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Downsizing Using Human Resource Planning Fundamentals

Introduction

With the uncertainty in the contemporary business environment, Human resource planning (HRP) is integral in the success of an organization. HRP helps align anticipated supply with labor demand to ensure that there is adequate staff to perform organization’s operations (Dessler & Chhinzer, 2020). As shown in the case, there is a decline in revenue in the Franchise’s in-stores and an increase in its online business operations for the franchise in the case. In the next three years, it is anticipated that demand in the stores would be 65, 52 and 41 respectively. On the other hand, the demand for labor in the online operations would be 7, 8, and 11 in the first, second, and third years. Based on this condition, the franchise owner should reduce the number of employees in its in-stores and add more employees to the online section to achieve its objectives.

Forecast The Demand for Labor in The Stores

In-stores

In the next three years, it is anticipated that the stores will have laid off the majority of their employees and will rely more on full-time employees working from remote locations. Because of the decreased number of customers visiting physical storefronts, the number of staff in the stores is likely to be reduced. As shown in the table below, as the stores’ revenue reduces, the number of employees required is expected to decrease. For example, in the first, second, and third year, the number of employees in the stores would be 65, 52, and 41 respectively. This means that 40 employees would be laid off by the end of the third year. Therefore, with the decline in revenue, it is expected that the stores would reduce their employees.

Year Revenue ($) Labor Demand
0 (1,200,000 x 3 {stores}) = 3,600,000 (27 x 3) = 81
1 2,880,000 65
2 2,304,000 52
3 1,843,200 41

Online Operation

The number of full-time staff working online is estimated to increase steadily in the next three years. An increase in the number of online customers is likely to increase the demand for additional services (Dessler & Chhinzer, 2020). As a result, it is best for the owner to focus on raising the number of full-time employees in online business to help deal with the gradually increasing traffic of customers. As shown in the table below, it is anticipated that there would be 7, 8, and 11 full-time online employees in the franchise in the first, second, and third years, respectively. Therefore, adding the number of employees for the online business would benefit the organization.

Year Revenue ($) Labor Demand
0 300,000 5
1 390,000 7
2 507,000 8
3 659,000 11

The HR Supply Estimates

Employee turnover is one factor that affects an organization because it takes a lot of time and money to replace an employee. According to Dessler and Chhinzer (2020), employee turnover occurs when an employee leaves an organization for both voluntary and involuntary reasons. For example, as shown in the table below, a 15% employee turnover for stores would result in 10, 9, and 6 staff leaving in the first, second, and third years. On the other hand, for a 30% employee turnover, 2, 2 and 3 staffs would leave the online business in the first, second and third year respectively. The forecast assumes that no interventions are placed to counter the turnover of employees.

Year 1 Year 2 Year 3
Physical stores 15% turnover (10 staff) 9 staff 6 staff
Online 2 staff 2 staff 3 staff

Labor Shortages or Surplus

In-stores

There is a surplus of employees in the stores to maintain performance of the franchise in the market. However, the shortage is because the projected supply should exceed the demand. In the first year, the stores are expected to have 65 staff instead of 81 staff at the start of the year. This translates to a surplus of 16 staff, which can have a cost effect on the business. In the second year, the stores should have 52 staff instead of 81. The stores are expected to have 29 employees more compared to the original number. The stores are expected to have 41 employees rather than 81 required to achieve its objectives in the third year. The difference shows that almost half of the original employees are in excess. As a result, there is a surplus of employees at the in-store.

Online Platforms

As opposed to the in-stores, the online is expected to experience a shortage of labor because the franchise owner is more likely to require more workers to run its operations effectively. In the first year, the online business demands two more employees to help run the business. As a result, there is a shortage of two employees by the end of the first year. The business needs an additional employee in the second year, which translates to three shortages. In the third year, the online business closes with 11 employees, representing a shortage of three employees from the second year. The franchise should employ six more staff to match the growing number of employees. Thus, although labor shortage may adversely affect productivity, the franchise owner saves more money.

Termination of Employees

Termination of employees is one of the organizations’ practices performed, especially when the services of some staff are not required. It is usually done when the number of existing employees exceeds the expected or when the organization wants new staff (Dessler & Chhinzer, 2020). For franchise, there is a need to terminate some of the employees on the in-store business operation due to surplus. In the first, second and third year, 16, 29 and 40 employees should be terminated respectively. However, they should be served with a termination notice in writing before they are dismissed. In addition, the employees should be given full salary during the termination notice period. Therefore, the franchise owner should effectively handle the termination process to avoid litigation and damage to reputation.

The Suggestions to Determine Labor Supply Details

There are various activities that could be done to determine labor supply details. The first activity could be knowing the problem from people within the organization. This could be attained by asking the employees to individually write the cause of the problem (Dessler & Chhinzer, 2020). The second activity could be seeking an expert opinion on what could be the problem and possible solutions. Thus, the information-seeking phase is important because it helps the owner make an informed decision. The third activity that could be used is a group discussion. With this activity, the owner of the business is more likely to understand the problem due to explanations (Dessler & Chhinzer, 2020). The final activity could be requesting the employees to rank the issues. Therefore, details on labor supply can be obtained by engaging relevant stakeholders.

