With changing business environment and implementation of modern business philosophies, organisations have started to adapt "soft model reflecting developmental humanism". Organisations have started to treat a human resource as an important business asset that is critical to achieve competitive advantage. One the typical examples of changing business model can been seen in construction industry. Historically, construction industry followed hard model that sees human as a resource that can be provided and deployed to attain organisational objective (Druker, J., White, G., Hegewisch, A. and Mayne, L., 1996). However, with increasing role of Government Agencies in construction industry and high customer expectation, construction companies are forced to adapt soft model to survive in the challenging business environment. In addition, the publication of the report of the Construction Task Force Rethinking Construction (commonly known as the 'Egan Report') has considerably shaped the contemporary agenda for change in the UK construction industry (DETR, 1998). The Egan Agenda places strong emphasis on the concept of "lean thinking" that is mainly employed in manufacturing industry. The concept of lean thinking includes continuous improvement, flattened organisation structures, teamwork, the eradication of waste, effective and efficient use of resources and co-operative supply chain management (CBPP, 1998). As human asset is one of the most import resources of construction industry especially with shortage of skilled staff, human resource management plays a critical role in achieving lean construction objective as lean production is directly linked with HRM regime of control, exploitation and surveillance
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One of the pioneers in construction industries adapting "lean construction" model is Balfour Beatty Plc. Thus, I have selected Balfour Beatty for my project work. We will studying companies background, operating environment and critical HRM issues encountered by the organisation. Also, in order to investigate Balfour Beatty strategic and competitive position we will conduct SWOT analysis.
Balfour Beatty PLC is a leading international engineering, construction, services and investment group. Balfour Beatty is ranked 19th in the international league table of construction contractors (www.balfourbeatty.com/bby/about/history). The Group is the largest fixed rail infrastructure contracting company in the world, a UK leader in roads, support services, electrical and mechanical engineering and other disciplines. It is heavily engaged in building and management of commercial properties and infrastructure development. It was formed in 1909 as a general and electrical contracting organisation and today it one of the world's leading construction specialist.
Balfour's Beatty long term strategy is to develop its business through international expansion and through acquisitions and disposals. It aims to be market leader by strengthening its value chain and building long term customer relationships. In order to achieve this objective, it requires a dedicated work force with competent technical skills.
Balfour Beatty has an explicit commitment towards human resource development. The long term success of its business is due to deliver of high quality technical competency and skills of its human asset. Thus, Balfour Beatty has been awarded Britain's most admired construction company in 2009.
Organisational Structure - (Annual Report, 2009)
Balfour Beatty Group Plc comprises of two distinct businesses; one, a substantial infrastructure investment specialist and the other an international engineering, construction and services contractor. However, the company classifies its business model in four core business sectors that is as follows
Professional Services: Balfour Beatty Professional Services include Programme and project management, architectural services, project design, technical services, planning and consultancy.
Construction Services: Balfour Beatty offers an extensive range of construction services that includes building, design, construction management, refurbishment and fit out, mechanical and electrical services, civil engineering, ground engineering and rail engineering.
Support Services: Support services provide ongoing support for maintenance and operation of infrastructure assets like highway network management, facilities management, rail renewals, electricity networks etc.
Infrastructure Investments: Balfour Beatty infrastructure investment mainly operates portfolio of PPP (Public Private Partnership) concessions project.
The UK construction industry is one of the most important sectors for economic growth. It has high economic significance on account of its huge market size, estimated at £123.24bn in 2008 (Keynote, 2009). Financially, it is one of the largest sectors in the UK economy. Structurally, the construction industry is divided in three main groups of large companies. The first group are diverse construction companies with activities in several sectors, the second group is house builders and the third is building material companies. Balfour Beatty's will mainly be classified as first group of construction companies as it is mainly involved in infrastructure and commercial development.
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UK Construction industry is highly concentrated in nature. However due to the huge size of the market the market share held by the large companies are still small. The top 15 companies have a market share of about 20% of total market.
The UK Construction market demonstrates an upward trend in next few years. This is mainly due to Olympics 2012 that has forced the government regulators to invest in growth and development of infrastructure especially in South of England.
