The Case of A-Z Networking: Problems in Human Resources Essay

 

 

Executive Summary

A-Z Networking was formed by 12 employees from a bankrupt company including the two directors, Paul and Malcolm. Paul is known for his engineering skills while Malcolm is known for his charisma and managerial skills. Because of their complementing skills, the company was a success at first but encountered problems when employee relations conflicts arise.

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These conflicts and their causes were identified in the paper. The conflicts were caused by being too comfortable with each other and developing hierarchical mentality. Another problem is the lack of organizational learning which caused the engineers to feel unsatisfied with their work. It is also found out that lack of motivation can also be a cause of the unsatisfied employees that is why a framework is presented for better understanding of employee satisfaction.

Aside from identifying these problems, the paper also managed to give recommendations such as benefits and rewards for the employees and performance appraisal systems.

Stock options were recommended as an alternative benefit to retain the employees and the 360-degree feedback appraisal system was suggested to have a better work environment in A-Z Networking.

As a whole, the paper talks about the different aspects of Human resource management concerned in the case of A-Z Networking.

 

 

 

I. Introduction

The topic of Human resources is probably one of the most discussed topics in business and management. This topic includes dealing with staff and employees as well as the employers. Human resources management is one of the most important aspects of the business for it deals with also one of the most important inputs in a business; and that is labor.

Dealing with employees and satisfying them just as much as satisfying the customers is pretty hard to do especially when the employer is not skilled enough in handling the business. But it is worse if the employers have enough experience in doing the business but still cannot manage to satisfy and retain their employees (especially the good ones). This would later cause a more serious problem. In this paper, we try to analyse what really is the problem of A-Z networking with regards to how they handle their employees and try to find ways to improve the treatment of these employees and to save the company from permanent organisational breakdown.

The paper aims to analyze the case of A-Z networking, not only the problems and issues but also the managerial techniques concerned with human resources and other factors that affect the company mentioned in the case. The paper made use of different articles to support the answers to the questions raised in the case. The paper was also able to show a framework that would analyse motivation within employees.

The articles used include the discussions about the Organizational Behavior and Organizational learning and other topics that are concerned with human resource management. The paper was also able to discuss the Organizational learning theory in order to answer the problem of transformational change in the company. Also, articles were used to develop rewards and benefit plan for the company for them to retain the remaining employees particularly the engineers.

As shown in the case, A-Z networking is experiencing problems with their human resources. Because of this, not only the human resource aspect of the business is affected but also the clients which will eventually affect revenues and profit of the company. As I see it, the company is facing a huge problem regarding the two directors, Paul and Malcolm and their managerial skills when it comes to their employees. If this continues to happen, there is a great possibility that the company will have to shut down for it will surely incur losses with the continual loss of staff and skilled engineers.

This is where the significance of the paper comes in. The paper made use of articles about human resources and organisational behavior to help analyse the case and formulate solutions. It made use of previous cases that involve the same problem in order to understand fully what the case is all about and recommend the right steps to make to attain organisational survival.

II. Analysis of the case

The company was set up by Paul and Malcolm, former employees of a bankrupt employer. Paul is a network engineer with no managerial skills but have enough money to support the organisation. However, his partner Malcolm is skilled when it comes to network management but have little money to invest in the business. At first, this seems to be a good combination because they complement each other’s weaknesses. But later in the case, many problems emerged because of the lack of managerial skills. Paul, having not enough skills when it comes to managing the business, does not seem to be a problem at first since Malcolm has all the charisma that has earned the trust of their employees as well as their clients.

