LABOR AS AN ECONOMIC FACTOR OF PRDUCTION
Labor is among one of the three main factors of production. Labor constitutes all the physical and mental efforts applied in the production of tangible products and services.
LABOR MARKET
The labor market describes a situation in which workers find paying work and employers hire workers willing to work at given market rates. Employers compete for the best talent while workers compete for the most rewarding jobs. A human resource practitioner acts as go-between for the two players in the job market. An employer hires human resource personnel to hunt for the most ideal candidate and make them a competitive offer according to current market standards (Davidson & Matusz, 2004, p. 15).
TIGHT LABOR MARKETS
In a tight labor market, the demand for labor is higher than the available laborers. According to Margo (2000, p.56), Workers in a tight market have the upper hand as they are presented with a range of employers to choose from.
LOOSE LABOR MARKETS
A loose labor market has more workers ready to work than available vacancies in a given industry. Employees in a loose market enjoy more freedom in regard to remuneration and contract terms.
IMPACTS OF A TIGHT LABOR MARKET ON HR PRACTITIONERS ACTIVITIES
- Employees have more opportunities to move to other companies. This is because there are more employers looking for employees than there are skilled workers. Employers have to compete for the available talent.
- More vacancies in organizations. A tight labor market is characterized availability of vacancies which outnumber the working population. Every worker can easily get a job in a tight labor market.
- Increase in recruitment costs. The recruitment exercise becomes an intricate undertaking and entails activities such as increased training, and re-design of the whole process (Ehrenberg, 1994, p.45).
CHALLENGES FACED BY HR PRACTITIONERS OPERATING IN A TIGHT MARKET
- Redesigning of organization structure. Firms have o redesign their organization structures in order to attract and retain employees.
- Employee retention is a big challenge for employers in a tight labor market. Firms are faced with the challenge of high employee turnover. Employees in a tight labor market have more than enough choices. Employees move from one position to the other in search of a more desirable position or occupation (Moretti, 2010, p.43).
- The recruitment process becomes more intricate and a strategic undertaking (Ogura, Tachibanaki, & Wise, 2003, p.57).
SKILLS NEEDED BY HR PRACTITIONERS TO OVERCOME THE CHALLENGES OF A TIGHT LABOR MARKET
- The HR practitioners must be able to communicate effectively the other leadrs and future employees. The HR should be convincing enough to potential candidates why their company is the best employer of choice.
- Consulting. The HR must consult for their organization on recent labor market trends and the employee preferences.
- The HR department has to assume more roles such as planning, organizational responsibilities, strategic recruitment decisions and adjustment of recruitment methods. Firms might opt to conduct their own in-house training of fresh interns in order to capture and retain future talent (Ehrenberg,1994, p.54)
- Skilled influencer. The HR must possess power to influence change in an organization. HR are the people who understand employees the most and as such must be in a position to tailor the work environment in favor of both the employee and their organizations.
- Collaborative. The HR must be able to work jointly with the administration of their organization in order to implement changes which will make their origination competitive in a tight labor make.
HR SITUATIONS AT INTERNATIONAL ORGANISATIONS
ABERCROMBE AND FITCH
Abercrombie is a retailer of popular informal youth clothing. In the last decade sales have dipped as teens shift their clothing tastes and preferences. The company also faces fierce completion from other industry leaders. In response, the HR removed the chairman cum CEO, Mike Jeffries from his chairman position in January 2014. This was the right move because since Jeff was stripped off his chairman powers, sales increased by 12% in the first quarter of 2014 (Linn, 2014).
YAHOO
Yahoo’s CEO Marissa Mayer fired her second in command, Henrique De Castro and chief operating officer COO in January. The HR department awarded Castro a severance package of $ 109million. The big severance package constitutes money offered to lure Jeffries from Google Inc. plus salaries earned. Jeffries was hired into yahoo to improve online advertisement revenue but he failed to achieve this. The decision by the company to let him go was right. Jeffries was not fulfilling his purpose at Yahoo yet he was receiving a huge salary. The company cut its losses by firing him since he was not making any money for the company (Covert, 2014).
References
Shimer, R. (2010). Labor markets and business cycles. Princeton, N.J., Princeton University Press. http://site.ebrary.com/id/10394769.
Davidson, C., & Matusz, S. J. (2004). International trade and labor markets theory, evidence, and policy implications. Kalamazoo, Mich, W.E. Upjohn Institute for Employment Research.http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db =nlabk&AN=108957
Margo, R. A. (2000). Wages and labor markets in the United States, 1820-1860. Chicago, University of Chicago Press. http://public.eblib.com/choice/publicfullrecord.aspx?p=432264.
Moretti, E. (2010). Local labor markets. Cambridge, Mass, National Bureau of Economic Research. http://papers.nber.org/papers/w15947.
Hamermesh, D. S. (2002). International labor economics. Cambridge, MA., National Bureau of Economic Research.
Reich, M. (2008). Segmented labor markets and labor mobility. Cheltenham, Edward Elgar Pub.
Ehrenberg, R. G. (1994). Labor markets and integrating national economies. Washington, D.C., Brookings Institution.
Covert, B. (2014). Fired Yahoo Executive Made More Than The Company’s Female CEO. Think Progress. http://thinkprogress.org/economy/2014/04/18/3428536/fired-yahoo-executive- pay/
Linn, A. (2014). Abercrombie Removes Mike Jeffries as Chairman. Diversitylnc. http://www.diversityinc.com/news/abercrombie-removes-mike-jeffries-chairman/
