Report: Human Resource Management Essay

This port consists of detailed analysis regarding the HRS problems of the company. We have identified and also some recommendations based on the research and supporting data. Our investigation suggests that some issues are severely hampering the progress of the company and needs to be addressed immediately, and some problems which are influencing the performance Of the company are not so severe.

However these problems need to be fixed in the near future to prevent them from developing into something major. Some of the major problems that have been found from the case are lack of top management, lack of performance review and poor rarer planning ‘development and etc. We recommend that, new performance review system should be introduced as soon as possible. Also HRS department should focus on attracting or retaining the new and current management to the company.

We have proposed a number of recommendations, by adapting which the company’s performance should increase and the issues that have been found could be solved. These issues and recommendations have been discussed in detail in the body of this report. Thank you for the trust you have put on us.

Comparing the Pay mixes of different employees 12 Figure 8: 3 Levels of employee retention strategy 13 Executive Summary: The purpose of this report is to analyses the situation of Equity Blue, to identify and narrow down the issues or reasons behind the decreasing performance Of the company. Also to find some recommendations this can be used to overcome the issues and increase the rate of success of the company. To analyses the situation, peer reviewed journals and books were used to cross check with the HRS theories.

These journals were used to find out similar situations in other companies and how they have managed to overcome it. In addition, appropriate second hand data was used to support the findings of the research. By analyzing the situation it has been found, the major problems in the company right now are the following. 1. Lack of top management. 2. Ineffective middle management. 3. High rate of redundancies (either voluntary or involuntary). 4. Loss of qualified workers and intellectual capital. 5. Decrease of Employee training. 6.

Risk aversion and ignoring innovative leadership. 7. Old fashioned bureaucratic management (obsolete management styles). 8. Lack of appropriate recognition and compensations. 9. Or level of trust /loyalty and shaky organizational culture. From these problems no. 1, 2, 3,4,6,8 has been identified as severe and discussed in detail. Even though the rest of these problems have not been discussed in detail, they still have been mentioned since they need to be addressed as soon as possible. From analyzing those problems some recommendations have been made to improve the situation.

By implementing an objective external or internal performance review system the employee performance can be increased. Also by providing adequate career opportunities and compensations job satisfaction, morale and loyalty can be increased to educe number of voluntary redundancies and increase employee retention. By rewarding risks that benefit the company, the middle management can be changed from risk aversive and bureaucratic. In recent years Equity Blue has suffered some problems which have lead it from being one of the market leaders to a struggling company.

It had 45% Of the market share and now the company is struggling to survive because of the mass exodus of the top management, voluntary redundancies and many other reasons. Therefore the company HRS director has requested a team to find out the major issues of the company and make some recommendations n how to overcome them. From analyzing the situation in Equity Blue, the HRS consultants have identified some issues of the company. These issues are shown as bullet points below. High rate of voluntary or intended voluntary redundancies initiated through lack of career planning and development, low degree of commitment to the company and low level of job satisfaction and the correlation between these aspects * The lack of performance reviews * Not compensating enough the employee and the management for their work. * The company’s management failing to attract or retain new talent in he company The focus will be on career planning work satisfaction and sustaining talents and employees in general due to the fact that the biggest problem of the company seems to be in that sphere.

The first to be considered are the general mistakes by the management This will be investigated shortly because it is actually no a key issue but some kind of condition the key issues are based on. Mistakes of Top Management: A general reason that leads to the current poor situation at ‘Equity Blue’ is the behavior of the management including general mistakes. There is uncertainĀ¶y’ among the employees about the stabilization of the company and he high number of voluntary redundancies and hence a decreased morale due to a lack of communication in the company between management and employees and the role of the employees for the company.

A recent survey among Coffs in the” PR Newswire Magazine” pointed out the main mistakes of top management as shown below. The survey was conducted by Accountants. The results Of those mistakes are described in the case study. In the following it will be investigated how to prevent or avoid such negative developments. Career Planning: Career planning and development plays a role satisfying individual and organizational needs (Stone et al. 2008, p. 394). That might encompass effects such as sustaining talents or reducing voluntary redundancies.

Some of the main reasons for using career planning are the following: * It develops profitable employees, so it helps to develop internal talents * It lowers turnover, means that attention on employees career development may increase organizational loyalty and lower employee turnover * It satisfies employee needs, with providing growth opportunities individuals may feel more esteemed (e. G. Recognition) which also increases job satisfaction (Stone et al. 008, p. 395). Hence, appropriate career planning might help to sustain employees or reduce the number of redundancies.

Job Satisfaction, Morale and Commitment: Another important aspect to be mentioned is the necessity of creating a comfortable working environment and good working atmosphere to improve job satisfaction. “The International Journal of Human Resource Management” recently published an article regarding culture, job satisfaction and participatory decision making. In that article “research suggests that employees with higher levels of job satisfaction, are less likely to quit and hat organization can reap significant benefits from more satisfied employees” ( De Wet Van Deer Westernizes, Gail Apaches, Don J.

