This study is about the complex nature of human resource planning. Human resource planning is the procedure whereby a concern determines the sum of staff support that they will necessitate in order to carry through concern demands and client demands.
It is the base upon which all the other human resource activities rest. It merely involves calculating what staff is needed and doing certain that the stairss are taken to run into those demands. Human resource planning can besides be described as the ongoing procedure of systematic planning to accomplish optimal usage of an administrations most valuable plus which would be its human resources. It is the manner in which directors guarantee that they have the right figure and sorts of capable people in the right topographic points at the right times. Through human resource planning, administrations avoid sudden people deficits and excesss.
It is concerned with placing the administrations demand for human resources and demand for human resource and fashioning agencies to guarantee that a sufficient supply of labor is available to run into that demand.
Human resource planning can be defined as the manner by which you determine the work force demands and the manner of run intoing those demands in order to transport out an incorporate program at the administration.
Harmonizing to Quinn Mills ( 1983 ) human resource planning is a determination doing procedure uniting three critical actions:
Identifying and geting the right figure of people with the proper accomplishments
Motivating the staff in order to accomplish high public presentation within the administration
Making synergistic links between concern aims and planning activities
The most popular manner of depicting human resource planning is “ holding the Right individual at the Right topographic point at the Right clip ” .
Purposes of human resource planning
The chief purpose of human resource planning is to do certain that the administration has the right figure of staff with the right accomplishments needed in order to run into forecast demands.
Harmonizing to Reilly there are a twosome of different grounds why some concerns choose to take portion in some signifier of human resource planning. Reilly identifies three chief grounds as to why concerns engage in human resource planning:
Planing for substantial reasons- The ground for this type of planning is to hold a practical consequence by heightening the usage of resources in the administration or doing them more flexible. It besides helps the concern to place possible jobs and minimises the opportunities of doing a bad determination.
Planing due to the benefits it gives the organisation-The ground for this type of planning is due to concern understanding the present human resources in order to face the hereafter human resources. This type of be aftering gives the concern a better apprehension of how many employees they have at present and how many they need to take on or allow travel to cover with the hereafter.
For example-The human resource planning section will analyze how many employees they have at present and they will seek and calculate how many employees they will necessitate to take on in the hereafter. If the concern is busier around the Christmas period so the human resource planning section will look at taking on more staff in order to cover with increased demands.
Planing for organizational reasons- The ground for this type of planning is that it communicates the concerns programs and helps the employees to back up them and adhere to them. This type of planning is all about associating the concern programs to the human resource planning section and incorporating the two more expeditiously.
For example-If the human resource section has plans to take on 10 new employees in 2013 due to a high work load for bing employees, it lets the bing employees know that the high work load is impermanent and encourages the employees to back up the concern and esteem the determinations that are made.
The Human Resource Planning Model
The human resource planning theoretical account is a method that the human resource section in a concern can utilize to guarantee that they have adequate employees and the right 1s to transport out the assorted maps of the concern. This human resource planning theoretical account consists of three key parts, including foretelling the sum of employees that your company needs, look intoing if the supply of possible employees meets your demand and eventually larning how to equilibrate the supply and demand of employees.
The three stairss are as follows:
Forecasting staffing demands
Balancing Supply and Demand
Forecasting Staffing Needs:
There are a twosome of different ways to calculate in order to foretell how many employees you need to run your concern and which roles these employees need to make full.
There are four chief factors to see when calculating staffing demands:
The state of affairs of the economy- The manner in which the economic system is executing is a critical factor when you ‘re looking at human resource planning. You need to be able to separate whether or non your company needs to enroll more staff or whether your company is traveling to downsize. In these economic conditions a batch of companies are looking at their human resource planning and doing the important determinations.
For illustration: If the economic system is in recession and concern is quiet, a company is less likely to be be aftering on taking on new staff. On the other manus, if the economic system is flourishing and concern is busy a company will be more likely to be enrolling more staff.
On the 1st of November 2012, McDonalds announced that they will be taking on over 700 new employees in the following 2years in Ireland. McDonald ‘s human resource planning section are get downing the enlisting procedure in January 2013.
On the 5th of October 2012, Cork Airport announced that they will be cutting over 32 occupations. The human resource section of Cork airdrome explained that the chief ground for the programs to cut occupations was merely due to the diminution in the economic system.
