Waterway HR Issues: Employee Retention Strategies

Executive summary

Waterway Industries is a canoe manufacturing company, headquartered at Gosford, NSW. Like many companies, Waterways started off small and has since grown and expanded its business in many areas and regions. It therefore follows that its human resource management issues have also expanded. Despite creating favorable working relationship among the employees to invoke innovations, Waterway has not managed to develop proper human resource policy that will ensure low employee turnover.

The methodology for compensation is not formal and this creates a feeling of biasness among certain employees who feel less motivated. The company therefore needs to develop proper human resource policy that would ensure its most priced assets in employees do not leave for other better deals. Compensation can be based on many issues other than monetary benefits. However, even the monetary approach should be done in a careful manner, in line with viable and agreed result expectations.

Discussion

Introduction

Waterway Industries is a canoe manufacturing company, headquartered at Gosford, NSW. The company has been in existence for the past half a century, having been started in 1960s as a small scale manufacturing unit for high quality canoes. Having expanded quickly to other states other states other than NSW, and subsequently increasing its operational activities in the entire country, the company’s human resource activities increased too. The company has also diversified its product range, with the help of its creative and innovative employees. Currently, one of its best performing products is kayak.

However, the employees work environment, characterized by relaxed and informal structure, has not changed. There is no restricted time for leaving office premises as long as one was able to complete his or her work in time. The freedom allows employs to think creatively, and come up with new ideas. Just like any other organization, there must be employees who are more dedicated and focused than others. Waterways has Lee Carter, one employee who dedicate almost all her time to the company’s related duties. The compensation system in the company is informal and has not definite formula to follow.

Employee Satisfaction

It has dawned on many managers that employee satisfaction is a critical aspect in any effort to achieve the success within the organization. Its no wonder organizations expend great deal of resources in terms of money and time to facilitate initiatives aimed at satisfying employees to reduce turnover, improve productivity and creativity, and most of all increase customer satisfaction to boost profitability (Tietjen & Myers 1998; Caruth & Handlogten 2001).

However, in many occasions, managers who have experienced high employee turnover may take long to realize why employee leave their company and join another company, probably a competitor. How and why do some firms manage to retain employees while others continuously suffer from high employee turnover? According to Caruth & Handlogten (2001), the question may have many answers but the ultimate conclusion is that it all depends on what treatment employees receive on the job. In fact, management theorists have in several occasions postulated that job satisfaction is even more important than monetary or material compensation in times of packs and reward schemes.

That is, when employees get fair and just treatment, they are likely to stay longer in the company. But when they are not, they will leave. High employee turnover can be so challenging and in most cases drains company resources. According to Howard Morgan, cited in Strategic Direction (2006, p.6), one thing is important about employee management: “if you do not appropriately address issues of retaining quality employees, they will leave and you will suffer.”

Work Design and Innovation

One area that Waterways has successfully managed to prosper is to engage employees in a more productive initiative. They have managed to make employees more productive and creative in everything they handle, work together and come up with new ideas on designs. From the beginning, Waterway did manage to avoid the traditional organizational hierarchy model of work. It’s known that organizational hierarchy model creates a separate class of workers, hence jeopardizes the opportunities for innovations at all levels of the organization. Amar (2001, p.90) candidly states, “Employing a traditional work organization and design model is a sure way to have a knowledge organization fail.”

Under the knowledge work design model, there is always a deliberate disengagement of the well-being of all three major human constituents of contemporary organizations, comprised of ordinary workers, intellectual workers, and employers (Amar 2001). It must be noted that if an organization’s initiatives gives same outcome to all the three groups, there is a possibility of different consequences for each of the three groups.

Waterway relies on its knowledgeable employees and creative designers. Basically, the primary objective in knowledge organization is to have the benefit to permit, plan, and most of all encourage the free flow of knowledge and ideas to increase productivity of the organization and drive it towards goal achievements. In a knowledge work design model, it is assumed that a bigger part of organizational well-being depends on the ability of the organization in question to integrate the intellectual and operator work assignments (Carayannis & Chanaron 2007; Deckop 2006).

