Write 525 words about strategic staffing decisions and the questions that should be asked when determining a strategy.
Use Exhibit 1-7 in Staffing Organizations, Ch. 1 for reference.
Select three specific questions, and explain why they are important.
Submit your assignment.
EXHIBIT 1.7 Strategic Staffing DecisionsStaffing LevelsAcquire or Develop TalentHire Yourself or OutsourceExternal or Internal HiringCore or Flexible WorkforceHire or RetainNational or GlobalAttract or RelocateOverstaff or UnderstaffShort- or Long-Term FocusStaffing QualityPerson/Job or Person/Organization MatchSpecific or General KSAOsExceptional or Acceptable Workforce QualityActive or Passive DiversityHire Yourself or OutsourceIncreasingly, organizations are outsourcing their hiring activities, meaning they use outside organizations to recruit and select employees. Although there are variations of staffing outsourcing (we will have more to say about it in Chapter 3), in some cases, an organization wholly cedes decision-making authority to the vendor. Why might an organization do this? First, it may believe that the vendor can do a better job of identifying candidates than the organization itself can do. This is particularly true for small and midsize companies that lack a professional HR function. Second, in labor shortages, an organization may not be able to recruit enough employees on its own, so it may supplement its recruiting or selection efforts with those of a vendor that specializes in staffing. Finally, outsourcing may also have advantages for legal compliance, as many vendors maintain their own procedures for tracking compliance with equal-opportunity laws.External or Internal HiringWhen job vacancies occur or new jobs are created, should the organization seek to fill them from the external or internal labor market? While some mixture of external and internal hiring will be necessary in most situations, the relative blend could vary substantially. To the extent that the organization wants to cultivate a stable, committed workforce, it will probably need to emphasize internal hiring. This will allow employees to use the internal labor market as a springboard for launching long-term careers within the organization. External hiring might then be restricted to specific entry-level jobs, as well as newly created ones for which there are no acceptable internal applicants. External hiring might also be necessary when there is rapid organizational growth, such that the number of new jobs created outstrips internal supply.Core or Flexible WorkforceThe organization’s core workforce is made up of individuals who are viewed (and view themselves) as regular full-time or part-time employees of the organization. They are central to the core goods and services delivered by the organization.The flexible workforce is composed of more peripheral workers who are used on an as-needed, just-in-time basis. They are not viewed (nor do they view themselves) as regular employees, and legally, most of them are not even employees of the organization. Rather, they are employees of an alternative organization such as a staffing firm (temporary help agency) or an independent contractor. The organization must decide whether to use both core and flexible workforces, what the mixture of core versus flexible workers will be, and in what jobs and units of the organization these mixtures will be deployed. Within the software development page 29company, programmers may be considered part of the core workforce, but ancillary workers (e.g., clerical) may be part of the flexible workforce, particularly since the need for them will depend on the speed and success of new product development.Hire or RetainThere are trade-offs between hiring strategies and retention strategies for staffing. At one extreme, the organization can accept whatever level of turnover occurs and simply hire replacements to fill the vacancies. Alternatively, the organization can seek to minimize turnover so that the need for replacement staffing is held to a minimum. For example, SAS Institute, a company that frequently finds itself on Fortune magazine’s “100 Best Companies to Work for” list, has an annual turnover rate of less than 3%, meaning that fewer than 3 out of 100 of its employees leave voluntarily within a 12-month period. The company’s ability to retain its employees at such a high level is likely due in part to the generous perks it offers, including subsidized Montessori child care, unlimited sick time, a free health care center, and four cafeterias serviced by a local organic farm.20 An organization could conduct an analysis to determine the costs and benefits of these types of strategies and then strive for an optimal mix to control its inflow needs (replacement staffing) by controlling its outflow (retention staffing).National or GlobalAs we noted earlier, one form of outsourcing is when organizations outsource staffing activities. Of course, many organizations outsource more than staffing activities—technical support, database management, customer service, and manufacturing are common examples. A growing number of computer-chip makers, such as IBM, Intel, and Motorola, contract with outside vendors to manufacture their chips; often these companies are overseas. Offshoring is related to, but distinct from, outsourcing. Whereas outsourcing is moving a business process (service or manufacturing) to another vendor (whether that vendor is inside or outside the organization’s home country), offshoring is the organization setting up its own operations in another country (the organization is not contracting with an outside vendor; rather, it is establishing its own operations in another country). In the computer-chip example, outsourcing would be if the organization, say, IBM, contracted with an outside vendor to manufacture the chips. Offshoring would be if IBM set up its own plant in another country to manufacture the chips.Increasingly, US organizations are engaged in both overseas outsourcing and offshoring, a trend spurred by three forces. First, most