The UK construction market is highly transparent and competitive. Most of the large companies target same projects. However, the selection of the final bidder is on MEAT analysis (Most Economically Advantageous Tender). Thus, most of the major construction companies have started participating in ECI (Early Contractor Involvement) projects in order to gain competitive advantage.
Also, there is an increasing trend of forming joint venture between competitors especially in infrastructure development projects. Companies like Balfour Beatty has partnered with Skanska on major projects like M25 Widening project, Carrillion on East London Rail Project. As this kind of projects are huge in nature and require enormous amount of resource and long pay back period, forming joint ventures helps in reducing risk and increase project management capabilities.
The main direct competitors of Balfour Beatty Plc are as follows.
Carilion Plc: It is one of the UK'S leading support, Public Private Partnership (PPP) and construction companies.
Costain Group Plc: It is an international engineering, construction and land-development group.
Kier Group: Kier Group PLC is a leading construction, development and services group, specialising in building and civil engineering, support services, public and private house building, property development and PFI projects.
Laing O'Rourke: It is a large, privately owned construction company with world wide operation.
Morgan Sindall: Morgan Sindall PLC is a construction and regeneration group with activities that span the UK construction market. The main sectors in which the company operates are commercial property, affordable housing, health, education, leisure, transport, utilities, retail and defence.
Skanska: It is an international company structured around construction, residential development, commercial development and infrastructure development.
This section provides a Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis, listing the
â€¢ Internal strengths and weaknesses of Balfour Beatty Plc.
â€¢ Opportunities and threats faced by Balfour Beatty due to the changes in the external environment (Political, Economical, Social and Technological Environment).
Market Leading Position: Balfour Beatty holds a strong market position in construction industry. It is one of the world's largest companies in professional services for infrastructure. Its investments business is a leader in PPP markets.
Operates in Low entry threat market: Applying Porter's five forces model, we can see that Balfour Beatty operates in a low entry threat market due to huge investment and geographic coverage. In addition, the tendering process for public sector projects is particularly cumbersome and can be seen as a barrier to entry for small players.
Capability to offer Integrated Service: Balfour Beatty has capability to manage infrastructure assets across their entire lifecycle: from conception, funding, program management and design to construction, systems integration, operation and maintenance. This is major strength for Balfour Beattys success in infrastructure market, as it can uniquely position it self in major markets to benefit from the long term growth.
Experience of managing popular flagship projects: Balfour Beatty has undertaken complex construction projects like building Blackfriars Station to span the River Thames, modernising M25 the busiest road of UK, building schools for future etc. This project has played important role in building Balfour Beatty brand name in the market and maintaining its market position.
High Customer Satisfaction Rate: Balfour Beatty has high customer satisfaction rate. Due to high customer satisfaction rate and delivering high on KPI's, Balfour Beatty has generated repeat business from clients like Highway Agency, HMP, MOD, and Local Councils.
World Wide Operation: Balfour Beatty operates a world wide operation. This is major strength for companies like Balfour Beatty as it can transfer resources from one area to another. Also, Balfour Beatty operates in both emerging and developed economies thus it can strategically tackle external factors like recession to maintain stable business growth.
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Skilled Personnel: Balfour Beatty has availability and access to skilled and competent personnel. Balfour Beatty current human asset is highly skilled, competent and dedicated which is very important to achieve vision and mission of Balfour Beatty Plc. Especially in commercial market t, the clients demand for high skilled personnel who can deliver on KPI's. With its current human asset, Balfour Beatty is successfully able to satisfy and meet its customer demands.
Diverse Range of product and service: Balfour has so many diverse product and service offerings could prove a weakness, as much of the management focus will be on maintaining and ensuring the quality of the services/products provided.
Subcontracting works: Due to Balfour Beatty's huge operation, it cannot conduct each and every activity in the infrastructure construction and development. Currently, Balfour Beatty sub contractors nearly 80% of the works to subcontractors. Thus, the sub contractors are not able to deliver on the KPI's of the project it will directly affect the brand reputation of Balfour Beatty.