At first, the company was very successful which caused them to hire new employees within six months. Because of the growing success of the company, issues in rewards and human resource management seemed to be neglected since the two directors treat their employees as “mates’ for they came from the same company before. This is when the problem started to arise. The two directors developed what can be called hierarchy which does not give the concept of ‘mates’ with their employees anymore. With the original twelve employees, only one was left. What I see as a problem here is that the employees were paid little attention because the two directors were so comfortable with them. Since they work together before with the same company before (with Malcolm and Paul as their co-workers), the two directors treated them not employees that were to be valued but “mates”. Because of their being so much comfortable with each other, the two directors assumed that the employees are satisfied with their job. Since they assumed that their mates were still comfortable with them, they became unaware that there was a developing hierarchy in the workplace. This is when the employees started to hate the environment because the people that they treated as mates were mistreating them through negligence and hierarchy (TOOLS & METRICS: ASK THE EXPERT, 2007).

Because of this, the company had to hire another set of employees including engineers. Because of Malcolm’s skills, the new employees did not have a hard time enjoying their stay. The company grew even more which resulted to Malcolm dealing with clients outside the state and Paul dealing with the engineers. Since Paul does not have the skills that Malcolm has, the engineers started to feel unsatisfied. Because of this, they have to increase the salaries of these engineers in order to retain them.

What I see as a problem here is a problem in Organisational Learning. As stated earlier in the case, only one of the two directors is skilled enough to handle the business. Organisational learning is about detecting and correcting errors. Organisational learning can be achieved through the individuals in them (Marques, 2007).

When applied to the case, it is possible that A-Z networking learns from the skills of Malcolm. Since Malcolm is the only one skilled enough to manage the business, he should have taught Paul on what to do with the employees since Malcolm has all the charisma. Malcolm could have taught Paul on how to earn the trust of employees and clients so that he will also be able to deal with them when Malcolm is out of the state or country. The two were not able to achieve organisational learning because they just neglected the fact that they have their own weaknesses. Instead of establishing organisational learning, they just let it that way since they were confident that there is one of them who know how to deal with the human resources aspect of the business. Because of this, the engineers feel unsatisfied with their job when Malcolm left and let Paul take over the job in human relations.

There are a lot of behavior modification techniques that can be applied in an organisation. However, there are few who learn from these behavior modification techniques. Some of the behavior modification techniques that Malcolm and Paul can be learned in the past six years are disrupting habitual behavior, rewards and punishment, suggestion, and self-monitoring.

Bad habits are inevitable with co-workers. In the case of A-Z, being bossy could be a bad habit and that must be learned by Paul and Malcolm since their “mates” left the company for that same reason. Rewards and punishment is also something that has to be learned by the two directors. Remember that they fail to give enough attention to the original employees that is why they left. They must be able to reward their employee that is worth the job they are doing. In that way, they won’t feel neglected. Suggestion is also important that must be learned by the two because this is where they can hear feedbacks from their employees. Through suggestions, employees will feel that they are being valued and that there is little bias in the workplace. Lastly, self monitoring is also something that has to be learned because organisational change starts from the individuals or the stakeholders. If the individuals are willing to change their behavior, they can be more efficient at work. (Larson, 2006).

III. Recommendations

The key to solve the problems in staff turnover is to motivate the employees. In this way, the employees will feel satisfied with their job and it can be prevented that they leave the workplace. Below is a framework that shows the motivation process within employees:

 

Another step that has to be done to solve the problem of employee dissatisfaction is competitive salaries and benefits for employees. Aside from the cash that the employees get from the company, there are other benefits that the company can offer. One of them is stock options.

Stock options are a form of compensation which serves as a bonus or reward or an incentive for employees so that they would continue in the company. In short, stock options are like a way of the company in retaining its employees and personnel. A stock option is a privilege in which the person can acquire particular numbers of share of the corporation’s own stocks at an exercise price. The exercise price is the specific price of the stock per share (Boyd, 2007).

Since the company’s main concern is the employees, they had top think of ways on how convince their employees not to seek jobs elsewhere. This is where the idea of stock options came up. Since they do not have long-term employment agreements with their key personnel, A-Z must think of a compensation method that will make their employees stay in the company. They can offer stock options to their employees so that they will have a reason not to resign from the company.

If A-Z networking would opt to offer cash as a form of compensation, the company is not assured that the employees would stay. There is still a chance that they would resign in the company if there is a company that offers a larger amount of cash as compensation. So, stock options are also a great idea if the company really wants to retain its employees.