The Internal finance of the business- The internal finance of a concern will depend on whether or non you ‘re traveling to put in new staff. It all depends on how much money you have as a concern. The human resource section of a concern is normally given a annually budget. They so look at the staff degrees and program on whether or non to put in more staff. They besides look at things at critical factors impacting staff degrees such as how many employees are retiring in the coming twelvemonth, is at that place anybody out on pregnancy leave etc. Internal finance is a chief factor in calculating staffing demands.
For illustration: If the human resource section plans to take on 15 new employees in 2012, there has to be money in the concern for this to be a feasible.
The demand for your merchandise or service- Obviously the demand for when it comes to calculate your staffing demands and demands, the demand for your merchandise or service is important. If your merchandise or service is in high demand so you will be looking at taking on more staff. However if the demand for your merchandise or service is in low demand so you as a concern may necessitate to look at cutting your employee ‘s hours or allowing some employees go.
The demand for your merchandise or service may be in high demand at certain times of the twelvemonth and you may necessitate to take on excess staff in order to run into demands.
For Example: Smyths Toys ever take on excess staff around the Christmas period as this is their busy clip of the twelvemonth. When the human resource planning section at Smyths Toys forecasts their staffing demands, they look at the demand for service. Therefore when they are in their busiest clip of the twelvemonth, they automatically forecast that they will necessitate extra staff in order to cover with the high demand.
The Growth outlooks of your business- The growing outlooks of your concern are another factor to see when calculating staff. If your concern is turning quickly so you may necessitate to take on more staff. Forecasting the sum of staff you will necessitate in the hereafter will all depend on how good your concern is turning.
For illustration: The human resource planning section of McDonalds will look at their growing outlooks for the following 6months, 12months, 18months etc. They will so find how many employees they will necessitate in order to run into the growing rate of their concern. By 2015 they hope to open 12 new shops across Ireland. The human resource planning section have already forecasted that they plan to take on 700 new employees. Therefore the growing outlooks of the concern are a cardinal constituent on calculating the staffing demands.
This consists of analyzing internally and externally. This measure is all about look intoing the sum of staff you have presently in your administration and look intoing the sum of possible staff outside of the concern. The human resource planning section measure the internal staff in the first measure when they are calculating staffing demands for the hereafter. In order to measure the external staff the human resource planning section will look at the demographics of the staff that is available to them. This can include factors such as instruction and the unemployment rate of the state. When the human resource planning section are measuring supply there are a twosome of cardinal countries they look at including:
The bing figure of staff employed ( broken down by business, accomplishment and potency )
Potential losingss the concern may incur due to staff go forthing ( employee turnover )
Potential vacancies through internal publicity
The consequence of altering work status ( recession may take to absenteeism )
The sum of supply within the concern
The sum of supply from exterior of the concern in the national and local labor markets
By the concern evaultaing all of these countries it will assist them find whether they have entree to the figure and types of employees that they need in order to carry through their staffing prognosiss.
For illustration: The human resource planning section at BMW in Germany evaluated the supply of employees internally and they have realised that over 50 % of their employees would be over the age of 50 by 2020.The human resource planning section evaluated externally in order to happen out how much possible employees would be available to them if they decided to take on new employees. By measuring externally they realised that there was a deficit of qualified applied scientists in Germany. When measuring externally they looked at instruction as a factor, they found that every twelvemonth the figure of technology alumnuss are worsening. This proves the importance of measuring supply externally. The human resource planning section of BMW have put programs in topographic point in order to increase the sum of pupils making technology classs. The human resource planning section have offered 18month internships for qualified technology alumnuss. This is a good manner on increasing the supply of employees externally.
Balancing Supply and Demand:
Balancing supply and demand is the 3rd measure in the human resource planning procedure. This measure is concerned with how the concern is traveling to equilibrate the demand of employees they need with the supply of employees available. The human resource planning section expression at the sum of employees that they need and the expression at the sum of employees that are available. By the human resource planning section making this, it helps them to do certain that they avoid an employee deficit and excess within the concern. If the human resource planning section realise that there is a deficit of employees in the concern, they must find what type of enrolling attempts that they will take part in to pull the employees they need in order to make full the demands within the concern. In order for the human resource planning section to equilibrate the supply and demand they have to find the full-time and parttime demands. The human resource planning section will look at the concerns supply of full-time workers and the demand for full-time work out in the work force. They look at the concerns needs for parttime workers and expression and see if there are parttime workers available in labour markets. If the human resource planning section realise that the concern have a excess sum of employees they may see employee layoffs, retirements and state of affairss where some employees may necessitate to be demoted. This measure in the human resource planning procedure is all about finding the sum of employees that they need and how many employees are out their willing to work for them. The important portion of this measure is doing certain that they balance.
