Human Resource Flexibility — Some Necessary Conditions for Success

Much publicity has recently been given to the attempts of a number of organisations to improve the flexibility of their human resources. By this is normally meant keeping their labour costs closely related to their level of business activity. We are particularly concerned in this article with the problems of those enterprises for whom the latter is often unpredictable. There are two major ways in which such organisations attempt to link their human resource costs to their business operations — either some variety of payment by results or profit sharing system and/or changing the numbers and contractual relationships of those employed. It is generally accepted that flexible pay systems cannot be totally flexible, but require some core proportion of earnings to be stable over time. The necessity for stability arises because of the difficulty for the organisation of managing a totally flexible system and because of the individual's need, in his/her own life, for some element of income predictability and security.