Human Resource Management Pirates Inc.

Submitted to: Mrs. Homayara Latifa Ahmed Assistant Professor, Institute of Business Administration University of Dhaka Submitted by:
Group 2 59 97 105 106 111

Ahona Azad Choyti Ashhab Zaman Rafid Md. Saif Hassan Afsar Hossain Jamil Emranul Haque Shehab

Date of Submission: 22nd May 2012

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Content
Items Page No

HRM Case: Pirates Inc. Questions and Learning Objectives Answer to Question No. 1 Answer to Question No. 2 Appendix A Appendix B (References) Appendix C

03 05 06 08 10 11 13

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HRM Case: Pirates Inc.

Mr. Jack Sparrow has been an integral part of management at Pirates Inc. a themed amusement park since its inception. His loyalty to the company is unquestionable, and his contributions are many and well recorded. So, naturally when the company decided to expand, the board of directors elected Mr. Sparrow to be the CEO of The Black Pearl (5 star hotel). The directors reasoned that market penetration should be handled by the most experienced and loyal employee that they had.

Mr. Sparrow conducted his market research and decided to set up the hotel in Dhaka. He bought a plot in Banani, constructed a 20-storied hotel with indoor swimming pool, gym, 24-hour restaurants, bars etc. Upon starting business, Mr. Sparrow was sure to employ a professional Human Resource Manager with good credentials. After a recruitment process, which he himself carried out, Mr. Sparrow employed Mr. Hector Barbossa as his Head of Human Resource Management. He gave Mr. Barbossa full reign regarding his activities; he only gave Mr. Barbossa one objective: It is important to me and our company that our employees are totally satisfied with their working conditions. To our investors it is important that The Black Pearl makes a profit. So it is quintessential that our employees are satisfied, productive and highly efficient. Keep them happy Hector (Mr. Jack Sparrow).

At the semi-annual management meeting Mr. Sparrow was shocked by the financial figures that the company had generated in the 6 months of operation. His market research showed that there would be a huge demand for such a hotel yet the profit margin was well below what he expected, in fact it was lower than the worst-case scenario in his pro forma sensitivity analysis. Mr. Sparrow knows for a fact that there is negligible loss of efficiency regarding inputs whether it is raw materials, machineries or capital. He also knows that there have been an adequate number of guests to the hotel to satisfy the profit margin requirements. So, with his job and reputation at stake, Mr. Sparrow starts to investigate the problem. His discoveries have led him to believe that the problem lies with the Human Resources Department. He saw that the customers complained about room service and general cleanliness and attitude of the staff. He also interviewed individual members himself and he detected a general sense of discontent amongst the staff members. He immediately confronted Mr. Barbossa, who appeared to be just as flabbergasted as he was. Mr. Barbossa defended himself by saying: I went by the book, boss. I hired experienced people with good references and an impressive resum. I was careful to hire people who fitted the job

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description and who gave a satisfactory interview and seemed to know what was required of them. I have set up a traditional organogram of our organization with a proper chain of command, and compensation and benefit system based on said chain of command. The managers seem satisfied and the staff knows what to do. I honestly dont know what went wrong. (Mr. Hector Barbossa)

This placed Mr. Sparrow in a dilemma. He investigated further into the chain of command and the general structure of the company. He found that the chain of command had five tiers of managers ranging from floor manager all the way to Head of Housekeeping. Then there were two more tiers between Head of Housekeeping and Head of Departments. These heads of departments then directly reported to the General Manager and the CEO. These managers were paid at the market rate, as per their post. The compensation and benefits and promotion were handled by the heads of the department on a basis of experience and time spent as a company employee. There seemed to be no obvious leak in the system, yet the staff members were not performing and the company had a low profit margin.

So for the next term Mr. Sparrow asked Mr. Barbossa to come up with an action plan that should boost the company performance in the long-run and make the company more profitable. Mr. Sparrow went as far as stipulating that the company might be willing to incur some losses for the time-being, if it meant that the company would perform better in the longrun. Mr. Barbossa proposed that the following actions be taken for the benefit of the company.

