Human Resource Management Issues at AccountCo - Case Study Example

A REPORT ON HUMAN RESOURCE MANAGEMENT AT ACCOUNTCO. Presented by: A report on Human Resource management issues at AccountCo DATED: September 5, 2005. TABLE OF CONTENTS: Page No: 1. Introduction 3 2. Key issues identified at AccountCo: Strengths 3 Weaknesses 3 3. Comparative Advantages offered by other firms 4 4. Application of Human resource Management Theories 5 5. Organizational Analysis 7 6. The role of the Internet 8 7. Recommendations 9 References 11 Human resource Management at AccountCo INTRODUCTION: Globalization has produced a business environment that is characterized by intense competition and in order to survive a business must develop a philosophy of visionary human resource management, encompassing a set of guidelines that will lead a business towards the gaining of a competitive advantage (Rampersad 2001). This Report presents an analysis of the key issues at AccountCo in the context of existing human resource management theories, in order to identify strategies that may be helpful to the organization in gaining that competitive business edge by attracting qualified personnel to serve with the organization. KEY ISSUES IDENTIFIED AT ACCOUNTCO: Strengths: There are some factors that work in the Company’s favor. (a) It has a solid, established reputation in the locality and has been in existence for fifty years. Since the firm offers accounting services where an old and established firm is always preferred, it is likely that the reputable nature of the firm will be a strong basis to not only attract new business, but also top notch candidates to serve with the firm. (b) With rising prices and tough living conditions in nearby London, the Company has a great opportunity to attract qualified candidates who are looking for better and less expensive living conditions and who prefer a more spacious environment. Weaknesses: However, there are several weakness in the current manner of operations in regard to Human resource management. (a) The firm does not appear to have realized the importance of Human Resources in enhancing the firm’s business, as evidenced by the fact that there is no human resource department, other than the involvement of one of the partner in managing payroll and pension issues. No other form of coordination exists in this department. (b) The Company does not appear to have a clearly defines vision and mission, nor does it possess a clear picture of its strengths and its target customers. (c) No formal planning or discussion system exists within the firm at present, and most communications and decision making systems are operating on an ad hoc, informal basis. ( d ) There is no scheme to offer trainee accountants study leave while they are preparing for exams, although exam fees are paid by the firm. (e) The firm faces a competitive threat from London based firms that offer better wages and incentives. (f) The firm does not appear to be currently involved in any kind of PR or advertising efforts to enhance its business but relies solely on its already established reputation. COMPARATIVE HR ADVANTAGES OFEFRED BY OTHER FIRMS: Other professional firms like AccountCo have a well defined HR Management, because professional accountancy is being identified as the sphere with the strongest demand for accountants. In addition to pension schemes offered at AccountCo, other firms are also offering their employees performance related bonuses and other incentives. Private medical health insurance is offered by these companies and cash in lieu of other perks such as a Company car and other incentives. Additionally, several companies are also providing for paternity and maternity benefits such as additional leave and crèche facilities for young children. Flexibility in working hours is a notable feature of the new accounting environment, in view of the increasing use of technology and the Internet in all work applications. While AccountCo offers its trainee accountants exam fees, most other Companies are also paying for textbooks for these trainee accountants and offering from 8 to 17 days paid leave to prepare for the exams. Therefore, on an overall basis, when AccountCo is compared with other accounting firms, it will be seen that the firm is still operating according to the rules that existed in business practice years ago and have not made the changes necessary to adjust to the rapidly changing business environment where technology and globalization have brought about radical changes in the way Companies do business. Also, it may be noted that AccountCo has neglected to develop its Human resource Management to plan for the future and take steps to recruit and retain talented employees, in order to maintain that competitive edge. APPLICATION OF HUMAN RESOURCE MANAGEMENT THEORIES: Since AccountCo needs to hire new personnel and redesign the packages that it offers to its existing personnel, it must take into consideration the fact that high achievers prefer jobs that offer (a) personal responsibility (b) feedback and (c) moderate risks. (Robbins 2003). In the effort to recruit employees, AccountCo partners must bear in mind the need to motivate talented people to join their organization. There is an increasing recognition of the need to pull in the best people and they must be motivated to join AccountCo. According to Maslow’s Hierarchy of Needs Theory (1970), an individual has two kinds of needs – the lower order needs which are satisfied externally, such