Remington Consulting Group - Essay Example

Remington Consulting Group (case study) Executive Summary In this report of ‘Remington Case Analysis’, findings have been laid out as human capital management; issues from low labour turnover; organisation, and selection criteria and processes and human resource management. Remington hires employees that are among the best talent available. However, Remington has not been able to leverage on its human capital. Organisational innovativeness and consultant customer orientation are necessary for driving customer service and financial performance. The firm enjoys low turnover which indicates that the firm is lacking ‘fresh bloods’ and this is likely to affect its performance in the long run. This report includes analysis of Remington Consulting in the context of human capital management and low labour turn over. It contains relevant theories and analysis of those in the context of the organisation. In addition to that the report also includes the major issues that are arising out of low labour turnover and recommended selection process. Recommendations have been developed for consideration by the Board of Directors and Director of Human Resources based on deficiencies identified; and strategies to overcome limitations. Recommendations include development of a program for human capital management; accepting higher turnover; embracing innovation in the organisation; adopting strategic human resource selection criteria and processes; and adopting modern HRM practices. This includes restructuring the organisational boundaries for a move towards dynamic responsibilities, and extensive use of innovation. Terms of Reference This study is a case study of Remington Consulting Group. This study was assigned as a unit assignment. The study has been laid out in several sections. Sections include executive summary; terms of reference; procedure; findings; conclusions and recommendations; references and appendices. Procedure The study has been conducted in several phases. The first phase was an overview of the case. This was followed by review of relevant literature in the form of textbooks, academic publications, case studies, reports. Material from publications was synthesized to analyse the Remington case scenario. This method was considered ideal for the study as it allowed review of a wide range of literature to evaluate the study, and identify good practices. Conclusions were drawn based on the analysis, and recommendations were developed. Analysis of Findings Findings from the review of literature have been analyzed. They have been laid down in four parts. These include human capital management; issues from low labour turnover; organisation, and selection criteria and processes and human resource management. Human Capital Management Human capital management is a relatively new concept that is concerned with value of people in an organisation. The phrase ‘human capital’ was first introduced by Schultz. In 1997 Smith and Ehrenberg opined that human capital theory actually “conceptualises workers as embodying a set of skills which can be ‘rented out’ to employers” (Baron & Armstrong, 2008). According to Elias and Scarborough human capital concept will be most useful if it is seen as a bridging idea. In 2004 Chatzkel said that “it is human capital that is the differentiator for organisations and the actual basis for competitive advantage” (Baron & Armstrong, 2008). According to human capital theory, training and education enhance the productivity of employees by imparting effective skills and knowledge. This in turn improves the future earning capacity of them (Xiao, 1999). In simple words it can be said that human capital theory is very much beneficial for individual workers. Elements of intellectual capital include human capital, social capital, and organisational capital. The branch of economic theory concerned with the value embodied in a firm’s human resources is known as human capital management. The ‘Accounting for People’ task force in UK has defined the term ‘Human Capital Management’. According to them it is “a strategic approach to people management that focuses on the issues that are critical to an organization’s success” (Ingham, 2007, p-4). The most significant link between human resources management and human capital management is definition of the link between the two. Human capital management is concerned with the measurement metrics. However, it is not primarily about measurement but creating and demonstrating value that people and people management can contribute to an organisation. The practice of human capital management begins with the collection of data and continuation with measurements and reporting. Specific applications of human capital management relate to human resources strategy formulation, talent management, learning and development, knowledge management, performance management, and reward management (Baron and Armstrong, 2008). Human capital management practices allow value extraction rather than value creation as a way to maximize value of the firm. Human capital has been considered an organisation’s intangible assets. These include competencies such as skills, experience, potential and capacity. It is widely believed that people with the right profile and capability provide a competitive advantage that cannot be replicated. Changes in practices have led human capital to become an important driver of organisational performance. Drivers include the acceptance that human capital is a key asset driving creation of value; move in human resource function from efficiency to effectiveness, cost to adding value, inputs to outputs, data collection to analysis, and operational performance (Ceridian, 2007). In the case study, Remington has not focussed on the value that can be derived from their human resources. The firm has consultants for specific domains within each branch. However, the use of tools to maximize human capital management has not been optimised. Issues from Low Labour Turnover Labour turnover is referred to the mobility of labour between the firms. According to Y. K. Singh labour