Human Resource Management at Work: Amifood case - Essay Example

?Organizational Context: Amifood’s importance in the food and drink industry is undoubted. It’s global presence not only entrenches its status as a world leading service firm, but it also increases expectations with respect to practices related to quality assurance, human resource excellence, environmental practices and customer service. The global operations are hence expected to be at par with the best in the industry. The Manchester unit of business forms half of the firm’s operations in the United Kingdom and is of special significance. It caters to the niche market of airline catering. The market is severely competitive and any compromise on service and quality can render perpetrators clueless and behind competition. Before analyzing the theoretical and practical implications of the proposal put forward by the HR manager, we shall analyze the several theoretically applicable HR models that Amifood can adopt in the long run, for the Manchester business unit, to improve performance. Theoretical Considerations – HRM for the organization: One of the options for Amifood is to adopt a standardized model for HR. These models seek to generate high performing work systems that enable employees to perform par excellence and are able to align their practices with the well understood standards of the organization(Mathis & Jackson 2010). The models concentrates employee development on three broad levels: Ability: This aspect of the model concentrates on the enhancement of employee ability and knowledge through good recruitment and training. Programs are developed to create specific and relevant expertise for employees and augment their performance. For a service firm, the broader implication of this activity is improvement in customer service(Mathis & Jackson 2010). Motivation: Incentives are given to increase motivation for employees. The kinds of incentives vary with respect to position in the organization of relevant employees. Intrinsic motivators work well for entry and middle level managers seeking to gain acceptance and promotions and looking towards strong recommendations from supervisors. Extrinsic motivations are relatively more useful for employees at the operational level as they are more concerned about meeting their daily expenditures. Opportunity: The prospective return to the organization is generation of better ideas and contribution from more motivated and skilled workers. This can help the organizations for the long haul(Sims 2007). Best Practices Model: Justification for Best Practices Model: The underlying argument, backed by evidence, for the best practices model is that all firms that adopt this model will see an improvement in performance as a result of its implementation(Meyer & Smith 2009). Method of Implementation: The model works by identification of best practices in the industry. HR is given a high profile within the firm and is a part of strategic decision making. All decisions are affected by the HR policy. Top level commitment is sought when deciding the HR policy and it is measurable, quantifiable and must be sold to strategic management for approval. Advantages of the Best Practices Model: The generation of consensus with respect to what constitutes best practice is a genuine advantage of this model. The industry benchmark, once set, is sought after by participants, and this can have positive implications for Amifood, which is still unclear on its strategic HR direction, specially with respect to Airline catering. Furthermore, the operational and evaluative aspects of the HR policy are decided and there is no need to re invent methods. This is not only cost affective, but helps create a standardized ground for evaluating employees of the same industry(Bratton & Gold 2001). Disadvantages of the Best Practices Model: There is potential for glitches and inconsistency if we step beyond straightforward practices mentioned above. There is a great diversity of what constitutes best practice and the organizational context plays a key role in determining the relative importance of the said practice(Truss, Gratton & Stiles 1997). Furthermore, there can be conflicts between what is good for the company and what is good for the employee. Such issues can arise when there is consideration given to reengineering of operations that can potentially lead to downsizing. Therefore this model may not be appropriate in all situations or even in sections of the same business(Armstrong & Baron 2002). The Best Fit Model: Justification for the Best Fit Model: This model asserts that the HR strategy will be most effective when it is altered and caters to the surrounding environmental and organizational context of the business.