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In this paper, I am going to assess the function of HRM as well as HR strategic problems that management have been faced in PATSA company, the company I worked for two years, from 2006 to 2008.
In the first part of the paper, I will provide an introduction about PATSA Company. Then, the general definition and functions of HRM in organization will be discussed. In the second part, I will put my focus on the HRM position and practices in PATSA Company as well as issues that in my perspective, bears a significant role of the HR strategic problems that company has been faced. The last part would be providing some recommendations from my own point of view to resolve their problems and to better enhance the current circumstances of that company.
1. PATSA Company
In order to get started with my paper, I am going to introduce the company I worked for during years 2006-2008 and the position I held there.
PATSA is an Information and Communication Technology (ICT) solution provider with a highly competent management team and strong customer orientation. PATSA with more than 20 Years of professional experience in ICT industry in Iran is one of the leading private ICT companies who has successfully designed and implemented mega national ICT projects in Iran. Since 1989, PATSA as one of the leading companies in ICT field was actively focused in following categories of ICT projects in Iran:
ICT Turnkey Projects execution
ICT System Integration
ICT Infrastructures designing and implementation
High-end enterprise level ICT products supplying
Value added services and support provision
To assist its expansion objectives, PATSA has forged numerous business relationships with famous local and international players in the ICT industry.
PATSA is a privately held Company owned in majority by its founder and the Head of Board, Dr. Ismaeil Sanaei and its Managing Director, Dr. Mahmoud Akbari while both are professors of Sharif University of Technology in Iran, the first ranked of universities in Iran. PATSA management philosophy is based on responsibility and mutual respect.
The firm includes 156 employees, under the Managing Director (MD) and four managers. Its main departments are Technical, Sales, Service, and Finance & Administration. HR is a subsidiary of Financial & Administration Department. In addition, there is a PMO (Project Management Office) which is handled by MD directly and it is responsible for planning, budgeting, controlling, and managing projects.
During years 2006-2008, the period that I worked for PATSA Company, Dr. Mahmood Akbari was the Managing Director and I was being the Deputy General Manager. I was holding the responsibilities of the primary activities in organization, all technical, sales, and service activities as well as PMO. However, I was not authorized to sign any financial and legal documents. In addition, Financial & Administration Department has a manager who reported to MD directly.
The Technical Department is technological core in the organization and provides all technological services associated with ICT (R&D, technical solutions, technical proposals, consultation, engineering level support, etc). The Service Department carries out installation and commissioning is requested by project managers, and provides maintenance & support services for customers.
The following chart illustrates levels of organizational structure in PATSA Company.
Organizational Structure at PATSA (2009)
As illustrated in the figure, PATSA's hierarchy structure has five layers over the engineers. In addition, MD (or Deputy General Manager) should approve all decisions concerning managing of departments and projects. In other words, decision making in PATSA is somewhat centralized.
Corporate Vision and Mission:
PATSA is well-established company with clear strategy. The corporate vision and mission shows the way, in which company is headed.
By 2010, PATSA shall be the excellent and number one ICT solution provider with world-class standards in Iran
Providing ICT products, solutions, and services through highly skilled people, industry aligned processes and strategic partnerships to meet customers' satisfaction.
Committing toward employees improvement
Creating innovative, unique, and cost-effective ICT solutions
Providing fast and reliable technical assistance for customers
Delivering products and services more effectively and efficiently
By continuous development and improvement of its people and processes, PATSA is able to provide fast response, informed expertise, and high quality solutions consistently, and keeps current clients and generates new satisfied repeat customers consequently. This generates sufficient profit to provide a comfortable living for both owners and employees.
PATSA has to insist of using resources to supply greater value to clients in different aspects:
Emphasis on "Execution with a Difference" and "Continuous Improvement" that focused on people, processes, and strategies
Together Everyone Achieve More
Comprehensive quality systems for processes
On time, on-budget service providing
Being partner for customers rather than a mere vendor
PATSA Core Competencies: :
PATSA has a Knowledge Base library containing all processes and repeatable solutions acquired from 20 years of ICT experience
Wide spectrum of ICT Solutions and Services
PATSA offers complete and integrated solutions to its customers with various ICT technologies, products, and services
Continuous Technology Adaptation and Innovation
PATSA maintains numerous partnerships with key industry players for easy access to latest technologies as well as innovations.
2. Human Resource Management at a glance
All organization consists of three basic components: Purpose, People, and Structure. Human Resource Management (HRM) is the study of activities undertaken by the people working in an organization (info-village.info). Employees are one of the organizational resources and same as other resources has to be managed. HRM is all about policies, procedures, and practices that are concerned with staff selection and recruitment, employees' value in organization, their relationship with each other, employee and organization interaction, development of people in line with development of organization, and employ them to enhance the firm's competitive advantage.
