Capacity Management
Intensive care units operate within a fast-paced and unexpected environment, where the reliance on accurate capacity management is critical to match demand and supply needs (Kima, et al., 1999). Capacity management measures the maximum output an organization can achieve within a given time period. In this case, the intensive care unit might measure how many patients can be treated within a day – increasing capacity by minimizing individual time spent in care. As for the intensive care unit, capacity management is a dynamic concept and changes in planning need to be adapted in the possible occurrence of unforeseen events. For instance, if there is an unexpectedly large incident and numerous patients require intensive care, the ICU must have enough resources available to treat the high number of injured individuals (Kima, et al., 1999). When measuring capacity utilization, both the actual level of capacity and the maximum level of output must be taken into consideration. This concept closely correlates with productive efficiency, where higher capacity utilization reduces costs. These costs fall under three main aspects; equipment, facilities and labour. To balance these respective costs and maintain resource efficiency, chase demand planning and level capacity planning are implemented within most industries (Corrado & Mattey, 1997). Both strategies emphasize the significance of aggregate planning, where capacity and demand must be balanced in a manner that effectively minimizes costs. A level capacity strategy seeks to produce output at a steady employment level, whereas demand chase planning attempts to match demand and capacity between each period (Stevenson, 1996). Organizations must be aware of the significance of the interaction between capacity levels. Short-term capacity involves managers focusing on the relationship between the allocation of resources and tasks. Whereas, long-term capacity requires decision-making in regard to distribution (Brandon-Jones & Slack, 2007). This report will focus on a form of chase demand planning in the intermediate-term, specifically discussing the management of staff capacity.
Zero-hours Contracts
After the 2008 financial crisis, many corporations struggled to recover from drastic financial losses incurred during this period. To begin successful recovery, firms employed individuals on zero-hours contracts, suiting those looking for part-time and flexible working hours (Ndzi, 2017). Dependent on the size of the personnel pool employed on zero-hours contracts, large corporations had access to a relatively wide range of highly-skilled and cheap labour. Section 27A of the Employment Rights Act 1996 defines zero-hours contracts as, “a worker’s contract under which – (a) the undertaking to do or perform work or services is an undertaking to do so conditionally on the employer making work or services available to the worker, and (b) there is no certainty that any such work or services will be made available to the worker” (legislation.gov.uk, 1996). This offers the firm the flexibility to employ staff when demand is high and avoid administrative costs when demand is low. Zero-hours contracts are prevalent amongst the service sector, with 19% of workplaces within the hospitality industry instigating these employment conditions (Brinkley, 2013). However, widespread controversy regarding the effectiveness of these contracts in terms of employee satisfaction is present within many businesses (CIPD, 2015). This leads to organizations questioning whether the use of these specific conditions enhance organizational quality or essentially hinder employees from producing required output to the best of their abilities. This debateable topic raises the following question:
To what extent do zero-hours contracts enhance employee satisfaction, and how does this effect quality of output within the UK service sector?
Hypothesis
It is hypothesized, that zero-hours contracts will negatively impact employee satisfaction dependent on employee purpose, whereas quality within the UK service sector will stay stagnant or increase regardless of employee satisfaction. In order to effectively discuss this question, the term employee satisfaction will reflect that of Locke’s definition as “a pleasurable or positive emotional state resulting from the appraisal of one’s job or job experience” (Locke, 1969). Quality is defined as the required standard by employers when completing business activities. Skilled workforces should meet expectations by producing products or services that fulfil customer needs (Batista, 2009). Moreover, quality and employee satisfaction are both indicators of organizational performance. To clearly incorporate the constitution of zero-hours contracts, the term flexibility outlines the extent to which working hours are compressed and distributed through the work week (Newstrom & Pierce, 1980). This report will specifically concentrate on various service based industries such as the higher education sector and healthcare industry, as well as sources of purpose expressed by individuals. The fact that the use of zero-hours contracts has risen within the UK labour market, with 23% of current employers implementing these contracts into their strategic chase demand planning (CIPD, 2015), makes the effectiveness of these contracts on business performance an interesting case to investigate.
