Adoption of Strategic Human Resource Policies and Practices at Watson Rothwell Fabrications - Case Study Example

THE CASE FOR THE ADOPTION OF STRATEGIC HUMAN RESOURCE POLICIES AND PRACTICES THE JOURNEY SO FAR: WATSON ROTHWELL FABRICATIONS Over the last five years, Watson Rothwell Fabrications has grown phenomenally and has taken its place among the ranks of engineering giants in this sub region. More and more, the organization is becoming fluid and interactions are becoming more complex, as situations get increasingly ambiguous and subject to different interpretations. We are all witnesses to the multi-faceted growth that has been experienced within this short span of time. The figures show a double digit percentage increase in net profit in the last five years, reaching an all-time peak of 89%. In order to build upon and sustain this phenomenal growth, it is my frank opinion that a certain level of order and clarity be imposed on the way and manner things are done and outcomes achieved. Going through the company records for the purpose of understanding how we arrived where we are, I observed that there has been a massive investment in technology, production monitoring and process mapping, resulting in a 75% increase in process capability. No doubt, there is an urgent need to raise the bar and to lead Watson Rothwell Fabrications to greater heights. The next step therefore, is to creatively harness and organize the human capital responsible for delivering this desired output. Hence, the need for a systematic and functional human resource model. Writing in the academy of management journal, Mark A. Youndt, Scott A. Snell, James W. Dean, Jr., and David P. Lepak puts its succinctly: "The value of human capital may be especially apparent in modern manufacturing organizations that have invested heavily in production innovations such as advanced manufacturing technology, statistical process control, and computer numerically controlled machine tools. Such initiatives tend to depend heavily on employee skills and commitment as key components in the value creation process (cf. Snell & Dean, 1992). Accordingly, it is instrumental for manufacturing firms to harness the productive potential of their employees in order to achieve superior performance". (Pg 836) There is a need to set a limit in the minds of those who are responsible for these results on how things should be done in the work environment; otherwise, there will not be legal liabilities consequent upon acting based on discretion and personal feelings. Continuing, the authors cite the fact that "It has become a widely held premise that people provide organizations with an important source of sustainable competitive advantage (Prahalad, 1983; Pfeffer, 1994; Wright, McMahan, & McWilliams, 1994) and that the effective management of human capital, not physical capital, may be the ultimate determinant of organizational performance (cf. Adler, 1988; Reich, 1991)". (836) THE NEED TO THINK GLOBALLY AND ACT LOCALLY Today, more than ever before, engineering, manufacturing and services companies operate in an environment of intense globalised competition, where many external factors impact on their enterprises. In these times, we see again and again, examples of companies protecting their future through innovation, not only in the design and implementation of new products and services, but in workplace innovation - improving the processes and procedures for managing work. One fact that is becoming globally acceptable is that one of the keys to successful organizational performance is the people within the organization, and the management systems that harness their talents and capabilities. The time has come to start focusing on the global business environment. In the light of the phenomenal success recorded by Watson Rothwell Fabrications within this short time span, it is imperative that management should begin to project itself into the global manufacturing environment in order to establish its cutting edge operations in the global market place One way to start is to have the internal structure and processes organized and properly aligned. This is what, in essence, HR practices and policies aim to achieve. WHY ADOPT HR PRACTICES AND POLICIES All HR practices and policies essentially aim to achieve two goals in the final analysis. The first is the goal of creating a system of manpower strategy that works and which can be managed by anyone with the basic training in human resources. The second goal is to serve as a blueprint for management and employees so that they are not left to imagine what actions to take when in doubt. All they need to do is consult the laid down policies and procedures. An article on the CIPD website on HR policies emphasizes the place of HR systems: "HR policies can help organizations to develop fair and consistent approaches to managing and developing people and can protect against legal claims. They can provide all employees with guidance about their own and the organization's responsibilities". Specifically, the need to adopt a system of high performance practices and policies draws upon four key factors which HR professionals have dwelled upon over the years. a. The need to keep up with the competition. In today's world of business, the question is not whether or not you have policies and practices, but whether your company continuously scans the business environment to identify key changes that its competitors are effecting and then revise its working documents to enable it compete in terms of attracting and retaining the best hands. That is the more reason why Watson Rothwell Fabrications, as a matter of urgency should go back to the drawing board and formulate its own policies and work practices to be able to measure up. Then it can stand at par with the competition. b. It helps to deal with internal change. Change is the only constant thing in life. As organizations evolve, change is inevitable. And to meet adapt to these changes, a system of practices must be in place which will always serve as a benchmark as organizations strive to align it structure to meet up with the changes. c. It increases operational efficiency. Several studies across industries and countries have revealed that adopting a formal approach to the implementation of HR practices contribute in no small measure to operational efficiency. People tend to focus on the more important issues of their