Contemporary Human Resources Issues - BAE Systems Electronics - Case Study Example

Contemporary Human Resource Issues Name Institution Lecture Course Date Executive Summary The modern business is experiencing numerous and rapid changes internally and externally. Consequently, human resource management (HRM) is experiencing radical changes arising from the call for value addition in firms. Recurring economic downturns, coupled by increased globalization (stiffening competition) are increasingly calling for improved productivity of the workforce, requiring the HRM to make every effort and adapt their organizations, as well as the workforce, with the current dynamism and competition. This paper seeks to present two contemporary human resource issues with the aim of presenting a recommendation in the form of an action plan. Many of BAE’s customers are working on tightening their defense budgets, including the United States and several other nations. This implies that either the profits for the company will drastically reduce, or the company will make huge losses. The action taken by BAE System (lay off) is expected to raise a major drawback by trade unions. In case the trade unions are successful, BAE system will have to compensate the affected employees or avoid laying them off. Whichever the case, the company’s profits will be affected, which will reduce shareholders’ returns. Further, the government (and the entire economy) will be affected due to a reduction in taxable income. Employees will also be affected psychologically, which will reduce their morale and working efficiency. BAE Systems should consider the various factors that will affect its business in the future, such as economic downturns, change of technology and the possibility of business expansion to decide the number employees and mode of employment to use. It is advisable for the company to allow the system to reduce the number of employees naturally by allowing employee reduction through retirement, which will avoid the negative impacts of the proposed layoff. Introduction BAE Systems is a global company that deals with defense and aerospace. The company has its headquarters located in the United Kingdom, but its operations spread out in various countries including Australia (BAE Systems 2011). The company works along a mission of developing a proper defense system that facilitates the establishment of peace and safety in countries. Originally, BAE Systems Inc comprised of BAE Systems Land and Armaments and BAE Systems Electronics, Intelligence & Support (EIS). Currently, BAE Systems Inc comprises of two main sectors and five subsectors. The two main sectors include Products Sector and Service Sector (BAE Systems 2011). Under the Product Sector, there are three subsectors (business units). These include Platform Solutions, Electronic Solutions, and Land & Armaments units. Service Sector comprises of two subsectors, Support Solutions and Intelligence, and Security units. The company distributes its employees as follows: EIS has about 18,000 employees, Land & Armaments employing about 17,000 employees, Platform Solutions employing about 14,000 employees while the entire Service Sector employs about 3,000 employees. This totals to about 52,000 employees (BAE Systems 2011). Human Resource Planning (HRP) HRP is a HRM aspect, which aims at ensuring organizational effectiveness (Kasinath 2011: 121). The main aim of HRP is to anticipate human resource movement within the organization based on employee transfers, turnovers, promotion and retirement (Kasinath 2011: 121). Human resource is a crucial organizational aspect that determines organizational performance. Therefore, the human resource department must be very keen in the selection process. Further, the department must devise excellent human resource planning strategies to ensure maximum output from the human resource. Extensive research has been conducted on HRP, especially on its role in linking human resource policies and programs to strategic, organizational objectives (Nkomo 1987: 387). Nkomo (1987) postulates that HRP is future-based and is purposed to answer two key human resource questions: (a) who will the organization require for future management and operation? and (b) which human resource policies and programs will the organization require to achieve its strategic objectives, as well as the human resource objectives? Therefore, human resource planning enhances organizational performance by answering the aforementioned questions thereby ensuring that the organization is ready for future occurrences with respect to human resource and the associated programs and policies. Consequently, the HRM must consider the organization’s strategic objectives during human resource planning. Recruitment and selection Recruitment and selection are two (essentially one) key human resource issues that determine the success of an organization, taking into consideration that they dictate organizational performance with respect to human resource (Absar 2012: 436). Human resource personnel conduct recruitment and selection with the sole aim of getting the right person for working in their organization. Recruitment usually precedes selection, as the term recruitment and selection suggests. Recruitment process may be associated with job (vacancy) advertisement, which is purposed to attract the right candidates for the various vacancies in an organization (Absar 2012: 436). Recruitment process is usually evaluated based on its ability to attract a multitude of competent applicants. There are various recruitment strategies, which can be broadly categorized into two: internal recruitment strategies and external recruitment strategies. This categorization is based on who is conducting the recruitment (Aswathappa 2008: 150). Internal recruitment strategy is the case where activities within the recruitment are done by people from the organization, such as employees referring or encouraging potential employees to apply for vacancies. On the other hand, recruitment process is deemed external if the whole process is conducted using external sources, such as media advertisement and recruitment agencies among others (Aswathappa 2008: 150). Each of the two recruitment strategies has its own advantages and disadvantages. For example, use of external sources of recruitment enables an organization to achieve diversification since it reaches a wider area than internal sources of recruitment. However, it is expensive owing to the fact that