Human Resource Management Plan - Case Study Example

INTRODUCTION The CEO of the Japanese Engineering Company ABC Ltd needs a paper with a purpose of drawing up a Human Resource Management plan as per the directive from the senior management. ABC Ltd has been beset with high levels of attrition and low employee morale and the task is to devise strategies to cope with the situation. Attrition is a fact of life in many industries and the engineering sector is no exception. However, what makes the present situation troublesome is that the attrition in ABC Ltd has been much above the industry average. Whereas the industry faces attrition of around 10-15%, ABC Ltd has seen attrition at record levels of 20-25%. Further, the attrition is happening at the engineer and the manager level. These designations are critical to the success of the company and hence steps must be taken to curb the attrition. This essay maps out a strategy for acquiring and retaining staff and the elements of the HRM plan include ways and means to hire the best people and retain them in the company. The essay discusses executive compensation, performance linked variable pay, employee benefits and other elements that include fun at work and enabling effective people management. The idea behind the HRM plan is that there would be a drop in the attrition levels after the plan is implemented. HIRING STRATEGY An effective hiring strategy would depend on the way in which the job is marketed and “sold” to the prospective employees. This would include an effective campaign of advertisements targeting potential job seekers in print and visual media along with a concise and precise summary of what the job is all about and what the employee can expect once he or she joins the company. The Hiring strategy’s success would depend on how well the actual duties and responsibilities of the job match up with those that were advertised. Hence, there is a need to “walk the talk” when it comes to specifying the job description. There should not be any scope for disappointment among the employees once they are hired. Any promises of specific divisions in which the employee is going to be placed should be honoured (Formbrun, 1984). Apart from this, the pay structure of the engineers must be competitive and as outlined in the sections below, the benefits and the perks must be competitive by industry standards. The theory states that engineers who would be hired would look for the whole package that includes compensation, benefits and perks. The hiring process must be transparent and unbiased consistent with the company’s policy of being an equal opportunity employer. RETENTION STRATEGY Management theorists often emphasise the fact that one of the reasons for low employee morale in engineering industries is the fact that the workers and the engineers in the shop floor often feel alienated and cut off from the larger purpose. The contention is that the engineers feel themselves to be part of an impersonal setup and perceive themselves to be unable to make a difference to the whole unit. Hence, there is a need to involve the engineers in the larger picture and provide them with perspective on the bigger picture. In engineering units with assembly line manufacturing, the engineer is often responsible for his or her part of the chain and is not in a position to relate to the bigger picture. Hence, there should be effective strategies like job rotation, interaction with other units, timely promotions and cross functional teams wherein the engineers would feel themselves to be contributing to the larger goal of the company (Miles, 1978). Taking each of these strategies in turn, job rotation is the practice of moving the engineers around divisions and within divisions with a clear emphasis on making sure that they operate in domains other than the ones assigned to them initially. This would mean that the engineers get trained on competencies beyond that of their assigned plant and this would lead to greater motivation to pick up additional skills and motivate them to perform better (Legge, 1995). Any employee retention strategy would necessarily include a plan for redressing employee grievances and ways and means to address employee issues. This would mean that the employees would be enabled to take their issues regarding pay, their work, their role etc to the HR manager for each division and expect to get a fair hearing in the process. There should be a plan where the HR manager in conjunction with the manager of the employee who has raised the issue works towards resolving the issue (Torrington, 1979). The importance of grievance redressal and mitigation cannot be emphasised more. This is the most critical and crucial component of the HRM plan as research has shown that an employee with pending issues awaiting resolution is twice more likely to quit the company than the other employees. Hence, all efforts must be made to redress the grievances of the employees. An effective retention strategy would focus on preventing as well as addressing grievances. Though it is not the contention that all grievances can be prevented, they can be “pre-empted” by actively listening to the employees from time to time. This strategy of “listening” to the employees would revolve around a concept of “one-one” meetings between the engineers and the manager and the engineers and the HR representative for the unit or division (Sparrow, 2003). The idea of the regular “one-one” meetings would be to identify potential causes of friction among the employees and any issues they may have vis-à-vis their job and benefits. These issues need to be brought out into the open before they become contentious resulting in the employee feeling frustrated and quitting the job. Hence, all efforts must be made to identify sources of employee dissatisfaction and “hygiene factors” that must be taken care of for proper functioning of the employees. PERFORMANCE LINKED VARIABLE PAY PLAN One of the key components of this HRM plan is the strategy of linking pay to performance. This is a strategy that has been followed by many Multinational companies across the world and consists of the overall pay structure being broken down into components. These components would include the basic pay, benefits and the variable pay. The variable pay would be paid out as a percentage of the whole subject to the performance of the employee. For instance, if the employee gets a grade of 2 on a scale of 1 to 4, the variable pay would be 70-80% of the eligible amount and if the employee gets a grade of 1, the variable pay would be 120-100% of the eligible amount. Accordingly, the performance of the employee determines the variable component of the salary. The