Human resource management is the strategic approach that explains the effective management of people in an organization (Bratton & Gold, 2017). Human resource management is a discipline that has seen major changes from in both its theory as well as its practice. To understand the current trends in human resource management in this paper, “Fonterra” has been chosen for the case study.
Fonterra is the multinational dairy company that has the largest share of export of the New Zealand’s dairy products. It was founded in 2001, and presently it has more than 10,000 farmers working under it (Fonterra, 2018).
1.1.a Two current trends in human resource management are, use of Artificial intelligence (AI) in human resource and flexible work arrangements.
Artificial intelligence (AI) in human resource can be used as an important tool due to its certain advantages.AI in human resource management helps making decisions by analyzing the data through algorithms. Machine learning and decision making helps to improve decision-making quality. Flexible work arrangements on the other hand not only increases productivity, it also develops the morale of the employees. Flexible work management is nothing but the flexible time and work culture so that the employees have enough choice and options. It helps the company to have more productivity when there are lesser work force available because flexible work arrangement helps employees to perform function, which does not require any specific skillsets.
1.1.b There are certain advantages of using Artificial Intelligence. Firstly, it is that it is less time consuming in nature. For example, drones can replace multiple tasks done by the farmers on-foot. AI in human resource helps to find the right talent maximizes employee engagement, research, solve problems, and most importantly help in automating the workflow (Albrecht et al., 2015). On the other hand, a flexible work environment would mean that the employees have less rigidity in diving works among them; productivity is high for the employees and the company. Secondly, the importance of flexible work arrangements is greater work-life balance of the employees and greater satisfaction of the employees with flexible time and work environment.
However, there are disadvantages of AI and flexible work arrangements, which are not to be ignored. Firstly, AI is a very expensive installation. The software and hardware required for the implementation are costly (Albrecht et al., 2015). Secondly, it might also lead to the loss of jobs, unemployment and reduced job security. The disadvantage of flexible work arrangement is less. However, the flexibility might hinder the productivity as it lacks specialized knowledge about the matter. Secondly, flexible work management would require the company to have more number of additional management processes to manage and monitor diverse activities.
1.1.c Fonterra has to develop flexible work arrangements for the farmers so that they could adapt and adjust their works according to their needs. Flexible work management helps them to divide the work among the other employees without fixed arrangements. It has to ensure that there is flexible work arrangement because the farm is completely based on the farmers. It also has the advantage of getting specialized knowledge about varieties of tasks. AI and automation help to identify, analyze and arrange for the crops and reduce the usage of toxic herbicides almost by 90 percent (Fonterra, 2018). AI and automation help to develop employees experience and reduce manual work in many ways. There are many organizations, which have already developed these practices in their organizational structure, and these have been successful in reaping positive outcomes.
1.1.d If these trends are implemented into any future business entity, it will have the benefit of performance evaluation of the employees and it can easily transfer the task of skill development and learning from manual to the machine (Strohmeier & Piazza, 2015). To implement AI in the organization, it should start with collecting the data, making a hypothesis, testing that data and finally putting the data into work. It can also install the “Talent Acquisition” software, which can automatically scan, read and analyze the applicant by reducing the manual workload almost to half. While if the trend of flexible work arrangement is implemented in the future business entity, it will have greater productivity to the company because it does not restrict one particular task fixed for one employee. To ensure flexibility in work, the company should relax its rigid procedure of allocating specific task to specific people. It can also manage to have compressed workweeks, which is a system of condensing one or more workweeks into fewer and longer days.
1.2.a The issues of the human resource management in Fonterra are; the failure of the protection of the interest of the dairy farmers. The company failed to maintain the interest of the employee in giving them the assured returns for their production (The Standard, 2018). The second issue associated with the working of Fonterra is major job cuts. The company slashed more than 750 jobs in the middle of the interest. Human resource management fails to protect the interest of its employees (Stuff, 2018).
The reason behind the failure of the management of the employees was their poor policies that could protect the company from the threat of inflation. It meant that the company did not have sufficient mechanism to protect themselves from any kind of market-led threat. Secondly, the company had to go for job cuts of so many employees due to the government policies, which again signify that the company failed to adopt recruitment policies keeping in mind the changes in the governmental policies. This reflect a poor management of the employees of the organization, which requires a robust solution mechanism to develop and build a strong human resource management system at the organization.