Basic functions of Human Resource Management:
If we consider planning, organizing, leading, staffing, and controlling as the basic functions of organization management, then HRM will focus primarily on the staffing function and the policies and practices related to people working for the organization.
For the purpose of illustration the entire functions of HRM, it is better to refer to the human resource wheel developed by McLagan (1989).
The Human Resource Wheel Developed By McLagan (1989)
As pointed out by McLagan (1989), the primary function of HRM is obtaining, maintaining, and developing employees. Definitely, these functions should be in line with the organization strategy, and has to be planned and performed in such a way that allows the organization to remain competitive on the external market and internally efficient.
In McLagan's model, HRM function is categorized into two main functions as follows:
Obtaining, maintaining, and developing employees
HR research and information systems
Compensation and Benefits
Selection and recruitment
Human resource planning
Performance management systems
Improving individual, group, and organizational effectiveness
Training and development
Organizational job design
I would like to have a review over the significant issues and provide the definitions of terms by some www sources as well as my own interpretation.
Human Resource Planning:
It can be defined as process of determining organizational long-term human resource needs, and assessing current resources in order to identify areas of need. However, an important point to be noted is that human resource needs should be defined based on the mission and strategy of the organization.
Selection and Recruitment:
It can be defined as process of attracting, identifying and hiring best-qualified candidate (from within or outside of an organization) for a job vacancy, in a most timely and cost effective manner (www.wdc.in). In other words, recognizing the best person who is the most suitable one for the vacant position can be called selecting and recruitment.
Performance Management System:
It is an assessment of an employee to measure progress toward predetermined goals. In my opinion, management could reach desirable efficiency in their companies with this system.
Compensation and Benefits:
Compensation and Benefits include writing job descriptions, conducting performance evaluations, and monitoring and administering benefits packages (www.allbusinessschools.com). This is more related to the list of works, which should be done in mostly written formats.
Human Resources development (HRD):
It can be defined as process of improving and developing employees and the organization as a whole through training and development. Training refers to organized activity aimed at imparting information and/or instructions to improve the recipient's performance or to help him or her attain a required level of knowledge or skill (www.toronto.ca). The definition implies any kind of information or instructions, which will provide assistance in gaining knowledge or skills.
In short, if I want to consider HRM through my point of view, I see it as the chain of activities, which are dealing with people in organization, their needs, their lives, their relations among organizational environment, the relations with each other, as well as the outcome influences on work quality. HRM is not one-time task in the organization but an ongoing process that come into existence, grows, and continues with organization simultaneously. As far as I am concerned, the role and the responsibilities of the HRM in the organization spreads from the basis with providing the perfect services in the aforementioned functions to the processes, which have the value added to the organization, such as the knowledge and innovation management and leadership development.
3. Human Resource in PATSA
PATSA Company is well-known and receives many more applications than what it needs for any specified job. In addition, PATSA has a routine internship program, in which usually twenty students from top Iranian universities do internships at company while completing their studies. PATSA therefore has a pool of potential job candidates at all times, particularly for engineering and technical positions. Company hires qualified candidates from their intern pool together with highly qualified new graduates of the Iranian universities, mostly Sharif University, on a regular basis.
In addition, there is a good performance appraisal and compensation program in PATSA. The compensation program is kind of profit sharing among project and technical teams. It is mainly based on the project's performance as well as individual's performance.
4. HR Strategic Matter
There are also on job training for engineers in order to improve their technical knowledge and skills, particularly about new ICT technologies and tools. HR and Technical Department design the training programs jointly and HR is responsible for planning and execution after receiving approval from MD.
In spite of the company's best efforts in the area of staff selection and recruitment activity as well as performing well-designed performance appraisal and compensation system, the company has recently faced to the attrition of good performing engineers. The attrition rate in PATSA has been increased from 5% in 2008 to 17% in 2009. Since I managed the company for two years and I am quite familiar with organization environment, PATSA MD called me and asked to collaborate in analyzing and solving this problem, which has been influenced the organizational performance negatively and its competitive position in the market consequently.
5. Work Environment in PATSA
Actually, I knew it was coming and I had reported to MD about HR issues in PATSA before I left the company. Based on my experience, and what I learned from HRM in IBS, I prepared my views and shared the following issues with PATSA MD.
The work environment in PATSA is quite stressful, particularly for engineers and experts. Normally, engineers work long hours to prepare the requested project design and solutions. Furthermore, the PATSA management expected all engineers to contribute to the strategic goals of the company by recommending new ideas, business plans, and innovative solutions, in addition to their basic job functions. This contribution is an important factor, which has more effect on employees' rewards as well as their career. Because of this, the working environment is challenging and engineers are in high competition with each other to achieve more.
