Human Resource Practices of Fastening Technologies Limited - Case Study Example

I. Introduction The purpose of this paper is to explore the human resource practices of Fastening Technologies Limited in relation to the current business situations. As these practices are analysed, shortcomings are determined on the part of the company which warrants improvements. After the business issues are determined, recommendations are made in order for companies to address the issues and create improvement through modification of human resource practices. A major component of the recommendations is for the company to adopt strategic management for a more strategic focus and better resource allocation. Strategic human resource management should be adopted by the company in order to address the issues in its operations. II. Fastening Technologies Limited: Human Resource practices analysed A. Strategic Human Resource Management 1. Lack of strategic direction The starting point of all the issue for any company is its relative strength in terms of strategic management—the clarity of the goals of the company in line with its mission and vision, in order to create good strategies in order to meet those goals. Without the goals and clear strategic direction, even those which are perceived to be the best human resource practices will mean nothing if they would not play a role in fulfilling a company’s objectives FTL’s lacks strategic direction as a company until Steve Davidson has started to craft a vision, as according to the case, “Steve had considered Anders management style to be too ‘seat of the pants’ and worked hard with his management team to create a vision for the business (Mason 2000, 11).” The company’s lack of strategic direction leads a cluttered approach to human resource management as evident in the policies which do not support any concrete corporate objective for the company. 2. No strategy, no concrete structure to support it Because the company lacks strategic direction, an organizational structure is not tailored to support any strategy to fulfill a corporate objective. This leads to a corporate structure that often leads to conflicts, and one that does not utilise an integrated approach to the company’s operations. The shift of organizational structure from individualised jobs to work teams in order to promote a team working culture is vital in order to address the integration issues that arise from customer frustrations and lack of ownership. Structure plays a huge role in the organization’s processes, as stated in the case, “After the training had been completed there was a noticeable improvement in attitude between and within teams, although changes in staffing and team structures tended to undermine the benefits (Mason 2000, 14).” 3. Communication issues Communication is very vital to any organization in order to pass on information and vital knowledge regarding the company’s operations. What is more important as regards communication is the ability of the organization leaders to communicate the vision, mission and strategic direction of the company to all the employees in order for them to play their part for the company’s fulfillment of corporate objectives. This can be attributed to the company’s more informal channels of communication. As the case has stated, “She enlisted the aid of ACAS to carry out a survey of employee views on communication and was startled to find that 47% of information came via the grapevine (Mason 2000, 7).” As the organization relies on grapevine for passing on information, the company is at a competitive disadvantage as the information that is passed on is not passed on through legitimate channels and authorities that warrant authenticity and truth. Also, heavy reliance on informal channels of communication such as grapevine tends to lessen the productivity and morale of employees. 4. Work design and organizational culture The conflicts that are apparent in the re-shuffling and filling in of new positions over the years come because of the company’s organizational culture that emphasises tenure versus performance. Although this is not very explicitly stated, the case made an example as follows, “Bill had been with the Company for 20 years, having steadily worked his way from being a clerk in the finance office and studying hard to gain his professional qualifications, to become Finance Director under Anders predecessor (Mason 2000, 7).” As junior officers rise over long-time employees who hold high positions, the appointment becomes an issue. This is because performance is not incorporated mainly as a success driver within the organizational culture. As this is true for the junior officers, this also happens for graduate recruits and apprentices. Work design is also an issue within the company. This is the other reason behind conflicts on new appointments of junior officers over more tenured officers, and graduate recruits over apprentices. As the career path for any employee is not clear, new appointments especially when they are made on the basis of tenures are sources of conflicts. B. Human Resource Planning and Acquisition 1. Recruitment process in line with strategy The company’s does not have a definite recruitment process. This is apparent in the company’s different recruitment process for graduate students as they get university tie-ups and for the apprentices. As for short-term recruitment, the company relies on agencies for short-term employment needs. As the company does not have a definite strategy and clear strategic direction, the recruitment does not serve as a strategic tool to entice the best candidates for employments as the company does not know what exactly what it looks for in a candidate in order to fulfill corporate objectives. 2. Non-standardized selection process According to the case, human resources play a role in the recruitment only as an administrative function. The function only assists managers for interviews and selection. However, this function evolves over the years as the new HR manager tries to incorporate more objective measures for selecting candidates. The company’s lack of strategic direction still holds a reason for the selection process not being used as a strategic tool and competitive advantage for the company. This is a major weakness for the organization, as the goal of recruitment process is not just to look for the best people for the job, but also the best people that will demonstrate the values of the company—one which is fit with the company’s culture. This is to reinforce the company’s brand image as it is demonstrated to customers and to other stakeholders. If the company wishes to create a corporate image and reinforce a certain culture, the selection process is a major strategic tool that it can use. 3. Issues on compensation Compensation is a major issue for the