Human Resources Management Strategy and Policies of the Royal Mail over the Period 2005-2010 - Essay Example

Assessment of the human resources management strategy and policies of the Royal Mail over the period 2005 Introduction At presentRoyal Mail Group is in the process of reorganization, caused by governmental regulation and economic crisis. For several centuries Royal Mail had been a government department and monopolized national market of postal services, but after nationalization of 1969 it came through numerous changes. Within this period its infrastructure, range of services provided, methods of customers’ servicing, management system and other substantially altered. In 2001 the Group was redirected to Consignia plc and further transformed into Royal Mail Group Ltd (RMG). It has lost monopoly on UK postal market and, thus, endures temporary economic decline. Industrial actions of post office employees are on the agenda of British mass media. RMG management system and servicing standards proved to be out-of-date, that’s why an efficient HR strategy is required to improve the situation. 1. Structure of RMG RMG comprises several branches such as Parcelforce Worldwide, Royal Mail (letters delivery), Post Office Limited and General Logistics System. According to Toberty (2010), RMG employs 188,000 people and its pension scheme covers round 449,000 members. Daily letters/parcels delivery businesses perform over one million orders. Absence of efficient HR strategy and administration union within the period of 2002 – 2005 predetermined long-term conflicts with RMG employees in 2006 – 2009 and financial problems. Preliminarily RMG did not have a joined HR department, because each large unit had its own administrative sub-group. Thus, administration functions and recruitment procedures were decentralized. The same referred to some Post Office (PO) units such as bicycles servicing, travelling PO, post sorting department etc. In the last year Royal Mail figured in many law proceedings and scandals, related to losing mail or delayed delivery. (Lea 2008; Wigham 2007) The Group provides services for residential customers, business customers, bulk mailers (legal persons, profit- and non-profit organizations). E-mailing, cell phones, iPods and other digital technologies significantly shortened range of post office residential customers. “Business customers provide around 90% of Royal Mail’s addressed letter volumes with Royal Mail’s top 50 customers sending around 40% of all mail.” (TNS-BMRB 2010, p. 7) They use franked mail for delivery of original documents, business correspondence and contractual goods. Modern banking system have undertaken social and pension payments and, thus, shortened UK post office network. To compete on the national postal market, range of PO services has been broadened; for example, there are send business mail overseas, personal/business delivery services, redelivery, urgent delivery, personal collection services etc. In spite of scandals and industrial actions of its employees (2006 – 2009) (Lea 2008; Wallop 2009), RMG strives to restore its business reputation and prevail among its rivals. In 2010 Moya Greene was appointed Chief Executive of Royal Mail. 2. Control of RMG Activities and Basis for Innovative HR Strategy Restructure of human resource management of RMG touches the whole organization. In this case, it has coincided with redistribution of national postal market and failures of the Group financial strategy. According to Postal Services Act 2000, the Postal Services Commission (Postcomm) performed two-way control of licensing, customers’ rights protection, just competition, observation of standards and quality system. Postcomm members are also responsible for pricing policy and strategic development of the Group. (TNS-BMRB 2010) This Commission confirms PO strategic plans; thus, realization of five-year HR strategy will significantly depend upon it. It provides commercial stability, strategic resources and high efficiency of the new HR management. Postcomm is a tool of governmental control and regulation the Group relations. Postwatch, on the contrary, controls inside and outside activities RMG for protection of interests of postal services customers. It represents interests of both residential (personal) and business customers. Mission of Postwatch is to improve quality and reliability of PO services, increase their availability and role of social factors. Also it supports innovations (Dave Ulrich’s model, six sigma), which will be efficient for HR practices. They will be the basis of the five-year HR strategy, applied in Royal Mail. Tony McCarthy, Director of people and organizational development, laid foundation of the innovative HR strategy. He is one of top British HR specialists, that’s why his transfer to BA has jeopardized the Group project. McCarthy was heading RMG people and organizational development within 2002 – 2007 and came across numerous difficulties, which “included industrial relations, change management, restructuring and modernisation.” (Wigham 2007, p. 2) RGM passed through a long-term process of reorganization and in 2005 the first industrial actions of its employees started. In 1998 – 2001 small administrative units of the company were firstly amalgamated; for instance, accounting services, payroll services. (Toberty 2010) RMG savings were invested in a new version of SAP financial system, which simplified administrative activity. These innovations proved to be efficient within several years, that’s why Tony McCarthy decided to use them for HR shared service centre. “Haddon was quick to praise his predecessor’s reform of the HR function, particularly in creating a shared service centre, which helped save the organisation £57m.” (Wigham 2007, p. 2) Although Royal Mail obtained the efficient HR strategy, the period of 2005 – 2010 turned out to be disadvantageous for its business reputation and stability (relations with employees). 