HUMAN RESOURCE MANAGEMENT IN CONTEXT

Executive Summary

The report is about Endeavours, which is a sportswear retail store. The store is experiencing several HRM issues which are highlighted within the case study. The introduction of this report offers a brief background to the case for understanding. It highlights the main problems and puts the case into perspective. The background is followed by a discussion of two of the main problem areas of the company. The areas identified and explained in the report are; high and increasing employee turnover and lack of access to promotion opportunities. The company has experienced an increasing trend in employee turnover, which is an indication of inefficient HRM. Employees have also expressed their dissatisfaction with the lack of career development opportunities. The analysis of one strength area follows the discussion of problem areas. The identified area where the company is doing well is supporting employees’ health and wellbeing because a healthy and happy workforce is more productive and guarantees company success. The final part of the report offers the suggestions on some of the actions the management can take to address the problem areas identified and discussed in the report. The two HRM actions proposed in the paper are; increasing employee engagement and providing employees with a career path as soon as they are hired.

Endeavours Case Report

Understanding of the Situation

Endeavours has existed for eight years and management to expand to major towns in the United Kingdom. The company has a presence in the UK market, and it provides quality products that have become its identity among the customers. Its growth, however, is marked with some external challenges that affect the entire industry, which include dwindling profits which could be due to new entrants into the retail sector providing alternatives to customers at lower prices. The growth of online sales and the range of products that are offered by these online stores poses a significant threat to Endeavours as well as other established high street retailers. However, Endeavour is implementing sound business practices such as the implementation of a five-year expansion plan, which is geared towards increasing their presence.  The plan provides an opportunity for the company to diversify its products to ensure that it remains competent amidst tightening competition in the industry. The business has several HR issues that must be addressed; this has been highlighted by the company’s annual staff satisfaction survey and its annual reports. Some of the issues in the company include lack of employee upward mobility, lack of employee engagement in the decision-making process, high employee turnover and a wide gender pay gap. However, the company provides an opportunity for its employees to undergo training and also supports their health and wellbeing. The executive management is taking steps to deal with the issues in the company. More can be done to ensure that the business grows.

Problem Areas at Endeavours

Increasing employee turnover

Two theories have been put forward in the theoretical study of employee turnover. The two theories focus on how employee turnover can affect productivity in a firm. The first theory is the firm-specific human capital theory, which argues that when a company is responsible for the cost of training employees, high turnover rates lowers the management’s incentive to provide training and development opportunities (Harris, Tang & Tseng, 2003, p. 4). This incentive is diminished even further when general training and specific training are intertwined in the company situation because employees’ opportunity cost to quit is low.  The firm-specific human capital theory also argues that as turnover increases in a firm, productivity lowers. Low productivity can be due to low morale among the workforce, lack of talent, and in most cases, shortage in the number of workers. In organizations where employees are trained by doing, the theory explains that the accumulation of knowledge and expertise is related to employee tenure. For example, an employee who has worked for five years accumulates more knowledge of the company’s processes then one who has worked for two years. High employee turnover means that more experienced employees are likely to be lost, and this poses a threat to a company’s productivity. In the case of Endeavours, the company has been experiencing high employee turnover, and the number of employees leaving the company has been increasing since 2016. In has increased from 22 per cent in 2016 to 28 per cent in 2019, which reflects negatively on the organization’s human resource management (HRM). The number of resources the company spends on recruiting and training new staff members could be channelled in other aspects of the company to improve its profitability.

The second theory is the job matching theory whose fundamental view is that companies will always be in search of the right candidates and job seekers will always be in search of companies until both parties get their excellent match (Harris, Tang & Tseng, 2003, 5). According to the job matching theory, employee turnover is inevitable and even necessary for organizations. This is because it argues, established companies such as Endeavours need fresh talents to change the status quo. Changing conditions such as a company that upgrades its technology may require a new set of skills that the existing employees do not have, and this necessitates the search to continue. The job matching theory overlooks the possibility of training employees to acquire the required skills and to update their knowledge in their area of expertise. It also fails to take into consideration the value of talent management to a firm.

Therefore, employee turnover at endeavours is a challenge because as the company grows, it will not have the support of all members of the organization. Employees cannot own the company’s vision because they do not feel like a part of the organization. High turnover has a negative effect on employee motivation, and one of the HR’s goal should be to implement strategies that will help towards employee development and retention.

Lack of access to promotion opportunities

Frederiksen and Takats (2009) explore the reason why employers use a mix of incentives in their contracts to employees. Among the incentives, they identify as commonly used by firms, include fixed wages, promotion options, bonuses and dismissals or threats. The researchers argue that for production firms, this strategy is vital as it ensures that the company keeps costs and quality in check. There are two reasons why promotions are important to employees. The first reason is that it motivates the employee to set a higher level of effort to apply in their job in order to achieve the set goals (Frederiksen & Tak’ ats, 2009, 160). It serves to increase the general workforce morale. Employees prefer to be in a place where they foresee a better future in terms of their career development. When a company fails to provide such opportunities, employees are likely to set lower effort levels – in most cases; they set the bare minimum as long as they complete their daily objectives. When they have promotion options, they will be motivated to achieve company objectives and give their best to meet the criteria for the promotion. Secondly, promotions have an implication on the information structure in the job market (Frederiksen & Tak’ ats, 2009, 160). Many studies have revealed that when companies pick candidates based on performance, they perceive promotions positively while dismissals are viewed negatively.

Consequently, a company is likely to experience high employee turnover as employees seek employers that can help them build their career by providing opportunities for growth. These employees will also avoid dismissal when a firm fails to show interest in training and retaining them. It is expected that if employees are not developed, they are bound to stay in one level for their time at the firm which is likely to end in dismissal in cases where a company upgrades its processes and requires new talent.

