HRM Issues at MAPS Ltd - Essay Example

1. MAPS Background: MAPS Ltd., (formerly known as Management and Public Services Ltd., and earlier as Engineering and Construction Services Ltd was formed as a result of local company mergers) has been in business for 33 years. The multi-national company that has acquired MAPS three years ago appointed a new CEO. His brief was to develop MAPS into a customer-focused organisation within a year. The company's new HRM initiatives include valuing diversity by offering equitable employment opportunities to all sections of the society, which also helps it contracting work from public sector companies. The organisation secured a substantial new contract that can create 850 new jobs in the next two years but has to live up to the avowed standard of customer service. The company specializing in management services to businesses and the general public has a turnover of 40 million and employs a staff of 1400 (fifteen years ago the company employed 3500 people) in 4 divisions in different locations in the North East of England. The special techniques and management systems the company developed made it an attractive 'outsourcing' destination for business services from a broad customer base including engineering and construction industries. Increasing operational costs and the advent of information technology altered the business scenario and dwindled contracts. In order to ward off staff lay offs, the company opened its services to the general public. The services include the contract purchase of telecommunications time, gas, electricity and oil sold at a premium. However the business remained unprofitable and the company had to continually discharge staff in spite of many re-structuring activities. 2.1 MAPS' human resource management: Human resource development according to Armstrong (2003 523) is "concerned with the provision of learning, development and training opportunities in order to improve individual, team and organisational performance." One of the axioms of human resource management is that employee commitment enhances employee performance. For this to happen organisations must have the proper human resource management systems in place. They include: Selection and recruitment of attitudinally right candidates Developing employees to understand organisational goals and develop team spirit Training employees to develop necessary skills Evaluating, motivating and rewarding performance Resolving or avoiding conflict situations Creating an atmosphere of security (psychological contract) and equitable opportunities A properly implemented human resource management system ensures attracting and retaining the right talent, motivating the workforce, developing workforce skills and resolving or avoiding conflict situations to achieve organisational goals cost effectively. Marchington et al. describe the best HRM practices as: Employment security and internal promotion Selective hiring and sophisticated selection Extensive training, learning and development Employee involvement and voice Self-managed teams/teamworking High compensation contingent or organisational performance Reduction of status differentials/harmonisation (2003 179) 2.2 Selection and recruitment: The absence of an HRM department at MAPS is stark. The company has no rational organisational structure. It has four divisions: operations, supporting services, (which lumps together finance and accounts, estates management like maintenance, security, porters and catering, internal information technology and personnel services), information technology services and marketing and sales. These divisions are located in different parts of the country making intra-divisional co-ordination very difficult. Each division has devised its own system for recruiting, negotiating pay structures and staffing. The largest and most important of the divisions viz., 'operations' employing a staff of 950 has the most ad hoc recruitment policies. Operational managers recruit staff either from within the organisation or without, based on the exigencies of work. The Support Services Division (with a staff of 350) comprising finance and accounts, estates management (maintenance, security porters and catering), internal information technology and personnel services report to the finance manager through their departmental heads. The staff of these departments are recruited based on their academic qualification without any attitudinal screening but encouraged to continue their education. The Information Technology Division has a formal recruitment system in place and has been attracting talent. The Marketing and Sales Division has no formal recruitment and selection procedure and follows the gut instincts of its managers. Further the marketing manager is smug in his belief that he can spot and recruit the right candidate for the right job without the hassle of any formal screening. 2.3 Induction, training and development: The second most important function of the HRM department is to appraise the new employee with his/her job functions and any training needs: Describing the key activity areas and key result areas for each job function. Defining qualitative and quantitative performance standards Defining the knowledge, skills and competences required for each job to achieve the performance standards. (Adopted from Armstrong 2003 555) The company does not have a system of induction to explain employees their roles and responsibilities, performance evaluation, reward and recognition procedures and organisational goals. Employees are expected to learn on the job. This also precludes any attempt on the part of the organisation to assimilate the employee into the organisational culture. The general atmosphere of apathy for training and development has permeated the marketing sales department also. As the department is the interface between the company and the market it should have been the first candidate for investment in training and development. The sales people in the department have had no training and are not even conversant with the intricacies of legal procedures and contracts. They are expected to refer to managers in the department every time there is any need to explain such contracts to prospective customers. This means that the company does not have the system of on-the-the job training, which is a serious lacuna in the job function of the sales people. Without proper knowledge of organisational policies and procedures the sales people will not have the confidence to meet prospects and function as mere messengers. 