Background of Modern Foods Limited - Essay Example

I. Background and context of the organisation Modern Foods Limited started as a small family firm in East Anglia, which specialised in distributing sausages, game and poultry within the area. Over the years, as the company grew, it was acquired by IVECTO, a holding company. Modern Foods Limited continued to expand its product line with other acquisition of IVECTO. The holding company did not interfere with Modern Foods Limited over the years although it had some degree of control being the majority owner of the company because Modern Foods continued to prosper and pose some profits during the years. However, as the marketplace became sophisticated and costs continue to increase, which had posed some threat to the companys operations, Modern Foods Limited had to check its strategy and revise its old policies in order to adapt to change. Some of these policies include those of human resource functions. In order to compete during these harsher times, the company must turn to its employees as a source of competitive advantage in the process. II. Findings A. Past external influences i. Technology According to the case, Modern Foods Limited started as a small family firm that sold sausages and other poultry products in East Anglia. As the company had evolved and was acquired by the holding company IVECTO, no major changes in terms of the companys operations had been made in terms of incorporating technology in the companys human resource management function. According to the companys history, this could be traced back to IVECTOs passive handling of the affairs of the company that it had acquired. Although Modern Foods Limited had been acquired by this holding company, IVECTO was not active in terms of management. This meant that the old practices and processes in the old company, as long as it was making IVECTO some profits in terms of targets would remain unchanged, or at least major changes were not incorporated. Without any driving force behind the change and incorporation of technology in the human resource function of Modern Foods Limited, as stated in the case, the Human Resource function among sites were not linked and integrated into one corporate network to facilitate the communications between production units. This could be largely due to the companys management history which was not affected by the acquisition process. ii. Market pressure In assessing the case, it can be seen that the company had faced relatively little market pressure in the past, as it was able to expand smoothly to major markets within the UK and some other markets in Europe. Because market pressure was low, there was little incentive for the company to refine its Human Resource Management practices and processes. Modern Foods Limited in the past had continued to reap profits for IVECTO. This left little incentive for the company to revise its HR practices and processes, as management had not also changed even after the acquisition. Most of the companys human resource practices were the ones that were employed even when it was a small family firm. As the company grew, the low market pressure did not push the company to adopt a more refined set of processes during the course of the years. As long as the company remained profitable, IVECTO as the major owner did not take part in the operations, much more on the change in human resource processes. iii. Legal framework Like other enterprises in the UK, Modern Foods Limited operated under certain laws since its establishment. Employment law was one of the laws that impacted the companys operations, and the one mostly related to the human resource function. The legal framework for employment covered provisions for recruitment, compensation, incentives, work environment, work design, unionisation, etc. These provisions laid the framework within which Modern Foods Limiteds employee relations practices were grounded. As indicated in the case, although the company was not fully unionised, some of employees depending on a given site had joined union which management was dealing with. Also, compensation and other human resource management practices were traced made in compliance with the employment laws that govern the company. B. Future external influences i. Technology The benefits of technology had started to be seen by the management, which had lead to a much-anticipated company-wide computerisation of the companys processes. The changes had been apparent in the Finance department of the company to its headquarters in Lincolnshire, as well as the companys production sites where product flows and inventory systems were linked by computer systems, as stated in the case. These changes in the companys technological structure as regards its operations would have some implications on the company human resource management practices of the company. A major function of the HRM that would be affected would include the companys communications processes. As technology would evolved and become incorporated in the companys operations, these external influences would influences the way of doing things in the company such as the corporate culture. As the company would realize the benefits and cost advantages of having an integrated network by investing in its technological infrastructure, the human resource management function should also be affected. ii. Market pressure The current economic climate holds a lot of implications in the human resource function of the company. As the current economic climate suggests, the company is in need of strengthening its human resource function in order to remain competitive in the market. Because a companys success would rely in its talents—its people, the company should address these market pressures through some of its human resource management policies in order to create competitive advantages despite the hard economic climate. As stated in the case, a major issue as regards the companys operations included the rising fuel and energy costs that could affect its profitability. As regards the sales side of profitability, the companys products were still selling well in the high end market; profit margin as regards the companys products in supermarkets had been decreased due to the increasing costs. In addressing these problems, there would be human resource aspects to consider. Management decisions such as the amalgamation of two production sites and the companys withdrawal in the