2. local position in existing stores and by developing

2. Description of
the company

   LEMET Company has been founded on December
20th, 1991, having as field of activity the production of furniture.
Nowadays, the company owns a property of
71.351,00 square meters on which there are 40.000 square meters of production
halls, wharehouses for the finite products, wharehouses for the raw materials
and office buildings. The anual capacity of processing of LEMET furniture
company is 5.000.000 panels type PAL and production is done on six completely
automatic production lines used for the processing of PAL and MDF panels.

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   The investments have always been done
following careful consideration to the protection of the environment.
Furthermore, heating systems which use sawdust as fuel have been purchased.

   LEM’S network is a the network of furniture
stores which has the highest coverage nationally, having over 68.000 square
meters of well-arranged spaces following the same standards in all the
country’s departments. The development policy of the company focused on both
reinvesting the profit and attracting sources of financing that are external to
the company (supplier’s credits, bank credits non-refundable financing). Thus,
LEMET is one of the largest furniture factories in Romania, having the largest
network of furniture stores, being represented by 100 stores out of which 82
working in a franchise system and 18 as the company’s own stores.

   In the year 2015 LEMET LTD sets down a
second project for accessing non-refundable financial aid. The goal of the
project consisted in developping a unit of production capable to diversify its
activity and to approach new categories of products (hard wood furniture, veneered
PAL and MDF furniture and dyed PAL and MDF furniture), by purchasing complex
production equipment. The project was approved and implemented successfully.

   All the organisation’s efforts are
channelled towards satisfying its clients. This is the only foundation on which
the company’s activity can grow in a competitive environment.  The company’s development objective is to
increase the overall market share under a certain amount of time by growing the addressability on the economic and
premium segments, by strengthening the local position in existing stores and by
developing the network of stores and opening new ones.

 

2.1.          
Mission:

–         
To supply products and
services which by their quality and performances can satisfy the demands and
overcome the expectations of the customers;

–         
Constant improvement of the products and
services;

–         
Prevention of pollution and protection of the
environment;

–         
To reduce or eliminate risks related to health
and work;

–         
To follow legal and regulation demands and any
other demands identified by the organisation;

–         
To educate and motivate the staff in order to
develop the organisational culture as regarding the quality of the products,
protection of the environment, health and work security;

2.2.          
Vision:

–         
The degree of satisfaction of
the customers;

–         
Augmenting the degree of
satisfaction of the customers;

–         
Lowering the intervention
time during the guarantee period;

–         
Low rate of unconformities.

 

2.3.      Objectives:

– To report on and to monitor expenses on fields of
activities;

– To grow productivity in each activity sector;

– To promote new ideas that can lead to the progress
of the company;

– To use company time as efficiently as possible;

3. Current
situation – Lack of labour force on the market

   One component of employability that impacts
it directly, is the ability of workers to meet the demand or the needs of the
labor force that requires the continuous upgrading of skills, especially in
sectors that experience rapid technological and organizational change, thus
avoiding obsolescence of their human capital or labor force.
   In a furniture factory sales may drop
due to lack of qualified and unqualified labor force. Lemet forms people at
work for various crafts such as the tapestry. This takes roughly around 6
months. In many cases, after Lemet has invested substantially in their
training, the newly skilled workers choose to go to another company or abroad.
The most difficult part of the training process is to persuade them to stay at
the factory after they have finished it.

   Lemet’s sustainable development manager
said: “The hardest part is to find qualified people in areas that include
woodworking, carpentry, upholstery, assembly. The labor market is increasingly
requiring qualifications to include these activities; everything revolves
around new technologies that easily make the old crafts lost”.

   The company needs to reconsider how it
manages the labor force. Managers have to face the challenges, including: job
rethinking, using remote work, greater flexibility of work.

   In an attempt to keep the labor force,
Lemet, applies a program of measures to motivate the staff:

–         
Motivating
salary package;

–         
Overtime
payment;

–         
Premiums
on the occasion of various holidays;

–         
Daily
allowance for travel;

–         
Offering
a hot daily meal;

–         
Payment
of transport from home to the workplace;

–         
Health
insurance;

–         
Gifts
for children;

–         
Participating
in international furniture fairs and experience exchanges;

–         
Trainings;

–         
Internship
programs;

–         
Firm
– various educational institutions partnerships.