3. Key Goals of HR Strategy Introduction of the new human resource management implied large-scale restructure of the organization. A number of administration units were liquidated to shorten bureaucracy. Structure of HR shared service centre has been developed according to Dave Ulrich’s 3 box model. (Ulrich 1993; Ulrich 2000) It comprises of highly-qualified HR staff, business partners and professional experts and works as an integral part of the company. Uniform system of accounting, records/payroll management, upgraded SAP financial system and staffs advanced training programs allow achieving long-lasting improvement capability. HR centre keeps in touch with all RMG branches and makes their work well coordinated. Before that small administrative units managed manpower planning, HR accounting and records management separately. For instance, there were different requirements and recruitment procedure for applicants to Parcelforce Worldwide and Royal Mail. Thus, coordinated operation of HR shared service centre is vitally important for the Group. PO staff is the most important asset of RMG, that’s why HR managers have approved common standards and recruitment procedure for applicants. In accordance with the above strategy, RMG employees must be materially interested and supported in the work. For their motivation an upper quartile reward package has been introduced. It stipulates payment of bonuses for units/departments with the highest performance. Thus, such reward package promotes teamwork and smoothes cooperation among Royal Mail structural units. As the majority of innovative HR approaches, the new strategy must be founded on progressive HR practices and measurability. “On average organizations possessing a more comprehensive HR system (based on scoring one standard deviation higher on his ‘HRM’ measure) demonstrated 7% lower labor turnover, $27k higher productivity/employee and $4.7k higher profitability/employee.” (Bourne, Haddon & Smith 2009, p. 3) Unfortunately, economic crisis prevented to realize reward package and measurability of HRM in a full scope. After UK postal market had been demonopolized in 2006, the employees partially lost trust to Royal Mail Group. Publicity, Postwatch and Postcomm started media campaign against the Group owing to decrease of mail services reliability. (Wallop 2009) Mass industrial actions took place within 2006 – 2010; PO employees and publicity demanded for further reorganizations. Nevertheless, Bourne, Haddon and Smith (2009) scientifically ground their viewpoint and provide reliable statistics, which proves efficiency of HRM measurability. For instance, HR strategies, which combine several types of practices, lead to growth of revenue/employee ratio by 4%. HR strategy applied within Royal Mail will also combine several approaches. The company’s activity covers several large branches and a wide range of services such as maintenance of RMG street furniture or manual sorting of letters. HR shared service centre should provide documentation, HR planning and accounting for any kinds of operations and works fulfilled. Also its HR practices and methods of work must be certified according to ISO EN 9000. It will increase its role on highly competitive domestic and EU postal markets. Centralization of complex administrative system has considerably curtailed HR and material expenditures of the company. They can be redirected for reward packages, advanced training, R&D research, health programs, technical innovations etc. For instance, RMG started Understanding Health Improvement project, intended for propagation of healthy lifestyle, diet and role of physical activity among its employees. The company established health-and-safety network, which involved circa 5,000 First Aiders Trainers and volunteers. The project had diverse educational forms, such as lectures, seminars, practice, quizzes. “Giving employees the opportunity to gain a nationally recognized qualification from a reputable public health awarding body supports their personal and professional development, self esteem and motivation, and of course, health improvement.” (Alvey 2008) It proves that the employer is interested in health state and social welfare of its employees. Health-and-safety network has strengthened personal and peer benefits of RMG employees, because their interests in healthy life style and mutual cooperation grow. They share the obtained information with families and apply in practice. It directly impacts socio-economic indices of Royal Mail, i.e. productivity, quality of servicing, relations with consumers. 4. Functions of HR Shared Service Centre Joined center allowed RMG reducing level of bureaucracy to minimum and saving millions of pounds annually. Variety of its functions also increased, that’s why high-qualified HR specialists were employed and prepared. Presently HR service center covers such spheres as: recruitment social support (health-and-safety network, Understanding Health Improvement project); training (professional development, advanced training, experience exchange programs, R&D research); payroll administration (HR accounting, banking services); pension administration (HR management records, records of services, health insurance, banking services); advice and support (job interviews, customers’ complaints, professional consultations). RMG has a complex structure and requires high percentage of multifunctional HR specialists, who will be to deal with different questions and decision making. To adjust favorable operating surrounding in the centre, specialists, employed in the above spheres, should be able to work smoothly and cooperate. Their previous practical experience might help them to adapt to the new conditions (SAP and Infinium, quality standards, HR procedures). As many of them are newly employed, top HR managers have taken proper arrangements to unite them as a large team. Team of HR center includes HR generalists, employee development specialists, classification/staffing specialists, personal support, personal systems managers, DoD managers and labor relations specialists. Firstly, they got acquainted with each other as RMG team members and informally discussed their vision of the future job. Trained HR employees of Royal Mail shared some knowledge and experience with the newcomers at training sessions. Face-to-face communication is equally important both for relations with employees and customers. According to Dave Ulrich’s model, the HR professionals’ competence model should include four components: business partner, HR leader, HR expert and advocate. The above specialists fully or partially perform functions of HR leader or expert. In practice they supplement each other and create multifunctional working environment. “HR professionals build capabilities of speed when they remove bureaucratic processes, gain