(Brewster & Harris 1999) This model seeks to look into business aspects that are important, before developing a HR policy, as opposed to the best practices model which sought to develop the HR policy at the strategic level. The model can be divided into two broad elements of consideration: The External Fit: The external fit for the HR policy is linked to the operations, marketing, supply chain, and distribution strategy, i.e. the overall competitive strategy of the business. Development of an external fit can overlook employee interests, leading to tension and stressed relationships. Furthermore, the entire effort of developing the best fit can be too focused, leading to a compromise on flexibility and quickness. The external fit must support and be consistent with the organizational flexibility. The Internal Fit: Policies and practices of HR must be coherent and consistent. E.g. The organizations must avoid policies that encourage team work but end up rewarding individual performances. When implementing the best fit model consistency is the key. E.g. expensive selection procedures must be complemented by the willingness to invest in expensive training and development. Similarly, groups of employees that are at the same organizational level, have the same kind of work, and same operational/strategic importance, must be treated in the same manner(Paauwe 2004). Analyzing Amifood: Amifood’s HR policy is flexible and does not emanate from the strategic management. Furthermore, there is little standardization and alignment of HR policies across different units of the organization. This indicates that the firm follows the best fit model, wherein HR strategies are altered to select the model which applies best in the given context. The implementation of this policy is understandable, given the diverse group of locations the firm operates in and the varied business concentrations it is a part of. Furthermore, high involvement of low skilled labor would make expensive recruitment and training tactics redundant, considering that extrinsic motivation shall be the main source of extracting performance(McClelland 1987). The competitive organizational context of Amifood makes the assurance of high quality and customer experience paramount to survival. The Manchester unit faces tough competition in the niche market of Airlines Meals. It employs 250 to 400 people, depending on the season. These people have significant costs and margins are slashing down. It is hence extremely essential that Amifood maintains high quality and extracts the most out of these employees. Operational efficiency is essential under such a competitive organizational context. The HR manager’s proposal of increasing pay rates of lower paid operational employees by 8-10%, while increasing higher paid employees’ pays by 2-3% can have varying implications with respect to overall performance and costs. The increase in wage rates would surely help attract labor towards the firm. While the increase for lower paid employees will definitely create greater motivation, it will not result in a quantifiable and distinguishable betterment of performance, given that the operations are largely of routine nature. Furthermore, the fact that the union is largely indifferent to rise in pays for lower level employees and more concerned about higher level workers can create mixed responses from the union. The rise in pays for lower level employees and not a corresponding rise in higher level workers can be met with skepticism and union reaction. The costs of the rise would, however, be high. The financial cost would push the firm to its limits to maintain profitability. While quantifiable changes in performance are unlikely, a quantifiable change in cost is definitely a consequence of the rise in wage rates. One of the added benefits of implementing this policy would be the expected decrease in absenteeism. Rewards tied up to work are likely to help hold employees who switch for greater rewards(Sansone 2000). The key drive for an increase in performance for the workers getting the higher reward would be the extrinsic motivation for money. This kind of motivation, however, is not likely to lead to increase in allegiance or loyalty for the firm. Furthermore, it will also prime employees to lower their level of performance if the company decides to lower wage rates at a given time period. We must also acknowledge that extrinsic motivation is indeed, the most effective mode of extracting performance from operational level employees. Implementation of this policy would be challenging for Amifood. The high turnover and absenteeism of employees are major concerns. Although higher rewards will help decrease turnover of operational employees, it is not likely to completely eliminate it. Furthermore, the employees who constitute Amifood’s operation line are unsophisticated individuals who have been guilty of vandalism and indiscipline. Rise in wage rates may breed laziness and unwillingness to put in extra hours. The existing problems are likely to decrease but not eliminated, and an increase in wage rates would only help to increase the cost of the problems, given that workers are allocated overtime but rarely work during the allocated hours, are guilty of casual absences and show indiscipline. Although the HR manager expects to attract a better standard of employee, the rise in wage rates would only take the firm’s offering at par with other competitors hence, while the problems of indiscipline and vandalism may be largely mitigated, the firm cannot ignore the possibility of high turnover. Therefore, the firm would continue to partly rely on agency and contingency workers to fulfill the gaps of the tray setup department. Given the tough competition the firm operates in, it will be a challenging for the firm to ensure quality and customer experience even after the wage rise. If the firm decides to adopt practices of comprehensive recruitment and training and development, it must start at the managerial level rather than the operational level. Operational training and development can help attain short term goals of efficiency and productivity, however, the industry’s employee turnover makes the firm vulnerable to loosing employees they have invested substantially in. This can have significant costs for the firm without any tangible long run rewards. The best way for the firm would be to train their middle level