Expanding of Organisations Nowadays - Coursework Example

Expanding Organisations Table of contents Executive Summary 3 Introduction 3 First part – The People 4 Second part – The Organization 9 Conclusion 12 Recommendations 12 References 14 Executive Summary The survival of the firms in the modern market can be quite difficult especially when referring to highly competitive industries, like the construction industry. Identifying and hiring highly skilled staff can secure a firm’s market position since such staff can support the achievement of organizational objectives. Particular problems can appear when the employees required for supporting a firm’s plans cannot be identified in the local market. In this case, overseas staff can be employed for covering the relevant gaps. However, this strategy has a series of implications: first, the readiness of the firm to make appropriate changes in its structure and culture, as such changes are related to the employment of overseas staff, is difficult to be diagnosed in advance. Then, the cost of the relevant plan can be higher than estimated if failures occur in the selection process. Also, the needs of the plan have to be checked carefully before any initiative is taken: for example, keeping local employees motivated could be achieved easier than when having to manage overseas employees, where cultural differences can set barriers in the success of the HR schemes introduced for securing high employee motivation. In any case, the recruitment of overseas staff is the most appropriate strategy for supporting critical business plans, such as market expansion, when all efforts for covering the relevant business needs through local staff have failed. Introduction The development of firms in their market is related to a series of factors: the promotion of innovation and the high quality of products/ services are important criteria for the business success both locally and internationally. In any case, the relevant plan has to be supported by appropriately qualified staff, otherwise failure will be unavoidable. In the firm under examination such an issue has appeared: existing employees are not able to respond to the demands of the firm’s plan for expansion. The use of staff outside the UK has been therefore necessary. Still, in this case a series of issues appear: a) which HRM practices would be most appropriate for ensuring high motivation of overseas staff? b) How the company would overcome the barriers related to the recruitment of such staff by UK firms? and c) which would the changes that should be developed in regard to the organization’s structure and culture so that the whole process, i.e. the recruitment of overseas staff, to be developed successfully? The literature developed in this area seems to emphasize on the cultural challenges that a firm that hires overseas staff usually faces. Indeed, as analyzed in the following chapters, the differences in the cultural background of employees within the same organization can lead to severe communication and cooperation problems which can be effectively controlled only if appropriate measures have been taken in advance, i.e. during the selection and hiring processes involved. In this context, it is concluded that the expansion of the firm in the UK construction industry could be supported by overseas staff, where necessary, but only under the terms that the various aspects of the particular employment relationship are carefully planned and closely monitored, as they are applied in practice. First part – The People The incorporation of overseas staff in organizations can be successful only if certain criteria are met: a) primarily, it is necessary for accurate job descriptions to be used. Indeed, for overseas staff the cost of participating in the selection process can be high and the relevant cost is usually fully covered by the candidates, unless a different agreement is made with the company involved (Naoum 2001). In addition, if an overseas candidate is hired based on a faulty job description, then it would be quite difficult, and highly costly, for the firm to cancel the relevant employment contract (Mullins 2010); b) then, the culture of candidates should be reviewed, if it is close to the culture of the firm or not; important cultural differences between employees could result to communication failures in the workplace, a fact that could harm the performance of the organization (Naoum 2001). Of course, in the case of highly skilled candidates who are willing to adapt in a new cultural environment without setting cultural barriers, an exception could be made. This means that culture of candidates would be a criterion for their selection but the specific criterion should be evaluated in combination with all other characteristics of the candidates, such as their educational and professional background and their perceptions in regard to change, innovation and teamwork. At this point, the following fact should be made clear: the successful engagement of overseas staff would be highly depended on the HR schemes introduced for securing high employee motivation and appropriate rewarding of overseas staff. The responsibility for the above tasks would belong to the managers of the firm; the latter have a series of responsibilities, including the obligation ‘to forecast and plan’ (Naoum 2001, p.11), as part of their role according to the theory of the Five Functions of Management, as developed by Fayol (Naoum 2001, p.11). In the context of business, motivation is a term used for describing the ‘choice by individuals of specific outcomes and the adoption of behaviours for achieving them’ (Naoum 2001, p.230). The strategy that the firm should adopt for enhancing the motivation of its overseas staff should be decided by the organization’s leader in cooperation with managers in HR department (Mullins 2010, p.373). At the next level, the theory on which the relevant HR plan would be based should be identified. Two are the most popular theories in the specific field: ‘a) the Hierarchy of Needs theory of Maslow and b) the two-factor theory of Herzberg’ (Naoum 2001, p.231). Figure 1 – The Hierarchy of Needs theory, Maslow (online) The Maslow theory (Figure 1) is based on the following view: employee motivation can be achieved only if specific needs of employees are covered; these needs are included in the graph developed by Maslow and are set in hierarchical order. The needs at the lowest part of the pyramid (Figure 1) have to be addressed first. Then, the needs at higher levels should be covered. The needs of each category should not be addressed unless the