company’s most employees. As differences in ranges of salaries and benefits are among the discretion of senior managers, lacking certain standardized package among job clusters have become an issue. Due to the company’s lack of strategic direction, compensation is not integrated in the strategic HR tools. When a company wishes to gain a great foothold in a certain market, say it aims to become a market leader, it aims for the best talents. In order to attract the best talents, HR and compensation schemes have to play strategic roles. As employees perceive relative differences among the industry players’ compensation packages for the counterpart positions in other companies, the firm’s compensation schemes are perceived to be inferior. This has an effect on the employees’ morale and satisfaction. C. Assessment and Development 1. Training A good point for the company is that it invests in training and upgrading the technical skills of its people. In areas like customer service, it also aims to train its staff in order to deliver value and address frustrations. The good thing about the company is that training has been part of the human resource practices of the company over the years. By constantly updating the technical skills of the people in order to perform a certain level and achieve certain quality standards, trainings have proven to be beneficial to FTL. 2. Career development issues As previously stated, new appointments for vacant positions create conflict because career paths are not laid out explicitly. Therefore, career development is definitely an issue. While this is apparent in many junior officers, this is also apparent in apprentices who choose to leave the firm after a couple of years of training due to fewer opportunities for growth. Fewer opportunities also result in higher employee turnover as employees look for more chances for growth and definite upward career development. 3. Performance appraisal methods and reward systems According to the case, “Appraisal was clearly felt to be waste of time for most employees and individual objective setting for shop floor staff as being meaningless, as they had little opportunity to influence the achievement of the objectives. The managers clearly found the whole process a chore each year (Mason 2000, 7).” Because the performance appraisal methods are only done as part of the practices of the human resource function, this does not serve a definite role for the company’s fulfillment of objectives. As the reward system is not linked with performance appraisal in a strategic manner, performance appraisals are perceived to be unnecessary by most of the employees. III. Recommendations A. Strategy 1. Strategic Human Resource Management With the crafted vision and mission for FTL by Steve Davidson, the company can come up with definite corporate objectives, long-term, medium-term and short-term. These corporate-level objectives, such as market share and returns for investors will be the basis for functional objectives and their respective functional strategies. After the corporate-level objectives have been determined, the Human Resource function of the company can come up with its functional-level objectives. A major objective can be in the form of return on investment/equity. The strategic direction of the company will serve as the starting point for the overhaul. In order to dominate the market of fasteners, FTL can adopt an innovation strategy, which according to Robbins, “is a strategy that emphasizes the introduction of major new products and services (2005, 441).” 2. Functional-level strategy to support objective According to Bartol in her book “Management: Pacific Rim Focus,” functional-level strategies “spell out the specific ways that functional areas can be used to bolster the business-level strategy (2001, 242).” After the strategic direction has been clearly determined, the company can come up with the functional-level strategies that are aimed to accomplish the Human Resource function objectives. In order to support a given return on investment, the company has to craft a strategy in the market which would accomplish such objective. That could be possible, by either increasing its market share or decreasing its costs to operate the business. As the company positions itself in the market, say a dominant player or the market leader, the Human Resource function’s strategy can be: “to attract the best talents in the market and retain them through competitive compensation and rewards system, fair work environment, lots of room for personal growth and training, and other motivational HR activities in order to keep them.” 3. Support strategy with structure In order to accomplish the objectives and carry on certain strategies, organizational structure is vital. This is where the proposed re-organization will happen, according to the company’s objectives and strategies. The positions that will comprise the organizational structure will depend on the human resource requirements in order to fulfill the objectives. Since the scope of this paper does not include strategic marketing which would present the company’s strategic position in the market, the relation between the overall company’s objectives and corporate structure is hard to determine. However, as the fastener industry requires constant innovation in order to keep with the changes in the car manufacture, cross-functional design which is based on the organic structural option. According to Robbins in his book Organizational Behavior an organic structure is “a lose structure; [with] low specialization, low formalization, [and] decentralized (2005, 441).” This is in order to equip the organization to respond to rapid changes in the market and retain the dominant role in the industry by being the market leader. 4. Work design to trace career path for development The organizational structure should incorporate the growth opportunities and career development for every employee in the form of career paths. By developing career paths, new appointments from within will not become major issues as the appointments are more or less predicted according to career paths in terms of the positions that are included in it. Work design, in the case of FTL can utilise job enrichment, which according to Robbins, “refers to the vertical expansion of jobs. It increases the degree to which the worker controls the planning, execution, and evaluation of his or her work (2005, 473).” By enriching the job and linking it to growth and promotion opportunities, FTL can better keep its hires in order for the company to both minimise the cost of acquiring new employees and training them. 5. Establish formal communication channels By establishing formal communication channels, the flow of information is more organised in order to respond to changes in the marketplace in a better way. The timeliness of information is very crucial for an organization that operates in competitive markets; therefore proper information should reach the person that needs it in order to make decisions that will have an impact on the company’s operations. FTL can utilise a formal organization network in the form of the “all-channel networks” which according to Robbins “permits all group members to actively communicate with each other. [This] is most often characterized in practice by self-management teams, in which all group members are free to contribute and to no one person takes on a leadership role (2005, 290).” The all-channel network as a formal communication channel is consistent with the company’s cross-functional organizational structure in order to encourage rapid response to the market. The all-channel network can utilise computer-aided communication which includes e-mail, intranet (network of company computers), and video conferencing. 