Webber, volume 23, Issue 13, 2012, p. 2661 – 2679). In a recent interview published in the ‘Wall Street Journal”, Jingling Wang, president of Cataracts Asia Pacific, commented the question of how Cataracts keeps good people: “We treat our partners with respect, creating an environment for them to excel. To really give the best of them, give the best to each other. We want to promote our own people, to give them opportunities. We have store managers who stay on 10 to 15 years, which is ere difficult, particularly in the retail business. But they love what they do.

They want to see their people grow” (Emily Beach, 2012). In addition to that, Dry. Erich Linger gave in the German human resource magazine “Billing astutely” a definition of the “Great Place to Work”. Translated it says, a great place to work is, where you trust those you work for, be proud of what you do and enjoy collaboration with others (Dry. Erich Linger, 2011 , Volvo. 8). Another part to achieve that satisfaction is employee value proposition which is the exchange between employer and employees that defines the relationship. The simplest form of that is the exchange of work and payment.

The highest form would be to provide payment, career opportunities, benefits and supportive work environment in exchange for the effort to realize the company’s missions and values by the employees (Fox, Adrienne, Jan. 2012, p. 37). Constriction and Powell (consultants in organization effectiveness, performance management and employee selection) therefore suggest “Six Steps of Improving Employee Job Satisfaction. Some are: Address concerns over job security. Let employees know what you are doing to help the business succeed. Make sure that each employee has a training and placement plan that is updated on an annual basis.

Provide ongoing feedback and recognition. Also a great influence has the commitment of the employees to the company. Allen and Meyers “Three Component Model” describe that it might influence organizational performance, absenteeism or quitting or turnover intention. The three-component model can demonstrate that. The types of commitment are Affective commitment: employee’s emotional attachment to, identification with, and involvement in, the organization. Continuance commitment: commitment based on the costs that employees associate with leaving the organization.

Normative commitment: employees’ feelings of obligation to remain with the organization. Common to all three components is a link between employee and organization, which determines the likelihood of employee turnover. A variant of the Allen and Meyer model is presented in the figure below (Allen, N. J. , Meyer, J. P. , 1996). Performance Review: The next paragraph deals with the meaning, the purpose and importance of performance reviews. Employees should be provided with appropriate and continuous feedback to let them know if they are on the rightward / doing the right things.

In the “Journal of Pension Benefits”, it is mentioned to implement people when they did well and not only when things get messed up. It is recommended that managers should formula evaluate their employee’s performance, review progress on goals and establish new goals at least once a year (Simonizes, Sarah L; Stored, Chris L. Journal of Pension Benefits. 2, p. 74-76). Hence performance reviewing is a dynamic and continuing process. As result it should be a system implemented to gather subordinates data. Achieving an effective review can be difficult, so it makes sense to keep the system as uncomplicated as possible” (Inkers et al. 201 1, p. 341 The many might invent an own system or charge an external firm to do that. However, there are several objectives performance review programs should match. These could be: * Assessment of past performance * Assessment of potential for promotion or transfer * Improvement of motivation * Identification of employee development needs To ensure that performance management is correctly conducted, an appropriate performance appraisal system might be useful that supervises the process.

The “European Journal of Innovation Management” published an article about a Brazilian research centre. The company perceived while implementing the appraisal system besides the function of recognizing achieved goals also a few other useful things such as identifying human competences and a basis for selection, training and compensation practices. So in addition to the mentioned requirements and advantages, a few other aspects were identified in the article (Bead, Santos, 1 998, Volvo. 10).

These authors state that satisfactory performance appraisal produces two types of results: (1) it improves the decision-making processes of the sector responsible for human resource management by focusing its activities on the aspects of the organization that contribute to the development of a company’s strategy; and (2) it provides a better allocation of resources, defining direct relations between human resource investments and strategic assets of a company. As a result the dynamic process of performance review shall be shown in following figure (the performance management cycle’, 201 2, Canada, image, HRS Council for the Nonprofit Sector).

Compensation Policy: From analyzing the case in Equity Blue it can be understood that, one of the major problem in this organization is that, the management and employees are not being compensated enough. Most managers have been seen working a lot of hours without sufficient compensation. In a normal company the basic way to reward the employees is to use the total compensation process. Gomez-Mejia, Balkan and Carry showed the elements total compensation through the following figure (1995). Base Compensation Pay Incentives Total Compensation Indirect Compensation indirect Compensation Figure 5: Elements of Total compensations.