needs of the previous category are fully covered. The two-factor theory of Herzberg is based on a different approach: according to the particular theory the factors that can lead to employee motivation can be divided into two categories: the Hygiene factors and the Motivational factors (Figure 2). The first category refers to issues that are vital for the existence of employment relationship: the level of compensation, the conditions in the workplace and the organizational rules and plans (Figure 2). In this category also, issues of secondary importance for employment, such as the personal life of employees are included. These factors even if they are vital for employment they cannot secure employee motivation. Rather, there are other factors, the motivational ones that can highly influence employee motivation: for example, ‘recognition, personal development and job achievements’ (Figure 2). Figure 2 – Two-factor theory of Herzberg (online) Rumpel and Medcof (2006) have explored the potential of a particular reward scheme, the ‘total rewards’ (Rumpel and Medcof 2006, p.27) to promote employee motivation especially in regard to the employees of ‘technology-intensive firm’s (Rumpel and Medcof 2006, p.27). Total Rewards is a HRM scheme which includes ‘all benefits that an employee could wait to receive for his work’ (Rumpel and Medcof 2006, p.27). Reference is made to both monetary and non-monetary benefits, such as ‘flexible working hours, training, bonuses and health care schemes’ (Rumpel and Medcof 2006, p.29). The potential elements of the Total Rewards are presented in Figure 3 below. Figure 3 – Total Rewards scheme (Rumpel and Medcof 2006, p.29) The Total Rewards scheme, as presented above, is used by global firms, such as Microsoft and IBM (Rumpel and Medcof 2006, p.27) and has been proved quite effective in promoting employee motivation. The value of employee motivation in regard to employee performance cannot be doubted. Tesco, a leading firm in the UK supermarket industry, has introduced a Total Rewards scheme for promoting employee motivation. More specifically, the rewards that Tesco provides to its employees include: ‘flexible working, high salaries and staff discount’ (The Times, Tesco case study, p.106). The Total Rewards scheme used by Tesco is presented in Figure 4 below. Figure 4 – Total Rewards scheme of Tesco (The Times, p.106) Second part – The Organization The construction industry is characterized by high competition. In fact, even if the turbulences in the global market are severe, the growth of the construction industry at global level is significant. By 2020 the value of the construction industry, worldwide, will reach the ‘$12 trillion’ (Loosemore and Dainty 2013, p.3), a figure that it is quite high if considering the strong pressures that other industries face. When referring to the HRM of the construction industry of UK emphasis should be given to the following fact: for many years, the specific industry has been ‘highly deregulated’ (Loosemore and Dainty 2013, p.3). This fact, along with high taxation, has led many individuals to prefer a self-employment scheme than to seek for a job position in one of the industries large firms (Loosemore and Dainty 2013, p.3). The above phenomenon has led to the gradual decline of skills of people involved in construction projects: in the context of self-employment individuals are not likely to take initiatives for enhancing their professional skills. Moreover, in such environment, the number of people working in the industry’s large firms is kept low: therefore, skills in the construction industry are stabilized since the number of people participating in training schemes is low (Loosemore and Dainty 2013, p.4). Another important characteristic of the construction industry is the following: due to the nature of its operations, the construction industry is highly based ‘on sub-contracting and outsourcing’ (Loosemore and Dainty 2013, p.4). In this way, the development in a construction firm of an integrate HR strategy is made quite difficult, since the completion of each task is gradual, incorporating ‘many levels’ (Loosemore and Dainty 2013, p.4). Because of this fact, it is quite difficult for the managers of construction firms to have a clear view on the distribution of tasks among employees and the progress of each task (Loosemore and Dainty 2013, p.4). If the managers of the firm under examination decide to proceed to the hiring of overseas staff, then there are certain issues that should be taken into consideration: a) in the context of the European Union ‘the free movement of persons is fully protected’ (Enterprise Europe Network 2010, p.4). This means that if the chosen employees would be citizens in one of EU’s member states, then the selection and hiring process would be developed easily, in the same way followed for the hiring of staff from UK. However, if employees outside from EU are chosen, then there would be certain implications: for individuals who are not citizens of one of EU’s member states the work in UK is permitted under specific terms. More specifically, according to existing law, introduced ‘in November 2008 and updated in March 2009’ (Enterprise Europe Network 2010, p.7) all individuals who are non-citizens of EU can work in UK not by using a work-permit, as this system applied up to November 2008 (Enterprise Europe Network 2010, p.7) but according to their performance in a point-system. The latter consists of five stages, ranging from ‘temporary workers up to highly skilled staff’ (Enterprise Europe Network 2010, p.7). As noted above, the particular firm seeks for highly skilled staff, thus the individuals that would be selected in the selection part of the firm’s recruitment process would not find difficulties in getting a visa, since they meet the requirements of the First Tier of the system; people in the specific category are given the visa rather easy, due to their educational/ professional status (The UK System for Migrants from outside the European Economic Area 2013). In any case, the expansion of the firm in the UK construction industry should be followed by a change of its structure: this change is made emergent by the fact that the specific firm not only will expand its operations but it will also recruit a high number of overseas employees, a fact that increases the firm’s exposure to market turbulences. According to Griffin and Moorhead (2013) the structure of its organization depends on its market presence, the resources available and the organizational culture. For example, in organizations where emphasis is given to the employees’ freedom to take initiatives, decentralization is preferred since in the specific mode of organizational structure the power of top management is limited in favour or high employee performance (Griffin and Moorhead 2013). However, changing existing organizational structure can be a risky plan for firms in all industries: the problem is higher in case that the structure of an organization has remained unchanged for quite a long period of time; in this case it is quite difficult, and costly, for HR managers and employees to use the new system, even if it has certain similarities with the previous one. A critical issue that the firm should address before expanding in the UK market is the following: a plan should be introduced for managing resistance to change (Mullins 2010). Such approach is used in organizations where resistance to change is extremely high: in these organizations, organizational structure cannot be changed unless organizational culture is alternated (Mullins 2010, p.738). In the case under examination, by allowing higher freedom to existing employees the firm’s managers would expect to face less resistance when attempting to change the organization’s structure. At the same time, reference should be made to the following fact: if a firm’s managers face strong resistance when trying to change organizational culture, then they should primarily improve communication with employees before proceeding to a plan which is of high difficulty, such as the change of organizational structure (Mullins 2010, p.739). Conclusion In all businesses, the role of People, i.e. employees, is critical. In the firm under examination, employees are not able to respond to organizational needs. Thus, the hiring of overseas staff is unavoidable. However, the firm has not used similar strategy in the past; up to now the firm has been based on its existing workforce for developing its operations. Still, the expansion in the UK construction industry is not an easy task; attempting this initiative without appropriately skilled staff would be a high risk for the firm. For this reason, it is suggested for the firm to proceed to the hiring of overseas staff developing, at the same time, a scheme for supporting employee motivation, as suggested in the Recommendations section below. As for the structure of the organization, the following facts should be highlighted: up to now, the firm has managed to keep its employee performance high by employing common methods of employee motivation, meaning especially the monetary benefits based on performance. However, the expansion of the firm in the UK construction industry will lead to the increase of the firm’s needs in terms of highly skilled staff; for responding to these needs the firm has the option of hiring overseas staff, an option though that it is not free from risks. The change of the firm’s existing structure, as suggested in the following section, could increase the chances for success of the attempted change, i.e. of the alteration of the firm’s existing workforce. Recommendations In regard to the People part of the case study, the following recommendations should be made: the firm should try to address primarily the basic needs of its overseas staff, i.e. the physiological and safety needs, as presented in the pyramid developed by Maslow (Figure 1). Then, the other needs of the overseas staff, as highlighted in the theory of Maslow, would be addressed, always in hierarchical order. In other words, the firm’s HR managers should try to cover various needs of employees, and not just their basic needs; this target would be achieved by incorporating a Total Rewards approach, as also used by Tesco. This means that overseas staff should be motivated through both monetary and non-monetary rewards. Using this approach the firm could secure the high motivation of its overseas staff. It should be noted that the benefits/ rewards included in the firm’s Total Rewards scheme should be aligned with the local culture, i.e. they should be adapted to the cultural and social characteristics of UK. The value of country-compatible motivation approaches is reflected in Figure 5 below. Figure 5- Motivation process as affected by country’s profile/ characteristics, presented above as ‘Framework effects’ (Gunkel et al. 2009, p.293) Moreover, since the hiring of overseas staff has been proved unavoidable for the firm, a series of changes should be developed in the organizational structure and culture, so that the relevant plan is successful: a) the firm’s culture would be alternated; in the past the culture of the organization has been based on local employees’ needs, meaning that emphasis has been given on hiring local staff; in this context, employee performance has been related to geography: local staff was considered as more able to respond to the firm’s needs, a view that was not verified in practice; b) a new organization department should be developed for managing the selection and hiring process of the overseas staff, especially since the organization has not experience in such plans and the relevant procedure can be a bit complex (Enterprise Europe Network 2010) and c) existing modes of cooperation within the organization should be alternated; emphasis should be given on tasks assigned to individuals, rather than on teams of employees, as up to now. The highly skilled workers hired by the firm would be able to complete successfully the tasks delegated to them without need for support; in this way, time and cost in regard to the firm’s daily operations will be significantly decreased. References Enterprise Europe Network (2010) Employing Foreign Workers in the UK. London Chamber of Commerce and Industry, March 2010, pp.1-9 Griffin, R. and Moorhead, G. (2013) Organizational Behavior: Managing People and Organizations. 11th ed., Belmont, Cengage Learning. Gunkel, M., Lusk, E. and Wolff, B. (2009) County-Compatible Incentive Design. SBR 61: 290-309 Loosemore, M. and Dainty, A. (2013) Human Resource Management in Construction Projects: Critical Perspectives, London, Routledge. Mullins L. (2010) Management and Organisational Behaviour, 9th edn., New Jersey: Prentice Hall. Naoum, S. (2001) People and Organizational Management in Construction, London, Thomas Telford Ltd. Rumpel, S. and Medcof, J. (2006) Total rewards: good fit for tech workers. Research–Technology Management. Industrial Research Institute, pp.27-35 The Times. Motivational Theory in practice at Tesco, pp.105-108 The UK System for Migrants from outside the European Economic Area Updated April 2013, http://www.workpermit.com/uk/uk-immigration-tier-system.htm Read More