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Mid Lancashire Quality Textiles was a new company merged by the Qual Tex and Mid Lancs. Which will be a small and medium company (SMEs) has 450 employees, the corporation strategy has been made to "maintain the prestigious 'high end' garment production, but concentrate more on exploiting 'low end' (high volume and low cost) markets at home and abroad. It is mean to reduce the unit cost and improve the product quality."
Therefore, this report is aim to write about what significant changes should be made and established according to the corporation strategy in human resource strategy to help to manage the new company. In order to succeed, HR must be a business driven function with a thorough understanding of the organization's big picture and be able to influence key decisions and policies (Chan, 2010).
Change is an inevitable feature of organizational life as organizations operate in dynamic and competitive environments. The vast majority of respondents report that their organization has undergone structure and system changes in the last two years. Clearly, change is an inevitable feature of organizational life and HR professionals in particular must be flexible to both changing business and people requirements (Hennessy and McCartney, 2008). The human resource strategy prepared for the new company should be consistent with business strategy and implementation should take account of human resource factors, and the human resource factors be considered not just in the implementation of policy but actually influence which business strategy is adopted (Renwick, 2003).
The Assumption of the New Mid Lancashire Quality Textiles in People Resourcing Management
A positive economic view will be taken as environment assumption in the background for the new company to help draw a completely HR strategy in the competitive and changeable market.
In addition to the management issues stated in the case, there are several important issues existed in the QualTex, such as turnover, staffs benefits, culture etc. Thus, the following analysis will base on the organisational performance management and organisational culture to discuss. We forecast that the management issues for new company will be employee performance management and organisational culture innovation.
Issues Statement and Analysis
Performance Management and Control Systems
QualTex has lower morale which has high turnover and absenteeism rate, it is the main issue directly influence the performance. However, Mid Lancs pay attention on the performance management. The turnover and absenteeism rate were lower than QualTex, but the company still has low morale. It seems to be fine for Mid Lancs to stay still, but, it will be a problem when these two company to merger. In new company, the employee attitudes to work may different, if the low working morale standing will influence employee control and rising management costs (Cully et al., 1999). In the longitudinal research of Buckingham (2001) on employee engagement at work revealed that 17% of UK workers "are engaged" (Buckingham, 2001). Most of the workers not willing to be controlled remain the difficulty of the performance management. The reward system of Mid Lancs did work by the point pay and bonus given.
However, Lachance (2000) has noted that rewards that bind an employee to an organisation have more to do with the way an employee is treated than any particular pay scheme. She suggests that while people may come to work for the pay, but they stay at work for many other reasons (Lachance, 2000). Managers need to acknowledge and manage those other rewarding conditions as part of an overall strategic approach to rewards (Milne, 2007). That is, the new performance management schedule in new HR strategy should stat from an employee's perspective, means every employee in a company conserves some type of knowledge, job and interpersonal skills beyond the needs of the current position. If this type of HR conservation is not measured and used for decision making during downsizing or retrenchment, then the company will have only limited organisation capital left. High employee performance determinants like product innovation, quality and reduced cost of production can be achieved by aligning and integrating HR systems for HR conservation and value addition to the key company objectives (Mariappanadar, 2003). A HR Manager must conduct regular organizational assessments on issues like pay, benefits, work environment, management and promotional opportunities to assess the progress over the long term. To be effective, an organizational reward system should be based on sound understanding of the motivation of people at work (Chan, 2010).
At the beginning of 2000s, the research on performance measurement in relation to SMEs takes two directions: the first and main one is the application/adaptation of the models developed for large companies, the second, is the development of specific models for SMEs. By following the first direction, it is possible to find cases of implementation of the well-known BSC, application of quality models like the BEM and application of the ABC. By the other hand, it was possible to find in the literature just three frameworks proposing an integrated approach to performance measurement. It is also important to remark that such models do not demonstrate the right characteristics for moving from performance measurement to performance measurement and management. It is also interesting to highlight the fact that, similar to large companies PMM literature, the development of integrated frameworks seems to have ceased in 2001-2002 in favor of research on more specific issues. While this phenomenon can maybe be understood in large companies' research, since it happens after ten years of research evolution and ten of models developed, it is surely incomprehensible in SMEs research. Equally, it is difficult to justify the large research through surveys and case studies carried out in the last ten years which attempts to verify and motivate this yet immature knowledge (Taticchi et al., 2010).
