Labour Demand and Supply at Amcor Limited - Case Study Example

Labour Demand and Supply Student’s Name Institution Affiliation Labour Demand and Supply Introduction Workforce planning and human resource management plays a crucial role to the success of the business. According to International Personnel Management Association (2002, p.7), organizations position themselves for success through workforce planning by aligning human capital with business direction. The methodology of workforce planning involves analyzing the current workforce, identifying future workforce needs, and comparing present and future needs. I doing so, organizations are able to establish ways in which they can achieve competitiveness. Luoma (1999, p.769) argues that application of strategic workforce planning has been the contributing factor of success for many organizations. Through strategic workforce planning, organizations are able to identify issues affecting labour supply and demand; and respond to them accordingly. However, workforce planning in the public sector is not adequately utilized (Freyens, 2010). This paper seeks to assess factors influencing workforce demand and supply at Amcor Limited. Factors affecting labour demand The labour market provides a means by which organizations and potential employers find labour for their needs. This in turn creates labour demand, which is the engine of employment growth (Guasch, 2009 p.29). However, rapport between employment growth and output growth is affected by institutional and efficiency structures of labour market through impact of labour costs. More so, labour demand is affected by unit labour costs and level of economic activities among other factors. At Amcor Limited, factors affecting workforce demand are not unique given that the firm’s demand curve for labour derives from downward-sloping portion of the firm’s revenue product. The slope provides a guide to the factors that are likely to shift it. According to Parkashin (2005, p.41), the marginal product of labour and price of good that the labour produces is equal to the marginal revenue, thus, anything that changes the two factors that contribute to marginal revenue will definitely shift the curve. As such, planning for possible shift in the workforce or recruitment procedures is essential. This allows for accommodations of possible arising scenarios from the shifts. In this context, Amcor Limited would use scenario planning as a means to align the possible changes to organizational goals. For instance, if the company intends to change quantities of materials used in production, it is likely that the marginal product of labour will shift. If Amcor plans to increase its packaging limit, then the increase in the marginal product would result to an increase in the demand for packaging workforce. The situational change in this context warrants scenario planning, which allows for evaluation of the most viable option that addresses needs arising from the change (Nankervis et al, 2011, p.134). From this understanding, a decisive argument arises holding that; upsurge in use of one aspect of production escalates the demand for another. On the other hand, the outputs are supplementary to one another. Using scenario planning, Amcor Limited assumes a structured way of thinking about the future. This involves visualizing the future production of packaging equipment, as well as, packaging activities. As one of the world’s leading packaging firm, an increase in packaging activities would either mean adopting efficient packaging technologies, increasing number or workforce, increasing number of work hours, or a combination of any of the three options (Cummings, & Worley, 2015 p.69). Therefore, scenario planning facilitates the evaluation of different possibilities and viable alternatives required to meet the visualized need. In addition, changes in technology have been found to influence labour demand in some scenarios and reduce demand in others (International Personnel Planning, 2002 p. 15). For instance, development of packaging robot is likely to increase the demand for controllers, allowing packaging processes to be computerized. However, the same robot takes away packaging function, replacing human labour that was previously used in packaging processes. Anticipating for such a scenario will require workforce planning because the firm may require downsizing of the labour requirement to accommodate the use of robots, or alternatively increase the number of workforce with the understanding of robot controls. For success in such a scenario planning, the firm will require to use intelligent data sets and computer-based technologies (Nankervis et al, 2011, p.134). This will facilitate efficient job profiling in which the firm explicitly defines job requirements, helping address the workforce needs. At Amcor Limited, scenario planning to understand factors influencing demand of labour would be instrumental in learning about the future needs of labour and impact of the most uncertain driving forces affecting labour. Scenario planning assumes that the future may differ greatly from the present. This implies that scenario planning caters for uncertain driving forces, helping align organizational goals with the labour demands (Stone, 2008, p.18). As