Ways to Improve the Work Environment at Capital Market Authority - Case Study Example

Executive Summary The Capital Market ity (CMA) came into existence as a result of the passing of the Capital Market Law, which was issued by Royal Decree in July 2003. In the recent times, the HR department of CMA had been facing a lot of issues in areas of employee motivation and retention. The author chose a combination of primary and secondary research design to suggest suitable ways to improve work environment. The author suggests redesigning the compensation structure of the organization along with providing company provided transport to the employees. The purpose of this memo is to suggest ways to improve the work environment at CMA. The next part of this report contains a brief background of CMA. This is followed by a discussion about the research method chosen and the reason behind the same. This is followed by discussion on the problems present in the work environment and the impact of those problems. The section succeeding it contains the various solution options available with the HR managers at CMA. It also contains the timeline and the cost-benefit analysis of all the options. The memo ends with the conclusion. Background Information The Capital Market Authority was established by the Capital Market Law, issued by Royal Decree on July 2003. Before the CMA was established, the Saudi Monetary Agency, or Central Bank, was in charge of regulating the securities market. However, the CMA was established to regulate and develop the Saudi Arabian Capital Market by issuing rules and regulations for the implementation of the provisions of Capital Market Law aimed at creating an appropriate investment environment. A board of five full time Commissioners is appointed by Royal Order to govern the CMA. The company has three divisions: core division which includes the corporate finance division that is in charge of listing securities on the market; the market supervision division which supervises market transactions; and the legal division which is responsible for issuing new regulations and adjusting old ones. The company has been facing some issues in the HR department which need to be fixed. Research Design For the purpose of this research, the author has chosen to use a combination of primary and secondary research methodologies. The author has used literature review as the secondary research method and interview as the primary research method. While the literature review will give the author a clear understanding of the concept known as employee retention in general, the interview will enable the author to understand the issues specific to CMA. The author has chosen to conduct a literature review on the areas of employee retention, employee motivation, compensation structure, and HR best practices. The objective of this literature review is to gain an insight into the various intricacies of the area of employee retention. These insights will help the author suggest suitable ways to improve the HR work environment at the organization. Moreover, it will help the author ask intelligent questions in the interview and get the most useful information. The primary research method chosen by the author was semi-structured interviews with the managers of the company. The author asked certain open-ended questions with the managers and the succeeding questions were based on the answer from the previous questions. Problems in the work environment at CMA Based on the interview with Mr Rayan Saleh, financial analyst at CMA, following issues have been identified at CMA Performance Management: The reward system at CMA is inefficient in motivating employees to the best possible extent. The first problem is that the government contract employees are not subjected to any performance review. Since, these contracts can not be terminated; these employees do not put their whole-hearted effort. At the same time, it also results in a drop in the motivation level of private contracted employees because they feel unjustified with some government employees getting the same amount of compensation with lower levels of commitment. At the same time, they are subjected to performance review which the government contracted employees are not. The performance management and the review system in place at CMA is heavily biased towards encouraging limited commitment from government contracts. At the same time, the system also discourages private contracts to work hard. Inefficient bonus structure: The bonus structure is defined in such a way that the maximum amount of bonus an employee may get is just 2 months of salary. Hence, employees do not feel it very necessary to work harder for the bonus. Since there is not penalty on underperformance, the organization does not get the benefit of full commitment from the employees. Moreover, unfairness of rewards amongst government and private contractors also lead to voluntary attrition in the organization (Rashid et al., 2009). Work Environment: The work-environment at an organization depends upon various factors such as air quality, ergonomic seating, management, parking, noise, and size of the cubicle etc. An employee who finds his/her work environment unsuitable will not be willing to work hard for the organization. An improper work environment may lead to an employee feeling that the organization is not concerned about his well-being. CMA is not having any proper parking space leading to employees often walking as much as half mile to reach their office. This leads to a drop in the motivation levels of the employees and they will not be willing to spend more time in their office. Attrition: All the issues discussed above lead to a decrease in employee motivation and satisfaction. As a result, employees feel it better to leave the organization for other better opportunities. High attrition in the organization leads to many fallouts such as loss in efficiency, decrease in the motivation levels of the leaving employee as well as his team members, exit interview time, administrative requirements, payout of the unused vacation time, and the cost of temporary, contracted or overtime for co-workers substituting the leaving employee (Mitchell et al., 2001) Solution Options There major steps that HR managers shall take shall be directed towards improving the motivation and satisfaction levels of the employees. In order to provide the employees with better work environment, the company can make parking space available for the employees. One of the options is to convert the ground and the first floor as the parking space and extending the building by two floors on the top. This option although solves the problem, it will be very expensive and time consuming. Another cheap option available with the company is to provide a bus for traveling between select points and the office. However, this might not be the best solution as some employees might prefer coming by their own vehicles as against public transport. In order to improve the motivation levels, the performance evaluation mechanism needs to be changed in the company. The government contracted employees shall also be subjected to performance evaluation and review. This will encourage them to work hard. At the same time, private contracts will also feel justified. With regards to the bonus structure, the compensation of each employee shall be divided into two parts: the fixed and the variable. The fixed component shall be based upon the grade of the employee while the variable component of compensation shall be dependent on the performance of the employees. At the same time, a certain part of the variable structure shall be linked to the corporate performance. Another option available is to give the employees with ESOPs. The compensation structure of the employees of the organization shall be like this: Figure 1: The proposed compensation structure at CMA Besides incorporating changes in the parking and the reward structure of the employees, CMA shall also aim at improving communication amongst the employees. The company can have town-hall meetings where the top management discusses the company progress and path with the employees. The company shall invite suggestions from the employees to improve its operations and try to implement them. Conclusion The HR space at CMA is having major HR issues in terms of employee motivation and satisfaction leading to high voluntary turnover. The company needs to overhaul its HR policies to provide equal footing to both government and private contracts. The government contracts shall be taken through the performance management system just as the private contracts. The compensation structure shall be divided into fixed and variable components linking the salary to the performance. For providing a better workplace environment in the short-term, the company shall provide company transportation to the employees. In the long run, company can think of building a parking space and extending its building. With these steps, the company will surely be a sought-after workplace for employees of the country. References Rashid, Humayun, and Zhao, Lin. (2009). Power of Involvement over Rewards for Retention Likelihood in IT Professionals. World Academy of Science, Engineering and Technology, 60. Mitchell, Terence R., Holtom, Brooks, C., and Lee, Thomas, W. (2001). How to keep your best employees: Developing an effective retention policy. Academy of Management Executive, 15(4), pp 96-108. Read More