How Can Software Companies such as Logica Win the War for Talent - Coursework Example

Running Head: Skills Shortage and HRM Skills Shortage and HRM [Institute’s Table of Contents Table of Contents 2 INTRODUCTION 3PROBLEM WITH THIS SHORTAGE 3 POSSIBLE RECRUITMENT STRATEGIES 4 AN ALTERNATIVE TO RECRUITMENT STRATEGIES 7 CONCLUSION 8 REFERENCES 10 INTRODUCTION No matter how developed an economy is, there are a few problems that it simply cannot avoid having. These are the problems of unemployment, especially structural unemployment caused by obsolete skills. These problems are extremely detrimental to the standard of living in the country. Also, it takes up significant resources for the government to help make such conditions less difficult for the people. Furthermore, it often increases the crime rate as people resort to earning money in illegal ways due to their unemployment. Other problems like low morale in the workforce, and economic recession are also very common due to unemployment. Furthermore, it discourages people to pursue further education because they see how even the highly educated people are often forced to do jobs which are below their potential, simply due to the lack of jobs available. Thus, unemployment has a major negative effect on the economy and welfare (Beresford, pg 190, 2004). Another difficult, however completely different, scenario occurs when the economy has plenty of jobs available in various industries, but does not have enough skilled labor to meet this demand. Whereas the people in the above mentioned situation were forced to compete with several other qualified people for the same job, this scenario describes a situation where companies are competing against each other for the same potential employee. They are forced to do this when the economy does not have an adequate supply of people with the skills which these companies require (Capelli, pg 145, 2005). PROBLEM WITH THIS SHORTAGE A shortage of skilled labor as described above usually pertains to fields which require high level skills, such as those needed for the technological industries. These industries are ever changing and developing, and thus require the workers to have updated and relevant skills. Such a feat can only be accomplished by regularly training these workers, which requires time and money. Sometimes, workers with such updated skills are not available for the companies to fill their vacancies. This causes severe problems, because then the company has to divert substantial resources to recruitment, which costs them heavily to get new employees; whereas new employees are supposed to be making more money for them, not costing them their funds. This causes problems for the companies, and thus it is necessary for them to determine some cost effective recruitment strategies (Goss, pg 232, 1994). POSSIBLE RECRUITMENT STRATEGIES One way of employing such cost-effective recruitment methods is to pay attention to factors which will attract employees as well as motivate them to keep working. These include the fringe benefits, bonuses, promotions, training programs and compensation rates that these companies offer the employees. The management style, reputation and size of the company are also very important factors in this regard. Different factors have a different level of importance for employees. Some may prefer a job which pays them a high salary, while others may be attracted to large companies with good reputations in the industry. Thus, these companies need to account for these individual differences when recruiting employees (Capelli, pg 146, 2005). Not every company can afford to offer the potential employees being recruited all the above benefits. In fact, some companies may face severe difficulties in recruiting new people due to such limited resources. If they exist in an economy which has a very limited supply of employees who possess the skills needed, they face major problems when trying to recruit such employees. Since they do not have all the resources other companies may be able to offer employees, they will not be the preferred choice of employers for the potential employees. This is especially true for smaller firms, who will often lose such competitions to larger firms who can afford to offer more benefits and perks. Such firms can focus on other factors to increase employee motivation, which may attract the skilled labor to join the smaller companies rather the larger companies (Debrah & Reid, pg 933, 1998). While these smaller companies cannot beat larger companies for the better reputations they have, they can still afford to attract these employees with better facilities, more benefits and higher payment, as well as a more desirable management style. For example, the smaller companies can afford to have a more personalized management style than the larger companies, since they have a smaller number of employees and lesser levels of hierarchy (Warhurst & Keep, pg 99, 2004). If the recruitment process is not optimized, it can be a cause of great concern for the company. Companies like Logica face such problems, as their inability to find new recruits leads to their revenue growth slowing down, and further diminishing their competition with larger firms. This can cause further problems for the company. Once their revenue growth slows down, their market value falls, leading to unsatisfied investors. Furthermore, it worsens their future prospects and image in the industry, making their overall entrepreneurship a failure. Employees, especially those who are fresh graduates, would not be interested in working for such a business, especially since they tend to prefer the accelerated growth that large companies offer them. Logica, for example, is losing recruits in France, to a newly integrated larger company. Such situations are driving companies to employ aggressive recruitment strategies, which seems to be their only remaining hope for recruiting talented employees. But Logica cannot adopt such ruthless strategies since they lack the needed resources. This problem is further fueled by the fact that they have a shortage of skilled employees in the field of technology, a large problem for a software company. Thus it is vital for such companies to improve their recruitment strategies (Burke and Eddy, pg 92-94, 2006). Such a strategy may cost the company a lot of resources in terms of time and money, but they should consider this an investment, because without the needed employees their enterprise is headed to inevitable failure (Burke & Eddy, pg 93-94, 2006). They could accomplish this by offering high wages to their employees, since several employees consider this a major motivating factor. Furthermore, they could draw these employees away from larger companies by offering them better job packages, with better hours, vacation times and benefits. Such benefits would have to be given continuously; however, otherwise the employees will choose those companies who