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Human Resource Management Issues at Arrium Mining and Materials - Case Study Example

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The paper "Human Resource Management Issues at Arrium Mining and Materials" is a great example of a case study on human resources. Arrium was established in 2007 after being spun off from One Steel Company. The company has established wide operations in the field of mining, recycling, and manufacturing and operates subsidiaries across Australia…
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A Report on Key Human Resource Management Issues at Arrium Mining and Materials Executive Summary Arrium Mining and Materials (Arrium) is a leading Australian company in the mining sector. This report has examined several key issues that affect the human resource management function of the company. The issues examined include leadership; training career development for the employees; performance management and the reward system in place for the employees; and lastly, issues to do with recruitment and overall talent management strategies in place in the company. Several recommendations for optimising the situation at the company are presented. For instance, there is need for the management of the company to enhance its talent management practices by ensuring that its recruitment processes target the global talent pool. This way, the company can enhance overall diversity in its workforce. Also, there is need for the company to optimise its training and career development opportunities. Training should focus on developing skills and knowledge to not only work in a global environment but also handle rapid changes at the workplace. Lastly, the remuneration and performance appraisal systems of the company should be improved so that it reflects equality within the company’s workforce. Table of Contents 1.0 Introduction Arrium was established in 2007 after being spun off from One Steel Company. The company has established wide operations in the field of mining, recycling and manufacturing and operates subsidiaries across Australia. Its growth and expansion in the recent times has brought about various changes in the way the company operates. Of particular importance is the human resource function of the company. With over 8,000 employees, the company faces the challenge of aligning the needs of its workforce with its overall corporate objectives in the mining and manufacturing sector. This report examines salient features of human resource management practices at Arrium. It also offers recommendations on how the situation can be improved. The report is divided into three distinct sections. The first section provides detailed information on the background of the company. Information about the general practice, history and salient human resource management practices in the company are presented in this section. The second section of the report presents a detailed outline of all the human resource management issues faced by the company. The impacts of different human resource management issues are presented in relation to theoretical knowledge and practical aspects experienced in the company. These issues include talent management, the productivity of employees; leadership issues of the human resources of the company; and lastly, communication and representation of the employees. In the third section, recommendations on how best the company should handle the human resource management issues highlighted in the previous section are presented. These recommendations entail possible solutions and actions which the management of the company can consider as part of official policies for the organisation. 2.0 Background Information Arrium has had a long history of operating in Australia. With the total number of employees reaching 10,000 at the beginning of this year, the company has established itself as a multinational mining and materials company (Arrium, 2013). Initially, the company was established as a local manufacturer and distributor of steel products in both Australia and New Zealand. However, following its growth and expansion strategy, the company has managed to diversify its operations to cover the global resources sector in mining consumables and exportation of iron ore outside Australia (Arrium, 2013). 3.0 Human Resource Issues Faced In essence, local companies in Australia face a number of human resource management issues. These include training and management of talent; performance of employees; reward and remuneration; staffing and organisational learning; communication and involvement of the employees; and lastly, issues to do with the representation and consultation of employees within the company (Deloitte & Touche, 2013, p. 12). The key human resource management issues facing Arrium in Australia can be divided into two major categories: those arising from common industry factors and those that are specific to the organisation itself. According to Topp, Soames, Parham and Bloch (2012, p. 9), several key issues affect all manufacturing companies in Australia. For instance, many corporations in Australia operating in the manufacturing sector face challenges in terms of the costs of labour. With rising changes in international relations laws, employment regulations and a shortage in skilled labour in the entire economy, many corporations in Australia are faced with the challenge of managing the rising costs of labour. Also, many corporations in Australia are faced with challenges regarding how to optimise their human resource management practices. These issues touch on the performance of employees, general reward systems and career development and growth programmes for the employees (Topp et al, 2012, p. 12). As such, many corporations are not only faced with the need to optimise the effectiveness of their human resource management practices but are obliged to ensure that the safety and health requirements of their employees are met. For the case of Arrium, key issues of human resource management arise from the way the management of the corporation approaches key aspects of its human resource management functions. This is outlined in the sections that follow. 