Table of Contents
Background Information. 3
HRM as a Strategic Force at Pound-Co Finance. 5
Talent Management Practices. 9
Recruitment Process. 9
Performance Management 11
Learning and Development 13
Closing Remarks. 17
A Critical Evaluation of People Management Practices of Pound-Co Finance
The following report analyses Pound-Co Finance’s people management practices. The report covers a brief background of the company including its history, its locations, how the business is carried out, the nature of business the company deals in, and its target market. Additionally, it captures the HRM model implemented by the company including its limitations and strengths. Furthermore, it extensively evaluates the recruitment process, performance management system, and learning process that is implemented in the company as well as their strengths and weaknesses. Finally, the report gives some recommendations that the company can implement in order to address these weaknesses which will greatly help in the achievement of the company’s current objectives.
Pound-Co Finance is a successful finance company which was launched in 2006. Its launch was a result of two small companies owned by individual entrepreneurs merging. Its head office is located in Huddersfield where there are currently approximately eighty employees. Pound-Co Finance has a significant number of branches that are spread out across the North of England, with central field offices known as Hubs in Yorkshire, the North East, and Lancashire. These Hubs act as field offices for the local branches.
The business operates in a non-standard market which means that it may opt to charge higher rates while at the same time undertaking greater risks on the customers it lends to. What this simply means is that the target customers are people facing court judgments that may have frozen their assets or they have been declared bankrupt or they simply have poor credit history. Pound-Co Finance deals in small scale loans ranging from £500 to £5,000. The company hosts a website that generates a customer’s interest, however, a customer must call their local branch to discuss the loans and arrange to sign all the necessary documents. Whether the customer is given the money or it is transferred to their bank account depends on the size of the loan. Mode of repaying the loan is then left up to the customer and he or she is given the following two options: either to set up a monthly direct debit or they can take a repayment book from the branch and pay off the loan directly to the branch on a weekly, fortnight or monthly basis
The company’s mission is “to be the leading specialist lender in our chosen markets, acting responsibly in all our relationships, and playing a positive role in the communities we serve.” To achieve this mission, the company adheres to the following values: Fairness, Responsibility; environmental consciousness and dedication to the provision of excellent service.
Pound-Co Finance is run by a board of directors comprising of the CEO, Finance Director, Director of Field Operations and Marketing and Sales Director. At this point in time, the company caters to approximately 1.6 million customers and in the last financial year, they reported a £17 million profit. From these numbers, it can be concluded that the company has been successful in all its years of operation. The board of directors recognizes and celebrates this success, however, they state that there is still a lot that needs to be done to ensure the company keeps going in this direction. To achieve this continuous success, the board has decided to concentrate on the market and products they already know. Additionally, they are deliberating on investing in new technology and personnel since many of the employees have become stagnant and tend to be ‘stuck in their old ways.’
In each Hub, there is one generalist HR officer who is responsible for dealing with conventional HR duties like disciplinary issues, health issues, absence issues and general employees’ grievances. In addition to this, the HR officer in each Hub is responsible for training all existing branch managers on the new candidate management system that was launched six months ago. In the head office, there is a HR team that is responsible for evaluating the personal development plan (PDP) which is part of the performance management program conducted every financial year where annual appraisals are conducted across the whole organization. These are all the duties that the HR team and officers perform in the organization. From the functions assigned to the HR team and officers, it can be concluded that the company employs loosely Ulrich’s HR model which means that the HR team carries out various specific roles.
Pound-Co Finance’s current organizational goal is to “have two million customers and to realize a £20million profit in the next five years”. In order to have such a large number of customers, it is paramount to have practical and dynamic people management practices. For any organization, the HR department is responsible for implementing people management practices. However, the company’s people management practices have remained consistently stagnant since the two companies merged. Inclusive in people management is how the company deals with customers, employees as well as candidates applying for jobs.
