Human resource management is an approach that has evolved since the industrial revolution and has had a great impact on the business organisations. This approach aims at managing the workforce of business organisations in order to optimise their performance levels. Human resource management aims at improving the workplace conditions for the employees and foster a strong relation between employers and employees, which ultimately leads to a happier workforce that demonstrates higher performance levels (Armstrong & Taylor, 2014). Human resource management provides a strong framework for the management of a business organisation’s workforce using various core functions, such as recruitment and selection, tainting and development, performance management, career development, etc. and non-core functions, such as employee motivation, attraction and retention of employees, etc. (Hendry, 2012)
ABC Company Pvt. Ltd. is an American multinational firm that deals in the information technology sector and offers technological assistance to its clients, which are some of the major multinational firms in the world. The company was started in 1987 in America with a workforce of 130 employees but as of today, the company has around 15 subsidiaries throughout the world that offer 24/7 technical services to its employees. The company now has a workforce of 123,440 employees and has dedicated human resource departments working at international as well as global levels to manage a diverse workforce of the company.
ABC Company has been one of the top companies in the industry and has demonstrated exceptional performance levels but has recently been experiencing a drop in its performance levels and is experiencing a lot of customer complaints. After conducting a lot of research in its different subsidiaries, the management of the company has been able to identify a number of human resource management practices that were inefficient and were causing a drop in the overall performance of the company. Therefore, this report is aimed at discussing those human resource practices of the company in detail and recommending some strategies that will assist the human resource management of the company in improving them.
Even though the company has a dedicated department for the management of its human resources at a global as well as a local level, it has still been identified that some of the human resource management practices of the company are inefficient. The human resource management practices, which have been found to be inefficient, are not only having an impact on the workforce morale and well-being but is also having an adverse impact on the business of the company. A detailed account of the inefficient human resource management practices is given below:
Performance management at ABC Company was implemented around 5 years ago and the same performance management system is being used by the management of the company till date. The performance management of the company involves assessing the performance levels of the employees over a period of one year using certain key performance indicators that are crucial to the business organisation. A major issue that is pertaining in the performance management system of the company is that it fails to plan and implement performance objectives for the employees. The company takes no initiative to plan the performance objectives of the company and fails to communicate its performance expectations to the employees. A failure to implement performance objectives and completely relying upon key performance indicators for the performance management system reduced the credibility of the program (Greenberg, 2015).
Furthermore, the company uses the same key performance indicators to manage the performance of its entire workforce. It never pays attention to individual tasks and operations that must be assessed in order to enhance workplace performance. The management of the company collects performance information at the end of the year and fills it up in a document, which contains all the key performance indicators in a tabular form. The document is then circulated to each of the employees (Entrepreneurs, 2012). A system of performance appraisal is totally lacking in the organisation and the human resource management of the company never talks to the employees about their performance or reward those who demonstrate exceptional performance levels (Hansen, n.d.).
Such a system of performance management is failing to achieve what it is supposed to. A simple and boring performance management system in failing in keeping the employees engaged and oriented towards performance. The system is also failing in fostering a competitive environment in the workplace. Furthermore, the fact that there are no performance appraisals makes the performance management system a mere formality for the management as well as for the employees.
The simplicity of the performance management system and its inability to meet its objective is also having a considerable impact on the training and development practices of the company. First of all, the company takes no initiative to assess the training needs of the employees. The performance management system of the company is designed in such a way that even though it measures the performance level of individual using certain key performance indicators but fails to assess the performance gaps because of the absence of performance objectives. In case the management finds that an employee is demonstrating exceptionally low performance as compare to the industrial standards, the management simply warns the employee but never tries to find the root cause of decreasing performance. As a result, the company fails to offer sufficient learning opportunities to its employees.
Training and development is not allocated much resources in the company. The management implements an on-the-job training program once every six months and makes all its employees attend it. The training program is aimed at improving the overall efficiencies of the employees and is generally not based on a specific skills set that might have been identified using training need analysis (Anon., n.d.). The lack of proper training and development programs is limiting the growth opportunities for the employees, which is ultimately resulting into an increased employee turnover ratio (Ferguson, n.d.).