3.1 Talent management One issue of human resource management practice at Arrium regards talent management. Theoretically, talent management in human resource management practice entails practices that seek to identify, develop and retain employees that are of high value to the company (Kuhnert 2009, p. 55). Such practices seek to enable an organization to benefit from the potential of high-worth employees. Since talent management can be used as an effective strategic tool by corporations, there is need for organisations to streamline their talent management approaches. This can be achieved in three broad steps as follows: identifying strategic positions within the corporation; using talent pools that have been developed within the corporation in the course of time; and differentiating the overall architecture of human resource functions within the corporation. For Arrium, there is need for the company to enhance its talent management practices. For instance, the company needs to consider different ways which can be used to reduce the needs of staffing in the future. This is because the company, just like many other corporations in Australia, is underutilising its talent management practices. This underutilisation occurs in all the key areas of talent management of forward planning in human capital and workforce planning. According to Scullion and Collings (2011, p. 66), talent management can be used as an affective tool for risk management of an organisation. As such, an organisation can use its talent management practices to counter the potential impact of business risks common in a particular industry. The practice of talent management within an organisation is a function of three separate entities: the human resource department, the line managers within an organization and the chief executive officer of the organisation. These three entities interact to build an employee group differentiation grid that takes into consideration the uniqueness of a firm and its strategic objectives (Scullion & Collings, 2011, p. 88). Under this grid, employees of an organisation fall into four main categories as follows: key employees, core employees, contract employees and alliance partner employees (Effron & Ort, 2010, p. 100). Since organisations seek to achieve their objectives using different types of employees, the methods that are used to manage talent in these employees vary in terms of the category of employees and the industry in which the organisation operates. Arrium has developed an effective employee value proposition that balances the needs of the employees on one hand and the objectives of the organisation on the other. This framework of talent management can be interpreted in terms of different factors. For instance, the value and general organisational culture helps an organisation brand itself in relation to the propositions of the employees. In addition to this, Arrium has established its employee value proposition through the nature of the jobs. All types of jobs within the company are reflected in the nature of the tasks that is characterised by opportunities for growth, a sense of freedom and autonomy in carrying out the tasks. Also, by having leaders who are focused on meeting the needs of the employees in terms of career development, the company is able to offer sound talent management practices. 3.2 Training and career development Another human resource management issue that Arrium faces regards employee training and career development. According to The Resource Industry Training Council (2010, p. 23), manufacturing companies in Australia are currently facing a shortage in the number of highly skilled employees. The situation is made worse by the fact that the majority of highly skilled employees in the industry are elderly workers. In the course of time, there shall be need to replace these highly skilled workers as a result of natural attrition. In addition to the challenges posed by an aging population, companies in the manufacturing sector in Australia generally face the challenge of marketing themselves as highly viable alternatives for highly skilled and trained employees. With stiff competition in the labour market coupled by non-competitive remuneration rates, many companies in the manufacturing sector in Australia are competing with companies operating in other sectors to recruit young and highly trained employees (Women in Mining Network, 2004, p. 29). For the case of Arrium, there is need to address the issue of the time between employee training and appointment in senior positions within the company. Also, since the level of training and education can be used as a tool for achieving the strategic objectives of the corporation, there is need for the management of the company to address all issues related to employee training programmes and career development. The process of training and career development for employees provides an opportunity for developing personal, organisational and overall skills. Although employees possess different levels of skills and knowledge when joining an organisation, there is need for the organisation to develop and enhance these skills through training (Wentland, 2007, p. 33). Such an approach ensures that the objectives of the organisation are met as a result of improvements in the competencies and knowledge of the employees. This is reflected in the amount of resources that an organisation devotes to employee training programmes. According to Wentland (2007, p. 41), employee training and development plays a key role in ensuring that organisations achieve their corporate objectives. In essence, human resource training and development entails several key processes. First, organisations seek to recruit and select employees. The recruitment and selection is guided by specific policies and objectives of the company. For the case of Arrium, the company seeks to tap into the global pool of talent in developing its human resource capacity (Arrium, 2013). Second, organisations subject their employees to a training and development programme. This takes place in the form of in-house training and opportunities to handle different tasks and assignments. For the case of international organisations, employee training and development takes the form of international assignments that seek to prepare individuals to become members of the international teams of the organisation (Saks & Haccoun, 2010, p. 157). This aspect of employee development is important for the case of Arrium since the company’s expansion into other countries means that it will utilise expatriates and other foreign workers in its subsidiaries. As such, there is need for the company to enhance two aspects in its employee development and training programme: cross-cultural training and development of international teams of employees capable of handling international assignments for the organisation. 