Question

Chapter 5 Carter Cleaning Centres—Continuing Case Part 5

Cleaning in a Dynamic Economic Environment

While in college, Jennifer was especially interested in labour forecasting. She learned that a key component of HR planning was forecasting the number and type of workers an organization needed, and to be prepared to re-evaluate those numbers when necessary. Her father had often discussed with Jennifer how his labour demand was dependant on the business cycle—that is, during periods of economic boom when business was soaring more workers needed to be hired and trained, as well as during times of recession when fewer workers were required because the demand for cleaning services had declined. As the economic downturn worsened in 2009, revenues at Carter’s Cleaning Centres fell steeply. Many of their customers were simply out of work and didn’t need (or couldn’t afford) dry cleaning. In the midst of this downturn, Jack knew that he had to get employment costs under control. Realistically, the problem was that there wasn’t much room for cutting staffing in a store. Of course, if a store got very slow, they would double

up responsibilities by having a cleaner also perform the pressing or having the manager work the front counter. If sales only fell 15 to 20 percent per store, there really wasn’t much room for reducing employee head count because each store never employed many people in the first place.

When the economy started to recover and cleaning services were back in demand, Jack faced a labour shortage and needed to find ways to deal with the lack of trained pressers, while at the same time keeping the quality of his services high and customer service levels better than the competition.

Questions

1. What is human resources planning and how will it help Carter’s strategic plans?

2. Describe the steps in the human resources planning process and discuss the important elements within each that will benefit Carter’s Cleaning Centres.

3. Outline three quantitative techniques for forecasting future HR demand. Outline three strategies used to forecast internal HR supply.

4. Assume that Jennifer did not want to terminate any of her employees during periods of economic slowdown. Describe strategies Jennifer might use to deal with the labour surplus?

5. Assume that Jennifer was faced with rising demand for cleaning services and desperately needed to hire more workers, however she faced a labour shortage. Describe strategies she might use to handle a short-age without sacrificing quality or customer service levels.

Answer 1

Answer 1)

Human resources planning is also known as WFM or workforce management. It involves forecasting the demand for a company's products or services along with the company's available supply of labor or employees. Human resources planning or WFM forecasts the number of employees that they'll need to staff at any given point of time by studying historical service levels or staffing levels along with historical demand. In Carter cleaning center's case, they can map out demand on a month on month basis in order to accurately forecast their labor requirements. For eg If historical data shows that the supply for labor will need to increase during the holiday season, the carter cleaning company can hire a third-party workforce at a slight premium from a third party staffing solutions firm. While the carter company would pay around a 30% premium on their employee's wages, they would save almost 6 - 9 months of labor costs. If they're able to ink a seasonal agreement with a staffing solution, they can also have seasonal training and development programs for their temporary staff.

Answer 2)

Here are the steps in human resources planning that would benefit carter's cleaning services ( in my opinion all of the below element will benefit Carter's Cleaning Centres)

• Forecasting demand for products or services. For Carter’s Cleaning services, that would involve forecasting the number of cleaning calls they receive on a monthly basis along with their average value and the average number of cleaner required per cleaning session.

• Calculating their operational expenses that includes payroll

• Study historical demand across various economic cycles or various season on a monthly basis and use the worst-case scenarios to forecast demand

• Come up with an acceptable service level for the business during the various seasons and throughout the year. Service level is the minimum percentage of the workforce that the business needs at all times to function.

• Account for leaves, attrition, and hiring by implementing

• Create an employee roster that meets the required service levels while taking into account leaves and attrition and new hires.

Answer 3)

Three quantitative techniques used to forecast future HR demand are

• Demand Forecasting: Forecasting demand for products or services. For Carter’s Cleaning services, that would involve forecasting the number of cleaning calls they receive on a monthly basis along with their average value and the average number of cleaner required per cleaning session.

• Service Levels: Service level is the minimum percentage of the workforce that the business needs at all times to function.

• Scenario Modelling: Forecasting demand and service under various scenarios such as various economic cycles, various seasons, etc.

Three quantitative techniques used to forecast future internal HR supply are

• Employee roster: This is a pre-agreed or pre mandated roster that maps out the days, dates and shifts that each employee or a group of employees will be staffed on.

• Leave Planning: Forecasting the number of paid, unpaid and sick leaves that each employee could take over the course of a year and a month

• Attrition and Hiring: Forecasting potential or the average rate of attrition or the rate at which employees quit the firm in order to forecast supply. Forecasting hiring in order to match attrition would also help in forecasting internal HR supply

Answer 4)

If Jennifer didn't want to lay off her employees during an economic slowdown, here are the strategies that she could deploy

• Differ all leaves by asking employees to take their paid leaves during the economic slowdown. Let's assume that her employees get around 10 paid leaves in a year, she could ask them to utilize those paid leaves right now and then staff them during peak demand timeframes. This would allow her firm to eliminate around 33.33 % in operating costs or payroll expenditure (since 10 days in a month is around 33.33 % of a month). This way she wouldn't have the staff additional employees during peak demand periods since she would have access to 100% of her workforce since they differed their leaves.

• Carter Cleaning could lease out their employees by operating as a third party payroll operator. Most companies are trying to cut costs during an economic downturn or a recession. If Carter Cleaning could pivot into a facilities services firm that cleans offices for large enterprises and other larger cleaning services companies by offering third party payroll or facilities services, they could deal with the labor surplus.

Answer 5)

If Jennifer was faced with rising here are two strategies that she could deploy that was mentioned earlier

• Utilizing Third Party Payroll when faced with high demand: As mentioned earlier, If historical data shows that the supply for labor will need to increase during the holiday season, the carter cleaning company can hire a third-party workforce at a slight premium from a third party staffing solutions firm. While the carter company would pay around a 30% premium on their employee's wages, they would save almost 6 - 9 months of labor costs. If they're able to ink a seasonal agreement with a staffing solution, they can also have seasonal training and development programs for their temporary staff.

• Leave Deferral : As mentioned earlier : As mentioned earlier she could Differ all leaves by asking employees to take their paid leaves during the economic slowdown. Let's assume that her employees get around 10 paid leaves in a year, she could ask them to utilize those paid leaves right now and then staff them during peak demand timeframes. This would allow her firm to eliminate around 33.33 % in operating costs or pay roll expenditure (since 10 days in a month is around 33.33 % of a month). This way she wouldn't have the staff additional employees during peak demand periods since she would have access to 100% of her workforce since they differed their leaves.