1. Does an organization have any ethical responsibility to share with all of its employees the results of its forecasting of HR requirements and availabilities? Does it have any ethical responsibility to not do this?
2. Identify examples of ethical dilemmas an organization might confront when developing an affirmative action plan (AAP).
APPLICATIONS
Markov Analysis and Forecasting
The Doortodoor Sports Equipment Company sells sports clothing and equipment for amateur, light sport (running, tennis, walking, swimming, badminton, golf) enthusiasts. It is the only company in the nation that does this on a door-to-door basis, seeking to bypass the retail sporting goods store and sell directly to the customer. Its salespeople have sales kits that include both sample products and a full-line catalog they can use to show and discuss with customers. The sales func- tion is composed of full-time and part-time salespeople (level 1), assistant sales managers (level 2), and regional sales managers (level 3).
The company has decided to study the internal movement patterns of people in the sales function, as well as to forecast their likely availabilities in future time periods. Results will be used to help identify staffing gaps (surpluses and short- ages) and to develop staffing strategy and plans for future growth.
To do this, the HR department first collected data for 2003 and 2004 to construct a transition probability matrix, as well as the number of employees for 2005 in each job category. It then wanted to use the matrix to forecast availabilities for 2006. The following data were gathered:
Transition Probabilities
(2003–04) Current (2005)
Job Category Level SF SP ASM RSM Exit No. Employees
Sales, Full-time (SF) 1 .50 .10 .05 .00 .35 500
Sales, Part-time (SP) 1 .05 .60 .10 .00 .25 150
Ass’t. Sales Mgr. (ASM) 2 .05 .00 .80 .10 .05 50
Region. Sales Mgr. (RSM) 3 .00 .00 .00 .70 .30 30
Based on the above data:
1. Describe the internal labor market of the company in terms of job stability (staying on same job), promotion paths and rates, transfer paths and rates, demotion paths and rates, and turnover (exit) rates.
2. Forecast the numbers available in each job category in 2006. 3. Indicate potential limitations to your forecasts.
Deciding Whether to Use Flexible Staffing
The Kaiser Manufacturing Company (KMC) has been in existence for over 50 years. Its main products are specialty implements for use in both the crop and dairy herd sides of the agricultural business. Products include special attachments to tractors, combines, discers, and so on, and add-on devices for milking and feeding equipment that enhance the performance and safety of the equipment.
KMC has a small corporate office plus four manufacturing plants (two in the midwest and two in the south). It has a core workforce of 725 production workers, 30 clericals, 32 professional and engineering workers, and 41 managers. All em- ployees are full time, and KMC has never used either part-time or temporary workers. It feels very strongly that its staffing strategy of using only a core work- force has paid big dividends over the years in attracting and retaining a committed and highly productive workforce.
Sales have been virtually flat at $175 million annually since 2002. At the same time KMC has begun to experience more erratic placement of orders for its prod- ucts, making sales less predictable. This appears to be a reflection of more tur- bulent weather patterns, large swings in interest rates, new entrants into the spe- cialty markets, and general uncertainty about the future direction and growth in the agricultural industry. Increased unpredictability in sales has been accompanied by steadily rising labor costs. This has been due to KMC’s increasingly older workforce, as well as shortages of all types of workers (particularly production workers) in the immediate labor markets surrounding the plants.
Assume you are the HR manager responsible for staffing and training at KMC. You have just been contacted by a representative of the Flexible Staffing Services (FSS) Company, Mr. Tom Jacoby. Mr. Jacoby has proposed meeting with you and
the president of KMC, Mr. Herman Kaiser, to talk about FSS and how it might be of service to KMC. You and Mr. Kaiser agree to meet with Mr. Jacoby. At that meeting, Mr. Jacoby makes a formal presentation to you in which he describes the services, operation, and fees of FSS and highlights the advantages of using a more flexible workforce. During that meeting, you learn the following from Mr. Jacoby.
FSS is a recent entrant into what is called the staffing industry. Its general purpose is to furnish qualified employees to companies (customers) on an as- needed basis, thus helping the customer implement a flexible staffing strategy. It furnishes employees in four major groups: production, clerical, technical, and professional/managerial. Both full-time and part-time employees are available in each of these groups. Employees may be furnished to the customer on a strictly temporary basis (“temps”) or on a “temp-to-perm” basis in which the employees convert from being a temporary employee of FSS to being a permanent employee of the customer after a 90-day probationary period.
For both the temp and temp-to-perm arrangements, FSS offers the following services. In each of the four employee groups it will recruit, select, and hire people to work for FSS, which will in turn lease them to the customer. FSS performs all recruitment, selection, and employment activities. It has a standard selection sys- tem used for all applicants, composed of an application blank, reference checks, drug testing, and a medical exam (given after making a job offer). It also offers customized selection plans in which the customer chooses from among a set of special skill tests, a personality test, an honesty test, and background investiga- tions. Based on the standard and/or custom assessments, FSS refers to the customer what it views as the top candidates. FSS tries to furnish two people for every vacancy, and the customer chooses from between the two.
New hires at FSS receive a base wage that is similar to the market wage, as well as close to the wage of the customer’s employees with whom they will be directly working. In addition, new hires receive a paid vacation (one week for every six months of employment, up to four weeks), health insurance (with a 25% employee co-pay), and optional participation in a 401(k) plan. FSS performs and pays for all payroll functions and deductions. It also pays the premiums for work- ers’ compensation and unemployment compensation.
The fees charged by FSS to the customer are as follows. There is a standard fee per employee furnished of 1.55 base wage hours worked per week. The 1.55 is labeled “markup”; it covers all of FSS’s costs (staffing, insurance, benefits, administration) plus a profit margin. On top of the standard fee is an additional fee for customized selection services. This fee ranges from .50 to .90 base wage hours worked per week. Finally, there is a special one-time fee for temp- to-perm employees (a one-month pay finder’s fee) payable after the employee has successfully completed the 90-day probationary period and transferred to being an employee of the customer.
staffing as provided by FSS. First, use of FSS employees on an as-needed basis will give KMC greater flexibility in its staffing to match fluctuating product de- mand, as well as movement from completely fixed labor costs to more variable labor costs. Second, FSS provides considerable administrative convenience, re- lieving KMC of most of the burden of recruitment, selection, and payrolling. Finally, KMC will experience considerable freedom from litigation (workers’ comp, EEO, torts) since FSS and not KMC will be the employer.
After Mr. Jacoby’s presentation, Mr. Kaiser tells you he is favorably impressed, but that the organization clearly needs to do some more thinking before they embark on the path of flexible staffing and use of FSS as its provider. He asks you to prepare a brief, preliminary report including:
1. A summary of the possible advantages and disadvantages of flexible staffing 2. A summary of the advantages and disadvantages of using FSS as a service
provider
3. A summary of the type of additional information you recommend gathering and using as part of the decision-making process