as physiological and safety needs, and the higher order needs which are satisfied internally such as social needs, esteem and self actualization needs. It is these intrinsic factors that contribute to job satisfaction, while the external factors are those that may contribute to dissatisfaction. Company policy, supervision and salaries play an important role in determining the kind of employees who are likely to join the organization. Therefore, in applying this theory in the case of AccountCo, it may be stated that the Company needs to direct its attention towards the creation of a Human resource department to evaluate the intrinsic and extrinsic factors that contribute to employee performance and apply it to their own employees, in order to glean some insight on why more employees are being attracted by other firms. The Equity Theory is based upon the principle that in a workplace situation, the degree to which an employee experiences satisfaction at his job is determined by the extent to which he feels that he is at an advantage or a disadvantage as compared to a “referent other”, who is actually a person that is in a position comparable to the employee. [Anderson and Bedini 2002]. According to the equity theory, “input” has been described as those assets a person brings to his job such as education and qualifications. The term “outcome” has been expressed in the Equity theory as referring to the results of the input that an employee puts into a job, i.e. salary and benefits [Anderson and Bedini 2002]. Applying the Equity Theory at the workplace plays an important role in shaping human relationships at the workplace and the performance that may be extracted from the employees. It is the perception of inequity that motivates people to behave in such a way that the input/outcome ratio is adjusted and if this ratio is to be compatible with what management desires, then the appropriate motivation needs to be provided to the employees to address the inequity [Beauvais, n.d.]. Such factors include bonuses or special considerations to redress the perception of inequity which creates dissatisfaction at the workplace among employees. Therefore, an application of the Equity theory at AccountCo will clearly show that the firm is lacking in what it offers its employees as compared to employees in other firms who function as the “referent other”, resulting in an unfavorable comparison where the odds are stacked against AccountCo rather than in its favor and may explain the draining away of employees and the failure to input fresh new talent. Equity Theory can play an important role in this firm, by providing AccountCo’s partners with the opportunity to eliminate that perception of inequity in its employees through the allocation of some benefit or reward that would put them on par with employees of other firms with whom they perceive an inequality. By altering the outcomes, the imbalance in the ratio between inputs and outcomes will be addressed, thereby altering the perception of inequity which causes employee dissatisfaction. This in turn, will contribute to better employee relations, especially in a small business where each employee will function as a team member [Inman, 1999]. Motivated employees will contribute better to an organization’s success. ORGANIZATIONAL ANALYSIS: Organizational analysis becomes relevant when a Company is facing losses in market profitability and lack of employee satisfaction [www.burke.com n.d.]. In the case of AccountCo, it may be noted that there is a notable lack of any kind of organizational hierarchy. The founding partner Adam Smith and his brother John are running the firm more or less according to their personal whims, which is not an attractive environment to offer for the hottest new graduates of the top management schools. Organizational behavior and strategic management are greatly influenced by the economic environment of the corporation which may cause tensions within the organization that result due to the difficulty in coordinating a variety of interests among the employees and management in the corporation[www.burke.com n.d]. When there is discord and dissatisfaction among employees since their interests are not being met, the profitability and productivity of the organization will be adversely affected. At AccountCo, it may be noted that most decisions and policies are shaped on an ad hoc basis by the four partners without much input from employees. However, according to Drucker (1988), bottom specialists will direct themselves. Therefore if a greater share of control is passed into the hands of the employees and they are allowed participation in the decision making process, it is likely that the Company will only prosper through the increased loyalty and commitment of the employees who can function with some degree of independence. When recruits from top business schools are to be attracted to the firm according to the wishes of the partner Tom Steel, this independence and creativity offered to recruits will function as a potent incentive to talented candidates who will grab this opportunity to exercise their creativity in the job environment. THE ROLE OF THE INTERNET: Tom Steel is interested in the concept of recruiting candidates online. In view of the modern business environment, it is essential to employ predictive mechanisms to evaluate a Company’s future prospects and take necessary steps to redress any lacking elements. While Adam and John Smith believe that they can manage as they are, this runs contrary to the Anticipatory Management Decision Process Model designed by William C Ashley and James L Morrison (1997). According to Ashley and Morrison (1997) the “failure to anticipate change can be fatal.”