In the contemporary business environment, human resources play a particularly important role because they comprise an important marketing asset of companies and, what is more, human resources provide services for customers and, therefore, maintain positive company-customer relationships. In this respect, it is possible to refer to the case of Verizon Communication Inc., which faces considerable problems related to its human resource management and strategies. As the matter of fact, the company suffers from the problem of the poor human resource management and the measurement of human resource performance. Today, the company focuses on the optimization of its human resource management and the company attempts to introduce new strategies, which can help to tackle existing problems. At this point, it is important to place emphasis on the fact that Verizon Communications Inc. has to develop effective approaches to human resource management to provide its customers with services of the high quality and, simultaneously, to maintain the competitive position of the company in the market. The latter is particularly important in the time of globalization, when Verizon Communications Inc. expands its market share and enters new markets because this strategy is crucial for the maintenance of the competitive position of the company. Therefore, the introduction of effective human resource strategies and the adequate assessment of human resource performance are keys toward the overall improvement of human resource management in Verizon Communications Inc.
KEY ISSUES AND PROBLEMS IN THE CASE
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In the late 1990s, Verizon Communications Inc. faced the problem of the growing competition in new markets. The company had to expand its markets internationally to improve its marketing position and to gain a competitive advantage over its rivals. However, the company had to improve its marketing performance through the consistent improvement of the quality of services being delivered to customers. In this regard, human resource management has started to play a particularly important role.
At the same time, the company faced a greater competition for customers because, in spite of the international market expansion, Verizon Communications Inc. had to offer customers services of a higher quality compared to rivals. Otherwise, customers would turn to rivals of Verizon. In such a situation, the quality of human resource management became crucial because it is only through the high quality of work of employees the company could improve the quality of services being delivered to customers.
In this regard, the customer turnover is one of the most important issues Verizon Communications Inc. has to deal with because the customer turnover undermines the position of the company in the market. To put it more precisely, the high customer turnover deprives the company of a large number of loyal customers. In a long-run perspective, the company can lose a large part of its customers because of the high customer turnover. In the contemporary business environment, companies focus on the maintenance of the customer loyalty to the brand.
The employee turnover is another problem Verizon Communications Inc. faces. In fact, the employee turnover undermines the internal stability within the organization because the company cannot rely on loyal employees, who have an extensive experience of work in the company. At the same time, employees can never be certain in their future in the company because the high personnel turnover implies that employees are likely to lose their job. In such uncertain environment, the organizational culture and organizational performance of Verizon Communications Inc. deteriorated consistently and the management of the company needed consistent improvements. The high personnel turnover threatens to the strategic development of the company.
HUMAN RESOURCE PRINCIPLES APPLIED TO VERIZONE COMMUNICATIONS INC.
In such a context, the role of human resource management becomes particularly important because the effectiveness of human resource management defines, to a significant extent, the effectiveness of company-customer relationships and decreases the personnel turnover. Verizon Communications Inc. focused on the change of the traditional to human resource management the company used to apply and focused on the change of the assessment of human resources. To put it more precisely, the company focused on the shift in the assessment of human resources in terms of efficiency and quality. What is meant here is the fact that the company shifted from the quantitative assessment of employees' performance toward the qualitative assessment of their performance. This shift was very important because it had changed fundamental principles of human resource management in the company and stimulated employees to focus on the efficiency and quality of their work, instead of their traditional orientation on the quantitative performance. In this regard, the company applied the balanced scorecards approach to the measurement of employees' performance in both quantitative and qualitative terms.
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At the same time, the company faced the problem of the increased costs spent on human resource department. This trend contradicted to the principle of reducing spending of the company and maximization of the efficiency of performance of each department, including human resource department. Therefore, instead of bringing considerable benefits and improvements to the organizational performance of Verizon Communications Inc., its human resource department became an unbearable burden for the company. Hence, the need of changes became obvious.
KEY FACTS SUPPORTING MAIN ISSUES AND PROBLEMS
Facing numerous problems and challenges in regard to its human resource management, Verizon Communications Inc. had to introduce changes to improve the situation and accelerate its business development and improve its organizational performance. In such a situation, the company needed to assess its current problems. In this regard, it is important to dwell upon key facts that reveal the essence of problems and issues that arose before Verizon Communications Inc.
First of all, the company faced the problem of the high customer turnover. To put it more precisely, in 1999 about 23% of all long-distance telephone customers in the United States changed their service provider at least once; about 35% of wireless phone customers did (Datar & Ebstein, 2). The high customer turnover is a serious threat to the competitive position of the company because the customer turnover leads to the steady decline of sale rates and drop of the number of customers. In addition, as it has been already mentioned above, the number of loyal customers decreases consistently too. As a result, the company suffers from a considerable deterioration of its marketing performance. In the context of the international market expansion, the high customer turnover undermines the position of the company and prevents it from fast and successful international market expansion.
Another problem of Verizon Communications Inc. is the high employee turnover. To put it more precisely, the employee turnover was also very high in the late 1990s - early 2000s. To put it more precisely, among telecommunications companies generally, employee turnover averaged 20 to 25% a year (Datar & Ebstein, 2). The high personnel turnover rate threatened to the internal stability within the company. When the personnel turnover reaches 25%, this may be a serious threat to the strategic development of the company and its steady business development.