1.2.b The problems discussed above have to be dealt with care and a proper strategic plan has to be adopted for dealing with this situation. The company should make a plan to ensure that the employees are getting enough dividends and payoff for their efforts. The company should also look after its profit margin at the domestic and the international market so that it does not suffer from major loss. In case of the loss, it is the employees who are suffering; hence, their interest has to be protected at any cost. Moreover, there has to be enough support to the employees in terms of monetary insurance that when there are major job cuts, the employees can sustain on their own for at least a shorter span of time. It should ensure better security to the employees and timely return for their production dividend.
2.1.a To enhance the sustainability end of Fonterra, two human resource management practices are to be adopted (Armstrong et al., 2014). The first practice would be to ensure “employee security.” The second practice in this regard could be “selective hiring.” It is found that the company has a large number of employees, which are a hindrance to the effective working of the company. In few situations, there is a need to limit the number of people being hired because the company fails to maintain their interests. Secondly, employment security is an issue, which cannot be compromised in any situations. Security assurance is the primary cause of job satisfaction. Employees feel more satisfied when they have the assurance that their company will protect their interest even in terms of adversities. However, if there are more chances of job loss, employees would feel less committed to work.
2.1.b Employment security is the primary necessity of human resource management, which has certain advantages. This not only helps the company to retain its employees, however it also helps the company to build a harmonious relationship between the employees and the company.The organization has to pay the price once the employees are laid off. It is argued that the chances of frequent changes of jobs on the part of the employees is reduced largely once employment security is ensured. (Nunoo et al., 2016).
While selective hiring has its advantages, the company can create value addition with a lesser number of employees. If the number of people were restricted, only the skilled employees would have a chance of being selected. This can contribute to greater productivity. Selective hiring would also have the benefit of less job cut offs.it is found that number of job cuts take place in companies where there is a large number of employees.
2.1.c If Fonterra adopts these two human resource management practices, there would be positive changes in its future functioning. For example, the company has more than 10,000 employees under its umbrella, which might be a hindrance to its working (Fonterra, 2018). The interest of the employees is not being protected properly. This implies that if the number of people who are hired is less, there are lesser chances of job cuts. If the company opts for selective hiring, it would not only ensure better employment security for the farmers; it will also help the company have specialized skills. However, the requirement for more employees has to be met with higher job securities for them. More job security would create a higher level of job satisfaction among employees that would contribute to higher productivity of the company.
2.1.d To ensure employee security and selective hiring, the company can adopt this plan. The company should develop the habit of proper pay for the position and timely dividend for the production. The company should ensure proper health benefits to the employees. This will have two-way benefits. It will ensure trust among the employees about the company’s concern for them. It will ensure that the employees feel that their interest are protected and they have a secure job. Selective hiring could be ensured by offering few positions for employees. Selective skill set are to be set as a criteria for recruitment so that any extra employment could be ignored.
2.2 It is found that in the business environment, employees are skilled; however, their skill is not utilized properly. There are two business strategies, which could be adopted to ensure proper utilization of the skill of the employer. Firstly, tracking the current productivity is extremely important and making a proper plan is necessary. The company has to keep track of the monthly and annual productivity of its employees and make adjustments in the planning process. Proper management of mapping and tracking individual productivity of the employees will help to have a detailed understanding of the skill underutilization. Planning based assessment will help the company to focus on better utilization of skills of the employees.
2.3 The survey that has been conducted shows that the company is going to have less employees in the next year because of retirement of number of them. Moreover, employing new candidates in indeed difficult in the competitive environment. In case of the Fonterra, had already high employee attrition due to various factors. This can be divided into two factors. One is internal, and one is external. The company took a drastic measure when it laid off 750 employees (Otago Daily Times Online News, 2018). To ensure employee retention of the company, it can adopt the employee retention proposition (EVP). This EVP measure is an integrated technique, which includes all benefits and rewards required for employee retention (Jha & Jha, 2015). Firstly, the company can opt for salary and benefit method. The company has to adopt benefit and incentives that are competitive. It has to ensure more benefits than other dairy companies of New Zealand do so that it works as a motivational factor for the employees. However, in case of the retirement issue, the old employees could be given extension for an extra period. It can give extension on a contractual basis, which will help the company not only to retain its earlier employees; it will reduce the burden of employing more employees. For the new employee recruitment, the company has to use monetary benefits to them, which has to be more than other dairy companies are. Money and incentives help create a positive mindset of people and greater commitment to work. It can adapt for future growth plans and development of the employees for those who are retiring and those who are going to be employed. These opportunity scopes of the employees would encourage them to work with a better commitment to their work with a higher interest in jobs (refer to Appendix A). The reasons behind this plan are to boost the morale of the employees. A future-oriented growth plan will help the employees to enjoy their work. This will add a competitive edge to the company and help them retain the employee for a longer period.