He proposed to:

1. Increase the number of staff members per floor Reason: Customers main complaint seemed to be about general cleanliness of the staff. So if there were more staff members per floor this would enable each member to spend more time and attention towards cleanliness. 2. Increase the number of Administration and Maintenance staff Reason: This will mean that administration staff will be able to concentrate on a smaller group of staff members this will make sure that staff members are always performing at their level best. Henceforth this should increase customer satisfaction, and thereby increase the companys profit margin. 3. Increase the salary of all employees on a fixed line basis Reason: This is basically a permanent bonus to the base line salary of all employees. This should provide a greater incentive to work better and therefore ensure higher performance from all employees throughout the company.

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It is of vital importance that The Black Pearl picks up its performance and increases its profit margin before the annual general meeting, which is in 6 months time. Not only does it have to perform better in the short-run, but also in the long run the company must become profitable enough so that the investors continue to invest. Mr. Sparrows long-standing reputation within this company hangs upon the success of The Black Pearl .

*Note: Refer to Appendix A for source

Questions and Learning objectives

Question 1: Discuss Mr. Barbossas proposed HR action plan. Do you think it will benefit the company? Why or why not? Learning objective 1.0: To understand the drawbacks of traditional HRM and how Strategic HRM makes a significant difference regarding company performance Learning objective 1.1: To understand when Job Analysis and Job Evaluation is conducted and their purpose Question 2: Mr. Sparrow is not convinced with Mr. Barbossas action plan. So he hired you as a HR consultant. What would you advise? Learning Objective 2.0: Understand the implication of Job Analysis and Job Evaluation in an organization and the process of implementation of Job Analysis and Job Evaluation

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Question 1: Discuss Mr. Barbossas proposed action plan. Do you think it will benefit the company? Why or why not?
In the context of the dissatisfactory performance of the company, when Mr. Barbossa was asked to come up with some action plan he proposed the following solutions: I. II. III. Increase the number of staff members per floor. Increase the number of Administration and Maintenance staff. Increase the salary of all employees on a fixed line basis. Analyzing these proposed action plans, it can be seen that Mr. Barbossa made these decisions on the basis of traditional human resource management strategy . He thought that if the numbers of staffs are increased per floor then more attention will be given to the customers and an increased number of employees will be able to attend to customers by giving each of them more time and focus. Secondly he thought to maintain and supervise these increased number of employees by employing more administration and maintenance staffs and henceforth there will be proper distribution of the workforce and also these new administration and maintenance staff will be able to make sure that all the floor-staffs are attending to the customers properly. In the third plan he thought that an increase in salary would motivate the employees to self-driven work and better performance. And thus he only concentrated mainly on the superficial traditional strategies . But he could not go to the core of the problem, which is introduction of strategic human resource management in the organization . Here Strategic human resource management is necessary because it focuses on human resource programs with long-term objectives. The focus is on addressing and solving problems that affect people management programs in the long run. In other words it can be said that strategic human resource management should be introduced in the company to increase employee productivity by focusing on business obstacles. Also strategic human resource management can be introduced for motivating the employees
[15] [2] [5] [2]

. But he could not identify the importance of strategic human resource

management and rather tried to bring changes on the basis of traditional human resource management .
[2]

He just suggested increasing the number of staffs and salary of the

employees, which can only add to the attendance of the customers on time. But it will not result in them improving their working performance in any way. Furthermore it is not evident anywhere that the employees are not performing well and giving their cent percent due to the lack of the salaries. So a raise in the salary will not necessarily increase employee dedication and satisfaction, which leads to employee motivation. As a result whatever he proposed might seem to be able to solve the problem for the time being, but in the long run it will not provide any healthy solution. Hence it can be said that Mr. Barbossaa proposed action plan would not benefit the company. In the whole case it can be seen that there is no sign of job analysis and job evaluation done in the company
[11]

