Question

1. What can an organization do when it expects the internal supply of labor to exceed the demand for labor?

Answer 1

What can an organization do when it expects the internal supply of labor to exceed the demand for labor?

An organization can take a systematic approach to deal with the situation. The reasons for the excess internal supply of labor may vary from improper planning to lower workforce requirement. If the organization doesn’t have enough future contracts, the organization should lay-off the excess employees. This would impact the morale of remaining employees, but it should be communicated to the workers that lay-off is necessary for survival.

If the organization does not have any issues related to the reduced operations of the organization, workforce planning is the culprit. The organization can take the following steps.

1. The organization can freeze the recruitment process, so the addition of new workers is stopped.

2. The organization can modify the working arrangements by reduced working hours or postponement of bonus. This will help the organization to balance the extra cost of worker surplus without harming the morale of the employees.

3. The organization can offer early retirement plans to the older employees, so the surplus will be reduced. This may impact the attrition rate, but it will help financially to the organization.

4. The organization can opt for the ending the outsourcing contracts. This will help the organization to retain surplus workers and become self-reliant.

Above steps are the reactive ones to handle the surplus of the workers. As a proactive step, the organization should work on the workforce planning aspect, and use forecasting tool to predict the demand of workers precisely.