In addition, Verizon Communications Inc. suffers from the poor quality of services being delivered to customers. For instance, typical complaints cited company employees giving out inaccurate information, being slow to complete service orders, being insensitive to different ethnic groups, and so on. Obviously, the poor quality of services being delivered to customers deteriorates the public image of the company and discourages customers to use services of the company over and over again. In such a way, the company cannot count on loyal customers. In this regard, it is important to place emphasis on the fact that the high personnel turnover leads inevitably to customer turnover. The latter leads to the deterioration of the organizational performance and undermines the position of the company in the market.
In such a context, the high spending on the human resource department and the lack of positive feedback from the department made the department an unbearable burden for Verizon Communications Inc. and made changes in the department and company at large essential. In fact, the human resource department didn't produce any revenue, and employees in the department were generally considered simply "costs" (Datar & Ebstein, 4). Therefore, the human resource departments slowed down the development of Verizon Communications Inc. instead of accelerating it.
In order to tackle the problem of poor human resource management and to develop an adequate and effective approach to performance measurement, Verizon Communications Inc. used the Balanced Scorecard approach. The balanced scorecard approach was a conceptual framework for assessing an organization's performance not only in terms of financial measures (the conventional way of assessing an organization's performance) but also in terms of non-financial measures (Datar & Ebstein, 5). In such a way, the adequate performance measurement allowed the company to identify the most efficient employees and to retain well-qualified and efficient personnel within the company. The latter could be achieved through the introduction of changes in human resource management and policies conducted by the company.
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In this regard, the company focused on five human resource strategic thrusts: talent, leadership, customer service and support, organizational integration, HR capability. In fact, the company attempted to focus on the retention of talented employees, who have better prospects compared to the rest of employees because they could introduce innovations and new approaches to improve the quality of services. Therefore, talented employees were particularly valuable for the company. Leadership qualities were also essential for the company because they motivated employees to do their best to improve their performance and to lead other employees. Leaders could facilitate the introduction of changes within the company and to accelerate its development. The customer service and support were crucial taking into consideration the low quality of services being delivered to customers. Employees capable to provide efficient customer service and support contributed to the improvement of the organizational performance through the increase of the customer satisfaction reached due to the high quality of service and customer support. Finally, organizational integration and human resource capability were essential to retain employees and to unite them for the sake of the organizational progress and success. To meet the five thrusts, The company created a group, which was formed within the HR department to translate these strategic thrusts into a meaningful measurement model. The group was called Planning, Measurement, and Analysis (Datar & Ebstein, 6).
In addition, balanced scorecards' measures were organized into four "perspectives": a Strategic Perspective, a Customer Perspective, an Operations Perspective, and a Financial Perspective (Datar & Ebstein, 8). Communicating the results of the balanced scorecard within the organization was viewed as key to its success.
Along with organizational changes, the company introduced technological changes. For instance, the company introduced new software to improve performance measurement and human resource management. An important feature of the software was that it contained layers of hierarchically linked data. This allowed people to look at data from the top down or from the bottom up (Datar & Ebstein, 9).
However, the company still had to tackle problems of reducing the separation rate and reducing the absence rate. In addition, the company had to improve the quality of services being delivered to customers and company-customer relationships at large. The measures undertaken by the company were still insufficient to cope with all the problems mentioned above and changes had to be introduced to improve its marketing performance and to maintain the competitive position of Verizon Communications Inc. in the market.
RECOMMENDATIONS TO SOLVE PROBLEMS AND THE MECHANISM OF THEIR SOLUTION
In such a context, it is possible to recommend Verizon Communications Inc. introducing changes that can improve its marketing position and organizational performance through the improvement of its human resource management. First, the company should focus on the organization of training courses for employees to improve the quality of services being delivered to customers. The training of employees will increase the efficiency of their work, motivate them to work better and improve the quality of services being delivered to customers.
Second, the company should introduce knowledge sharing management. Knowledge sharing management will help the company to improve the qualification of its employees and to improve relationships between employees. They will learn to interact with each other and to share their knowledge and experience.
Furthermore, the company should focus on the introduction of total quality management. This measure is essential to improve company-customer relationships and to stimulate the rise of customer satisfaction along with customer loyalty to the company. In addition, total quality management will improve internal business operations and relationships between employees.
Moreover, the company should develop team work. This measure will improve relationships between employees and make them more flexible. Employees will learn to work in a team that will improve internal atmosphere and contribute to the formation of the healthy organizational culture.
Finally, the development of employee loyalty to the company is essential. The employee loyalty can be achieved through the development of attractive compensation plans for loyal employees. In addition, employees should have a prospect of career development.
Thus, Verizon Communications Inc. has to improve its organizational performance to maintain its competitive position. Today, the company faces a number of problems related to the poor company-customer relationships and poor human resource management. To tackle these problems the company has to focus on training of its employees and knowledge management. Moreover, the company should introduce total quality management to increase the quality of services and to improve relationships within the company.