. In this century it is very important to conduct a job analysis for

successfully running a business. But Pirates Inc. is expecting to make high-levels of profit without doing any kind of job analysis and job evaluation of the company. When the company

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started to make losses, Mr. Barbossa was supposed to propose to conduct job analysis, but he failed to consider its significance and identified few steps superficially which will not benefit the company in any way. Other then identifying those steps if he had advised to the high officials and Mr. Jack Sparrow the importance of job analysis in the company, his purpose would have been served and the company would have been benefitted. It is evident that the main problem in the case lies in the lacking of job analysis and job evaluation . The customers are not satisfied with the performance of the employees and of the organization and they frequently complain about it. This is leading to loss of the company and also customers and employee dissatisfaction
[13] [16] [2]

. In order to solve these problems, a

successful job analysis is needed to be done by the company, along with identifying and explaining job description, job specification, etc
[14]

. By this formal process the content of the

job in terms of activities involved and attributes needed to perform the work and major job requirements has to be identified . It will also provide information to the organization about

how many employees are required for the job and which employees is best fit for the organizations. Thus what Mr. Barbossa proposed in his first and second step will only be successful after a proper job analysis is being conducted. Again one of the main purposes of conducting job analysis is to prepare job description and job specification, which in turn helps to hire the right quality of workforce into an organization. Thus when hiring more employees in the organization for proper maintenance it is very important to keep in consideration the job description and job specification of their respective jobs. Otherwise only the number of employees will increase bringing no significant change in the quality of the performance. The third step, which Mr. Barbossa proposed; to raise the salary of the employees, also has no basis because in any successful organization it is very absurd to specify or raise salary without determining and describing the job description. For positive results the company should first go for describing the job of the employees and the range and level of duties that they will perform and then decide on the salary scale . Otherwise, without knowing the nature and type of the job, an increase in salary would be inappropriate. In conclusion, it can be said that whatever Mr. Barbossa had proposed can only be implemented if he can recognize and understand the significant difference between traditional human resource management and strategic human resource management . He must understand the significance of strategic human resource management to run a business successfully on a daily basis and that it is the key to success to satisfy both the employees and the customers. At the same time his plan will benefit the company if and only if a successful job analysis and job evaluation is done in the company. So without any further delay he should propose to Mr. Jack sparrow to introduce strategic human resource management in the company and conduct a job analysis on a first priority basis. Otherwise whatever Mr. Barbossa had proposed would not bring any significant advantage to the company and the company will continue to do make losses.
[2] [8]

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Question 2: Mr. Sparrow is not convinced with Mr. Barbossas action plan. So he hired you as a HR consultant. What would you advise the company?

Mr. Sparrow came to us with the projected profits of The Black Pearl and its semiannual performance reports. He tasked us with the job of improving his HR department to ensure that the company starts performing at its full potential and hopefully make profits. As a HR consultancy firm, our first task was to analyze the companys current situation so that we could advise them accordingly. We found out that Mr. Barbossa, the companys current Head of Human Resources is running the firm as per traditional human resource management systems . However, this has resulted in a severe lack of employee motivation and general confusion amongst staff, which has led to customer dissatisfaction. We believe that this is the reason behind the poor performance of the company. We advise that before the company takes any drastic steps, the organization must conduct a Job Analysis and a Job Evaluation
[13][8] [2]

. Using data generated from Job Analysis methods, we should be able to

[13]

construct a Job Description and Job Specification, which should in-turn help us improve staff coordination and work-standards which will then improve company performance . Then we