For Example: The human resource planning section of Dunnes Stores chief purpose in the concluding measure of the human resource planning procedure is to equilibrate the supply and demand of the employees available to the concern. The human resource planning section at Dunnes Stores looks at how many employees they need and how many employees are in the work force available to make the work with the necessary accomplishments. The human resource planning section of Dunnes Stores must do certain that they do n’t stop up with a deficit of employees or a excess of employees. They need to acquire the balance merely right in order to finish the human resource planning procedure right.
Importance of Human Resource Planning
Human resource planning is one of the most of import resources in direction and needs to be used expeditiously. Success, stableness and growing of a concern depend on its ability in geting, using and developing the human resources for the benefit of a concern.
In recent old ages, Human resource planning has become progressively of import due to the high degree of competition that today ‘s concerns face. Without effectual human resource planning, a company may confront the danger of being unable to run into marks because employees with the necessary accomplishments are unavailable.
In my ain sentiment, I think that human resource planning is highly of import for every type of concern. The chief ground I think human resource planning is of import is because by a concern be aftering their human resources they can analyze their staffing demands for the hereafter and place any vacancies which may originate, they can salvage money through limited enlisting and choice and it helps actuate employees.
Future staffing needs-The concern is able to happen out how much staff they will necessitate in the hereafter. It helps the concern to place the figure of occupations which will go vacant in the close hereafter. The human resource planning procedure is conducted for the full concern ; hence staffing demands for every section can be identified. This allows the human resource section to place any vacancies.
For illustration: The human resource planning section of Dunnes Stores looks at the full administrations staffing demands and identifies any vacancies that may originate in the hereafter. Therefore the human resource section can place if anyone is retiring or traveling on pregnancy leave. If there is person traveling on pregnancy leave in the finance section, the human resource planning section can be after to take on a impermanent replacing. On the other manus if there is an employee in the selling section retiring, so they will look at the selling section and figure out if they need to take on a lasting replacing. Human resource planning is of import as it highlights any vacancies in an administration and prevents any sudden staffing deficits or excesss.
Cost savings-The enlisting and choice procedure can be really dearly-won. Many concerns spend a big sum of money on this. Therefore by utilizing the human resource planning procedure a company will salvage money as they are n’t blowing money taking on staff that is non necessary. Recruitment and choice will merely be carried out if it is highly necessary. The human resource planning procedure helps to place whether enlisting and choice are necessary or non.
For illustration: By Dunnes Stores be aftering their human resources efficaciously and expeditiously they will salvage money. They will cognize precisely how many staff that they have at present. They will be able to find if they under staffed or over staffed and whether they need to pass money on the enlisting and choice procedure. Human resource planning is of import to Dunes Stores as saves them money by merely foregrounding when it is perfectly necessary to enroll new staff. Therefore they are n’t passing money on taking on new staff if they do n’t necessitate them.
Motivation-Human resource planning makes public presentation assessment more meaningful. Employees receive feedback in the public presentation assessment and they are informed of their opportunities of future patterned advance in the company. As a consequence of this, the employees will be more motivated to work harder and seek harder to affect. This shows the importance of human resource planning.
For illustration: By Dunnes Stores prosecuting in human resource planning they will cognize precisely what publicities are available. So if the Gross saless Manager is traveling on pregnancy leave, so when the helper gross revenues director is holding the public presentation assessment, she may be told if you improve on certain accomplishment, you may be in line for publicity and may be considered when the gross revenues director goes on pregnancy leave. This will actuate the helper gross revenues director to better on certain accomplishments and work harder in order to turn out that she would be capable for the gross revenues director place. Human resource planning shows its importance in the public presentation assessment as the concern knows precisely when there is publicities available and this is turn motivates employees to work harder and turn out that they are worthy of a publicity.
