Strategic Human Resource Planning - Labor Supply and Demand - Literature review Example

Strategic Human Resource Planning: Labor Supply and Demand Name: Tutor: Course: Date: Introduction Human resource planning continues to experience changes in national and global industry environments concerning effective and efficient human resource functions (Nankervis et al. 2008). Federal government of Australia is looking for a long-term skills requirement plan based on industry assessments and demographic-economic modeling of higher quality to envelop and inspire the government training and education policies (Stone, 2008). Nevertheless, estimation of Australia’s long-term labor demand is unreliable owing to a wide range of variability hence unlikely to provide better planning with the estimates (Freyens, 2010). It also remains a challenge for the Australian government to balance domestic training and education for overseas labor supply and satisfying the internal labor demand. Environmental scanning and strategic human resource planning intertwine to engender interplay of labor markets with comprehensive skills, competencies and practices that promote organizational growth (Nankervis et al. 2008, p. 133). Using wider range of models has heightened the attempt to provide more accurate predictions of labor demand and supply than arithmetic estimations based on short-term cohort data. This essay will assess the factors that influence demand and supply of labor based on certain models and data in Australia. Labor supply Centre for Labor Market Research (2008) defines labor supply as the total number of hours that employees or workers are willing to work for a given wage rate. When wages are on the rise, employees tend to get incented and attracted to work for more hours (Hamermesh, 1996). Werner and Desimone (2012, p. 298) observes that strategic organizational planning takes into consideration the future changes in supply of labor that is supportive of employees while increasing their morale, job satisfaction, levels of productivity, and staff turnover. David Jones (2009, p. 17) predicts in The Weekend Australian that Australia in the coming few years will have five percent of its population leaving the workforce. This implies that there will be skills shortage as well as quality candidates irrespective of the level of the economy. According to Freyens (2010, p. 85), Australian organizational environment has been altered to a point where HR specialists and senior managers have had to integrate strategic plans and human resource to tap into the skills, competencies and quality of the workforce. For example, the mining and infrastructure industry that are experiencing a boom operates with a competitive platform and rapid technological change. Luoma (2000, p. 34) concurs that a country’s capacity to take advantage of the present and future opportunities in productivity is threatened without this investment. Consequently, the government has had to relax its immigration laws and allow in more foreign workers with huge requirements for additional training and education. Nankervis et al. (2008, p. 122) argues that scarcity of skills has a huge impact on job performance and organizational growth. In support of this argument, Palmer (2007) notes that demand forecasting have often been used to determine the supply of skills into the labor market. The author decries that there has been more emphasis on the needs of the employers during planning for training at the expense of candidates’ preferences. This implies that it is possible to measure qualifications and not skills. For example, an Information Technology (IT) firm requires qualified IT professionals, and obviously, and there are more IT professionals looking for IT work. Most job seekers fail to acquire such jobs because the employers are not only looking for qualifications but also splendid experience in the IT sector. Computable Equilibrium (CGE) models and Australian Bureau of Statistics have been inaccurate in workforce planning that have necessitated the use of skills inventories to capture employee skills and competencies comprehensively (D’Annunzio-Green et al. 2004). Obtaining employees with advanced job aptitudes and skills is difficult as positions such as technical specialists, managers and executive need to be filled by candidates with qualities of adaptation, innovation, flexibility and with specific job skills and competencies (Nankervis et al. 2008). It will be important to conduct the SWOT (strengths, weaknesses, opportunities and threats) and PESTLE (political, economic, socio-cultural, technological, legal and environmental) analysis of an organization. This will help in understanding the future changes in labor supply and take advantage of opportunities in legislation and international cooperation for exchange of skills and competencies. Substantial rise in wages owing to unmet labor demand will increase supply of labor (Klaveren, 2009). Cieri (2007) notes that as more workers pursue higher living standards and new demand for education and health they will be willing to work for more hours. Demographic data shows a shift in labor and skills towards certain economic sectors paying more wages above the normal wage rate (Lewis, 2008, p. 10). Oversupply of skills, on the other hand, will drop the wage rate in the medium term that is likely to affect labor supply (Luoma, 2000). This aspect will trigger demands for legislation on affirmative action and equal employment opportunities as organizations attempt to balance between hiring new staff and exiting others. For example, Pacific Foods, an Australian food distributor has had to partner with a Chinese company to manufacture and distribute its products in China because of lower cost of production and wage rate. As companies realize that the cost of compensating specific skills in Australia is quite high, the major option is to franchise overseas and take advantage of lower wage rates and labor of labor abroad (Kramar et al. 1997). By adopting the PESTLE model, the external environment of the company provides for entry into foreign markets with the promise of greater economies of scale and profitability. Labor demand Sloane et al. (2013) observes that labor demand is the total number of employee hours that a firm is willing to sustain at provided wage levels. Changing industry mix has been a consequence of changing composition of employment (Hamermesh, 1996). According to the data from ABS (2012) and Keating (2013), fifty percent of all jobs in Australia, were service related in 1975 but by 2007, the figure had gone up to seventy percent. However, manufacturing slumped to eleven percent from twenty-three percent in the same periods. Similarly, ‘blue collar’ jobs have been on the decline in the 80s, 90s, and 00s compared to managerial, associate professional and professional workforce that is rising (ABS, 2012). It implies that demand for skills has also changed due to technological and industry composition dynamics. Casualisation of jobs has emerged due to technological and structural changes that alter the demand for labor with regard to skills, gender and part-time employment (Klaveren, 2009). Trend analysis is the likely model to measure demand for labor in the context of past human resource growth (Nankervis et al. 2008). Although it fails to consider the opportunities and changing requirements for