Managing HR in a Business Context – 3F Brief Business Environment

Internal Environment Analysis

Human Resources

Personnel is treated by the company in a caring and friendly way. The general performance of the company should be enhanced due to the employees-management cordial relationship. Still, there are specific issues with the HR policy:

• rumors and dropping morale within the company; hence, no motivation;
• increased short-term sickness absence;
• matriarchal HR management policy;
• no specialized training for the low-qualified employees is conducted; therefore, they have no relevant skills;
• no special education and training of HR managers. As a result, no efficient HR strategy and management.

Possible solution: HR managers training and internal marketing to improve and strengthen the employees morale; shift to more efficient HR management policy.

Capital Resources

Due to the unstable external environment, the financial capital of the company is under the hit. The financial position of the company is not as sustainable as per the financial controller’s opinion. Therefore, currently, there is an opportunity to invest in factories, tools, machinery, and employee training and marketing initiatives.

Possible solution: attracting investors, seeking funding, precise control of the annual budget.

Operational Efficiency

Operational efficiency is one of the strengths of the company’s owner. She is aware of all the company’s processes and the ways they are performed, pays special attention to the product cost, maps the process’s failure.

Possible solution: focus on mapping process failure and the increase of operational productivity through the use of technology.

Organisational Structure

The centralized organisational structure of the company functions efficiently and smoothly. The information flow conveys widely to all customers. The management ensures the employees benefits at the maximum affordable extent.

Infrastructure

The company has high-quality facilities, Wi-Fi and internet connection, and stable power. The infrastructure is functioning in a proper way and benefits to the company’s success.

Innovation

The use of lower-cost raw materials brings cost reduction. Nevertheless, no further innovation in products according to customer needs is an issue to be solved. Otherwise, the company will face the risks of high competitiveness, loss of key staff, and profit decrease. The challenge is that currently the company has no financial actives to be invested in the innovation.

Possible solution: attracting investments and funding to implement innovation technologies.

External Environment Analysis

Economic Situation

Fluctuation in the economic situation due to oil market instability is the critical factor influencing the company’s position in the competitive environment. The adverse financial condition results in 3F’s capital shortage and HR issues.

Laws

The laws of the country foster the company’s development and sustainability. The strength of the local legislative system is the strict demands for financing and investing in the local business. The Scottish Loan Scheme provides loans to business searching support and further growth. The company may apply for the loans from £250,000 to £2 million. For some companies the loan sum might be increased to £5 million. The main demands for applying are as follows:

• providing a strict business plan;
• proof that the company will be able to repay the loan;
• a business should be not less than two years old;
• the minimum turnover of the applying business should be at least £250,000;
• providing the planned positive profit within the next year;
• being operated and located in Scotland;
• having previous unsuccessful attempts to get other funding;
• providing proof that the funding will positively impact the economic level in Scotland;
• using fair work practices (“Search for business,” 2020).

Possible solutions: an in-depth analysis of the current ability of 3F to apply for the loan.

Technological Factors

No technologies on private information security and trade advantages are implemented. Moreover, the production process is neither computerized nor automatized.

Possible solution: computerization of production process as soon as the budget affords.

Customer Demands

As a result of the massive local loss of jobs, the middle-income customer spenders fell. The customers prefer price than quality, whereas 3F initially focuses on quality. Hence, the company faces the challenge of the decrease in customers loyalty. The sales process suffers from customers employment status and wages. On the other hand, intergenerational consumption habits significantly contribute to the company’s income.

Possible solution: the research of consumers needs is needed to establish 3F as a leader in its industry.

Competition

The existing competition environment in the market hits 3F’s position by focusing on local artisan foods and niche product markets, leading 3F to the drops of certain items sales. Moreover, the food trends are widening, therefore, a more innovative approach to the production and better customer service are needed.

Possible solution: SWOT analysis has to be developed to evaluate the weaknesses and strengths of the company.

