Workforce Planning and Employee Development

This assignment discusses the demand and supply analysis in the context of an Australian construction company named ADCO. It explores the factors influencing labor demand and supply and their impact on the organization's workforce planning and employee development strategies.

Running Head: WORKFORCE PLANNING AND EMPLOYEE DEVELOPMENT
Topic- MM333 WORKFORCE PLANNING AND EMPLOYEE DEVELOPMENT
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Introduction
The assignment emphasis on the discussion of demand and supply analysis based on
current business prospects and economic conditions from the perspectives of an Australian-based
organization. The organization chosen is a construction company named ADCO (ADCO, 2019).
The company has nearly 50 years of market experience and is one of the oldest and experienced
companies in Australia. In this section the demand analysis and supply analysis are emphasized
and are evaluated from the VUCA (volatility, uncertainty, complexity and ambiguity) business
world perspectives which is the new mantra of success in this rapidly changing and increasingly
unstable business environment (Mack et al., 2015). The industrial sector in Australia account for
more than one-third of the nation’s total GDP and construction industry is one of the highest
contributors in the same. Market volatility is quite high due to reduced current sectoral output
which has increased employment uncertainties (Bennett & Lemoine, 2014). Keeping the
workforce equilibrium has become complex and is full of future success ambiguities. Almost
39% of the labor force are employed in industry sector and around 1.1 million people are
employed in construction sector itself accounting almost 8% of GDP (ABS.GOV, 2019). The
national presence has increased in recent past and the labor demand supply paradigm has also
risen consecutively.

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Labor demand factors
Australia is basically a nation of larger mixed market economy with a newly industrialized
market economy focused in recent times. Though the major dominator is still the service sector
where almost 61% of the GDP is from the same (ABS.GOV, 2019). ADCO has shown steady
growth in construction business and its demand rises considerably due to rapid urbanization
(ADCO, 2019). For the very reason the demand for construction outputs increased and the firm
demands more labor force to support construction operations and thus more and more staffs need
to be hired. The labor demand of an organization or an employer is simply the number of labor
hours the employer of the organization is willing to hire based on a number of exogeneous
variables like wage rate, unit cost of capital, market based selling price and number of outputs
(Cadle, Paul & Turner, 2014). Labor market requirement of ADCO is highly influenced by its
demand supply paradigm and marginal decision rule of labor production is used for profit
maximization. Here the firm will continue to hire more and more labor force up to the point
where the extra revenue generated by the extra labor no longer supersedes the extra labor cost
(Nankervis, 2013). The optimal number of workers that can be employed in the given market
wage rate can be determined and economies of scale will thus be optimized. (Moon, Zekavat &
Bernold, 2015). The profit maximization firms like ADCO will hire labor forces up to the point
where marginal revenue of product equalizes the wage rate beyond which the firm’s efficiency
will decrease (Cahuc, Carcillo & Zylberberg, 2014). However, labor demand can be variable and
there are a number of reasons for it, such as,
 Change in marginal productivity of labors where technological advancements like
process automation, e-commerce tools, computerized process management has shifted the
demand for labor greatly (Boeri & Van Ours, 2013).
 Price change in production factors like change in shift of relative labor prices and stock
market fluctuations, export needs etc.
 Change in price of the output of an entity generally for an entity charging more than their
corresponding products and services.
 Also, government subsidy plays an important role in allowing businesses to employ more
labor forces (Keane & Rogerson, 2015).

4WORKFORCE PLANNING AND EMPLOYEE DEVELOPMENT
 The change in the number of firms also plays an important role in determining the labor
demand. Construction companies in the country is limited and ADCO has a diversified
sectoral profile which has made it one of the market rulers in construction industries and
quality labor engagements has made it possible.
 Motivation and organizational policies also play an important role in fulfilling labor
demand where labor loves to work in the organization. ADCO has its core values
underpinned to its responsibility, dynamism and teamwork (ADCO, 2019).
In ADCO the economy is increasing and so the demand for labor is rising and elasticity of
labor demand is always higher than one. But during recession times of the business cycle the
firm will cut their cost of operations and productions sale will also be reduced which will reduce
the demand for aggregate labor (Boeri & Van Ours, 2013).
Labor supply factors
Labor supply in simpler words is the number of hours employees are willing to and able to
work to meet the supply needs at a given wage rate. In most cases of industry consideration, the
labor supply curve is generally upward sloping and the reason being due to rise in wage workers
find the incentive plan attractive and entre the industry (Kaufman & Barry, 2014). The major
factors that affect the labor supply are,
 Real wage rate being offered in the industry, higher the wage rate being offered will
boost number of people willing to work in this organization and as a result supply of
labor will increase (Ehrenberg & Smith, 2017).
 Overtime is one of the main boosting factors that motivate workers to work more and
thus earnings increases. In ADCO there is higher payment scale for overtime employees
and it also have other lucrative productivity related pay schemes that help in attractive
labor force.
 Substitute occupations also affect the labor supply need in ADCO. It is one of the best
organizations to work with in construction sector and its competitors are not able to
match with its level. So, the scope of competing job substitution for the labor force in
ADCO is less and people are happy with their remuneration here.

