A Professionally Managed Company - Essay Example

HRD Practice - Practical Experience Submitted By: Affiliation: Word Count = 3680 Executive Summary A study of HRD as practised by a large successful organisation was carried out to understand how theory translates into practice in the field. ABC was selected since they are a professionally managed company and have full fledged HRD as an integral part of their organisation. ABC is a highly respected and successful company. Its operations, in a remote location, present a challenge to attract and retain the talent required to run the high technology plants. While an overall appreciation of HRD activity was done, time available and limitation of resources narrowed the focus to detailed learning of the career development and performance appraisal systems only. Within these, scope was further limited to understanding career development of graduate engineer trainees while the appraisal system was studied in its coverage of all middle-management personnel. Information was gathered and notes taken through personal discussions with HRD personnel, management and a number of personnel affected by these systems. Data on attrition rates, performance appraisals, and career development was garnered from the meticulous records maintained by the ORTD. This data was allowed to be drawn for study only and not allowed to be used in this report. The main findings included in the following report are that ABC has a clear view of its mission and objectives and HRD strategy is visibly and strongly linked to the overall plans. The two areas studied are well developed and effectively used. This report offers some recommendations to further strengthen these. Table of Contents Item No. Description Page 1.0 Introduction 4 2.0 Industry Studied - Overview 5 2.1 Background 5 2.2 Industry Characteristics 5 2.3 ABC's Mission/Corporate Values 5 2.4 General Strategy driving HRD in ABC 6 3.0 Scope of the Study 8 4.0 Career Development at ABC 9 4.1 Career Development - Overview 9 4.2 Objectives of Career Development at ABC 10 4.3 Critique - Present Practices 10 4.4 Strengths and Weaknesses 13 4.5 Recommendations 14 5.0 Performance Appraisal Systems in ABC 16 5.1 Performance Appraisal - Overview 16 5.2 Objectives of Performance Appraisal at ABC 17 5.3 Critique - Present Practices 17 5.4 Strengths and Weaknesses 18 5.5 Recommendations 19 6.0 Conclusion 21 7.0 References 22 Appendix - I Training Program for GET's 23 Appendix - I Evaluation of Appraisal Forms 25 1.0 Introduction This report is written at the conclusion of a study of Human Resource Development (HRD) practices in an existing company (ABC, at their request). Theoretical inputs received during class and the thinking of various experts was compared with actual practice, to develop deeper understanding of HRD. HRD embraces a large range of activities aimed at bringing out the best in each individual to meet organizations' objectives this study was limited to two areas, Career Development and Performance Appraisal. ABC adopts a paternalistic approach and shows total involvement in the welfare of the employee both on and away from the workplace. In all dealings with employees the company makes a conscious attempt to integrate feelings, priorities and welfare of the employees' family. ABC also has well thought out medium and long term plans for growth and consolidation and its efforts at career planning and development are fully integrated into them. Manning and skill level requirements of the organisation as it evolves and grows in the next five years are written and HRD responds to this through its activities of recruitment, training and development of in-house human resources. Lateral recruitment at higher levels is rare. 2.0 Industry Studied - Overview 2.1 Background The Organisation selected for study is a large company, employing about 3,600 personnel. The company manufactures fertilizers, PVC and Cement and is essentially chemical technology driven. The company is very successful in its performance as is evident from their plus 15 percent annual growth. Personnel and HRD functions are handled by a department referred to as ORTD (Organisation, Recruitment, Training and Development). 2.2 Industry Characteristics The company uses the latest technology in all production lines. Plant operations and maintenance involve high levels of knowledge and skill and highly skilled technical personnel form the vast majority of the workforce. Some unskilled workers are also employed in ancillary functions such as loading of finished products etc. ABC is located in a remote location that offers little in terms of quality of life outside its campus. The society is very conservative and mostly dependant on agriculture. Within this situation it faces a major challenge to attract and retain talent and all HRD policies are directed towards this goal in addition to providing a sustaining atmosphere to its employees. 2.3 ABC's Mission / Corporate Values ABC strives to be the lead supplier in its areas of business based on uncompromising adherence to quality and services rendered to its customers. The company targets continuous growth and expansion. ABC is a public company with majority stockholding with one family of which the third generation presently steers management policy. The family brings its deep concern for human capital, and uncompromising adherence to the law, to all policy issues. This is evidenced in all their decisions and guiding policy statements. 2.4 General Strategy Driving HRD in ABC Careful study does not reveal conscious use of a theoretical framework but the overall strategy employed broadly conforms to theoretical thinking. 