 

3.    
Critical
analysis of lack of labour force on the market applied within LEMET Company

Firstly, we can
see that there are many definitions and also types of labour market shortages. Usually,
they refer to a situation where the number of workers needed is higher than the
qualified people in that domain and in the working conditions. So, we can
distinguish two main types: the quantitative shortages where there is an
insufficient number of workers to fill the overall demand and the qualitative
shortages which refer to lack of some occupations, skills and information of
workers to fill this sectors and shortages. There is no universal agreement
about the definition of labour market shortages in the literature (OECD, 2003;
Barnow, Trutko and Piatak, 2013; Ruhs and Anderson, 2010; IOM, 2012). Various
definitions are suggested in policy documents as well as in the academic
literature. Very generally, labour shortages refer to a situation in which
labour demand exceeds labour supply (Barnow, Trutko and Piatak, 2013: 1). The
European Commission (2004: 5) gives a more narrow definition by stating that
‘labour shortages occur where the demand for workers in a particular occupation
exceeds the supply of workers who are qualified, available, and willing to do
that job’.  Barnow, Trutko and Piatak
(2013: 3) define labour shortages as ‘a sustained market disequilibrium between
supply and demand in which the quantity of workers demanded exceeds the supply
available and willing to work at a particular wage and working conditions at a
particular place and point in time’ which is a definition that we can focus on.

The quantitative
shortages and the qualitative ones can also be divided in other categories that
we can find as issues in our case.

We have as quantitative shortages the following: a
decline in the population of working-age, a decrease in the participation rate,
an increase in overall labour demand, a geographical mismatch between regions
and as qualitative: mismatch between the skills needed and available in the
labour force, mismatch between preference of jobseekers and the jobs offered,
information mismatch between jobseekers and employers.

A decline in the population of
working-age can be caused by a natural outflow out of the working-age
population that is larger than the inflow due to ageing and a low fertility
rate and by net emigration. In our case LEMET can’t find workers because the
skills that they need are no longer learned by young generations and most of
the qualified workers are retired or close to the retirement period. Also, in
Romania many skilled workers emigrated for better payments so there is a lack
of labour force left behind.

A geographical mismatch between
regions occurs when there is a lack of skilled workers in a region or a country,
while there is a surplus in another region or country. Consequently, there are
sufficient people but they are not in the same locations as the available jobs
(Desjardins and Rubenson, 2011; OECD, 2012). Usually, this happens between
rural and urban areas. Most of the qualified workers for LEMET’s available
posts are living in the country side so, as we said befor,e assuring them a way
to travel or a place to live in the same location with the workplace would be a
great solution.

 A decrease in the overall labour participation
or activity rate may be the result of particular segments of the labour force
becoming inactive. For this reason, it is important to focus on marginal
groups, as they are more vulnerable. Also we have here early retirement and skill
obsolescence of older worker.  If older
workers lose their job and become unemployed, this may result in a permanent
departure from the labour market, due to a loss of skills been shown to
depreciate with age.

An increase in overall labour demand
Generally, an increase in the demand for goods and services can result from an
increase in the purchasing power of consumers, a change in the composition of
the population of consumers, or changes in the tastes of consumers (Barnow,
Trutko and Piatak, 2013).

Mismatch between the skills needed
and available in the labour force Skill mismatch can be defined as an imbalance
between the supply and demand of particular skills within a given economy. A
skill mismatch can occur in a specific sector, a specific occupation, or at
particular skill levels. The ILO (2014) distinguishes between vertical skill
mismatch, meaning that the level of education or qualification is less or more
than required, and horizontal mismatch, meaning that the type or field of
education or skills is inappropriate for the job (see Box 1). Another
distinction is that between educational mismatch and skill mismatch (Allen and
Van der Velden, 2001; Allen and De Weert, 2007) to specify whether the
imbalance concerns the level or field of education or, more broadly, the skills
possessed by job holders compared to what is required for their jobs.

a. Skills shortages due to
technological change Ongoing technological change increases the demand for
skilled labour. Despite a general trend towards a higher level of educational
attainment of the labour supply, skills shortages will occur if the supply of
skilled labour does not keep pace with demand. Skills shortages may be due to a
scarcity in the skills required for certain production technologies (e.g.
digital literacy and computer skills), especially in high-tech companies.
Quintini (2011) observes that structural changes, such as the adoption of new
technology, can create needs for new skills that are not immediately available
in the labour market, giving rise to skills shortages until the education
system is able to meet the new skill requirements

b. Skills shortages due to changes at
the sectoral and the occupational level Sectoral shortages Skills shortages may
be caused by a lack of adequately trained candidates in labour market segments
that experience strong growth. Skills shortages in specific sectors may be the
consequence of sectoral shifts in demand. Skills shortages resulting from
business growth in expanding markets with strong product demand can also be
regarded as a marker of firm success (Healy, Mavromaras and Sloane, 2011). In
such cases, shortages tend to be a temporary phenomenon associated with
expanding sales and a consolidation of the business position in the market.