2.4 Evaluating, motivating and rewarding performance: The four key elements of performance management are: A common understanding of the organisation's goals. Shared experience of how individuals can contribute Employees with skill and ability to meet expectations Individuals who are fully committed to the aims of the organisation. (Holbeche 2001 126) At MAPS only the project teams in the operations were rewarded bonuses if they made a profit but the distribution of these bonuses within the team members were as per the whims and fancies of the team managers. This democratic distribution of bonuses irrespective of individual performance in fact acts as a disincentive. For the performers it has no motivation as everybody is going to get a share of the pie and for the non-performers it has no motivation either as they are going to receive a bonus anyway if there is a profit. There is no formal performance evaluation/appraisal with the employee actively participating so that he/she is apprised of his/her performance vis--vis set standards, strengths and improvement areas. 2.5 Resolving or avoiding conflict situations/Creating an atmosphere of security and equitable opportunities: There is no evidence of the company having any mechanisms for resolving conflicts. On the other hand there seems to be a gender bias with most managers being male and very few from ethnic minorities. 2.6 Culture of bureaucracy: Each team seems to be operating in isolation with a lot of inchoate camaraderie within and lack of co-ordination between teams which often seem to be working at cross purposes with a false notion of competition. There is a strong culture of bureaucracy, no delegation of work and inordinate delays in responding to customers needs, as all decisions need the approval of a manager. 2.7 An oasis within: The information technology department, which provides information and help desk services to a wide range of customers, is the most profitable division. The staff in the department exhibit a professional culture that appears informal on the surface but in fact helps its members to form networks within and outside for the smooth conduct of work processes. Team leaders in the department have been empowering their members in skill up-gradation and job enrichment. The staff in the department are keenly alive to the importance of customer satisfaction, respond quickly to calls for customer services and on their own volition and initiative were able to bring in new business. Staff turnover in this department is lower than the industry average for the area but corresponds to the intense churn of a booming industry. The company's ability to build a broad customer base in the past may be attributed to the initiative and enterprise of individuals who were able to network with customers in a small area of operation. As competition intensifies and the customers have wider choices the limitations of individual initiatives and enterprise to network with customer groups stand exposed. Such a radically altered business scenario calls for radical organisational shifts in its approach to business and customers. A broad business strategy, which internalises a strategic human relations management strategy, is required to bring about a culture of commitment among the employees. The afore mentioned discussion of the HRM status of the company, mainly the company's inability to attract and retain the right talent, inability to train and develop people, inability to institute systems of performance appraisals, rewards and recognitions and inability to value diversity explains paucity of employee commitment, high rate of turnover and dwindling fortunes. 3.1 Managing performance: While exploring the links between satisfaction with HRM practices and commitment to the organisation Kinnie et al. observe that satisfaction with some practices is associated with the commitment of all employees while for other practices commitment varies between the three employee groups, viz. senior managers, front line managers and shop floor employees. This is because employee attitudes are influenced " not so much by the way these policies are intended to operate as by the way they are actually implemented by line managers and team leaders on a day-to-day basis." The authors cite the important example of performance appraisal to demonstrate their point: employee perception of this important tool is determined by their personal experience of the appraisal interview and their relationship with the manager conducting the interview. The authors also quote Bowen and Ostroff (2004), to suggest that employee attitudes can be a measure of the HR 'system strength', which forms an important bridge between HR policies and organisational performance. (2005) The following is diagrammatic representation of the links between HR policy and practice, employee experiences and responses. Marchington et al., drew from literature (Williams 1998, Sisson and Storey 2000) to list the reasons for the popularity of the 'Performance Management Systems', at the expense of the reward-driven systems (Bach and Sisson 2000): Increased competitive pressures, which put an emphasis on performance improvement. Attempts to achieve a clearer correlation between organisational goals and individual targets. Restructuring and devolution which have put a primacy on delegating tasks and responsibilities down organisational hierarchies The shift from collectivism to individualism, which has allowed for a more rigorous specification of individual performance standards and measures (2003 317) The authors further quote from literature (Armstrong and Baron 1998; Williams 1998; Lowry, 2002) to elucidate the characteristics of performance management systems: Clarify and help translate corporate goals into individual, team, departmental and divisional goals Provide regular communications about business plans and progress in achieving objectives Create a shared understanding of what is required to improve performance and how it is to be achieved Encourage self-management of individual