Even though in Equity Blue, the managers are getting paid the base compensations, however they are not getting any pay incentives or indirect compensations. Therefore, their productivity is going low and as a result the placements are going slowly than the company expects. Figure 6: Psychological Dimensions of Total Compensation (Eagan & Forest 2008; popup-232) Eagan and Forest (2008; up. 225-232) argues that the amount of pay directly influences the autonomous motivation of the employees and therefore increases or decreases the performance or mental health.

In this case, Equity Blue managers are not being compensated enough, thus they are losing their motivation and their performance is decreasing day by day. MacAfee argues, every organization must have a structured compensation system (1988). Every employee must be awarded for their labor and dedication to the company. If employees are being rewarded according to their work, they will definitely be interested to stay and perform better for the company. Core, Holocausts and Larker argues that introducing a structured compensation system can motivate the managers to increase performance.

They also stated that, without necessary compensation, managers start being risk aversive, old fashioned and slow (1999, up. 371-406). That is one of the major issues found in the Equity Blue case. Therefore, to prevent the managers to turn into risk aversive and afraid f changes, the top management should introduce a system of compensation which rewards for taking risks and improving performance. According to Dowling, Fisting and Engle, the managers willing to take risks should get paid more or receive more benefits than other managers.

However this recommendation only applies to the situation where taking risks are benefiting companies rather than making it worse than it already is (2008). Compensation does not mean only paying the managers their specific wages. They can also receive different monetary benefits or bonuses to increase their morale. Figure 7: Comparing the Pay mixes of different employees (Jackson, Schuler, Werner 2011, p. 361 ) Decency and Robin argued that the employees all around the world receive different style of compensation.

For example, the managers in LISA get stocks, the Japanese managers get golf club membership and wine and French managers get paid holidays as a reward to their work (2007). As a result the managers incase their performances and achieve the organizational goal. Therefore by analyzing the situation of Equity Blue a recommendation can be made from the findings of Gerhard and Miltonic to introduce a new compensation System to reward the managers and employees in a monetary and non monetary mix.

Thus it can be ensure that employees are realizing their value to the company and putting their best performances (1990, up. 663-691). Retention Policy: Another major issue in Equity Blue is the failure to attract and retain new talents in the company. As it has been noticed throughout the organization, the old managers (who have been promoted from normal employees) disregard the new and energetic way of the young managers or employees. As a result most of the new employees have left or openly discussing about leaving the company.

To prevent the losses of valuable personnel, the top management needs to act fast to start a new employee retention programmer. As it has been discussed before in this report, an objective performance review system can help retain employees. As Barman, Sheridan and Peters indicated performance s the key of employee reinvention. If the employees are measured for their performance objectively and being awarded for their good performance, they are more likely to stay in the company (1992).

Kerr and Slouch recommended that the organizational cultures has to be supportive and rewarding to the new and idealistic employees to retain them. Introducing new ideas about teamwork, personal respect and security in an reconfiguration’s can be a major force to retain employees (1982) Figure 8: 3 Levels of employee retention strategy ( Phillips, O’Connell 2003) By analyzing the retention strategy shown above, it can be concluded that recognizing good performance, providing better lifestyle and opportunities and promotions more employees can be retained and attracted.

Even though the organization is having some troubles,if the good employees are retained and new employees are attracted Equitable is sure to improve their indention. Therefore it can be recommended that, the company should start to recognize good performance and provide benefits to good workers and ideas to retain and attract excellent employees. By analyzing the situation of Equity Blue some recommendations can be made to improve the performances of the company. Implementing an external or internal performance review system to monitor employees performance and development regarding the company’s objectives * Provide adequate career opportunities and training or development programs * improve job satisfaction and commitment and internal communication * Introduce a insemination structure and change the organizational culture of being risk aversive to reward the managers and employees for their work and beneficial risk taking. * Performance management system should be improved to identify and reward the new and idealistic managers who can improve the company’s performance.

This will improve the retention rate and attract new managers. In summation the following conclusions can be drawn from analyzing the case: As mentioned above appropriate Career planning and development can lower employee turnover, increase organizational loyalty or commitment and influence job satisfaction. Hence, there seems to be a correlation between career planning and development, job satisfaction and employees commitment to the company. Research suggests that the higher the level of job satisfaction, the lower the affinity to quit a job. In addition, the durability of employees may also increase.

Concerning to employee value propositions, job satisfaction can be achieved by providing career opportunities or comfortable work environment. The third pillar of avoiding employee turnover is the concept of commitment of employees to the company. As considered, commitment might influence employee turnover intention and absenteeism which is an indicator of job satisfaction. There are different degrees and forms of commitment which leverage the company’s performance. The purpose and importance of performance reviews is to give employees appropriate feedback whether they are on the right way doing their job.

It might motivate as well. That dynamic process can even be suitable to identify workers specific strengths and potential. Moreover, performance reviews may facilitate managers decision making processes and provide a better allocation of resources. Also the introduction of a new compensation logic can improve the management status and change the retention rate of the employees.

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