'Competition is at the core of the success or failure of firms, and determines the appropriateness of a firm's activities that can contribute to its performance' (Porter M, 1985). Competitive strategy is the search for a favourable competitive position in an industry, and aims to establish a profitable and sustainable position. ABC operates in industries that are inherently profitable and has chosen a competitive position with regard to price, matched by cost leadership, and an emphasis on quality. Cost competitiveness is attained by the use of technology, energy conservation and high productivity of its workforce through sustained efforts in HRD and finally through the sheer breadth and size of the company leading to economies of scale. ABC also differentiates itself from its competition through 'Extension Services' provided to its customers that creates superior value and help generate customer loyalty. These services include assisting the customer in making proper and cost effective use of the company's products. ABC's offensive strategy has been successful through a large diversification of its product lines in unrelated areas that helps in overcoming any slump in demand for any of its products caused by changes in market conditions. The large investments required to enter any of the fields provides a barrier to the entry of new players while ABC has the advantage of 'momentum of an early start'. HRD is an important element in ABC's strategy of cost competitiveness, through recruitment and careful nurturing of the best talent it ensures an atmosphere where innovation and free thinking is actively encouraged. 3.0 SCOPE OF THE STUDY Areas for study were selected after discussion with the management of the organization and an assessment of personal aptitudes and resources for carrying out such a research. These are: 1. Career Development 2. Performance Appraisals and Counselling The company recruits a large number of engineers every year from the country's best institutes, and spends considerable effort in training them. However, attrition rate is high in the initial years and only a handful complete ten years of service. Interestingly, those who remain continue till retirement, all present top managers joined the company as trainees! This study is restricted to observations and analysis of the two areas described above. The research is further limited to analysis of the policies with respect to graduate engineers. While some reference is made to other aspects of HRD practices of the company the survey addresses only career development strategies and performance appraisal systems. 4.0 Career Development at ABC 4.1 Career Development - Overview Career, for an individual, is a progression through life at the workplace that brings increasing success and status. Steady progress also brings an increase in responsibility and involvement in ones work as also stability in ones work patterns. Advancement in career depends on increasing skills, competencies and interests and leads to growing personal sense of fulfilment and achievement. Career Development (CD) therefore becomes a continuous process through which an individual progresses in a series of stages, each of which can be characterised by unique issues, themes and tasks (Werner & DeSimone, 2002). It is therefore up to ABC to make opportunities for development and increasingly involve the employee in decision making, provide a clear and defined path for progress and provide performance based compensation. While the company has a structured career development path for each category of employees and individual routes for the star performers, it is to be expected that the employees themselves have their own plans and aspirations. Successful HRD practices aim to integrate the two and find a middle path which meets the requirements and addresses the limitations of both. ABC's efforts in this regard are found wanting and discussed in detail later. Career Development involves understanding of employee careers as the first step and influencing those careers through a change of KSAO's (Knowledge, Skill, Aptitudes/Ability and Other characteristics) and through assisting them in preparing for new work thus enhancing their employability. In modern thought individuals must be responsible for their own development (Werner & DeSimone, 2002) and must add value to the company in a measurable way and must understand the nature and nuances of the business of their company. In the long term perspective ABC must look at this and develop a system to measure and monitor contribution. (This has not been developed as a recommendation since it requires a different and more detailed study). 4.2 Objectives of Career Development at ABC The objective of the CD in ABC is to retain the skilled talent and to provide them with enough challenges and stimulation to stem turnover intentions. Requirements for future growth and attrition are to be met as also for sustaining current operations. The strategy adopted is in consonance with the overall, declared and implicit, strategy of the company. 4.3 Critique - Present Practices The main strength of current practice is effective in meeting the objectives of the organisation; the weakness results in the initial turnover of trainees. To offset this, more personnel than required are recruited. This is not the correct approach, and reflects poorly on the orientation process and cost effectiveness of HRD practice (which are not a part of this report). The CD function of the ORTD can easily divided into two parts, one that leads to normal career growth and the second that looks at fast-track development of identified and exceptional talent. Engineer trainees join the company as Graduate Engineer Trainees (GET). A description of the training program is enclosed at Appendix -I. The salient features of the training are: Daily interaction between supervisor and trainee, Rotation of the trainee through different departments for him as well as management to find a good fit. The creation of a family atmosphere and a feeling of belonging. Performance appraisals of the supervisors and tutors include an appraisal of their ability to train people. The career growth pattern for trainees found to be average and slightly above average is cut and dried. At the