Holland market. These would have human resource implications for Modern Foods Limited in relation to employee morale during uncertainty due to some decisions that management had enacted, as well as power structures that would be shaken; generally, the factors that were included when changes would be made within the company. iii. Legal framework One of the changes in the legal frameworks was the Information and Consultation of Employees Regulations in 2004 which had established a communication channel within the company. This was an example of changes in the legal frameworks which had implications on the human resource function of the company. As the economic climate would grow harsher and threats of lay off would just be around the corner, employees could lobby the government to create similar laws to serve as protection to them. Therefore, in the next couple of years, the company could expect more stringent regulation in terms of employment practices which could influence the companys management policies as a whole. C. Internal situation i. Participants: employees and their unions, management and the government Participants in the internal situation of the companys human resource management function would include the employees and their unions, management and the government. These three functions were the major entities that would determine the human resource management practices and policies within the organisation. According to the case, the employees of Modern Foods Limited are partially unionised. Most of these workers that were part of the union were the factory floor workers. As indicated in the case, unions had been recognised in different divisions and levels within the company. According to the case, unions existed usually depending on certain sites; for example, employees in the Luton Warehouse and Transport are part of the Transport and General Welfares Union. Because the legal framework had permitted employees to join unions to seek protection, the company did not forbid employees in joining unions. Thus, the employees voice through the unions were a vital participant in the human resource management practices of Modern Foods Limited. Management was another player in the human resource management policies of Modern Foods Limited. According to the case, the companys management had remained the same even after the acquisition of IVECTO, aside from other officer appointments such as the Group Finance Director and the Group Management Director. According to the case, the companys management style was autocratic on the management team as a whole, but more leeway were provided to division and site managers. The companys management was mainly responsible for maintaining communications with its employees and their unions, with employees being a key stakeholder in the company—their interests and demands should be heard as well. The managements role was to serve as intermediary between the interests of these stakeholders as well as other stakeholders of the business. The governments role as a participant in the human resource management function of Modern Foods Limited was limited to enacting laws that would impact the human resource practice of the companies. For example, the employment law was enacted in order to provide protection to employees and allow them to join groups that could represent their causes and their interests, such as unions. This was the role of the government in the human resource function of the company. ii. A “web of rules” According to Noe, et al., the web of rules is defined as the ways and the processes that labour and management interact in order to resolve issues, conflicts and disputes (2006, 578). The web of rules in Modern Foods Limited was shown in the case. The case was clear that although unions had been recognised in different divisions, management had no strategy and concrete policies to interact with unions and their demands. When pay was the issue, the major thing that management did, as according to the case was to make the compensation rates competitive in relation to the whole industry. Because compensation was one of the concerns of the unions, and the management had addressed it by raising rates, both parties had agreed and thus satisfied. As stated in the case, few disputes were left to be resolved in their respective Divisions. This was due to the free reins that were given to managers in different sites. Because of this, the human resource practices among the different sites was not standardised, and vary from one division to another. This could be considered another weakness of Modern Foods Limited. As according to the case, apart from the basic outline of what was deemed to be a collective agreement, there were few concrete human resource policies to guide the company. Managers were just left with targets that they needed to come up; this leeway was the same basis why even disputes were left to Division managers. The company had communicated with its employees through a system that was called Staff Consultative Committees at each site. The goal of each was to provide information to employees from top management as regards profit and loss reports, new product development reports, and where employees would be asked for feedback, as according to the case. The communication process involved at least one employee per level; however, as it turned out many employees of Modern Foods Limited believed the committees were ineffective in the overall communications. As stated in the case, many employees, through a survey responded that they were “under” informed especially in some of the sites of the company. III. Recommendations The first thing that the company should do to make the human resource function an ally during the current economic climate where trading was harder and that many factors would start to impact the profitability of the company would be to become strategic. With this, the company could start by redefining its mission, vision and goals. By doing this and employing strategic management in different functions such as marketing, production, finance and human resource, the company could better allocate its resources more efficiently and become effective in pursuing its goals both in the long and short-term. To make the human resource management function strategic was to make it a partner in achieving the goals of the company. If the companys goals for example would include some level of returns to its shareholders, in