The need for managers is determined by enterprise and organizational plans and, more specifically, by an analysis of the number of managers required and the number available as identified through the management inventory.
But there are other factors, internal and external, that influences the demand for and supply of managers. The external forces include economic, technological, social, political, and legal factors. For example, economic growth may result in increased demand for the product, which requires an expansion of the work force, thus increasing the demand for managers. At the same time, competing companies may also expand and recruit from a common labor pool, thus reducing the supply of managers.
One must also consider the trends in the labor market, the demo-graphics, and the composition of the community with respect to knowledge and skills of the labor pool and the attitude toward the company. Information about the long term trends in the labor market may be obtained from several sources.
The US government, for example, publishes the monthly labor review and the annual manpower report of the President, which makes long-term projections. Some trade associations and unions also project the demand for labor.
The data about the need and the availability of personnel give rise to four demand-and-supply situations, each requiring a different emphasis in personnel actions.
With a high supply of managers and a high demand, the focus will be on selection, placement, and promotion. Consequently, particular efforts are made to match the available managers with enterprise needs most effectively.
A low supply of managers and a high demand requires a different emphasis. If the company favors internal promotions and many firms give special emphasis placed on training and development to enlarge and improve the pool of managers. But this takes time, and planning far in advance of actual needs is essential. Staffing may be based on open competition for available jobs, and managers from outside the firm should also be considered. Thus, recruitment would be another option. In a situation with a high demand for managers within the enterprise, chances are that there is also a general demand for managers in the external environment. It is therefore crucial that compensation be competitive. This is important for retaining managers already employed by the enterprise, and it is also essential for recruiting managers.
A company with a high supply of managers and a low demand has several alternatives available. The firm can change plans to provide for growth, which would increase the demand for managers and thus take advantage of the managerial assets. The company may also resort to replacement or â€œoutplacementâ€? (a conscious attempt to help managers find and select other suitable employment), layoffs, demotions, or early retirements.
An enterprise with a low supply of managers and a low demand should give special attention to enterprise plans, because this situation indicates a degree of stagnation in the firm. Since developing managers takes a long time, the company should start the process early if there are prospects of growth and of changes in demand for managers in the future.