As the company operates on a global scale, it is obvious that it also has to deal with expatriates. Expatriates are those employees who are sent to a foreign subsidiary for fulfilling a particular work or assignment. The company believes that the expatriates do not require extensive training or development programs and the training and development programs for expatriates are half a day long, which takes place 3 days before they have to leave. The training program just provides an orientation to the expatriates regarding the foreign subsidiary and fails to increase their awareness about the culture of the host country or prepare them for the problems that they are most likely going to face because of cross cultural differences. As a result, most of the expatriates who are sent to foreign subsidiaries lack motivation and fail to achieve success in their work because of difficulties in adjustment (Pinnington, et al., 2015). The failure of expatriate programs is demotivating the workforce and their morale is suffering too.
Recruitment and selection strategy of the company is also not that strong as compare to the competitive firms. The human resource management of the company does not conduct workforce planning and is always finding it difficult to deal with the fluctuations in human resource demand and supply conditions. The failure of the management to analyse the demand of the human resources creates situations where there is either surplus human resources in the subsidiaries or there is a shortage of workforce, which ultimately increases its operational costs and disturbs the smoothness of operations (Sullivan, n.d.). The recruitment and selection procedure of the company lacks a criteria and the managers include tests to assess some random qualities and skills of the candidates, which might not even be required in the workplace. The failure of the management to assess the right skills and qualities in a candidate is preventing it from finding the right fit for the right jobs and the labour turnover ratio is increasing as a result of it.
Another major issue in the recruitment and selection of employees is that the company fails to incorporate expatriate management programs in recruitment and selection procedures. It is generally said that for a company to increase its chances of success of expatriate management programs, it should look forward to recruit those people who have the ability adjust in a foreign culture and have the sufficient technical and cultural knowledge of the foreign subsidiaries. The human resource management of the company never makes any efforts to design special recruitment and selection programs for recruiting those candidates who are culturally sensitive and have a greater scope of being sent to foreign locations (cpjobs.com, 2010). The management choses expatriates from within the workforce without even assessing their ability adjust in a foreign subsidiary. The failure of the management to recognize candidates with the potential to be selected as expatriates also prevents it from training and developing those employees adequately and increasing the chances of success of its expatriate programs.
The company is facing tough market situation because of presence of certain major companies that dominate the market and the chances of new market entrants can further add up to the complications for the company. In such conditions, inefficient human resource management practices are having a considerable impact on the market position of the company and the increasing employee turnover ratios is also making the company less competitive. The overall human resource management scenario is creating an alarming situation for the company and the management needs to carefully redesign its human resource management practices as soon as possible. Some recommendations that can help the company in redesigning its human resource management practices are given below:
First of all, the company needs to completely redesign its performance management system. The inability of its performance management system to meet the desired objectives is doing more harm to the company than the benefits that the company can expect from a performance management system. The company should put an end to its existing performance management system altogether and should implement a 360-Degree feedback system in all the subsidiaries as soon as possible. In a 360-Degree feedback system, an employee receives performance feedback from all those people who around him or her, such as peers, juniors, seniors, managers, etc. A system of 360-degree performance feedback will have multiple advantages for the company (Tee & Ahmed, 2014). It will provide a greater opportunity to the employees to receive accurate performance reviews that will be highly reliable. Receiving feedback from multiple sources will allow the manager to achieve higher accuracy in performance management system. It will not only be a more practical approach towards performance management but will also provide a self-assessment and self-awareness approach to the employees for assessing the contributions that they have made towards the success of their companies. 360-Degree feedback system will also help the management of the company in analysing the performance gaps and implementing employee training and development programs to bridge them.