order to accomplish this, the participation of its workforce in terms of meeting its sales and production targets would be vital. This was where human resource management would come in. After the goals were established, the goals for the human resource function of the company should be crafted consequently. These could include goals for functions that could be measured, as well as functions that might not be able to measure. For goals that could be measured, these could include employee turnover rates, absence statistics, etc.; whereas those goals that might not be measured completely could include employee satisfaction, productivity and overall performance and contribution to the company. These goals entail policies such as rigorous recruitment to find employees that were fit for the job, then training them to make room for growth, employ job enrichment to empower employees and affect their morale at the same time cutting down on redundancy of jobs, and hearing their voices and looking after their interests by setting policies to interact with unions. These would be part of the human resource policies that the company could employ in order to strengthen its workforce, and create competitive advantages through them. As the company would use technology in order to consolidate its HR system and reinforce these policies, the company could set up formal and non-formal communication channels through these technologies. For example, in order to keep employees more informed, emails that could be disseminated by division managers could be utilised. Traditional channels such as memos, corporate bulletins, telephone conversations and pre-recorded speeches could still be used; other channels such as on line group discussions, video conferencing could be employed with the use of the new technology in order to cut down on costs, at the same time not sacrificing the quality of communication between employees. This would be a vital component in Modern Foods Limiteds human resource strategy. These communication channels should also be utilised to come up with a bottom-up approach to management where employees would be asked for feedback and suggestions to the companys operations. When in the past, the upper management had exercised an autocratic leadership where targets were just determined for the various divisions of the company, the new structure of the company with the support of the communication channel through the information technology infrastructure should encourage employees to participate and get involved. Management by objective, where employees would be asked to come up with their individual goals which could be made to align with the interest of the company as a whole as the goals add up and reach the top would be a good strategy as well. Employees involvement had been proven to have an impact on their moral and job satisfaction. Apart from compensation, one of the reasons why employees join unions was to gain a voice within the company. While joining unions was a healthy thing in order to protect the interests of different parties, employees that were satisfied would be less likely to join unions and demand different things that could create hostility between the management and these unionised employees. Through the communication channels, when employees would be given adequate means to have their voices heard by the management and participate, they would be less likely to resort to unions. As for employees that were already part of the union, management should maintain a healthy relationship with them in order to ensure that there would be no disruptions in the workforce due to disputes. The company should also have a standardised policy when dealing with unions in order to better manage the communications and avoid misunderstanding between the different parties that were involved in the process. IV. Conclusions Modern Foods Limited had grown from being a small firm to employing some 5,000 people within the country over the years. However, because of certain forces such as the environment, the technology, market pressure and legal framework, the companys management policies especially those that deal with the human resource management had not evolved in the last couple of years because there was no real incentive as well as impetus to improve. As the marketplace becomes more and more sophisticated, the company would be now faced with a harder economic climate when it would need to adopt sound management principles and policies in order to survive. In order for the company to remain competitive in the current marketplace, Modern Foods Limited would have to become strategic—that would be to set up certain goals which it would plan to achieve. The company must concentrate all its efforts and resources in order to achieve these goals, which could be done by maintaining a strategic approach in all its functions, the human resource management function included. The strategic approach to human resource management could be done by employing the function as a partner to achieving goals of the firm. Various policies could be used in employing its strategy—from enriching the jobs of employees to establishing communication channels in order to support the structure. This should also reinforce the companys culture in the process. The goals of the human resource function should include utilising employees full potential in order to support the business needs to achieve the goals. Ensuring employees voices would be heard were important considerations, which could be addressed by establishing communication channels as well as protecting their interests by working closely with special interest groups such as unions, as well as devising sound strategies to deal and interact with them. In a harsher economic climate, a companys source of competitive advantages could be its employees. Therefore, sound human resource management policies would be crucial to a companys success—both in attracting and retaining talents that could add value to the firm in the process. These would be the focus of human resource management, which was to determine the needs of employees and align these needs with the interests of the company. V. Reference List Noe, R. A., Hollenbeck, J. R., Gerhart, B. & Wright, P. M. (2006). Human Resource Management: Gaining a competitive advantage. New York: McGraw-Hill. VI. Bibliography Robbins, S. (2005). Organisational Behaviour. 10th ed. UK: Pearson UK Pte. Ltd. Read More