turnover “is the cause and effect of instability of employment” (Singh, 2006, P. 259). Labour turnover rate actually shows the relationship between those who have left the organisation and those who are on the average pay roll. It is very important for an organisation and its human resource department to have proper idea regarding labour turnover rate so that the human resource planning can be done effectively. Theories of labour turnover have been described in table 1. Table 1. Labour Turnover (Morrell et al., 2001) Theories of Labour Turnover Theory Description Labour market school Labour market exists when buyers and sellers of labour agree on a wage at which they are willing to exchange services. Complications arise as each party needs to be aware of each other’s circumstances, and perfect knowledge does not exist. Search theory Search theory is based on individuals with imperfect knowledge of labour market variables such as constitution of actors and volume of work available. According to the “multidisciplinary model,” the rate of employment is affected by the relationship between satisfaction and turnover. Opportunity influences turnover. Objective opportunities According to the model of interaction labour turnover is influenced by the interaction between labour market, occupational opportunity, and organisational size. Economic conditions can produce workforces, influencing the different patterns of turnover. Job satisfaction may be influenced by opportunities or influence of economic activity. Turnover is a function of economics. Components such as status and working conditions are converted to monetary equivalents. Labour market scope Assessing the impact of the labour market on employment conditions, the scope of the labour market must be defined within a geographical area, industry sector, or site. This gives rise to occupational labour market allowing modelling of turnover. Turnover is affected by situations such as variation in labour demand, supply, and volume. Psychological Labour turnover analysis involves explanation of individual’s decision to leave. There is a greater concern for individual factors, and despite unitary models assume heterogeneity among employees, they are suitable for the development of policies. March and Simon The principal determinant of labour turnover is job satisfaction. Labour market account of turnover can be incorporated in terms of internal and external opportunities. Perceived desirability and perceived ease are expected utility. Motivation is based on organisational equilibrium describes the balance between organisation and its employees. Price and Mueller The ‘Professional Turnover Model’ is one of the most important “causal models” that are mainly used in the nursing profession. In this model a complex combination of various professional, organizational and individual attributes or characteristics is used for the purpose of predicting labour turnover (Hiscott, 1998, p. 21). It has an emphasis on causal factors and outlines causal pathways between antecedents and turnover. Mobley Griffith, Hand and Meglino According to the expanded model, search and quit intentions are precursor to turnover. The model is more comprehensive and draws ideas from expectancy theory and earlier turnover models. Principal determinants to quit are job satisfaction, expected utility of alternate roles within the organisation, expected utility of alternate roles outside the organisation, and non-work values and roles. Job satisfaction (according to Locke’s theory) arises from self evaluation of job and comparison with personal values. Labour Turnover (Morrell et al., 2001) Remington has “too low” turnover (see figure 2 Appendix A). Based on the theories described above, labour turnover is influenced by labour market fundamentals of supply and demand, job satisfaction, individual factors, job assessments, tenure, wages and fringe benefits, and perceived opportunities. Remington is negatively affected by low labour turnover. The effect of turnover depends on turnover costs, incumbent suitability, and new hires. Remington’s low turnover indicates employees with favourable job assessments, tenure, and higher wage and fringe benefits. It is possible that the assessment system is not comprehensive enough. The firm seems to be paying high wages and making lower profits per employee. Also, the labour market conditions could be influenced by current macroeconomic conditions with lesser opportunities available externally. Remington can actually capitalise on this market condition and starts paying less. If because of this some of its employees decide to leave, it should not be worried as then it will have opportunity to recruit some fresh bloods. In addition to these, low labour turnover means no new and fresh bloods are entering into the company. As a result, there is high probability of shortage of new innovative ideas and this is very likely to affect organisation’s performance in the long run. Remington Consulting is mainly involved in providing specialist advices through its expert consultants to its clients. Now, for innovative specialist advices it is very important to have people with new ideas in the firm and this is where Remington may face problem in future due to lack of fresh bloods in the workforce. Organisation, Selection Criteria, and Selection Process Going beyond an instrumental recruitment strategy, many firms employ managers that represent a symbolic value for the organisation or its clients. Another important consideration is individual self-interest in decision making. Employees’ customer orientation is positively related to employee customer-oriented behaviour performance. Additionally customer oriented behaviour has an influence on profitability without concomitant increase in costs. In order to profit from recruitment, hiring, and retention of customer-oriented employees, the focus should be on creating a climate supportive of customer-oriented behaviours (Grizzle et al., 2009). Since Remington provides specialist advices to various industries, it should develop selection criteria accordingly. Considering the