 

ADVANTAGES OF STOCK OPTIONS

One advantage of using stock options as from of compensation is that it reduces cash employee compensation while reducing compensation expense as well. Of course, the goal every company is to maximize profits and minimize costs. Reduction of cash compensation would surely help the company in lowering its costs. Aside from reducing cash compensation, stock options also reduce compensation expense which is a big help for the company. Another benefit in stock options is that it gives the employees the incentive of improving their corporate performance through the alignment of employee interests with corporate interests. In this way, employees can improve their knowledge in the field they are into since they already own a share in the company. They can also get to voice out their interests and match it with the corporation’s interest. This is good because the company gets to know the views of their employees when it comes to their business. The third advantage of choosing stock options as a form of compensation is the retention of employees. Since stock options offers a part of the future sales growth of the company, employees would not think of resigning in the company because they want to get their shares in the future income the company would generate. There are also some cases that employees earn more money in stock options than their annual income. Because of this, employees are motivated to continue to the company they are working because of the financial benefits of stock options. The fourth advantage of stock options is that it reduces income taxes. Since stock options do not come in the form of cash, it is not included in an employee’s income tax. Aside from these benefits, stock options can also serve as a means of starting a savings plan or an investment for someone who has a long-term financial strategy. (Boyd, 2007)

Aside from offering competitive salaries and benefits, there are still a lot of things that can save the organization. One way is to utilize a performance appraisal system in order for them to know the feedbacks of their co-workers. Through this, conflicts can be avoided.

360-DEGREE FEEDBACK EVALUATION

The 360-degree feedback evaluation is not like any traditional performance appraisal systems. This kind of evaluation system tries to seek information about a person’s performance through people who have been working or had a working relationship on the person being evaluated. It also includes self-evaluation (Noe, 2005).

One advantage of this kind of evaluation procedure is that the feedbacks come from people who have been working or had a working relationship with the person being evaluated. Because of this, feedbacks are most likely to be accurate since the people around the person being assessed are the ones who really know the competency and weaknesses of that person. Another advantage is that the employee is able to compare his perception about himself and how others perceive him as an employee. Lastly, the evaluators are able to give feedbacks confidentially and anonymously to avoid conflicts among colleagues. In using this kind of appraisal system, the individual being evaluated is given more room for improvement.

With all of these things being done correctly, the organisation will certainly overcome its problems with human resources.

Conclusion:

Putting up a new company is not as easy as it looks. What makes it harder is dealing with your employees the right way. Employees are very important for they are the ones who will keep your business going. For a business to be successful, it has to value its employees and think of ways to retain the good ones. Negligence of employees can result to the downfall of a company.

 

 

 

 

 

 

 

 

References:

 

Joan Marques 2007. Personal and Organisational Learning: The Path To Advancement. Management Services, July 1, 32-35.  http://www.proquest.com/ (accessed August 10, 2007).

 

Bernd Siebenhüner, Marlen Arnold. 2007. Organizational learning to manage sustainable development. Business Strategy and the Environment 16, no. 5 (July 1): 339.  http://www.proquest.com/ (accessed August 10, 2007).

 

TOOLS & METRICS: ASK THE EXPERT. 2007. B to B, July 16, 14.  http://www.proquest.com/ (accessed August 10, 2007).

 

Tristan Boyd, Philip Brown, Alex Szimayer. 2007. What determines early exercise of employee stock options in Australia? Accounting and Finance 47, no. 2 (June 1): 165.  http://www.proquest.com/ (accessed August 10, 2007).

 

Robert Noe. 2005. Human Resource Management. 9th edition. Prentice hall.

 

 

Jason Nawyn, Stephen S. Intille,  Kent Larson. 2006. Embedding Behavior Modification Strategies into a Consumer Electronic Device [Video]. http://web.media.mit.edu/~nawyn/downloads/NawynUbiComp06Abstract.pdf (accessed August 9, 2007)

 

 

 

 

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