When it comes to employees, the annual appraisals evaluated by the Human Resource Head Office Team dictate that the line manager rate each employee against the organization’s core values on a scale of one to five where one is excellent while five is very poor. This has not proven to be an effective way of evaluation since most line managers’ end up giving an average rating for all employees in order to avoid upsetting the workforce which would eventually lead to them quitting their jobs. Additionally, this process creates a lot of unnecessary tension between managers and employees since the employees feel that this exercise does not capture any development issues they may have. Moreover, managers feel that they do not possess sufficient knowledge to coach and train employees to achieve the organization’s development goals.
When it comes to potential employees (i.e. applicants), the situation is not any better since branch managers are not able to operate the candidate management system efficiently despite being trained by the Human resource officer. For this reason, these managers did not arrange and conduct interviews since they felt uncomfortable using a system whose operation was foreign to them. For this reason, many applicants were contacting the head office since they did not hear anything after passing the initial screening interview. As a result, the company’s external brand image suffered greatly because many of these potential employees end up getting jobs with Pound-Co Finance’s competitors.
From the above analysis, it is clear that the current Human Resource Management model employed by the company is not contributing effectively to the achievement of the current organizational objectives. The Human Resources department has general roles that contribute significantly to the achievement of the company’s goals. However, the company needs to fully implement the Ulrich model to achieve specificity of roles in the HR department. It has been suggested that specific organizational skills require specific employee behaviors and that it is the duty of the Human Resource managers to foster these behaviors in employees (Cappelli & Singh, 1992; Schuler & Jackson, 1987; Delery & Shaw, 2001). To achieve this, the HR department should fully and effectively employ the Ulrich’s HRM model as it is. A working HRM model contributes highly towards the success of an organization and should be considered an integral part of the company’s strategy (Lengnick-Hall & Lengnick-Hall, 1988; Brewster and Larsen, 1992; Bamberger & Meshoulam, 2000; Schuler & Jackson, 2007).
Ulrich’s HRM model suggests that the Human resource department of the large-scale organization should be organized into four key roles to help the organization achieve its goals and objectives. These roles are HR Business Partner, Change Agent, Administration Expert and Employee Advocate. HR Business Partner handles the duty of communicating with internal clients (these are people who are directly connected with the company like stakeholders, employees, creditors and shareholders). The HR Business Partner here acts as the point of contact between these individuals and the organization (Ulrich, 2005). He is responsible for sharing the company’s goal with internal clients and ensuring that they are achieved through the harmonious working of all these components (Pay, 2015). The human resource department in Pound-Co tries to do this, however, it is lacking in effectively carrying out this role since employees have complained that their grievances are not being addressed.
Change Agent here implies that the human resource department should be responsible for communicating organizational changes internally (Ulrich, 2005). This occurs when the company wants to change its objectives and needs to evolve. Human resource officers should organize training for employees so that they can acquire new skills that will be useful in helping the company achieve its altered goals (Pay, 2015). Pound-Co Finance has already started implementing this role by having the human resource officers train employees in the new candidate management system. However, they must have not comprehensively trained these employees, since this attempt proved to have been a failure. For this reason, the human resource should organize better and broad training sessions and keep at it until the employees are fully trained.
Administration expert, on the other hand, is responsible for handling many different types of duties like safety rules, health issues, absence issues and general grievances (Ulrich, 2005). This can possibly be seen as the traditional role of the human resource department. With regards to Pound-Co Finance’s administrative role of the HR department, they seem to be accomplishing this role just fine.
Employee advocate suggests that the HR department should be responsible for making sure employees’ grievances and needs are met and that they are well protected (Ulrich, 2005). This role comes with the responsibility of analyzing employee morale and level of satisfaction and using this information to create a conducive atmosphere where people will always want to work (Pay, 2015). David Ulrich dubbed this role as the “employee champion”. Pound-Co Finance’s HR department collects information but does nothing substantial with it which leads to dissatisfaction of employees since their development needs never come to fruition. Financial Advisers also voiced their concerns regarding the shift of the company’s direction from being all about helping the customer gain good credit to becoming all about making a profit and treating the customer as only a means to an end (customers are now seen as a way to earn bonuses) but nothing came out of it. For this reason, employees become frustrated which in turn affect their overall productivity and sometimes they end up leaving the jobs.