end of training they are designated Assistant Superintendent., which function they perform for about five years. At this stage, and depending on performance, they are promoted to superintendent and progress up the hierarchy. Stages of life and career development have been defined in the works of Erik Erickson and Daniel Levinson (Levinson et al, 1978) from two different points of view. Erickson uses the psychological growth of an adult through different stages to trust, autonomy, initiative, industry, identity, intimacy, non stagnation and ego integrity. Levinson uses chronological growth as the base for defining stages of growth and defines 'Seasons of Life'. The approach of Greenhaus et al is similar to that of Levinson. ABC needs to make a clear linkage between its CD strategy and the changing needs of the personnel as they grow chronologically and in their careers. Identification of "customers'" needs through theoretical models supported by personal interaction will assist ORTD in tailoring its efforts to suit. Career Development helps organizations through planning of effective succession plans to meet needs of natural and unexpected attrition. Succession planning is a complimentary activity of Career Development and ABC has done very well in this area. There has virtually been no gap in performance in case someone critical to operations left. With clear lines of succession and constant growth no barriers are faced and ORTD is continuously able to provide larger roles and responsibilities to personnel and at times at a very exciting pace. For a person to continue to perform at high levels it is essential to develop career motivation and building in flexibility and resilience in the organisation structure. Effective career development systemsneed a systems approach (Gutteridge et al., 1993), by identifying needs for career development, developing a vision for the future and developing a plan for action. ABC would benefit through use of such an approach. New generation X engineers have different learning styles and opinion of the way their careers should progress (Rosen, 2004). The long drawn training is one of the deterrents that make some of the trainees leave. ABC must consider ways of shortening the training program through use of modern training techniques. Career Development in this report is restricted to a view from the employer side and does not include employee own planning. However, in order to be successful ABC must understand the employees' aspirations and plans for their own career and integrate these into their efforts. 4.4 Strengths and Weaknesses The study and discussion above reveal that strengths of the CD efforts of the organisation may be summarised as below. While these apply almost uniformly to all categories of workers, including blue-collar workers, they are listed in order of importance to the organization vis--vis engineer trainees. CD is fully integrated with the organisation's strategic planning and development is targeted at preparing individuals who will be able to meet the identified needs. CD is treated as a link between various HRD activities and is treated as an integral part of the whole. The ORTD and IR departments institutionalise the efforts and play the role of moderators. Emphasis on lateral movement (job rotation) and for personnel to acquire multiple skills in areas other than their core competencies. On-the-job training is handled very well and through perpetual monitoring and coaching. Inclusion of the family and social life in career management and other HR activities is a major strength and reflects in their performance. Weaknesses identified in the study may be summarised as under: CD is kept secret; this approach does not benefit anyone. Understanding the needs of employees as they progress in life and career and systematic integration into CD efforts and sharing expected outcomes is necessary. There is no concept of team based development. The training period is too drawn out and becomes constrictive for good performers. 4.5 Recommendations Based on the study of theory and assessment of the efforts of the organisation the recommendations for consideration of the management are: 4.5.1 Increase the openness of career development effort - Immediate perspective This exercise needs the involvement and active participation of the employee. Through discussions with the employee it will be possible for both to align their future plans and strategies for progress and result in a positive influence on the motivation and turnover intentions of the employee. 4.5.2 Expand team based development efforts - (mid to long term initiative) The company must develop a vision for the future where team working will replace the current hierarchy and develop a plan for action. Implementation should commence soon as times are changing and the paternalistic approach may not be suitable for very long. Management style shall have to adapt to exploit modern thinking while simultaneously keeping its roots firmly in the long traditions and values. 4.5.3 Revamp Training Methods - Immediate perspective ABC must use a wider variety of training tools to accommodate different learning styles and needs, instead of just on-the-job training use must be made of simulators and simulation software to enhance the training values and reduce time taken for preparing trainees for taking up direct responsibilities. 