a strategic planning tool, scenario planning is underutilized in the firm. This is so because changes occurring at the company do not take into account long terms shifts in demand. They focus on short term changes, thereby missing the advantage of the tool. Another factor influence shift in labour demand is changes in product demand. The understanding of this concept is that changes in demand of final products cause a shift in price both in short and long run. An increase in demand according to the law of demand is likely to increase the price. This increases the demand for factors that contribute to production of the product, in which labour is one. Similarly, a decrease in demand for final product causes a decrease in price, which affects the quantity produced negatively. In this case, the firm may consider decreasing quantity produced, downsizing the number or workforce, or both. This means that the demand for labour is derived from the commodities it helps produce. Thus, when there is a high consumer demand for the product, there will be likely a greater demand of labour to meet the market need. The elasticity of labour demand, therefore, depends on elasticity of output demand. The demand for labour also varies depending on budgetary allocations for any given financial year. While the firm may seek to employ a large number of workforces, it may be restricted by the budgetary allocation to employ a certain number. Alternatively, budget allocation will influence how the firm is going to employ workforce, for instance, that is, either permanent or on contract basis. The larger the budgetary allocation, thus, means that more employees are hired and remunerated by the firm. Labour at Amcor Limited will be inelastic if wages constitute only a small portion of total wages. The concept of labour cost is essential in workforce planning and greatly influences demand for labour. According to Werner and DeSimone (2012), labour cost arises from availability of labour market and skills of the labour group. The more the skills of a labour group, the higher they are likely to demand for wages. This factor, coupled with tax wedge, make it important for firms to develop workforce planning which ensures the fundamental goal of making profit is realized. Management of labour force at Amcor is achieved through strategic planning. Coordination of strategic labour force planning is the mandate of human resource management in collaboration with the senior leadership team. This is achieved through a five-step process, involving determining business goals, performing environmental scans, establishing gaps, identifying human resource priorities, and monitoring progress. The above steps play a key role of aligning human resource planning with workforce planning, thereby driving demand for labour force. Factors affecting labour supply Supply of labour refers to the availability of workers who are willing to offer themselves for employment in return of wages. The supply of labour for any given industry is elastic implying that if a firm requires more labour, it can attract potential workforce from other organization or those unemployed. The strategy to attract labour force from other organizations is to offer better working conditions and higher salaries. However, the law of supply will tend to influence the demand for labour supply at Amcor Limited. The law of supply holds that the lower the wage, the lower the supply of labour force while the higher the wage, the larger the supply for labour. While wage plays a critical role in demand for supply, need to recruit and retain skilled workforce also affects the labour supply. Nankervis et al (2008, p. 132) argues that a firm can understand it needs for labour supply only after conducting a labour supply analysis. This helps in identifying labour skills and talents required in different work fields at the company. Once identified, the firm embarks on a talent acquisition search. The company may also opt to engage in workforce development instead of hiring a new skilled workforce. Amcor Limited is a strict observer of workforce training to ensure that workforce meet skills and knowledge required in the firm. Where there is a shortage of skills, especially within product development and service advancement, Amcor Limited engages its training programs to address the shortcoming. This allows the company to remain competitive in the market. Supply of labour, according to the various labour studies depends on the social, economic, political, and institutional factors. For instance, a law prohibiting students from seeking employment undermines possibilities of hiring students in the workplace. Similarly, attitudes towards work influence the likelihood of seeking for employment opportunities. The supply of labour may decrease if workers refuse to work, for example, when workers go on strike. In this scenario, the supply of labour depends on the number of workers willing and able to work for some given wage, and the number of work hours each worker is willing to work. Amcor Limited aligns its organizational objectives with human resource management to attract and retain workforce. This is embedded in the company’s mission statement and philosophy, which seeks to enhance workforce, empowering them