performance Require a management style that is open and honest, and encourage two-way communication between superiors and subordinates Systematically measure and assess all performance against jointly agreed goals Are a continuously evolving process in which performance improves over time The various components of a performance management process and how they impact the performance management system have been diagrammatically represented thus: Figure 1: The performance management process (Marchington et al. 2003 319) 3.1 Establishment of performance standards: The first stage of the performance management system is when the new recruit is briefed about the performance standards at the time of induction. This will obviously include briefing about the organisation's objectives, divisional goals and objectives and the individual employee's roles and responsibilities. Ideally employees' roles and responsibilities are set out in a written communication along with the letter of appointment, but obviously it cannot be exhaustive and can vary depending on the varying objectives of the organisation. Employees may be briefed on this and apprised of the changed roles and responsibilities whenever they happen. The largest and most important group of people in MAPS is the Operations division comprising 950 people. These employees are further divided into project teams to support activities depending on the customer needs to which the team is assigned. As project management presupposes constitution of temporary work teams, which are re-configured after each project management goal is achieved, these employees are of a highly skilled nature capable of taking up constantly evolving new project responsibilities. But the general nature of their jobs remains for e.g. engineering, information technology, finance etc. Therefore the basic structure of performance standards may be established at the time of joining and reviewed at the commencement of each new project. Establishment of standards is easier in the case of the support services division, the information technology division and the marketing and sales division. As the information technology division and the marketing and sales division come directly into contact with customers, it will be ideal if elements of customer satisfaction and customer loyalty are included in the performance standards of employees of these divisions. Quality audits like ISO measure performance of each department against specified standards. Similar mutually agreed upon (between the employee and the immediate superior) standards may be stipulated internally at the commencement of each year. For example the time taken in terms of number of hours/days to fill in a customer's order or attend to a complaint. In the case of the marketing and sales department not only the financial outputs but also the number of new customers brought in may be included. In case of service departments cost saving may be set as a standard for measurement. 3.2 Review and appraisal: This is the second stage of performance management and involves both day-to-day interaction at an informal level between management and staff and in a formal interview between the staff member and the immediate superior with the departmental head as the referee in case a conflict arises with reference to setting standards or in case a difference of opinion in evaluating performance. Such differences of opinion are likely to occur when considering such intangibles as 'factors aiding / hindering performance' and 'aid / support employees received / not received' while rating employees' performance. In case of managerial staff the interview may be between them and the next higher manager in the hierarchy. As far as possible it is ideal to keep the structure flat in order to increase flexibility of decision making and improve operational efficiency. The objective of performance appraisals must be clearly understood as not an occasion for criticising employees' faults and shortcomings but as an instrument of two-way communication wherein the employee is genuinely apprised of his strengths and weaknesses, receives praise for 'good' performance and as far as possible leads for improving performance (counselling) and not just 'reprimand' for bad performance. The interview may be held at least once in a quarter between the employees and immediate superiors to offer feedback on the current state of performance and any gap that exists between individual performance and organisational objectives. The annual performance review will be the basis for offering the employee monetary benefits like bonuses or promotions and include the following areas: The link between business and individual objectives Clarification of the 'performance agreement' A measurement of individual contribution, including discussion on the achievement of objectives and an analysis of why they have or have not been achieved The identification of training and development needs Career and succession planning A general discussion on feelings about work and aspirations {Armstrong and Baron (1998), Lowry (2002) and Redman (2001) quoted by Marchington et al. 2003} 3.3 Reinforcing performance standards: The major premise on which the above discussion rests is that the employee has performed / shown willingness to stretch beyond expectations. However there may be cases where the employee consistently fails to meet the required standards. In case of loosely governed organisations like MAPS, such cases may abound. In some of these cases the organisation itself may be responsible for the poor performance, for instance poor recruitment and selection, failing to brief the employee of his roles and responsibilities, failing to train the employee with requisite skills, not satisfying the employee monetarily or denying him a due promotion etc. On the other hand there may be instances where the employee's 'lack of capability' is the reason for poor performance. Failure to take action in a situation like this is likely to vitiate the working atmosphere in the whole department or even the entire organisation. The reason for the 'lack of capability' should be ascertained and if necessary the employee should be helped to acquire the required skills. If the employee is still unable to reach the required standards the organisation must first consider if it can offer him an alternative employment commensurate with his skills. Dismissal of the employee should be considered only as 'end-stage remedy'. The objective of this entire exercise is to reinforce performance standards. The other contingency when performance standards have to be reinforced is poor attendance of one form or another. Both examples presuppose that the employee is not wilfully failing to attain the required performance standards. 