Introduction
Given the dynamic business environment, stiff competition, and the need to meet stakeholder expectations, employees’ optimal management should be a fundamental strategic measure. It falls squarely to HR strategy’s core dimensions, including learning and development, recruitment, succession planning, compensation, and performance appraisal (Noe et al., 2017). These aspects are imperative in all organizations regardless of their sector of operation. Currently, Avatar Ireland is in the process of restructuring, and its HR function is one of the highly affected areas in the company. Therefore, integrating human resource strategies and its business is central to its organizational goals. HR strategy is the processes and policies that a company formulates and executes to manage its staff optimally (Anonymous, 2019e). This critical review will assess the current company situation, identify problems, and provide potential alternative recommendations to mitigate them. It will further develop appropriate implementation and evaluation strategies for the company to execute and assess the recommended solutions’ short-term success.
Organization Background
Avatar Ireland is part of the larger Avatar Group, the world’s leading technology company operating in over sixty countries worldwide. Major categories of the parent company are listed in global liberal stock exchange markets with a high dividend payout ratio. However, compared to its dividends’ share, it reinvested less in the organization. Therefore, the need to meet shareholder expectations is a central goal in the larger firm. Avatar employs a transactional, strategic approach because it operates in a network structure whose capabilities, resources, and assets are neither completely centralized nor decentralized (Anonymous, 2019a). Avatar Ireland is a distinct profit and loss (P&L) unit in the global conglomerate. However, the Group sets the subsidiary’s financial targets and a range of products and services that it has to deliver to the Irish consumer market.
Being a distinct P&L unit, Avatar Ireland’s ultimate objective is to meet the financial targets and deliver a range of products and services, as identified with the Group. It has two predominant goals: generate revenue and reduce costs. The cost reduction measures are further categorized in accounting as capital expenditure (CAPEX) and operational expenditure (OPEX). The unit has been tasked to implement various stringent measures to ensure these business targets are met. The subsidiary experiences frequent structural reorganizations dubbed re-org in the company.
Nonetheless, while Avatar is focused on enhancing its revenue flows while cutting capital and operational costs, it has created various but critical challenges along the way. Most of these issues affect the company’s HR function significantly. As employees continue to raise concerns over the organization’s approach, there is a need for effective and optimal initiatives to mitigate some of the emerging matters and elevate its HR function as a central partner.
Issues and Challenges
Issues and challenges facing the company’s HR function limit its ability as a strategic partner in the company. This aspect could affect the company operations and possibility create inefficiencies among its staff. It could affect employeesâ morale, job satisfaction, and productivity. All these effects could upset the companyâs financial goals on cost reduction and revenue generation. These factors requiring intervention measures include human capital problems, job insecurity and improper communication framework, and role insecurity.
Human Capital Problems
Organizations should use evidence-based HR practices to promote employeesâ productivity and overall efficiency in company operations. In this case, they would focus centrally on the impact of their management practices on organizational and financial outcomes (Anonymous, 2019c). Using the CAPEX and OPEX categorization at Avatar is based on this pragmatic approach. However, it has been a source of challenges in the organization. The generative knowledge work concept lacks the crucial bottom-up approach due to the Group’s aggressive pursuit of financial goals at the expense of innovation. There are governance and bureaucratic bottlenecks at the CAPEX committee level that cause delays and lost consumer time.
On the other hand, operational knowledge work faces its limitations due to OPEX practices and processes. OPEX initiative was created to reduce resources, including equipment, manpower, and training. However, employees in this category are supposed to complete defined work processes to achieve defined performance targets while resolving any problems and complexities. Furthermore, apart from monitoring OPEX budgets, senior management played no role in operational decision-making. Operational knowledge work staff interacted with other parts of the company on cost issues but nothing on what they did to implement their projects.