ANALYSIS
Zero-hours contracts hinder unsatisfied employees from performing adequately, therefore, lowering quality within the UK service sector. Section 172(1b) of the Companies Act 2006 states, “A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to the interests of the company's employees” (legislation.gov.uk, 2006). As managers should focus primarily on the success (quality output) of the firm, this allows directors the freedom to self-determine the definition of what “acting in good faith” entails. Subsequently, managers acting in what the employee considers bad faith are exploitative of their workforce, leading to respective workers feeling insecure. The results of such behavior are clearly exemplified within the UK higher education sector. A study conducted at the University of West England and the University of East London described the emotional and practical concerns these contracts have amongst university staff (Lopes & Dewan, 2014). Participants were only informed shortly before the beginning of each semester whether they would be granted working hours. Legally managers are obliged to allow their employees to pursue additional occupations (legislation.gov.uk, 1996). However, due to such short notice, employees cannot be as flexible as initially intended through the use of zero-hours contracts. Consequently, the study emphasizes that these actions caused individuals to complain about limitations regarding short-term and long-term planning and the lack of support and benefits from their respective employers. Moreover, fear of being dismissed or of underworking causes individuals to accept all proposed working hours. The CIPD states that 14% of employers deny their workers the right to decline proposed working hours, despite what the law states (CIPD, 2015). Additionally, these scheduled hours didn’t include preparatory work, causing university staff to feel overworked. Furthermore, over-time monetary benefits were not granted. In this particular case, participants were aware of the negative impact this mental strain had on their students and the quality of their teaching. Not only were lecturers constantly afraid to underperform, but were also denied access to regular teaching hours and training – aspects which could potentially improve worker productivity and benefit the higher education sector in terms of quality (Lopes & Dewan, 2014). In essence, the term ‘flexibility’ was largely abused, causing directors to focus only on the profitability of the organization.
Under the Nurse Staffing Level (Wales) Act 2016 Section 25B(1b), hospitals are required to “take all reasonable steps to maintain the nurse staffing level” (legislation.gov.uk, 2016). Alternatively, service organizations could feel obliged to implement zero-hours contracts within a dynamic environment, where fluctuating levels of demand cannot be predetermined. This could lower both employee satisfaction and quality. For instance, at Brighton and Sussex University Hospitals, most employees are qualified, highly skilled and full-time workers, however the ever-changing demand makes it difficult to operate such an organization without the introduction of zero-hours contracts. Due to the legality of nurse to patient ratios, there must be an extent of flexibility under which the hospital can meet strict guidelines (Stevens, 2013). Although, this allows for local working opportunities, determining working hours within this setting is difficult for the director, and consequently, those acting in bad faith continue to exploit the workforce. In this case, the extent to which quality output is produced is difficult to establish. Due to lack of necessary skills, the term ‘quality’ is perceived as a form of efficiency within the health care sector. For instance, with the hiring of flexible staff, managers at UK hospitals intend to increase efficiency by accepting as many patients as possible and reducing waiting times (Arrowsmith & Mossé, 2000). However, the quality of treatment executed by flexible nurses, who are simply hired due to legal expectations, is possibly immeasurable. The quality of treatment is largely understood as meeting maximum capacity of a given hospital.
Both case studies outline that the use of zero-hours contracts, under certain conditions, diminish employee satisfaction, and to some extent reduce the quality of output. Directors abusing the term ‘good faith’ and ‘flexibility’ could potentially augment the dissatisfaction of their employees. Additionally, the perceived definition of quality varies across industries and can only be measured to some extent. Moreover, individuals desperately seeking employment may accept all offered working hours in fear of losing their current positions, and those underperforming will be dismissed with ease. Since 16% of employers rarely or never supply their workers with written agreements, there are little to no legal requirements to give employees any dismissal benefits (CIPD, 2015).
It can also be argued that due to the flexibility zero-hours contracts grant individuals, these working conditions do in fact enhance employee satisfaction and quality of output. As previously discussed, employees could potentially feel pressured to accept working hours due to intense competition within the UK labour market. However, individuals who do not financially rely on flexible employment, exercise their rights to its fullest potential. For instance, at Finco and Bancko, managers seek to employ women who are returning to work as part-time individuals pursuing a second-income. This case assumes that women are the most suitable gender to employ, due to the family-orientated lifestyle they lead. However, with these particular assumptions, the corporation values the flexibility of these employees and are aware of the additional responsibilities they face outside of their careers (Durbin, 2006). Although the organization is accused of exploiting zero-hours workers, 10% of individuals were primarily attracted to work offered in the call centre due to the number of hours. Additionally, they were also faced with promotional opportunities. The employees are provided with a sense of mastery, a significant aspect when measuring employee satisfaction (Pink, 2009). The sense of growth and developmental opportunities, leads to enhanced quality of output. This is exemplified at Finco and Bancko, where women who began as advisers in part-time or flexible work, valued their positions to the extent where many exceeded quality standards and were, therefore, promoted to people-management roles (Durbin, 2006). In addition to this, 82% of employers using zero-hours contracts within the UK labour market, provide their employees with the possibility to engage in training and development (CIPD, 2015).
