The concept of a “flexible firm” (as proposed by John Atkinson, 1985) recognizes that organizations will requires enhanced flexibility to meet ever evolving market and competitive pressures. The “flexible firm” model suggests that we can design our workforces to proactively meet our business needs through flexible staffing arrangements. In other words it is a concept of simply integrating flexible conditions into the administration an organization’s functional operations, in order to meet the demands of a highly competitive market and attain its strategic aims and goals. Flexibility is a calculated risk utilized by organizations to survive and gain strategic competitive advantage.
Atkinson’s model for labour flexibility included “core” workers and “peripheral” (secondary) workers. Numerical flexibility, the expansion and contraction of labour to address market fluctuations, would primarily impact “peripheral” groups: part-time, temporary, or contractual workforces. “Core” groups of full-time employees would provide their organizations with functional flexibility: an employee pool of skills that could be moved about in reaction to emerging technological, market or product changes.
Benefits associated with a flexible staffing strategy include:
The flexible practices are more likely to be adopted by large, technologically advanced employers that operate within concentrated or niche markets
Increased international competition has produced various initiatives world-wide for greater organizational flexibility, and emerging new economic trends may be characterized by smaller firms, industrial districts, vertical disintegration, flexible firm strategies and production networks, and flexible technology. The emerging technological pattern of flexible specialization implies that not only certain flexible organizational forms may be observed in different firms or industries, but that flexible specialization is a necessary and crucial factor in championing mass production.
Flexibility has two basic dimensions:
For a “flexible firm” model to work, it requires a sophisticated interaction between strategic business planning and Human Resource Management. When HR is unclear on the long-term business needs for labour flexibility, short-term reactions such as staffing activities are often subjected to product or market pressures, will result in poor employee relations and reduced quality and productivity. Essentially the HR Team needs to be aware of every single critical detail of the organization’s strategies aims and align themselves accordingly, in order to achieve them.
In most advanced industrialized societies, Governments have debated ways of reducing labour market (including pay) rigidity as well as increasing overall organizational flexibility. The managements of various organizations have been concerned with job flexibility, multi-skilled employees, and increasing their ability to hire and fire; and unions have reassessed their stand towards new production concepts and employee involvement. The focus has been on two types of flexibility:
Linked to both numerical and functional flexibility is pay flexibility; that is, a firm’s ability to adjust labour costs. Particularly pay accordingly to changing market conditions (both product and labour)
The most common management innovations for flexible practices are;