Business Integration - on Heavy Construction Systems Specialists Inc - Case Study Example

Business Integration - Case Study on HCSS and Report Executive Summary This research paper throws light on the business of Heavy Construction SystemsSpecialists, Inc. (HCSS). The paper is based on a case study that tries to foreground challenges are being faced by the company, in terms of human resource management. These challenges are primarily related to matters of employee management and entrepreneurship process followed in the company. The context of the paper would analyze and try to explore issues faced by HCSS while striving to achieve double digit growth as well as provide certain suggestions through which HCSS would be able to overcome these challenges. For conducting the research work, the researcher would consider several types of strategic supervision theories and models such as, PESTL and Competitors Analysis. The context of the case study will prove that HCSS presently encounters severe problems related to human resource. So, considering the desire to grow and transform into a prominent player in the industry, HCSS needs to employ effective instruments in order to resolve human resource related issues in business. From the PESTL analysis, it has been rightly stated that political, technological, legal, economic and social aspects of U.S. have notably helped in HCSS achieve growth in the market. However, it is a small player in a competitive industry. Finally, the researcher claims that entrepreneurs of the organization should become transformational leaders. Owing to such changes, the organization would be able to improve its overall level of communication, which would in turn help in rendering the management structure flatter in nature. In addition, they would render employees more efficient and creative and thereby boosting growth of the concern in near future. The assignment subsequently claims that democracy should be preferred in an organization as opposed to bureaucracy. Contents Contents 3 Background 4 Purpose 4 Problem Statement 5 Direction 6 Assumptions 6 Main Discussion and Argument 6 Literature Analysis 6 PESTL 8 Competitor Analysis 11 Conclusions and Recommendations 13 Reference List 16 Background The extent of business complexity in the modern era has increased for almost all the industrial segments. The contemporary business organizations are subjected to extensive competition within their industrial framework. Giant business firms at present have turned out to be multinational corporations (Abeles, 2001). The roles of entrepreneurs in modern organizations have increased and they are considered as transformational leaders who ultimately help in stimulating long run growth of firms. However, it should be noted that economic prosperity of an organization significantly depends on effectiveness of all factors of production like, land, labour, capital and entrepreneurship. The project focuses on business opportunities and challenges faced by Heavy Construction Systems Specialists, Inc. (HCSS), a software developing company of U.S. (Roche and Shipper, 2011). Purpose HCSS has achieved substantial growth since its inception and presently provides with software to almost 3500 companies around the world. The company’s services are exclusive and it owns large financial reserves for business growth. Nevertheless, Mike Rydin, president and founder of HCSS, believes that there still are areas in which the firm needs to improve, despite the substantial progress made over time (Roche and Shipper, 2011). He has strived to improve scale and scope of operations of the company since 2011. The case study mentioned that he had aimed to double activities of the firm in the following three years. It is also noted that the company owns sufficient financial resources to sustain long-term growth. However, it is found that the company has faced extreme scarcity and challenges while acquiring adequate manpower resource within its business. HSCC since its inception have failed to successfully motivate and retain its workforce. The case study also claims that the firm’s leaders lack adequate expertise to upgrade skills of exiting workforce. Employee recruitment has always been the major challenging issue for the organization. Hence, it can be rationally stated that aim to achieve double digit growth would become a challenge for the company in the long run as a productive workforce is absent. This paper would study and try to resolve problems faced by HCSS, while it attempts to achieve double digit growth in the next three years as well as provide recommendations with which the company will be able to overcome these obstacles. Problem Statement Mike Rydin, who is the founder of HCSS, desires to expand the business in a multiplicative manner in coming three years. Given that, there are a few challenges that are faced by the concern. The organization is facing severe scarcity in terms labour resources. The employee recruitment process followed is lengthy and time consuming. In addition to that, existing workforce is less productive and lacks motivation towards work. They are not satisfied with incentives that are offered by the organization. The communication flow between various departments of the organization is also not appropriate. Since HCSS aims to deliver customized services to all customers, effectiveness of cross-departmental communication is a vital component of business. Long-term economic success and innovation cannot be achieved by the organization with presence of such issues. Economic prosperity of HCSS significantly depends on workers’ creativity and commitment to serve its customers. From the