(p 47). In view of the rapid advances in technology, it is essential that AcCountCo redesign itself and change many of its old fashioned ways of doing business in order to adapt to a rapidly changing environment. In an era where more employees are aggressively seeking job satisfaction and increased incomes, AccountCo will lag behind if it fails to utilize the tools offered by the Internet, which characterize the manner in which most modern corporations conduct their business. A large percentage of job hiring and recruitment occurs over the Internet, since it offers one of the fastest and cost effective methods of doing business. In the race to grab the most qualified personnel, many Companies are taking necessary steps to tap into the talent pool as quickly and as aggressively as possible. Most recruitment in the United States is done online and AccountCo needs to eschew its traditional British policies of slow and thoughtful recruitment in order to aggressively tap into the marketplace in order to harness the best talent. To a large extent, the success of a firm is determined by the quality of the employees who work for it. The reality is that the manner in which work gets done in a business and the success that it enjoys is often dependent upon the employees of the organization and the manner in which they work together, are motivated and cooperate in the achievement of a common goal. According to Block (1999), change in the human systems has “more to do with the consent of the governed than the will and ability of those who govern.” (p 264). Therefore AccountCo’s reliance on traditional systems of control which were vested in the partners who owned the firm will not succeed in a modern, technological, globalized environment and it is necessary for the firm to improve its human resource management in order to become competitive in the marketplace. RECOMMENDATIONS: In the light of the foregoing, the following recommendations are offered, for consideration by AccountCo’s partners, with a view to increase productivity of the firm and render it more competitive in the marketplace: (a) A Human Resource Department needs to be set up at AccountCo, with qualified personnel who will be concerned solely with the management of the employees of the organization and their concerns and related issues. (b) An aggressive advertisement and public relations campaign needs to be designed and implemented for AccountCo, in order to make its services more widely known, not only in the marketplace but also among graduating Accounts students (c) The existing wage levels at AccountCo must be reviewed and necessary adjustments upward must be made in order to make them more competitive with wages being offered by other similar firms (d) AccountCo could consider a system of bonuses, health insurance, housing allowance, maternity leave and other additional perks as it may deem necessary to attract the most qualified candidates to come to work for AccountCo. (e) The Company must review its existing policies and arrive at a decision on its vision, mission and policies. It must also clearly spell out its long term objectives and goals and decide how best it can work towards achieving those stated goals. (f) The company must consider changes in its organizational structure in order to evolve a more formal process of decision making, which will include regular weekly or monthly meetings where the Company’s employees will interact on a regular basis with the partners and where performance attained can be compared to the stated objectives and goals of the Company. (g) The Company must consider actively using the Internet and the tools of technology in order to further and promote its business and enhance its commercial opportunities in the future. References: Anderson, Denise M and Bedini, Leandra A, 2002: “Perceptions of workplace equity of therapeutic recreation professionals”. Therapeutic Recreation Journal. [Online]. Accessed 09/05/2005 from URL: http://www.findarticles.com/p/articles/mi_qa3903/is_200207/ai_n9096508/pg_2 . Ashley, William C and Morrison, James L, 1997. “Anticipatory management: Tools For better decision making” The Futurist. Washington: 31 (5), p 47-50 Beauvais, No Date: “Motivation: Sources and processes of Motivation in contemporary organizations” [Online] Accessed 09/05/2005 from URL: www.cba.uri.edu/Faculty/Beauvais/ MGT402/Spring_2005/motivation1.ppt Block, P, 1999. “Flawless Consulting, Second Edition, A Guide to getting your expertise used.” San Fransisco: Jossey Bass/Pfeiffer Drucker, Peter. (1988): "The Coming of the New Organization" Harvard Business Review, 66(1). Inman, Mark,1999: “Motivational Theory in Small Business Strategy” [Online] Accessed 09/05/2005 from URL: http://www.accaglobal.com/publications/studentaccountant/43888 Maslow, A.H, 1970. “Motivation and Personality” 2nd Edition. New Jersey: Prentice Hall. Organizational analysis”, No Date. [Online] Accessed 09/05/2005 from URL: http://www.burke.com/bscg/bp_oa.htm Rampersad, Hubert K, 2001. “A Visionary Management model”. The TQM Magazine. Bedford:2001, 13(4), p 211-224. Robbins, Stephen P, 2003. “Organizational behavior” Tenth Edition. Prentice Hall. [Online]. Accessed 09/05/2005 from URL: www7.tamu-commerce.edu/mktmgt/ faculty/sadler/mgt305/Ch06.ppt Read More