Decision Making, HRM and Motivation in Management - Literature review Example

Commonwealth Introduction According to an article by Pannett & Koons of Dow Jones Business News (2012), Commonwealth Bank of Australia (CBA) has released a report announcing the company has made a net profit of 7.09 billion Australian dollars (US$7.4 billion) in fiscal 2012, this is an 11% increase from the previous year. However, despite this remarkable achievement, the bank is facing a lot of challenges ranging from cut throat competition from other banks, uncertainty in the domestic and global economies and new international stringent requirements dubbed Basel III. In addition, the bank has also registered a decline in return on equity which analysts say could hurt their share price on the stock exchange. However, CBA’S economic analyst forecasts a 5% to 7% growth on overall credit in fiscal year 2013. Based on this year’s good earnings, the management has announced a dividend of A$1.97 per share. Moreover, an article by Tan (2012) of Dow Jones Global Equities News highlights the cut throat competition in the corporate childcare market. The fierce competition in this market, has been brought about by the high demand for such services by Australian companies. Tan (2012) observes that Guardian Childcare Alliance has taken the war to another level by announcing its acquisition of Jigsaw Corporate Childcare in a bid to dominate the market. Wolseley, the owners of Guardian have shown a remarkable growth with the revenue of the group expected to exceed the A$100 million in fiscal year 2013 (Tan 2012). This essay seeks to analyse the important role played by three aspects of management, namely; decision making, human resource management and motivation as depicted by articles described above. The relevance and the critical role of decision making with regard to CBA’s profitability and looming challenges is discussed. This essay also explores the critical role played by human resource management in spearheading the acquisition of Jigsaw Childcare by Guardian Childcare Alliance and how motivation will be crucial in boosting the morale of the new workforce (Pannett & Koons 2012; Tan, 2012). In addition, this essay explores the implications of these three aspects of management to the organisation, staff and competitors as evident from the articles. Decision making Pannett and Koons (2012) note that commonwealth’s announcement of an 11% increase in its net profit for the fiscal year 2012 is great news to the ears of its share holders. However, this does not come easy since the banking industry in Australia is facing numerous challenges ranging from cut throat competition to down turn in both the domestic and global economic conditions. Credit therefore goes to the Chief Executive Ian Narev and his team for the sound decision making process which has steered the company to profitability amid a turbulent business environment. The role played by decision making in achieving this remarkable business objective is undeniable and therefore, it is crucial to examine how decision making has been applied to Commonwealth’s case scenario. According to Swansburg (1996, p, 273), decision making can be define as a logical conscious and cognitive process that entails choosing or selecting one option out of many alternatives which will give the best desired results in a given situation, circumstance or condition (Swansburg, 1996, p.273). Decision making is generally a reserve of the management of an organisation although the process should also incorporate other employees at low levels of the company structure (Waddell et al 2007; 193-195). A critical look at Pannett’s and Koons’ article (2012), decision making as an aspect of management is evident. This article gives a glimpse of the impact of decision making on the organisation and its competitors. It is important to point out that an organization such as commonwealth bank runs literally by the execution of decisions. The decisions that involve daily or regularly routine are classified as programmed decisions (Bagad, 2009, p.15-16). An example of a programmed decision as highlighted in the article is the regular release of the company’s annual financial report (Pannett & Koons, 2012, p.2). This is a programmed decision by the management of the company to inform its shareholders and general public its current financial position as relates to the annual business transactions it has conducted throughout the fiscal 2012. The action is conducted annually at end of the financial year of the company and therefore is a clear example of a programmed decision. On the other hand, a non programmed decision is also highlighted in the article when the bank announces a dividend of A$1.97 per share for its shareholders (Pannett & Koons, 2012, p.3). This decision falls into the non programmed type because the bank had to put into consideration various factors before arrival at a final figure for the amount to be given out as dividends. It is also important to note that dividend is not automatically given to shareholders by the mere fact that the company has registered profitability during its fiscal year. Several factors have to be considered and then a decision made as to whether the company is in a position to release some of its profit as dividends to its shareholders or plough back the profits in order to finance its strategic decisions such as expansion programmes. If the