Stonewall Industries

Define and explain the significance of the term ‘derived demand’ as it applies to Strategic Human Resources Planning. (5 marks) Derived demand is described as a requirement for one product that is produced due to the purchase of another product. This happens when consumers purchase goods to further their production and their purchases are due to the demand of a final product. An example of this is when the demand for housing is high; therefor the demand for lumber and other materials would be high to finish the final product. If the demand of housing would drop, so would the sales and demand of the needed materials. Derived Demand applies to Strategic Human Resource Planning for organizations to forecast the demand of what’s needed. Successful organizations combine quantitative forecasts with more qualitative expert processes to achieve the most comprehensive demand forecasts possible. They must consider demand for current personnel and for future to ensure the right numbers and skills are ready and available to work when the organization needs them. Also, the demand for labor is influenced by the level of economic activity, the productivity of labor and relative cost of labor compared to the capitol.

Also, a thorough analysis of the overall demand of the product/service, to them examines how these factors will affect the overall picture. Explain ‘derived demand’ as it applies specifically to Stonewall Industries. (5 marks) In the case of Stonewall Industries, the demand is derived on two major environmental factors: the number of housing in which starts in a given year, and the interest rates. As housing increases, Stonewall’s demand increases, but as the interest rates increase, funds available for investment decrease and demand for the product decreases. Stonewall Industries produces a commodity item (there is very little discernible difference between their product and their competitors). The demand for that item is directly affected by interest rates and housing starts. As interest rates fall, more people can afford to borrow money to build and therefore new building is more appealing. As interest rates rise, less people are able to afford borrowing to build and therefore the number of new houses fall. The HR department at Stonewall Industries can monitor these factors so that they can act proactively as opposed to reactively.

Monitoring interest rates will help them identify the future selling. The production of Gypsum wallboard is derived from the housing demand. In 1982, the derived demand of labor was extremely low due to the interest rates soaring, and so the number of houses being build took a drop. This lead to stagnate consumption of the gypsum board and subsequently, the senior executive team was put in the unhappy position of selecting a gypsum operation to close. The Senior Executive Team at Stonewall has to consider a number of environmental factors that impact on its Human Resources Planning activities.

Describe these environmental factors and explain their impact. (10 marks) Environmental Factors that the Senior Executive Team at Stonewall Industries would have to consist of the following: Scanning – They would have to attempt to identify early signals of changes and trends in the environment. Monitor – This is a systematic approach to follow some key indicators that may affect the organization. Forecast – After monitoring a trend, they must attempt to forecast what the impact may be on the organization. Assess – They must attempt to assess the impact that the monitored trend on the organization will do. They must also make a judgment of the probability of the specific outcomes. Other environmental factors that Stonewall should be following are: Economic Climate

Concerning themselves with the unemployment rate because it will affect their ability to recruit when needed. Worried about the cost of fuel for employees transportation to and from work The value of the Canadian Dollar as it affects the company’s sales. Public debt as it will affect the company’s ability to survive Interest rates as it’ll affect the amount the company is willing to borrow and invest. Globalization

This is the growth in flows of trade and financial capitol across the borders. It affect sovereignty, prosperity, jobs, wages and social legislation. Political and Legislative Factors Both Governments, provincial and federal influence the business environment through political programs that changed the laws and regulations. HR professionals at Stonewall Industries would need to continuously monitor legislative changes and ensure compliance with legal requirements. Technological Factors

This includes tools, machinery, equipment and software. Technology also has the ability to transform the organizational culture of how work is done. Labor Market
The Labor Market influences an organization’s ability to implement strategy. This is where Stonewall Industries would recruit its employees. The number of people available for work depends on factors such as unemployment rate, geographic migration and graduation rates from educational institutions. Generational Differences

This one would affect Stonewall Industries as most of their workers are near retirement, and have been working there for over 20 years. They would have to be aware of how many employees will be leaving, and watch the environmental factors for availability in new employees. Etc. Identify and explain the various techniques for forecasting labor supply and labor demand. What can organizations do in the short run when they recognize a gap in which supply far exceeds demand. What could Stonewall do in this situation? (20 marks) Trend analysis; is a quantitative approach that attempts to forecast future personnel need by extrapolates in one or more organizational indices. A single index, such as sales or ratio, might be used, but for more complex modelling or multiple techniques used by professional planners, rely on a combination of factors. Ratio analysis involves examining the relationship between an operational index and the demand for labor. Although sales are most commonly used, there are other indices (1) the number of units produced (2) the number of clients serviced (3) the production hours.

Regression Analysis is a very affective quantitative forecasting technique for short, medium, and long range time horizons and can be easily updated and changed. It presupposes that a linear relationship exists between one or more independent variables which are predicted to affect the future demand of personnel. Envelope/Scenario Planning – Projections or multiple predictor estimates of future HR demand based on a variety of assumptions about the future organizational events. This is much more helpful for incorporating the effects of uncertainty and change into our strategic HR planning process. Impact Analysis is a method in which past trends are analyzed by a panel of experts who then predict the future events. Delphi technique; summarizing the responses of experts who do not meet.

A project coordinator canvasses them individually for their input and forecasts by questionnaires. There are advantages and disadvantages to this method. Advantages include shyness, perceived lower status or authority, perceived communication deficiencies and issues involving dominance and groupthink. Disadvantages are costs incurred can be higher than other techniques, as well as, the results cannot be validated statistically. Scenario planning; the creation of hypothetical future events and extrapolation of their consequences. Nominal Group is a long term Technique utilizing expert assessments. This group meets face to face but after preparatory work has been done and all the demand estimates have been publicly tabled or written on a flip chart without discussion.