3.4 Counselling and support: There may be instances where factors not directly connected to the work environment may be affecting performance like for example, some family calamity or alcoholism. In such cases although most managers are not trained to act as counsellors, they may still use their listening skills to ameliorate the employee's suffering and bring him round to good performance standards. Or help arrange professional counselling help. The objective of the performance management system comprising the two main elements, induction and review and the contingency elements, reinforcement and counselling is to constantly raise the standard of performance so that the performance of the entire organisation improves. 4. Motivation and reward: There have been many developments in behavioural science since Ivan Pavlov experimented with the gastric system of mice to put forth his theories of learning. The crudest of them all is the carrot and stick theory, which seem to work regardless. Money, if not the only one, certainly motivates people at the work place. Some people may work irrespective of monetary reward, for instance for recognition. Marchington et al. quote Armstrong and Brown (2001) to define the reward strategy as: "a business-focused statement of the intentions of the organisation concerning the development of future reward processes and practices, which are aligned to the business and human resource strategies of the organisation, its culture and the environment in which it operates" (477) The competitive nature of the market place is driving employee rewards as much as it is pressurising revenues and profits. Just as businesses are focusing on customer satisfaction programmes to win customer loyalty, so they are also focusing on not only on attracting and retaining talent but motivating them for better performance. However it is not as easy as it seems. Job security and linear progression in the job are no longer attractive. In fact designing compensation systems to reflect employee skills, behaviour and experience is one of the most challenging tasks that HR managers face today. This is more so in case of project management where there is an undercurrent teamwork behind the successful completion of projects. How then does a HR manager determine individual productivity for determining compensation In such cases, continuous work appraisals help managers rewarding the right employee and avoiding the pitfalls of rewarding the wrong person. Many organisations are experimenting with flexible packages, which include variable pay linked to individual skills, competence and performance. As organisations shed layers, flattened organisational structures mean increased job responsibility and call for acquiring new skills. This is especially so in cross-functional teams, which manage, projects. Pricing such jobs is challenging. Businesses are going global and employees roam the world, employees with the right skills expect pay parity with their counterparts elsewhere. Employees' stock options (ESOPs) are increasingly being seen as a tool to retain talent. Holbeche lists the reward systems that have become popular in the last few years: Profit sharing Flexible benefits Bonuses payable in terms of extra leave rather than pay Bonuses payable towards prestigious qualifications Long-term incentives Differed incentives Extending private health schemes to all employees and their families Longer holidays Sponsored holidays 'Free' family holidays in company-owned cottages Enhanced early retirement (2001 140) 5. Achieving Diversity: Nazarco quotes Thomas (1991) to define diversity as "a strategy to promote values, behaviour and working practices that recognise the difference between people and thereby enhance staff motivation and performance and release potential, delivering improved services to customers". According to her the objective of diversity lies beyond offering equitable opportunities but more about deriving competitive advantage by developing people. The premise of diversity, according to her is that it adds value to the organisation. (2004) Bibliographic References: Armstrong, Michael. (2003). A Handbook of Human Resource Management Practice (9th Edition). London. Kogan Page. Aghazadeh, Seyed Mahmoud. (2003) The future of human resource management. Work Study. Volume 52, No. 4 2003. Available from: http://www. emeraldinsight.com/0043-8022.htm Cakar, Figen, Bititsi, Umit S and MacBryde, Jillian. (2003). A business process approach to human resource management. Business Process Management Journal. Vol. 9, No.2 2003. Available from: http://www.emeraldinsight.com/researchregister den Hartog, Deanne N, Boselie, Paul and Paauwe, Jaap. (2004). Performance Management: A Model and Research Agenda. Applied Psychology: An International Review. Oct 2004. Vol. 53 Issue 4. pp 556-569. Available from: http://search.epnet.com/login.aspxdirect=true&db=aph&an=14354132 (Accessed 2006-05-08) Holbeche, Linda. (2001). Aligning Human Resources and Business Strategy. Oxford. Butterworth Heinmann. Kinnie, Nicholas, Hutchinson, Sue, Purcell, John, Rayton, Bruce, and Swart, Juani. (2005). Satisfaction with HR practices and commitment to the organisation: why one size does not fit all. Human Resource Management Journal. 2005. Vol. 15 Issue 4. pp 9-29. Available from: http://search.epnet.com/login.aspxdirect=true&db=buh&an=18850366 (Accessed 2006-05-08) Marchington, Mick, and Wilkinson, Adrian. (2003) People Management and Development Human - Resource Management at Work. (Second Edition). London. Chartered Institute of Personnel Management. Nazarko, Linda. (2004). All work and low pay Part 2. The challenge of diversity. Nursing Management - UK. Jun 2004. Vol. 11 Issue 3. pp 25-28. Available from: http://search.epnet.com/login.aspxdirect=true&db=aph&an=13234900 (Accessed 2006-05-08) Read More