above context, it can be claimed that the company would not be able to achieve its desired business aim if such severe problems persist (Roche and Shipper, 2011). Direction This case study will analyze causes behind human resource management issues in HCSS. Finally, the researcher would provide recommendations so as to help the company overcome these challenges. For making the research work, the researcher would consider several types of strategic management theories and models like, PESTL and Competitor Analysis. Assumptions The recommendations that will be provided in final section of the paper are formulated after considering the state of external, political, social, legal, economic and technological affairs in U.S. It is also assumed that all other competitors of HCSS will not change their business decisions substantially in the coming three years. This means that pricing and output decisions of these firms would be altered to a lesser extent. Main Discussion and Argument Literature Analysis The recruitment process of the HCSS is very complicated and time consuming. The senior officials scrutinize details of the recruitment process of workers in the organization (from senior to entry level) (Strawson, 2011). The case study states that Mike Rydin recruits officials on the basis of “collective wisdom”. This theory advocates that a lengthy recruitment process followed by a company is feasible. This is because through this process, employees can become aware of work culture of the organization and at the same time, management authorities are able to gather knowledge about skills and qualities of the workers. By following such norms, extent of job attrition and replacements are greatly lowered. The case study has proved that HCSS officials consistently abide by norms of collective wisdom. This is gathered from the fact that Daniel (the receptionist) of the company was interviewed by the human resource officials, colleagues, future managers and finally, by the company president during recruitment. The explanation of collective wisdom provided by Mike Rydin is consistent with the original theory presented by Rutherford B. Hayes (Hayes, 1998). The case study states that though HCSS takes time to hire each of its employees, yet in certain departments, hired employees are found to productively work only after 90 days of recruitment. In reality, workers of the concern are burdened with various types of responsibilities; this often confuses them about their job task and description. It becomes difficult for leaders of the firm to generate smooth communication among employees, who works in multiple layers (Smith, 2000). Even so, from the case study, it can be claimed that the company believes on theories relating to employee motivations and performance. This is proved from the fact that HCSS provides various financial and non-financial incentives to its employees, like, conducting several indoor and outdoor sports events. The views of the company regarding employee motivation is consistent with the theory stated by Frederick Taylor, suggesting that individuals work for benefits and higher incentives act as a working motivational tool, thereby enhancing their productivity (Locke, 1978). The organization refuses to abide by the “open door policy” in business coupled with a bureaucratic management structure. Under this regime, tasks of junior most employees are tackled by higher officials. Mike Rydin claims that he believes in a participatory working atmosphere. The employees are considered as owners of the organization and are encouraged to participate in important decision making processes. Nevertheless, the case study points out that the company’s management structure is consistent with bureaucratic system, as opposed to democratic or participatory system (Andersen, 2000). This is because Mike Rydin still finalizes upon certain or uncertain decisions of the company, irrespective of employee perspectives. Employee ownership process is followed by the company in a way that primarily encourages workers to perform as owners, although in reality, they exercise no ownership powers. PESTL The PESTL analysis elaborates on the macroeconomic environment where a company operates. The factors within this environment influence the business, but the organization has no control over such factors (Stutely, 2002). The company can only modify its business decisions according to these factors. Political HCSS provides superior software to companies that operate in the heavy and highway industry. The firms in this industry undertake public projects that are set according to political rules framed by the Department for Transport. The demands for software from companies within the industry that is to be faced by HCSS are determined according to political norms of the country. The political authorities of U.S. encourage free trading activities (through enactment of Free Trade Agreement) and this has augmented degree of competition across all its industries segments as foreign participation has increased (Data Monitor, 2010). However, during recession, U.S. government had adopted stimulating fiscal policies that helped companies like, HCSS, to achieve sufficient finances during economic crisis (GOV, 2014). Economic The U.S. economy is considered as the largest world economy in terms of gross domestic product ($ 11.5). The per capita income level of the country is approximately $ 46400 (Data Monitor, 2010). Since aggregate income level of the country is high, it can be said that software companies like, HCSS, can easily procure finances for long-term investment purposes. The global financial crisis in 2008 had generated severe