will conduct a Job Evaluation, which will help us determine an internally equitable and externally competitive compensation and benefits system, which will ensure that the employees are being rewarded according to the amount and value of work that they do. We advise that to start off with, the company should observe employees to understand what each job is and what it requires. Observation should help construct a job specification in terms of technical skill and competency required to perform the job satisfactorily, i.e. just by observation an HR supervisor should be able to determine the level of technical skill and competency needed to clean a room, wait-on customers at the hotel restaurant or serve drinks at the hotel bar . The observation process should also help the HR department to come up with a job definition that clearly states the purpose of the job. On top of this, observation will also be used to delineate jobs into tasks, so that the expectations from employees are clear to the employee themselves. So according to us the first and most important task of the HR department is to come up with a job specification, job definition and job delineation based on observation of jobs. While conducting the observation processes, we will also carryout a small questionnaire to the employees. This will enable the HR department to establish job identities with respect to the jobs being performed, i.e. a simple questionnaire with no more than 5 questions asking each employee to identify their job title, job department, job function (in their opinion) and job evaluator (the manager that the member reports to), should suffice. This will allow the HR department to construct clear, concise job identities for each class of jobs.
[2] [2]

The

observation processes will provide enough data for job specifications and coupled with the questionnaire we should have data regarding job identification, job definition and job delineation all of which will be combined to form the job description. For our initial stage of

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investigation, we have only used generic methods of job specification and job description so that we can provide quick-relief for the major areas of concern regarding HR. For our second stage of investigation, we will use some specific methods to further develop our job analysis. We will use McCormicks Position Analysis Questionnaire (PAQ) model to further develop our job specification, job delineation, job definition and job identification
[12]

. The PAQ model includes approximately 195 items that determine necessary
[17]

information input, mental processes, work output, interpersonal relationships, job context and other job characteristics . This should help the HR department to identify and solve all

compatibility issues between employee characteristics and job characteristics. Furthermore, we will also conduct a Task Inventory Analysis (TIA) to clearly identify discrete tasks, this should provide us with a clear job delineation so that the employees know exactly what and how much is expected from them
[19]

. On top of this, the TIA should help the

company maintain work standards, which should ensure continued customer satisfaction. TIA will also provide us with inferences about KSA (Knowledge, Skills and Abilities) requirements and the weighting of the required KSAs
[14]

.
[3]

To conclude the second stage of our investigation, we will conduct a Functional Job Analysis (FJA), developed by the United States Department of Labor . By the time we have finished the PAQ and TIA, the necessity of training should become clear to us. So we will conduct the FJA to mainly focus on the training requirements of the employees should fulfill all the job analysis requirements of the organization. After the job analysis has been conducted successfully, we will conduct a Job Evaluation. The purpose of our job evaluation is for the company to become internally equitable and externally competitive . Since Mr. Barbossa has already set-up a compensation structure, we opted to conduct the job analysis first so that issues regarding customer satisfaction could be addressed immediately. The other reason for doing job evaluation after job analysis is because we believe that the data generated from job analysis will help the job evaluation is more comprehensive. For our job evaluation we will use the Hay Method to account for knowledge, problem solving, accountability and working conditions . The Hay method basically divides the job into input, process and output, which is then scored as score A, B and C respectively: Score A judges depth, breadth and interpersonal skills, Score B judges problem complexity and available guidelines/information and Score C judges discretionary authority and real-time importance of job . These scores are then amalgamated into a total score, which then forms the basis of compensation and benefits along with relevant data from job analysis. We believe that this will increase employee satisfaction and employee motivation by making the company provide the proper amount of compensation, where it is due. This is how the company will become internally equitable. This will also help the organization be externally competitive by eliminating extra, unnecessary compensation that adds no value to the company, its outputs or its performance. This concludes our opening investigation of The Black Pearl as its HR consultants. After we have all the data from job analysis and job evaluation, we will be in a position to advise the company regarding its future policies. At this initial stage we believe that we have sufficient data to implement strategic HRM policies, which should make the company profitable before its annual review by the board of directors from Pirates Inc.
[2] [8] [2] [18]

. This

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Appendix A
Interview with Mr. Mahir Haroon (25% stakeholder of a new hotel to be constructed)

Q1. What Compensation system do you plan to apply? Why? Q2. How do you plan to motivate the employees to self-driven work? Q3. What will they do with wastage of perishables? Do you have a wastage management plan? Q4. On what basis will the performance of employees be evaluated? What are your methods of performance appraisal and key performance indicators? Q5. How do you plan to train them to handle emergency situations? Q6. How will you increase production without increasing employee number/working hours, efficiency plans? Q7. What measures do you plan to take for employee satisfaction? Q8. What are your recruitment methods? Q9. How do you plan to organize your human resources? No. Of managers or team leader (vs. employees)? Q10. What kind of departmentalization do you plan to implement? Why? Q11. What are your proposed employee benefits?