6. Organizational culture to reinforce structure In order for the organization to reinforce the structure, the company has to create an identity and sets of customs and norms. This will be the organization’s culture. The organization’s culture will reinforce the image, values, vision and mission of the organization as it reflects the structure that supports it. Schein, in his book “Organizational Culture and Leadership” refers to organizational culture as a system of shared meaning among members of the groups, which characterizes an organization into a personality that is distinct from other organizations (1985, p. 168). Being the system of shared meaning, organization culture will reinforce the core values and processes of FTL in order to reinforce its cross functional structure. As O’Reilly III, Chatman and Cadwell in their article in the Academy of Management Journal, there are primary characteristics that determine an organization’s culture: “innovation and risk-taking; attention to detail; outcome orientation; people orientation; team orientation; aggressiveness; and stability (1991, 487-516). As these are spectrums that determine the organization’s culture, FTL can craft a culture that will support its organizational structure by determining the extent of these characteristics. FTL, for example may choose to rank high in innovation and risk-taking in order to support its innovation strategy, high in outcome orientation and team orientation, then moderate in other aspects. The overall picture as a result of the combination of the characteristics will “determine the ‘feelings of shared understanding’ within the organization” (Chatman and Jehn, 1994, p. 522-523). 7. Recruitment strategy in line with overall corporate objective As the corporate and functional objectives have been determined, and corporate and functional strategies are crafted in order to fulfill these objectives, recruitment can be used as a major strategic tool. Depending on the company’s objectives, the market from where the company will wish to find its new recruits will be determined. FTL will be able to find the best pool of talents after it has determined what it is looking for in a candidate. 8. Standardised selection processes and equal employment opportunities The standardised selection processes will require the managers to accept candidates that are best fit with the job and the company. By adhering to certain protocols, chances will be greater that those who are the best fit for the job and the company will be accepted, who could create value to the company. Aside from these, standardised selection processes will aim to reinforce equal employment practices as well as minimising subjective influences in the choice of the accepted applicant. This will reduce the employee turnover, thus the cost for acquiring and training new hires for the company. 9. Standardised evaluation and performance appraisal methods Standardised evaluation and performance appraisal methods will promote fairness in the workplace, and will be very crucial if this will be linked to strategic compensation schemes. Standardised evaluation techniques will minimise subjective influences on the part of the evaluators, therefore will create a better workplace as it will minimise conflicts due to injustice in evaluation procedures, especially if it will be linked to pay. 10. Strategic compensation schemes As major human resource management experts, labor economists and strategists suggest, pay-for-performance metrics has long been “the idea” to resolving the issue of productivity within a company, which has something to do with meeting the objectives of the company, and in turn impact the growth in shareholder value. A manager’s compensation package is usually comprised three types of compensation: base pay, bonus pay and long-term compensation. In order to link pay to performance, the mixture between the base pay and the incentive pay—which includes bonus pay and long-term compensation, will have to be determined. The percentage of incentive pay, the way it is intended for use, is designed to motivate a manager to increase its efforts, which in turn, increase performance if he wishes to increase pay. With this, compensation can be used as a major strategic tool to retain and reward employees. 11. Training and development While the training has been part of the human resource practices of FTL, it can improve its training methods by including team-building seminars in order to reinforce the new structure. While the technical training is very important, training managers specifically in order to gain new skills such as management skills is also important. Works Cited Bartol, K., Martin, D., Tein, M., & Matthews, G.. Management: A Pacific Rim Focus. Australia: McGraw Hill Company, 2001. Chatman, J. & K. A. Jehn. “Assessing the Relationship between Industry Characteristics and Organizational Culture: How Different Can You Be?” Academy of Management Journal. June 1994, p. 522-523. Mason, Carol.,Fastening Technologies Limited. MSC-Named Awards—Managing People Case Study. Oxford: Oxford Brookes University, 2000. Meyerson, D. & J. Martin. “Cultural Change: An Integration of Three Different Views” Journal of Management Studies. November 1987, p. 623-647. O’Reilly, C. III A., J. Chatman & D. F. Caldwell. “People and Organizational Culture: A Profile Comparison Approach to Assessing Person-Organization Fit.” Academy of Management Journal. September 1991, p. 487-516. Schein, E. H. Organizational Culture and Leadership. San Franciso: Josey-Bass, 1985, p. 168. References Dessler, Gary, Human Resource Management. 9th ed. New Jersey: Prentice Hall, Inc, 2003 Noe, R., Hollenbeck, J., Gerhart, B., & Wright, P, Human Resource Management. International Ed. Philippines: McGraw Hill Company, 2006. Robbins, S. Organizational Behavior. International Ed. Philippines: McGraw-Hill, 2005. Read More