3F Business Strategy Overview

The main advantage of 3F is that most people prefer fresh and natural products. With decent risk management and the relevant strategy, the profit is likely to grow and become sustainable. Being a producer of foodstuff, 3F has creative items in its menu remaining value sensitive to meet the desires of its customers. Therefore, the customers’ service remains high-level as the company aims to provide its products to its outlets and supermarkets nearest the customers. Moreover, the strategy should consider entering other stores to widen its potential target market.

Trying to keep the prices as low as possible, 3F initially looks at low-cost leadership strategy. The purchased raw materials are now cheaper than earlier, although the salaries cost raised to be competitive in the employment market. Nevertheless, this is balanced by previously reduced staff without the subsequent hiring of additional labour. The general sales rate might be affected by lower prices as cheaper products mean lower standards and are subconsciously perceived by people as being worse. Staying in line with competition patterns requires the development of a loyal and firm customer base in the operation areas. The company’s management plans to achieve customers loyalty through correct advertising and promotion differentiation strategy.

The final and yet important issue is meeting the needs of its customers through a speed-based strategy. The company is seeking the opportunity to integrate the technology and product range changes and, therefore, stay relevant. Although 3F’s management initially cares about its trademark quality, the differentiating strategy keeps customers’ loyalty by adopting the current paying capacity of consumers.

The main objective of the company’s strategy is its customer’s satisfaction and their loyalty increase. The second aim is establishing confidence in new target market links through supplying fresh and canned products. Simultaneously, adequate allocation of budget and acquisition of labour and other sources should be implemented. “The closer the alignment between HR and an organization’s overall business strategy, the better the company’s ability to anticipate and respond to customer needs and to maintain a competitive advantage” (“Practicing strategic,” 2015, para. 5). The HR department needs to conduct awareness of the employees to meet the planned production outcome.

HR Strategic Priorities Analysis

“There is a wealth of experience and evidence that convincingly demonstrates that businesses can transform themselves in ways that improve performance, reputation, employee welfare, and social responsibility” (Hlupic, 2015, para. 4). Staff engagement survey was conducted among at circa 600 employees to evaluate the feedback from personnel. As a result, the high level of staff participation and engagement was revealed. A comprehensive review of the current HR strategy should be implied to highlight the specific areas requiring special attention to ensure the appropriate F3 functioning. Currently, there is deep dissatisfaction with HR department activities and approaches.

There is a weak linkage between HR planning and the corporate strategy in terms of capabilities and skills evaluation and staff headcounts. Moreover, the HR manager has insufficient opportunity to manage the staff, so there is a lack of accountability. Simultaneously, HR is functioning with an excessive focus on the matriarchal approach and maximum CEO’s engagement with “one-family” strategy, resulting in capacity gaps and insufficient use of information technology. HR department demonstrates a lack of attention to promotion management, staff training and development, and technical expert skills enhancement.

The HR program is not integrated with the company’s current financial capability and, therefore, is not fully aligned to its strategic operation. Moreover, there is a gap in benefits and remuneration practices, as they include the reward in the form of Christmas hampers from the company’s products range depending on the seniority level. In contrast, the economic situation assumes money benefits to be more efficient and motivating. Moreover, various money benefits might cause unrest and discontent among company employees.

The recruitment strategy is outdated; hence, the company fails to engage and retain high-quality staff. Managers make decisions regarding selection, performance management, and the team’s progression following the matriarchal style of managing the staff with no innovation adaptive approach. Being initially highly efficient and motivating, this HR management style finally led to the imbalance in the employees attitude to the company: part of them stayed loyal and prideful about their job. Another part benefited from the soft leadership attitude, resorting to methods like litigation.

Another factor forcing potential employee dissatisfaction is the wages payment strategy: managers have fixed salaries while ordinary employees are paid on an hourly wage rate basis. There are no evident structured social security policies for most of the staff, which is a losing strategy. At the earliest opportunity to obtain the position with a broader range of social guarantees associated with other companies, the employees are likely to cross over to competitors companies, especially in conditions of economic instability. In the current terms of fierce competition in the market, the brain drain possibility should be excluded.

