HUMAN RESOURCE

PLANNING AND
RECRUITMENT

Is the Demand for On-Demand Labor about to Shift?

I. Introduction
Uber Technologies, Inc., commonly known as Uber, is an American
multinational ride-hailing company offering services that include peer-to-
peer ridesharing, ride service hailing, food delivery, and a micromobility
system with electric bikes and scooters. Beyond the software application,
though, a big part of Uber’s success can also be attributed to the fact
that all of the labor employed is low paid. In the United States, for
example, many Uber drivers enjoy the flexibility that this work provides
but the fact is that they are paid far less than the minimum wage,
especially when one figures in expenses and vehicle depreciation. The
company can get away with this because the drivers are classified as
“independent contractors” rather than “traditional employees”.
I. Introduction
This classification has been challenged in several instances, however,
and in June 2015, the California Labor Commissioner’s Office ruled that
Uber drivers should be classified as traditional employees. This finding
has huge implications because Uber is just one of many “on-demand”
companies that rely on this ever-increasing business model for
managing workers.
Also, the case tackled about how companies are shifting away from
outsourcing and offshoring, and instead relying more on local talent to
compete in today’s fast-moving economy. Still there are advantages and
disadvantages to recruiting workers from different sources.
II. Issues Underlying the Problem
1. Discuss the advantages and disadvantages of hiring local workers versus
offshoring versus bringing in immigrant labor. How does the nature of the
product market affect what you might do in the labor market?

2. Assume you are a well-established company facing a labor surplus in some job
category. Why might it be in your best interest to use some method other than
layoffs to reduce this surplus, and in what sense are your options here a function
of how well you did in terms of forecasting labor demand and supply?
3. Discuss the advantages and disadvantages of promoting workers from
within your own firm versus going outside the firm to bring in external
hires. How does the nature of the business situation affect this decision?
III. Alternative Solutions to the Problem
1. Hiring local has a numerous of advantages for a company. While
offshoring or bringing in immigrant labor may save a company money in
labor costs, it can lead to instances of poor customer service, security
violations, and quality control issues. With immigrant labor, there may
be cultural or language barriers that prevent work from being
completed as efficiently. It is also federally regulated, meaning
obtaining work visas may not always be possible. Hiring locally can
avoid things like this. It gives a better impression of supporting
American-made goods to consumers, avoids issues with privacy laws,
and is less logistical overhead. The product market can affect your
choices in the labor market depending on what you’re producing.
III. Alternative Solutions to the Problem
2. If my company is facing a labor surplus, using a method other than
layoffs to reduce it would be in my best interests because layoffs are
very difficult for people. They have a high amount of human suffering
involved with them, and they are not the ideal option. If the proper
analyses are being done to try and accurately forecast what the labor
supply and demands will be far into the future, then other forms of
reduction in anticipation of the surplus could be done ahead of time. A
hiring freeze, retraining current employees into other areas, or offering
early retirement packages would all be much less impactful ways to
avoid this surplus and not have to make more serious decisions down
the line.
III. Alternative Solutions to the Problem
3. Promoting from within a firm looks great to potential employees. Many people
are looking for a company where they have the opportunity to climb the ladder.
Internal hires will have realistic expectations of a job because they are already
familiar with the company, its culture, and how it operates, and in turn the
company is familiar with them as a person. It can be cheaper and faster than going
through an external recruitment and hiring process, as well. External hires gives a
much wider pool of competition for a company to get the perfect person for a job,
can weaken their competition, and introduces fresh ideas and perspectives. The
nature of the business situation affects the decision because, depending on the
economy and labor demands, different practices may be more effective than
others, and some may not be logical. During poor economic times, external hiring
and poaching of talent from other businesses can strengthen a company and
weaken their competition. In turn, if this talent isn’t available, companies must
focus on training and promoting within to make the most of their current
employees.
IV. Conclusion
It is clear that human resource management is a very crucial function in an
organization. The processes of human resource planning and recruitment are very
important as they determine the performance of an organization to a very large extent;
they should for this reason be handled carefully to allow for their success and hence that
of the organization as a whole.
In Uber’s case, the California ruling stating drivers should be classified as traditional
employees would be a challenge to the Company’s successful business model, since if
Uber will be required to fire the drivers as employees, the labor laws applicable can be
fully applied. Thus, increasing costs in terms of recruitment, and drivers’ salary and
benefits which will now be subject regulations. With the ruling effected, and some
companies like Instacart adhering to the said ruling, and has since concluded that this
change improved the quality and efficiency of order picking and made for a better
customer experience. Apparently, the customer services advantages of a more traditional
supply of labor outweighed the cost savings associated the on-demand labor supply. These
changes should also be tested out by Uber so they replicate the positive effect.
V. Recommendations
Some of the issues linked with human resource management
include hiring local or immigrant, compensation and benefits, safety
and welfare, communication and motivation, employees’ performance
management and administration and training among others. Hiring
local has a numerous of advantages for a company. Hiring locally can
avoid things like language barrier. Local candidates understand the
culture in which they live. That means they can navigate potential
problems with greater ease. That usually translates to higher
productivity and a decrease in financial loss, if any.
V. Recommendations
Also, the product market can affect your choices in the labor market
depending on what you’re producing. In the tech industry, it can be
difficult to find the appropriate talent at both ends of the spectrum. It
is common that foreign workers are brought in on work visas to fill
these skill gaps, or that things like customer service or parts production
are offshored where labor will be cheaper. On the other hand, if a
product is being produced where there is an abundance of qualified
individuals available locally, this may be a much easier and more logical
choice for the company.
VI. Factual Experience
Thank you!