Fastening Technologies Ltd.: Evaluation Prediction

Executive Summary

Glancing through the case study of Fastening Technologies Ltd (FTL), it is quite apparent that the company has been going through a challenging time. Part of the reason appears to be the general business environment, which has become fiercely competitive under the globalization regime. But the company appears to be struggling on some issues on the organization front as well. Managing human resources in such a manner that the organization is able to fulfill its stated mission and objectives, is one of the key challenges in scripting a success story for the organization. In this era of cut-throat competition, every organization aspires to make its objectives and mission clear to all its employees, so that their performances can be measured against such objectives. The employees need to be motivated towards achieving these objectives. Therefore, a lack of effective management of industrial relations is quite apparent on part of the company.

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Introduction

Maintaining effective employee relations implies, treating them employees as empowered partners towards achieving the strategic objectives of the company. Employees not only feel valued bust such gestures help in motivating them and smoothening the employee-employer relations. Motivation in simplest terms can be defined as a means of providing motives. The lack of any positive motivation by the managers often results in an automatic provisioning of negative motivation. Motivation may be defined as the state of an individual’s perspective which represents the strength of his/ her natural inclination to exert efforts towards some particular behavior. How somebody makes use of his/ her efforts towards a goal is determined by the motivating/ de-motivating factors. It is through their behavior that employees give expression to their commitment to work, level of motivation and their attitudes. Behavior includes all actions overt or covert, and verbal or non-verbal. This affects the overall efficiency of the person and the performance of the organization. At FTL Steve tried to come out with a vision and mission statement and these statements were printed on posters and widely distributed throughout the Company, but the main ingredients in realizing this vision, the employees appeared quite confused and disinterested in the mission statement. This approach points towards a lack of strategic focus in the policies being implemented at FTL.

FTL: The survival instinct

It is quite apparent that FTL had survived couple of crisis like situations in the past, and the organization was able to come out much stronger and leaner, but times are changing now. Today, we are living in the times when survival of the fittest is the de-facto norm in the industry. Earlier, the Asia Pacific region was not counted as a hub of manufacturing activities, but today China has registered itself as a formidable location for carrying out manufacturing activities at extremely competitive labor costs. China has seen a remarkable growth in its economy and the living standards of its citizens since it adopted a more open and liberal stance under the premiership of Chairman Deng Xiao Ping. China’s membership of the World Trade Organization (WTO) made it possible for business organizations from world over to operate in China in an era of free trade. These developments coupled with some of the organizational failures of FTL led to the decision of shifting some of the manufacturing facilities towards China.

During Anders’ stewardship the company seems to maintain healthy financial figures, but after some time Anders van Hoy moved on to head a different division of Global and Gunther Schmidt replaced him, signs of fatigue started appearing on the horizon and FTL started feeling the pressure in maintaining the profit margins. Global, the holding company of FTL, also decided to transfer the engineering centre to China, where labor costs were found to be considerably less. In fact Global was very pleased with the performance of FTL during the first few years of its operation after the acquisition. But as the UK economy entered turbulent times and the demand for cars and white goods dropped dramatically, there was pressure on FTL. At that point of time FTL appeared bit slow in responding to the changes, but the holding company Global finally lost patience after three years of cumulative losses and the Managing Director was fired making way for an innovative young Dutch engineer, Anders van Hoy, to turn the business round. Anders had the uncanny ability of taking along all his team members and within twelve months he was able to make the organization lot leaner and raised a team of like-minded, young and enthusiastic engineers and managers to help turn the business round. Lot of older employees were allowed to go for early retirements to bring in fresh talent. Alistair Scott proved to be equally strategic in implementing the HR strategies. With active support and cooperation of Steve Davidson as Operations Manager and Phil James as Quality Manager Anders was able to script a turnaround story. Ford, a renowned name in car industry and a client of FTL, at one point of time appeared reluctant to do business with the company, but Anders and his team was able to reinvent the confidence and the company received the coveted Ford Q1 award as well. Anders leadership style and energy created a buzz in his team. A chain is said to be as strong as the weakest link in it. A team is also composed of a number of people with differing abilities, qualification and motivation levels. A cohesive team of highly motivated and well organized members can do wonders for the growth of the organization. On the other hand a group of individuals concerned with only their work and their own benefits can potentially harm the interest of the organization. An organization can no doubt function with the boss giving commands to his/ her subordinates and the subordinates in turn following the instructions and completing the tasks. But a basic disadvantage in this type of functioning is that the employee doesn’t feel the belonging to the organization and therefore may not go for value addition and creativity to the task. An individual is least bothered about the final product, once he/ she has done his/ her share of task. A team on the other hand helps in networking of the individuals, with exchange of ideas and suggestions. This not only helps in regular updation of the knowledge level of the team members but also enriches the final product and service. In this case as well, though the team worked long hours, the satisfaction from their successes and the positive feedback from Global made it all worth-while. But this team spirit disappeared once Anders left for the headquarters and the cascading effect left the company in disarray.

