Question

Concerned about the human resource issues within the company, Michael and Peter have hired an external HR Consultant (You) to prepare a report for presentation to the board.

Your task is to write a report in which you analyse the case study and offer suggestions on how to improve the business from an HR planning perspective to help move RS Electronics into greater profitability, as the basis for Michael and Peter to complete the sale of the company.

All academic source references must be shown throughout your report in order to achieve a pass grade.

The problem is a business one…. Use HR as a tool to resolve it!

Learning outcome:
examine the component parts of effectively managing the employment cycle within an organisational context.

To identify and discuss solutions to encountered HR problems in organisations with a practical deliverable focus.

RS Electronics

RS Electronics is a company based in the West Midlands which produces electrical components and systems for a range of industrial appliances. It was started in 1982 by Michael Richards and Peter Stewart, who used their redundancy money to set up their own business. Emphasising high quality and rapid customer service, the company grew quickly and achieved healthy profitability. ‘RS means service and reliability’ has always been the core communication.

The company has continued to invest in technology to maintain competitiveness, but despite occasional discussions about moving to new premises, the directors have consistently decided to remain in their existing industrial unit. This has resulted in a poor layout and hence increasingly tight and unpleasant working conditions for many of its 652 employees. Costs have risen, productivity levels have fallen and employee motivation levels have suffered. Critically, the financial crisis of 2008-2011, combined with increased competition from more nimble competitors, has meant that the company is now barely breaking even.

The management at both senior and junior levels have good technical skills and problem solving capability, but typically lack people management skills and are unwilling delegators. Recruitment and selection is thus based upon technical expertise to the neglect of ability to effectively manage staff. Whilst the company has a policy of equal opportunities, in practice recruitment tends to favour men, as there is a need for new staff to fit in with the culture; women, therefore, are typically found in administrative jobs. The company is structured on functional lines, incorporating finance, marketing, production, purchasing and human resources departments. However, the HR department is considered low in status and is conceived in support terms, being responsible for low level tasks such as the pay roll, staff records, monitoring sickness absence and job advertisements. HR is the only department not represented at board level. Moreover, each department looks after its own needs; hence, finance does not perceive any obligation to understand the needs of marketing and vice-versa.

As noted above, the working conditions at RS have deteriorated as competition has intensified. While the company aims to recruit and retain high quality staff, salaries have not kept pace with the industry average and indeed have now seemingly fallen below the local average in the West Midlands. There is also some resentment as marketing staff are believed to earn higher salaries for undertaking easier and more glamorous work. The company has maintained its traditional shift pattern for production staff, operating two shifts: 0600-1400 and 1400-2200. Whilst there are stipulated breaks, many employees work through the shift taking an occasional five minute pause because ‘it is the way it is round here’. Equally, no attention is afforded to work-life balance issues. It is no surprise, therefore, that minor accidents are increasingly common, reflecting additionally the cramped working conditions. How long will it be before a serious accident occurs? There is currently no formal health and safety policy and procedures, and the skills of the designated health and safety staff can only be described as basic. The consequence of all of this is that labour absence rates are increasing, particularly in the factory, where labour turnover reached 17% last year; indeed, labour turnover in the company generally is increasing. While relationships between management and staff on a personal level remain good, the atmosphere in the organisation as a whole is tense.

Michael and Peter are now approaching retirement and would like to sell the company, but the problems detailed above suggest that they would have difficulties in satisfactorily achieving this aim. The other senior managers are also ageing and most of the key staff have served many years with the company; many of these, too, will be retiring over the next few years. There is a distinct lack of able and energetic younger staff that could move into senior positions. Career development has not been a priority. This is further manifested in the lack of training and development in the company: Michael and Peter have long held the view that on-the-job training to do the job that an individual is designated to do is sufficient. Overall, there has never been any attempt to undertake human resource planning.

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