To:
Shanon Mae de Asis
CEO of Queensland Leisure Goods – Capital Report
Enclosed with this letter is the analysis conducted in order to evaluate the different HR risks that are associated with your plan of changing your business model and culture. Based on the information gathered from your company as well as additional information gathered from different literatures and studies, it has been found out that your company must deal with the two of the most important problems in HR, including:
§ high turnover rate; and
§ aging of your employees.
Information about these problems was mentioned in the paper for your further reference. However, I am advising you to focus on these issues because they can cause bigger problems for you in the future, including the aspect of your production and profitability, which will affect your position in the market. Based on this, it will be important for you to focus on the following aspects and strategies:
§ good communication;
§ good leadership approach;
§ training;
§ motivation of the employees; and
§ performance management.
Sincerely,
Jenifer Ruth Navarro
Introduction
Queensland Leisure Goods is facing challenges in competing with cheaper, imported brands and meeting the changing demands of the leisure goods consumers in Australia. These deteriorating business circumstances suggest a need to adopt a new business model, including application of new technology and strengthen the corporate culture. However, this shift carries with it potentially adverse human capital outcomes. Thus, it raises the question: How should QL manage the human capital risks that are associated with the proposed business model change?
As a result, we have concluded that human capital risks can be prevented by adopting the following:
§ standardized management training;
§ implementing performance management; and
§ improve communication flow.
Analysis
§ the QLG’s turnover profile for each of the critical job role is a sign of a future capability and capacity shortage;
§ the cost of turnover will add up to the expense of the company and affect the production process;
§ the number of employees who are approaching the retirement age will affect the future supply of employees in the said roles;
§ Based on these, the QLG will be facing different challenges in terms of their ability to grow.
Turnover
The QLG’s turnover profile for each of the critical job role indicates future shortage for capability and capacity. All of the supply of the critical job role is being affected by separation and termination. This is important because it can affect the entire HRM of the company. Table 1 shows that from 2008 – 2007, there will be 11 managers, 53 production specialist and 67 production worker who will be separated from and terminated by the company. Overall, it shows huge loss in labour force of the company. This number shows that the company is having difficulty in retaining their employees, which is vital for the operation of the company.
This turnover has a great impact on the operation of the company, particularly in the issue of productivity and cost. The costs of employee turnover can be divided to two categories: direct costs, which pertains on the costs spend by the company by hiring and selection process such as examination, interviewing etc.; and the opportunity costs pertains on the number of hours it takes in order for a new employee to fully acquire the skills and knowledge of the previous employees, along with the cost of mistakes this person makes along the way (Wendover 2005). Aside from that, it is important to take note of the ongoing war for talent in the industry (Harkins 1999).
Table 1 Supply Forecast: Separations/Terminations
Critical Job Role
Separation/Terminations
2008
2009
2010
2011
2012
Managers & Supervisors
3
6
8
10
11
Production Specialist
20
34
43
49
53
Production Workers
16
31
44
56
67
Total
39
71
95
115
131
Retirements
The number of employees who are approaching the retirement age will affect the future supply of employees in the said roles. Retirement or aging of the employees has a great impact over the HR and overall performance of the company. Table 2 shows that from 2008 to 2012, there will be total of 1 manager & supervisor, 1 production specialist and 5 production workers who will retire. This can be considered as small number, however, because these employees are commonly have been working in the company for a long time and have been loyal, they have gained enough knowledge and skills that can be considered as great lost for the company.
This can affect the company in different ways because like what have been said, the ability, knowledge and skills of the employees will be a great lost for the company. It will be hard to find new employees that will have their devotion and passion in working in the company due to their long stay (Shultz & Adams 2007). Aside from that, it can cause the company to spend huge amount of money due to different financial benefits for these employees (Chen & Vitt 2003).
Table 2 Supply Forecast: Retirements
Critical Job Role
Retirements
2008
2009
2010
2011
2012
Managers & Supervisors
0
0
0
1
1
Production Specialist
0
0
0
0
1
Production Workers
3
3
5
5
5
Total
1
3
3
6
7
Based on these, separation, termination and retirement can cause additional cost and effort for the company. Thus, table 3 shows that in 2012, because of these three events, 17 Managers & Supervisors will decrease to 5, 60 production specialist will decrease to 6 and 200 production workers will decrease to 128. It can affect the overall performance of the company, particularly in the aspect of productivity.
