Human Resource Management in Construction Industry - Essay Example

Industry background: The construction industry in the UK employs 4 million people and contributes 10% of the nation's GDP. (DTI 2006) According to Loosemore (2003) quoted by Anumba et al. the industry combines a number of craft based and professional skills across a range of fairly disparate subsectors. (2005) They include bricklayers (masons), carpenters (timber trades), civil engineers, electricians and plumbers not to mention other supporting staff like accountants, clerks, mechanics and of course the managers to manage them all. A key characteristic of the construction industry, according to Loosemore et al. (2003), quoted by Dainty, Mei-I Cheng, et al., is its unpredictability relative to static production industries. This is because the construction project teams that work for varying periods of time during the construction of projects are reconfigured and redeployed to work on other projects. The rapidly changing environments call for a great variety and flexibility of managerial skills. (2005) While the construction industry is growing it is also facing a severe shortage of skills across the spectrum i.e. crafts, professional and managerial areas, some of which may be attributed to its strong growth over the last decade. Dainty et al. quote Mackenzie et al. (2000) to list out the factors that contribute to it: a demographic decline in the number of people entering the industry; the ever-changing nature of the market leading to a decline of operative skills; the emergence of new technologies which make re-training necessary; increased tendency of people for self-employment and the use of specialist and labour-only sub-contractors; the fragmentation of the industry; and most importantly the decline in training and related resources. (2005) Changes in industrial structure, wastage rates and international competition also impact the market. According to Loosemore et al. (2003) quoted by Dainty et al. these factors have created a "casualised labour market characterised by its informality and flexibility". (2005) The Construction Skills Certifications Scheme (CSCS) and the On Site Assessment and Training Scheme (OSAT), both voluntary, have been introduced to regulate labour with regard to the necessary skills. These initiatives recognize the complexity of training needs of people from a variety of backgrounds entering the industry. (Dainty et al. 2005) Quick Build Construction Ltd.: The core business of Quick Build Construction Ltd., one of UK's leading regional contractors, is contracting and contract joinery market and speculative multiple occupancy housing projects. The company has a partnering relationship with TiesRus, as it's principal European contractor. Quick Build's stated business objective is "To continue to grow its UK market share in its core contracting and contract joinery market, to rapidly expand its speculative multiple occupancy housing division (its most profitable market) and to deliver and consolidate its partnering relationship with TiesRus (as their principal European contractor)." The sudden departure of Mr. A. Smith who was managing the affairs of the company with a personal touch and with great success necessitated a review of the company's strategic HRM policies to maintain its competitiveness and achieve organisational goals. The company built a solid business infrastructure and its success in diverse fields over the years helped it earn a reputation as a leading contractor. The company's main weakness is its lack of adequate systems and practices in place, which normally help organisations function like well-oiled machinery with standard operating procedures to fall back upon in times of crises. The lacunae especially in such areas as resources, training, development and responsiveness to change are greatly felt at the individual, group and organisational levels. The company's current rigid, hierarchical and archaic system of governance is more a hindrance and does not fully utilise the full potential of its human capital. There is an urgent need to instil a team spirit among various functional activities and to create a flat organisational structure that can respond quickly to emerging business opportunities. Another important aspect that a strategic HRM policy framework will have to address is the sense of insecurity that a change in leadership has brought in, a volatile market place and challenging company objectives. There seem to be a breakdown in communications from top down especially in explaining organisational objectives and plans for achieving them. The atmosphere of uncertainty definitely takes a toll of employee loyalty. If these problems are addressed to ensure employee loyalty and motivate the employees, the company can cash in on its reputation to achieve its organisational goals of increasing its market share in the UK and expand its business to the rest of the European Union. This is the time for the company to invest in people (IPP). Mr. B. Smith who succeeded Mr. A. Smith in the top management has been an office manager all along and his lack of field experience does not exactly inspire confidence among his subordinates. Finally the weaknesses inherent in the rigid organisational structure should also be addressed to make it responsive to the needs of the dynamic environment of the construction industry. Quick Builds organisational structure: Human resource development according to Armstrong (2003 523) is "concerned with the provision of learning, development and training opportunities in order to improve individual, team and organisational performance." We can see from Quick Build's organogram that the company has no HRM/HRD department. The other notable absentee is the Safety Department. (White) Based on the industry background discussed above and considering the kind of hazards that the construction industry poses to its personnel, these two departments must be considered crucial. Similarly the marketing arm, which is the lifeline of the company, has just one manager. A properly structured HRM department would have corrected these imbalances. The remainder of this paper shall be devoted to issues concerning HRM and more specifically the training and development functions and how they impact the effectiveness and profitability of Quick Build, which in the ultimate analysis is the real test for the success of a business. The following diagram represents the problems the company is currently facing, most of them attributable to poor organisational structure: Figure 1: Current concerns facing Quick Build