clarity of governance to make rapid decisions, build discipline into how to make change happen, and identify and remove management virus or old ways of doing things that get in the way of speed.” (Ulrich 2000) Staffing specialist in the role of HR expert, for instance, is well-aware of HR principles and available managing resources. He will provide consultation as to arising difficulties, using innovative HR tools and required business procedures. The specialist will be helpful for business partner or HR leader in decision-making, because his activity is customer-oriented. The fifth component covers change agents. This is a link among the above four components, which promotes efficient teamwork and stability within HR shared service center. It includes influence and coalition skills, consultation techniques, socio-cultural competence and analysis. Owing to warnings of Postcomm/Postwatch and definite unpopular steps, Royal Mail has strained relations with many employees in post office departments all over the country. (Hooper, Hutton & Smith 2008; Wallop 2009) Smaller rivals blame RMG for unjust competition and entice of bulk mailers, which make basic group of consumers. “It made a £157 million operating loss after exceptional items last financial year on “access” mail – the letters, packets and parcels collected by its rivals but delivered by Royal Mail’s postmen and women.” (Wallop 2010, p. 2) Attraction and retention of customers is the main purpose of RMG, because its position on UK market of postal services has weakened. New HR team should employ and train professional PO staff and deal with any customers’ claims as to servicing quality, competency, and communication techniques. Dave Ulrich’s 3 box model distinguishes three kinds of professional competency both HR and PO employees: business management competency (HR generalists, labor relations specialists), professional competency (staffing specialists, employee development specialists) and technical HR competence (personal systems managers, DoD managers). Business management competency is important for HR business partners and advocates. In daily practice they deal with change and financial management, strategic HR practices, project management, negotiating, marketing etc. If a labor relations specialist has to assess budget of training session for sorting mail, intended to decrease level of failures, he should predict and measure HRM outcomes of the session and its practical value. Instructional systems development, instructional technology and HR management fundamentals are vital for DoD managers, who are responsible for introduction of SAP and Infinium. They install, support and integrate the software in various units of the HR service center. Also they trace observance of quality system, programs certification and standards (ISO). “The systems will be used by 25,000 staff working for Royal Mail Letters, package courier Parcelforce and local Post Office shops. They will provide self-service HR functions for staff.” (King 2008, p. 2) SAP has been preliminary applied in administrative system of RMG, but current version is optimized. This is cost-efficient, because requires less expenditures for staff training and hardware. Core systems SAP and Infinium fit for diverse working environment of RMG. They can be applied for different operations and purposes. Both programs are based upon Ulrich’s model and six sigma tools. For instance, SAP version of Parcelforce delivery has been modified in accordance to its requirements (spreadsheets, accounting, and blanks). HR specialists coordinate the systems under current HR business strategy. Adopting six sigma principles, RMG strives for balance between strategic goals and socio-economic needs of its employees. (Kleasen 2007) In this case, statistical analysis and comparison method will be the most efficient, because they allow completing obtained results in single database. Heath-and-safety network exemplifies the Group’s care for employees’ basic needs and psychological problems. The network promotes growth of self-esteem, productivity and peer needs of the employees. The core systems perform such functions as e-recruitment, E appraisal, E accident reporting and SAP IEC (Toberty 2010). All operations and notifications are fulfilled electronically. It spares management time and allows making serious decisions quicker than in manual mode. SAP IEC records all contacts among employees by phone, fax and e-mail, providing reliable information for analysis. As for E appraisal, “appraisals are now done electronically, thus, providing vital performance data information on line.” (Toberty 2010, p. 4) Knowledge Management Portal is a on line database, which joins up to a hundred of departments and post offices in the UK. PO employees have access to all necessary information and do not need to loose time for the search. Conclusion Within this period its infrastructure, range of services provided, methods of clients’ servicing, management system and other substantially changed. In 2001 the Group was redirected to Consignia plc and further transformed into Royal Mail Group Ltd (RMG). Absence of well-organized HR strategy and administration union within the period of 2002 – 2005 predetermined long-term conflicts with RMG workers in 2006 – 2009 and financial issues. Reorganization of human resource management of RMG touches the whole company. In this case, it has coincided with redistribution of national postal market and failures of the Group financial strategy. Preliminarily RMG did not have a joined HR department, because each large unit had its own administrative sub-group. Five-year HR strategy of RMG proved to be efficient. It is based upon innovative principles such as Ulrich’s 3 box model, six sigma and HRM measuring. They allow developing and combing the best professional qualities, competence and experience of PO employees in accordance with business strategy of the Group. The core systems SAP and Infinium have been upgraded and efficiently applied in the UK postal network. Even current economic difficulties and employees’ industrial actions did not prevent realization of the strategy. Bibliography 1. Alvey, N. 2008, Understanding Health Improvement Case Study, Royal Institute of Public Health Journal, Available at: www.smuc.ac.uk/workplace-health/docs/Case_studies_x2.pdf 2. 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