Further, the company should also attach a performance appraisal system along with a 360-Degree performance feedback system so that it can take necessary actions against those employees who fail to meet the performance objectives and reward those who contribute towards organisational success by fulfilling the performance objectives. It is important from a business point of view to reinforce positive behaviour amongst the workforce, which the human resource management can do by rewarding and recognizing star performers in the workplace (Bernardin & Wiatrowski, 2013). Rewards and recognition will help the company in keeping the employees engaged and motivated. It will also foster a competitive workplace environment that will be more oriented towards performance.
Secondly, training and development should be considered as an important human resource management practice by the management and a greater focus should be laid upon it. Though the new system of performance management system will allow the company in identifying the training needs of the employees because of identification of performance gaps, the company should still allocate more resources to it. The human resource management of the company should implement off-the-job as well as on-the-job training programs for the employees where they can acquire those skills that will help them in performing better in the workplace and increasing their competencies. Further, the management can even empower the employees to take care of their own training and development needs. By empowering the employees to take care of their own training needs and by paying for all the training and development programs that the employees attend on an individual level, the management can offer them with a great development opportunity. The employees will feel more engaged and the company will be able to increase its competencies through an increase in the competencies of the workforce (Jehanzeb & Bashir, 2013).
Further, the management also needs to start taking the issue of expatriate training and development seriously. The management should carefully select the employees who have the right skills and qualities that are required for adjusting in a foreign location and complete a specific assignment. The human resource management of the company should regularly conduct an analysis and should identify potential expatriates so that they can be prepared before a foreign assignment comes up. The management of the company should then implement training and development programs that will help in preparing the expatriates for adjusting in a foreign culture. The expatriates should undergo detailed training and development programs that will help them in increasing their awareness about foreign cultures and the way in which the foreign counterparts communicate (Feitosa, et al., 2014). If required, the expatriates should also be trained for greater technical capabilities. Such training and development programs will help in increasing the expatriate competencies and the company will be able to ensure a greater success rate in its expatriate management programs.
Recruitment and selection is one of the most important function in strategic human resource management and the management at ABC Company should work hard to strengthen it. The management needs to start planning its workforce so that it can have a better understanding of human resource demand and supply patterns. Continuously planning the workforce will help the management in ensuring optimum workforce at all times and will help them in carrying out their business operations without a halt. The management also needs to standardise its recruitment and selection procedure so that it can include certain psychometric and psychological tests that will assess those qualities and skills of the candidates that are of utmost importance from a business point of view. Including such tests in the recruitment and selection procedure will help the management in filtering through the candidates and making a recruitment decision on the basis of skills, qualities and behaviour that an employee is likely going to demonstrate in the future. This will help the management in finding the right people for the right jobs and at the right point of time, which will ultimately help it in decreasing the employee turnover rates.
Further, the management should also design recruitment and selection programs that will be specifically aimed at selecting candidates for expatriate programs. It is obvious that the candidates who are going to be selected for expatriate programs should have greater skills and qualities then the normal candidates who are going to work locally or in their home countries itself (Selmer & Lauring, 2012). Therefore, it is important for the management to assess certain qualities and skills in candidates, such as cultural sensitivity, communication skills, adjustment capability, etc. so that they can be considered for employment and can later on be selected for expatriate programs. By strengthening the recruitment and selection programs, the management will be able to attract and retain a large pool of talented employees, who will be able to produce synergies and contribute more towards the achievement of organisational goals and objectives.
Conclusion
ABC Company Pvt. Ltd. is facing a critical market situation that can damage its market reputation and can throw it out of business if its human resource management practices are not dealt with immediately. Being in the service industry, it is important for the company to ensure that it manages its human resources in the most efficient manner because the business of the company is highly vulnerable to how the human resource perform and deal with the clients.
The inefficiencies found in the company’s performance management system, training and development and recruitment and selection programs are having a negative impact on the employee morale and motivation levels, which is resulting into a decrease in employee performance levels and high employee turnover rates. If the situation is not controlled, the company might lose all of its market share to the competitors. Thus, the human resource management of the company should look into the above recommendations and should start introducing some planned changes in its human resource management practices.
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