The most widely recognized PM framework is the balanced scorecard (Kaplan and Norton, 1996), which proposes four interconnected perspectives of PM in which measures of internal business process performance and learning and growth are derived from shareholder and customer views of performance. It is fundamentally based on recommendations such as defining measures from strategic positioning and planning, and balancing financial and non-financial measures derived from different perspectives of measurement and interconnected by a causal relationship among results and determinants.
The performance management proposed by Neely and Adams (2000) was based on interconnected perspectives of measurement, which were illustrated by the facets of a prism. It is argued that the PM system should be derived not only from customer and shareholders' views but also from other stakeholders' such as employees, suppliers, regulators, and communities (Neely and Adams, 2000). Bititci HYPERLINK "#idb1"et al.HYPERLINK "#idb1" (2000), based on what is called a dynamic PM systems model, present several requirements for a PM system framework: an external and internal monitoring system to monitor development and changes in external and internal environment; a review system; and an internal deployment system to deploy the revised objectives and priorities to critical parts of the system (Bititci et al., 2000). Other contributions to PM system design include the PM questionnaire for auditing existing measures based on their effect on improvement and the importance of improvement on different areas and factors (Sousa et al., 2005). Designing and implementing PM systems is a highly complex discussion. The complexity arises partially due to the fact that the use of a PM system has a dual nature (Sterman, 2000).
Organizational performance is an overall measure of organizational outcomes (Churchill HYPERLINK "#idb16"et al.HYPERLINK "#idb16", 2000). From the company's point of view, as the risk increases, organizations would benefit by opting for incentives rather than intensifying direct control since incentives share the risk among all the employees. Incentives motivate the employees to become involved in taking risks that improve long-term firm performance. Gerhart and Milkovich (1990) and Govindarajan and Fisher (1990) support that argument. Therefore, from the point of view of reducing agency costs and increasing firm performance, when the risk faced by the firm is high, it will be more efficient to use more incentives in order to transfer risk to employees. Thus, an outcome-based control system could offer good outcomes (even as good as, or better than, a behavior-based control). The behaviour of a set of workers, the team, as perceived by their managers, will therefore depend not only on the uncertainty of achieving by unit of productions (Verano-Tacoronte and Melián-González, 2008). For example, the employee in new company can be managed by their outcomes, the quality of the good and the quantity of the units.
The current employees of QualTex are not willing to be merged. They should be particularly noticed by the new company performance measurement system. And also, the poor working skills in QualTex may bring low working speed to the Mid Lancs after merger. Therefore, the working morale of employees in Mid Lancs should be tracked start from May.
The Organisation Structure and Culture in Mid Lancashire Quality Textiles
QualTex has a long history and good supply chain in their business. But, the management style was too simply to decide by only two people, the managing director and his personnel assistant. It cannot be worked in the new company which has 450 employees. Obviously, Mid Lancs has relatively better structure in people management. But, it cannot be directly used to be a new company structure. The structure of the new company should be restructured by the new organisational culture and corporation strategy. It is important to involve into the environment characters and advantages from both original companies.
The organisational structure we talking about is one part of the organisational culture together with the business strategy, people and process (Sanchez, 2004). According to the corporate strategy mentioned before, the structure of Mid Lancashire Quality Textiles should both look at quality and quantity. People work within the organizational structure that supports organizational processes to accomplish the overall business strategy. While organizational structure and corporate culture are interrelated, both have been identified as necessary elements for knowledge management initiative success (Santoro and Gopalakrishnan, 2000). Traditional hierarchical management structures allow vertical knowledge transfer through typical chain-of-command, but inhibit horizontal knowledge transfer that must cross the organization's functional boundaries (Gopalakrishnan and Santoro, 2004). Increasing competition and ever shortening rates of technological change necessitate better transfer of knowledge across organizational boundaries (Walczak, 2005).