structure of the company and the condition of global aspirations, Remington should select consultants on the basis of their educational qualifications, professional experience, relevancy of experience, ability of solving critical problems, innovativeness of solutions, general knowledge, understanding of Remington’s business and understanding of global consultancy business scenario. The selection process should be cost effective and efficient. It should starts with a written test to assess the aptitude of the candidates. Those who will successfully clear the written test will be allowed to sit for the interview. There will be a minimum grade and candidates whose score will be above that grade will have permission to go for the interview. To judge the candidate in the interview there will be a board of panel which will be consisted of experts from both inside and outside of the company. An assessment matrix will be prepared for evaluating the job seekers. In order to make the process unbiased, people who are not associated with company will be included in the panel of interviewers. Human Resource Management Boxall and Purcell (2007) have developed a conceptual framework allowing exploration of strategic human resource management within Remington. Employees in Remington are mentored and motivated to perform to their optimum level. There is a proactive and strategic career development program. Individuals are encouraged to set targets within the group’s targets and strategies. However, employees are bound to their mentors, and limited to the group’s targets and strategies which are confined to business units at each location. Globally, there has been an increasing emphasis on social structures for determination of factors influencing career. Changes in the nature of work have resulted in transition in the shape of careers and their management in organisations. Traditional careers have seen a shift towards boundary-free and protean careers. The focus has also seen a shift from organisation to individual. Major issues faced by Remington in the management of careers include strategic management of human capital; management of global careers; and diversity (Baruch, 2006). Protean career attitude has been considered an important determinant of success. Development of career insight mediates the protean attitude. In career orientation, the person is in charge, and the person’s core values drive career decisions and success. Remington should create situations where people pursue their “path with a heart,” and intensity of a calling (Hall, 2004). In order to enhance the efficiency as well as effectiveness Gareth Morgan should try to make the working environment more formal and professional. With the rapid increase in the company’s operation, it is very crucial to have a well-structured, formal and professional system in place. At present the work culture is more of informal rather than a formal. However, as the company become bigger in terms of its number of employees and operational activities, it will require a more formal and professional culture. A well-defined professional work culture is likely to improve the effectiveness and efficiency of the employees. It is true that productivity of employees remain at its peak if they are happy. Now, employees generally remain happy when the working environment is little informal and rules and regulations are not very strict. However, in a rapidly growing big organisation rules, regulations and disciplines are crucial to retain the higher level of productivity for a long time. Most importantly the operation in a firm like Remington should be standardised throughout the verticals. For this purpose Morgan should make the HR department centralised. Currently each branch is operated as a separate business unit. In order to standardise the operation, Morgan should control the HR department of each branch centrally. Aspects like human resource planning, training, recruitment, selection should be controlled centrally. Conclusions Remington has employees that are among the best talent available. Human capital management at Remington has been effective, but it can be made more effective. The firm enjoys low turnover indicating that employees have favourable assessments, enjoy high wage and fringe benefits, and tenure. However, it also indicates that the firm is paying its employees high and making lower profits. It is also possible that the assessment methods are not comprehensive or there are inadequate opportunities available based on current economic conditions. The firm has a traditional structure, and each branch has a similar setup. There is not much information available about the selection criteria, though the firm selects the best individuals available. There is lack of adequate flexibility in the way employees are operated, especially in light of developments in consulting practices. The firm has not kept pace with the use of technology such as the use of customer relationship management systems. Remington has global growth ambitions, but the firm's human resource practices has not adopted practices such as cultural influences or inculcating customer oriented behaviour among employees. Recommendations Recommendations have been developed based on deficiencies identified, and strategies to overcome limitations based on good practices. Recommendations include development of a program for human capital management; accepting higher turnover; embracing innovation in the organisation, and adopting appropriate selection criteria and processes; and adopting modern HRM practices. Recommendation 1: Development of program for human capital management This recommendation is for consideration by the Gareth Morgan, Director of Human Resources. Baron and Armstrong (2008) have recommended the use of toolkits to develop and manage human capital within organisations. In order to manage its human capital, Remington should develop a human capital management program (see figure 1 Appendix A). Organisational design requires skills measurement to provide a base of skills requirement and descriptions allowing the development of competency