Long Pay Back Period: As Balfour Beatty mainly undertakes huge projects in public sectors; they require huge investments in forefront. Generally, the clients take long duration to pay the final invoices. This restricts the cash inflow in the business and may affect the stability of the organisation.
Target market - Price Fighters: As Balfour Beatty mainly targets public sector organisations with high bargaining power, it is hard to maintain profitability and cost advantage in this market.
Procurement Trend: There is an increasing demand for suppliers like Balfour Beatty who can offer broad range of integrated services who can get engage in design, build, finance and operation (DBFO) projects.
Increasing population: The increasing population, changing demographics demands major investment in infrastructure development. The increasing number of population will result in increasing number of road users, demand for huge water treatment plants, overstress the capacity of power plants. (Keynote, 2009)
Ageing Infrastructure: In most the developed economies, most of the infrastructure is nearing the end of its service and must be restored. In addition, tighter regulations and increased regulatory standards in areas like environment, health and safety, there is strong impetus to upgrade and rebuild the current infrastructure. One of the recent project of ageing infrastructure is Thames Water investment of £1.2bn to improve and maintain ageing water pipes, sewers and other facilities over the next five years. This kind of opportunities is ideal for Balfour Beatty plc for growth and development. (www.thameswater.co.uk/cps/rde/xchg/corp/hs.xsl/10179.htm)
Non PPP market: As Balfour Beatty has extensive experience in the UK and US PPP markets, it can take these skills to the wider non-PPP market, particularly where there are attractive business opportunities to take management control and improve asset quality (Annual Report, 2009)
Increasing demand for sustainable solutions: Buying green is key priority for the UK Government. Public sector bodies in the UK spend over £220 billion on goods and services. Thus, it is a great opportunity for Balfour Beatty to build competency in sustainable solution and market to public sector bodies.
Shortage of Skilled Workforce: The construction industry faces a challenge in shortage of shortage of skilled work force. Some construction companies are now laying off workers, especially in the house building sector. If a long recession occurs, there could be a considerable loss of skills in the construction industry.
Off site Construction: As Balfour Beatty mainly specially in undertaking complex civil works , new construction techniques that aim off site off-site manufacturing of modules for assembly on site can threaten its unique selling proposition.
Failure of employees and subcontractors to comply with legislation: As SHE (Safety, Health and Environment) factors are key focus of construction industry, any SHE related accident by employees or subcontractors will strongly affect the goodwill of Balfour Beatty. It is a major threat for Balfour Beatty, as any such crisis can lead to termination of contract and a severe impact on brand reputation of the organisation.
Changing legislation: Balfour Beatty is greatly influenced by changes in political factor. The allocation of government budgets plays a key role in success of companies like Balfour Beatty. If the governments decides to divert funds to other sectors like manufacturing, IT, tourism etc., it can threaten the growth and stability of the organisation.
7. Linking business strategy with People Management
Balfour Beattys dedication towards human resource management is evident from Balfour Beatty Strategy and Vision (www.balfourbeatty.co.uk/bby/about/strategy). It recognises Human resource as one of the most valuable asset. Their success strategy is to employ best people, share knowledge and integrate abilities across the organisations. Balfour Beatty aims to build team of players that are not only high in performance but also demonstrate leadership in their values and behaviour.
Besides, people management is one of the important KPI's measured by main clients like Highway Agency, Network Rail, and Local Councils to evaluate the performance of Balfour Beatty on major construction projects. Thus it is very important to devise effective human resource strategy in order to achieve business objective and growth.
Critical HRM Issues in Balfour Beatty Plc
HR professional in construction industry encounters a serious challenge. With changing technology and globalization advances, HR professionals need to devise strategy that acclimatize to the changes in technology and changing issues in management of employees (Storey, J 2007),. The challenge is to create an enabling organisational environment for the employees. In order to accomplish this objective, they need to examine relevant HRM issues such as training and development, health and safety, employee welfare etc. that are highly critical in construction industry.
To further understand Balfour Beatty's Human Resource Management Strategies, and identify opportunities and challenged, we have identified critical issues faced by Balfour Beatty in human resource management.