3.3 Leadership Leadership in human resource management practice entails two broad approaches: managing leadership within an organisation top-down and managing development within an organisation bottom-up (Kuhnert, 2009, p. 32). It is the role of leadership to ensure that the strategic objectives of the business are achieved. Because of this, highly effective and efficient leadership serves as a foundation upon which successful organisations are built. According to Fairholm (2008, p. 80), effective leadership within an organisation seeks to streamline different objectives of the entire organisation with the present needs of performance facing the organization. This is achieved by aligning the entire strategy of the organisation with different elements of the organisation. There are different models of organisational leadership. Their characteristics, attributes and mode of operation are based on different theories of leadership which have been developed over time. For instance, transactional leaders differ from transformational leaders (Zaccarro & Klimoski, 2004, p. 16). Whereas transactional leaders seek to guide or motivate the workforce by clarifying roles and tasks, transformational leaders provide a lot of stimulation to the workforce as a result of their personal attributes (Castellano, 2013). On the other hand, organisational leadership may be characterised based on different types of theories. For instance, the contingency leadership models seek to define leadership based on the relationship between a situation within an organisation and the best required response from the leaders (Pearson & Daff, 2013, p. 9). Also, behavioural theories of leadership seek to identify behavioural traits that can make leadership either effective or otherwise. According to Fairholm (2008, p. 100), there is need for organizations to transform their moderately effective leadership so as to develop their capacity to address challenges of the future. The dynamics of leadership at Arrium are complex. For instance, the management of the company places high value on the following aspects of leadership: maintaining the right structure of the organization; seeking to improve the core processes of the organisation; and ensuring that the business is focused on issues that are critical, thus avoiding all manner of distractions. Although this is the case of leadership at Arrium, there are many possible occurrences which can lead to failure of leadership to align the strategic objectives of the company. 3.4 Performance management and remuneration The performance of employees and the policies governing their remuneration is an indicator of how an organisation views its workforce as part of its overall business strategy (Lawler, Benson & McDermott, 2012, p. 48). Theoretically, managing the performance of employees within an organisation is necessary as a means of aligning the business and functional objectives of the business. Also, performance management serves the function of linking the primary functions of the human resource management of an organisation to the corporate objectives of the organisation (Shields, 2001, p. 31). Thirdly, performance management is necessary for the purpose of clarifying the roles of different positions of individuals within an organisation. In essence, the process of performance management involves three key steps. The first one entails setting the objectives of what is desired within an organisation. The second step involves reviewing, evaluating and providing feedback on the performance of different employees. Lastly, the process of performance management involves linking the results of the individuals to the rewards that are offered (Rao, 2004, p. 124). Performance management at Arrium is based on a formal appraisal scheme that is in operation within the company. This scheme is applicable to all managers and other groups of employees across the organisation. The evaluation of employees is based on different measures that take into account both qualitative and quantitative measures in the job. In the same way, the appraisal system in place takes into consideration the feedback from peers, the subordinates and supervisors of employees. This way, the system provides a mechanism in which the skills and competencies of individuals are strengthened for the future benefit of both the company and the individuals (Armstrong, 2008, p. 196). Theoretically, the reward framework of an organisation covers both the extrinsic and intrinsic needs of individuals. Extrinsic rewards include direct compensation in the form of financial remuneration and indirect compensation in the form of employee benefits (Armstrong, 2008, p. 200). Financial remuneration may be in the form of base wages, sharing of profits, stock options and incentives to both individuals and groups. On the other hand, non-financial benefits include services that are wholly purchased by the employer as well as superannuation. On the other hand, intrinsic rewards are non-financial in nature and include recognition, job title and other benefits that address the needs for self-actualisation in employees. For the case of Arrium, there is an elaborate financial participation scheme for employees. The essence of such a scheme is to use employee stock options as a method of enhancing the remuneration packages of the employees within the organisation. In general, financial participation for employees at Arrium is practiced in three fundamental schemes: employee share ownership scheme; the profit sharing scheme; and the share options scheme. 