The Influence of HR Policies in Precision Optical Limited - Case Study Example

The Influence of HR Policies in Precision Optical Limited: A Critical Evaluation Introduction Background Two of the most pressing issues that HR faces are recruiting talented and skilled employees. Subsequently following the attraction of key talent, HR addresses the need to retain employees who have demonstrated high performance. Employee retention has been the focus of numerous researches; effective employee retention ensures the delivery of high-quality products and services. Thus, it serves as a strategic leverage amidst cutthroat competition. Retaining a talented pool of employees also allows for cost-efficiency in the recruitment process. This is especially critical considering that a high employee turnover increases costs for training; leads to productivity loss; and causes a decrease in sales (Garavan 1991). Moreover, Kreisman (2002) emphasizes that the success of a company prudently depends on its ability to attract and retain employees, apart from their capacity to promote and exercise innovation, flexibility, and creativity. The retention of a talented and stable workforce has become an advantage for enterprises in today’s competitive market. Thus, organisations must adopt HR strategies that are dovetailed to the needs of today’s workforce to maintain an adequate number of key talents. The ability to retain employees determines a company’s stability, a characteristic that most stakeholders seek. Despite the alarming increase of employee turnover as determined by a survey by the Society for Human Resource Management or SHRM (2003), this problem can be addressed by the company’s HR or department heads (Gupta-Sunderji, 2004). The study intends to focus on the role of HR policies in the retention of employees of Precision Optical Limited. The mission of Precision Optical is “to produce the best quality lenses and spectacles for all our customers in the shortest possible time, and offer total Customer Service to all our customers”. To attain this, they are committed to undertake continuous training of their employees; to put premium on high technology and equipment; and to continuously update their lens range. Moreover, their strategic objective is to be a major player in the UK, by according small, autonomous optometrists and dispensing chains the selling capacity that big players have (Precision Optical Limited 2006b). Since its inception in 1996 (Precision Optical Limited 2006a), there has been no deliberate effort to analyse the HR policies of the company, and how it influences employee retention. This study, thus aims to analyse its policies and to benchmark these against those of other players within the same industry. The analysis shall be undertaken using the typology of Herzberg (1969), where policies shall be classified as related to either motivators or hygiene factors, based on the two-factor model of Herzberg. Research Problems The study aims to analyse selected HR policies of Precision Optical Limited which have an impact on employee retention. Specifically, it shall undertake an analysis of the company’s employee retention policy and related policies. Objectives The objectives of the research are as follows: 1) Analyse the existing employee retention policy and related policies of Precision Optical Limited; 2) Benchmark, review and compare these policies to other companies. 3) Recommend policy improvements to enhance employee retention. Research Questions The following are the research questions that the research shall attempt to address: 1) What are the strengths and weaknesses of Precision Optical Ltd.’s motivator-related policies? 2) What are the strengths and weaknesses of Precision Optical Ltd.’s hygiene-related policies? 3) What improvements may be made to the company’s policies to enhance employee retention? Rationale for the Study Garavan (1991) further provided reasons on why HRD should engage in policy formulation. First, policies help management in identifying and implementing HRD activities or programmes that will address and resolve issues and organisational problems and take advantage of opportunities. It also ensures that executives, managers and subordinates are aware of and cooperate in HRD activities. Third, it also acts as a clear framework and rationale for investing on human development. Moreover, it provides an effective blueprint of the skills and knowledge requirements for particular posts. Policies also act as guidelines for determining which activities are value-adding and which are futile in the achievement of organisational strategies. Hales (1986) proposed guidelines in constructing HRD plans and policies, specifically focusing on the training policy as an example. First a strategic business plan is needed prior to the construction of an HRD plan and corresponding policies. The HR policy also requires permission and involvement of top management. These policies should be aligned with the business plan, and comprehensively considers both internal and external factors. All HRD functions should thus be strongly supported by robust policies, providing the structure upon which HR programmes and activities may be built. This is particularly relevant at these times of crisis and stiff competition within the industry of Precision Optical. They have a goal to fill the need for a high standard of service in the wholesale side of the Optical industry that previously had not existed” (Precision Optical Limited 2006a). They have crafted a transparent pricing scheme; have honed the quality of their output; and have ensured the competence of agents that directly interface with their customers. They also say that they “believe strongly in doing, and not just talking” (Precision Optical Limited 2006a). Given the dynamism and competition that characterize the external environment, Precision Optical Limited must carry out all means