c. Skills shortages caused by
recruitment rigidity Rigidity of recruitment criteria is another factor that
contributes to skills shortages. In order to respond timely and effectively to
skills shortages, a better understanding of the relationship between skill
mismatches and human resource policies is necessary (CEDEFOP, 2012b). Skills
shortages may result from poor investments in recruitment, especially for SMEs,
which lead human resource managers to overestimate candidates at the
recruitment stage and hire underskilled workers. Other recruitment related
factors that can lead to skills shortages are discrepancies between the
recruitment channels used by firms to attract skilled labour and the search
strategies pursued by skilled job-seekers (Oyer and Schafer, 2011; cf.
discussion below about information mismatch). Finally, informal recruitment
channels have been found to reduce vacancy duration compared to more formal
recruitment methods (Russo et al., 2001). d. Skills shortages caused by
increasing replacement demand Skills shortages may also be due to an increase
in replacement demand, i.e. ‘jobs resulting from the departures of workers that
have to be filled by new workers’ (Willems and De Grip, 1993). If replacement
demand is increasing and not all vacancies left vacant by departing employees
can be filled by candidates with adequate skills, shortages arise. Factors that
influence the replacement demand are the share of employees entering
retirement, temporary or permanent withdrawals of women due to childbirth and
childrearing, and occupational and job mobility. Replacement demand tends to be
low in relatively new occupations that have recently arisen (Willems and De
Grip, 1993).

e. Skills shortages caused by the
‘wrong’ educational choices of students An important source of skill mismatches
is a discrepancy between the fields of study that students choose or are able
to choose and the type of qualifications that employers demand. This phenomenon
is known as horizontal mismatch and is particularly severe in health care,
finance, ICT and engineering. In choosing a course direction, many pupils and
students do not take into account the expected future demand for different
fields of study. As far as they do base their field of study on labour market
prospects, they tend to focus on current labour market shortages or surpluses
instead of on the projected future shortages. This may result in so-called
cobweb or pork cycles, in which periods with shortages and periods with
surpluses of workers with particular qualifications succeed each other (Heijke,
1996: 8-10). In addition, the access to particular fields of study, such as
medical specialisations, may be limited and may thus lead to a shortage of
specific qualifications, despite the fact that sufficient students are willing
to choose that field of study. Skill mismatches can also occur when
insufficient educational institutions exit, or if they offer programmes of
insufficient quality to meet the standards of the labour market, limiting the
options of students.

1.3.2. Mismatch between preference of
jobseekers and the jobs offered Preference mismatch refers to the unwillingness
of working-age people to take up certain jobs despite the fact that these jobs
match their qualifications and skills profile and are located in the relevant
geographical region (European Commission, 2004). This means that the full
potential of the workforce is not utilised because people’s preferences differ
from the available occupations. Various factors may divert people from certain available
jobs. Preference mismatch can be related to the objective and to the subjective
characteristics of particular jobs, in short the attractiveness of a job. a.
Preference mismatch due to working conditions The most important objective
factors are inadequate remuneration and working conditions. Green and Owen
(1992) argue that definitions of skills shortages often assume that reasonable
wages, training and working conditions have been offered to potential
candidates. However, this is not always the case. Sectoral or occupational
labour shortages may occur because certain jobs do not offer attractive working
conditions (e.g. long hours, low wages, demanding tasks). Haskel and Martin
(2001) report a lower incidence of Policy Department A: Economic and Scientific
Policy PE 542.202 30 shortages in establishments that offer a higher wage
relative to the average wage for the same occupational group in a given
geographical area. ‘Inability to offer a competitive starting salary is cited
by 25% of employers in the 2010 Eurobarometer survey as a reason for unfilled
vacancies. Another 11% of firms say limited resources inhibit their ability to
market their graduate vacancies’ (CEDEFOP, 2014: 3). Preference for jobs might
also be reduced by a lack of flexibility in working hours which hinders
combining work with caring responsibilities. In industries characterised by low
wages and poor working conditions, employers may be forced to hire
underqualified personnel for lack of interest from more suitable candidates
(CEDEFOP, 2012b). b. Preference mismatch due to low social status of a
job/sector The more subjective factors include the status of the job, whether a
social stigma is attached to a particular kind of job and whether jobs are
associated with a gender stereotype (European Commission, 2004; European
Commission, 2014a). According to a recent study by the European Commission
(2014a) around 35% of the reported bottleneck occupations were related to a
gender-biased image (e.g. skilled manual occupations, personal care workers,
science and engineering professionals). This can lead to a substantial
narrowing of the potential workforce that has a preference for these
occupations. As shown by the same study, the building sector in particular has
a poor image and lacks attractiveness for female workers. Another sector that
experiences a strong gender imbalance and that is affected by skills shortages
is ICT (European Commission, 2014b). Some professions are also associated with
immigrant or ethnic minority workers, often implying a social stigma (European
Commission, 2004). Also the popularity of health care occupations is declining
(European Commission, 2004). The problem of preference mismatch is more serious
in countries where social benefit systems provide disincentives to take up
low-paid or seasonal work (European Commission, 2004). 1.3.3. Information
mismatch between jobseekers and employers Shortages can also be related to
information asymmetries. In this case, there is no shortage of skilled labour
in the local labour market but the demand still remains unmet due to imperfect
information flows, resulting in a lack of transparency on the labour market.
Information mismatch may result from recruitment activities by companies that
fail to reach their target or from job search strategies by job seekers that
fail to locate available jobs. Depending on whether the focus is on the supply
or on the demand side, either unemployed workers or other job seekers do not
receive information on relevant vacancies, or firms do not obtain information
on suitable candidates (cf. discussion above on skills shortages due to
recruitment rigidities). Information mismatch may also concern workers who are
currently employed in jobs that do not match their level of qualifications or
skills and who may be qualified for and willing to move to a better fitting
position.