Construction Ltd. (White 5) The high staff turnover (12% of office staff and 28% of management staff) may be attributed to poor morale and a sense of insecurity, which stem from lack of functional competence at various cadre levels. Therefore a strategic approach to HRM will have to address training cadres in various functional areas to be 'quick-reflexive' and to respond to marketplace needs in real-time, to use an expression of the information age. For example the marketing/tendering department is often expected to submit detailed project proposals against tight timelines. Preparation and submission of such proposals will need perfect co-ordination with various functional departments like, engineering, finance etc. each department having its own priorities and objectives. The function of an effective, strategic HRM is to bring about such co-ordination that dovetails individual departmental objectives and priorities into organisational goals. Quick Build has set itself the following objectives: expanding in the domestic housing sector in the short term (one year); increasing its UK market share in the medium term (three years) and deliver and consolidate its partnering tie-up with TiesRus in the long term (five years). Research in the field of project management has it that less than fifteen per cent of personnel have prior qualifications in project management. The remaining eighty five per cent have to learn by trial and error by working in projects or on-the-job training. This is especially so in the case of management staff. No amount of classroom studies can presage the unexpected eventualities that project management staff face in real life situations. (Turner et al. 2003) This does not mean that there is no room for formalised training in project management. The training and development function of the HRM department is to extend learning from previous successes and failures; train apprentices based on earlier experiences and facilitate project teams to extend their learning by reflecting on their own experiences. Identification of training needs: The section on "Construction industry key performance indicators and benchmarking" in the Construction Statistics Annual 2005, lists ten parameters for the measurement of social performance in the construction industry. Listed as "Respect for People Key Performance Indicators (RfP KPIs)", they are: employee satisfaction, qualification and skills, staff turnover, equality and diversity, sick absence, training, safety and pay. (Pottier 2005) Four of these parameters, employee satisfaction, qualification and skills, staff turnover and training have either a direct or indirect relationship to training and development. Training and development activities need to be designed based on an understanding on the staff needs of the organisation at various levels, keeping in view the short, medium and long-term goals in perspective. The analysis is carried out not just to fill in the current gaps but taking future projected objectives also into consideration. The following matrix aims to project Quick Build's projected resourcing needs beginning with employee selection procedures. Figure 2: Resourcing for Quick Build (Adopted from White 18-24) Considering these aspects, there is an immediate need for Quick Build to initiate training and development programmes for its staff in the areas of change management, teamwork, communication, customer service and productivity. The training programmes thus initiated should be periodically reviewed to ensure compliance and continuity to achieve organisational goals in the long term. Implementation of training and development in Quick Build: As the company does not have a training and development department, the first step would obviously be to create a training and development department, which will report to the Human Resources Director (the company has to recruit even for this position) and supporting staff. The department should have adequate staff resources to train people from across various functional areas. The department will commence its task by undertaking a 'job role and competency' analysis for identifying learning and training needs: Describing the key activity areas and key result areas for each job function. Defining qualitative and quantitative performance standards Defining the knowledge, skills and competences required to for each job to achieve the performance standards. (Adopted from Armstrong 555) For the organisation to achieve its current/projected objectives, personal development plans for all employees require development of key capabilities. The traditional learning cycle is depicted in the following diagram: Figure 3: The classic training cycle (Balderson 2005 28) Balderson observes that business objectives are not often taken into consideration when training programmes are designed either because the training people are not involved at the strategy planning level or because the dynamic nature of the business environment. (2005 30) The training needs analysis (TNA) therefore begins with an understanding of the strategic goals of the company, breaking them down to the level of various functions/departments and individuals. Palmer urges that all training and development must take place in its proper cultural and environmental context. (2005 119). The PESTEL and SWOT analyses suggest the following additional objectives be pursued in the long-term interests of the company: Short term (One year): Emphasis on quality of products/services Homogenisation of the organisation. Medium term (Three years): Expansion in the EU markets. Seeking partnering agreement. Long term (Five years): Evolving into a learning organisation. In order to achieve these objectives the new training and development department has to begin with an overhaul of organisational culture. This is easier said than done. Bringing about cultural changes in any organisation requires willingness on the part of the employees to first unlearn and then learn new practices and requires involvement and commitment of the top management. As unlearning is a tacit admission that something indeed was wrong, neither the employee nor the organisation is generally prepared to do this but everyone pays lip service to training and development. The usual expression is that they have an open mind, as if the human mind is an empty vessel into which the training faculty can dump anything. A change in the Quick Build's production oriented, inflexible hierarchical organisational attitude should be the first priority of the new training and development department. In practical terms, the management