Harmonizing to Farnham human resource planning is highly of import as it encourages employers to set up clear and expressed links between their concern programs and the human resource programs in order to incorporate them more efficaciously and expeditiously. He feels that by a concern prosecuting in human resource be aftering it can profit them as the concern will hold more control over staffing costs and on the figure of staff employed. It ensures that a concern is non over-staffed or under-staffed. He besides feels that through human resource planning, employers can do more informed determinations about the accomplishments and attitude mix in the concern. Farnham states that human resource planning besides provides a profile of the current staff in the concern in respects to age, sex, gender, disablement etc. By holding this information readily available to them, a concern is in a better place to do informed determinations and do certain that they are an equal chance administration.
Advantages of Human Resource Planning
Meeting Staffing Requirements
One of the advantages of human resource planning is that it improves the use of human resources by assisting the human resource planning directors to calculate the staffing needs in footings of both Numberss every bit good as the types of accomplishments that the concern requires. By the human resource planning directors placing the concerns short-run and long-run ends it allows them to foretell their human resource demands. In order for the human resource planning directors predict the staffing demands successfully, they need to set up what accomplishments, abilities and cognition is required in order to run into the concerns ends. By human resource planning being carried out in a concern, it helps the human resources be aftering directors to place any possible replacings that they might necessitate in order to carry through the staffing demands. Every twelvemonth many employees either retire or go forth companies that they are employed in. By transporting out human resource planning it helps the human resource section discovery replacings for these employees. These replacings may be either from inside the concern or exterior of the concern. Therefore by transporting out human resource planning in a concern it gives the advantage of run intoing staffing demands. This is one of the chief advantages of transporting out human resource planning in a concern.
One of the chief advantages of human resource planning is that it improves employee development. The human resource planning section identify employees within the concern that could potentially travel into a direction place within the company. The human resource planning section can so implement certain actions that will assist the possible employees develop their direction accomplishments. Human resource planning encourages the concern to carry on public presentation assessments with their employees. By carry oning public presentation assessments on their employees, it helps the human resource planning section to see what peculiar skills an employee is missing and what type of preparation chances the employee should have. Therefore human resource planning encourages and improves employee development.
By human resource planning directors taking portion in the human resource planning procedure, it helps them to mensurate and entree results that make it possible to supervise the advancement of the concern and the employees. The human resource planning section make the human resource program and they will normally include assorted albatrosss in order to estimate success. The hereafter may be different than expected so the human resource planning section must be flexible plenty for the concern to pull off the alteration. By a concern taking portion in human resource planning, it benefits them as the know precisely what is go oning within the company at nowadays, how many employees they have at nowadays, how good they are making presently and how the employees at executing at present. By the human resource planning section transporting out uninterrupted rating they are able to run into new technological alterations. Human resource planning helps to be effectual in the usage of technological advancement. In order for the human resource planning section to run into the challenge of new engineering, they make certain that bing employees are retrained and when they are enrolling new employees, they have the up-to-date technological cognition.
Human resource planning takes a proactive attack in order to run into the company ‘s demands which are evidently an advantage for the company. By the human resource planning section taking a proactive attack it enables them to expect future demands, measure the company ‘s current work force and helps them find what actions that they should fix to take for the hereafter. The advantage of holding a proactive attack in human resource planning is that the concerns consider all facets and the possible deductions of different actions before moving. Businesss without human resource planning react to the employees demands without leting themselves adequate clip to believe and see all actions. Businesss with human resource planning avoid doing rushed and rash determinations. Therefore an advantage of human resource planning would be proactive concerns.
Through effectual human resource planning, the human resource planning section can assist the concern to react to environmental factors such as statute law, altering demographics, globalization and engineering. Through environmental scanning, the human resource planning section can expect different alterations that will impact the concerns work force and the concerns program. An advantage of human resource planning is being able to expect the different environmental factors which will impact the concern and its employees. The human resource planning section can foretell and program in expectancy for any alterations in the environmental factors that may impact their concern or their staffing demands. The human resource planning section can fix in progress for factors such as an aging population and an older work force. By the human resource planning section, believing in front and taking the environmental factors into history, they help the concern to avoid possible accomplishment deficits in the hereafter. By the human resource planning section neglecting to fix for the environmental factors it can hold a negative impact on the concern.
