Human Resource Managmenet - Research Paper

Human Resource Managmenet - Research Paper

By

Ninah Ashani Silva

University of Atlanta (Student Number 1433)

Executive Summary

The UAE based company in the Insurance Sector, Scott Kin & Co.'s (SKC), bottom line figures were highly impacted by its lack of recognition of Human Resource Management and its systems as a strategic partner in achieving the organization's objectives. This lack of recognition had lead to its employee performance management practices not being linked to SKC's strategy and business objectives and thus creating a severe disconnect between the organization's objectives and employee's performance objectives essentially scattering the strengths instead of harnessing and channeling the strengths to achieve the organization's targets.

This hindrance coupled with the organization's culture and practices were together causative towards high employee turnover harshly impacting the organizations bottom-line figures. Although an organization can never completely stop turnover, organizations definitely can take actions to influence the rate of turnover and thereby reduce the negative impact turnover has on the organization and its profitability.

Several researchers have explored the relationship between strategic Human Resource Management and organizational performance (D.P Lepak & J.D Shaw), research has also proved the positive outcomes when business objectives and HRM practices are aligned (Shaw and Prennushi).

To this end relatively simple and effective strategies, principals and practices are discussed which, when/if implemented, will reduce SKC's employee turnover drastically and will direct the richness of all available talents and resources towards the achievement of organization's objectives and subsequent profitability.

Organization overview

SKC is a medium sized organization in the United Arab Emirates with nearly 620 employees, providing products & services in the insurance & investment industry. SKC has strong Sales and Marketing departments with cutting edge & innovative investment and insurance products. The Chief Executive (CE) of SKC is supported by an executive team comprising of Directors for each of the core directorates, Legal & Compliance, Sales, Marketing and Finance. The HR Manager reported to the Board via Legal & Compliance Director. SCK worked on a 9 hour working day, 8am - 5pm, from Sunday to Thursday.

SKC's HR Dept was on a constant recruitment drive, aided by several recognized employment agencies. Many new competent employees were regularly coming on board. SKC had a portfolio of excellent products & good marketing campaigns. Despite these SKC management was noticing negative bottom-line figures year on year.

SKC increased their marketing budget and engaged an external media company to change their line of advertising. They also hired a Training Manager to improve and take over sales staff training initiatives already run by the HR department. Nevertheless, these initiates have shown only marginal improvements and not yielded the expected results of curbing/reversing the issue of negative/stagnant bottom-line figures.

Although highly motivated and talented individuals were regularly injected into SKC, they soon became de-motivated and disengaged. Teams worked within "silos" to better their individual work area as opposed to working for the better of SKC as a whole. Essentially there was no "one -team" but many teams within the firm. Employees were becoming increasingly dissatisfied and the atmosphere was becoming exceedingly negative, disengaged and unproductive. The employee turnover of SKC was way higher above sector average and increasing at an alarming rate.

Problem analysis

The Chief Executive (CE) of SKC was supported by an executive team comprising of Directors for each of the core directorates, however, HR Dept. was not appointed as a core directorate and thus not a full member of the Board. This emphasizes SKC's lack of recognition of Human Resource Management as a fundamentally essential strategic business partner. The HR Dept. at SKC appears to be a mere "hiring and firing machine" adding no more value to the profitability of the business. This has led to a workforce which was disengaged from its strategic objectives, and are working without clarity of where the firms is headed and how to get to there. This disengagement from the organization's strategic objectives has also created silos & divisions within the organization essentially forming "mini teams" working in different directions instead of creating synergies to move towards a common goal.

There seem to be a severe disconnect between Organization Objectives (OOs) & employee objectives. The lack of alignment in the employee objectives against the OOs appear to be causing divisions amongst departments as well as amongst employees themselves as they have lost sight of the "common goal". Although each individual/team was contributing their best the efforts brought little success to the organization's profitability as their contributions were not aligned & channeled towards meeting the organization's objectives (OOs) as a whole. Especially considering SKC hired highly competent individuals the evident lack of results make them feel frustrated and high energy expended leave them "burnt out".

High turnover within SKC is having devastating effects within the organization and is greatly affecting its profitability.

Statistics (Source: Unpublished Saratoga Institute research, 2003)

89% of managers believe Employees leave for money 11% of mgrs believe emps leave for other reasons

12% of emps leave for money 88% of employees leave for reasons other than money.

Average cost of losing an employee is estimated to be one time annual salary. This means that a company with 300 employees, an average employee salary of $ 35,000 and voluntary turnover rate of 15% a year is losing $ 1,575,000 per year in turnover costs alone. If for the sake of illustration, 7- percent of this company's forty-five yearly voluntary turnovers- thirty one employees- is avoidable, then the company by correcting the root cause, could be saving $ 1,102,500 annually (Saratoga Institute).

Above statistics indicate how turnover is directly linked to