recessionary trails in the U.S. economy. The country faced extreme monetary crisis during the recession. The government was able to soon inject $700 billion in its economy through Troubled Asset Relief Program (TARP) (Data Monitor, 2010). The government additionally stimulated the economy through expansionary fiscal policies (worth $ 787 billion) that focussed upon lowering taxes imposed on business organizations, thereby increasing their financial base. The case study claims that HCSS did not face significant loss in business during the recession of 2008. It can be stated that companies operating in the IT industry have sustained severe negativities of recession in U.S. only with the help of adequate finances received from expansionary fiscal policies and lower tax rates (Hirsch, 2008). Higher industrialization in U.S. has helped HCSS experience higher demand in business. The government authority of the country aims to generate high economic growth by developing its highway and heavy industrial sector, besides providing special incentives and growth benefits to associated firms. All such factors facilitate business growth for HCSS (Data Monitor, 2010). Social The proportion of aged population in U.S. is significantly increasing overtime. Some researchers claim that growing aged population can generate hindrance in long-term economic growth of the country. Degree of income inequality in U.S. is estimated to be highest when compared with other developed nations of the world. This is the reason for which demand for luxurious products is high in U.S. markets. Superior software produced by HCSS is a type of luxury goods and hence, experiences high demand in U.S. market. The literacy rate in the country is very high and individuals are inclined towards technical studies. The growth of heavy and highway industry considerably depends on lifestyles of its people. The living standards of U.S. individuals are high and rate of urbanization is above 80% (high) (Data Monitor, 2010). This has boosted growth of its heavy and highway industry as well as that of HCSS. Technological U.S. has achieved its economic growth primary with the help of superior technological knowhow and innovation. Nearly 2.6% of total GDP of the country is spent over research and development purposes (Data Monitor, 2010). The government authority of U.S. provides high incentives to software companies as the latter help in improving technological base and living standards of the nation. However, in the recent years, U.S. lags behind nations like, China, Germany and France, in terms of technological innovation. HCSS have garnered high value in the market because U.S. actively aims to ensure growth through technological innovation (BIS, 2010). Besides that, degree of competition within this industry has increased in recent past. Hence, HCSS must ensure higher creativity and productivity at workplace to achieve growth and lead the market competition in the long run. Legal The legal system of U.S. has proved to be sound for all business enterprises, irrespective of their nature. The judiciary system of the country is independent, which helps to create a positive investment environment. Since 1980, the level of government intervention through legal procedures in commercial affairs has remarkably declined (Data Monitor, 2010). Even so, since recession, it is found that extent of frictional unemployment in the country has increased. Researchers claim that legal system of the country should introduce new regulations through which employees within a particular segment of workforce can be retained for a longer period of time. New laws related to employee disability and social security benefits should be established. HCSS is subjected to all the legal regulations imposed by U.S. legal authorities; but from the above context, it can be indicated that laws related to labour in U.S. are not very strong. Certain human resource problems faced by the company could be resolved easily with the help of better labour laws (Data Monitor, 2010). HCSS must frame its business strategies after scrutinizing matters pertaining to external business environment and ensure that they fit well within the environment (Stutely, 2002). Competitor Analysis HCSS engages in developing technical software. So, the company operates within the Information Technology (IT) industry in U.S. The degree of competition in the IT industry of U.S. is high. The case study states that companies like, Microsoft, BID2WIN (B2W) and Hard Dollars, are potential competitors of HCSS. Figure 1: Position Map High Quality Microsoft Corporation B2W HCSS Low Price Hard Dollar High Price Low Quality (Source: Author’s Creation) The above figure shows position map of the industry and explains business position of HCSS along with some of its competitors. HCSS: HCSS was founded in 1986 by Mike Rydin. The company engages in designing hi-technology software that is used by companies within the heavy construction industry. Heavyjob and Equipment360 are few of the most popular software prepared by the company (Roche and Shipper, 2011). The company devises software according to customized preference patterns of consumers. The above position map claims that the company provides high quality services at moderately high prices. Microsoft Corporation: Among all firms including HCSS, Microsoft Corporation is the largest software developing company. The company was founded in 1975 and engages in providing well-known software such as, Skype, Windows, Azure and Dynamics (Microsoft Corporation, 2014). The product quality is considered to be most superior at a high cost (compared to the other rivals). B2W: This company was