Avatar management seeks the costly advice of external consultants on cost-reduction measures. According to the company employees, this consultation is hypocritical. It shows that senior management disregarded the organization’s staff’s free advice while preferring the expensive external consultancy services. Subsequently, it has led to employee frustration. Furthermore, the junior staffs are unhappy with the management’s tolerance for the CAPEX costs but intolerant towards OPEX-related budgets. Besides, Avatar undermines employees as an asset because it has cut training costs categorized as OPEX. Pegging employee training on OPEX denies company staff essential skills, especially after acquiring new equipment (Hide, 2016).
Improper Communication Framework
Proper and effective communication is crucial in promoting business in an organization. Improper communication affects employee morale and satisfaction as the workers feel more threatened than appreciated in their different roles in an organization (Chaddha, 2016). Negative communication goes against the tenets of effective communication in change management (Anonymous, 2019a). An example of this practice is seen in one anecdote in the Group’s regional communication. The European region CEO threatened that he would not waver at replacing Avatar Ireland’s directors if financial figures failed to improve by the next quarter.
Job Insecurity Concerns
While employees in the company had many job security concerns, little has been done to alleviate the problem. This challenge is majorly tied to the Group’s aggressive pursuit of its financial goals. Threats of sacking directors are rampant from the top management. This is a major challenge in Avatar Ireland because it affects employee morale and satisfaction. While Avatar Ireland sought voluntary redundancy, leading to a reduced workforce by about a hundred full-time staff, further job losses were in the offing due to outsourcing and centralization. Nonetheless, other employees are not engaged while making these cost-cutting decisions. Only directors with the Group’s approval make decisions on financial goals and initiatives, a matter other staff feel as not only hierarchical but also dictatorial.
Role Insecurity
Avatar Ireland has been experiencing regular annual structural reorganizations. While these reorgs are designed and implemented in tandem with the set Group’s financial goals of reduced costs and increased revenue, they cause unexpected disruptions. The structural changes came with what the directors call a win-lose scenario as some of the employees were okay with the adjustments while others were affected negatively. In the company, one’s role was affected on average once annually. However, the frequent role changes led to role insecurity because they made employees’ roles and status unstable. The reorg exposed management’s lack of regard for what the employees did at the workplace. Disregarding people’s roles and contributions creates mistrust against the company’s top leadership (Islam et al., 2020).
Through the re-orgs, Avatar created new structures, with whole teams vanishing, only to reappear when the management becomes aware of the situation. Some teams were completely forgotten during the reorganization programs. Besides, some employees have changed from one department or team to another, severally raising perceptions of incompetence in making the right decisions at their previous workplace. As one employee described, management’s lack of concern for the staffâs experience during the changes led to confusion developed into work intensification and inefficiencies among the affected workers. Role insecurity resulting from the structural changes has far-reaching repercussions on an individual’s performance and the eventual company productivity (Costa and Neves, 2017). This note highlights the possibility of unmet financial goals due to the frequent reorganizations in the company.
Leadership Style in the Organization
The organization’s leadership style presents a major challenge in the Group’s pursuit of its business objectives and financial goals. Avatar Group partially operates within the realm of transactional leadership and power-influence theories. The transactional leadership style emphasizes organization, group performance, and supervision, creating a framework of rewards and punishments (Ma and Jiang, 2018; Afsar et al., 2017). In this case, employees are rewarded for achievements but reprimanded for failure to meet set targets. On the other hand, power-and-influence leadership theory has five facets in which Avatar Group relies overtly on coercive power while avoiding other dimensional forms. Avatar Ireland could be on a forced evolution, which uses coercive or directive style to enforce change (Anonymous, 2019b). For instance, the regional CEO is seen threatening to sack all the directors working at the Avatar Ireland unit. These threats amount to nothing but coercion and punishment. Besides, the top management is not concerned about the junior staff during structural reorganization.
Recommendations
Formulate Proper Communication Framework
While the Group has elaborated its financial goals, namely cost reduction and revenue generation, an amicable solution should be formulated to ensure the staff own these goals and act on them effectively. Appropriate communication should be embedded in McGregor’s Theory Y on goals’ integration. This theory underscores employees’ intrinsic interest in their work, desire to seek responsibility and self-direct, and the capacity to solve business problems creatively (Touma, 2021). Effective and open communication help organizations to retain talent as it emphasizes employee participation in decision-making, self-control, and respect along with the ranks (Anonymous, 2019a; Chaddha, 2016). This recommendation will boost employee morale and satisfaction by reducing threats and appreciating their company’s role as assets.