The organization structure is, in effect, an outward expression of the culture. Different functions and activities within an organization may be more suitable for and more effective under different types of culture. However, the predominant culture of an organization, determined by the controlling group, tends to result in a structure that pervades the whole organization. Organizational change carried out for a major productivity drive should be accompanied by an attempt to change the culture to one which is supportive of innovation and change. In fact, it can be argued that such activities as productivity improvement programmes, quality programmes, customer service programmes and their like are essentially vehicles for accomplishing culture change (Gregson, 1995).
Furthermore, employment relations in small- and medium-sized enterprises (SMEs) are often characterised as being different from those in large companies (Kinnie et al., 1999). The changes in management structure and work organisation which were made to meet the demands of customers also affected the existing HR policies and practices. These changes, in turn, created a potential tension or inconsistency between the external pressures and internal policies and practices (Kinnie et al., 1999). Culture could enhance the level of organisational commitment and thereby ensure organisational success. Further, these factors have important implications to managers, who are the drivers of the organization (Rashid et al., 2003).
And also, Pool (2000) examined the relationship between organisational culture and job stressors. He found that executives working in a constructive culture reduced the role stressors in their working environment. However, the passive culture showed a positive relationship between role conflict and role ambiguity. He also believed that organisational culture (passive or constructive) could hinder job performance, job commitment, and job satisfaction (Pool, 2000). Similarly, organisational culture can influence how people set personal and professional goals, perform tasks and administer resources to achieve them. Organisational culture affects the way in which people consciously and subconsciously thinks, make decisions and ultimately the way, in which they perceive, feel and act (Lok and Crawford, 2004).
However, no two companies are identical, each having its own management style, culture and market. Business requirements also differ between the companies. Hence, requirements for one company cannot be synchronised with the new employee's own market experience and environment. Despite the fact that the world continues to change, in general companies owe their success to the building of one experience on another (Mariappanadar, 2003). Organisational culture refers to a set of shared values, belief, assumptions and practices that shape and guide members' attitudes and behaviour in the organization (Twati and Gammack, 2006). Culture involves beliefs, values and behaviour, exists at a various levels, and manifests itself in a wide range of characteristics of organisational life (Krumbholz and Maiden, 2000).
Organisational culture becomes formulated when employees in different functional contexts, observe, interpret and give meanings, on the one hand, to both official messages and the administrative structure of the organisation and, on the other hand, to unofficial messages that have been produced and transmitted in the organisation and its environment and mediated through formal and informal communication channels (Kasila and Poskiparta, 2004). Using these meanings, employees construct their own concept system and, through this system, classify themselves, other members of the organisation and human relationships (Tukiainen, 2001). Organisational culture is also implicitly determined by the members' tacit knowledge (Choo, 2000). A strong culture provides shared values that ensure that everyone in the organisation is on the same track (Robbins, 1996). Organisations use different resources and processes to guide behaviour and change. Organisational culture seems to be a critical factor in the success of any organisation. Successful organisations have the capacity to absorb innovation into the organisational culture and management processes (Martins and Terblanche, 2003).
In people resourcing strategy, employees' expectations, behaviour and performance may be different with various national cultures (Miroshnik, 2002). The influence of national culture on individual behaviour is well established and the differences between eastern and western cultures are rather significant (Trompenaars and Hampden-Turner, 1998). The differences in national cultures are reflected in how organisations are structured and managed (Lok and Crawford, 2004). The problem lies in the generation and use of new tools and techniques within the organisational culture perspective which makes the "people management, the management of change and the realisation of strategic objectives, easier to accomplish" (Brown, 1992). Companies that have cultures supportive of strategy are likely to be successful, while the company that has insufficient "fit" between strategy and culture must change since it is the culture which supports the strategy (Pascale, 1990; Maull, 2001).
Therefore, the new organizational cultural should be the big thing in the plan of HR strategy management. It is the most important key issues in the new company.
The Conclusions of the Key Issues in Mid Lancashire Quality Textiles People Management
The key issues of resourcing strategy in new company should start with performance management and culture statement. Organisational culture has an influence on the organisational structure and operational systems in an organisation (Armstrong, 1995).In the consideration of both two aspects, the sustainable competitive advantages which may remain successful should be the knowledge workers. In the performance measurement literature there are many instances where authors have referred to the impact of organisational culture and management styles on success and failure of performance measurement systems implementations (Nudurupati, 2003). The knowledge employees will help performance management easier, and provide positive culture for manager to do implementation (Bourne HYPERLINK "#idb12"et al.HYPERLINK "#idb12", 2002).
