial authoritative status due to the extended inability of firms to compete in the market. The job market shrunk to a point where unemployment rate rose for the employable class as many firms underwent employment levels reduction that was expensive and affected employee relations (Atkinson, 1984). With the recession, investment uncertainties hindered private owned companies from committing to investments and employment. These firms preferred safety since the predicted growth did not look sustainable at the time. Technological changes presented the firms with the need to respond to changes quickly to substantiate their line of production with the changes (Kharroubi, 2006, p. 3; Sena, 2006, p. 21). The pace at which technological changes presented it ensured that cost of installation dropped by every new innovation made. This disadvantaged the firms with slow adoption pace since their chances of market eviction became more of a reality than it was predictable. Working time had greatly changed where employers were forced to consider deployment of the employees in the most effective working time. Employers used unconventional ways to restructure working hours. This raised the need for employers to come up with a flexible ways of manning the developing market actualities that needed workers who could respond quickly, easily and at the lowest cost to the unexpected changes as they happen (Atkinson, 1984). Employers attached working time to job requirements by looking for a way unit labor cost could be as little as possible. The employers took advantage of the labor market status that had high unemployment rate, limited demand for labor, and destabilized trade union movement to implement their aim. The need for developing more flexible workforce with great opportunities was thus the reason why Atkinson (1984) expressed optimism by proposing changes that will ensure a level of flexibility capable of accommodate both employers and employees in the labor market. Types of flexibilities Atkinson (1984) identified that firm’s needed functional, financial, temporary, and numerical flexibilities. Functional flexibility ensures that employees are within reach to be deployed between activities and task as fast and smoothly as their need arises. This could mean employing individuals with multiple skills that can be utilized in more than one task. Functional flexibility also involves moving workers from direct production line to indirect production and vice versa. It also involves flexibility of career where one can change career from manufacturing to sales. This flexibility was deemed efficient since with changes in production methods, there was no need to hire new employees for the new production. The old employees will change their skills with the change in production methods and thus the firm could always rely in its employees regardless of the line of production adopted (Atkinson, 1984). Numerical flexibility involves physical head counts of employees assigned to a task. The number can either be reduced or increased depending on the demand of the task at hand. This flexibility emphasize that hire and fire policies can be implemented at will when need arises. The flexibility also implied that hiring could be accompanied by less binding contracts so that the managers and the workers are at liberty to exercise their will at any given time of the contract. With numerical flexibility, the number working is equivalent to the number needed by the nature of work involved. Temporary flexibility allows firms to only hire labor when demand arises. Majority of workers are on part-time bases and their level of productivity is high compared to permanent employees who are assured of job security. However, when need arises, employer often need more people to manage the task but availability of labor is normally unpredictable. Availability of workers for temporary flexibility is based on the chance that the employee has no other engagements apart from working for the firm at that moment. This type of flexibility is faced by the challenge of functionality since majority of workers are women which makes it mandatory for the employer to consider issues on equality and legislature. Financial flexibility involved cutting employment costs and other cost to reflect the current demand and supply in the labor market (Atkinson, 1984). Employers hire different group of workers depending on their nature of work. The wages are thus distributed through the groups instead of being cut across the board. To balance the cost incurred, firms balance the number of skilled and unskilled labor as a way of reducing the cost on labor. Financial flexibility also involve implementing new payment systems that either works for numerical flexibility or for financial flexibility. An example is replacing rate-of-the-job system with assessment based system that ensures that employee is paid and remunerated based on the last positive assessment. Implementing any of the internal flexibilities requires a firm to do thorough analysis of flexibility. The analysis involves evaluating the advantages of an individual flexibility against the disadvantages. For example, while functional flexibility ensures that demarcations on specialization are broken and individuals possess multiple skills to complement other employees in the team, functional flexibility will only apply to permanently employed workers willing to do intense work with less trade union protection. Numerical flexibility on the other hand allows the firm to expand and reduce workforce rapidly in response to fluctuation labor demand. This helps in reducing pay bills as the temporary workers are basically not protected by trade unions. Numerical flexibility however has high transactional cost, risk of loss of control and risk of ambush when trade unions start recruiting temporary workers. The employees are also disadvantaged by lack of job security and loss of talent since one is subjected to certain functions for the sake of earning a wage. With such knowledge international human resource managers are able to evaluate the best option for the firm before implementation. Insourcing as an external flexibility and its implication to international management of human resources Insourcing and out sourcing are external flexibilities applied to firms willing to work with migrant workers or establishing production firms in countries where there is cheap labor. Insourcing allows a firm to import labor in the country to sectors with non-regular employment like Japan (Keizer, 2008, p. 407). The dimension of insourcing works for countries with declining manufacturing and decreasing employable population. This flexibility ensures that a firm has supply of skilled labor from outside its operational boundaries at any given time of production. Nursing profession is one among many sectors that practice insourcing flexibility. According to Buchan (n.d), there has been a continued inflow of nurses in the UK from other countries. This has been aided by international recruitment that aims at improving staffing levels. The main areas that an insourcing firm considers is improving staffing levels by attracting foreign workers whose presence ensures there is enough workforce accessible at the time of need (Winkelmann-Gleed & Seeley, 2005, p. 955). Insourcing firm is motivated by the need to have balanced skills, numerical flexibility, financial flexibility, diversity, and quick fix to labor related issues (Buchan, n.d, p. 4). According to Bach (2008, p. 5), migration specifically in health sector is influenced by the governing frameworks installed by individual governments. Professional profile also drive the migration despite the fact that different countries have different education systems that influence the knowledge