employee efficiency, it successfully establishes the rise and falls trends such as dismissals, retirements, resignations and exits in a five year period. Job matrix and actuarial approaches which are a refinement of trend analysis are critical in considering job categories, and labor movement by departments into conveniently predicting the future of HR needs based on means and averages (Nankervis et al. 2008). For example, by observing the trends of job vacancies in Australia from 2007-2012, there has been a rise in the number of vacancies for in the private and public sectors looking for unskilled and skilled labor. It means that the trends are a true reflection of labor shortages over time. Philips and Gully (2013, p. 89) concur that bottlenecks in certain economic sectors and nearness to full-employment trigger demand for particular skills, are not sustained by the current workforce demand such as engineers, economists, pilots, nurses and medical practitioners. Strategic human resource planning and HR policies in the long-term will need to be adjusted to consider temporary residents and migrants (Nankervis et al. 2008). Consequently, the demand for labor will attract skills shortage, skill gaps, labor shortages and recruitment difficulties. Technological change and introduction of new capital have affected ways in which the management organizes capital and labor in the firm (Roberts, 2005). ‘Codified competencies’ are sought after instead of individual based competencies; hence, firms will tend to look for skills that are more transferable between places of employment and jobs (Varma et al. 2008). Scenario planning that takes into consideration the imagined and plausible future environments will be important in improving performance, organizational learning, decision-making and current thinking. Through scenario planning, a firm develops various scenarios and adopts one that is more favorable or viable (Nankervis et al. 2008). For example, during the economic recession of 2008/09, many firms in East Asia and Malang had to reduce workers. Of the 600 companies, 120 of them resorted to a scenario of temporary job cuts by removing overtime and reducing working hours while the rest adopted the permanent job cut scenario. In this case, demand for labor is reduces owing to poor economic performance of companies and failure of international financial markets. Strategic human resource planning has shifted from long-term employment contracts to short-term due to increased incidences of takeover, corporate ownership in the share market and high-interest rates (Dowling et al. 2008). Globalization internationally or domestically has increased competition that as consequently increased uncertainty for firms and reduced the workers capacity to bargain (Lewis, 2008, p. 9). This has been coupled with falling union density and employer response to greater job security over union pressure. For example, unions in Australia have been weakened due to preference for casual jobs over permanent jobs among workers. This has increased demand for labor with negotiable wage rates between the employer and the job seeker (Nankervis et al. 2008). However, Roberts (2005) argues that employers are not likely to retain and recruit good workers that will potentially increase the cost of skill shortages. Work study model will be important to identify job profiles, description and specification dictated by certain wage rate and productivity to the firm. This model is used by firms who want to recruit and retain people costing as little as possible. Stone (2008, p. 50) suggests that employers’ training and recruitment costs rise when the labor market becomes tighter. For example, in 2008, University of Canberra recruited seventy-one professional lecturers and professors based on the work-study model and thirty-six clerical workers based on linear regression models on job availability. This shows that skills and competencies determine the model to be used and influence demand for labor. Data for labor supply and demand Data and information are not critical elements in understanding labor supply and demand but also in observing trends, movements and gaps in national policies and laws (Cieri, 2007). Data can be classified as primary or secondary depending on the source. With the development of Human Resource Information Systems, there has been increased the need for accurate data that reflects the organizational level of workforce and their skills and competencies (Nankervis et al. 2008). Primary sources of data are interviews and surveys that are used in employee satisfaction, job profiling, performance management and rewards (Werner & Desimone, 2012, p.321). Australian Bureau of Statistics, Department of labor and immigration, university or college registers and LinkedIn internet databases are some of the secondary sources of data that are beneficial to employers. Data provided by these methods provide up to data employee information details on the individual, previous experience, condition of service, recruitment and selection, and career paths and selection plans (Charmine & Fujimoto, 2014). MS Access represents the common used Microsoft tool to capture employee details for internal use within the organization. Other systems used by the department of labor shows the inflow and outflow of talents and skills and will be relevant to employers and strategic human resource planning by companies (Stone, 2008). Conclusion The aim of the essay was to examine the issues and factors that influence demand and supply of labor alongside the need for data in the organization. Technological and structural changes are mentioned as the critical factors that influence demand for labor while increase in wage rate and state of employment will affect the supply of labor. Trend analysis and work study models are common techniques use in labor demand and supply to determine the availability and placement of skills and competencies in the labor market (Dubra & Gulbe, 2008). Scenario analysis is also used by organizations seeking to make decisions that affect medium and long-term human resource plans of the company. However, these quantitative and qualitative techniques require accurate data provided from primary sources such as department of labor and immigration, and employee surveys and interviews to provide informed judgment (Burke & Cooper, 2011). HR analysts and professional consultants will need data and appropriate models to establish the skills gaps and job openings to help organizations meet its objectives and goals. The essay concludes that factors influencing supply of labor mirror those influencing supply of labor and that models to determine their trends require accurate and up to date data. References Australian Bureau of Statistics, 2012, Year Book Australia, Canberra < http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/1301.0~2012~Main%20Features~Labour%20market%20statistics~43> Burke, R.J. & Cooper, C.L. (2011). Human Resource Management in Small Business: Achieving Peak Performance. Cheltenham, UK and Northampton, MA, USA: Edward Eglar. Centre for Labor Market Research-CLMR (2008). Australian Journal of Labor Economics, Volumes 11-12. Cornell University. Centre for Labour Market Research. Charmine, E.H. & Fujimoto, Y. (2014). Human Resource Management. Pearson Australia. Cieri, H.D. (2007). 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