Too much workforce flexibility not always a good thing: Study

A new study suggests that companies which try to improve efficiency by building more flexibility into their workforce could end up too lean and increase their costs.

"Flexibility is good, but too much of it is dangerous," Oded Berman, a professor of operations management at the Rotman School said. He co-authored the study with the University of Rochester's Edieal Pinker and University of Rochester graduate student, Hsiao-Hui Lee.

Workforce flexibility is supposed to improve the match between an organisation's labour resources and the work required. Using a theoretical staffing model under different demand conditions, the study examined the impact of several forms of worker flexibility, including workers with a multiple skill-set, variable start times, part-timers and workers switching from one job to another within a shift.

While most forms of flexibility helped reduced costs under normal demand, the study found higher levels of flexibility meant insufficient staff to respond to unexpected demand shocks, leading to higher inventory costs. Variable start times created the most robust flexibility, while part-time workers and job-switching within a shift were not as robust.

"The rule of thumb we've suggested is, have flexibility - and use it -- but set your workforce size assuming you don't have it," professor Pinker said.

The paper was co-published by the University of Toronto's Rotman School of Management.