Political Instabilities on the Small and Medium Enterprises - Dissertation Example

? Does political instability have any effect on the SME sector: with a specific focus on HR Table of Contents Chapter Background to the research 31.1Introduction 3 1.2Study Background 3 1.3Research Aim 5 Chapter 2- Literature Review 6 Chapter 3- Research Methodology 10 3.1 Research Philosophy 12 3.2 Research Strategy 14 3.3 Data Collection Method 17 Chapter4- Action Plan 18 Gantt Chart 18 Reference 21 Bibliography 23 Chapter 1- Background to the research 1.1 Introduction The research aims to put forth the impact of political instabilities on the small and medium enterprises. The research is conducted against the backdrop of the aspects of human resource management practices in the SMEs. The project is further complimented with relevant theories and concepts with regards to employee motivation, employee turnovers in the organization and employee dedication and loyalty. This is followed by the literature review which explores and critically evaluates the relevant academic literature, policy documents and corporate information which explains the previous relevant research. It also evaluates the present the relevant intellectual ideas and organizational issues. Chapter 3 presents the research methodology which presents the ways in which the research is conducted and the reasons for selection of particular procedures. This is followed by the action plan for the research which is presented in the form a GANNT chart which provides the time allocated for each individual action plan. 1.2 Study Background The project is conducted against the backdrop of the small and medium scale industries and the impact of external and political instabilities on the same. The small and medium enterprises (SMEs) face major obstacles in gaining competitiveness due the influence of the external and dynamic environment in which they operate. The study primarily seeks to analyze the external factors on the operations of the SMEs in terms of their human resource management practices. The impact of such external factors influences the strategic planning decision making processes of the firms. The human resource departments in organizations are constantly required to change their human resource practices in accordance to the changing needs of the organizations due the changes in the external environment. The research would indicate what aspects of the environment bears relevance to the functioning of the SMEs in terms of their human resource management practices like recruitment, selection, compensation practices, training and development, employee development programs etc (Andzelic, et al., 2010, p.1). Recently there has been increasing concern and attention on the human resource management practices in the small and medium sized enterprises. The human resource researchers have ignored the sector, however, the smaller companies can be considered to be useful subjects that can be investigated. This is primarily because they are numerous numbers, has strong potential for growth and diverse in nature. Thus the large proportion of the small and medium scale enterprises with their institutionalized and organized structure provides the basis for a greater professional approach towards their human resource management practices (Andersen, 2003, p.2). Thus the human resource management practices is SMEs forms important subjects of research. Extensive research is also being conducted on the Danish companies because of the characteristics that their employees carry, their democratic styles of management, informal organizing and their flexible work arrangements (Andersen, 2003, p.2). There are a number of tangible and intangible implications of the unresponsive human resource domain to the needs of the small businesses, and the lack of interest in the part of company managers on human resources. Lack of consulting and follow through between the sides appear to be working against the mainstream arguments which claims that the small and medium enterprises have been losing to the larger companies in terms of competition for skills and expertise. There are arguments beyond HR emphasizing on the implications of recruiting the right employees. Human beings make the difference and are considered to be the preconditions for innovation (Andersen, 2003, p.2). 1.3 Research Aim The research aims to find the relationship between the political instabilities and the human resource management practices in SMEs. It seeks to identify the impact of the external political instabilities on the decision making of the managers. The project would provide special emphasis on the external influences on organizations reflected through employee turnovers, the motivation level of employees, and their loyalty and dedication towards the organizations. The objective of the research would be focused on the following: The assessment of the political instability on management decision making, Impact of political instability on the employee turnovers in SMEs, Assessment of the human resource management practices in SMEs resulting from the impacts of political instabilities, The human resource management practices in SMEs for gaining employee loyalty and dedication of employees, and Reaction of the government policies on the human resource management practices in SMEs Chapter 2- Literature Review The Hawthorne Studies The Hawthorne studies comprises of a series of investigations about the importance of workers behaviors and attitudes of various economic, physical and social variables. The studies were an effort towards determining the number of effective hours of work in organizations, the periods of rest, and lighting which were required for reducing the workers’ fatigue and enhancing their productivity. These experiments are considered to be one of the major and foremost conducted research efforts. The studies conducted revealed that the social environment posed greater effect on the physical environment and productivity of employees. The Hawthorne experiments conducted in the Western Electric Company’s Hawthorne Works near Chicago, Illinois revealed the impacts of specific factors on the productivity (Indian University, n.d., p.7). HR professionals and specialists generally agree on the fact that