5. Personal recommendations

   Lack of qualified personnel is becoming a
growing concern among employers who are in constant search of the right person
to hire. However, this might be a two-headed problem. Firstly, there is indeed
a lack of trained personnel in certain domains in which companies are required
to either train by themselves the newly employed or import workforce from
overseas. On the other hand, in other industries there is a surplus of skilled
individuals. In this sort of industries, employers have the luxury of being
picky when it comes to hiring new people since there is such a large pool of
talent available to them. The second sort of industries are the most prone to
thriving since “the ceiling on research and development activities is
fixed by the availability of trained personnel, rather than by the amounts of money
available” (J.R. Steelman, 1947).

   Lemet S.R.L. unfortunately falls in the
first category. Furniture manufacturing is no longer a cutting edge business,
nor a desirable working environment for the young graduates. The workforce is
shifting towards a digitalized era. In order to stay relevant on the workforce
market, Lemet needs to invest in new and revolutionary technologies. They need
to make a shift from relying on unskilled workers for various operations to
machinery that can be operated by a trained professional. This way they would
reduce their operating costs and be more attractive to young graduates looking
for a job.

   Another aspect in desperate need of a
makeover is their entire marketing strategy. For instance, their website looks
ancient and it is a struggle to apply for a job opening online. Almost anyone
nowadays finds it easier to apply for a position directly online. It is more
convenient and way faster than sending a CV via post or delivering it
personally. Therefore, Lemet needs to develop a better online presence in order
to attract both customers and employees.

   Another issue Lemet struggles with is the
placement of their factory. It is placed in Megiesec, comuna Brebu, judetul
Prahova. It is a rather secluded area with only a handful of inhabitants,
therefore making it hard for the company to find local skilled workers. The
solution is to bring people from other parts of the country to work there.
However, there are not so many willing to give up their lives in order to come
and work for Lemet, no matter how high the salary might be. The main problem of
the village where the factory is placed when it comes to the rejection of the
job by the skilled people is that there is no modern housing. Locals are living
in traditional houses which are avoided by professionals since most of them
come from an urban area where they grew accustomed with all the commodities of
modern day living. In this instance Lemet has three options:

5.1
 Build an affordable yet modern neighbourhood
specifically for its employees

   This is the more costly method at the
moment. Still, over time, it might prove to be the least costly. By building a
few houses in Megiesec it will attract skilled workers and it could make a
separate revenue by renting these houses to them. Also, in the event that the
factory will have to relocate in the future, the houses can be sold and money
used inside the business. Even more, by doing it right, Lemet may even venture
on the real estate market, this way opening doors towards other ventures.

5.2
 Provide free transport for employees

   Lemet’s workers may be scattered among the
entire Prahova county therefore making it quite difficult to establish a single
mean of transport (like a bus). Still, Lemet may provide its more valuable
workers with a personal vehicle. In this way it may attract personnel from
Ploiesti or even Bucharest which is at roughly an hour away.

5.3
 Training

   It is true that Lemet is already investing
in training for their employees. However, when we spoke to Lemet’s sustainable
development manager, he complained that most of the new employees choose to
leave for another company after they finish their training inside Lemet. Due to
this factor, the management tends to be reluctant when it comes to further
invest in their employees. A long term fix to this situation we believe to be
the method applied by the government when it comes to preparing the police and
army forces. Upon joining a military school or a police academy, the student
signs a contract which binds them to spend a certain amount of time working for
the government after they graduate. Otherwise, they are obliged to pay the
entire training process. This may not be the perfect solution but it has been
proven in Romania. Lemet may implement it and see how it goes from there.