` From the above discussion, Pound-Co Finance loosely applies Ulrich’s HRM model, however, they do not apply it effectively leading to poor people management practices which affect the company’s productivity as a whole. To counter this, the HR department should make a point of applying for these four roles fully into their department to ensure that the company can be able to achieve its current organizational objectives.
Traditionally, Pound-Co Finance has always used Word of Mouth and advertisement tin local newspapers, job centers, and often supermarket notice boards to broadcast vacancies when they arise. However, this has proven to be a major hindrance to the company’s expansion and growth since these methods only seem to attract the same kind of applicants who possess a caring and professional nature but lack the skills necessary to move the company forward towards its five years projected targets. For this reason, the company shifted its selection and recruitment process about six months ago and adopted central coordination of the process by implementing a new candidate management process. Since this technology was new and unknown to the company’s high-level employees, the HR officer in each hub underwent training on this system and in turn, they trained all current branch managers how to use this system.
This system doesn’t only involve the branch managers alone, it also includes the Head Office Staff since the initial interview is conducted by this staff. This interview is conducted through the phone and once an applicant passes it, his or her name is forwarded to the respective branch managers who are geographically close to the applicant for a follow-up interview. Branch managers here are tasked with the responsibility of communicating with the applicant, arranging a time and venue for the interview and finally conducting the interview itself. From this interview, they are supposed to choose a candidate suitable for the position and incorporate them into the company.
Human resource officers from the various hubs reported that training of branch managers had been successful since everyone was in attendance for the entire training course. However, recent complaints from candidates have proven this to not be the case since branch managers were unable to conduct follow-up interviews due to inability to operate the new candidate management system. A recent meeting of senior managers reported that the central recruitment manager raised concern over a large number of applicants contacting the head office inquiring about the state of their potential employment since they had not been contacted by the company. Branch managers, upon inquiry revealed that they were not comfortable conducting interviews using a system which they did not fully understand how to use. These applicants end up frustrated by the lack of communication and since they are adequately qualified and possess the necessary skills, they end up securing jobs with the company’s competitors. In the process of all these, the company’s image suffers greatly as these applicants will probably share their dissatisfaction with other potential applicants.
From the above, it can be seen that the current recruitment and selection process is flawed. However, these flaws do not lie in the new system itself, but in the employees using this system. At this point, a sensitive question arises, did the branch managers not understand the training or did the HR officers not deliver the training well? With this in mind, failure of this recruitment process is hindering the achievement of the current organizational objectives and therefore can be said to be in contrast with the strategic objectives of the company.
A successful recruitment process comprehensively maps out the strategy for attracting and hiring the best-qualified candidates (University of California, 2015). In today’s world, the most effective way to reach a diverse number of applicants is through the internet especially social media sites like Facebook and Twitter and most especially LinkedIn (Entrepreneur, n.d.). Using this avenue would ensure that Pound-Co Finance attracts a diversified group of candidates who have the necessary skills required to move the company forward. Alternatively, the company can use Diversity Recruitment Agencies which are agencies that assist disadvantaged groups in finding jobs (University of California, 2015). These agencies have access to different types of people who possess diverse skills that can be useful in helping the company move towards achieving its goals by hiring qualified individuals.
The other most important process in the recruitment process is the interview process which Pound-Co seems to be failing at. Even after completing a phone interview, hiring managers should always conduct face to face interviews to get to know the applicant more personally. Scheduling and conducting interviews is important since it helps one to be able to select one candidate amongst the various shortlisted one. Pound-Co.’s branch managers have undervalued this important part and in the process have cost the company, good potential employees. The company needs to make their branch managers take this process seriously which will help the entire organization achieve its five-year targets.