as important part of the company. The vigorous competitive strategy employed at attracting talent can signify how important skilled workforce is to the company. This is consistent with Roberts (2005, p.89) argument that holds that any firm that wishes to remain competitive in the labour market must market jobs vigorously. This approach takes into consideration challenges of talent acquisition in the future, where recruitment of new personnel will be difficult because of changing trends in the labour market. According to the Society for Human Resource Management (2016), rapidly changing worker profile will make it difficult for human resource managers to locate effectively talent and skills of possible employees in the future. For instance, finding candidates with soft skills, good interpersonal communication, and adaptability is a major issue in today’s organizations. This is because of changes in demographics and education systems. However, Werner and DeSimone (2012, p.14) feel implementation of human resource development strategies will help counter such challenges. In addition to human development strategies, leadership succession programs, mentorship programs, and succession planning tools will be instrumental in ensuring fair supply of demand. According to experts, a deeper insight into demand of labour depends on the ability to perform environment scans that provide an understanding of the future demands. The firm may engage in consultations and interviews with business line managers to understand the needs at business level, thereby understanding needs and shortages, which can then be utilized in planning for action. Alternatively, the firm may engage in scenario planning to visualize needed or appropriate workforce changes (Freyens, 2010). While conducting these scans, it is necessary that the firm align the needs to organizational strategic direction. In addition, the scans need to factor in anticipated changes in business models and activities, as well as community and other stakeholders’ expectations (Nankervis, 2011 p.124). This information is mandatory for effective and appropriate decision-making. Lack of such information may cause a conflict of labour demand at the company such as lack of finance to accommodate the increased workforce, lack of appropriate labour force in the event new workforce is needed, and poor workmanship in the case that adoption of information technology takes place without proper planning. Nankervis (2011, p. 133) argues that firms can utilize trend analysis to forecast labour requirements. Such trend analysis needs to focus on the expected demand for services as well as the amount of workforce needed in given period. Volume of production is also required to determine the number of workforce required. In the event that the organization intends to adopt technology in production, then the organization will require data that analyse production output of the technologies in order to understand the kinds of skills required when hiring the workforce to manage the technology. Data required for understanding labour supply include such aspects as the composition of staff and their respective qualifications as well as skills. This data can be obtained from a training needs assessment as well as a skill assessment that identifies talent and skills gap in the organization (Kramar, 2014). Data obtained from employees quitting the company can be instrumental in determining the retention rate and developing retention strategies. Similarly, data of employees joining the organization can be used in developing talent acquisition programs. References Amcor Limited (2016) About us. Retrieved from http://www.amcor.com/home Cummings G., & Worley G. (2015) Organization development and change, 10th edition.Cengage Learning Freyens,B P. (2010). Managing skill shortages in the Australian public sector: Issues and Perspectives.Asia Pacific Journal of Human Resources, December 2010 vol. 48 no. 3 262-286, doi: 10.1177/1038411110368468 Guasch, J. L. (1999). Labor market reform and job creation: The unfinished agenda in Latin American and Caribbean countries. Washington, D.C: World Bank. International Personnel Management (2002) Workforce planning resource guide for public sector human resource professionals Kramar, R. (2014). Human resource management in Australia: Strategy, people, performance.North Ryde, N.S.W. McGraw-Hill Education Luoma, M. (2000).Investigating the link between strategy and HRD. Personnel Review, 29(6), 769-790 Nankervis, A R. & Compton, R L. & Baird, M. (2011).Human Resource Planning in a Changing Environment'.In: Human resource management: strategies & processes / Alan Nankervis, Robert Compton, Marian Baird. 7th ed. South Melbourne, Vic. :Cengage Learning, 2011. Chapter 4, pp. 119-161 Society of Human Resource Management (2016) Challenges for human resource management and global business strategy. Retrieved from http://futurehrtrends.eiu.com/report-2014/challenges-human-resource-management/ Stone, R J (2008).Human resource planning.Human resource management. Raymond J. Stone. 6th ed. Milton, Qld. :John Wiley & Sons Australia, 2008. Chapter 2, pp. 52-84 Werner, J M. &DeSimone, R L. (2012). Human Resource Development 6e.6th Ed. Mason, Ohio: South-Western, Cengage Learning Read More