Disadvantages of Human Resource Planning
Lack of Support
During the last 25years, human resource planning has become a strategic spouse in most concern determinations. Before this it was known as forces disposal, a section responsible for treating paysheet, passing out occupation application signifiers and inscribing employees in the concern. One disadvantage of human resource planning is that without the support of direction and the employees ; it will non work or be effectual. In order for human resource planning to be effectual, the directors and the employees must back up the human resource programs one hundred per cent. The direction do n’t ever see human resource planning as an indispensable component in the concerns long term and strategic ends. The employees of a concern do n’t ever back up human resource planning due to the fact that they do n’t to the full understand what their function is in the concern.
One major disadvantage of human resource planning relates to the current cultural thought of the employees in a concern. Many employees work in the same manner they were originally trained in. These types of “ old-school ” employees have learned to execute their work expeditiously and they take great pride in their ability to execute good in the concern. When a concern decides to take a new attack by implementing human resource planning into the concern, these types of employees feel threatened. The employee ‘s current accomplishments may non be able to be transferred to the concerns new manner of making things ; hence some of the employees will necessitate to larn the new system.
Larger Initial Investment
A concern must put clip and money into their human resource planning to go to the full functional this is a disadvantage for concerns that do n’t hold extra hard currency to put into their human resource section. A concern would besides hold to put money into developing their employees into understanding human resource planning. The employees would necessitate to be thought how to research alternate attacks to planning, how to measure which attack fits the concern the best and eventually to implement that chosen procedure. The human resource planning director would necessitate to be able to find how the new procedure tantrums in with their current employees and they would so hold to delegate new duties to each employee. Once the employees are assigned their new duty, they will necessitate extra preparation in order to assist acquire them utilize to it. They will each demand to larn what their new function in the concern is each employee will necessitate. This would be one disadvantage to human resource planning ; the initial capital invested.
The Strategic Human Resource Planning Process
The strategic human resource planning procedure consists of four stairss:
Measuring the current human resource capacity
Forecasting human resource demands
Developing human resource schemes to back up concern schemes
Measuring the current human resource capacity
Based on the concerns strategic program, the first measure in the strategic planning procedure is to analyze the current human resource capacity of the concern. The cognition, accomplishments and abilities of the current staff in the concern demand to be identified. A manner in which this can be done is by developing a accomplishments stock list for each employee in the concern. The accomplishments stock list should travel beyond the accomplishments needed for the peculiar place. The concern should name all the accomplishments each employee has demonstrated. The instruction degrees or extra preparation and development classs that they have participated in should besides be included.
Forecasting Human Resource Requirements
The 2nd measure is to calculate human resource demands for the hereafter, based on the strategic ends of the concern. Realistic prediction of human resources involves foretelling both demand and supply. In order for the concern to calculate the human resource demands, they need to be able to reply the undermentioned inquiries:
How many employees is required in order to accomplish the strategic ends of the concern?
What occupations will necessitate to be filled?
What accomplishment sets will people necessitate?
When calculating demands for human resources, the concern must besides place the challenges that they will confront in run intoing their staffing demands based on the external environment. In order for the concern to find external impacts, they should see the undermentioned factors:
How does the current economic system affect the concerns ability to pull new employees?
What alterations are happening in the Irish labor market?
This measure is concerned about finding the spread between where the concern wants to be in the hereafter and where the concern is presently. The spread analysis involves placing the figure of staff and the accomplishments and abilities required in the hereafter in comparing to the current state of affairs the company are in. The concern should inquire themselves the undermentioned inquiries:
What new occupations will the concern demand?
What new accomplishments will the concern require?
Do the concerns current employees have the right accomplishments?
Does the concern have enough troughs?
Developing Human resource schemes to back up concern schemes
There are five ways in which a concern can run into their demands in the hereafter:
Restructuring-This involves cut downing staff by expiration, reorganizing work units to be more efficient
Training and development-This involves supplying staff with preparation to take on new functions, supplying current staff with development chances to fix them for future occupations in the concern.
Recruitment-This involves enrolling new staff with the accomplishment and abilities that the concern will necessitate in the hereafter.
Outsourcing-This involves utilizing external persons or concerns to finish some undertakings
Collaboration-This involves leting employees to see other concerns to derive accomplishments and penetration. It involves working together with other concerns to fix future leaders by sharing in the development of assuring employees.
