Increase Tapal Tea Company Efficiency Business Essay

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Tapal Tea Company (Private) Limited is one of the largest tea companies of Pakistan. Tapal have a number of brands both in black and green tea. Tapal is expanding its areas of operations to North America, Saudi Arabia, Oman, UAE, Spain, Italy, Greece. It was established in 1975, and situated in Korangi Industrial Area Karachi. It has more than 1100 permanent staff and 4900 temporary and contract employees in Pakistan. Tapal has a high turnover rate in Pakistan, more than 26% of employees are leaving the organization every year. As every one knows that employees turnover puts a huge cost in any organization, as well as shortage of skilled staff. I tried to figure out the main causes and possible solution to decrease the employee turnover rate as a Human Resource Department. The company is not putting much emphasis on the this department but this can play a vital role to eliminate the root cause to problem and can increase the company's efficiency.

Introduction to the Problem

The business environment has become very competitive and complex with the passage of time. The current situation of market flow, energetic macro environmental factors, global financial crisis and dynamic labour market, it is essential for any company in order to stand out to keep an eagle eye on its core processes specially like cost, invest in competitive advantage and work out a sustainable strategy. Nobody can deny the importance of Human resource management now-a-days. HRM can be defined as' (HRM) is the function within an organization that focuses on recruitment of, management, and providing direction for the people who work in the organization. Human Resource Management can also be performed by line managers."

In the past, Human Resource Departments had never been regarded as a mainstream department in Pakistan and largely the most common attributes associated with employee related issues had been dealt with by administration. However, companies are now awaking to the fact that for greater productivity, and to remain ahead of the market competition, it is absolutely crucial to invest in the company's most important asset - its employees. But the real problem comes to light after companies spend colossal amounts to attract, recruit, train and designate employees and employees leave the company. Employee turnover is an exigent problem faced by the industry. The riddle of employee turnover can only be resolved by effective HRM practices and operative retention strategies.

Theoretical sustenance to the efficacy of problem

Issues of higher turnover rates and lower retention level of employees destroys the organisational culture and has negative implications on productivity. Reviewing the literature constrain that the significance of employee retention is widely researched. It goes without saying that the paramount objectivity of the research remains the crafting of sustainable elixir to counter the problem of employee turnover. Another phenomenon that comes to light is perceiving the problem of employee turnover as incessant and ceaseless. This idea has been debated by Adorno, 2008 who asserts that "executives have been apparently complacent regarding the issue of employee turnover- almost simply accepting it as a" staple" of the industry. This conceptual model should be undermined to guide the employee retention ship in the positive direction. The asperity of the problem can be rightly assessed by taking "loss & gain" into the context. The noticeable effects of employee turnover are increased recruitment cost, operational disruption, and loss of implied organisational knowledge and demoralisation of peers. Whilst on the flip side higher retention level always tends to pay back in a desirable way with employees who stay and work to their absolute potential for the betterment of the company.

Problem Statement

This presented research has been conducted in the environment of Tapal Tea Limited in front of the critical problems of employee turnover. The problem statement for the research is

"How to raise the employee retention level and leveraging down the turnover rate of Tapal by effective Human Resource Management practices and retention strategies or procedures".

Tapal Tea (Private) Limited began with a humble start in a shop at down town Karachi Pakistan over fifty years ago and now has become one of the largest national tea company in Pakistan, having four production facilities, with a potency of over 1,100 employees in permanent staff and rest is temporary hired from different agencies according to market demand and a huge nationwide network of distributors. The visionary foresight of the leadership of the company, coupled with relentless hard work, has led it to reach many milestones and landmarks in the local economy, with a presence made overseas in recent years (Tapal corporate profile, 2008). With a huge workforce, Tapal continue to progress. In spite of edible profits, one of the main problems faced by Tapal is grand employee turnover. Since the initiation of a Human resource department at Tapal, the problems have been contained to some extent but still it exists. The Objective of the research carried out is to analyze the current HRM practices and Retention strategies induced. Furthermore prospective reasons of employee turnover with the help of literature and research will be evaluated. By conducting this research an attempt will be made to find out the factors and causal background that originate the employee turnover even whether the traditional and well accepted policies are practiced. Of this research, it is expected that this global phenomenon of employee turnover will be analyzed in local context in Pakistan and the solutions/ suggestions will be devised in terms of effective retention strategies which will bear the most chances of being successful in local context.

Aims and Objectives

To analyze HRM practices and documents at Tapal.

To critically review the employee retention strategies at Tapal tea Ltd.

To analyze a chain of factors including human resource practices that have huge impact upon staff turnover at Tapal tea Ltd.

To analyze the effects of staff rewards and incentives on retention level at Tapal tea Ltd.

To make useful recommendations like how the management at Tapal can strengthen their human resource management practices at Tapal tea Ltd and identify the key areas which need immediate attention.

