Answer to Question #205468 in Management for Sesona Nontshokwen

Question

Compare the three aggregate plans (Level Output, Overtime and Temporary Employee). What will you advice the company if this was a newly established branch with no workers, and they are faced with the following three choices;

1. Hire 15 employees
2. Hire 14 employees and use overtime to cover for the shortage in expected output.
3. Hire 14 employees and use temporary employees to cover for the shortage in expected output.

Answer 1

Aggregate Plans

Aggregate planning is an operational activity crucial to the organization as it looks to harmonize long-term strategic planning with short-term production success. The overall objective is to allocate all the resources efficiently while satisfying the forecast demands over the planning horizon. (Tang, 2020)

Level of output

Level of output refers to aggregate planning that aims to regulate production at a constant level regardless of fluctuation in demand. The level of production is determined by both the aggregate supply and aggregate demand within an economy. The level aggregate plan maintains a constant workforce and produces the same amount of product in each period of the plan. (Shin, 2019). The benefits of level of output include maintaining a stable workforce and the optimum use of capacity. However, the cost of storage and responding to significant changes in demand is challenging to meet.

Temporary Employee

A temporary employee generally referred to as" temps" are hired to help employers in achieving business demands yet allow the employer to prevent the cost of hiring a regular employee. Sometimes they are hired to cover absent employees, temporary vacancies, or fill gaps in a company's workforce. They work part or full-time.  (Braun & Fiori-Khayat, 2019).

Having temporary employees is an effective way to keep staffing levels optimal and a cost-effective way to replace employees. Also, the employer can evaluate potential employees before hiring them. However, temps may take more time to speed up company procedures, and they may not possess the same level of loyalty as regular employees. It may also affect the production of the established team since trust has not been established with the added workers.

Overtime

Overtime usually means time or hours worked more than a standard work time or hours. This context refers to extra hours worked by an employee past their normal days' work. Overtime advantages to the employee and the employer include more earning by the employee and the employer mutually benefits, it enables the employer to have a more flexible workforce with the ability to deal with busy periods, cover for absent workers or when there is a shortage without having to employ extra employees' it's also during overtime when repair and maintenance work is carried out to avoid disruption of work during the regular working hours.

Overtime has been found to impact employees and the employer negatively. For it has been known to harm the employees' body and mind. Working for long hours increase mental and physical fatigue thus increases the risk to employees' safety. As the hours accumulate, attention and concentration are impaired. When workers work for long hours, their productivity decreases; these factors altogether contribute to an increase in absenteeism and turnover.

About the above-discussed plans, hiring fourteen employees and using overtime to cover for the shortage in expected output would be the best option. This is because the advantages of overtime outweigh the other aggregate planning strategies that have trust issues, are costly to implement, and are not flexible to changes.

 

Reference

Braun, O., & Fiori-Khayat, C. (2019). The Determinants of Employee Commitment to CSR: A Qualitative Study in a Temporary Work Company. Academy Of Management Proceedings, 2019(1), 13731. doi: 10.5465/ambpp.2019.13731abstract

 Shin, S. (2019). Paths to long‐term performance and strategic planning. Strategic Change, 28(3), 203-208. doi: 10.1002/jsc.2259

Tang, B. (2020). Aggregology: Exploration and innovation at aggregate level. Aggregate, 1(1), 4-5. doi: 10.1002/agt2.9