5.0 Performance Appraisal Systems in ABC 5.1 Performance Appraisal - Overview Next to firing an employee performance appraisals (appraisals) are universally cited as one of the most disliked tasks by mangers. This happens when appraisals become a ritual more in the nature of post-mortems rather than being useful tools for implementing corporate strategy. Management must focus on performance management in its entirety which includes performance development, training, giving challenging assignments to employees and providing regular performance feed back through appraisals. From the organisations viewpoint appraisals help provide feedback to workers so that they know where they stand, which in turn is vital for career development, and provides a means of communicating this feedback. Appraisals assist in counselling and coaching so that they may improve performance and develop skills and capabilities to increase their future potential and increase their usefulness to the organisation. Appraisals help develop commitment and loyalty to the organisation and motivate the employees through recognition and respect. From the individuals viewpoint appraisals provide them the opportunity to assess how well they are doing and how they are rated by the organisation and set new goals for themselves. Therefore, it is essential that the appraisal be a two way process where the employee is also given an opportunity and encouraged to give feedback. 5.2 Objectives of Performance Appraisal at ABC Appraisals are carried out with the objective of helping ABC management to achieve goals such as planning and strategising plans for the future. Appraisals are an important element of the information and control systems and are used to influence performance, behaviour and work ethic of the workers. They provide information that is useful in making decisions regarding placement, promotion, organisation, training needs, compensation structuring and yes - firing. 5.3 Critique - Present Practices Performance Appraisal is a continuous exercise with ORTD. Employees are divided into several categories and a pre-selected category is taken up for appraisal every month in such a way that each employee is covered once every three months. The appraisal takes the form of a confidential report from the supervisor in a specific format. These formats are discussed in Appendix - II to this report. The important part of the format is the assessment of ability to take further responsibility and workload as well as the perceived training needs. The forms are filled in by the supervisors and ratified by a higher officer. There is no involvement of the employee, his peers or subordinates. Appraisals are collated by the ORTD and presented in the form of an agenda for meeting. Appraisal meetings are chaired by the CEO and all senior managers attend. Counselling is done only in cases where a need is identified because of poor performance or lack of motivation or similar problems. Counselling is done by a team formed of the supervisor, head of department, ORTD representative and the employee. These sessions are unstructured and held in a friendly and relaxed atmosphere. The counselling team plays the role of helper and not that of a judge and are meant to help the employees discover their own developmental needs. An attempt is made to identify the reasons for lack of performance and the employee given full latitude to express problems faced. The meeting usually ends with a plan for the immediate future and a record is kept of this on the appraisal form itself. 5.4 Strengths and Weaknesses The only strengths that emerge are: The opportunity provided to the employee found underperforming to express problems faced and planning for performance improvement. It provides a significant and scientific basis for determination of compensation structuring, relocation, training and firing decisions. The system is fraught with inherent weaknesses, which may be summarised as: Appraisals are directed towards isolating lack of performance, in cases where performance is equal to the expectations or exceeds it there is no feedback to the employee. The power of positive feedback is totally ignored. Communicating strengths and weaknesses to employees and understanding feedback creates an environment that is less defensive and stressful to the employee. Appraisals are too repetitive and place an enormous workload on the ORTD; this makes it monotonous and thus treated casually. Appraisers are continuously filling forms and the care required to make such critical judgements and decisions gets diluted. All employees are appraised on similar criteria and no relevance is given to the job requirement. To illustrate, theoretical knowledge is of larger relevance to the person working in quality control compared to the shift operator where different skills are required, yet both are measured against the same parameters. Some supervisors are strict in their appraisals while others tend to award higher rankings; the appraisals thus suffer from a bias which can be easily removed. Examination of the summary records of appraisals done over the past one year reveals a strong halo effect. 'The Matthew Effect suggests that no matter how hard an employee strives, their past appraisal records will prejudice their future attempts to improve' (Gabris & Mitchell). Most supervisors tend to have favourites among their personnel who can do no wrong and others who can do nothing right (Heneman, Greenberger & Anonyou,1989).This bias will lead to distortion of the appraisal and cause frustration for those employees who are discriminated against. 5.5 Recommendations Through study of the present system and organisation culture and the theoretical inputs from literature and case studies of best-practice models, following recommendations, targeted at improving effectiveness and improving on the identified weaknesses of this very important tool of HRD emerge: 5.5.1 Reduce Work to Improve Quality - Immediate perspective Due to the sheer number of personnel involved and reasons stated above the periodicity of the appraisal should be reduced to once every six months to reduce workload and help improve the quality of the appraisal process. 5.5.2 Share Appraisals with Employees - Immediate to mid-term goal The person being appraised must be able to share the perceptions of supervisors about performance. This will build an atmosphere of mutual trust. Care must be exercised and only trained personnel be allowed to handle this, it is as important as the counselling session. 