to gain competitive advantage. The current study will thus point out the strengths and weaknesses of its HR policies, which will in turn help it build an empowered and motivated workforce. The latter is the foundation of an enterprise’s vitality. Literature Review and Conceptual Framework Werner and DeSimone (2006) define HRD as a process where skilled individuals manage and coordinate the production of goods and services to achieve the goal of societies. It is also defined as the combined use of training and development, career development and organisational development to improve and enhance employees’ efficiency at work (McLagan, 1989). Garavan (1991) discussed the key characteristics of HRD. The first is integration with organisational missions and goals. This key characteristic- the integration of HR planning and training into business, is established in a variety of HRD-related literature. Barham, Fraser and Heath (1987) emphasized that HRD is involved with fragmented activities, each systematically linked to organisational goals; these HR activities effectively contribute to the organisation. The second key characteristic involves top management. HRD must be able to solicit the participation of top managers since they act as role models to their subordinates. The third and last facet of HRD is environmental scanning. This implies that HRD must be knowledgeable of the external environment, in terms of opportunities, challenges, or threats. HRD-related activities include strategic planning, providing intervention for organisational development, constructing a new curriculum for training, and supporting on-the-job training of individual employees (Packendorff 1995). Their roles are dynamic in nature, commonly involving managing different that requires interaction from a variety of departments. They act as learning agent, change catalyst, and manager (Hutchins and Wang 2008). HRD ensures the maintenance or increase in job satisfaction; decrease in turnovers, absenteeism and job-related incidents; improvement in the level of performance and promotion aspects within the organisation; decrease in the duration of learning process and managing the human and financial resources allotted for training; and, the creation of a learning organisation that flexibly copes with a dynamic environment (Garavan 1991). In light of the objectives of the current research to analyse the policies of Precision Optical Limited related to the retention of its employees, the link between HR policy and retention must be demonstrated. A study by Wright, Gardner, Moyniham, and Allen (2005) determined that there is a positive relationship between HR policies and the performance of employees. Similarly, a study by Katou and Budwar (2010) determined a positive relationship between HR policy and performance. However, such positive outcome is dependent o the employees’ attitude and effectiveness of HR in implementing their policies. Conceptual Framework Researches that deal with employee retention can be categorized into two types: the first are those researches focused on determining factors that increase employee retention, while the second are those that focus on ascertain the causes of job dissatisfaction and employee turnover. One of the first researches that focused on employee retention is Herzberg (1969), which determined that there are two factors that greatly influence employee retention: motivators and hygiene factors. Motivators include achievement, recognition, responsibility, and growth and advancement. On the other hand, hygiene factors encompassed company policy and administration, supervision, working conditions, salary, status, interpersonal relationships, and security. Moreover, the study expressed that intrinsic factors strongly influence job satisfaction, while extrinsic typically avert job dissatisfaction. Herzberg’s (1969) further notes that job satisfaction is influenced by achievement and recognition. Moreover, dissatisfaction with company policies and administration, and the absence of supervision are dissatisfiers. Finally, a high salary does not necessarily cause job satisfaction; however, a low salary is directly related to job dissatisfaction. In effect, the study aims to analyse employee policies related to Herzberg’s typology. Policies will be categorized into those that have to do with motivators; and those that deal hygiene factors. As stated previously, HR plays a great role in retaining employees and global talent management (GTM). HR is responsible for recruiting talented and skilled employees; training and equipping them with necessary skills and knowledge; and most importantly, ensuring that employees remain motivated in working for the company (Farndale, Scullion, and Sparrow, 2010). The HR policies that influence employee retention, and grouped according to Herzberg’s typology, are as follows: HR Policies Related to Herzberg’s Hygiene Factors Recruitment Policies: Retaining talented employees starts in the recruitment process. It is during this process where the match between the job, the applicant and organisation is assessed. The main goal of recruiting is to attract talented employees and retain them as long as possible (Farndale et al, 2010). Compensation and Benefits Policies: Providing financial and non-financial rewards as a means to increase job security began in the 20th century (Kaufman, 2004). Dulebohn, Molloy, Pichler, and Murray (2009) conducted a study that determines the relationship between employee retention and benefits, specifically non-health insurance benefits, tuition reimbursements, health and retirement benefits, and flexible working arrangements. The results of the study revealed that there is a direct and positive relationship between benefits and employee retention, specifically health and retirement-related benefits. Moreover, the study determined that the effectiveness of benefits is dependent on the peculiar