5WORKFORCE PLANNING AND EMPLOYEE DEVELOPMENT
 Barriers to entry is not significant here as there is no such hard and fast rule of entry
policy and skilled labor force is what is being emphasized upon (Ehrenberg & Smith,
2017).
 The organization offers timely training to its workforce to develop their necessary skills
required for the work and thus occupational mobility of labor is supported holistically in
ADCO by improving their skills and knowledge areas through internal training.
 The focus on non-monetary job specifications are well integrated in ADCO where factors
emphasized include risk with other jobs, anti-social work hours, non-pecuniary benefits
like good work conditions, job security, promotional opportunities, health benefits,
leisure benefits, scope of overseas placement, pensions etc. (Kaufman & Barry, 2014).
 Migration of labor is also one of the major external factors that impact labor supply to a
great extent. People migrate to Australia for job opportunities and most migrated labor
force are found in industries like construction, manufacturing and automobiles (Peri,
2016). Net overseas migration rate is around 62% in the country. ADCO has a diversified
labor force support where larger portion of people have come through migration.
Data source analysis
The construction sector in Australia is developing and construction work is continuing to rise
by 2% ever quarter and annual productivity has also risen by 2.8%. Employment in the
construction sector is expected to rise by 3% in the coming years and ADCO will be benefitted
by this increase (ABS.GOV, 2019). But the trend estimate for total construction in the country
has fallen by 2.5% in the recent 2018 December quarter. Total building work done also fell by
1.2% which signifies that the construction sector is not growing to the level expected to grow
(ABS.GOV, 2019). The larger engineering projects are causing volatility in the construction
market sector and labor demand supply trend estimates need to be handled cautiously. The
followings are the employment trend data collected from the Australian Bureau of Statistics.
 Increase in employment from 20,600 to 12, 762, 800.
 Full time employment rose from 12,300 to 8,743, 400 and part time from 8200 to 4,019,
300 (ABS.GOV, 2019).
 Unemployment also increased from 1800 to 6,73,100 though the rate of it remained
steady at 5.0% (ABS.GOV, 2019).

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 Labor force participation rate remained steady at 65.5%.
 Monthly working hours increased from 2.6 million hours to 1767 million hours for all
sectoral jobs (ABS.GOV, 2019).
 Labor underutilization rate decreased and more workforce participation is seen in sectors
like construction, manufacturing and automobile (ABS.GOV, 2019).
The Human Resource Information System (HRIS) implementation has increased output
delivery on one hand bit it has also lowered the scope of labor participation in core sectoral
functions. The advent of IT has changed the labor demand structure but the labor-intensive
organizations like construction are still largely dependent on its labor force IT enabled tools has
helped them in adding effectiveness to their works (Nankervis, 2013). Though labor turnover has
been prominent due to decreased future prospects in construction companies, ADCO has relied
on its policies of workforce retention and effective training provided to them. Most exit
interview surveys in recent construction companies show that the decreased market economy is
one of the core reasons of their exit where they are focusing more on service sector jobs.

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Conclusion
It is true that increased investment in construction industry is expected in near future in
Australia but the labor demand supply factors will play crucial role in the success of the sector.
Increased population growth will widen the prospects of new constructions of both residential
and commercial spaces in Australia but the construction giants like ADCO need to be more
focused in balancing the demand supply need of labor force so that current business growth is
not affected at large.

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References
ABS.GOV (2019). 1006.0 - Forward Work Program, 2014-15 to 2017-18. [online] Abs.gov.au.
Available at:
https://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/1006.0~2014-15%20to
%202017-18~Main%20Features~Labour%20Statistics~34 [Accessed 2 Apr. 2019].
ABS.GOV (2019). 6202.0 - Labour Force, Australia, Feb 2019. [online] Abs.gov.au. Available
at: https://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0 [Accessed 2 Apr. 2019].
ADCO (2019). Who we are - ADCO | Construction & Building Australia. [online]
Adcoconstruct.com.au. Available at: https://www.adcoconstruct.com.au/who-we-are
[Accessed 2 Apr. 2019].
Bennett, N., & Lemoine, G. J. (2014). What a difference a word makes: Understanding threats to
performance in a VUCA world. Business Horizons, 57(3), 311-317.
Boeri, T., & Van Ours, J. (2013). The economics of imperfect labor markets. Princeton
University Press.
Cadle, J., Paul, D., & Turner, P. (2014). Business analysis techniques. Chartered Institute for IT.
Cahuc, P., Carcillo, S., & Zylberberg, A. (2014). Labor economics. MIT press.
Ehrenberg, R. G., & Smith, R. S. (2017). Modern labor economics: Theory and public policy.
Routledge.
Kaufman, B. E., & Barry, M. (2014). IR theory built on the founders’ principles with empirical
application to Australia. ILR Review, 67(4), 1203-1234.
Keane, M., & Rogerson, R. (2015). Reconciling micro and macro labor supply elasticities: A
structural perspective. Annu. Rev. Econ., 7(1), 89-117.
Mack, O., Khare, A., Krämer, A., & Burgartz, T. (Eds.). (2015). Managing in a VUCA World.
Springer.
Moon, S., Zekavat, P. R., & Bernold, L. E. (2015). Dynamic control of construction supply chain
to improve labor performance. Journal of Construction Engineering and
Management, 141(6), 05015002.

9WORKFORCE PLANNING AND EMPLOYEE DEVELOPMENT
Nankervis, A. R. (2013). ‘Building for the future?’Government and industry responses to the
challenges of talent management in China following the GFC. Asia Pacific Business
Review, 19(2), 186-199.
Peri, G. (2016). Immigrants, productivity, and labor markets. Journal of Economic
Perspectives, 30(4), 3-30.

10WORKFORCE PLANNING AND EMPLOYEE DEVELOPMENT
Appendices
Labor Demand curve shown in red and supply curve shown in blue
(Cadle, Paul & Turner, 2014)