3.1 There are certain challenges that the company faces in achieving its goals and organizational objectives. The company faces setbacks if its productivity and earning mostly in exports. The company faces major economic challenges in its profit margins while functioning in its domestic and international markets. The dairy products have a volatile environment both in New Zealand and in the global market (Otago Daily Times Online News, 2018).The company also failed to protect the interest of its employees by protecting them from the domestic labor laws and governmental changes. A large number of employees were laid off due to some structural changes in the domestic laws of the country. The biggest problem of Fonterra within the context of New Zealand is its domestic laws (NZ Herald, 2018). The company loses out profit due to the existing laws that the government has. Hence, the economic environment and labor laws of the country work as a hindrance to its growth and development. However, there is also cultural and social change within the context of New Zealand’s dairy farmers. The number of sharemilker-operated firms is reducing in number in case of Fonterra. People are opting for diverse jobs other than dairy farming (Radio New Zealand, 2018). This cultural and social change is working as a hindrance to the fulfillment of the organizational objectives. Regarding the external technological environment, robotics and automation have taken a central stage. Companies are failing to achieve the organizational goals which are not able to adapt to the advanced technology within their business functioning.
3.2 For an organization to succeed, it is extremely important for the organization to comprehend the needs of the employees and to regularly motivate them to work towards the goal and objectives of the company. One of the most important strategies that are available for understanding and motivating the employees is the organization should employ the strategy of training and development (Cloutier et al., 2015). The employees of Fonterra are often demotivated by factors such as irregular payment structure and the erratic dismissal of employees (Fonterra, 2018). The organization must engage in constructive activities to analyze the needs and progress of the concerned employees. Training the employees and considering their valuable feedbacks can help in improving their skills and assist in understanding their needs. Training and development activities organized by companies can motivate the employees to work for the benefit of the company. This strategy can help the employees in realizing the vision and objectives of the companies. Training and development activities organized by the companies can always act as a motivational force because it paves the way for increased employee commitment towards the greater goal of their parent company (Cloutier et al., 2015).
Another strategy that helps in understanding the needs and helps in adding to the motivational factor of the employees is the cultivation of the factor of emotional intelligence among the persons who play a major role in the functioning of the company. Recent studies have projected the fact that managers possessing emotional intelligence can easily access and comprehend the requirements of the employees under him (Njoroge & Yazdanifard,). These persons who possess and cultivate emotional intelligence can gauge the various factors that can help in motivating the employees to work for the desired objectives of the parent company. Higher emotional intelligence among the managers or authorities can ensure proper channelization of feedbacks to the workers, which in turn, will assist them in improving their performance by contributing towards the goals of the company (Njoroge & Yazdanifard). Social and emotional intelligence of the managers and employees can help the company and the employees in valuing and respecting each other’s opinion, thereby motivating the employees to voice their opinion, and contribute towards the desired goal of the parent company. Combining social and emotional intelligence can ensure higher contribution and proper functioning within the team works. Further, this can also pave the way for the surge in confidence and motivation of the employees who feel their greater participation in every activity.
3.3 As discussed earlier, the factor of offering regular and proper feedback in the form of appraisals can ensure a rigorous check on the performance of the employees and assist them in improving their performance (Udurawana, 2014). The feedbacks should ensure a mix of positive and negative attributes. It is necessary to provide regular and unbiased feedbacks to ensure proper participation. In case of the less productivity of the company, it should have a prior plan for dealing with situations like this. The employees should be informed beforehand in case of any unforeseen situations like this. In case of the cultural change and farmers opting out other profession, the company must ensure that there are enough payoffs and dividend for the production. This might be a reason why the farmers face less commitment to work and opt for other profession.
Collating the social and emotional intelligence can ensure a proper evaluation of the performance of the workers. By harboring emotional intelligence, managers can ensure that they are in touch with every need and performance of the employees. This will help the employees to stay motivated throughout the process. This is another method of understanding the psychology and mindset of the employees towards their work, which can be used in ensuring a better commitment to work and proper utilization of their skills. Lastly, in technological issues, if the company installs the automation and robotics, many of the tasks could be done without the manual labor and energy being drained. The will reduce the laborious task of the farmers and employ the same on the other important issues.
References
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