models, and adapt them to match changing job requirements. Skills metrics allow employees opportunities for career advancement by establishing skills milestones. Skills assessment helps identify employees with training needs and measure training effectiveness. Skills can be improved and their progress assessed on a continual basis. Such systems provide important advantages for managing and improving performance in relation to balanced scorecard initiatives and employee evaluation. These systems provide valuable source of metrics for gauging critical skills and drive balanced scorecard metrics. Employee evaluation can be determined by several factors. The scores provide a valuable source of data for supporting the process, and include details for tracking improvements, and validating acquisition of new skills (Brainbench, 2003). The concept of human capital accounting and human capital monitoring can also be practiced in the context of Remington Consulting. Human capital accounting is aimed at portraying the potential of human capital in terms of monetary value and this is further reflected in the financial statement of the company (Eigenmann, 2007, p. 13). Remington Consulting is part of such an industry that is primarily dependent on the human capital. As a result the company should give proper importance to the aspects like human capital accounting. It can use models like input model, output model and comparison model for the evaluation of human capital. Recommendation 2: Accepting higher employee turnover A new assessment system is desirable in line with the human capital management program. The assessment should be upgraded in line with best practices, and wages and fringe benefits should be re-structured in line with current economic conditions. Remington can increase profits by an increase in turnover rates to “about right” (see figure 2 Appendix A), as incoming workers could be better educated, more skilled, and have greater initiative and enthusiasm than existing ones. ‘About right’ is referred to ‘not too high’ and ‘not too low’ – in other words a balanced turnover rate. One of the ways of doing this is to modify the existing performance standard. Performance standard should be made higher than ever before so that the existing employees who have been unable to improve their performance after a certain level for a long time can be forced to leave the organisation. References Acton, S. (2006). Five Factor Model. Available http://www.personalityresearch.org/bigfive.html [accessed 08 March 2010]. Baron, A. and Armstrong, M. (2008). Human Capital Management: Achieving Added Value Through People. Kogan Page Ltd:UK, 240. Baruch, Y. (2006). Career development in organizations and beyond: Balancing traditional and contemporary viewpoints. Human Resource Management Review. 16(2), 125-138. Brainbench. (2003). Strategy: Human Capital Management. Available: http://www.brainbench.com/pdf/STG_HumCapMgnt.pdf [ accessed 08 March 2010]. Ceridian. (2007). Human Capital White Paper. Available: http://www.ceridian.co.uk/hr/downloads/HumanCapitalWhitePaper_2007_01_26.pdf [accessed 08 March 2010]. Eigenmann, U. 2007, Design and Implementation of a Human Capital Oriented Balanced Scorecard in an Engineering Services Unit, GRIN Verlag, p. 13 Grizzle, J., Zablah, A., Brown, T., Mowen, J. & Lee, J. (2009). Employee Customer Orientation in Context: How the Environment Moderates the Influence of Customer Orientation on Performance Outcomes. Journal of Applied Psychology. 94, (5), 1227-1242. Hall, D. (2004). The protean career: A quarter-century journey. Journal of Vocational Behavior. 65(1), 1-13. Hiscott, R. D. 1998, Career Paths of Nursing Professionals: A Study of Employment Mobility, McGill-Queen's Press – MQUP, p.21 Schuler, H. (2004). Personnel Selection, Psychology of. International Encyclopedia of the Social & Behavioral Sciences. 11343-11348. Singh, Y. K. 2006, Human Resource Management, APH Publishing, P. 259 Weinert, A. (2004). Career Development, Psychology of. International Encyclopedia of the Social & Behavioral Sciences. 1471-1476. Xiao, J. 1999, Determinants of salary growth in Shenzhen, China: An analysis of formal education, on-the-job training, and adult education with a three-level model, the Chinese University of Hong Kong, [Pdf] Available at: http://www.tc.columbia.edu/centers/coce/pdf_files/d4.pdf [Accessed on August 16, 2010]. Bibliography Boxall, P. and Purcell, J. (2007). Strategy and Human Resource Management (Management, Work and Organisations) (2nd Ed.). Palgrave Macmillan:UK, 400. Dale-Olsen, H. (2006). Wages, fringe benefits and worker turnover. Labour Economics. 13(1), 87-105. Garino, G. & Martin, C. (2007). The Impact of Labour Turnover: Theory and Evidence from UK Micro-Data. University of Leicester: Department of Economics. Working Paper 05/10, 131. Holbeche, L. (2008). Aligning Human Resources and Business Strategy (2nd Ed.). Butterworth Heinemann:UK, 496. Munasinghe, L. (2006). Expectations matter: Job prospects and turnover dynamics. Labour Economics. 13(5), 589-609. Resick, C., Baltes, B. & Shantz, C. (2007). Person–Organization Fit and Work-Related Attitudes and Decisions: Examining Interactive Effects With Job Fit and Conscientiousness. Journal of Applied Psychology. 92(5), 1446-1455. Reychav, I. & Weisberg, J. (2009). Going beyond technology: Knowledge sharing as a tool for enhancing customer-oriented attitudes. International Journal of Information Management.29(5), 353-361. Segalla, M., Sauquet, A. & Turati, C. (2001). Symbolic vs functional recruitment:: Cultural influences on employee recruitment policy. European Management Journal. 19(1), 32-43. Theoharakis, V. & Hooley, G. (2008). Customer orientation and innovativeness: Differing roles in New and Old Europe. International Journal of Research in Marketing. 25(1), 69-79. Toh, S., Morgeson, F. & Campion, M. (2008). Human Resource Configurations: Investigating Fit with the Organizational Context. Journal of Applied Psychology. 93(4), 864-882. Appendix A Figure 1. Human Capital Management Matrix (Ceridian, 2007) Figure 2. Employee Turnover (Garino and Martin, 2007) Read More