Endeavours do not provide promotion opportunities and the dissatisfaction with this practice is reflected in the company’s annual employee satisfaction survey. Employees responses show that lack of development and growth opportunities in the company can be contributing factors to low employee motivation. The company will struggle to retain competent workers, and when it rolls out its online operations, it may be forced to lay off some staff whose roles will become obsolete. Such layoffs can be unnecessary if the company focusses on the development of employees and trains them based on the company’s strategic focus of diversifying its products and business processes.

Strength Area

Support for employees health and wellbeing

            Success is a source of happiness; however, in an organizational context; one of the most important roles of HR is to ensure that employees are healthy and happy. It is reversed, a healthy and happy workforce results into a successful business. Among the factors that make a company a great place to work in the twenty-first century is employee satisfaction. The best example is Google PLC, where one of the reasons job seekers cite for preferring google, as the best place to work is the benefits it offers its employees. Benefits such as onsite physicians, best paid parental leave, death benefits and recreation facilities mean much more to employees than the basic salary. The current generation of workers are looking for employers that are interested in their wellbeing and health, and this makes Endeavours a desirable place to work.

Employees are able to exceed expectations when they are happy. However, supporting their health and wellbeing goes beyond making them happy; it makes them more productive. Health has become a significant concern for many people, and when a business shows that it cares about it; employees begin to care about the company. Also, a healthy workforce spends less time worrying or taking time off due to sickness. Absenteeism can interrupt business processes and lead to poor results. Therefore, by supporting employees in this area, Endeavours is creating a happy workforce that is easier to manage and is highly productive.

Human Resource Management Actions

Reducing Employee Turnover

Increase employee engagement – The HRM at Endeavours has not engaged employees in the decision-making process. Instead, a small group of HR managers at the headquarters have made HR decisions on behalf of all staff. The danger in this is that they fail to consider the input of employees who are largely affected by the policies formulated by the group of HR managers at the headquarters. While implementing the devolution of the HRM functions to various Endeavours store or area, it must ensure that decisions are not up-down. The HRM should take a consultative approach that allows employees to weigh into decisions by giving their ideas about what they would like to be done. As it is now, the company is not aware of what is best for its staff, because decisions are made on presumed best practices instead of being tailored to the needs of the company environment. The company is planning to install a Human Resource Information System. This system should be used to encourage information exchange at all levels of HR management, and this will ensure that the issues that cause employee turnover will be addressed to avoid a further increase. Engaging employees in the decision-making process will also increase their sense of ownership, which is important for creating employee commitment to the goals of the company (Wilson, 2018).

Providing opportunities for career development

            Showing a career path – as noted previously, employees want to stay in a job where they can be challenged and be able to move up the career ladder. To give employees a sense of purpose and direction in the HRM need to show them a projected career path. Therefore, the job contract or employees handbook should show employees where they can go after their current position in the organization. Promotion can involve receiving more responsibilities from their current position, and that means that new positions does not have to be created or a gap in the workforce. Entrusting employees with more strategic projects or involving them in critical decisions gives them a sense of purpose and opens them to a possibility of filling more prominent positions (Wilson, 2018).

Another way to prepare employees for more prominent positions is by providing coaching. Coaching can be an excellent way to nurture and maintain talent in the organization (Wilson, 2018). It provides employees with exposure to new skills and responsibilities that make them familiar with higher positions. When a gap is created in management positions, it is better to fill it with employees who are already familiar with the company’s processes. For instance, a frontline sales representative at Endeavours, with coaching, can be the frontline HR manager when the manager takes on other responsibilities. Filling positions with locally bred talent will motivate employees to work hard, take on more challenging tasks and stay in their job because they can see the direction of their career. This process should start early, as soon as hire is made, the employee’s career path must be made clear.

Appendices

Appendix I: Swot Analysis for Endeavours

Appendix II: PESTLE Analysis

References

Anders Frederiksen and El˝od Tak’ ats, 2009. Promotions, Dismissals, and Employee Selection: Theory and Evidence. The Journal of Law, Economics, & Organization, Vol. 27, No. 1. [Online] Available at https://www.cbs.dk/files/cbs.dk/frederiksen_and_takats_2011_jleo.pdf [Accessed March 24th 2020].

Case study: Endeavours

Mark N. Harris, Kam Ki Tang and Yi-Ping Tseng, 2003. Employee Turnover: Less is Not Necessarily More?* [Online] Available at https://espace.library.uq.edu.au/data/UQ_10735/paper.pdf?Expires=1585062338&Key-Pair-Id=APKAJKNBJ4MJBJNC6NLQ&Signature=Exi0nN754ZALFzLqfwah7YTPeC1Zl~vk6bdw7USjAGoBpLGgNAqd~X4NE0eUjOCsRs49~p8TOyJEsA5TIfOh~FHVnz9-DFL5WzxJuBE28tu~ePVtct~HOlYtmTsMNrkg3ShITHe3S5vLFRKGYe-Lt6ini3XrbKBwlN41vosbe4HUC94d8JSCQhNJq0KYxYqJ2AclTNOdH4kTRGnACXrq1N3tAmAzjcrGZkUMT3tGt2qZVRDLYlIfwCfy5ocAVautwnsksUUPHQA7kS776ejZ0kq1vTEZJCLhAe5ler0~iMsqvFIVUhFjWNIh1jPKmwQp1BhR~PjEKSujB0BVi7Dn6Q__  [Accessed March 24th 2020]

Wilson, D., 2018. Strategies for Reducing Employee Turnover in Retail Outlets. Walden University