the Hawthorne studies play a critical role on the development of human resource management practices in organizations. The Hawthorne studies finds relevance in this project because of its efforts to humanize the workplace and providing ways for motivating workers. Maslow's Hierarchy of Needs Theory The Maslow’s hierarchy of needs is a part of the content theory of motivation. Since the content theories make studies of those factors within individuals which provide them with motivation, it would be elaborately discussed in the project. The hierarchy of needs theory highlights on the five major and basic human needs based on which five categories of needs were constructed in ascending order as per their importance in survival and their effectiveness in motivating employees in organizations (Colvin & Rutland, 2008, p.6). The five needs which would be discussed in the project are the psychological needs, safety needs, love needs, esteem needs and the needs for self actualization. The idea which bears relevance to the context of an organization is the fact people can be motivated to portray certain behaviors against unsatisfied needs only when certain needs are satisfied. Once a certain need is fulfilled a person can no longer be motivated by that need, he would rather have to be motivated by the next level of unsatisfied need in the hierarchy (Colvin & Rutland, 2008, p.6). Herzberg's two- factor theory The Herzberg’s model provides an alternative to the Maslow’s theory for the study of job satisfaction. The difference between the Herzberg’s theory and Maslow’s theory is that the former emphasizes on such factors which account for both the satisfaction and dissatisfaction of employees at the workplace. The study of the Herzberg's two- factor theory in the project would reveal such factors as motivation factors which would serve to motivate employees. These factors would comprise of recognition, advancement, achievement, responsibility and the work itself. Some of the factors recognized for de-motivating employees are the company policies, technical competence, salaries, working conditions or the interpersonal relations (Colvin & Rutland, 2008, p.13). Vroom's expectancy theory The Vroom’s theory focuses on the cognitive development of motivation and explains the way in which people initiate, sustain and terminate motivation. The theories are relevant in the project as it proposes general mechanisms which are applicable for all individuals and under specific conditions. Vroom (1964) proposed that people act or behave according to their rational choices and conscious about the expected outcomes (Cardona, Lawrence & Espejo, 2003, p.4). As per this theory organizations could motivate towards the implications of the desired outcomes and results in the organization. People would be motivated to direct their performance towards attainment of that desired outcomes. For the theories, the only aspects which are related to the content of the job are responsible for satisfying and motivating people. Other theories suggests the individual differences can be explained through various concepts that people develop about who they are, or what they could do or should do. According to the theories employees are motivated towards behaving in such ways which are consistent with their individual and self perceptions (Cardona, Lawrence & Espejo, 2003, p.5). Adams' equity theory The Adams equity theory says that all individuals would be motivated towards reducing inequity. This theory bears relevance in organizations as it would throw light on how people evaluate and assess their performance against other individuals’ performance in the organization. People compare their outcome to input ratio to that of other employees or colleagues in the organization. This theory suggests that people behave in such ways which reduces inequities among colleagues with regards to their outcome and input ratios. This fact also throws light on the fact that removing inequalities would be effective in motivating employees at the workplace. It also suggests that employees’ performance must be evaluated against their individual input to outcome ratio. Skinner's reinforcement theory The Skinner’s Reinforcement theory would be discussed in the project at length with regards to the expected and desirable behaviors of employees at the place of work. Skinner emphasizes on positive reinforcement as the offering of those desirable consequences for a specific behavior with the intention that the behavior would yield greater chances of reaching that outcome in future. Some of the rewards that are used in the workplace are promotions, monetary bonuses, praises, paid holiday leaves, and even attention. The rewards must be such which produces desirable behaviors on the part of the employees. In other words, the reinforcer must be able to motivate the employees to a significant extent. This theory would be extensively discussed in the project as it would bring out the positive reinforcements in the form of rewards which organizations could provide its employees for ensuring repeated and desirable results in the future. On the contrary it would highlight on the negative aspects or the punishments which would be effective in making employees prevent from undertaking specific actions (Redmond, 2011). Employee Turnover Attitudes towards the small and medium scale businesses vary between nations and from time to time. Before the occurrence of the industrial revolution there were numerous small and medium businesses which have grown up to be large businesses. The number of SMEs in nations has shown a rapid growth lately. They have also become extremely important for the economy of the nation and account for a major proportion in terms of the employment, output and utilization of the regions resources (Ramsurrun & Dalrymple, 2002, p.2). Carraher, Ferris, and Carraher, (2008) have directly related employee turnovers with their compensation. Thus the foremost responsibility of an employer during the time of any political instability would be to make its compensation package more attractive as that would account for the most effective and easiest way of attracting valuable employees. Employers also try to curtail employee turnovers through the provision of added benefits. Benefits