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The Nonstationary Staff-Planning Problem with Business Cycle and Learning Effects

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  • Edward G. Anderson, Jr.

    (University of Texas Department of Management, CBA 4.202, Austin, Texas 78733)

Abstract

Managing highly skilled employees is extremely complex because of the need to balance the costs and time lags associated with their training against the need to meet demand as quickly as possible. Unlike previous approaches to this problem in the staffing literature, this paper develops an optimal staffing policy at the strategic level to cope with nonstationary stochastic demand for a staff characterized by unproductive apprentice employees and fully productive experienced employees. The paper then explores the implications of this policy in different industries, using empirical data. Aside from the optimal policy, this paper's primary results include: (1) demand volatility reduces average productivity, most especially under conditions of low (or slightly negative) growth and---nonintuitively---low employee turnover or knowledge obsolescence rates; (2) there is a trade-off between meeting demand and high productivity; (3) firms with longer business cycles should smooth their hiring and firing policies; and (4) firms in industries with longer training times should smooth their hiring and firing policies. The paper also explores the possible rewards from reducing training times and turnover rates. Finally, it discusses managerial implications and possible future directions in research.

Suggested Citation

  • Edward G. Anderson, Jr., 2001. "The Nonstationary Staff-Planning Problem with Business Cycle and Learning Effects," Management Science, INFORMS, vol. 47(6), pages 817-832, June.
    • Handle: RePEc:inm:ormnsc:v:47:y:2001:i:6:p:817-832
    DOI: 10.1287/mnsc.47.6.817
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    References listed on IDEAS

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    8. Nelson, Charles R. & Plosser, Charles I., 1982. "Trends and random walks in macroeconmic time series : Some evidence and implications," Journal of Monetary Economics, Elsevier, vol. 10(2), pages 139-162.
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    Cited by:

    1. López, Luis & Zúñiga, Roy, 2014. "Dynamics of judicial service supply chains," Journal of Business Research, Elsevier, vol. 67(7), pages 1447-1454.
    2. White, Sheneeta W. & Badinelli, Ralph D., 2012. "A model for efficiency-based resource integration in services," European Journal of Operational Research, Elsevier, vol. 217(2), pages 439-447.
    3. Song, Haiqing & Huang, Huei-Chuen, 2008. "A successive convex approximation method for multistage workforce capacity planning problem with turnover," European Journal of Operational Research, Elsevier, vol. 188(1), pages 29-48, July.

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