Training and development is another important area where human resources managers are supposed to focus their eyes while carrying out the task of management. In view of the evolving global economy, which demands appropriately skilled workforce, most of the governments around the world are currently undertaking reforms of their education and training systems, with inclusion of the vocational streams into the system and by providing apprenticeship training to the students. Similarly, companies also start hunting for fresh talent from colleges and institutes and groom them for utilizing their services in the company. FTL has also been recruiting young graduates for apprenticeship training. In fact, when a young college graduate prepares to come out of the university with a degree and diploma in hand, he/ she is full of enthusiasm and ideas but he has no idea of how things work practically in an industrial set up. When the industry recruits these young graduates as a regular workforce, quite often these graduates are not able to meet the expectations of the company. This works to the disadvantage of the company as well as to the morale and motivation of the individual. It was therefore felt that training imparted in colleges/ institutions, by way of majorly theoretical studies, alone is not sufficient for acquisition of skills and requires to be supplemented by training in the actual working environment. It is therefore considered that providing the students with practical training immediately after the completion of the course or in the final year of the course, helps in polishing them for the appropriate job. This way the needs of the organization/ industry for skilled manpower are also met, while the individual too enters the company with a confident attitude and high morale, which in turn is bound to benefit both the parties. Broadly speaking the objectives of apprenticeship training are;

  • To provide the students with industry and job-specific training.
  • To raise the skill level of the young graduates
  • To provide a better match between skills acquired in college/ institution and the industry, which helps in accelerating the school-to-work transition.
  • To encourage industry’s participation in the formal education and training system
  • To establish a coherent system of vocational qualifications
  • To provide the industry with trained manpower with upgraded skills.

But it is quite peculiar that FTL indeed had a tradition of taking on engineering apprentices each year, but most of these graduates, were left to join other companies on completion of their training with FTL, because the company was not able to offer them attractive opportunities. This was a big shortcoming on the part of the company, as it was not able to make use of the services of these well trained young trainees. This was perhaps one more reason that today majority of the employees of FTL are well above the age of 40. Though Anders and Steve were good at spotting the talent and providing bright apprentices a chance to develop their skills and experience further through a post apprenticeship training program, but somehow they could not succeed in their efforts and passing on the tradition to successive managers.

Policies of company appeared to be partial, incoherent and de-motivating at times. For example the bonus disbursal was not found to be pleasing the employees to the extent that they could be motivated enough. The reward system, if implemented systematically and by integrating the subjects into the mainstream works wonders towards a larger interest of the organization (CIPD, 2005). FTL indeed invested heavily in imparting training. Senior and middle managers were able to take part in the Dale Carnegie leadership and management development program. A local college also ran a supervisory management course in-house which was meant for training the shop floor staff in techniques like statistical process control and Total Quality Management. But for a long time the training opportunities were not provided to deserving and desirous workers. Training was indeed being accorded a high priority but it was not systematically organized. In the absence of a systematic training plan the managers were often found to resort to non-systematic and biased approach while selecting the trainees. This led to some of the workers even complaining about the lack of such opportunities.

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Another gray area in managing the human resources at FTL happens to be the process of performance appraisal. The appraisal interview documentation did not serve the purpose it was meant for. Sometimes, there were indications from the managers about the need for training for some particular person, but the lead was not being followed. Some of the managers were also not found fit enough for evaluating the benefits of training. Michael Armstrong (2006), defined performance management as a ‘systematic process for improving organizational performance by developing the performance of individual and teams. It is a means of getting better results from the organization, teams and individuals by understanding and managing performance within an agreed framework of planned goals, standards and competence requirements.’ This approach believes in managing the people well and using their performance to provide adequate feedback and recognition towards helping the employees in realizing their full potential. Similarly Baron and Armstrong (1999) define performance management as ‘a process which contributes to the effective management of individuals and teams in order to achieve high levels of organizational performance. As such, it establishes shared understanding about what is to be achieved and an approach to leading and developing people which will ensure that it is achieved’. They go on to stress that it is ‘a strategy which relates to every activity of the organisation set in the context of its human resource policies, culture, style and communications systems. The nature of the strategy depends on the organizational context and can vary from organisation to organisation.’

Performance appraisal is aimed at evaluating as well as developing the human resource. The main evaluation (i.e. judgemental) objectives of performance appraisal include;

  • Providing feedback to the subordinates and telling them where they stand in the performance management mapping.
  • Developing a data bank for the HR department to decide on matters like placement, pay, promotion, etc.