an organization must pay for the services offered by external recruitment sources. Selection process involves selecting, from all the people that applied through the recruitment process, the right candidates for the vacancies (Absar 2012: 436). The selection process involves gathering and analyzing all the necessary information from every applicant, such as education background and professional experience among others, to decide the rightful candidate for employment. The selection process is pointed as among the most crucial HRM functions since it directly affects organizational performance (Dessler 2007: 110). The selection process, like the recruitment process, may be conducted internally by the organization’s HRM, or externally by external recruitment and selection means, such as recruitment agencies who also conduct the selection process on behalf of an organization (Aswathappa 2008: 150). Various issues affect employee selection, which compromise the quality of the selection in terms of the capacity to select the best candidate for employment. Such issues include HRM perception of a candidate, a candidate being selected based on favoritism (nepotism and tribalism) and lack of fairness in interviewing and examining applicants. These factors, especially favoritism, may emanate from the recruitment and selection team or from external forces, such as a senior manager who wants a friend or relative to be selected for employment (Aswathappa 2008: 186). Like any other major engineering firm, BAE Systems faces major challenges especially in the recruitment process in that it is challenging to attract the best candidates (BAE Systems Plc n.d). The company strives to overcome this challenge by forming a close relationship with colleges and universities to attract fresh graduates (BAE Systems Plc n.d). The company, in this way, does not get experienced candidates, who are crucial for the success of technical-based firms in ensuring efficient and effective work. As aforementioned, there are various issues that affect effective recruitment and selection, which include HRM perception of a candidate, a candidate being selected based on favoritism (nepotism and tribalism) and lack of fairness in interviewing and examining applicants. These are issues facing a majority of contemporary organizations, although the senior management, who are often the cause of such flaws, do not often admit that their organizations are victims of the issues (Absar 2012: 438). Therefore, it is very likely that BAE system faces similar issues, which lead to incompetent and inexperienced people being employed. The consequence of the aforementioned issues is reduced human resource performance, which leads to reduced financial performance. This, in turn, affects the company shareholders, who receive reduced returns on their investment. Customers are also affected in that they receive low quality products and services and/or delay in the product or service delivery due to work inefficiency. Human Resource Planning Model A typical HRP model comprises of three key elements: forecasting staffing needs, supply evaluation and balancing of supply and demand (Human Resource Planning Society 1986: 81-83). The model ensures that an organization is always equipped with enough of the right employees for the various tasks within the organization (Human Resource Planning Society 1986: 81). The human resource department (HRD) must predict the number of employees required by the company. Various factors determine future employee demand, and the HRD should use one or a combination o these factors: economic situation, product and service demand, internal organizational finances and organizational growth expectations. Therefore, organizational, strategic objectives and business plan must be used when predicting employee requirement (Human Resource Planning Society 1986: 81). Employee evaluation involves two processes: internal and external evaluation. Internal employee involves evaluating the staff already in the organization, which occurs alongside forecasting. External employee evaluation involves addressing external issues, such as the unemployment rate in the economy, mobility, education, employment laws and regulations, existing employees, potential employees and business dynamics. Once the evaluation is complete, the HRD can determine the number of employees the organization requires and if the organization will get the desired number and rightful employees needed for future staffing (Human Resource Planning Society 1986: 82). Finally, the HRD balances employee demand and supply. If, during the evaluation process, the HRD finds out that the organization has employee deficiency, the HRD establishes a recruitment strategy and decides the recruitment efforts that the organization requires to attract applicants. If the organization has excessive employees for future business, the HRD then comes up with a strategy for reducing the number of employees, such as layoffs and retirement. Further, employee demand and supply balance enables the organization to decide if to have employee promotions, demotions or lateral movement within the organization (Human Resource Planning Society 1986: 83). Therefore, it is apparent that the human resource planning process precedes the recruitment and selection process, as shown in the figure below. Figure 1: A typical Human Resource Planning model (Adapted from Human Resource Planning Society 1986: 81-83) Implications of HR Planning on BAE Systems and its stakeholders (Employees, Investment and the Government) Many of BAE’s customers are working on tightening their defense budgets (BBC News 2011). These include the United States and several other nations. This implies that either the profits for the company will drastically reduce, or the company will make huge losses. Actually, BBC News (2011) indicates that BAE System plans to reduce its workforce in the United Kingdom by about 3,000 jobs. According to BBC News (2011), the United Kingdom, Germany, Spain, and Italy, the four partners of BAE’s Eurofighter Typhoon program, are easing their budget pressures by reducing the rate of production. Therefore, workload is drastically reducing at various sites of the company. Further, the company is experiencing a human resource planning challenge in deciding which employees to get rid off and the best strategy for getting rid of the employees. It is apparent that employee reduction is one of the key components of a human resource planning. BAE Systems