Question

Discuss how the flexible firm model makes use of different forms of human resources. Illustrate your answer with examples.

(By making use of different types of labour flexibility: numerical, functional, outsourcing, temporal flexibility)

Answer 1

The flexibility firm model identifies four types of flexibility that a company seeks:

Numerical flexibility

This is the ability of a firm to adjust the number of labors/workers to manage the fluctuation in the expected output. This is done by hiring part-time labors, temporary labors, contractual labors, etc. This is over and above the permanent work force which is currently not able to fulfill the output requirements. The increase in non-permanent workforce is considered to be a cheaper and efficient way to tackle volatile requirements.

Example: Logistics companies hire temporary manpower to address spike in demand during festive seasons.

Functional flexibility

This is the ability of a firm to skill and train their labors/staff to align with the changing business requirements and technology. This is done by mult-iskilling, re-skilling, cross functional training in order to match the requirements. The goal is to reduce hiring costs for new employees by training the existing workforce resulting in increased efficiency.

Example: IT firms are re-skilling their employees in machine learning, AI, block chain, etc to stay relevant with the change in requirements.

Outsourcing

Hiring third party agencies to handle non-business activities like catering, cleaning, pantry, transportation and other services will be cheaper.

Example: Almost all companies higher third party vendors for catering, transportation, cleaning, etc.

Temporal flexibility

This is the ability to manage the hours worked so that they align with the demands of the business. At the same time this also addresses the seasonal aspect of a business wherein the demand is higher during certain months and not so much in other months.

Example: E-commerce business like Amazon would need more manpower and resources during the festive seasons to manage their logistics. So, they have to manage the shifts of their employees accordingly.