4.0 Possible Solutions and Actions There are several possible ways which the management of Arrium can adopt as a method of improving several issues regarding the practice of human resource management. These are outlined next. 4.1 Talent management One way in which Arrium can handle its talent management issues is by developing a strategic approach to the development of its workforce. Such an approach would ensure that the company matches the talent in its employees with the organisational needs that may arise in the future as noted by Effron and Ort (2010, p. 123). Also, although the company has put in place a robust talent management programme that addresses all the three key issues of developing a talent pool, identifying different positions within the company and matching these positions with the available talent, there is need for the human resource management of the company to adopt a highly disciplined approach in implementing its programme. Such an approach would ensure that all the employees of the company are not only conversant with the key talent management practices of the company but also are able to put them in practice. As such, the company would achieve enhanced loyalty among its employees, teamwork and overall commitment to the organisation’s purpose. Another way in which the company can handle its talent management practices in all its subsidiaries is by enhancing the use of key performance indicators as a primary method of ensuring that staff motivation and overall management is maintained in the best practices within the organisation. By enhancing the culture of using key performance indicators as a primary method of gauging the performance of the employees, the company can ensure that employees across various subsidiaries work towards attaining certain defined levels of performance. Also, there is need for the company to improve its use of succession planning in talent management practices. Although in general the company operates a succession system, there is need top enhance its usefulness and overall efficiency so that the objectives of setting up such a system can be realised. By enhancing its system of systematic identification and development of the human resource of the organisation, the company can be able to spot highly talented employees and position them for taking up senior management positions in future. 4.2 Training and career development There are several ways in which Arrium can improve its employee training and career development approach. One way is by enhancing its in-house training programmes for employees. This is an important aspect which can be used to overcome the general trend in Australia where there is an overall shortage of skilled and trained employees to work in different sectors of the economy. Apart from enhancing the use of in-house training as a platform for developing the skills and knowledge of its employees, there is need for the company to put in place appropriate and highly efficient succession programmes for its key staff. Such a measure would ensure that the company does not lose its key employees in whom it has invested in training and career development. Also, since Arrium is one of the leading companies in the Australian mining and manufacturing sector, there is need for the company to take place in solving the overall human resource training and development issues in the country. As such, the company should play a key role in developing a link between the education system and work - place training initiatives. Programmes such as increased apprenticeship should be enhanced as a way of solving the overall problem of lack of vocational and technical skills among workers in the manufacturing and mining industry. One common model by which organisations enhance cross-cultural training for their employees is the Mendenhall, Dunbar and Oddou’s cross-cultural training model (Schultz & Grimm, 2005, p. 33). In essence, the model takes place in three key approaches: the information giving approach, the affective approach and the immersion approach. Arrium can enhance cross-cultural training for its subsidiaries by utilising this training model in its human resource training and career development practices. The company can incorporate the three approaches in its training programme so that employees coming from different cultural backgrounds as well as those that are required to work in different cultures are exposed to a training programme that focuses on several key areas such as language training, issues of sensitivity, simulations and potential critical issues. Apart from taking this approach, the company can also enhance cross-cultural training among its employees by evaluating their performance in the course of training. This can be done in relation to three key parameters of skills development, individual differences and contextual and situational factors. Such approaches will ensure that employee training and development is carried out with respect to developing international teams that can handle international assignments of the organisation. This will ensure that individuals are exposed to individual career development and are also developed as part of international teams. 