Define and explain the significance of the term ‘derived demand’ as it applies to Strategic Human Resources Planning. (5 marks) A demand for a commodity, service, etc. which is a consequence of the demand for something else. In respect to Strategic Human Resource Planning, derived demand applies specifically to labor. The demand for labor is derived from the demand for the goods and services that labor is used to produce. The demand for labor is also influenced by the level of economic activity and the relative cost of labor compared to capital. An organization will try to plan for vacancies and market fluctuations but derived demand can be difficult to plan for if you have a product or service that has very little discernible difference from your competitors.
For example when the Canadian dollar is lower Canadian transport companies are much busier, delivering more exports to the US market which become cheaper for them to purchase. 2. Explain ‘derived demand’ as it applies specifically to Stonewall Industries. (5 marks) Stonewall Industries produces a commodity item (there is very little discernible difference between their product and their competitors). The demand for that item is directly affected by interest rates and housing starts. As interest rates fall more people can afford to borrow money to build and therefore new building is more appealing. As interest rates rise less people are able to afford borrowing to build and therefore the number of new housing starts fall. The HR department at Stonewall Industries can monitor these factors so that they can act proactively as opposed to reactively.
They can monitor interest rates (by checking Bank of Canada updates) 3. The Senior Executive Team at Stonewall has to consider a number of environmental factors that impact on its Human Resources Planning activities. Describe these environmental factors and explain their impact. (10 marks) There are many environmental factors that have an impact on the HR Planning activities at Stonewall. Firstly, there is a significant discrepancy in wages amongst the plants. It would likely be difficult to align wages at all of the plants due to differing unions and union climates in each province but the difference in wages could cause poor morale in a plant that discovers they are making significantly less than another plant that produces the same product. (Also, aligning wages to the highest current level may not be possible. Another environmental factor that would impact Stonewall’s HR planning is the state of the current Vancouver plant. It is the oldest and smallest plant and there is no room to expand on the current property. (This property is also very desirable real estate next to the ocean but closing the plant and terminating the employees would come at a high cost. A cost that would need to be calculated to see if the short term costs would produce a medium term benefit. Offering these very experienced employees promotions to other plants may be possibilities as they have a lot of knowledge that would leave with them and would help reduce the layoff or termination costs that are going to be high with this group of employees.)
The state of the labour unions in British Columbia and Quebec are factors that will affect Stonewall’s HR Planning. Stonewall will have to ensure they walk the tight line between ensuring they are fiscally responsible while maintaining a good relationship with these unions. This is not only important for future relations but because of the importance that is placed on public relations and ultimately the image of the company in the public’s eyes. This may pose an even greater challenge in Quebec where the labour unions are opposed to English owned companies. Although this is one of the plants with the lowest Total Compensation Rate it may be one of the biggest challenges as far as labour relations. As recently mentioned previously, image and public relations are very important to Stonewall (and in a commodity market in general). In any industry layoffs are view critically buy the public.
The company is viewed to be insensitive and public relations tend to take a hit. In mentioning layoffs, another environmental factor that will impact planning is that of an internal nature. Internal employees that are questioning the future of the company are likely to seek other employment. As mentioned by Belcourt et al., the high performers are the ones that are likely to find new employment and if the company was only looking to downsize they will be left with the average or underperformers. 4.Identify and explain the various techniques for forecasting labour supply and labour demand. What can organizations do in the short run when they recognize a gap in which supply far exceeds demand. What could Stonewall do in this situation? (20 marks) Time-series models
•Data simply is projected forward based on an established formula •Predicts what will happen based on what has happed historically •Uses chronologically arranged data to arrive at forecasting •Can account for
seasonal differences in demand
Cause and Effect Models
•Assumes that an activity (ie implementation of a new piece of machinery) determines an outcome (higher productivity). Judgement Models
•No historical data to pull from
•Example for Stonewall would have been forecasting demand for their vinyl siding branch before its implementation. When an organization recognizes a gap in which supply far exceed demand an organization can seek out contract or freelance employees or contact retired employees in the short term. Until a longer term solution can be realized. An organization can also do some planning for short term gaps by cross training employees. When these short term gaps are identified the labour force can be shifted and adjusted to compensate. This would not necessarily work for Stonewall as their employee’s skills are very specific to certain areas. I would think a possibility for Stonewall is to take employees from their smaller, less efficient plant in British Columbia and use them to fill in gaps at some of the other plants. The British Columbia plant cannot take on any more capacity and other plants can.
This may be a short term plan to fill a gap or it may become a longer term solution if they can discuss more permanent moves with the BC employees as a result of the condition of the building and the need for workers at the other plants. This would reduce the costs of termination the BC employees (as well as smoothing over some potential public relations issues).