Similarly the developmental objectives include;

  • Diagnosing individual and organizational strengths and weaknesses
  • Counselling, coaching, career planning and motivation of subordinates
  • Developing congenial industrial relations.

But FTL appears quite lost as far as fulfilling these objectives are concerned. Lack of a coordinated approach amongst managers after Anders left for Germany, became a stumbling block for progressive policies in the company. Although Steve carried on the human resource practices introduced by Anders, Steve started questioning the professional capability of Alistair and within three years. Alistair had come from a strongly unionized environment and despite good intentions appeared suspicious of collective bargaining and employees relations practices. Initially, there was no trade union presence at FTL, but in later years such moves were started by the employees to bring into the notice of the management some distracting policies. So things starting becoming little difficult after such moves started and his differences with Steve started growing up. Subsequently, Alistair had to move to Germany to join Anders team at the European head office.

Catherine, who took over the task of HR manager after Alistair, on the other hand appears quite convinced that taking the employees into confidence helps in improving the organization culture. She is of the opinion that employee relations practices could be improved, particularly communications. She enlisted the services of ACAS to carry out a survey of employee views on communication. The survey pointed out that 47% of information that goes to employees is received via the grapevine. HR manager subsequently arranged for team briefings and the Company had an all hands meeting once a year to talk about the years results and future plans. Another area which Catherine focused upon was the training schedule and systematic training plan. Catherine worked her way consistently to improve the way training and development was managed in the Company. And thanks to an enormous amount of hard work the Company was able to achieve ‘Investors in People award’. That was indeed a proud moment for Steve and his team at FTL. It was for the first time that the award has been given to a company in the south of England. But the selection criterion for training still remains to be worked upon.

Organizational difficulties took another serious turn during the last five years when Catherine headed for Germany and FTL started seeing the reduction in profit margins on account of the pressure from main customers to reduce prices. The German bosses from Global Inc. started to be seen as interfering too much in the affairs of FTL resulting in worsening relations between Germany and FTL, which subsequently led to the exit of Steve.. Phil James, his successor has his hands full with the tasks of improving the relationship amongst the managers, leaving other crucial strategic things untouched for quite a while. Human behavior is a function of a person in relation to the situation, having ‘personality’ and ‘situation’ as the two variables. Motivational factors arouse a need, propelling a person to channelise his efforts and energies in the direction of fulfilling those needs. These needs are aroused in the employee of an organization to increase the output, provide quality, increase efficiency, maintain industrial peace etc.

An effective manager must understand the fact that there are at least two ways by which the behavior of employees could be directed towards the productive pursuits in the organization. One is by changing the personality, i.e. the internal psychological structures of the person, which is a long-drawn and uncertain process. Another strategy is to modify the characteristics of the situation prevailing around the employees. These situational factors have tremendous influence in shaping one’s personality. If an employee, putting more efforts and energy, coming out with better results than another one having a lethargic attitude towards the work, are treated in the same manner than this may act as a negative motivation for the efficient employee. Most human resource management strategies are eventually meant to optimally utilize the capabilities of individuals and groups towards achievement of organizational objectives. Performance of an individual is a function of his ability and willingness to use his efforts towards achieving personal or organizational goals. This willingness or desire to act and to behave comes in the ambit of motivation. Phil was aware about the difficulties the organization was going through and he was initially apprehensive about accepting the challenge. And his fears proved genuine when he did not get the desired support from his subordinates and peers in the organization.

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The difference in levels of education between Phil and some of the new graduates in the organization was also not allowing Phil to deal confidently with them. This points out towards the lack of confidence in Phil. There are instances where lesser educated people have taken on the reigns and worked their way up solely on the basis of their experience and vision. Another area where the company fared badly was handling the diversity issues in the department. Though it might be sheer coincidence that the two female managers were deprived of some of the perks, erstwhile male counterparts, but the company was not able to handle the issue properly which fueled the speculations that FTL is working against the interests of female managers. But in the futuristic projections Phil appears to be readying himself for a long and successful innings with FTL.

Conclusion

It is amply clear from the foregoing discussion that FTL is indeed in dire need of a coordinated approach to make way for a successful long-term strategy and the company needs to take along its key workforce for letting them feel at home in the company and work towards common objectives. In addition there has to be unanimity of views amongst the managers for realizing fullest advantages of the strategies. This also results in motivating the workforce.

References

  1. Armstrong, Michael (2000), 2nd ed, ‘Performance Measurement’, Kogan, UK.
  2. Brown, Duncan & Armstrong, Michael (1999). Paying for contribution: real performance-related pay strategies. London, Kogan Page.
  3. CIPD (2005). Reward strategy-How to develop a reward strategy, CIPD, London
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