needs of an employee. Thus, HR is responsible for determining which benefit would yield optimal outcomes for the employee. However, a study by Micelli and Lane (1991) suggested that there is no direct relationship between the salary and benefits package and job satisfaction. In support of motivators, a study by Straughn (2009) found that appreciation and involvement were key determinants of employee satisfaction. Specifically, the study found that wages and benefits only explain 2% of job satisfaction, while appreciation and involvement contribute as much as 70%. Based on the results, the author suggests that managers treat their employees with respect and appreciate them more. These are costless people strategies, compared to according them with financial rewards which only have short-term positive effects on job satisfaction. Thomas (2002) further states that intrinsic rewards or motivation is critical to today’s workforce. Employees need to feel motivated in order to continuously provide high-quality performance. They need to feel that where they are right now is a rewarding career, and they need to feel that they are growing and learning as a person (Hall and Associates 1996). Moreover, Tymon, Stumpf, and Doh (2010) determined that intrinsic rewards have a direct and positive relationship with employee retention, as well as satisfaction. The following are policies that are related to intrinsic rewards. HR Policies Related to Herzberg’s Motivators Orientation, Training and Development Policies: The second phase in employee retention is the orientation, where newly hired employees are familiarized with the work environment; his roles and responsibilities; and company expectations. HR plays a vital role in this phase because they are responsible for articulating the company’s goal, visions, and expectation to new hires, and they must deliver these clearly, otherwise, it might cause undue confusion. More importantly, HR ought to have a robust policy for training and development, to ensure that they are equipped with competencies needed to perform their current job as well as to prepare them for future, more complex roles (Hales 1986). Performance Management Policies: One of the factors that influence employee retention is providing adequate, timely, and positive feedback on employees’ performance. HR plays a vital role in this practice since it allows them to directly inform the employee, on behalf of the company, about how their performance is appreciated and how it contributes to the company’s strategic goals. In addition, it also allows HR and the employee a venue for discussing about how they can improve performance levels. Performance reviews also permit HR to communicate with non-performers and propose interventions that may increase employee performance (Straughn, 2009). Apart from these related policies, the employee retention policy of the company shall also be analysed, grouped under ‘motivators’. Research Paradigm and Approach Ontology is a formal way of knowledge capture, through a group of concepts within a dimension, and the association among them. It is utilised to explain the characteristics or that construct or dimension, and are utilised to depict that dimension. It is also a common vocabulary which typifies the construct of interest along with their relationships (Hight 1996). The ontologies that are of interest in the current study include 1) attributes of HR policies and 2) the relationship of these to employee retention. A discussion of epistemology is critical because this contends how knowledge is garnered. It emphasizes how knowledge is yielded and how truth is ascertained. There are two major schools of thought on epistemology; namely, empiricism and rationalism. Empiricism focuses mainly on experiential knowledge, while rationalism is centered on knowledge garnered through reason (Hendricks 2006). The current study is mainly anchored on rationalism, since the sources of primary data are interviews and running records. Both are subject to the interpretation of the researcher, dependent on his reasoning and thought. Moreover, the research paradigm that shall be adopted for the current research is anti-positivist specifically, phenomenology. The latter reinforces the interface of the individual with the phenomena of interest, thus espousing qualitative means of gathering data. By definition, phenomenology pertains to a research paradigm which advocates that a person’s actions are ascertained by his experience, which he garners from direct interface with the variable of interest. This paradigm has been put forth originally by Husserl and Schutz (in Cohen, Manion, and Morrison 2000). Such interface cause a distinct interpretation from the individuals who experience them, thus leading to equally different cognitions and behaviours. It is thus imperative for researchers to have a profound grasp of the meaning experienced to have a full, empathic understanding of what they have undergone (Cohen et al 2000). In effect, qualitative research approaches shall be used in the study. Qualitative research lends deeper understanding of the phenomena being investigated because it comes directly from the one who has experienced such phenomena. Primary sources of information that this approach espouses includes interviews, observations, review of running records, and focus groups, among others (Crabtree & Miller 1999). There are certain difficulties that are inherent in qualitative research and these include inconsistencies or uncertainties in the meaning attached to qualitative raw data; making sense of the data that have been gathered; and deriving substantial conclusions on the basis of the meanings culled from the data. Moreover, qualitative data and their corresponding interpretation are heavily dependent on the interpretation of the one who carries out the study (Creswell 1994). The extent to which the researcher exercises