5.5.3 Bring Appraisals to Equal Footing - Immediate perspective Existing data of appraisals carried out in the past should be used to devise a system for assigning weights to the appraisals carried out on the basis of: The relevance of the particular KSAO being assessed The person doing the appraisal This will help to view the performance of each employee against a levelled yardstick. 5.5.4 Resolve the Matthew Effect - Short to mid-term perspective The supervisors performing the appraisals must be made aware of the horns and halo biases and the effect these have on the morale and motivation of their workers. They should also be given incentive to help improve the performance of the poor performers. In addition ABC may consider peer review of performance appraisals that would help. 6.0 Conclusion ABC have developed practices and systems through a century of usage and tuned these to the ethos and requirement of the organisation. However, any system can benefit from a fresh look and comparison. Career development and Performance Appraisal are areas that have seen a lot of study and development in recent times Through the above study one has been able to comprehend what makes for success in industry. The strategy chosen by the company, especially in light of the remote location and high technology employed, of taking care of its employees and looking after the welfare of their families is appropriate and well considered. It is only through having a satisfied and motivated work-force that they are able to meet their mission and objectives. Through constant assessment of systems and procedures, which go towards meeting the overall strategy, and addressing shortcomings ABC will improve its prospects of being able to meet its objectives of being market leaders and constant growth and improvement of financial performance. ABC personnel have been wonderful in their open discussions and helpful attitude towards my pestering ways and I wish to sincerely record my gratitude to all my friends at ABC and wish them well in their lives and careers. References 1. Gabris, G.T. & Mitchell, K., (1989) The impact of merit raise scores on employee attitudes; the Matthew effect of performance appraisal, Public Personnel Management, Vol. 17, No 4 (Special Issue). 2. Gardner, H. (1993). Frames of mind: The theory of multiple intelligences (10th anniversary edition). New York: Basic Books. 3. Hendry, C. (1991) Training and Corporate Strategy, in Stevens J. & Mackay R.eds. Training and Competitiveness, Kogan Page, London 4. Heneman, R.L., Greenberger, D.B. & Anonyou C., (1989) Attributions and exchanges: the effects of interpersonal factors on the diagnosis of employee performance, Academy of Management Review, Vol 32, No 2. 5. Michael Beer, Paul Lawrence, D.Quinn Mills & Richard Walton (1985) Human Resource Management: A General Managers' Perspective, Free Press New York 6. Michael E. Porter, 1998 (1985) 'Competitive Advantage: Creating and Sustaining Superior Performance', Free Press, 1998 (1985) ISBN-13: 978-0-684-84146-5 7. Michael E. Porter, 1998 (1980), 'Competitive Strategy: Techniques for Analyzing Industries and Competitors' Free Press, 1998 (1980) ISBN-13: 978-0-684-84148-9 8. Mabey C., Salaman G. and Storey J., (1999) Human Resource Management: A Strategic Introduction, Blackwell Business, Oxford 9. P. Senge (1990) The Fifth Disclipline: The art of the learning organization, Doubleday 10. R.L De Simone, (2002) J.M. Werner & D.M Harris Human Resource Development 11. Rosen, L. D. (2004, March/April). Understanding the technological generation gap The National Psychologist, 13(2), 18 Appendix - I Training Program for GET's About 20 GETs are recruited every year and join on the same day, making it more like an extension of college, especially since they are also provided accommodation and board in a hostel on campus for the time it takes them to find their bearings and organise their personal lives. They are placed in different departments in the factory and most training is on-the-job. The head of the department is designated their 'supervisor'; this in no way interferes with the relationship with the immediate superior at the work place. A higher officer is designated 'tutor' during the period of training. These people act as family and guide and counsel the trainee on a regular basis. (Performance appraisals of the supervisors and tutors themselves include an appraisal of their ability to train people in their care and the company places a very large emphasis on this assessment). The responsibilitiesof the tutor and supervisor essentially entail coaching, appraising, advising and referring. Trainees are put through a training period of two years. In cases where the trainee fails to measure up to the standards expected even after two extensions of the training period his services are terminated. Training during the first year consists of a detailed analysis of different departments through which the trainee is rotated, this helps in the trainee learning about the interface between different sections and also the management to find a good fit for the trainee, his capabilities and the work he is most likely to succeed at. During this period the trainee maintains a 'Daily Diary' which is reviewed every day with the supervisor and at least once a month with the tutor. At the end of the year the trainee is supposed to present a 'Core Project Report', it is the quality of this report and the quality of the recommendations that help determine how well the trainee has been able to absorb training imparted. Successful trainees join the regular cadres of the company and undergo another one year of training as Officers on Special Duty (OSD). An OSD is not given any direct responsibility and learns the operations of the assigned department in detail. Gradually independent charge is given to the individual and at the end of training he is fully competent to handle the operations of at least one section of the plant or its maintenance. Read More