Human Resource Strategy for a Ship Management Company - Term Paper Example

Managing human resources is a challenged faced by most industries across all nations. Managing people on ships is even more challenging because of the stress experienced by the officers in different operations. Managing human resources on liquefied natural gas (LNG) tankers is a much bigger challenge as lot of vulnerabilities lie in the human factor within the LNG industry (Hurst, 2008). The human element has been defined as a complex multi-dimensional issue that affects maritime safety, security and marine environmental protection involving the entire spectrum of human activities performed by ships crews, shore based management, regulatory bodies and others (MCA, 2007). While the ships and tankers are structurally sound the problem lies within the people involved. This implies that selection and recruitment process of people for the LNG tankers must have a defined strategy to cope with the inherent problems. Recruitment in the shipping companies has gained importance because it is recognized that the human element plays an important role in its operations. The human factor is more important than the operational quality, technical and mechanical aspects (Kouri & Naniopoulos, 2000). Generally ship management companies use the services of manning agents but it has its own drawbacks. Because of an efficient and integrated supply chain and advanced communications technology it has become easier for ship managers to arrange and rearrange crew composition at will. The problem with outsourcing recruitment is having the P-O fit or finding the suitable officer for the job requirements. If smaller agencies are appointed in the labour-supply countries there is little attention paid to their abilities or health conditions (ILO, 2001). They are even known to violate the standards and legislation. Hence recruitment and selection process will not be outsourced. ILO has proposed regulations to ensure that private manning agencies adhere to international standards. There exists a perennial shortage of officers to work on board but due to the collapse of the Soviet Union an extra amount of officers entered the manning market. In addition there members from Eastern Europe that were available for employment but this does not take care of the shortage. In times of shortage, there is a tendency to compromise on quality but in the LNG tankers any compromise would not be acceptable. Because of increased competition and to ensure cost-effectiveness, the manning levels have been lowered. This allows the ship owners to register themselves under second registry where legislation is permissive as far as taxation, safety, manning, licensing, inspection and management are concerned. The LNG industry is facing shortage of crew members. Considerable and profound structural changes have taken place in the shipboard environment and this necessitates the adoption of ILO standards in recruitment and selection of officers (ILO, 2001). Liquefied natural gas (LNG) tankers usually originate from politically unstable countries which include Qatar, Nigeria, Algeria and Egypt (Hurst, 2008). The LNG tankers operate without any international regulations and hence it becomes possible for anyone to work on board these tankers and get away without being detected. There is no trustworthy system to verify the foreigner mariners. Background checks are not carried out on foreign crews. There is no system in place to verify that the crew on board is who they claim to be. The foreigner mariners do not have to undergo background checks through the FBI and nor are they vetted through the national driver record database or subject to terrorism background checks. The LNG industry has grown very rapidly and this has affected the quality of mariners working onboard these vessels (Hurst, 2008). Because of the nature of the industry highly skilled and trustworthy officers are required to be on board. This is because the ships are totally in control of the person who is at engine and has total control over the speed and the direction of the tankers. Engineers need to have steam experience because the ships are fitted with steam turbines. The senior LNG officers are due to retire soon and hence highly skilled mariners will need to be identified. Poaching in the industry is not the answer. Officers need to be trained in their respective jobs. According to the Society of International Gas Tanker and Terminal Operators LTD training is essential to combat the inherent problems and steer the tankers with safety. The LNG supply chain faces three types of threat – suicide attacks possibly by explosive-laden boats, standoff stacks when the weapons are launched from a distance and armed assaults (Wilson, 2008). Therefore, the LNG industry presents further challenges in preventing and responding to terrorist attacks. This has to be taken into account at the time of man power planning and recruitment. This is the reason that US mariners are recommended to be employed on the tankers as they undergo rigid qualifications process to ensure they are highly skilled (Hurst, 2008a). It should also be noted that US has no control over the quality of foreign officers. According to the Deep Water Port Act, the administration has to allow the ships access to the port facilities regardless whether US mariners are available on board these tankers. India too has temporarily relaxed the manning requirement to handle the shortage of officers (Sanjai & Manoj, 2008). The maritime regulators have been known to hold up ships when the manning requirements have not been met but this has been relaxed for six months. To influence the companies not wishing to comply with the manning request, the Maritime Administrator offers priority processing to companies that are willing to comply with the manning requirement. When prioritized, the ships can move to the front of the line for the processing of license application. Another point which would have to be considered is that since it is costly to register a ship in the US than in a foreign country, no US flagged ship exists. A US flagged vessel necessarily has to employ Americans which is expensive and also pay higher taxes and fees. Under the US Code of Regulations, the requirements are stringent. For LNG operation the flag flown has no bearing on the ship’s operator. Hence the requirements would be relaxed but it is believed that since restrictions are relaxed there would be compromise on security precautions and fleet training (Hurst, 2008a). This could prove to be dangerous for the LNG operators and hence this company should ensure that the recruitment is from the right source with the right skills. The LNG vessels are quite likely to be hijacked or seized by terrorists. Fears in the shipping and security circles have give rise to the concern that armed terrorists or pirates could take control of the vessel carrying LNG and transform into a floating bomb. Pirate hijacking of a ship usually takes place by planting an insider within the ship. Hence the recruitment process at this company should be very stringent. Ship managers are operating on a tight budget and in order to gain competitive edge they work harder to reduce their overheads and to develop competitive manning resources. Technology has revolutionized how ships are managed and it is regulated and monitored by various authorities. The people that should be employed should have the initiative to seek and apply methodologies and tools to reengineer their work process, reduce cycle time and improve service quality (Bajpaee, n.d.). Bajpaee finds that officers should be recruited from countries like India, China and Indonesia. Reduced manning levels can result in significant savings and this has become possible because of the automated systems coupled with human performance models. This has to be done without jeopardizing the mission readiness or safety. Crew levels could be reduced to 17 without violating the law. When addressing the introduction of technological change stress, fatigue, boredom, living/social conditions and individual and team skills should be considered as these are the most critical human factors (Marine Board, 1990). Today ships and tankers operated under flags of convenience which have facilitated the employment of multicultural and third world crews who have lower wage demands and who are not in a position to have high social demands (Kouri & Naniopoulos, 2000). The European Union seamen have lost interest in careers at sea and hence being able to employ from other nations has become essential. The loss of interest by the Europeans is partly due to loss of image of the industry and the hardship and the social isolation that the crew members experience while they sail. This is compared to the jobs on land and this deters the people from joining the ships. LNG vessels pose other challenges in manning. Ships are bought and sold, crews are changed and new equipment fitted. Such changes lead to discontinuities in management (MacHardy, 2005). Besides, training methods of different countries vary and the multi-nationality crew comes with their own characteristics. Problem of communication between mixed crews exist not only due to language but also due to cultural differences. During a crisis there are rapid exchanges and this is different from normal communication. In panic everyone tends to speak in his own language. The recruitment strategy Crew management involves management of the crew in accordance with the national, international, rules, regulations and codes. The crew of a ship is responsible for ship maintenance, cargo operations and safe navigation (Lwin, n.d.). Based on the above facts from the LNG industry the right recruitment strategy would have to be devised for a fleet of 9 LNG tankers in the European Union. Crew is the most important part of the ship management and the quality of people make the difference between success and failure. Certain issues that are relevant only to LNG industry would have to be given importance. These include the right skills to handle the terrorist and hijacking attempts, no compromise on quality and compliance with the manning requirements. Number of people No less than 17 people would be employed per vessel because international regulations require a lookout to be on duty 24 hours a day. At the same time, no compromise can be made on the hours required to operate the ship while ensuring that fatigues does not set in among the officers. Each seafarer has to be provided 10 hours of sleep in every 24 hours and out of which at least six hours must be at a stretch (Lloyd, 2007). This is essential because inadequate manning safety, fatigue levels and watch keeping. These are the reasons for many problems at sea. Because these are LNG tankers extra security is essential and hence a gangway watch would be necessary. Hence a manning proposal will be prepared which will be approved by the MCA. With a fleet of nine