Analyse the Possible Reasons Why Kevar Travel Plc. Wished to Make Its Workforce More Flexible? (18 Marks)
Business and Management
Submitted By hannahconvery13
There are several possible reasons for why Kevar Travel Plc would benefit from a flexible workforce. Flexible workforces exist when businesses place less reliance upon permanent full-time employees and make greater use of part-time and temporary workers. Implementing a core and peripheral strategy is one way to make the workforce more flexible. This is because it allows them to gain a core of skilled workers which are all kept on permanent full time contracts which keeps them motivated and secure within the company so they stay which is beneficial as it means lower levels of having to train to high levels. The peripheral aspect of the strategy allows them to hire when necessary whether its unskilled staff to account for increased demand or highly skilled staff for specialist problems. This is beneficial as it means they don’t have to employ all their staff permanently whilst still allowing them to respond to the flucations in demand for cheap holidays.
Kevar Travel Plc has seen a high degree of fluctuation with demand for its product. This is due to seasonal demands, competitive power from rivals and also consumer tastes and fashions regarding holidays over recent years. A strategy that was proposed was to make the workforce more flexible. One way in which they implemented this is the relocation of head office from London to Stoke. They would then go on to create a new workforce plan, which would achieve more flexibility within the workplace, this was done by increasing temporary contracts from 9.2% in 2009-10 to 29.7% 2011-12.
Making the company’s workforce strategy more flexible has its advantages and disadvantages. A benefit of a flexible workforce strategy is cutting costs, this could be done by having a majority of your unskilled workforce on zero hour contracts. Zero hour contracts mean that workers only work when needed and agreed by both parties. This allows the fluctuation in demand to be covered without incurring extra costs. By using a flexible workforce strategy the company can avoid paying redundancy pay, this is because if the workers are on temporary contracts it is technically not redundancy, the company is just ending their contract with the employee. Another benefit could be the ability to cut training costs as they’re able to outsource certain jobs to those who already have the skills needed instead of having to train them up. This also means Kevar Travel plc do not have to pay the specialised skilled workers permanent wages as they can just use them when and where they need them.
Flexible workforces do also have their limitations one of which is that there could be breakdown in communications. This is because if staff are only on part time or tempory contracts it could mean that more than one staff member has to deal with problems which could lead to things being missed out as they would think the other had sorted it. This in turn could mean it takes longer for problems to be resolved which means that the workforce is unable to be efficient. It could also lead to confusion for the customer as they possibly wouldn’t be able to talk to the same person each time about their booking. This in turn could lead to customer dissatisfaction, which isn’t good for the company as a whole. Another limitation is that by having many people on low or zero hour contacts it could produce a low productivity rate. This is due to the fact that the morale of the workforce could be quite low as they feel there is no job security for them as the company could end their contracts with very little notice and without any compensation. It also means that people are more likely to be on the look out for different jobs which offer them stability through a permanent contract. This leads to a high turnover level of employees which means that it is increasingly hard for employees to make connections with each other as people are constantly coming and going. This high turnover rate also means that the company loses any time and money invested in those employees through any training they received.
In my view, Kevar travel plc would benefit from a more flexible workforce. Flexible employees are cheaper because Kevar travel plc would avoid many of the costs of full-time employments –such as pension contributions. Wages are also generally lower, which will make the firm more competitive, which may be important in an increasingly global market. Although lack of job security may arise as an issue for many issues and could see higher skilled workers switching to jobs that give them more security, leaving Kevar travel plc even more work to replace said employees. High rates of labour turnover also means workers are unfamiliar with their duties and this can slow production, meaning firms incur both greater recruitment costs and operation costs. But overall I feel the economic and financial benefits of flexibility within the workplace outweigh the disadvantages and Kevar travel should go ahead with the movement to a more flexible workforce.