Key HRM Issues are as follows:
Training and Development
Health and Safety
Assessing performance of employees
Training and Development:
Balfour Beatty highly committed towards training and development of all employees. The group invested over £20 million in training in 2008 Balfour Beatty manly provides two type of training. First is mandatory training like Construction Skills Certification Scheme (CSCS), Basic Heath and Safety Training and second is personnel development training that will influence performance and growth of organisation. However, all staff is provided structured training based on the business needs and career goals of individual. In January 2005, Balfour Beatty signed with Snowdrop, an HR and payroll software provider, to replace its training administration databases, centralize the training process and allow line managers to remotely access training information.
For its entire managerial and supervisory staff, Balfour Beatty conducts a Performance and Development Review on yearly basis. This gives employee opportunity to discuss their career development objective and any training required for further growth and support. In addition, it also provides all its employee on and off the job training that gives them chance to undertake challenging and wide-ranging practical task and facilitate with off the job training courses in technical, supervisory and management skills. (www.balfourbeatty.co.uk/bby/responsibility/people/training-development)
Training Days, 2002 - 2008
Rest of World
Total Training Days
Sourced From: Corporate Sustainability Report, 2009
Balfour Beatty lays high importance on Leadership and Management Training. They believe that Leadership and Management are critical for good safety and they invest a high amount of resources in appropriate safety for managers at all level. In order to support their managers to become a better Leader and a manger Balfour Beatty conducts Balfour Beatty Management Development Programme that is a modular programme that pulls delegates across the Group, including overseas businesses. This programme is aimed to provide business managers opportunity to broaden and refresh their business management skills in areas like strategy, innovation and leadership; it allows time for networking and sharing information and experience between diverse businesses. Thus, Balfour Beatty not just preaches or expects its employees to be good leaders and business manager, but provide all the possible support for their progression and development. (www.balfourbeatty.co.uk/bby/responsibility/people/training-development)
Health and Safety
Health and Safety is the most important HRM issue not just for Balfour Beatty but for whole of Construction Industry. Due to high risk nature of construction industry, some of the key hazards identified by health and safety experts are working on height, lifting operation, managing health and safety performance of subcontractors, working at night etc. This kind of serious hazards can result in fatalities, thus is very important to ensure health and safety is key focus of every personnel working in the organisation
Balfour Beatty has launched "Zero Harm" Health and Safety Campaign all across the group in 2008. The objective of the campaign is to achieve Zero RIDDOR incident for all the projects they undertake by 2012 and to ensure the long term health of all employees. This means there is no fatalities, no serious injuries, and no long term harm to health for every person working with Balfour Beatty. To achieve this objective, Balfour Beatty has been taking strong initiative and investing high amount of resources especially in training and development and employee welfare. As there is a direct relation with the health and safety performance and training and development offered and welfare facilities provided to the employees (Clarke, S 1999)
Zero Harm Campaign
Balfour Beatty outlines all its health and safety strategies and action in Health and Safety Policy. However, the challenge here is to communicate this strategies and policies to all its employees. In order to communicate health and safety policy and strategies, Balfour Beatty has devised various communication tools like briefing sheets, tool box talk, posters and signs in all areas of site especially site canteens, health and safety notice board. In addition, every employee has to mandatory undertaken heath and safety induction. Employees are offered Specific safety training on specific hazards like near miss reporting, fall arrest equipment awareness, manual handling, driving on site etc.
One of the important reasons why health and safety is important to Balfour Beatty is huge amount of financial implication. Most of the common health and safety accidents has impact of lost of man power, increase lag time, lost of time in resolving the issue, impact on performance etc. However, the major accidents also affect the goodwill and brand reputation of the organisation and results in prosecution and penalties.
UK Regulatory Action
Visits by HSE Inspectors
Convictions and Prosecution in UK.
Sourced From: - www.balfourbeatty.co.uk/bby/responsibility/safety/targets-performance.