international practice is to increase the component of the variable pay higher according to the hierarchy. This would mean that at senior levels of the employee hierarchy, the variable component can be as high as 50-60% of the overall pay (Torrington, 2002). Further, there can be different categories of variable pay. The first component of the variable pay can be linked to individual performance, the second component can be linked to division performance and the third component can be linked to company performance. The idea behind variable pay is that it provides an incentive for employees to feel a sense of ownership and take responsibility for their jobs as well and relate to the overall division and company (Lawler, 1971). By introducing variable pay, the management would ensure that employees are motivated to contribute individually and as a unit and a division and finally as part of the whole company. As outlined in the section on retention strategy, the sense of alienation of the employees can be reduced by making them feel part of a whole and not treat them as individual “cogs in the machine”. EMPLOYEE BENEFITS One of the reasons for the low morale and lack of motivation resulting in attrition may lie in the way in which the benefits to the employee apart from the pay and bonuses are structured. In engineering industries, it is often the case that engineers would have to work late into the night and beyond their shift hours. Further, there would be the engineers in the night shift who come in late in the night and then work into the morning. Hence, there should be an arrangement for housing them and their families near to the plant and providing them transportation (Lawler, 1971). Though the idea of providing housing to the engineers and workers may seem far fetched, nonetheless it is a practice among many of our competitors to provide affordable housing to the engineers. After studying the business practices of our competitors, I have come to the conclusion that many of them either find housing units for the engineers to stay in or subsidise the cost of rentals for the houses that the engineers stay in. Apart from this, the other benefits that can be extended to the engineers would be provision of educational facilities for the children of engineers. One of the most important aspects of the employee benefit plan would be the provision of medical benefits to the employees. The medical plan provided by the company must cover the engineers and their families and must go beyond the basic coverage and include special provisions as well (Torrington, 2002). A study of the competitors medical plans indicate that they have gone the distance in providing quality and affordable care at major hospitals and have made provisions for emergency care as well. Hence, it is my contention that we have to do better or match those plans provided by the competitors. In these recessionary times, it becomes important more than ever to ensure that employee’s needs are taken care of and this would mean that the medical plan for them be as comprehensive as possible. PEOPLE ENABLING PLAN The people enabling plan would include strategies on employee training aimed at providing additional skills to the employees and making sure that they acquire leadership skills and the ability to perform effectively as managers and leaders. The budget for training and skill development has to be increased substantially and provision needs to be made for training and re-training the engineers in people management skills, domain knowledge and leadership skills. The training plan that needs to be drawn up should include training and educational sessions for employees commensurate with their level in the organisation. What this means is that employees at a certain level, say engineer, would be trained on managerial skills and enhancing their domain knowledge. Employees higher up the hierarchy would be trained on leadership skills and cross functional expertise and so on (Tyson, 1995). The concept of “people enabling” goes beyond the usual concepts of motivation and should be seen as a move towards “empowerment” and enabling the employees to perform better. This strategy would entail that employees feel a sense of belonging and they feel “enabled” to be in charge of their jobs and roles. FUN AT WORK One of the most anticipated but least understood components of any HRM plan is the “Fun at work” component. This part of the HRM plan is often thought of as a useful but not really effective way to retain employees. However, the fact remains that this component often catalyses the employees towards greater motivation and infuses in them a sense of purpose and resolve in going about their jobs. The fun component of the employee enabling plan would include events where the employees across divisions get together for indulging in some non-serious and non-work events and this would help the employees to bond together as well. These events can be merged with the people enabling plans that include team building activities and some events to make the employees come together. CONCLUSION The different components of the HRM plan have been listed out with a view to retain employees in view of the rising attrition levels. It must be noted that Management theories like Maslow’s need hierarchy theory as well as Hygiene theory and the Theory X and Theory Y make mention of the fact that employees must not only be motivated to do their job well but also enabled to reach higher levels of performance that provide the cutting edge for the company over its competitors. In conclusion, when times are tough, the tough people survive. Similarly, companies like ABC Ltd would be able to beat the downturn and the current crisis of attrition when they evolve with the times and treat their employees as well as they would treat their friends. List of References Fombrun, C., Tichy, N.M. and Devanna, M.A. (1984) Strategic Human Resource Management. New York: Wiley Lawler, E.E. (1971) Pay and Organizational Effectiveness. A Psychological View. New York: McGraw-Hill. Legge, K. (1995) Human Resource Management: Rhetoric’s and Realities. London: Macmillan Miles, R.E. and Snow, C.C. (1978) Organisational Strategy, Strategy and Process. New York: McGraw-Hill. Sparrow, P. and Cooper, C. (2003) The Employment Relationship: Key Challenges for HR. London: Butterworth-Heinemann Torrington, D.P. and Chapman, J.B. (1979) Personnel Management. Hemel Hempstead: Prentice Hall. Torrington, D.P., Hall, L.A. and Taylor, S. (2002) Human Resource Management (5th edition). Harlow: Pearson Education Tyson, S. (1995) Human Resource Strategy: Towards a General Theory of Human Resource Management. London: Pitman Read More