jobs, instead of spending their energy seeking interpretations of their actions or planned actions. For instance, a procurement manager who is offered a mouth watering gift by a supplier need not make a call to his director as to what he should do, if there are clear provisions in the company manual. d. Questions of double standards are eliminated. Because the workplace is a dynamic system of people with different behaviors, different situations will definitely present themselves in the work environment and they are subject to different interpretations by different people. This may result in different treatments for different people and may end up tearing the work place apart. Adopting a laid down policy and practice framework, will no doubt, reduce the possibility of creating double standards and hence increase objectivity. CORE AREAS AROUND WHICH TO BUILD HR PRACTICES AND POLICIES In order to build a full proof, workable and sustainable framework of HR practices and policies which ultimately fosters a high performance work place, the first thing to consider is the fact that four key elements must be addressed in the policies and practices that is to be built namely: roles, rules, consequences and tools. 1. Roles Work Role is traditionally defined as the mix of tasks and responsibilities undertaken by individuals or within a team. People like to have a clear understanding of their role in an organization and the roles of others. Every organization that aims to achieve and sustain a successful system must have clearly defined positions for its members. When roles are spelt out in black and white, everyone knows what he or she is to do, how to do it and how their performance can impact on the entire organization. In business, this means you need to have clear reporting structures that spell out who is in charge and how tasks are to be accomplished in the organization. This approach applies not only to intradepartmental structures, but also to company-wide or interdepartmental projects. In addition, role definition is a foundational part of establishing clear performance expectations for each employee. 2. Rules Members of an organization need to be on the same page in terms of what is and what is not acceptable within the organizational context. Unfortunately, in today's workplace, an employer can be held liable for the bad behavior of an employee, especially when that bad behavior affects other employees, clients or individuals. Having a clear set of behavioral expectations is critical to establishing that you are not contributing to that bad behavior as an employer. Setting clear and specific behavioral standards in the form of rules establishes a framework for spotting and addressing violations of those standards. If you rely on loosely defined general standards that are not properly documented, then violations become subjective and open to interpretation. The result of such ambiguousness is often litigation. 3. Consequences It is important that you clearly state consequences for violations of your behavioral standards, so that employees know what to expect and have fair warning of those expectations. In addition, clear consequences help to ensure that you are not limited in your options for dealing with improper behaviors. To establish these standards and violation consequences, sit down with your management team and think through the over-the-line behaviors that will not be permitted in your organization. It is essential that you know ahead of time what employee actions require an immediate dismissal. Similarly, you want to know what performance issues may qualify for a more progressive disciplinary approach, and then define the steps involved in that approach. As I said earlier, people are by nature complex beings who will confound you one minute and astound you the next. And, except for violations that warrant immediate firings, it is usually a wise, compassionate and financially prudent course to help people strengthen their character by overcoming their weaknesses. Also, this approach provides you with a way to retain experienced employees and recover your investment in their training I have found that in many instances, managers are disappointed in an employee's performance, although the manager never clearly communicated his or her expectations to the employee. If you do not take steps to set clear expectations, the consequences you administer for failure to meet those expectations can seem unfair. This is extremely important because an employee who feels that they have been treated unfairly can create a great deal of liability. In many cases, the key issue is not whether they were actually treated unfairly, but whether the employee feels or perceives that he or she was treated unfairly. And it doesn't stop with the affected employee. If you or your managers have not clearly communicated your expectations to one employee, chances are you have not done so with other employees and they can be quick to empathize with any affected workers. It is natural for employees to wonder, "What if that happened to me" To avoid the negative effect such a chain-reaction can have on your workplace, be clear about your expectations with all employees at all times. Most employees will appreciate and respect your forthright clarity. Building a great company has a lot to do with how people work together. Policies and practices can improve the way your employees interact, while minimizing the personnel obstacles that often arise in today's workplaces. 