company decides to give dividends, the next decision to be made will be to state by how much. This kind of decision is therefore of non-programmed type. The other type of decision highlighted in the article is reactive decision. Reactive decisions are decisions taken as a response to a problem or a stimulating factor. (Waddell et al 2007). The decision by Australian banks to try attracting as much deposits in a bid to ease reliance on international funding markets is a good example of a reactive decision (Pannett & Koons, 2012, p.2). The decision is taken as a response to the need to reduce dependence on international funding markets which had “become increasingly costly amid Europe's festering sovereign-debt crisis” (Pannett & Koons, 2012, p.2). The problem or the stimuli that the decision maker is reacting to is the need for reduction on dependence on international funding markets. Another example of a reactive decision is Commonwealth’s strategic decision to “hold high-quality, liquid assets” as a fulfillment of the requirements of the New international banking standards, known as Basel III (Pannett & Koons 2012, p.2). Chas responded to these new requirements by launching a major drive to secure more deposits. From this examples we are able to note clearly that reactive decisions are purely responding to a stimuli in this case the stimuli is in inform of the new global banking requirements established in Basel III which ultimately create a chain reaction like decision making processes (Pannett & Koons 2012; Waddell et al 2007). Based on the findings of Pannett & Koons (2012), it is evident that CBA is facing a challenging business environment which will require a complex decision making process in order to balance all the factors of production and ensure that it continues to register significant profit margins. Foremost, the bank is facing a lot of cut throat competition from its rivals especially with regarding to attracting deposits. If the bank succeeds to wade off competition and therefore attract a significant amount of deposits, it will now be faced with a new problem of dealing with the return on equity. This problem arises from the push to gain more deposits and therefore boost their capital base. In essence, it is a problem created by deposit gains. This article highlights the complex nature of the decision making process that the bank’s top management are faced with since they have to create a balance between attracting more deposits while at the same time ensuring that the resulting effect on the return on equity is minimised. This challenge will require the top management to use an effective decision making model which will yield the required results while at the same time minimizing the risks involved (Pannett & Koons 2012). A suitable decision making model that can be used under such complex circumstances is the classical approach. This model of decision making gives a prescriptive approach as to how managers ought to make decisions. It follows rationality and emphasises the need for the decision maker to remain focused on the logic and actual facts therefore eliminating the chances of pitfalls and the making of inappropriate assumptions (Griffin 2011, p.244; Li 2008, p.151). Human Resource Management Tan (2012) highlights the important role played by human resource management in important undertakings such as acquisitions and other organisational expansion programmes through the acquisition of Jigsaw by Guardian Childcare Alliance (Tan 2012). At the time of the acquisition, Jigsaw owned and operated 10 early learning centers for employees of blue chip corporate clients (Tan 2012). This goes to show that the company has a substantial workforce which the Guardian Childcare Alliance needs to integrate into itself. Given that CBA holds as stake in early learning centers and playrooms under the Guardian Childcare Alliance, the human resource manager of the company is faced with the challenging task of merging and reconciling the two human resource assets arising from the acquisition. In the process of addressing this matter, the HR manager must create and implement new human resource strategies, policies and practices which will address all the human resource concerns and requirements which are likely to arise (Dowling et al 2008, p.51). One important initiative which the HR manager needs to undertake is to conduct an employee appraisal for Jigsaw staff. Employee appraisal is a systematic way of analysing and evaluating an employee in order to determine their level of skills, performance at work, works related behaviours and the potential he/she possesses for further training and development (Randhawa, 2007 p.130). Therefore, by conducting the appraisal the HR manager will be able to determine the human resources gaps accruing from the acquisition. In addition, the appraisal will ensure that the company off loads excess staff in redundancy programs thereby maintaining a leaner and efficient workforce which is capable of achieving the company’s set goals and objectives. The role played by the human resource manager during the acquisition process of cannot be overemphasised. The HR manager plays a crucial role especially at the pre due diligence stage since he is responsible for addressing the preliminary expectations with regard to retaining unique skills, labor and knowledge, supporting the transaction stage and also in highlighting the impact of potential