nations have lowered trading and immigration barriers, which has facilitated offshoring and overseas outsourcing. Second, particularly in the United States and western Europe, organizations find that by outsourcing or offshoring, they can manufacture goods or provide services more cheaply than they can in their own country. Third, some organizations cannot find sufficient talent in their home countries, so they have page 30to look elsewhere. A recent report by ManpowerGroup suggests that the world is currently experiencing the highest talent shortage since 2007, particularly in the IT, skilled trades, and sales industries. Although the cost of talent is often cited as a reason for this shortage (e.g., applicants often look for more pay than what is offered), the most frequently cited reasons why employers can’t fill the positions are a lack of applicants, a lack of technical competencies, and a lack of experience. Notably, nearly one-fifth of those surveyed by ManpowerGroup have resorted to outsourcing.21Attract or RelocateTypical staffing strategy is based on the premise that the organization can induce sufficient numbers of qualified people to come to it for employment. Another version of this premise is that it is better (and cheaper) to bring the labor to the organization than to bring the organization to the labor. Some organizations, both established and new ones, challenge this premise and choose locations with ample supplies of labor. The shift of lumber mills and automobile manufacturing plants to the southern United States reflects such a strategy. Likewise, the growth of high technology pockets such as Silicon Valley reflects the establishment or movement of organizations to geographic areas where there is ready access to highly skilled labor and where employees would like to live, usually locations with research universities nearby to provide the needed graduates for jobs. The software development company, for example, might find locating in such an area very desirable.Overstaff or UnderstaffWhile most organizations seek to be reasonably fully staffed, some opt for being over- or understaffed. Overstaffing may occur when there are dips in demand for the organization’s products or services that the organization chooses to ride out. Organizations may also overstaff in order to stockpile talent, recognizing that the staffing spigot cannot be easily turned on or off. Alternatively, understaffing may occur when the organization is confronted with chronic labor shortages, such as is the case for nurses in health care facilities. Also, prediction of an economic downturn may lead the organization to understaff in order to avoid future layoffs. Finally, the organization may decide to understaff and adjust staffing level demand spikes by increasing employee overtime or using flexible staffing arrangements such as temporary employees. Many have blamed the slow job recovery following the Great Recession on the reluctance of companies to put themselves in an overstaffing situation, instead asking current employees to work longer hours in order to handle increased demand in the company’s products or services. The software development company might choose to overstaff in order to retain key employees and to be poised to meet the hopeful surges in demand as its new products are released.page 31Short- or Long-Term FocusAlthough any organization would want to have its staffing needs fully anticipated for both the short term and the long term, optimizing both goals is difficult, so trade-offs are often required. In this case, it often means addressing short-term labor shortages by identifying and developing talent for the long term. When forced to choose, organizations focus on their short-term needs. This is understandable because labor shortages can be debilitating. Even when the overall economy is sluggish, the pool of qualified applicants may be thin. One recruiting expert noted, “The weak labor market has really increased the noise level as more unqualified candidates apply for a decreasing number of job openings.”22 So, even in periods of economic duress, a labor shortage can happen in any industry. When business leaders in the trucking industry were asked to identify their top business concerns, 86% of executives listed the unavailability of drivers as one of their top three concerns.23Balanced against this short-term “crisis management” focus are long-term concerns. Organizations with a long-term view of their staffing needs have put in place talent management programs. In some cases, this means thinking about the strategic talent, or future skill, needs for the entire organization. Bringing to mind John Maynard Keynes’s comment, “In the long run we are all dead,” the problem with a long-term focus is that long-term needs (demand) and availability (supply) are often unclear. Often, it seems as if calls for an upcoming labor shortage due to baby boomer retirements never end. As Peter Cappelli concluded, “They’ve been predicting a labor shortage since the mid-1990’s and guess what, it’s not happening.” In fact, recent projections from the Bureau of Labor Statistics (BLS) predict that by 2024 the labor force will have grown by 7.9 million, an average of 0.5% per year (which is much smaller than the growth rates of previous decades). However, BLS economist Ian Wyatt admits that whereas population and labor force growth can be forecasted fairly accurately, labor demand estimates are far less reliable. The future demand for workers “is a very tough question to answer,” Wyatt said. “Perhaps because of this, while most organizations are aware of projected labor shortages, many fewer have any concrete plans to do anything about it.” Furthermore, even though the labor force is expected to slowly grow over the next decade, the labor force participation rate, or the number of those from the labor force expected to become employed and work, is slated to decrease steadily by 2024.24These long-term forecasting difficulties notwithstanding, growth will occur in some skill areas, while others will decrease