A Plan to Address Forecast On the Surplus of Labor

Conduct Effective Layoffs

Due to the high workload of retail staff and the scarcity of online staff, the franchise owner must pay close attention to the impact of layoffs. The termination of employees may significantly impact existing staff because it causes uncertainty (Dessler & Chhinzer, 2020). As a result of the trauma of massive terminations and subsequent rebuilding, excess representatives may rethink their current job conditions, evaluate work alternatives, and then depart, normally to take another position offer or seek a reasonable offer. Personnel reductions may result in more personnel turnover, leading to additional stacking concerns. Consequently of the surprising resultant turnover, the more the organization is understaffed, and its efficacy is hampered.

Representative turnover can also have a negative impact on the performance of the franchise. It may result in unanticipated knowledge gaps, which can lead to more expenditures owing to additional preparations, or, more seriously, it may affect customers or business contacts. This can lead to decline in revenue or increased opportunities for employees (Waters, 2019). Therefore, various strategies for direct labor redistribution should be investigated. In-store asset terminals are the ideal solution for hotels. Given that increased turnover caused by worker terminations and rebuilding can be particularly costly for an organization, representative substitution, training, and outplacement costs are very significant, with per-leaver gauges typically double leaver pay.

Integrate The Three Stores

The franchise owner can consider integrating the stores to have one to save on cost. One of the factors driving the demand to reduce or increase employees is the level of income and assets (Dessler & Chhinzer, 2020). This means that the franchise can add more employees when there is high revenue to support high customer traffic. Each of the three stores is in the area, and each of the three stores can have a labor surplus sooner than projected. This can be restricted in the predictions for years by putting all in-store assets into a single adaptable asset pool (Waters, 2019). This can allow assets to be shifted from store to store as needed to compensate for locally variable demand while maintaining the number of full-time assets required under the circumstances.

To guarantee seamless progress, cross-utility store preparations for all in-store assets should be coordinated to ensure that any store-to-store operating measurements are handled before integration. For effective learning and rebuilding, it is critical to understand how these exercises are identified in order to avoid mistakenly damaging one while pursuing the other (Dessler & Chhinzer, 2020). This cross-functional training strategy opens up new opportunities for the organization as they set the pace to transition from a responsive organization in a favorable environment to a dynamic learning organization. The employees from the three stores can learn from one another, which is integral in building positive relationships and reducing turnover.

Career Development

Career development is an important employee retention program because it majors in improving the skills of the employees. The main purpose of career development is to support the employees to improve the organization’s performance (Dessler & Chhinzer, 2020). As shown in the case study, the in-store earnings are declining, while online earnings are rising. To ensure that legitimate income is distributed, all in-store representatives should be provided with dedicated career development management so that they can preserve assets online before considering any in-store termination. Changes made to obsolete assets in the store online will reduce potential end-points (Stewart & Brown, 2019). Therefore, career development help maintains employees and promote organizational success.

Employees are motivated to perform when they believe their employer cares about their personal and professional development. A career development path provides employees with ongoing opportunities to improve their skills and knowledge, which can lead to mastery of their current jobs, advancements, and relocation to other stores or different responsibilities (Stankeviit & Savaneviien, 2018). Adopting career paths may directly impact the franchise by enhancing employee satisfaction, productivity, and sensitivity to its goals. Thus, the employees can learn digital marketing and online operations and assist with the overall growth and expansion of the business.

Conclusion and Recommendations

The franchise owner should initiate effective lay off procedures to reduce its impact on the remaining employees. There is a shortage of employees on the franchise’s online operation and a surplus on in-stores. As a result, the franchise owner should add more employees to its online business and reduce the number of employees in its stores. To achieve this, the owner should ensure a smooth termination of employees or adopt alternative techniques of managing excess employees. The first strategy is a career development program aimed at enhancing the value of the employees. For example, the employees working at the stores can be given an opportunity to professionally develop themselves. In addition, training the employees on areas such as online marketing and operation may help increase the presence of the franchise on the internet and retain the employees.

References

Dessler, G., & Chhinzer, N. (2020). Human resources management in Canada (14th Canadian ed.). Pearson Canada Inc.

Gaul, C. (2019). Employment termination benefits. TAXtalk, 2019(77), 70-71.

Stankevičiūtė, Ž., & Savanevičienė, A. (2018). Designing sustainable HRM: The core characteristics of emerging field. Sustainability, 10(12), 4798. Web.

Stewart, G. L., & Brown, K. G. (2019). Human resource management (4th ed.). John Wiley & Sons.

Waters, D. (2019). Supply chain management: An introduction to logistics (2nd ed.). Bloomsbury Publishing.

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