are perceived as rights of the employees and not merely an added form of compensation (Carraher & Buckley, 2008, p.3). The project would seek to formulate and present such compensation packages for employees along with their benefit programs which would help in curtailing employee turnover in the company. In spite of providing valuable compensation packages to employees, organizations have failed to attract talents from the industry and retain them. This is because there are numerous other factors on which depends the satisfaction of employees which consequently determines their decision to stay or leave the organization. According to Carraher, (2006), employees generally assess the value of the benefits they receive in comparison to the packages that are offered by the other competing organizations. The project would highlight on the aspects which would determine the factors on which depends the rate of turnover of employees in the organization. Chapter 3- Research Methodology The research would seek to present the way in which the research would be conducted. The research would be conducted using the questionnaire method. The questionnaire would develop ensuring the objective of the research. The questions would be framed with regards to the impacts of the political instabilities on the human resource management practices undertaken in the SMEs. The questions would put special focus on the management practices that are incorporated during such times, as financial downturns and other economic fluctuations like inflations and deflations in the economy. The questionnaire would be developed with the focus of gathering both qualitative and quantitative data for the research. The interviewees would be selected from employees from the small and medium scale enterprises in the industry. The qualitative questionnaires would be prepared for collecting data which would be related to the HR aspects in SMEs. It would be used for the gathering of data from individuals within the small and medium scale organizations and their opinions would be collected with regards to the level of satisfaction they derived from the HR components. This would reflect the components which they considered being attractive for working in organizations. Special emphasis would be provided with regards to training and development programs, compensation and benefit programs, recruitment and retention strategies or even inter-communication and strategies for enhancing interpersonal relations in the organization. Compensation and payroll benefits are few of the major components which determine the attractiveness of an organization in the eyes of employees. Thus data collected for these aspects would reflect the same. Internal data would be collected to identify the factors which enhanced performances of employees at all levels. Performance of all executives as well as the management staff would be studied. This would be analyzed against the prevailing management practices in the SMEs. This would be required to identify the coherence existing among the different management practices and their effects on the employee’s performance. As a further area of investigation, the strategies which were implemented for gaining employee loyalty would be measured. The project would also focus on employee relations and its impact on the performance of employees. Employee relations are often reflected through low employee morale and high employee turnovers. Enhanced morale of employees resulting from enhanced and improved employee relations would reflect through improved performance and productivity which would further show through the performance of the organization. Employee turnovers are also associated with the nature of the work that they perform. Very often repetitive nature of works is associated with high employee turnovers. Also repetitive works result in decreased team spirit in which each one wants to minimize their proportion of the work and put the burden on other employees. The paper would highlight on the quality of works in SMEs and their impact on the performance of employees and their decision to work in the organization (Brannan, 2005). 3.1 Research Philosophy There are a number of reasons why it is important to understand the philosophical issues of the research. It is the nature of the philosophical questions which demonstrates the value of understanding of the philosophy. It is the simple and uncomplicated way of questioning which produces instability and understanding of the ideas and understanding about the world which makes the study or philosophy beneficial and important. It produces and enhances in-depth thinking about the research question and also generates further questions in relation to the research topic (Indiana University, 2003, p.9). The research philosophy would be to apply the principles and methods to develop the best designs of the strategies of human resource management to handle impacts of the external shocks on the SMEs. It would highlight on the best designs, principles, implementation and evaluation of the technologies at the workplace with regards to their usability, acceptance and effectiveness in the organization. It would develop a scientific approach towards meeting the practical needs of the organizations based on the real life examples. The research philosophy would emphasize on the building and application of such technologies in the workplace settings which would bridge the gap actual performance of human resources in the organization and the desired performance. The research philosophy would reflect on the understanding of the role of human resources in meeting the changing needs of the organizations resulting from the external influences and shocks (Pennstate, n.d.). Easterby-Smith et al (1997), has put forth various reasons behind exploring philosophy as being significant with particular reference to the research methodology. Firstly it would allow the researcher to specify and refine the research methodologies that would be used for the study. This would be further used for clarifying the overall strategy in the research. This would be based on the types of evidences that would be collected and used for interpretation and the way it would help to answer the research question. Knowledge of the