Limitations of Academic Research

Research is a tool to draw out the real picture in the given context of the study. One of the limitations faced by a researcher is the inadequacy of management literature specifically composed which is directed to Pakistan. This idea has been supported by Khilji (2001) as despite its cultural setup, well-versed and educated workforce, and strategic and geographical importance, Pakistan has been largely ignored in management research. This idea will be elaborated on in detail and reflected upon from a socio-political perspective at a later stage of research. Every piece of research undertaken has certain limitations. This research is no exception. Tapal being one of the largest national tea companies in Pakistan, with a total capacity of over 6000 employees, it was not possible for the researcher to conduct a qualitative (semi-structured interviews) method of research with each and every individual because of cost, time and country differentiation restrictions "means that the research has been conducted in UK and company is in Pakistan". This might result in bias towards the research topic. Furthermore, as mentioned earlier about the limitations of the interviews, it is a possibility that the new strategies and policies might not be openly accepted or accessible by every single employee of the company.

Literature Review

Employee turnover and employee retention are two widely used phenomenon business circles. Though a lot of studies have been conducted on this topic but most of the researchers, focus on employee turnover but little has been done on the examining the factors related to employee turnover and the strategies which can be used by managers in various organizations to ensure high level of retention. This review examines the importance of turnover, factors contributing to employee turnover, impact of human resource practices on turnover, retention theories and the job retention strategies at different organizations to reduce turnover.

Employee's Turnover

Employees turnover is a much studied phenomenon, and it is been defined as "the rotation of workers around the labour market; between firms, jobs and occupations; and between the states of employment and unemployment. It claims that it is important to retain high level of staff in an organization because a high turnover rate may reduce the capability of innovation. The turnover rate is directly linked with demand for human skill. Therefore, demand in the market defines the retention level. It is difficult to retain potential employees if the market demand for human skills is high. Staff retention reduces the cost of the organizations; therefore, companies are now investing more in human capital. According to Dess and Shaw that good relationships between employers and employees is needed to reduce the staff turnover. A low staff turnover rate can achieve better-cost savings in term of recruitment and training of new staff.

Some writers consider that companies should pay attention on human resource management practices and the performance. The impact of human resource system on the financial performance of the company has significantly influenced employee turnover rates. A high level of employee retention can achieve potential costs such as training costs, replacement and administration costs. Therefore, it is of important to pay attention to human resource management practices as it has direct relation to the employee turnover. Moreover human resource management practices has substantial amount of influence on the growth of the company. According to the analysis of the National Employer Survey identified that a high performance work system linked with a lower workforce turnover in small firms. The result is also identified that human resource management practices and turnover rate are both important factors that an organization needs to consider for improving its staff turnover strategy.

Importance of Employee Retention

In this regard the very first argument, which can be put forward, is the current credit crisis when market financial instability is at its peak and recession is spreading all over the world. As debated by Fredric et al (2004), the economy growth slows down, reducing turnover cost and retaining frontline workers, becoming the higher priority. According to the American Management Association, the cost to replace an employee who leaves is, conservatively, 30 percent of their annual salary. For those with skills in high demand, the cost can rise to a frightening 1.5 times the annual salary to replace them. Replacement cost undoubtedly remains the most substantial among the other cost, which entails many pertinent elements. These replacement costs include for example, search of the external labour market for a possible substitute, selection between competing substitutes, induction of the chosen substitute, and formal and informal training of the substitute until he or she attains performance levels equivalent to the individual who quit. Implied knowledge is intangible resource and is difficult to explain because it gains through the staff experience as well as sharing through interaction. New knowledge is created through employee tacit knowledge and the explicit knowledge possessed by the company. Tacit knowledge is needed an individual awareness and instinct. Implied knowledge is difficult to identify and few people understand deeply. Hence, implied knowledge considers more important that codified knowledge especially codified knowledge is not at risk when staff resigns. This is because when staff is leaving, codified knowledge remains in an organization. But the implied knowledge may loss when staff leaves from an organization. The best value created through the implied knowledge is continuing operation and can create new knowledge processes that useful for business development. The management should understand that the higher the rate of staff turnover, greater is the loss encountered.

Human Resource management Practice in Pakistan

The trend is growing in Pakistani industry to set up a human resource department in organisations. This is evidenced by the Increasing number of job advertisements in national newspapers looking for HR managers, specialists in Human Resource Management or else in Training and development (T & D). Human resource management has been adopted by an increasing number of Pakistani companies. In reality when one moves away from the classified pages of the newspaper and enters into an organization to look at the real picture of the operational human resource department, then the spirit to do something new by bringing innovation instantly disappears, making him or her understand that the attempt of setting up a professional and well-established human resource department is not the result of certain needs directed by the company's management, but is a demonstration of our emotional obedience to the Western culture. Moreover according to "the concept of human resource management in Pakistan was introduced by multinational companies in the mid 1980s and at that time it was significantly advanced by PIDC (Pakistan Industrial Development Council) which was set up with a mandate of accelerated industrialization of Pakistan".

Core Areas of Research and Analysis

Following areas of interests can puts a longer effects on Human resource management practices,

Situation analysis of Pakistan

Political environment ofHYPERLINK "#_Toc241908602" Pakistan

Economic environment ofHYPERLINK "#_Toc241908603" Pakistan

Employment trends in Pakistan

Social environment of Pakistan

Human resource management practices in Pakistan

Retention initiatives through the context of industry and case studies

Individual Characteristics

Causes of turnover

Impact of human resource practices on turnover