flexibility and open-mindedness determines the effectiveness of the approach. Qualitative studies attempt to find out the reasons behind a phenomenon, from the point of view of those who have directly experienced it. Moreover, this approach is distinguished by its flexibility, where questions are crafted on the basis of the interviewee’s responses. They may be adjusted to be lengthier or to be shorter, on the basis of the initial responses garnered from the participant. The tedium and the level of detail with which qualitative approaches are carried out intend to achieve clarity and in-depth responses (Kvale 1996). Research Methodology The research methodology employs the case study method, since it focuses on a particular company. The main intent of the researcher is to analyse the HR policies of Precision Optical Limited in relation to employee retention. Thus, apart from the policies which were directly interpreted by the researcher, interviews with employees are deemed apt in the case study, because these are first-hand information on how such policies affect their intent to stay with the organisation. Rather than determining statistical figures that describe relationships between work facets and turnover intent, the researcher wants to have a complete, in-depth understanding of the influence of HR policies on employees’ desire to stay with Precision Optical Ltd. Data Collection Methods There are two major sources of data collection methods that shall be employed in the research, namely, secondary and primary data collection. Secondary data shall be collected through a compilation of literature related to HR policies and retention. Online sources were garnered through search engines, using the following search terms, ‘HR policies and retention’, and ‘retention factors’, and ‘employee retention and HR policies’. Moreover for primary data, there are two major sources that shall be used in the research. These are running records which will come in the form of HR policies from Precision Optical Limited, and from comparable companies. The second source of qualitative data are interviews from 10 employees and 2 managers from the company. Tentatively, the following questions shall be asked in the interviews: 1) perceived effectiveness of each HR policy related to retention; 2) recommendations for improvement of each policy; and 3) suggestions for improving retention at Precision Optical. On the other hand, the data from HR policies shall be analysed through documentary analysis, while those garnered from the interviews shall be thematically analysed. Data on the following dimensions shall be garnered from the analysis of policies: 1) rationale / philosophy for the policy; and 2) procedures for enacting or implementing the policy. Sampling Purposive sampling shall be used in selecting the participants for the interview. The inclusion criteria that shall be utilised for participant selection are as follows: 1) a regular employee of Precision Optical Limited; 2) a tenure of at least 2 years; and 3) explicit permission to participate in the research. The tenure is a requisite for being an interviewee to ensure that the employee has enough experience of HR policies and may share their views on the matter. Data Access Issues A main constraint on data access is seeking permission from Precision Optical Limited, and comparable companies. There has to be a sincere, authentic effort to assure the HR Managers of the companies concerned that the data shall be used only for research purposes only. Moreover, they must be guaranteed of confidentiality and anonymity. There shall also be a consent form that the participant will be asked to sign prior to the interviews, to ensure that they are willing to share information to the researcher. Proposed Method of Data Analysis Miles & Huberman (1994) say that thematic analysis involves determining patterns of experiences from the responses garnered from interviews. The distinct themes are listed and the various interrelated responses are logically grouped under one. Daly, Kellehar, & Gilksman (1997) concur that thematic analysis involves seeking themes that surface, related to the construct or phenomenon of interest. It is engaged with the determination of themes through prudent and painstaking analysis of the qualitative data. Themes, therefore, become the bases for subsequent analyses. The process of coding deals with ascertaining the value or contribution of each response to the subject under investigation, which enables the researcher to group these responses into discrete themes (Rice & Ezzy 1999). An alternative is to go back and carry out follow-up interviews with the participants once themes have been identified and analysed in a preliminary analysis. Creswell (1994), notes that documentary analysis, on the other hand, is used for determining the common patterns or themes from documents or running records. In the case of current study, the documents to be analysed are HR policies of Precision Optical Ltd. and other companies. Reliability and Validity The researcher shall ensure the validity of the interview tool by soliciting assistance from a subject matter expert who can ascertain the validity of the interview guide. Content validity ensures that the instrument is capable of measuring what it intends to measure (Creswell 1994). One other issue on reliability and validity has to do with transcription of the interview responses. The researcher shall check the transcriptions to ensure their accuracy, and request two other judges to undertake the same review. The interviews are the sole bases for primary data, and are also in the form of ‘self-reports’ and opinions of the interviewees. There was thus a need to enlist several interview participants to garner rich and varying perspectives on the influence of HR policies on retention within the company. Ethical Issues Before beginning the interview, the researcher