vessels, a certain number of officers would have to be kept as reserve officers on rolls. This suggests that the needs have to be identified correctly and in line with the regulator requirements. The provisions of the ILO Discrimination (Employment and Occupation) Convention, 1958 (No. 111), should be fully applied in the selection process in order to eliminate any possible discrimination (ILO, 2005). They will be engaged only after an appropriate selection process. Modern selection methods would be employed so that aptitude can be ascertained. Outsourcing The global market for seafarers has no nationality restrictions and hence a seafarer of any nationality can be recruited. Recruitment in the industry is highly organized through extensive global networks linking ship owners, ship managers, crew managers, labour-supply agencies and training institutions (ILO, 2001) but outsourcing recruitment for LNG tankers would not be considered. This is because of extra caution that has to be exercised to ensure against terrorist attacks and hijacking. Insider involvement would have to be avoided. The company should employ subcontracting in certain areas like cleaning, security and transport. This allows the company to save costs as well as focus on core issues. Even though such staff maybe working the same number of hours and using all the same facilities on board, but the company does not have the same liability towards them as the full time officers. This also substantially reduces the workload on payrolls and other activities. Nationalities Officers should be recruited from the Indian subcontinent and Eastern Europe. The company would employ mixed nationality crews as they are distinctive and consciously composed. Mixed nationality crew should be based on language compatibility along with availability of skills. Officers would not be recruited from Russian Federation and the Republic of Korea. Citizens from these two nations find compatibility difficult in a mixed-nationality crew. They are often found in single nationality crews as standard of English language is very low among them. It hence makes sense to employ them in homogenous crews. At the same time, citizens from Philippines, Poland and India are seldom found to form whole crews and since their English language proficiency is of a decent level, they are found in mixed nationality crew (ILO, 2001). Since this company is based in the European Union a triple layered price structure is advisable. As the company has nine LNG tankers to manage, the officers could be shifted periodically and the layers could be exchanged. The senior officers would be from Italy or, the second layers from India and third level of officers from Poland. Officers from India and Poland could come for wages cheaper than from other countries. Besides, Polish people are physically strong and hard working, always immaculately dressed and they come out of the marine academy well educated, trained and with an understanding of the shipping companies. The company would strongly consider India as a very valuable source of officers. China would not be considered as China is undergoing vary rapid development of its shipping industry. There is currently worldwide shortage of officers and India is a promising future source. Bangladesh and Pakistan too have potential but they are disadvantaged due to geo-political reasons (Marinetalk, 2009). Other nationalities that can be considered for recruitment are Vietnam, Myanmar and Cambodia. Other abilities The candidates should have excellent communication skills and an understanding of the seafarer’s mentality. All ships have to be manned with qualified, certified and medically fit seafarers in accordance with national and international requirements. Communication ability needs to be strong among the officers (IMO/ILO, 1999). English speaking abilities would be tested specially for applicants from non-English speaking countries. Communication is an essential requirement and English language proficiency is mandatory. This is because under normal conditions when English is spoken slowly and clearly it can be understood by the majority of the crew. The English language skills must be tested under different circumstances. English should be understood when using portable communication devices or when wearing fine suits and masks (Lloyd, 2007). English should be understood above the noise of the wind and the sea while working on the deck. This is necessary as it adds to the workload while on board. This can be a major issue in having a multi-nationality crew and hence the company would have to ensure a proper language testing system. Normal reflection and good eyesight are essential for people employed on ships and tankers. They should have the ability to work in teams as the act of one has a direct impact on other around. To avoid poaching a minimum period of service guarantee would be ensured as the ship management company has to invest in training of the personnel. It is also advised to have an HR officer in charge of all the nine vessels to handle various issues pertaining to mixed nationality crews. This is essential because it is necessary to recognize and harmonize the different cultures from different countries and companies, mentalities and styles (Bernhard, n.d.). While there would be no compromise on quality, taking into account the isolation that creeps in the mariners, other incentives would be offered to attract the right talent. These include medical insurance, health