risks (Deloitte, 2009, p.2). The initial duties and responsibilities of the human resource manager may include; evaluating the costs associated with severance, integration risks and possibilities of either merging or separating the management executives. The HR should be in a position to advise the cost implications of taking one option over the other and whether this can be supported over the long term. As far as risk and liability management is concerned, the HR will be responsible for addressing issues related to payroll, compensation, retention, benefits, pension, regulatory compliance, retirement savings and planning, HRIS, employment practices and immigration matters (Deloitte, 2009, p.2). Is it important to note that acquisitions also provide the parent company with an opportunity to harness valuable resources such as the human the resource asset in order to strengthen itself against competitors, build synergy and improve its efficiency (Domsch & Lidokhover 2007, p.257). Motivation Based on Tan’s article (2012) it is apparent that one of the approaches that the Commonwealth bank of Australia uses to motivate its employees entails meeting their family life related needs by providing playrooms and learning centers for their children within the work settings. Motivation refers to the process of stimulating an individual in order to take a desired course of action with the aim of achieving certain set goals and objective (Kumar et al, 2003, p.12). Motivation inspires and influences the way individuals will behave or conduct themselves in a certain given situation or circumstance (Gadsdon, 2001, p.15). In the current case scenario, the management can effectively motivate the new staff by offering them work life balance, guarantying job security, promotions and also opportunities for training and development (Watkins 1998, p.208). By ensuring the staff are motivated, the new company will be re-energizing itself therefore creating a solid foundation for further growth and development. A motivated workforce will give the company an added advantage in overcoming its numerous competitors in the corporate childcare market segment. Motivation is the key to gaining a competitive advantage over and above existing business rivals (Wagner 2010. p.81). Motivation also contributes to better job performance in terms of reliability, efficiency, and quality service delivery which will expedite the achievement of company goals and objectives. A motivated workforce also provides the CEO of the company with an easy time in running the company since decisions are acted upon quickly and efficiently therefore minimizing his supervisory role. Implications Decision making as a function of the management plays a critical role in determining the way the organisation performs. In the case of Commonwealth Bank of Australia, it will determine whether the bank will achieve its key objective of profitability. The bank’s activities rely on the decisions made by the top management. One good implication of decision making as witnessed in Pannett’s & Koons (2012) article is the 11% rise in Commonwealth bank’s profit in the fiscal year 2012 (Pannett & Koons, 2012, p.3). The profit gains by the bank reflect a sound decision making process by the management throughout the fiscal year 2012. The management of the bank though faced with very complex challenges such cut throat competition, uncertain domestic and global economies was able to effective decisions such as the push to increase retail deposits which was key in facilitating the achievement of the profit gains. Commonwealth’s strategy of providing playrooms and learning centers for their employee’s children within the work settings can be considered as a strategic human resource management and motivational approach. Effective human resource management and the use of effective motivational strategies contribute to the overall efficiency of the organisation. By ensuring that the company’s staffs are well motivated, Commonwealth will be re-energizing itself therefore creating a solid foundation for further growth and development. Additionally, a motivated workforce will give the company an added advantage in overcoming its numerous competitors in its market segments. Conclusion Decision making, human resource management and motivation are crucial functions of management which will influence the achievement of organisational goals and objectives. This article has critically analysed these aspects of management in the Commonwealth Bank of Australia as depicted by Pannett & Koons (2012) and Tan (2012). It is established in this article that although, there is cut throat competition from other banks, uncertainty in the domestic and global economies and new international stringent requirements dubbed Basel III, Commonwealth Bank of Australia has managed to maintain its competitive edge in the market due to effective decision making (Pannett & Koons 2012). Moreover, Commonwealth’s strategy of providing playrooms and learning centers for their employee’s children within the work settings is a strategic human resource management and motivational approach that has contributed to the overall efficiency of the organisation (Tan 2012). References Bagad, V. 2009. Management Information Systems, Technical Publications, Pune. Domsch, M. & Lidokhover, T. 2007. Human Resource Management in Russia, Ashgate, Hampshire. 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