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Summary of case
The studied company was Company X that located in Latvia. It was a subsidiary company of Company P that conducted its business in 27 countries, hired 11, 800 people and supplied metal-based components, systems and integrated systems to the construction and engineering industries. Company X was a middle-size manufacturing and construction company which set up in 1995. It had about 110 employees and classified as top five construction firms in Latvia’s construction industry according to its operating income. It implicated in few types of projects lately, the projects were housing and hi-tech buildings, infrastructure and mass transmit projects both in Latvia and aboard.
Company X attempted to enhance project progress tracking and resource management in multi-project environment. In the past, different business functions of Company X such as accounting, production, marketing and purchasing used different information systems. The old system used by the company had it own ways to gather and kept information according to needs. Short of functional integration causes difficulties in transmission of message and collaboration between different business functions is problem of the old system.
Prefabrication and construction processes were work processes of Company X. The two processes operate concurrently. If production factory did not supply building materials on schedule, company need to bear cost of delay at construction perspective. However, if the materials produce too early or when they not needed then company need to bare cost to store the excess materials such as warehousing. Operation of the materials of Company X became complicated and influenced progress of others projects in a multi-project environment since prefabrication process and construction processes must be complement to each other.
Company X began a two months assessment and research to find out was there possibility to present and apply an ERP system in year 2007. A project group was formed by the company in order to handle ERP implementation’s matters. Manager from IT department became project manager of the group. Besides, the group also involved three personnel from production, accounting and sales departments and one outsourcing vendor. When the system assessed by the company, employees kept received latest information about the system and they encouraged to give feedback on the new system. Eventually, the chosen system was iScala as other representatives at other countries use this system.
A central ERP manufacturing group was established after Company X decide to use the system. The group consists of four department representatives from the company, three external IT consultants and two IT consultants from parent company. Individuals that elected for the group were people from specific department who were familiar and understand regarding ERP systems. Besides, they had attended and participated in professional activities with respect to such system. They also participated in the assessment discussion. (Tambovcevs, 2012)
Company X able to determine staffs who talent in Information Technology (IT) and who can easily adapt to new technology system of company. Staffs are most important and valuable assets (Duncan, 2013). Every company needs manpower to operate and conduct business process smoothly. Staffs are people who contribute and help company to achieve organizational objectives and gain profit.
After staffs of Company X learn and adapt new system and technology it increases core competencies and distinctive competencies of company. Core competencies are competitive advantages for company which not easily imitate by competitors ("Core Competencies Working Definition," 2010). Distinctive competencies are a company’s special ability to create and send value to consumers which help to differentiate your company from competitors and ensure your success will be continuing in long-run ("Distinctive Competence or Nothing," n.d.).
Resource-Based View (RBV) is method to analyze and identify strategic advantages of a firm based on combination of assets, skills, capabilities and intangible assets such as brand name, reputation and technology knowledge. Each company hired staffs with different level of skills, capabilities, knowledge, behavior and attitudes so each company have different and special group of human resources, which will bring different level of achievement. (Pearce & Robinson, 2013)
As Company X let staffs go through training to learn the new system, it indirectly increase IT knowledge of them which will increase satisfaction of staffs because some staffs like to learn new things and gain new experiences. Besides, operation process that using new system will go smoothly as staffs always practice how to use the system.
Implement new ERP system in Company X may cause conflict between ERP consultant and staffs of the company. The consultants think the system is a way to solve company’s problem but staffs feel old system is very convenient for them because functions of the old system are what the company needed (Molla, Loukis, & Licker, 2005).