People Management Focused Recommended Strategy

Step 1. Change in HR management Style

The established matriarchal style of managing staff lost its efficiency and required a shift to updated CEO’s leadership behaviour. Although Susan herself assumes that her leadership style is efficient, in terms of economic fluctuations, it should be changed to adaptive, integrating the advantages of the directive, achievement-oriented, and leadership. The relevant recommended approach is in introducing another behavioural model.

The CEO should continue taking part in the employees performance and activities outside her office, simultaneously implementing directive leadership features. Leadership style should change according to the needs in a concrete situation. “Matriarchal Leaders must learn to shift to a more directive style to ensure goals are achieved in a timely fashion” (“Dysfunctional leadership,” 2016). Still, her leader behaviour currently did not change depending on the people she was dealing with in specific circumstances. Therefore, Susan cannot capture the dynamics of changing environment and synchronize her leadership style with people’s attitudes accordingly. The possible solution is a correct use of expert and referent powers.

Moreover, proceeding participant leadership behaviour towards ordinary employees will let the CEO keep their trust and confidence. When applied to the top management and HODs, she should simultaneously engage directive leadership’s characteristics like “a strong tendency to control discussions, dominate interactions, and personally direct task completion” till the company reaches financial sustainability (Bell, 2018). If top management has a high level of skills and education in the field of activity, the employees trust its experience and reply to its decision.

Step 2. Improvement of Financial Sustainability

Efficient productivity is impossible in the environment of the staff’s concern about the company’s current financial state. CEO should undertake responsibility for the business decisions made in contemporary terms. The management team is likely to face a protracted timeline for achieving economic sustainability. Moreover, the perspective to deal with the surrounding resistant community should be taken into account, as any changes in financial and managerial frames initially will lead to discontent and rejection due to the formed habits. Applying for governmental support as a long-term loan is highly recommended as a short-term perspective to provide the company with long-term sustainability due to the critical investments in technologies and attracting high-qualified specialists to management positions.

Step 3. Abandonment of the Family Business Model

The next short-term recommendation is logically following from the previous paragraph. The current family business model appeared to be not as effective as expected. Therefore, there is an urgent need to engraft external employees with extensive experience in crisis management and relevant training and skills to the finance and HR departments. The company needs a complete restructuring of financial control and personnel management strategies based on the current situation.

Step 4. Changing Rewarding and Confidentiality Policies

Apparent financial and social inequalities are the surest way to the employees discontent. The suggested solutions include the transfer of all employees to a fixed monthly rate instead of piece-work payment. The next step is an incentive bonus implementation: part of the fixed monthly salary is paid subject to 100% attendance. If the employee at any position takes sick leave or vacation, the bonus part is paid partially in the percentage, preliminary agreed by CEO, top managers, and financial department (for instance, 50-60%). This approach will serve as a strong motivation to attend work without frequent absences.

The next proposal is implementing of non-disclosure policy regarding salaries and bonuses. Hence, the company will be able to avoid unrest, discontent, and objections of discrimination on any grounds which it faced before. Finally, the Christmas hampers should be substituted with the equivalent cash rewards regardless of the position held by an employee. This step will support the staff financially during the economic crisis and create a feeling of appraisal equality. Such an approach contributes to the staff’s loyalty and engagement.

Step 5. Target Training Programs

Taking into account a significant number of recently employed non-skilled staff, there is a sharp need for target training programs development. Appropriate powers and responsibilities should be delegated to the HR department under the strict control of top management. As a long-term perspective, an annual appraisal report might be applied along with the motivation bonus increase based on its results. This will let the company efficiently motivate the staff to demonstrate to the limit precise performance during the working year. It is highly essential to increase the level of the employees professional skills and, therefore, the quality of their performance and, accordingly, of manufactured products.

References

1. Bell, C. (2018) The effect of participative and directive leadership on team effectiveness among administrative employees in a South African tertiary institution.
2. ‘Dysfunctional leadership styles: the matriarchal leadership style’ (2016) Caliber Leadership Systems. pp. 2-6.
3. Hlupic, V. (2015) Shifting to more people-focused management styles. Web.
4. Practicing strategic human resources. (2015).
5. Search for business funding or advice. (2020) Web.