check-up, and travel arrangements. Most marine institutes have a placement cell and these would be contacted to enroll freshers. While the students are in their final year of education, placements would be given. In the meantime, this company can tie up with the institutes to offer specialized training for LNG tankers to those students that have been offered placement. This has gained importance as Curtin (n.d.) recognizes the reduced emphasis on practical sight taking skills by both training institutions and officers on board for trainees under their supervision is aggravating. The navigator interacts with technology and people. The past principles of navigation cannot be overlooked and rely totally on technology. This only heightens the chances of human error and hence enhances the importance of training while at the offshore institute. For the post of the experienced officers, the company should invite applications online. These should be very strictly vetted before they are invited for interview. Lawsuits have become common which heightens the importance of background verification of employees. Terrorist connections and attacks are other reasons. False and inflated information is often supplied by the candidates which makes the employers unwilling to accept on face value. This is all the more important in the LNG industry as terrorist attacks and hijacking remain perennial threats. To conclude – the recruitment strategy for the nine vessels would have to be in accordance with the ILO provisions and the marine regulators. No compromise would be made on the number of officers or the quality. Emphasis would be on the right skills match and the job specifications. The recruitment process would be conducted in-house and not outsourced. Focus would be on recruiting the freshers directly from the institutes while lateral entries would be done online. A special HR officer would be appointed to handle the issues of cross-nationality, culture and communication. The threats to the LNG industry cannot be ignored and hence background verification of the applicants would be conducted before appointing them. Poaching would not be done as these are short-term benefits. To attract and retain the officers, suitable incentives would be offered. Since the foreign mariners require no verification ascertaining the trustworthiness is critical to the success of the management of the nine KNG tankers. A sufficient number of reserve officers would have to be kept on rolls as managing nine vessels could lead to emergencies. References Bajpaee, R n.d., WHAT IS THE KEY TO SUCCESSFUL SHIP MANAGEMENT, retrieved online 23 February 2009, from http://www.shippingstarnet.com/Bajpyee.pdf Bernhard, n.d., GROUP HR (SHORE) DIRECTOR: MR. JUERGEN KOHL, retrieved online 25 February 2009, from http://www.bs-shipmanagement.com/company/organisation-structure/group-management/juergen-kohl/ Curtin (n.d.). The impact of new technology, Chapter 5, retrieved online 25 February 2009, from http://adt.curtin.edu.au/theses/available/adt-WCU20040311.113717/unrestricted/12Chapter5.pdf Hurst, C 2008, Liquefied Natural Gas Tankers Remain Giant Terror Targets, retrieved online 23 February 2009, from http://www.thecuttingedgenews.com/index.php?article=531 Hurst, C 2008a, The Terrorist Threat to Liquefied Natural Gas: Fact or Fiction?, retrieved online 25 February 2009, from http://www.iags.org/hurstlng0208.pdf ILO 2001, The impact on seafarers’ living and working conditions of changes in the structure of the shipping industry, retrieved online 25 February 2009, from http://www.dtic.mil/cgi-bin/GetTRDoc?AD=ADA378421&Location=U2&doc=GetTRDoc.pdf IMO/ILO, 1999, RELEVANT REQUIREMENTS OF THE INTERNATIONAL SAFETY MANAGEMENT CODE, retrieved online 25 February 2009, from http://www.ukshipregister.co.uk/imo_fatigue_part_2.pdf ILO, 2005, Safety and health in ports. ILO code of practice, retrieved online 25 February 2009, from http://www.ilo.org/public/english/dialogue/sector/techmeet/messhp03/messhp-cp-b.pdf Kouri, P & Naniopoulos, A 2000, Maritime and Port Employment in Southern Europe, a challenge for the Mediterranean States: The case of Greece, retrieved online 23 February 2009, from http://www.acem.org/observat/pages/kouris.htm Lloyd, M 2007, The manning problem, Seamanship International Ltd. retrieved online 23 February 2009, from http://www.marinetechpublishing.com/images/PDF/short/ManningProblem-SeamanshipInternational-0807.pdf Lwin, S n.d., SHIPMANAGEMENT AND THE ISM CODE, retrieved online 25 February 2009, from http://www.wmu.sof.or.jp/lwin_ism.pdf MacHardy, JA 2005, Vessel and Terminal Standards and Security , LNG Journal, retrieved online 25 February 2009, from http://www.lngjournal.com/articleJanFeb04p1-4.htm Marine Board, 1990, Crew Size and Maritime Safety , retrieved online 23 February 2009, from http://www.nap.edu/openbook.php?record_id=1620&page=80 Marinetalk, 2009, Future of India as a Crew Supplying Nation, retrieved online 23 February 2009, from http://www.marinetalk.com/articles-marine-companies/art/Future-of-India-as-a-Crew-Supplying-Nation-xxx000125335OT.html MCA, 2007, Human Element Strategy, retrieved online 23 February 2009, from http://www.mcga.gov.uk/c4mca/mcga07-home/workingatsea/mcga-healthandsafety/mcga-adviceandguidance/mcga-ds-rap-hestrategy.htm Sanjai, PR & Manoj, P 2008, India relaxes safe manning rules for ships to tackle shortage, retrieved online 23 February 2009, from http://www.livemint.com/2008/05/13221655/India-relaxes-safe-manning-rul.html Read More