So, the staffs consider the new ERP system of Company X is more difficult to use so they unwilling to learn use the system. It increase implementation period of the system as well as increase cost of implementation of company. In addition, if the staffs still not willing to use new system, it will reduce sales, efficiency of company’s work process and company performance. (Molla, Loukis, & Licker, 2005)
If a company wants to successfully implement ERP system, it needs to find out the main factor that causes the implementation to be fail. (Gattiker and Goodhue, 2005). According to Bobek and Sternad (2010), “ERP training” affect acceptance of end user for ERP system. If staffs willing participate formal and informal training, they are more skilled to use ERP system (Bobek & Sternad, 2010). Acceptance of end user for new ERP system is most important factor to determine whether the system is successfully implement in company. (Seymour, Makanya & Berrangé, 2007)
During a company implement a new ERP system, it will change job description and skills require by company. In addition, certain new position may generate whereas certain position will be remove by the company. (Danford, 2010)
Company X can implement a talent management program when it implements ERP system. The talent management program assists company to guide staffs throughout the process of implement ERP system. It train and develop staffs to adjust and get ready themselves to new positions and roles after implementation of the new system. (Danford, 2010)
By implement talent management program, Company X able to determine talented staffs, staffs with unique skills and skills need for a new position. Apart from that, Company X can set up new compensation or reward plan for staffs that learn how to use the new system. Staffs always want their contribution will be rewarded by company. Reward is driving force for staffs to give their best contribution to company ("4 Ways to Reward," n.d.). As staffs satisfy with company they would not leave and betray the company (Martins, n.d.). After Company X implements new ERP system, job requirement of company will change. The change is due to Company X want to hire right candidates for right position which enable Company X to save cost of hire wrong candidates.
Younger generation such as Generation Y (Gen Y) have high turnover rate which is 70 percent of Gen Y’s staffs quit their first job within two years of joining a company. (Expericnce.com) They decide to leave a company may not due to money but other reasons such as they feel employer do not trust them, they do not feel like a part of a group or team, they want immediate feedback from superior about their work, they like to use technology products and have flexible time to work. (Maffin, n.d.)
After Company X let Gen Y staffs go through training, they know how the new system operate. Then, if they decide to leave Company X due to not satisfy with the company or have better promotion from competitors. It may cause a great loss to the company in terms of human resource and knowledge that they learn from Company X.
Staffs who leave Company X and work for competitors may disclose what system use by Company X and how the system runs to competitors. Company X will not have competitive advantages to compete with competitors in market. So Company X need and try to satisfy the staffs especially Gen Y’s staffs in order to compete with competitors. (Dantes, & Hasibuan, 2011)
Company X should capture opportunity, overcome threat and strengthen its weakness to have higher achievement. Company X needs to reduce conflict between ERP consultants and staffs by involve senior executives in process of implementation the new system. Trust is willingness of a person to take risk and do favor for another person or party (Mayer & Davis, 1999). Trust of employees towards senior executives is a key element to decide success of failure of a company and welfare of employees (Shaw, 1997). According to many studies, employees trust senior executives in the company and willing to change their attitudes that desire by the executives (Albrecht, 2002). The executives are role model for employees (Improving Talent Management Outcomes, 2007). As senior executive of Company X also learn and use the new ERP system, the staffs will follow their actions because the staffs trust them and perceive they are right.
Company X need to ensure it has good compensation plan for employees at different level in order to satisfy and motivate them to give best efforts for company and to complete their works which will increase efficiencies and enhance performance of the company.
Generation Y have been identified as to be highly educated and they willing to accept challenges. Company need to provide promised reward to them if they really achieve a target or goal. If they do not receive the rewards, they will felt not valued by organization and lowering trust between organization and employees (Fernandez, 2009) which may cause them to leave the company.
Gen Y like non-cash rewards such as flexible work condition and flexible working time (Schawbel, 2011). They also hope company give holiday as reward after they complete their work successfully. ("10 Excellent (non-monetary!) Incentives," 2013) Company X has to provide rewards that need and want by the staffs in order to increase their satisfaction towards company and organizational commitment. As staffs satisfy with Company X, they are more willing to contribute and work for the company. They will give their unique opinion and best advice to increase company’s performance and profit. In addition, staffs that have high level of organizational commitment also means they are more loyal to the company (Al-Aameri, 2000).