In addition, the average age for engineers in PATSA is 29 and most of them are not married yet. They have little or no social life. For the married engineers, the long hours work in company affects their families' life negatively. They are too tired to communicate and interact with their family after spending many hours in their stressful work environment. Concerning the single engineers, they are more in competition with each other than having friendly relationship due to PATSA's competitive environment. As a result, their moral and their energy are destroyed because of work/life imbalance and poor home-life quality.
Another problem is in the middle management level. There is a general lack of qualified technical and project managers. Most of the technical managers, project managers, and supervisors are selected from engineer pool. Although they are highly qualified engineers, they knew nothing about management. There is also not any on-job training to improve their managerial skills. This resulted in poor management and supervision that caused the low level of morale and dissatisfaction within the engineers and project teams as well. Consequently, projects are executed beyond of their budgets and time schedules and this has made customers' dissatisfaction. As a result, PATSA is going to lose its competitive position in market too.
6. Issue Analysis
The other important issue to be noted here is about compensation program. As mentioned earlier, the compensation program in PATSA is kind of profit sharing among technical and project teams. It is mainly based on the project's performance as well as individual's performance. Although the compensation program is well designed, the weak performance in project management has been influenced employee's compensation negatively.
As far as HR experts are concerned, a primary responsibility of HR department is to determine the organizational HR needs and recruit the most qualified people, which are available, in order to staff the organization. As mentioned earlier, PATSA is doing an excellent job to hiring qualified engineers, but it is not all the company needs.
Employees need good relationship and healthy environment instead of high competitive and stressful. They also need help to create a better work/life balance.
In addition, as one can see, the lack of managerial skills in project and technical management due to assigning people with engineering background and technical experience is the PATSA's Achilles heel in poor efficiency and weak projects performance. As a result, PATSA is going to lose not only its efficiency, productivity, and employees' satisfaction internally but also its competitive position in the market.
In my opinion, the aforementioned factors result in a high attrition rate at PATSA. Engineers are leaving PATSA because of the stress from competitive environment, work-life imbalance, poor management, and the lack of suitable supervision.
In order to deal with these problems and to reduce the attrition rate consequently, in my opinion, the following are some of the HR related issues in PATSA that have to be taken into consideration by management:
Generating the sense of belonging, loyalty, and ownership among talents
Building a challenging work environment instead of competitive to motivate talents and good performing employees to stay with the company
Decreasing stress and balancing employees' work life and home life
Developing managerial skills of highly qualified and capable engineers
Assigning right people in project/technical management and supervision
Although, there could be number of recommendations for PATSA to resolve its current problem concerning the attrition rate, but I think PATSA has to get a step forward and do an essential reform in its organizational structure as well as HR systems. This improvement not only is suitable for overcoming the current circumstances but also prevent the future HR related shortcoming in advance. Some applicable initiatives, from my point of view, for better enhancement of the HRM in PATSA are listed as follows:
Reinforcing the HR Department, even separate it from Financial Department, and assigning HR specialists to study and analyze the HR related issues professionally whether by hiring specialists or outsourcing jobs to the HR consultant agencies.
Restructuring the organization from hierarchy to flat and matrix structure, concerning the high-tech nature of organization, to facilitate faster decision-making, better project management, efficient cross-functional teamwork, and create a sense of belonging and motivation among employees. This pushes authority and responsibility down to lower levels in the hierarchy, encourages employees to make decisions, creates a sense of belonging, and leads them toward acting like an owner of the company.
Recruiting at least five high-qualified ICT project managers with PM (Project Management) or MBA certification in order to enhance the firm's project management capabilities and competitiveness, to assigning good bosses for its valuable employees, and to appointing suitable representative in relation with valuable customers
Planning for an MBA courses for those current project managers, which are qualified and has the good sense to manage projects as well as people
Creating new jobs in organization such as advisor or mentor for those current technical and project managers, which has good technical knowledge and experience but any managerial and leadership skills to manage people. These mentors are supposed to share their knowledge with project teams and provide consultancy for each innovative committee.
Reducing the stress in work environment by creating innovative committees instead of innovative individuals, persuade teamwork culture, and encourage fun in work place.
Build a culture of professional entrepreneurship in talents and high performing employees by helping selected employees to take break from regular work and to focus on a project of his/her interest. This results in the employee focusing on a specific project to deliver specific results to the organization and to achieve his/her goals in the organization as well. In other words, by providing an opportunity for a talent to work on a project of his/her interest, PATSA not only is succeeded to align individual and organizational goals and to improve individual and organization synergy but also to create a sense of belonging and ownership in its valuable high-performing employees.
Planning social activities and holding parties and ceremonies in organizational and national occasions to improve employees' work/home life balance. Employees should be encouraged to attend in parties with their families and partners.
Allow and encourage low-performing employees to leave the organization