shall inform the participant of the objectives of the research. This is to ensure that they are fully informed of the rationale for their participation and are willingly engaging themselves as interviewees. The researcher shall also inform each participant that all their responses shall be kept confidential and that their identities shall remain anonymous. The respondents have also been informed of their right to withdraw their participation to the interview at any time. The researcher likewise ensured that there is rapport between her and the respondents. Elliott & Stern (1997) concur that effective rapport will enhance the veracity of the respondents. Thus, the researcher made an effort to begin the interview on a casual note and asked informal questions before the interview proper, to help establish trust. There is also a keen awareness on the non-verbal language exhibited by the researcher, to avoid interviewees from feeling anxiety, fear, or discomfort. The interviewee was also informed that they were free to ask questions to clarify any of the topics that will be discussed during the interview. They were told that the researcher was more than willing to clarify all their concerns. Methodological Limitations One of the methodological limitations of the study is the use of a limited number of employees as interview participants. This was decided upon given the time and resource constraints of the researcher. Moreover, there is also the limitation on socially desirable responses; that is, employees of Precision Optical Limited may still feel fearful that they may be reprimanded if they speak ill about the HR policies of the company, and thus selectively share only the positive aspects of such policies. Resources There are several resources that are needed to complete the research. The first resources are secondary data sources. The researcher will have to gather pertinent research materials to provide a solid theoretical backdrop for the study. This shall also form the bedrock of analysis of the outcomes of the current research, since the results shall be compared with outcomes of previous researches. A semi-structured interview guide shall be drafted by the researcher for use in the interviews. The interview guide shall first undertake a review of an expert in qualitative research to assist in ascertaining its validity. There is a need to determine if the questions are sufficient to make conclusions about the influence of HR policies on employee retention within Precision Optical Limited. The help of a subject matter expert is thus one resource that the researcher needs to complete the research. Financial resources are needed for the expenses necessary for conducting the interviews, including the transportation and material expenses. The materials needed for the interview is an audio tape, which may be used to record the interviews if the participants so allow. Timetable and References Table 1. Timetable for Research Research Component W1 W2 W3 W4 W5 W6 W7 W8 W9 W10 W11 W12 W13 W14 W14 W15 W16 W17 July Aug Sept Oct Nov Definition of scope Gathering of secondary data (literature review)               Submission of permission letter to Precision Optical Ltd and comparable companies               Thematic analysis of policies               Interviews of selected employees from the company               Data Analysis               Drafting of Conclusions and Recommendations The first step in the research plan is the definition of the scope of the research, primarily involving finalising its objectives and methodology. This will be done by end of July. The next step is the gathering of secondary data to form the literature review. This will involve collating related journals, books, and online references to provide a solid theoretical foundation for the study. These studies will focus on the relationship between HR policies and employee retention, as well as the two-factor theory of Herzberg (1969). Three weeks have been allotted for this step since it is within the full control of the researcher. The second week of August marks the end of this step. Next, letters of permission shall be submitted to the HR Manager of Precision Optical Limited and comparable companies, to officially ask for permission to conduct the study. The researcher assumes that it will take more than a week to get final permission, since the HR Managers may have to exercise the necessary protocol for the researcher to be granted such permission. Three weeks have been allotted for this step, and will be done by the first week of September. The thematic analysis component, being the core of the research, shall be analysed within four weeks and will end by first week of October. This shall involve consultations with subject matter experts and the researcher’s mentor, thus the long timeline. The interviews with selected employees of Precision Optical Limited shall also be undertaken, and four weeks have been apportioned for this step, ending on the third week of October. This timeline already subsumes the thematic analysis of interview responses. The consolidated results from the analysis of policies and interview responses shall be analysed. The analysis of results shall take three weeks and shall be finalised by the first week of November. The write-up of the conclusion portions of the research shall be accomplished in three weeks and will end on the second week of November. The remaining weeks of November and December were not shown in the chart, but will be spent for the revisions of the paper. References Barham, K, Fraser, J, and Heath, R 1987. Management for the Future. Ashridge Management College, Berkhamsted. Boston Consulting Group 2008. 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Wright, P, Gardner, T, Moyniham, L and Allen, M 2005. The HR performance relationship: Examining causal direction. Academy of Management Review, vol. 23, no. 1, pp. 756-72. Read More