*Note: Refer to Appendix B-5

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Appendix B
References:

1. Contents of Position Analysis Questionnaire. Human Resources. N.p., n.d. Web. 21 May 2012. <http://www.humanresources.hrvinet.com/contents-of-position-analysisquestionnaire/>. 2. Fisher, Cynthia D., Lyle F. Schoenfeldt, and James B. Shaw. Human Resource Management. New Delhi: Biztantra, 2009. Print. 3. Functional Job Analysis. Human Resources. N.p., n.d. Web. 21 May 2012. <http://www.humanresources.hrvinet.com/functional-job-analysis-fja-model/>. 4. Functional Job Analysis Questions. Human Resources. N.p., n.d. Web. 21 May 2012. <http://www.humanresources.hrvinet.com/functional-job-analysis-questions/>. 5. Haroon, Mahir. Personal interview. 15 May 2012. 6. Hay Evaluation Method. Waterloo Human Resources. University of Waterloo, n.d. Web. 21 May 2012. <http://www.hr.uwaterloo.ca/staff/hay_evaluation.html>. 7. Hay Guide Chart. Wikipedia. N.p., n.d. Web. 21 May 2012. <http://en.wikipedia.org/wiki/ Hay_Guide_Chart>. 8. Hay System of Job Evaluation. The Hay Group. N. pag. PDF file. 9. Hay vs. Mercer Job Evaluation Methodology. LinkedIn. N.p., n.d. Web. 21 May 2012. <http://www.linkedin.com/answers/hiring-human-resources/compensation-benefits/ HRH_CMP/117532-1618173>. 10. HR Ogranizational Structure and Organization Chart. HRM Advice. N.p., 2008. Web. 21 May 2012. <http://hrmadvice.com/hrmadvice/hr-organizational-structure.html>. 11. HR Planning. Explore HR Management. N.p., n.d. Web. 21 May 2012. <http://www.explorehr.org/category/HR_Planning/HR_Planning.html>. 12. Hurst, Carol L. Position Analysis Questionnaire. Arizona State University, 2008. PDF file. 13. Job Analysis Method. Human Resources. N.p., n.d. Web. 21 May 2012. <http://www.humanresources.hrvinet.com/18-methods-of-job-analysis/>.

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14. Knowledge, Skills and Abilities. Human Resources. N.p., n.d. Web. 21 May 2012. <http://www.humanresources.hrvinet.com/what-is-knowledge-skills-and-abilities-ksamodel/>. 15. Performance Appraisal. Exploring HR Management. N.p., n.d. Web. 21 May 2012. <http://www.explorehr.org/category/Performance_Appraisal/ Performance_Management.html>. 16. Performance Appraisal Rating Factors. Human Resources. The University of Arizona, 3 Feb. 1998. Web. 21 May 2012. <http://www.hr.arizona.edu/05_prf/ratingfactors.php>. 17. Position Analysis Questionnaire. Human Resources. N.p., n.d. Web. 21 May 2012. <http://www.humanresources.hrvinet.com/position-analysis-questionnaire-paqmodel/>. 18. Process of Functional Job Analysis. Human Resources. N.p., n.d. Web. 21 May 2012. <http://www.humanresources.hrvinet.com/process-of-functional-job-analysis/>. 19. Task Inventory. Human Resources. N.p., n.d. Web. 21 May 2012. <http://www.humanresources.hrvinet.com/task-inventory-method/>.

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Appendix C

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