founded in 1993 and is involved in producing B2W estimate, dispatch, track and maintain. B2W offers supports and sells estimating and bidding, analysis and field tracking repairing, resource planning, dispatching and equipment maintenance software for construction companies (B2W, 2014). The company produces less pricy, high quality products. Hard Dollar: The company was founded in 1989 and is the inventor of Project Cost Management Software (PCM) for owners, contractors and EPCMs. This software centralizes any project related productivity or cost data as well as helps to estimate returns of a project (Hard Dollar, 2014). The company claims that its software allows customers to build several capital projects. Hard Dollar aims to lower operating costs of its corporate customers. The prices of services provided are almost similar to HCSS, but service quality is relatively inferior. Therefore, from the above analysis, it can be claimed that if HCSS desires to grow and become a prominent player in the industry, then it needs to undertake serious measures in order to resolve issues faced in business pertaining to human resources. Conclusions and Recommendations From the above PESTL analysis, it can be stated that political, technological, legal, economic and social aspects of U.S. have considerably helped HCSS to achieve growth in the market. Even so, the competitor analysis model proved that the company still has a long way go, given that it is a small player in a competitive industry. The company experiences human resource crunch and creativity level of its employees are still far from being satisfactory. The communication system of the organization is also very poor. In order to motivate employees, senior officials of the company have decided to introduce an Employee Stock Ownership Plan (ESOP) (Roche and Shipper, 2011). Under this plan, employees would be allowed to participate in vital decision making processes in business through voting systems. Besides that, it was also assumed that the employees would receive 25% profit generated by the company (Roche and Shipper, 2011). The senior officials of the concern aimed to enhance the level of entrepreneurial activities by virtue of which greater creativity and productivity of workers can be achieved (Stephen and Toubia, 2010). Nonetheless, the researcher believes that desired goals of the company would only be met if HCSS adopts certain strategies in business. The ESOP program of the company would become successful with presence of greater degree of transparency in operations of the plan. The profit allocation among employees should be executed on the basis of equality (under the ESOP program). The ESOP plan of the company might be unsuccessful because in certain situations, decisions collectively undertaken by employees regarding company’s future capital investments might prove to be incorrect (Simic, 1998). In addition, perceptions of workers and senior board members of the company might end up being contradictory. This would increase level of commotion within the firm and lower organizational productivity. It is highly recommended that the company should not treat its employees as owners. The organization must try to effectively motivate its workers through special incentives, thereby improving their productivity. The concept of collective wisdom should be strictly discouraged by the company because this increases overall time and complexity of the recruitment process. The activities and decisions regarding recruitment should only be undertaken by officials of the human resource department of the company. The organization should encourage a participatory atmosphere in the workplace as this would help to improve dedication and efficiency of employees (Scully, 2008). The leaders of the concern should be transformational entrepreneurs who would govern on the basis of individualized consideration, intellectual stimulation, inspirational motivation and idealized influence (Huse, 2003). These transformational leaders of the organization should be able to improve overall level of communication efficiency as well as to render the management structure flatter in nature, so that activities conducted in various organizational departments are properly coordinated. Furthermore, transformational leaders would assist employees to become more efficient and productive, thereby stimulating growth of the concern (Bigler, 2001). Reference List Abeles, T. P., 2001. Impact of Globalization. The Impact zation. On the Horizon, 9(2), pp. 2 – 4. Andersen, J.A., 2000. Leadership and leadership research. 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The ubiquity of the technique of goal setting in theories of and approaches to employee motivation. Academy of Management Review, 3(3), pp. 594-601. Microsoft Corporation, 2014. Microsoft Corporation. [online] Available at: [Accessed 23 April 2014]. Roche, O. and Shipper, F., 2011. Heavy Construction Systems Specialists, Inc. (HCSS). Journal of Business Case Studies, 7(2), pp. 1-18. Scully, S., 2008. Transformational Leadership during transformational change. [pdf] The ICOR. Available at: [Accessed 23 April 2014]. Simic, I., 1998. Transformational leadership-the key to successful management of transformational organizational changes. The Scientific Journal, 1(6), pp. 49-55. Smith, G., 2000. Motivation. [pdf] IBS. Available at: [Accessed 23 April 2014]. Stephen, A. T. and Toubia, O., 2010. Driving Value from Social Commerce Networks. Journal of Marketing Research, 47(2), pp. 215-228. Strawson, P. F., 2011. Introduction to logical theory. London: Routledge. Stutely, R., 2002. 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