in demand. Employers that make no efforts to project future supply and demand risk having their strategies derailed by lack of available labor. As a result of a lack of planning, some companies are facing unanticipated skilled labor shortages. For example, Linda Fillingham cannot find skilled laborers to work in her family’s Bloomington, Illinois, steel plant. Fillingham expresses puzzlement as to her labor shortage, given the alleged lack of job growth in manufacturing: “It’s there if you want to do it,” she said. Perhaps long-term planning would have avoided or ameliorated Fillingham’s dilemma.25page 32Staffing QualityPerson/Job or Person/Organization MatchWhen acquiring and deploying people, should the organization opt for a person/job or person/organization match? This is a complex decision. In part, a person/job match will have to be assessed anytime a person is hired to perform a finite set of tasks. In our software company example, programmers might be hired to do programming in a specific language such as Java, and most certainly the organization would want to assess whether applicants meet this specific job requirement. On the other hand, jobs may be poorly defined and fluid, making a person/job match infeasible and requiring a person/organization match instead. Such jobs are often found in technology and software development organizations.Specific or General KSAOsShould the organization acquire people with specific KSAOs or more general ones? The former means focusing on job-specific competencies, often of the job knowledge and technical skill variety. The latter requires a focus on KSAOs that will be applicable across a variety of jobs, both current and future. Examples of such KSAOs include flexibility and adaptability, ability to learn, written and oral communication skills, and algebra/statistics skills. An organization expecting rapid changes in job content and new job creation, such as in the software company example, might position itself closer to the general competencies end of the continuum.Exceptional or Acceptable Workforce QualityStrategically, the organization could seek to acquire a workforce that is preeminent KSAO-wise (exceptional quality) or that is more “ballpark” variety KSAO-wise (acceptable quality). Pursuit of the exceptional quality strategy would allow the organization to stock up on the “best and the brightest” with the hope that this exceptional talent pool would deliver truly superior performance. The acceptable quality strategy means pursuit of a less high-powered workforce and probably a less expensive one as well. If the software development company is trying to create clearly innovative and superior products, it will likely opt for the exceptional workforce quality end of the continuum.Active or Passive DiversityThe labor force is becoming increasingly diverse in terms of demographics, values, and languages. Does the organization want to actively pursue this diversity in the labor market so that its own workforce mirrors it, or does the organization want to more passively let diversity of its workforce happen? Advocates of an active diversity strategy argue that it is legally and morally appropriate and that a diverse workforce allows the organization to be more attuned to the diverse needs page 33of the customers it serves. Those favoring a more passive strategy suggest that diversification of the workforce takes time because it requires substantial planning and assimilation activity. In the software company illustration, an active diversity strategy might be pursued as a way of acquiring workers who can help identify a diverse array of software products that might be received favorably by various segments of the marketplace.STAFFING ETHICSStaffing the organization involves a multitude of individuals—hiring managers, staffing professionals, potential coworkers, legal advisors, and job applicants. During the staffing process, all of these individuals may be involved in recruitment, selection, and employment activities, as well as decision making. Are there, or should there be, boundaries on these individuals’ actions and decisions? The answer is yes, for without boundaries, potentially negative outcomes and harmful effects may occur. For example, staffing is often a hurried process, driven by tight deadlines and calls for expediency (e.g., the hiring manager who says to the staffing professional, “Just get me someone now—I’ll worry about how good they are later on”). Such calls may lead to negative consequences, including hiring someone without proper assessment and subsequently having him or her perform poorly, ignoring the many applicants who would have been successful performers, failing to advance the organization’s workforce diversity initiatives and possible legal obligations, and making an exceedingly generous job offer that provides the highest salary in the work unit, causing dissatisfaction and possible turnover among other work unit members. Such actions and outcomes raise issues of staffing ethics.Ethics involves determining moral principles and guidelines for the acceptable practice of staffing. Within the realm of the workplace, ethics emphasizes “awareness of organizational values, guidelines and codes, and behaving within those boundaries when faced with dilemmas in business or professional work.”26 More specifically, organizational ethics seeks to do the following:Raise ethical expectationsLegitimize dialogue about ethical issuesEncourage ethical decision makingPrevent misconduct and provide a basis for enforcementWhile organizations are increasingly developing general codes of conduct, it is unknown whether these codes contain specific staffing provisions. Even the general code will likely have some pertinence to staffing through provisions on such issues as legal compliance, confidentiality and disclosure of information, and use of organizational property and assets. Individuals involved in staffing should know page 34 and follow their organization’s code of ethics.
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