Formulate High-Performance Work System
Avatar should reconsider its HR practices to develop initiatives that foster high performance and contribute to its financial goals. Despite its cost reduction objectives, the company should invest in employee training. Continuous employee training increases productivity by preventing various mistakes that could arise as the workers perform their duties (Rodriguez and Walters, 2017; Butler, Szwejczewski and Sweeney, 2018.). Similarly, operational errors, especially on new equipment, could be costly because they could lead to damaged machinery, which would necessitate repair overheads or an expensive replacement (Zhang et al., 2019). Additionally, the organization should exploit the power of knowledge transfer. This theoretical paradigm refers to the companywide dissemination or sharing of valuable information and the provision of problem-solving inputs to teams (Anonymous, 2019c). In this case, Avatar would solve some of the human capital problems through training and knowledge transfer patterns. High-performance work practices increase trust levels, employee job satisfaction, and commitment (Anonymous, 2019d). Therefore, it would solve job and role insecurities since employees would boost trust towards the management.
The company focused on regular structural reorganizations; it should hire competent and extensively skilled people during the selection process. In-job training boosts employee’s morale and commitment to the company. Employee commitment is critical to productivity. It increases sales from new products and services by 16.9% and overall growth in sales by 18.8%, especially in technology companies (Collins & Smith, 2006, as cited in Anonymous 2019d, p.7). This aspect would promote the organization’s financial goal on revenue generation.
Embrace a Different Leadership Model
While Avatar is trying to reorganize its operations, the need for a different leadership style cannot be overemphasized. A transformation leadership approach is appropriate in managing the company’s structural reorganization and other operational undertakings. It is considered an integral component of a holistic leadership model (Noor, Adi, and Kamaruddin, 2018). It envisions leaders working with their teams to identify the need for change and adjustments required, create a vision to inspire and guide the modifications, and implement an organizational alteration with the committed team members (Amin et al., 2018). Embracing this leadership style will solve the inadequacies resulting from the employees’ work security concerns and role insecurity. It will also mitigate the leadership vacuum in the operational knowledge management teams created by the top management’s lack of concern for the employee’s actual work in the project implementation processes. Notably, the transformational leadership model integrated collaborative style, which allows all members to give their full input before effecting a change (Anonymous, 2019b). Thus, it will boost employee trust towards the company management, allowing them to participate and provide their perspectives before structural reorganizations.
While this recommendation does not suggest a wholesome change in the management style, it calls for a combination of different leadership concepts and the full implementation of existing theories. For instance, according to power-and-influence theory, the management should integrate reward power with coercive power to appreciate employees’ organizational achievement (Chen, 2018). A similar case should be replicated and the company should implement the transactional leadership approach in full. Through reward power and transactional reward systems, leaders motivate teams by appreciating their contribution to different company tasks (Curtis, 2018). These moves will allow employees to feel appreciated and solve the problem of management mistrust and human capital problems associated with the senior leaders’ lack of concern for the daily operations of the employees in the OPEX category.
Conclusion
Although Avatar Group is a global corporation, it faces many operational and structural problems in the Ireland market. Through its Irish unit, the company is undergoing a reorganization of its structures in line with its financial goals. The company is focused on improving revenue generation and cost-cutting. It has put in place different measures that have affected employees in the Ireland subsidiary differently. Its human capital management practice has created several problems that have degraded its HR function as a strategic partner. However, taking various tactical steps such as formulating a proper communication framework, developing a high-performance work system, and embracing an integrated leadership approach comprising transformational, transactional. Power-influence models would be able to solve its HR limiting frailties. The suggested recommendations would mitigate human capital issues on training, job and role insecurities, defective communication systems, and a poor leadership approach.
References List
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