Flexible Firm Hrm

Assignment 2 (a)Outline the main forms of flexibility as defined in Atkinson’s (1984) model of the flexible firm (b) What are some of the strengths and weaknesses of the Atkinson model? ANSWER PLAN: ?Introduction/Background oWhat are the aims of flexibility oGuest (1987) de-centralisation helps to create flexibility oWhat are the main forms of flexibility that modern organisation need ?Body: 4 types of flexibility oFunctional/Temporal/Numerical/Financial ?Body 2: Atkinson’s Model oCore group oFrist/Second peripheral groups How each of these differ oOutsourcing activities/ Agency / Self-employed/Sub-contracting ?Advantages / Disadvantages of Atkinson’s model ?Criticism ?Conclusion In highly competitive environment, organisations need to be able to react quickly and effectively to changes. David Guest (1987) in advocating de-centralisation emphasised the role it plays in increasing flexibility within an organisation. He cited flexibility as one of the keys to responding effectively to changes in the environment, and that it is essential for organisational success.

The main forms of flexibility in modern organisation according to Blyton and Morris (1992) are four: Functional, Temporal, Numerical and Financial. Functional flexibility involves the task of multi-skilling where employees are required to possess one specific skill and many other generalist ones. This means a reduced specialisation of roles with individuals being trained to carry out a much wider range of activities than before. The purpose of numerical flexibility is to expand and contract the labour force according to specific demand for it.

In times of expansion, more workers are required. Conversely a smaller workforce is needed if the business is decreasing. The third form is temporal flexibility. In this case the number and distribution of hours varies. It concerns different approaches to managing the time of employees, such as “annual hours contracts” where there is a total number of hours to be worked but actual hours will vary according to circumstances. Finally, financial flexibility involves the way that an individual’s payment varies in ways which best allow it to meet objectives.

At the individual level this can mean pay-related-performance or multiple pay strategies such as bonuses, dividends and share options. Atkinson developed a model of what he called the flexible firm which brings together a number of aspects of flexibility. This model is shown below: The model consists of a core group, first and second peripheral groups and outsourcing activities. The core group include the full-time, generalist skilled workers who are expected to keep learning and adapting to changes.

This is the permanent component of the firm’s workforce; they are the ones with the most job security, and they have better opportunities for training and promotion. They are relatively few in the organisation. This group provides flexibility through its commitment because they are the permanent ones. In contrast, peripheral workers provide a firm with numerical flexibility. The first peripheral group is normally full-time but does not have the same job security as the core workers. Their numbers increase or reduce with changing labour market conditions.

The second peripheral group is employed on a part-time basis, with short-term contracts. They tend to be less well paid and have fewer rights and benefits than the first peripheral group. Less is invested in them as far as training and opportunities for promotion are concerned. As a final alternative if necessary, organisations can outsource functions as a means of generating flexibility. These are contracted to do specific work and are more expensive; outsourced flexibility comes at a premium price.

An example of outsourcing services is office cleaning where an agency is contracted to carry out the cleaning of the office on a continuing basis. In times of recession, peripheral or non-full-time workers are much more likely to be made redundant. The advantages of the Atkinson model for the organisation include: a more easily controlled and managed workforce; core employees being more committed due to enriched jobs (Soft HRM); the facility for bringing in skills as required and cost saving and low wage costs for part-time workers.

The disadvantages include: risk of lack of specialist expertise due to multi-skilling and issues connected with loyalty and security. Firstly loyalty, because they are not bound by permanent contract, there is no guarantee that the worker will continue to be available. They may also lack necessary training as the organisation will be focusing more on the core workers because the more you move to peripheral workers the more you want to contain costs, therefore minimal training is offered.

Atkinson’s model is criticised because many organisations will have core, peripheral and outsourced workers without having the Atkinson’s model in mind. In other words even when flexibility is practiced, it is not because of his model. The requirement for flexibility happened in organisations before he developed his model. In conclusion flexibility can take a number of different forms as proposed by Blyton and Morris. It helps the organisation react to changes faster and more effectively. The four types of flexibility link to The Atkinson’s model which illustrates how organisations are structured.

Managers value the model to a degree of financial flexibility because it separates core workers from peripheral workers. It helps them taking decisions on who to contract. High level skills can be brought in when necessary and outsourced tasks can end up being less expensive, as the termination of the contract is simple. There are a number of potential advantages and disadvantages of workforce flexibility, depending on which group is considered. The flexible firm emphasises the need for organisations to be flexible and have the capability to adapt to constantly changing circumstances.