should be concerned about the company's ability to adapt to the ever-changing dynamics of the marketplace. The second priority is equipping existing personnel or new recruits to achieve short, medium and long-term organisational objectives. For e.g. the company's immediate (short term) objective is, geographical expansion of its core business. This calls for the marketing department to understand the market and competition in the geographical areas in which the company seeks to expand. Are the people in the department equipped with the necessary skills for this Similarly the technical people may be trained on the job. Do the company's engineers/managers have the competence to train the 'on-the-site' supervisors and other personnel In the absence of such personnel, it would be better to attract suitable talent from outside, while simultaneously instituting training programmes by external faculties. Wilkinson et al. (2003) quotes Bennet (1996) to suggest that an engineer (for e.g.) may be trained in six ways. They are on-the-job training, formalised graduate education, professional registration, non-credit short courses and workshops, professional society activity and reading. In addition training may be within or without the company. In the medium to long term the objective is to make the organisation more flexible, communicative, adaptive to change and make it 'self-learning'. This calls for development of a core of values and capabilities at the artisan, support and managerial functional levels, fuelled by internal motivation, internal and external competition and a desire to excel. The long-term plan for the training and development function must concern itself with the following issues: Identification and development of a core training and development team that can train, guide and mentor personnel at various levels. Development of international competencies in all staff. Development of project teams taking their individual core capabilities into account. Development of multi-tasking capabilities in staff at various levels. Careful screening and selection at entry level. Development of a system to monitor the progress of all employees with a view to develop them to occupy larger roles and responsibilities. Development of an organisation that is based on capabilities and skills, not authority. The importance of on-the-job training: Of all the ways in which training may be imparted, by far the best is the on-the-job training. The learner learns by trial and error, by experimenting with success and failure, which in itself is enriching and over a period of time develops an instinct or gut feeling. This is called gaining experience or the process of development. Human mind acts as a filing cabinet, which stores a series of such experiences allowing an appropriate 'file' to be ferreted out at a time of need. However if the trainer is not adequately trained or not competent the employee is likely to learn the wrong practices. In order to overcome this problem, it is necessary to train the managers who are expected to train others as developing subordinates is a key function of managers. Success acts as best the motivator for performance. Therefore a good manager helps his employees to 'succeed' to further the process. Managers can help extend the learning or facilitate the process of development by formalising the project management process, adopting post completion reviews and implementing project management support and mentoring networks. (Turner et al. 2003 45). In traditional organisations, the organisation is a repository of knowledge and people move along the learning path through functional hierarchies. The construction industry, by nature operates through project management that largely obviate the necessity functional hierarchies. The leaders of these teams have a larger role and responsibility to train and equip their protgs to operate autonomously. Bibliographic References: Anumba, Claire, Dainty, A. R. J., Ison, S. G., Sergeant, Amanda. (2005) The application of GIS to construction labour market planning. Construction Innovation. Dec 2005, Vol. 5 Issue 4, pp 219-230. Available from: http://search.epnet.com/login.aspxdirect=true&db=buh&an=18904923 (Accessed: 2006.04.24) Armstrong, Michael. (2003). A Handbook of Human Resource Management Practice (9th Edition). London. Kogan Page. Balderson, Sue. (2005) Strategy and Training and Development. In (Editor) Wilson, John P. Human Resource Development: Learning and Training for Individuals and Organizations (2nd Edition). London. GBR: Kogan Page, Limited, 2005. p 28. Available from: http://site.ebrary.com/lib/britishcouncilonline/Docid=10084454&ppg=59 (Accessed 2006.04.24) Dainty, Andrew R.J., Ison, Stephen G., Root, David S. (2005) Averting the construction skills crisis: a regional approach. Local Economy. Feb 2005, Vol. 20 Issue 1, pp 79-89. Available from: http://search.epnet.com/login.aspxdirect=true&db=buh&an=15963742 (Accessed: 2006.04.24) Dainty, Andrew R. J. Mei-I Cheng, Moore, David R. (2005). Competency-Based Model for Predicting Construction Project Managers' Performance. Journal of Management in Engineering. Jan2005, Vol. 21 Issue 1, pp 2-9. Available from: http://search.epnet.com/login.aspxdirect=true&db=aph&an=15382390. (Accessed: 2006.04.24) Department of trade and industry - (Construction). (2006) http://www.dti.gov.uk/index.html (Accessed 2006.04.24) Palmer, Richard. (2005). The Identification of Organizational and Individual Training and Development Needs. In (Editor) Wilson, John P. Human Resource Development: Learning and Training for Individuals and Organizations (2nd Edition). London. GBR: Kogan Page, Limited, 2005. p 117. Available from: http://site.ebrary.com/lib/britishcouncilonline/Docid=10084454&ppg=148 (Accessed 2006.04.24) Pottier Frances & Achur James (Eds.) Construction Statistics Annual 2005. (2005). Norwich. TSO (The Stationery Office). Available from: www.tsoshop.co.uk (Accessed 2006.04.24) Turner, J. Rodney, Keegan, Anne and Crawford, Lynn. (2003). Delivering improved project management maturity through experimental learning. In Turner, J. Rodney (Editor). People in Project Management. Abingdon, Oxon. GBR: Gower Publishing Limited. pp. 45-61. Available from: http://site.ebrary.com/lib/britishcouncilonline/Docid=10048739&ppg=63 (Accessed 2006.04.24 ) White, Ricardo. (no date) Quick Build Construction Ltd. Re-wiring the Corporate Brain. Wilkinson, Suzanne and Leifer, David. (2003.) Human Resource Management. In (Editors) Best, Rick, Langston, Craig and de Valence, Gerard. Workplace Strategies and Facilities Management. Oxford, England. Read More