Pound-Co Finance has a performance management program in place. It exists in the form of annual appraisals conducted throughout the entire organization by the end of July of every year. From this information, it can be deduced that a normal financial year for the company runs from 1st of August and ends on 31st of July. During the appraisals in the course of the financial year, the line manager is tasked with the responsibility of observing employee behavior and their performance and grading it based on the company’s vital values on a one to five scale where one is an exceptional performance, while five is very poor performance. After completion of these appraisals, a personal development plan (PDP) is prepared and submitted to the HR team at the head office for evaluation.
Appraisal meetings are then conducted to evaluate all these results. The output of these meetings is that, it has been observed from these PDPs that all employees usually score averagely and the underlying reason is that line managers do not want to upset employees or be responsible for their dismissal based on their grading or cause them to quit their jobs as a result of receiving a low grade. Based on the output of these meetings, the company conducted an employee survey to identify the employees’ view of the appraisals and the results were not what they expected. It turned out that employees were not in favor of this appraisal since they deemed them as a paper exercise that was incapable of capturing their true performance. In addition to this, employees stated that none of their development suggestions have come to pass and thereby see that these appraisals as a mere formality and not an exercise that contributes to the general growth of the company. Managers on the other hand also voiced their displeasure with the appraisal process since they also stated that none of their needs were addressed or acted upon. They complained of the uneasiness the process causes them by having to rate their employees, however, the company has done nothing to address this issue which has increased their dissatisfaction with the entire process.
A performance management system should encourage collaboration, teamwork, and communication (Oberoi & Rajgarhia, 2013). Additionally, a management system is only as effective as the managers who implement it (Oberoi & Rajgarhia, 2013). If employees feel that the company performance management is not effective, they will tend to be demotivated which ends up creating feelings of frustration and anguish which in turn negatively affects their performance (Oberoi & Rajgarhia, 2013). This seems to be the case with Pound-Co Finance since both managers and employees are dissatisfied with the company’s performance management system since it does not address any of their development issues. For this reason, employees are left feeling frustrated and feel like the company is not listening to their grievances. This can only negatively affect their performance and some of them may even opt to leave their jobs which some of them have already done. Many employees have already started leaving the company which has left managers with only one choice which is to give remaining employees glowing reviews in the assessment which will encourage them to stay. Major companies like Adobe have proven that addressing employee feedback is important in ensuring proper running of the business (Duggan, 2015).
Additionally, managers have a great effect on any performance management system (Oberoi and Rajgarhia, 2013). Managers personally drive these systems by encouraging development, empowering employees, supporting employees and communicating the company’s development initiatives to employees (Oberoi & Rajgarhia, 2013). Based on the employees’ survey, managers in Pound-Co with regards to this issue feel that they have neither the knowledge nor the skills necessary to coach and support employees at a local level. If managers are unable to perform their duties with regard to the performance management system, then how can the system be considered effective?
Looking at all these issues, it can be concluded that the current performance management system of Pound-Co Finance is not effective and does not represent a true evaluation of the employees since it has been proven that managers only give employees these average reviews to keep them happy and prevent them from quitting their jobs.
Learning needs of the employees and managers are identified through the performance management system as well as employee surveys carried out across the whole organization. If employees are in need of learning, their managers are tasked with communicating these to their superiors preferably in the head office and in turn, they are provided with the information they need to train employees. It is the work of managers to coach their employees at a local level. However, on the managerial level, it is the duty of the human resource officer to conduct these learning process.
In order for learning and training to take place, there has to be a schedule and a target completion date set. This information is based on the training that the HR officers in each branch were tasked with delivering to branch managers regarding the newly installed candidate management system, from this system, we learn that training is evaluated based on the attendance of employees. This has proven to be an ineffective way of evaluating the training since it turned out in the end that these branch managers didn’t really acquire the skills they were being taught even though they attended all sessions. Regardless of the training, they were unable to operate the system which ended up costing the company its external brand image.
Training of employees should be evaluated after this training has been practically implementing. If this had been done when the branch manager actually implemented the training they had received, then it would have been noticed that the training was not successful as previously reported. Proper measures would have been taken at the appropriate time and this would have saved the company all the negative publicity it received as a result of the branch managers’ inefficiency.