employs a third approach, partnership, where the company has a deliberate and proactive involvement of trade unions in decisions regarding the employees and their work (Stiles et al., 2006). The action taken by BAE System (lay off) is expected to raise a major drawback by trade unions. Indeed, Unite, the biggest trade union that represents workers from BAE System, has already decided to face BAE System in order to oppose the move (BBC News 2011). The trade union asserts that it is incredible to see such skilled workforce disappearing due to the planned lay-off by BAE Systems. In case the trade union successful, BAE system will have to compensate the affected employees or avoid laying them off. Whichever the case, the company’s profits will be affected, which will reduce shareholders’ returns. Further, the government (and the entire economy) will be affected due to a reduction in taxable income. Employees will also be affected psychologically, which will reduce their morale and working efficiency. This is in consideration that the employees are uncertain of their job security owing since the company has not yet specified which employees will be laid off. Conclusion Human resource planning, including recruitment and selection is crucial human resource issues that greatly affect the performance of an organization. Various issues affect employee selection, which compromise the quality of the selection in terms of the capacity to select the best candidate for employment. Such issues include HRM perception of a candidate, a candidate being selected based on favoritism (nepotism and tribalism) and lack of fairness in interviewing and examining applicants. The layoff proposed by BAE Systems is a serious human resource issue that will greatly affect the company and its stakeholders. It is apparent that the company did not conduct a comprehensive human resource planning, which has resulted into the current problem (over excessive employees). Recommendation The HRP model presented in figure 1 is effective in dealing with the HR issues facing BAE system, now, as well as in the future. Effective human resource planning enables an organization to avoid unintended layoffs, such as the one facing BAE Systems (Kasinath 2011: 123). As aforementioned, effective human resource planning begins with employee forecasting and this must be conducted alongside business strategic planning. BAE Systems should consider the various factors that will affect its business in the future, such as economic downturns, change of technology and the possibility of business expansion to decide the number employees and mode of employment to use. Considering the recurring economic downturns facing many economies, BAE Systems should consider employing a majority of employees under the renewable contract management to avoid a similar issue of employee reduction through layoffs. Incase business gets to its worst, the company would just have to wait until the contract term is over and fail to renew the contract for the employees it wishes to get rid of. This will prevent the company from future loggerheads with trade unions (as is the case), which may require employees to be compensated for being laid off. With respect to the planned lay-off issue, it is advisable for the company to evaluate the cost, in terms of employee compensation, and benefit, in terms of employee lay-off before deciding to reduce the number of employees through lay-off. Considering that the trade unions will intensify the battle to ensure that employees are not prematurely laid off, it is advisable for the company to allow the system to reduce the number of employees naturally. Every year, the company must get rid of some employees through retirement. Therefore, the company should allow retirement to reduce the number of employees. In the mean time, the company should avoid excessive expenses human resource expenses in terms of unnecessary packages and allowances until the company reduces the employees to the required number. In the case of the recruitment and selection process, the company should continue using external sources of recruitment and selection, which will enable the company to reach a wide area and attract the best candidates. However, company representatives, who should only be involved in the interviewing process but not in the decision-making process, should work alongside external recruitment firms to ensure that the right candidates are hired. When necessary, the company should attract experienced employees from other companies through attractive remuneration packages and working conditions that will force the targeted candidates. However, this should be done for certain key positions, such as design work, to avoid excessive human resource expenses. Action Plan Priority: effective human resource planning using appropriate expertise and human resource planning model Objectives: To attain the optimum number of employees in every department and field Actions/means Responsible Person/department Time Frame/After Forecasting staffing needs All department - Employee evaluation and supply HRM Forecasting staffing needs Employee demand and supply balance HRM Evaluation and supply Action 1. Recruitment and selection of specific employees at specific departments HRM Supply and demand balance 2. Reduction of excess and unnecessary employees through retirement HRM Supply and demand balance 3. Employee shift from departments with excess employees to departments with employee shortage HRM Supply and demand balance Bibliography Absar, M. N. 2012. Recruitment & Selection Practices in Manufacturing Firms in Bangladesh. Indian Journal of Industrial Relations, 47(3), 436-449. Aswathappa, K. 2008. HRM: Text and Cases. Delhi: Tata McGraw-Hill Publishing, 150-186. BAE Systems Plc. N.d. Through-Career Skills Development. Retrieved from: Accessed 10 May, 2012. BBC News. 2011. BAE Systems Confirms Plans to Cut Nearly 3,000 Jobs. Retrieved from: Accessed 8 May, 2012. Desler, G. 2007. HRM. New Delhi: Prentice Hall, 110 Human Resource Planning Society. 1986. Human Resource Planning: HR, Volume 9. Human Resource Planning Society, 81-83. Kasinath, S. 2011. HRM: A Study of Indian Railways. Review of Business Research, 11(3), 121-132. Nkomo, S. M. 1987. Research Notes and Communications. Human Resource Planning and Organization Performance: An Exploratory Analysis. Strategic Management Journal, 8, 387-392. Stiles. 2006. Best Practice and Key Themes in Global Human Resource Management: Project Report Read More