4. Tools Tools address the question of how the supervisors in your company who are responsible for the employees manage their work. When they are faced with a specific personnel issue, are there resources are available to them Do they have an employee handbook or a policy guide Are they exposed to regular training programs on company policies and practices, coupled with simple, easy-to-use forms to guide them when dealing with particular issues Are they given clear directives on how effectively to work with the human resources team or legal personnel Tools like these are important, not just to help avoid litigation, but also to minimize the time it takes to deal with people issues that affect the organization, instead of core business matters. Because many small business owners lack these resources and are not sure where to turn for help, they call on professional employer organizations like Admin staff to provide the support of a full-service human resources department. Whatever the approach, the key to success is to devote the time and resources to develop a policies and practices strategy for your organization before the need arises. It is an investment that can pay large dividends in increased productivity and minimized litigation. And it is an essential component of your comprehensive people strategy. IMPLEMENTING HR PRACTICES - KEY AREAS TO FOCUS UPON Organizational Planning. The first and most important step in transitioning to a high performance work place is to institute a sound and sustainable organizational planning methodology. This will serve as a foundation for implementing the other steps described below. Essentially, focus should be directed along the following dimensions: Organisational structure Human resources function and budget Planning and managing change Human Resources planning Legal compliance Recruitment. Another area of focus in formulating policies and practices is recruitment. This purpose of this is to ensure that the company attracts and retains a diverse workforce with the skills and competencies to deliver quality results. Individual areas to focus on in crafting the organization's policies are: Recruitment and Selection policies & procedures Job design and descriptions Employment Contract/Benefits Package Deployment. New members of the organization have to be introduced to the organizational culture as soon as they are absorbed into the organization. Again, this has to form a central part of the documentation process and should include: Induction manuals Briefing procedures Management. Good support, management and leadership of staff are keys to the effectiveness. Performance management system Compensation and benefits program Career ladder framework Communication channels Health , safety and security policies Employee Documentation/Data Disciplinary & Grievance channels Organizational Development Programs. Another aspect of focus in building the company's HR system is organizational development. Learning, training and staff development programs should have a place in the learning and development policy. Learning and development policy Termination. Procedures for terminating an employees' contract should also be clearly spelt out so as to build consistency in the administration and implementation of the following: Redeployment Resignation Redundancy Dismissal Debriefing/Handover ONE SIZE DOES NOT FIT ALL: CHOOSING THE WAY TO GO In truth, one size does not fit all. In order to create a high performance work system, there is a need to customize human resource management to fit the overall organizational strategy. Still citing the article on the CIPD website on: HR policies: why and how to introduce them, the need to adopt policies and practices that lead to high performance work practices is emphasized: "Over and above the minimum legal requirements, each organisation will need policies that are adapted to suit their own purpose and to fit with their sector, culture and structure. Introducing an HR policy doesn't indicate that the organisation previously had no provisions in place. It reflects a desire to formalize arrangements in certain areas of people management and development for the reasons suggested. The culture of the organisation and the complexity of the policies will influence how a policy is introduced. For example, when it comes to communication, hard copies could be given to employees or put on notice boards, or 'soft' copies circulated by email or placed on an intranet. The communication process should be tailored to the organisation". Esteemed members of the board, this is the time to take Watson Rothwell Fabrications to the next level. Perhaps, it will pay off to put in place a working committee to kick start the process by articulating the specific strategic objectives of the organization. This will serve as a starting point; and then, the human resource dimension can then be factored in. Having consulted severally in various industries, I am of the view that in order to create a high performance environment, the organization has to look inwards and evaluate its overall strategy to see how HR can fit into the framework; otherwise, any attempt to formulate and implement the most sophisticated HR models will result in failure. I'll end by citing a recent study carried out at the Rutgers University on 1000 companies in 35 industries and cited in the 'Employer's Advantage", Business Advantage International's Publication: "The data covered profit, employee productivity, employee turnover and human resource practices. The analysis also considered many variables that affect firm performance (e.g., industry, differences in firm size, union coverage, sales growth, research and development intensity and total assets), so as to accurately measure the independent effect of HR practices". (1) "The study uncovered a clear tie between high performance work practices, employee turnover and employee productivity. Surprisingly, an increase in the deployment of high performance practices reduced turnover by an average of 7% and increased sales per employee by more than $27,000 per year. The study also found that such an increase enhanced profitability by more than $4,000 per employee". (2) Given the foregoing, it is my strong recommendation that Watson Rothwell Fabrications should, as a matter of urgency, adopt a systematic approach to human resource management. My firm is ready to partner with you in making Watson Rothwell Fabrications an employer of choice. BIBLIOGRAPHY Allen Miller. "High Performance Work Practices Directly Improve Bottom line". Business Advantage International. Johnny Sung, David Ashton. "High Performance Work Practices: linking strategy and skills to performance outcomes". Chartered Institute of Personnel and Development. Mark A. Youndt, Scott A. Snell, James W. Dean, Jr., and David P. Lepak. "Human Resource Management, Manufacturing Strategy, and Firm Performance". The Academy of Management Journal, Vol. 39, No. 4 (Aug., 1996), pp. 836-866 Published by: Academy of Management Stable URL: http://www.jstor.org/stable/256714 http://www.administaff.com/HR_tips_%20policies_and_practices.asp. "HR practices and policies". Originally published April 2005 by Entreprenuer.com http://www.cipd.co.uk/subjects/hrpract/general/hrpolproc-why.htm: "HR policies: why and how to introduce them. September 2009". Read More