Posted by: kenwbudd | August 11, 2010

Increased worker flexibility not always a good thing

Companies trying to improve efficiency by building more flexibility into their workforce could end up with the company running too lean and drive operational costs up, says a new paper co-published by the University of Toronto’s Rotman School of Management.

“Flexibility is good, but too much of it is dangerous,” says Oded Berman, who holds the Sydney C. Cooper Chair in Business and Technology and is a professor of operations management at the Rotman School.

Workforce flexibility is supposed to improve the match between an organisation’s labour resources and the work required. Using a theoretical staffing model under different demand conditions, the study examined the impact of several forms of worker flexibility, including workers with a multiple skill-set (skill mix), variable start times, part-timers and workers switching from one job to another within a shift.

While most forms of flexibility helped reduced costs under normal demand, the study found higher levels of flexibility meant that insufficient staff levels were in place, to respond to unexpected demands, leading to higher inventory costs.

Variable start times created the most robust flexibility, while part-time workers and job-switching within a shift were definitely not as robust.

“The rule of thumb we’ve suggested is, have flexibility and use it wisely, but set your workforce size and service levels, assuming you don’t have it,” says Prof. Pinker.

Comment
The suggestion is that workforce ‘flexibility’ models do not operate at an optimum level when tested or put to practical use. This may be because of the immaturity of the process or system used or the motivation of the personnel involved.

The complete study is available at: www.rotman.utoronto.ca/newthinking/flexibility.pdf

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