Moreover, when further exploring the role of youth employment within the UK labour market, a tendency towards flexible or part-time working conditions has risen drastically. It is currently more common for organizations to promote temporary or part-time working conditions with zero-hours contracts, with young people in these working conditions exceeding the number of full-time workers (Rosemary & Ralston, 1997). This is in large due to the fact that many university students seek flexible work to either financially support themselves or gain initial work experience (CIPD, 2015). It would seem that employers are more lenient in regard to the legality of zero-hours contracts, due to the known expectations and availability of students as employees. As with the Finco and Bancko case, managers are aware of students’ responsibilities and intentions before agreeing to certain arrangements. Due to the reliance of students in low-skilled sectors (Green, et al., 2013) the power of rejecting proposed hours is much higher than with individuals who greatly rely on their current occupations. Supposing a student or young individual is pursuing their occupation in order to socialize or gain work experience, their output will generally increase if they are satisfied with the working environment. If these individuals are dissatisfied, many have no requirement to continue working, therefore, intentions to quit and indeed withdrawal from these situations is completed with ease (CIPD, 2015). Therefore, in this type of situation, the employer and employee are both dependent on each other, in one aspect to fulfil organizational performance needs (quality), and in the other aspect satisfy purpose needs (employee satisfaction). However, limitations in regard to this assumption lie again in the purpose for which students are undertaking jobs based on zero-hours contracts. If the student is requiring additional financial support, satisfaction may decrease. There is a large tendency for underpayment when directors employ younger individuals (Rosemary & Ralston, 1997). These individuals continue to work knowing that their satisfied colleagues are receiving higher salaries, therefore, potentially producing lower quality output.
Furthermore, directors acting as what is perceived as good faith by employees, will add considerable value to the organization in terms of quality due to satisfied individuals. This is emphasized at Produce World, a corporation that uses zero-hours contracts to benefit their employees. Managers attempt to incorporate chase demand planning, due to the high fluctuations in demand present every week. At one of the sites, 40 from 200 employees are working under zero-hours contracts. Unlike many directors, these managers provide their employees with the additional benefits that full-time employees can exercise, such as paid holiday and healthcare benefits. This firm believes that employees should be treated equally regardless of the type of contracts they are working under (Stevens, 2013).
Flexible working hours allow those who are voluntarily and temporarily seeking employment to complete set tasks with high quality due to the respective working conditions granting them the basic rights they are entitled to. Additionally, these workers hold more power over their employers, as both parties are dependent on one another.
CONCLUSION & FINDINGS
The analysis partly confirmed the hypothesis, suggesting that zero-hours contracts can potentially decrease employee satisfaction without impacting quality within the UK service sector. However, the findings propose that success of zero-hours contracts in terms of employee satisfaction and quality, greatly depend on employer behaviour, and employee reactions and purpose. Managers acting in bad faith, could lead to permanent employees producing quality output due to fear and anxiety, or reduce output due to workers experiencing emotional stress. Moreover, employers acting in good faith most likely encourage and empower their workers to produce expected output. In terms of employee purpose, those who rely on zero-hours contracts for financial support, most likely respond in fear. Whereas, individuals who are not dependent on their flexible occupations feel more empowered to leave the organization if treated unfairly. Zero-hours contracts are undeniably a valuable method for chase demand planning where organizations must meet various and frequent fluctuations in demand. However, directors must act in what their respective employees believe is good faith. Furthermore, since the term ‘zero-hours contracts’ is still loosely defined, employers and workers must form concrete and transparent arrangements before signing any agreements. Employees also have the responsibility of informing themselves prior to agreeing to potential working conditions. The implementation of these flexible contracts should only be considered when necessary to the organization in order to prevent exploitation. Additionally, the purpose of implementation should be clearly communicated to the existing and future workforce.
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