Although Pound-Co Finance reports that it has experienced success for the past ten years since its inception, it is clear that the company is undergoing a crisis which if not checked can develop into a full-blown disaster for the company causing huge losses. Some of these major issues include the inefficiency of the selection and recruitment process. Here it has been identified that branch managers are unaware of how to operate the new candidate management system therefore, they are unable to conduct personal interviews which are the final stage of the recruitment process. Without this stage, the company is unable to recruit new employees which hinder the company from moving forward in the achievement of their current organizational goals. One way in which the company hopes to attain their five-year target objective is to recruit new employees with diversified skills and new ideas to replace employees that have stayed with the company for so long that they have become ‘stuck in their old ways’.
Another major issue is the inefficiency of the performance management system which has resulted in some employees leaving their employment. From the collected information, the system itself is not at fault. However, the people tasked with its implementation have proved to be incompetent. The line managers that are supposed to perform annual appraisal do not provide true assessments of their employees since they are afraid of upsetting them leading to their exit from the company. On the other hand, the human resource team in the head office has been ineffective in addressing the lower level employees’ needs and grievances. Managers and employees alike have voiced their frustrations with the lack of attention to their grievances and needs.
Additionally, a recent issue has arisen where the company is shifting direction and becoming more profit oriented than quasi-philanthropic. This is as a result of increasing pressure on finance advisers to hit target sales. Moreover, these finance advisers are paid bonuses based on these sales targets. This has led to customers being targeted as profit making instruments instead of a general desire to help them acquire credit. For these reasons, many of these financial advisers are opting to leave the company since the sales targets are too high meaning that they are not awarded any bonuses and their basic salaries are insufficient for them to live on. From this evaluation, it is evident that the company needs to address these issues to ensure they can be able to achieve their five-year target objectives in the specified time.
Losing employees at this stage is a big red flag that should not be ignored. Therefore, first and foremost, the company needs to address their employees’ grievances and keep them happy since happy employees will always equal to more productivity and in turn to increased profit and success. To start this, they should summarize all their needs as expressed in the annual appraisals and form strategies on addressing these. If it is an issue of conducting more training, these should be scheduled and delivered. If it is an issue of high sales targets, the board of directors should deliberate on ways to reduce these so they are easily attainable. Implementation of these specific remedies will cost the company some capital since training always costs an amount of money. However, if employees are satisfied and happy, they will become more productive and as a result, they will be able to make more money for the company thereby reimbursing the costs incurred in addressing their needs.
Secondly, the performance management system needs to be re-evaluated. From the analysis, the system itself has no flaws, however, the people tasked with implementing it are at fault. Line managers have cited that they lack sufficient knowledge of the learning and development initiatives the company offered and also felt they didn’t have skills to be able to coach and support employees at a local level. For this reason, the line managers need to be provided with sufficient information about the company development initiatives so that they can correctly communicate these to their employees. Additionally, they should undergo a rigorous training session that will teach them how to motivate, support and communicate to their employees. These will ensure that the line managers limitations are eliminated which will lead to better management of their employees which in turn will increase the company’s overall productivity.
Most importantly, the company should make changes in their recruitment process. Precisely, the company should consider retaining the branch managers on how to use the candidate management system. This time around, the HR officers should oversee the practical implementation of the system to assess the level of success of the training. Alternatively, the HR officers can sit in with the branch managers in the first few interviews to ensure that the managers are using the system correctly and to assist them, should the need arise. Finally, the company should consider diversifying their job advertisement strategies. Specifically, they should consider venturing online to recruit employees using social media sites. This would ensure that applicants are diversified and have a wide range of skills that can be applicable for the overall benefit of the company.
Pound-Co Finance has the potential and ability to achieve their five-year targeted objectives. However, to do this they need to make the necessary changes to ensure their current employees stay happy and to ascertain that their future employees will also enjoy the same satisfaction. This will increase productivity which is key to achieving the current set goals.
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