research philosophy would also allow and assist in the evaluation of the different research methods and methodologies and would also avoid the use of unnecessary works by early identification of the limitations of particular approaches in the research. Thirdly, it would help and allow the researcher to be creative and innovative in both selection and adoption of the research methods (Indiana University, 2003, p.9). In the present research the philosophical level of the research method would relate to the assumptions based on the general features, encompassing on such aspects like the mind, reality, truth, reason, nature and proofs of knowledge. If, for example, the question is made on examining how the research based on positivist philosophies differ from the research based on post-positivist philosophies, the relevance to the needs of the research can be simplified. Moreover nature of the most appropriate and relevant approach can be clarified. What follows from this is that the approaches that is chosen can be dependent on contexts of the study and would also depend on the quality of questions that are being asked. The experience of the researcher and his understanding of different philosophies and his personal beliefs might also have bearing with the method that is adopted. Shih (1998) has expanded on the idea and has listed four major areas to be considered while deciding on the research method, the philosophical paradigm and the goal of research, nature of phenomenon of interest; the nature and level of the research questions, and the practical considerations which are related to the environment of the research and the efficient use of resources. 3.2 Research Strategy The research strategy is nothing but the entire way in which the research is conducted. A research requires making two major decisions. The first is what the research seeks to find out about or the research questions that require to be answered. The second is how to proceed about finding the answers to the questions. A number of practical steps are there through which the research must go through for finding the answers to the research questions. The way to finding the answers to the research questions accounts for the research methodology. At every operational step of the research process, it required choosing from multiple methods, models and procedures of the methodology which would help the researcher to achieve his objectives in the best way. This is the reason why the knowledge base of the research methodology finds importance. The first step would include formulating the research problem. This is the first and the most important step in the entire process of the research. The main function of the project would be to decide how political instabilities affect the small and medium scale enterprises. Moreover, the way in which the problem is formulated determines each step that would follow. Study Population The study population would include the organizations, individuals, communities and individuals. In this project, the subject population would include employees from the small and medium scale enterprises from all levels. The employees would be chosen from the lower levels as well as from the top levels of the organization. Subject Area The subject area would include the problems, issues, associations, situations, needs and profiles. The program would include content, the structures, outcomes, attributes and satisfactions. The phenomenon would include the cause and effect relationships and study of the phenomenon itself (IHMCTAN, 2008, p.8). In this research, the subject would be highlighting the human resource issues which are affected by the impact of external influences. Special emphasis would be provided to the aspects of compensation, recruitment and selection strategies, payroll strategies, training and development issues, retention issues etc. The problems would be identified with regards to the above issues (Kumar, 2005, p.5). Also the relevant changes that are incorporated in the human resource functions during political instabilities would be highlighted. The impact of these actions would be studied. This would be presented in the form of outcomes and results. The effects of human resource management practice changes would be reflected through the changes in the employee satisfaction and morale, changes in employee turnovers, enhanced employee relations, changes in the productivity and performance of employees and changes in the performance of the departments and the organization on the whole (IHMCTAN, 2008, p.8). Quantitative and Qualitative Research Primary research would be conducted in this project. This would include both quantitative and qualitative research methods. Quantitative research method would include the usage of numbers and figures. The technique of quantitative research would be used for the analysis of the research question. This method would be effective for developing the answers to the research question. The technique would take help of the predefined procedures which would be used for the research. The evidences that would be collected would throw light on the findings. This is the kind of research technique that has been used because of its effectiveness in providing complex descriptions for research issues (Family Health International, 2006, p.1). Qualitative research would be used for the measuring of the human aspects in the project. This would include such aspects like behaviors, relationships, emotions and beliefs. It would include various variables in analysis. It would also find usage when large data sets would be considered. The questionnaire would be distributed among the employees, and would comprise of both the open and close ended questions. Open ended questions would assist in making of a comprehensive analysis of various views of the employees in SMEs. It would also allow in the creation of a rich and explanatory answer to the topic of the research (Denscombe, 2007, p.249). Conceptualizing the findings This step includes comparing the answers to the research what the others have found. It also includes understanding the contributions that the researcher has you been able to make to the existing knowledge. The project would discuss how the findings were different from that of the others. For the researcher to be able to answer the questions, he would need to come back to his own literature review. It would be important to place one’s own findings on the present context of that which has already been known in the field of enquiry. 