managers who are responsible for creating the products and interacting with the employees who form a part of delivering the customer experience. One the managers and leaders are trained into efficiency, they can guide their employees, at every stage to achieve better performance. This strategy would be consistent with the best fit model of HR. The firm’s vast scope of operations makes it very difficult to apply a globally acceptable HR policy. Furthermore, varying business dynamics demand improvisation and innovation. This policy of training the trainers (managers), would help create an external fit, with operational employees, and an internal fit, with managers. Managers would also be less likely to leave the firm and would be aware of the HR practices and policies, and hence can make efforts to attain maximum alignment of the two. The change in pay levels for Amifood needs to be planned in context of the operations of the relevant unit. Here the firm seeks to increase the pay scale for operational level employees of the firm by 8-10% while increasing middle and higher level employee pays by 2-3 %. Some important considerations must be taken before the announcement and implementation of such policies. The financial strength of the firm: The financial strength of the firm must be examined carefully before announcing any kind of rise. This is important because labor is unionized and there is high demand for the kind of labor for which the rise is being promised. Failure to deliver the promise can exacerbate an already weakened relationship between the firm and the employees. Cost benefit analysis: A comprehensive analysis of the underlying costs and benefits of such a policy’s implementation must be done before taking the decision. Amifood is already facing tough competition and shrinking margins. If the production and operations manager is unable to correctly forecast and quantify operational benefits, emanating from an increase in efficiency, greater than the financial costs of the rewards, a pay rise will be completely futile. Furthermore, as in any case, if costs are greater than the benefits, it can only weaken the firm further, making it vulnerable to completely losing out to competition. Operational Feasibility: The higher wage rates are aimed at keeping the employees at the workplace during overtime and normal hours when they fled. Managers must be able to evaluate whether the firm has been able to adapt to the inept behavior of the employees and made changes that deem the employees unnecessary. A lack of communication between different departments can lead to the illusion that a problem exists, wherein the problem has already been taken care of. It is hence essential that once hired, the now more efficient employees, have the operational and logistical support needed to raise performance. Evaluation of the performance of employees must include:- Quantitative Analysis: The production and operation manager must make quantitative forecasts into the number of extra units/extra service the employees are expected to add after the wage rise. This must be done on a what if scenario basis, taking into consideration three situations of different contexts with respect to performance from competition, etc. Once established, these forecasted figures shall be the benchmark of measurement of quantitative value addition to the firm by the employees. Qualitative Analysis: The increase in wage rates shall also have an underlying motive to increase commitment to the firm. While operational level employees are least concerned about the firm and grab any opportunity that pays higher, the managers must enhance their communication with their concerned personnel in establishing their importance to the firm. They best way to gauge the qualitative success of the increase shall be to examine the change in inventory turnover of the employees. Recommendations: The HR manager’s proposal has its flaws and benefits that have been explained in detail above. It is important to understand that Amifood cannot afford to invest in incentives that do not give quantifiable rewards. Hence some recommendations I shall propose are: Giving greater responsibility to middle level managers: High turnover of operational employees is partly an extraneous variable and cannot be eliminated. Trained and responsible middle level managers are essential to ensure that the change in personnel does not create a change in customer experience. The firm must avoid decisions that can trigger controversy, especially with respect to union affairs. The HR managers proposal of increasing wage rates of lower level employees while ignoring middle and higher level employees must be phrased in a way that depicts an operational routine rather than excess incentives, which can lead to union leaders demanding standardized wage rate rises. Bibliography Armstrong, M & Baron, A 2002, Strategic HRM, CIPD Publishing. Bratton, J & Gold, J 2001, HRM: Theory and Practice, Routledge. Brewster, C & Harris, H 1999, International HRm, Routledge. Mathis, RL & Jackson, JH 2010, Human Resource Management, Cengage Learning. McClelland, DC 1987, Human Motivation, CUP Archive. Meyer, JP & Smith, CA 2009, HRM Practices and Organizational Commitment: Test of a Mediation Model, Canadian Journal of Admin Sciences. Paauwe, J 2004, HRM and Performance, OUP. Sansone, C 2000, Instrinsic and Extrinsic Motivation, Academic Press. Sims, RR 2007, HRM: Contemporary issues, challenges and opportunities, IAP. Truss, C, Gratton, L & Stiles, P 1997, Soft and Hard Models of HRM, Journal of Management Studies. Read More