Balfour Beatty recognises that welfare of employees as an investment in the efficiency and effectiveness of the organisation. It is committed towards providing hazard free, caring, supportive working environment that is conducive to the welfare of all employees. Balfour Beatty's employee welfare policy mainly focuses on important issues like occupational health, providing adequate welfare facility, absence management, family friendly policies etc. Balfour Beatty has taken a constructive approach to initiate flexible work options to help the work-life balance of employees operational on construction projects. (www.flexibility.co.uk/cases/Balfour-Beatty.htm)
Balfour Beatty has set up an occupation health department on all construction project site. It pays high attention on occupation health risk associated with construction industry like vibration, noise, respiratory diseases, skin condition, musculoskeletal disorders etc. It provides all its employees with all the essential PPE (Personal Protective Equipment) outlined in risk assessment of specific job activity. It offers all staff subsidised rates at staff canteen and promote healthy living. (www.balfourbeatty.co.uk/bby/responsibility/safety/occupational-health)
In addition, Balfour Beatty pays particular consideration towards stress management and promoting health life style. It provides training and seminars on stress management and recognition to all its employees. Also, Balfour Beatty is now focusing on Wellbeing, both within and beyond the work. In 2008, Balfour Beatty Management introduced health and living policy. To communicate the message, Balfour Beatty in affiliation with Haden Young health Bus visited several sites across UK promoting healthy attitudes at work. (www.balfourbeatty.co.uk/bby/responsibility/safety/occupational-health)
Recruitment and Selection
The quality of the workforce is vital to the long term growth of the organisation. Balfour Beatty employs rigorous and efficient selection process to ensure the potential employees have ability to overcome challenges and perform above the set standard. In addition, they also evaluate the values and integrity that they expect from all Balfour Beatty employees. Also, they ensure recruitment practises are fair and non discriminatory by providing training and support for managers responsible for selection and demonstrating commitment to equal opportunity and diversity. (www.balfourbeatty.co.uk/bby/responsibility/people/recruitment-graduates)
In order to identify right candidate, for the right job with the right skill, Balfour Beatty utilises various tools like personality profiling, ability test and assessment exercises to evaluate the ability and characteristics of potential employees. Also, Balfour Beatty has launched an application management system called (I-Grasp) to ensure applicants that are unsuccessful in their application to specific operating companies are offered opportunities elsewhere in the Group. This helps in reducing recruitment cost and helps in developing database of potential employees that can be utilised during emergency situation. (www.balfourbeatty.co.uk/bby/responsibility/people/recruitment-graduates)
Also, Balfour Beatty outsource huge amount of manpower due to nature of the business. Nearly 80% of the staff is subcontracted or outsourced based on the project needs. However, Balfour Beatty ensures they select right supply chain partner that demonstrate technical capabilities and competency in their work. (Annual report 2009). It offers intensive training not only to its employees but also subcontractors or agency workers,
Besides Balfour Beatty supports sourcing of manpower from local resources in order to maximise employment opportunities especially for minority group. In addition, Balfour Beatty offers huge opportunities to young growth to assist in growth and development o the organisation. Balfour Beatty is one of the major graduate employers in the country. It offers graduate carefully planned and structured induction programme. Senior Management team of Balfour Beatty take active interest in recruitment process and selection of graduate. Each year, all new graduates have to attend a two day Graduate Conference that gives them the opportunity to meet senior management team and network amongst them. Also, during their training period, graduates are offered opportunity to spend half day with management team at their head office and discuss their experience and development in the organisation.
Balfour Beatty also promotes internal promotion to fill positions in the employees. Currently, over 75% of the senior positions are filled in by internal promotion. This offers long term development and progression opportunities for employees of Balfour Beatty. In order to support internal promotion, Balfour Beatty adapts a succession strategy. Each year a formal succession planning process is undertaken that involves succession to the senior management in group and operating companies on young mangers and graduates demonstrating high potential and values.
In order to achieve Balfour Beatty's strategy and vision it is very important that all employees understand companies strategies, vision and goals. Thus, Balfour Beatty takes strong initiative to promote employee engagement in achieving companies' objective.
Balfour divides the communications process in two groups, management communication and employee communication. All the key developments and activities are communicated promptly to the senior management cadre of about 250 mangers who further surge the information to their own operating companies as appropriate. In order to boost, senior management engagement they organise two day meeting every year to discuss the key development and issues within the organisation.