individuals go with to other countries. The more remunerating a profession is, the more it will attract more people to be distributed to countries where the acquired skills are needed. Different careers present different qualification demands when looking for either local or international workers. Depending on the type of skills required, some professions demand for higher qualifications like degree level. These qualification requirements are often set by individual firms regulatory body that emphasize on experience, expertise, and ability to demonstrate proficiency given position (Bach, 2008, p.5). Having set the qualification demands, availability of workforce directs the hiring firm to consider either going for internal flexibilities or external flexibilities. With limited labor supply, a firm or a government consider insourcing as the only way to fill the gap between available labor force and the required labor force. However, in-sourcing comes with a number of regulations (Winkelmann-Gleed & Seeley, 2005, p. 955). For example in the UK, any nurses wishing to practice in the UK must be registered with the UK’s professional regulatory authorities called Nursing and Midwifery Council (NMC). This is regardless to whether the nurse came through European Union (EU) application or through non-EU application. However, the regulations do not limit applications since UK has had an upward growth in the migrant Nurses who register with NMC (Buchan, n.d, p. 7). Insourcing present a number of implications to international management of human resources. Among them are, insourcing emphasize the need for reforms on labor allocations in the global labor market (Chatterjee, 2012, p. 4). This dimension presents a scenario whereby some countries could be having excess labor force while there is another country with a deficit of the same. In sourcing advice the international management for human resources to create such avenues that facilitates movement of labor from the excess zones to the deficient countries. With insourcing, international management for human resource is able to identify the main skills needed for circulation (Sena, 2006, p. 19). The direction given by insourcing indicate that internal services can be delivered at the least cost possible compared to outsourcing that lead to debt collection after agency identify that contactors bring small revenues compared to insourced services or federal employees. For example, UK has proved a need for medical practitioners. Acknowledging such needs helps in eliminating misguided spending on a labor flexibility that may not yield better results than an insourcing option. Through international management of human resources, priority areas are able to be identified and acted up on with a global perspective. International management of human resource targets improving governments’ efficiency through strengthening operations in human resources division. Through data collected on a country’s insourcing trends, the government is able to identify the areas in which operation improvement will yield higher productivity. Insourcing thus acts as the mirror that reflects the state of the labor market. It creates a transparent slate where performance can be measured and evaluated against global labor market performance (UNISON, 2011, 37). Conclusion Globalization has eased the burden of unemployment and vulnerable worker effect by allowing migration of workers in search for “greener pastures.” With globalization, new business blocks have been developed. This has raised the need for increased labor mobility across borders as firms try to meet the market demands and supply for labor. Labor flexibility ensures that no firm exits the market due to the inability to compete. A flexible firm ensures that working hours are more flexible, there are a number of contract assignments, and allows job sharing through creating opportunities to trainees and apprentices. The concept of labor flexibility stems from Atkinson’s (1984) publication with the same name. The publication aimed at creating optimism in the labor market after manufacturing and industry failed in many of the EU countries. At that time, employers took advantage of the labor market status that had high unemployment rate, limited demand for labor, and destabilized trade union movement. Atkinson (1984) therefore suggested that a flexible firm could either take internal or external labor flexibility to be able to deal with the challenges. Internal flexibility involves implementing changes in the functionality, financial, temporal and numerical dimensions of an organization and external flexibility involve in-sourcing and outsourcing of services. With external flexibility, firms established in labor deficient areas could benefit from skills that were not necessarily developed in the country of operation. Insourcing and out sourcing are external flexibilities applied to firms willing to work with migrant workers or establishing production firms in countries where there is cheap labor. The dimension of insourcing works for countries with declining manufacturing and decreasing employable population. This flexibility ensures that a firm has supply of skilled labor from outside its operational boundaries at any given time of production. For example, nursing profession is known to import labor from around the globe. This is made possible by international management of human resources that facilitate the recruitment with the aim of improving staffing levels around the globe. International management for human resources is influenced by the governing frameworks installed by individual governments. These frameworks determine need for importing labor within a country’s boundaries. Insourcing thus bridge the gap between available labor force and the required labor force. There are a number of implications of insourcing to international management of human resources. Among them are, insourcing emphasize the need for reforms on labor allocations in the global labor market, ability to identify the main skills needed for circulation, as well as directing the type of data to be collected in evaluating market demands. With insourcing, international management of human resources is able to identify countries with excess labor force to be distributed to the deficit countries. Acknowledging such needs helps in eliminating misguided spending on a labor flexibility that may not yield better results than an insourcing option. Through international management of human resources, priority areas are able to be identified and acted up on with a global perspective. References Atkinson, J. (1984). 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Work Employment Society, 22 (3), 407-425. Kharroubi, E. (2006). Labor market flexibility and growth. Kindly complete the refence to this paper, i cannot tell the kind of paper it is. Kosnik, T. (2006). Outsourcing vs insourcing in the human resource supply chain: a comparison of five generic models. Emerald Group Publishing Limited, 35(6), 671-683. Sena, J. A. (2006). Outsourcing, insourcing IT-related business: The impact on the organization in: Khosrow-Pour, M. Emerging trends and challenges in information technology management. Idea Group Publishing, 1(2), 19-22. Taylor, P., & Bain, P. (2005). India calling to the far away towns’: The call center labor process and globalization. Work, employment and society, 19(2), 261-282. UNISON. (2012). Insourcing update: The value of returning local authority services in-house in an era of budget constraints. APSE, https://www.unison.org.uk/upload/sharepoint/On%20line%20Catalogue/20122.pdf Winkelmann-Greed, A., & Seeley, J. (2005). Strategies in a British World? Integration of international nurses. British journal of nursing, 14(18), 954-961. Read More