4.3 Leadership One recommendation that Arrium needs to take into consideration with regard to corporate leadership is the need to overcome leadership challenges that are common in the manufacturing and mining sector in the country. There is need for the company to put much emphasis on the role of the management in clarifying the roles, expectations and responsibilities for different individuals of the organisation. Such an approach is important not only in helping the organisation achieve its human resource objectives but also in helping key human resource management personnel in initiating effective plans of managing the human capital of the organisation. Another way in which the company can transform its leadership to optimal performance and efficiency is by developing a framework that places leadership at the centre of identifying the long-term capabilities of the organisation in the future. Such an approach ensures that the leadership of the organisation unites the different organisational functions of culture, talent and capabilities within a single strategy. Also, it has already been observed that Arrium, by virtue of rapid growth and expansion, has acquired a global status in its operations. As such, there is need for the organisation to align its leadership with the requirements of a global organisation. In order to achieve this, there is need for the organisation to develop global leadership competencies within its workforce. This means that the organisation should invest in developing interpersonal skills, systematic skills, global knowledge and attitude and orientation in its leaders who are required to practice leadership within a multinational context. By seeking to develop such skills among its leaders, the company would also enhance its talent management practices across all its levels. Also, in order for the company to build its leadership competence, the management should adopt the horizontal leadership initiative for developing global leaders as part of its overall approach to developing organisational leadership. This involves developing skills of managing people, working in a team environment, working from a distance and having a global mindset among its leaders. Such an approach can be effective in developing the leadership capabilities in individuals within the organization. The effectiveness of this approach is that it seeks to build global leadership capabilities within leaders in an organisation by exposing individuals to coaching, supported leadership development and mentoring. Lastly, there is need for the company to encourage a type of leadership that is best suited to handle change. Since there are many organisational and environmental changes, coupled by the effect of rapid growth and expansion of the company, there is need for the leadership of the organisation to take into consideration leadership attributes that can best handle uncertainty in times of change. By showing attributes of confidence, clear communication and courage, the management of the organisation can provide effective leadership in times of change for the organisation. 4.4 Performance management and remuneration The first recommendation which the management of Arrium needs to take into consideration with regard to issues of performance management relates to optimising the overall performance for all its employees. This is important since with rapid expansion of the company, there is need for the organisation to enhance its overall performance appraisal system for all its subsidiaries. In the same way, although the company has put in place an elaborate financial sharing scheme for its managers, there is need to enhance equality at the workplace by expanding the coverage of such financial and non-financial schemes for all employees. This will be an important step in enhancing equality at the workplace. 5.0 Conclusion This report has examined the situation at Arrium with regard to human resource management practices. Several key issues regarding human resource practice at the company have been highlighted. Many of these issues are common in all companies operating in the mining and manufacturing sector in Australia. For instance, issues to do with training and career development for employees, performance appraisal systems, remuneration and leadership are common across the entire industry. In order to improve the situation at Arrium, several recommendations have been proposed. Many of these recommendations seek to optimise different human resource management issues at the company. For instance, there is need for the company to expand its financial and non-financial benefits to cover a wide net of its employees. Also, there is need for the company to enhance leadership skills among its employees. 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One Page Talent Management: Eliminating Complexity, Adding Value. New York: Harvard Publishing Press. Fairholm, G. W. (2008). Organizational Power Politics: Tactics in Organizational Leadership. London: Greenwood Publishing. Green, R. J. (2007). Rewarding Performance: Guiding principles; Custom Strategies. New York: Routledge. Kuhnert, K. W. (2009). Transforming leadership: Developing people through delegation. In Bass, B. M. & Avolio, B. J. (eds). Improving Organizational Effectiveness through Transformational Leadership. New York: Sage Publications. Lawler, E., E., Benson, G., S. & McDermott, M. (2012). Performance management and reward systems. Centre for Effective Organization Working Paper. Retrieved 14 November 2013 from: ceo.usc.edu/pdf/G12-10.pdf Mining Industry Human Resource Council (2010). Making the grade human resources challenges and opportunities for knowledge workers in Canadian mining. 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Such an event will attract many of these individuals, thus reaching a larger audience to educate them on road safety issues.... … The paper “Formula One - Organising the Event as an Important Requirement in the Hospitality Industry” is a bright example of the business plan on management.... The paper “Formula One - Organising the Event as an Important Requirement in the Hospitality Industry” is a bright example of the business plan on management....
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The human resource management Plan (HRMP) was published on the 25th date of October 2010 in a draft version then it was printed on the 1st day of July 2011.... The human resource management Plan (HRMP) was published on the 25th date of October 2010 in a draft version then it was printed on the 1st day of July 2011.... … The paper “human resource Requirements” is a fascinating example of the resume on human resources.... The paper “human resource Requirements” is a fascinating example of the resume on human resources....
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