In order to communicate information to the employees, Balfour Beatty utilises interactive tools like employee communication road shows to discuss and communicate relevant issues especially related to environment and health and safety. Also, they utilise bi-annual group magazines to all employee to update developments within the organisation. Recently they have also launched an intranet portal to further boost communication within the organisation. (www.balfourbeatty.co.uk/bby/responsibility/people/engagement)
Besides, Balfour Beatty believes in two way communications, it recognises importance of representative bodies that act on behalf of employees. In UK, it operates an active staff association comprising of approximately 3000 members. In addition, it also measures staff satisfaction by conducting regular surveys and encourage staff suggestion and feedback. In 2008, employee feedback helped Balfour Beatty to identify personal development issue in Balfour Beatty. The survey outlined that there was perception among employees that PDP are often left at one side and inadequate follow up was conducted. Thus, to resolve this issue it was important to encourage employees to take self initiatives towards their own development. As a result, a campaign was launched focusing on empowering employees to take responsibility for their delivery of their own plan was launched in 2009. Also, Balfour Beatty has introduced a pilot study on providing opportunity for junior employees to discuss and feedback about any concerned issues within the business. (www.balfourbeatty.co.uk/bby/responsibility/casestudy/cs_people/construction-northern)
Evaluation and Feedback of Balfour Beatty HRM Strategy
It is clearly demonstrated that Balfour Beatty pays high attention towards human resource management. It values, improves, develops the skills and abilities of all its employees. It has invested huge amount resources in planning and implementation of human resource strategy. It has effectively structured its organisation to enable communication and measure performance of its employees. It has launched creative campaigns in order to effectively communicate message to all its employees. In addition, Balfour Beatty has taken sincere efforts in making safety personal and creating a safe working environment. And thus Balfour Beatty has been awarded British Most Admired Company and accreditation from Investors in people. However, studying company's human resource strategy, following is the finding and analysis for Balfour Beatty's Human Resource strategy.
1. PDR for all employees: Currently, Balfour Beatty only conducts PDR for all managerial and supervisory staff. It should also involve site operatives and junior level staff in PDR. These motivate employees and demonstrate Balfour Beatty commitment towards its employees.
2. Training is focused on health and safety: Most of the training provided in Balfour Beatty is directly or indirectly associated with health and safety. In order to grow the business and achieve companies' business objective it should identify training needs in different aspects of business that would improve over all performance and not just concentrate on health and safety.
3. Lack of Staff Motivation: Reviewing Balfour Beatty's HRM strategies, there was lack of evidence that illustrated their strategies for staff motivation. As construction is a very challenging and a complex, working environment employing employee motivational tools will encourage employees and improve efficiency and effectiveness which would further result in reducing AFR (Accident Frequency Rate)
4. Focus on team work: Ability to be a good team member is an important skill required to perform on construction projects. However, most of the training is centred around being a team builder and not team member. In order to be a good leader it is very important to be a good team member and a leader cannot lead effectively if it does not have a supportive team. Thus Balfour Beatty should take initiative towards develop team working skills among all its employee rather then solely focusing on developing team leaders.
5. Forming Forums of Subcontractors and Balfour Employees: As subcontractors and Belfour Beatty employee jointly works on project, they should form discussion forums to discuss specific issues like health and safety, absenteeism, environmental awareness etc. As most of the project staff includes subcontractor employees, it is important motivate them to participate in jointly resolving critical HRM issues.
6. Less employee engagement at operative level: It is undoubtful that Balfour Beatty is committed towards employee development. However, there seem be less initiatives taken to engage employees at operative level. There are many facilities like occupational health, health and safety training, welfare facilities etc. offered to site operative. However, most of this facilities offered is compulsive due to health and safety legislation. There is not enough evidence to support that Balfour Beatty take intensive efforts in welfare of site operative that play important part in success of every individual project.
With increasing complexities in business environment, HRM is become an important function in business management especially in service driven businesses. Today, the focus is not just to get the right people but to retain them and offer them a work environment and culture that helps in getting the best out of them. Especially, in industries like construction, human resource is a fundamental resource for successful operation of the business. Thus, organisations must realise the importance of its staff in order to improve efficiency in the business and maximise profit.