Knowledge management then is any process (either formal policy or informal personal methods) that facilitates the capture, distribution, creation and application of knowledge for decision making. This decision making may be at the tactical level of day-to-day operations performed by an employee or at a more strategic level of developing organizational strategy by upper level management and every level of decision-making in between. Effective knowledge management ensures that every employee has access to appropriate and the highest quality of information available at the time when a decision needs to be made (Sheeham, 2005). The role of the Human Resource Manager is evolving with the change in competitive market environment and the realization that Human Resource Management must play a more strategic role in the success of an organization (Bititci et al., 2006). With the increase in competition, locally or globally, organizations must become more adaptable, resilient, agile, and customer-focused to succeed. And within this change in environment, the HR professional has to evolve to become a strategic partner, an employee sponsor or advocate, and a change mentor within the organization (Chenhall, 2003).
According to the case said, the staffs in QualTex are mostly low skills and lack of morale. It is necessary to increase their professional knowledge and skills. To some extent, described how performance measurement can impact the way management behaves (Franco and Bourne, 2003). Therefore, the role of the HR manager must parallel the needs of the changing organization. Successful organizations are becoming more adaptable, resilient, quick to change directions, and customer-centered. Within this environment, the HR professional must learn how to manage effectively through planning, organizing, leading and controlling the human resource and be knowledgeable of emerging trends in training and employee development (Trivellas and Dargenidou, 2009).
The people resourcing strategy should arranged by the employee performance management and company culture establishment.
Recommendations for Mid Lancashire Quality Texiles People Resourcing Management
According to above analysis, the suggestions to new company on HR strategy are describe as follow:
Step 1: organisational culture established
In terms of the long history of QualTex, the employees should have a lesson about the form of company which give out an honour to the employee. It aims to increase the communication between employee and company. And also, it is a preparation to the following steps. The culture express can be deal with following ways:
The uniform, symbol and slogan
The unique cloth, company logo and slogan will give attribution to the employees, and make them feel like home. In the main time, the company should listen to their employees about their opinions to the new company. It is better to fulfil the requirement from the outstanding employees. This method can help company deliver the sprite and bring employees into active working emotion.
The company party and meeting
The company part, the meaning of it is aims to do communication between leaders and employees. It can be adopted in every three months (season). In the party, even the lowest level employee will has change to claim their requirement and mind of their daily work.
The meeting can be taken daily when work finished. It is a time to discuss the work condition and also a chance to know each other well.
Step 2: employee performance management
It is the main part of the HR strategy in new company. According to the company feature, the manufactory, the employee, as the soft equipment in the company has significant influence in production and quality. In order to reach the corporation strategy, the measurement system should be separated.
Quality product assessment
It can be simply to say to use total quality management (TQM), the 360 apparel can be used to protect the product quality. In the department, the employee better chosen the people came from Mid Lancs. They are easy to do it because of their previous working experience. However, the decision only suitable for the first 6 months, the reason is everyone in the company should know how to produce every product. After 6 months, the employees from QualTex will finish their retraining and transfer to this line.
Quantity production evaluation
Because of the cost saving plan in new company, this part is most important in new company operation. The Just in Time (JIT)can be considered into a practically product requirement time. The employee should be reward by more method. The pay holiday offer and star staff selection will be good ideas in pushing employees to work efficiently.
In the end, the cost control should be made for the low economic development assumption in the start of the report. It is aim to avoid fault because of the merger. A new company need more operational fund to do daily operation. Therefore, the cost saving will give more flexibility in future business development. The strategy should follow the culture element, because the culture of organisation is the key of the success of a company and a way to stand its long life. There is no way to manage people without culture influence.
However, this report still has limitation on a good economic development and natural resource consideration. And also, the cost saving is limited by the minimal wage standard by the UK government. Therefore, the report is stated by the stable political environment and health economic development.