Despite growing optimism, global hiring activity remains flat, something which is due in part to cautious hiring practices. But we find it can also be attributed to the way in which multinationals now turn their hiring on and off in response to market demand.

On this page:

• Core staff is a key component in making JIT work

  Labour when needed
• Competition is key driver
• Advantages of JIT HR
• Potential problems
• Global focus
• Building on past success

Figures from the latest Manpower Employment Outlook Survey show global hiring is rather flat, even though employers in most of the 23 countries surveyed are optimistic about hiring plans. Ambiguity is due in part to cautious hiring practices, but it can also be attributed to how large multinationals are making sure they have the right people in the right part of business at the right time.

Just-in-time (JIT) inventory management, whereby materials are scheduled to arrive exactly when needed in the production process, has become standard practice for many companies since it was first pioneered by Toyota Motor Corporation in the 1950s. The basic concept behind JIT is to improve a company's return on investment (ROI) by reducing costs associated with carrying inventory. It has also been shown that, when implemented correctly, JIT can lead to better product quality and greater operational efficiency.

Because ramping up and down in response to market demand has met with such success in the area of inventory management, companies have looked to other areas where they might achieve similar results. With salaries and related costs accounting for a significant portion of a typical organisation's expenditures, it stands to reason the next logical frontier would be staffing.

Manpower CEO Jeff Joerres indicates there is certainly a trend toward more JIT HR. Industries leading the way include telecom, IT, computer services, automotive, and automotive supply, he says. Companies in these fields have experienced the benefits of JIT in other aspects of the business and are now applying JIT practices to the area of labour, he tells Expatica.

JIT HR can focus on the recruiting perspective, benefits, or contract staffing. The common element is flexibility and sophistication. Just-in-time doesn't mean waiting until the last minute. It's a highly analytical, planned approach that matches labour needs to market demand.

To illustrate how just-in-time labour can be applied, Joerres references the most traditional side of Manpower's business, manufacturing. In manufacturing, there are typically seasonal and cyclical peaks where more employees are required.

But the same is true of other environments. Engineering, IT, and the sciences, for example, are very project driven. Because approval processes and deadlines create peaks in the workload, it's not uncommon for companies to respond by adding staffing to meet specific objectives.

The growing interest in JIT HR is another way in which companies are trying to gain an edge. "Everyone is in a competitive battle. You're seeing prices become much more difficult to maintain," Joerres explains.

The elements of price and being able to please shareholders are generating interest in JIT HR from companies that haven't yet implemented the practice.

"The trend is likely to continue. This is not a fad," Joerres says. "We can see it growing in momentum from the kinds of questions companies are asking."

JIT HR allows companies to be more competitive, Joerres tells Expatica. "Now what you're doing is bringing in the right talent at the right time," he says.

JIT HR allows for the speed and agility necessary to start, stop, and change direction, Joerres explains. And quick response is essential in today's rapidly changing business climate.

What's more, JIT enables companies to take a closer look at their labour requirements. At most companies, 30 to 70 percent of the cost and challenges are labour-related, Joerres says, and it's important to get this component of the business right.

Still, JIT HR doesn't eliminate the need for a core staff. In fact, Joerres indicates that the core staff is a key component in making JIT work. "What you have to do is cultivate the talent. That now creates more speed in your organisation," he says.

Manpower's large customers typically rely on 70 to 75 percent core staffing, and about 25 to 30 percent outside staffing.

Although Joerres advocates JIT HR, he also recognises that, to be effective, the concept must be understood and embraced. "Just hiring temporaries does not solve your problem," he says.

Because JIT HR involves a level of sophistication and analysis, there may be a tendency to overlook the homework required. "Labour is a bit unpredictable. Hot skills can turn into cold skills in 12 months. You have to stay tuned to the market," Joerres tells Expatica.

By the same token, waiting too long to bring in the necessary staff can be problematic. "One of the disadvantages is if you cut it too tight, then you have disruption to your entire chain," Joerres says.

As a result, he recommends that companies without JIT HR experience move slowly into it.

Meanwhile, multinational companies that have successfully implemented JIT HR in one country or at a single plant are now seeking ways to map it globally. This, says Joerres, is the next level of sophistication, and it is where the opportunity for a massive competitive advantage lies.

John Herbert, executive director of the European HR Forum (EHRF), a networking organisation for HR professionals, recognises the advantages of JIT HR. But he also sees challenges as employment is being moved to various locations, while companies rely on contingent workers. One issue is that an organisation still wants to be one company; another is how companies treat contingent workers.

Herbert, who in his role with EHRF chairs roundtable discussions with member company HR directors, says he has been quite shocked by the attitudes of some of his colleagues. The idea of paying people a fraction of the wages because there is a totally compliant workforce is, in effect, managing by fear, he says. Indeed, he cites how employees engage in negative activities when they are unhappy with a situation, noting how these types of problems have surfaced at call centres in India.

Still, Herbert cites various industries where JIT HR has thrived for years, pointing out that because companies are so much leaner these days, there is now more opportunity to implement the concept.

Mark Pearson, president of the European HR Forum (EHRF) who has served in an HR role in the brewing, retail, and automotive industries, has hands-on experience with JIT HR in a variety of environments. He tells Expatica that in the brewing industry there are peaks of demand that tend to be dictated by weather. In the summer, the brewing company with which he was associated operates at maximum capacity with a higher intake of employees. During this time, the contingency workforce accounts for 5 to 8 percent of total staff.

In retail, there is a different kind of issue that is reflective of a high level of turnover, Pearson says. "You almost inevitably over hire to compensate for about 30 percent of employee turnover," he explains. This is another type of demand hiring, he says.

Pearson has found JIT HR can also be effective if a company is going through a re-organisation. "It gives you enormous flexibility," he says.

And then there's the outsourcing trend. "What I have seen is a really interesting difference between the UK and other parts of the world. What we're living through is the whole shift of outsourcing along with the greater need for flexibility," says Pearson, who is based in the UK.

He tells Expatica he has outsourced a number of operational areas, including several offshore. When a function is outsourced, the provider is then the one focused on movement of people, which Pearson indicates can vary greatly in response to business needs.

However, in an outsourcing situation, HR is no longer focused on staffing requirements. "It is managed as a cost," Pearson says.

July 2005

Paula Santonocito is a freelance writer specialising in workforce management issues. She is the author of more than 500 articles on a wide range of topics.

Subject: Global job market, hiring worldwide, Just-in-time HR