Principally, the well-being of the workers, intellectual workers, and employers in this integrated assignment will have to be looked at in more justified and balanced manner. Unfortunately for Waterway, the well-being of these groups of employees has not been observed in a balanced manner in anyway, the reward scheme is wholly reliant on one person’s instinct and individual beliefs. In other words, the scheme is not in anyway designed according to the productivity or ability of the individual employee.

Contractual Arrangements and Work Commitment

The contemporary human resource literature allude to the fact that contractual arrangements in employment help firms and employees manage any HR issue that may crop up in the job environment (Maslow 1998; Dymock & McCarthy 2006; Deckop 2006). It being based on the legal aspects gives both the employer and employee the confidence in their duty and bases the whole concept management ethics on the productivity and compensation mechanism for the employees. In fact, many modern economists have unanimously agreed that implicit contracts between employees and the employer provide adequate mechanism to foster employee commitment as well as motivation (Deckop 2006, p.202).

In a more recent development, Baker, Gibson and Murphy (2000, cited in Deckop 2006, p.202 ) proposed that it’s always better for a firm to properly develop informal contracts with its employees so as to obtain better results instead of relying on market competition process. Other management scholars have on the other hand applied psychological contract construct to develop and explain specific mechanisms as well processes within the relationship between employer and employee. The specific mechanisms and process have been identified to have strong effects on the attitudes and behaviors of the employees.

Formal Compensation system

A formal compensation system is normally designed to encourage employees to greater productivity. That is, a system can be designed and applied just any other measure, which may results in financial compensation, as a way of increasing external stimulus to invoke the will of the workers to in an organization (Caroll & Nafukho 2006, p.127). A formal compensation system will help Waterways identify factors such as rising inflation, shortage of human resources, insufficient public funds, insufficient accommodation, and uncharacteristically high rate of employee turnover. Once identified, the incentive systems to raise productivity would eventually benefit the firm and its employees in mitigating the highlighted problems, at least within the organization.

It is therefore critical to place high level of emphasis on the use of formal compensation mechanism for employees, where incentives can only be used as a means to realize specific goal of the firm. In this case, it must be acknowledged that, in return for the standard compensation, all the beneficiaries (employees) should be prepared to deliver specific amount and quality of work during their official working hours of the week (Andrew 1988; Tietjen & Myers 1998).

In her empirical analysis, Andrew (1988, p.173.), however states: “It’s only necessary to encourage personnel with additional compensation, if more than the required standard amount of work must be performed by one personnel member.” Despite its benefits, it must be noted that not every employee can be encouraged with financial compensation to make more that their standard contribution (Caroll & Nafukho 2006).

If the methodology is developed to justify the fact that every employee work to satisfy a specific need in an organization, it would not be necessary to increase certain employees’ compensation or rewards them with more financial benefits. It is therefore important for Waterway to develop a formal compensation mechanism with compensation system well designed. But, the application of such a scheme should be carefully designed because two individuals will definitely not have same needs, coupled with the fact valid system may not be found in a simple manner.

The Concept of Employee Motivation

Contemporary management experts have concurred that a motivated employee will surely increase company’s profitability. The concept of motivating work environment has been used in the management circles for quite long. However, Carr (2000) observes that many managers have not acknowledged the basic components of this concept. It is therefore not easy for them to reinforce the desired behaviors among employees. the common misconception among many managers is that if they developed ‘nicer’ attitude towards employees, then their productivity will increase or they will perform better (Carr, 2000; Francis, 2003). But this kind of belief may even backfire with employees ending up with worse performance.

Surveys have also shown that monetary compensation is ranked way below other psychological satisfaction that employees expect from a working relationship. But still, money is usually a major source of satisfaction, or dissatisfaction if not properly handled. Milne (2007) highlights the most important elements of motivations to include: achievement, recognition, empowerment, opportunities for growth, and corporate policies (Milne 2007).

Employees get the feeling of achievement in their jobs and career when they feel motivated to work. Such employees are more dedicated to their organizations. Employees also find it satisfying when they are recognized for whatever contributions they bring at work. Recognition should come from colleagues, managers and being engaged more with organizational issues (Hong, Yang, Wang et al. 1995) Milne 2007). Another important component of good motivation techniques are empowerment. If an employee is allowed to perform particular jobs with certain degree of autonomy, job satisfaction feelings are consequently enhanced (McKenzie & Lee1998, p.7).