3.3 Data Collection Method Reliable sources would be used and would be considered to be one of the major and prerequisites for conducting the research. This would ensure that finding of the research would be reflected through the true and accurate. Interviews would be conducted using the method of questionnaire containing both open ended and close ended questions. These questions would be designed for bringing forth their views in the SMEs related to the human resource management practices and its impacts in the organization. The questionnaire method would be chosen in this research because it would remove the chances of doubts that could arise in the respondent’s mind (Saunders, 2003, p.27). Data which would be collected from the questionnaire method would be analyzed for finding the relationship between political instabilities and their impacts on organizations with special emphasis on the small and medium enterprises. The responses would be collected from the organization and would be put into statistical analysis. This would be represented in forms of pie charts and graphs. Both primary and secondary data would be collected and represented for the purpose. The secondary sources would include reliable and authentic sources. These would be collected from academic articles, journals, organization reports and industry reports. Authentic websites and other electronic sources would also be used for the purpose. On the other hand primary data would be collected from the primary sources. The questionnaire method would be followed and the responses that would be provided from the respondents would be collected in the form of primary data. The primary data that would be collected would be put to statistical analysis and presented in the form of pie charts and graphs. Chapter4- Action Plan Gantt Chart Gantt chart is a significant and popular tool to present the information in a project management. It would give an at-a-glance perspective regarding the names and tasks’ timing. Furthermore, it would also reveal the present status of the activities. The Gantt chart would be used to highlight the project’s time constraint, cost as well as requirements and furthermore, affords an at-a-glance perspective on the project variance. In this project, the Gantt chart would be sued to represent the information to the management, customers as well as the team members at a wide range of varied levels. This would also provide a general perspective on the project activity. This would also be beneficial to let the team members know about the wide range of the tasks which are going to be performed as well as the timing and status of these tasks (Pritchard, 2004, p. 137). In this project, the Gantt chart includes a list including various activities which are required to be coordinated with the horizontal bar chart which would be reflecting the duration of each activity. Each of the activities would have bars different from each other. In this project, the Gantt chart would reflect the completion of each task with certain notations. This chart can also include ‘split bars’ which have been used to highlight the baseline of the original project and this would be also used to display the information which would use the actual timing used by the performed projects. Although, there are a number of software packages which can be used to prepare such Gantt chart. With the increasing number of fields, it is pretty much possible to display Gantt chart with some information regarding the resources, task status, predecessors, timing and some more information. In this case, the Gantt chart has been developed using the excel sheet, displaying the bar charts. The following GANNT chart would present the time line for the individual actions of the research. It is assumed that the research would require three months for completion. The activities would be divided into weeks. Weekly actions would be allocated for the research. It would emphasize on the weekly milestones that would have to achieve through the research. The The Gantt chart would provide the estimated completion dates for each individual action. The data would be presented in the form of a table. Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Introduction Research aims and objectives Literature Review Research Methods Data Collection Methods Data Analysis and Interpretation Results, Findings and Discussions Reference Andersen, T. (2003). HRM in SME’s – first findings on structure and practices. [Pdf]. Available at: http://www.lok.cbs.dk/images/publ/Torben%20Andersen.pdf. [Accessed on May 17, 2011]. Andzelic, G., Dzakovic1, V., Lalic1, B., Zrnic1, D. & Palcic2, I. (2010). African Journal of Business Management Vol.5 (4), pp. 1253-1265. [Pdf]. Available at: http://www.academicjournals.org/ajbm/PDF/pdf2011/18Feb/Andzelic%20et%20al.pdf. [Accessed on May 17, 2011]. Brannan, M. (2005). 'If You Leave Me Now': Employer Retention Strategy In a Call Centre. [Online]. 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The project management communications toolkit. Business & Economics. Artech House. Ramsurrun, B. & Dalrymple, J. F. (2002). Global Competitiveness within Small & Medium Manufacturing Enterprises in Mauritius. [Pdf]. Available at: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.137.3906&rep=rep1&type=pdf. [Accessed on May 17, 2011]. Redmond, B. F. (2011). Reinforcement Theory Overview. [Online]. Available at: https://wikispaces.psu.edu/display/PSYCH484/3.+Reinforcement+Theory. [Accessed on May 17, 2011]. Saunders. (2003). Research Methods for Business Students. Pearson Education India. Bibliography Armstrong, M. & Baron, A. Strategic HRM: the key to improved business performance. (2003). UK: The Cromwell Press. Beer, M., Spector, B., Lawrence, P., Mills, D.Q. & Walton, R.E. (1984). Managing Human Assets. New York: Free Press. Bratton, J. & Gold, J. (2001). Human resource management: theory and practice. Routledge. Fomburn, J. C., Tichy, M. N. & Devanna, A. M. (1984). 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