BMW ‘s Human Resource Planning Practices
In 2007, Human resource planning directors at the BMW fabrication works in Germany came up with the “ Today for Tomorrow ” undertaking. Human resource directors realised that with Germanys ageing population, by 2020 approximately half of BMW ‘s 18000 workers in Germany will be over the age of 50. By 2020, more than a fifth of the state will be over 65.Faced with a likely diminution in productiveness, human resource director ‘s reacted in an unusual and advanced manner.
For BMW, it is a affair of necessity, like many industries in Western states ; the company faces the challenge of seeking to stay globally competitory with an experient but ageing work force. The human resource planning director believed that their older workers have more forbearance and accomplishments than the younger workers.
The human resource planning director in Germany believes that they are coping with an ageing work force. With the state besides confronting a deficit of qualified applied scientists, the human resource planning section have decided that its best to maintain good workers on the occupation every bit long as possible and accommodating the fabricating mills to their demands.
The human resource planning section came up with thoughts on how to do the older employees more comfy at work. They asked the employees for advanced thoughts that would take to a more comfy working environment for them.
Since so the German BMW fabrication works have implemented the followers:
Installing easier-to-read computing machine screens. The new computing machine screens were introduced with bigger type.
Wooden floors were put in, which are softer on the employee ‘s articulatio genuss.
The company got particular places for all of their employees to forestall their pess from aching.
Employees were given specially modified chairs to sit on during their displacement, instead than stand during work.
They besides piped a batch more daytime into the mill.
The older workers now rotate occupations during a displacement ; they no longer reiterate the same undertaking all twenty-four hours.
The employees now have a diversion country, equipped with telecasting, couches etc.
The human resource planning section in Germany said the undertaking merely cost about a‚¬70000 including lost clip. Productivity went up seven per cent. Absenteeism fell below the old twelvemonth ‘s norm. The assembly lines defect rate dropped to zero.
In all, the human resource planning section has made 70 little alterations in the workplace to cut down physical strain for their older employees.
Another cardinal characteristic of BMW ‘s “ Today for Tomorrow ” undertaking is their new flexible work agreements. The human resource planning section introduced a flexitime theoretical account. As a consequence, the employees are able to set up their single work times. Within flexitime there is no limitation on the figure of free yearss that can be taken each twelvemonth.
A twosome of the different types of flexible working agreements that the human resource planning section of BMW Germany offer their employees are clip off for a piece, telecommuting and partial retirement.
What these work agreements consist of are as follows:
Time off for a piece: All employees at BMW Germany have the option to take a sabbatical. Once an employee has the blessing of the human resource planning director, so they have the option to take personal leave for one to six months. The human resource planning section at BMW foremost introduced sabbaticals in 1994 ; more than 11,400 employees have taken advantage of this and opted for a two month block of leave on norm. In 2008 the human resource planning section introduced a new strategy called Fulltime Select with the option for the older employees to take an extra 20 yearss off per twelvemonth.
Telecommuting: This is self-explanatory. If an employee wants to work from place they need to acquire permission from the human resource planning section. The human resource planning section will so look at the peculiar employees fortunes and find whether or non to allow permission to them to work from place. Sometimes the human resource planning section will non allow an employee work from place due to the fact their occupation may non be suited to make from place. If an employee ‘s occupation is to spray paint the autos so this would non be suited to make from place. However the human resource planning section attempt to suit the employee ‘s desire to work from place 2 or 3 yearss a hebdomad every bit much as possible.
Partial Retirement: This component of flexible work agreements was brought in particularly aimed towards BMW ‘s older employees. The human resource planning section came up with the thought of leting the older employees the pick of halving their working hebdomad for a period of six old ages before retiring permantly.
In decision after researching information on the complex nature of human resource planning, I found it interesting it looking at the different elements that are of import in the human resource planning subject. In my study, I gave a twosome of illustrations of a standard definition of “ human resource planning ” . The definition which seems most common and simple to understand and larn from is
“ Human resource planning is all about holding the right employees, with the right accomplishments, at the right clip in the right topographic point ”
From researching the complex nature of human resource planning I found that human resource planning has three chief purposes which are:
Planing for substantial grounds
Planing due to the benefits it gives the concern
Planing for organizational grounds
In this study I looked at the importance of human resource planning which I learned were it helps concerns with future staffing demands, it helps the concern to salvage money and eventually it motivates employees to work harder in the concern.