Table 3: Net Supply
Critical Job Role
Net Supply
2007
2008
2009
2010
2011
2012
Managers & Supervisors
17
14
11
9
6
5
Production Specialist
60
40
26
17
11
6
Production Workers
200
183
166
153
139
128
Total
277
237
203
179
156
139
Conclusion
The analysis have been able to identify different risk factors that if not considered will cause future consequences to the QLC. The impact of the separations, terminations and aging employee population can cause additional burden for the company in terms of cost and effort. Therefore, it is important to focus on managing the human resource, particular those that will help to lessen the turnover rates.
The following are the vital workforce risks that have been identified in this report:
§ QLC’s turnover profile shows that there will be shortage for the three critical job roles in the company;
§ the number of aging employees will be a great loss for the company in terms of intangible assets in terms of knowledge and ability;
The growing turnover rate of the critical job role will affect the productivity of the company, particularly on its desired business model which is produce more products in lower cost. Based on this, the company will have shortage in the upper management level which is very important because they are the one that analyze the different aspects of the business. This is also important because in the current business s environment, different companies are battling for the talent war. Therefore, it will be important for the company to implement different strategies that will help to motivate and train the employee.
On the other hand, in terms of the aging employees, this aspect is inevitable. It can affect the company, first in the aspect of the knowledge and skills of the retired employees that have been experienced everything and the company and have been able to attached to the company for a long time. Therefore, the company will not just lost knowledgeable and skilled employee, but also loyal and honest employees that will do things that could help the company.
The current business environment where QLC operates, there are different factors which can affect their operations, including changing preferences and demands of the customers. It will be vital for the organization to focus on the aspect of internal customers or employees in order to sustain their competitiveness.
Recommendation
The analysis in this report identified vital workforce risk for QLC, which are:
§ high turnover rate;
§ aging of employees.
In order to manage these risks, the following can be done and implemented:
High turnover rate
§ promote good communication flow in the organization, including feedback;
§ implement leadership style and approach that will meet the characteristics, behaviors and cultures of the majority as well as the company;
§ apply strategies that will motivate the employees which comes in financial and non-financial aspects such as incentives, bonus, appraisal;
§ standardized training process;
§ manage performance of employees.
The aging of the employees can be considered as inevitable, however, in order to solve the problem about lost of knowledge and skills it is important to:
§ enables the senior managers, supervisors, production specialists and the production workers to train those employees under them.
Bibliography
Bartell, S. M. (2001). Training's new role in learning organizations. Retrieved August 11, 2009, from Innovations in Education and Teaching International: http://www.highbeam.com/doc/1P3-1037518761.html
Bunker, S., & Ciccantell, P. (2005). Globalization and the race for resource. JHU.
Chen, Y. P. & Vitt, L. (2003). Encyclopedia of Retirement and Finance. Greenwood Publishing Group.
Curry, A., Flett, P. & Hollingsworth, I. (2006). Managing information and systems: the business perspective. Taylor & Francis.
Green, M. (2007). Change management masterclass: a step by step guide to successful change. Kogan Page.
Harkins, P. (1999). Powerful Conversations: How High-Impact Leaders Communicate. McGraw Hill Professional.
Harrington, J. (2006). Change management excellence: The art of excelling in change management. Paton Professional.
Kerzner, H. (2009). Project management: A systems approach to planning, scheduling and controlling. Wiley Publishers.
McConnell, J. (2003). How to identify your organization's training needs. AMACOM Division American Management Association.
Mind Tools (2009). Kotter’s 8-Step Change Model. Retrieved August 19, 2009, from http://www.mindtools.com/pages/article/newPPM_82.htm.
Paton, R. & McCalman, J. (2000). Change management: A guide to effective implementation. SAGE.
Paton, R., & McCalman, J. (2008). Change management. Sage Publishing.
Shultz, K. & Adams, G. (2007). Aging and Work in the 21st Century. Routledge.
Wendover, R. (2005). Smart Hiring at the Next Level: The Complete to Finding and Hiring at the Next Level. Sourcebooks Inc.
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