Waterway has surely empowered its employees with a lot of autonomy to perform specific duties. Employees also need to access opportunities for growth, preferably through career development. The feelings that work environment provides opportunity for growth and learn new things is one way of bringing a lot of satisfaction to the employees. Finally, corporate policy is an important aspect of work environment and a motivator of employees. It is evident that Waterway lacks corporate policy that would guide employees’ management.

Conclusion

Even through Waterway Industries’ work environment is conducive and supports innovation and development of new products, the company suffers major human resource issues. The lack of clear human resource policy that would guide any form compensation is lacking. The company cannot retain its most priced assets any longer as they leave for better deals in other companies. The reward scheme is biased and lacks coherent procedure. Some of its best performing and highly dedicated employees are not well compensated, hence feel unappreciated. It is therefore prudent to develop proper formal compensation scheme that would not only rely on monetary benefits to employees but many other motivating factors as highlighted by many management experts.

Recommendations

1. Waterway’s priority should be on how to keep its knowledgeable and dedicated employees. They should learn to integrate the intellectual and operator work assignments given to individual employees. It therefore means that well-being of the workers, intellectual workers, and employers in this integrated assignment will have to be looked at in more justified and balanced manner.
2. The company needs to adopt the contractual arrangements with its employees. Contracts help firms and employees manage any form of arrangements that may crop up in the job environment. Moreover, the legal aspect of contracts gives both the employer and employee the confidence in their duty and bases the whole concept management ethics on the productivity and compensation mechanism for the employees.
3. The company also needs to develop a formal compensation mechanism. A formal compensation arrangement will help Waterways identify factors that would influence labor market such as rising inflation, shortage of human resources, insufficient public funds, insufficient accommodation, and abnormally high rate of employee turnover. Once identified, the incentive systems to raise productivity would eventually benefit the firm and its employees in mitigating the highlighted problems that face Waterway.
4. Waterway should adopt contemporary ways of motivating employees. The most important elements of motivations that Waterway can use are: achievement identification, recognition of the employees’ work, empowerment of the staff, making opportunities for growth available for the staff, and developing appropriate corporate policies.

List of References

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Amar. D. (2001) Managing Knowledge Workers: Unleashing Innovation and Productivity. London. Greenwood Publishing Group, pp. 90-97.

Carayannis, G. & Chanaron J. (2007) Leading and Managing Creators, Inventors, and Innovators: The Art, Science, and Craft of Fostering Creativity, Triggering Invention, and Catalyzing Innovation: Innovation and Knowledge Management. New York. Sage Publishers.

Caroll, M. & Nafukho, F (2006) Culture, Organisational Learning and Selected Employee Background Variables in Small-size Business Enterprises. Journal of European Industrial Training, Vol 31 No 2, pp 127–144.

Carr, A. (2000) Critical Theory and the Management of Change in Organizations, Journal of Organizational Change Management, Vol 13, No. 3, pp. 208-220.

Caruth, D. & Handlogten, D. (2001) Managing Compensation (And Understanding It Too): A Handbook for the Perplexed. London. Greenwood Publishing Group

Deckop, J. (2006) Human Resource Management Ethics. Charlotte, NC. Information Age Publishing, pp. 202- 206.

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Maslow, A. (1998) A theory of human motivation. Psychological Review, Vol. 50, pp. 370-96.

McKenzie, R. & Lee, D. (1998) Managing Through Incentives: How to Develop a More Collaborative, Productive, and Profitable Organization. Oxford. Oxford University Press, pp.104- 127.

Milne, P. (2007) Motivation, Incentives and Organizational Culture. Journal of Knowledge Management, Vol. 11 No. 6, pp. 28-38.

Strategic Direction (2008) Keeping your talent: identifying and retaining your star employee. Emerald Group Publishing Limited, Vol. 24 No.9, p-6-8.

Tietjen, M. & Myers, R. (1998), Motivation and Job Satisfaction. Management Decision, Vol. 36, No. 4, pp. 226-231.