can actually afford to give such benefits on a continuous basis. This may create resentment amongst existing employees, who would also demand better job packages when they see the offers being made to the new employees (Warhurst & Keep, pg 66, 2004). A flexible management style may also help attract such employees, which would provide these employees with a friendlier work environment, one which the large companies would not be able to offer. These larger companies may have a strictly managed environment rather than a personalized one, which may be less preferred by employees. If Logica were able to offer them a less formal and strict environment by making their management more flexible and charismatic, they would be able to attract several talented employees. For this, they would also need to ensure proper communication channels in between the hierarchies, and a friendlier environment for the employees to work in (Loveman, pg 77, 1994). Furthermore, the company could attract employees by promising them individual growth. If they know that their hard work as employees in this company will pay off and get them promoted and awarded for their hard work, they will be more interested in working for such a company. Such promotions are easier for smaller companies to offer. A larger company would have to endure more red tape before they could decide upon promotions and other such reward and bonus schemes (Debrah & Reid, pg 915, 1998). Apart from all of this, these companies can also offer perks and fringe benefits to their employees if they feel that they are deserving, and if they consider such a spending an investment. This is an alternative to offering higher salaries. Such benefits can include health insurance, car loans, vacation packages, and conveyance. These perks can be very helpful in attracting these new recruits, especially when the perks are extended to the families of the employees as well, for example health insurance. These can be very helpful strategies for recruiting skilled labor (Cassell & Clegg, pg 184, 2002). Such strategies can be very expensive for the firm. Additionally, they also find themselves forced to pay their existing employees the same high wages and benefits that they have offered their new employees. This is a step to ensure that the motivational level in the workplace does not fall. Otherwise offering a higher compensation to some employees will make the other employees feel like they have less worth in the workplace. This would cause problems in productivity and efficiency of the employees, which would in turn be reflected in the income generated by the company. Thus such measures would be necessary, and at the same time, they would cost the company heavily (Causar & Jones, pg 13-15, 1993). AN ALTERNATIVE TO RECRUITMENT STRATEGIES Finally, there is one more strategy which Logica could employ to gain skilled employees. It could employ labor which is less proficient than needed, and then train these employees until they possess the skills needed. This would also be a very expensive method. However, it would end the problem of the company not having enough potential employees, due to the lack of skilled labor present in the economy. Plus, the employees they train will develop a loyalty towards this company for the investment it has made in them, and this will thus decrease the employee turnover rates (Casell & Clegg, pg 191, 2002). Furthermore, it would help slash recruitment costs, which is a costly process in terms of money as well as time and effort. Finally, it would also save them the trouble of having to match the high rates that other companies are offering the scarce skilled employees (Causar & Jones, pg 15, 1993). This training program would make the offer a very attractive one to the new employees, since it would offer them a good chance for advancement and personal growth. It would save them the money it would cost them to gain the training by them. Such companies pay to send their employees to institutions for learning and training, sometimes even in other countries. This means that the employees are trained for free, which would be a very attractive offer for employees, and would beat any offer given to them by large companies. However, Logica must ensure that the employees have a comfortable and desirable work environment to work in after their training is complete, because otherwise these employees may switch to another company after their training ends (Loveman, pg 24-38, 1991). CONCLUSION One final step Logica could take to ensure a good chance of securing enough skilled employees, would be to ensure that they have marketed the employment opportunities they offer adequately, so that that there is no lack of information amongst the employees. This can be done by placing newspaper ads, advertising online through emails and website ads, word of mouth as well as several other recruiting techniques (Debrah & Reid, pg 921, 1998). All the above mentioned strategies are necessary for the company to undertake, since their problem of recruitment could otherwise affect their business and their future negatively. Thus, it is important for such a company to solve any such problems promptly, and to consider any large expenses they incur as necessary investments. This attitude alone will help them avoid the several problems that a shortage of skilled employees causes. REFERENCES Beresford, R., Skinner, D., & Saunders, M. 2004. “Towards a shared understanding of skills shortages: Differing perceptions of training and development needs”. Education + Training. Volume 46, Issue 4, pp. 182-193. Burke, R. J. & Eddy N. G. 2006. “The changing Nature of Work and Organizations; Implications for Human Resource Management.” Human Resource Management Review. Volume 16, Issue 2, pp. 86-94. Cappelli, P. 2005. “Will there really be a labor shortage?” Special Edition: the Future of Human Resource Management. Volume 44, Issue 20, pp. 143-149. Cassell, C., Clegg, C., Grey, M., & Nadin, S. 2002. “Exploring Human Resource Management Practices in Small and Medium Sized Enterprises.” Press Release. Volume 31, Issue 6, pp. 671-692. Causer, G. & Jones, C.1993. “Responding to Skills Shortages: Recruitment and Retention in a High Technology Labour Market.” Human Resource Management Journal. Volume 3, Issue 3, pp. 1-20. Debrah, Y. & Reid, E. 1998. “Internet professionals; Job skills for an on-line age.” The International Journal of Human Resource Management. Volume 9, Issue 5, pp. 910-933. Goss, D. 1994. Principles of Human Resource Management. Routledge Loveman, G. W. 1991. “The managerial implications of Changing Work Force Demographics: A Scoping Study.” The New Workforce and Workplace. Volume 30, Issue 1, pp. 7-91. Pichault, F. & Schoenaers, F. 2003. “HRM Practices in a Process of Organizational Change: A Contextual Perspective.” Applied Psychology. Volume 52, Issue 1, pp. 120-143. Warhurst, Grugulis, & Keep. 2004. The Skills that Matter. New York Press. Read More