Introduction
Background
In the contemporary business environment, the role of Human Resources has become a crucial and important component. Many traditional perceptions suggest that the HR is only perceived as a department to source and acquired new talents. However, most of the HR activities are far beyond the sourcing and employing the new employees. Human Resources Managers are involved in planning, coordinating, and directing the administrative responsibilities of the organization. According to Bach and Edwards (2013), human resources management allows organization and establishment of employment conditions that allows the employees to achieve the desired productive output while satisfying a wide range of employee needs. However, it has become evident that the not all companies are in a position to develop, manage, and support the HR. Currently, various companies, especially in the Banking sector are facing HR issues that impend their efforts to achieve their strategic goals. These organizations face various HR challenges that need to be addressed to enhance the company's strategy. According to Charlotte Sweeney Associates, HR challenges that face the banks in the United Kingdom include reputation, remuneration, talent strategy, diversity, shared parental leave, and competition with the international markets (Higginbottom, 2015). One of these banks that has faced the Human resources issue is the Bank of England.
Reaction on the subject
This paper has shown that the Human Resources issues are not only common to the small business enterprises but also multinational companies. This was beyond my expectation that large and reputable enterprises such as Bank of England face problems in the human resources management. It is important to note that the paper has also illustrated that that the role of human resources does not only involve searching and acquiring new talents but also developing the talents to help the employees improve their performance and develop their career as well. From this paper, I have learned that it is important as a Human Resources management to focus on training and development, reward, and challenging employees as some of the performance management practices. Such practices are important in helping the company retain and develop the talents.
Thesis: this paper provides insight into the human resources challenges facing the Bank of England, which include the retention problem and inability to offer balanced and accurate remunerations. The paper also attempts to determine how these challenges can be solved through practices such as 1) developing more effective compensation standards and practices. 2) performance management include, reward schemes, training and development, keep challenging the high performers, engaging them, and offer chances for the advancement within the organization.
Human Resources Issue
Excess Pay
One of the challenges of the HR in the Bank of England is the ability to provide balanced and accurate remunerations that enhance employees' equality in the organization. According to Higginbottom (2015), HR directors in the banking sector are challenged by the regulation changes especially in the Remuneration Code that was proposed by the Financial Council Authority (FCA) and Prudential Regulation Authority (PRA) in October 2014. Some of the proposals were likely to affect the remuneration policy in the bank organizations regarding financial sanctions, especially on the top management. However, this has turned out to be a challenge for the HR directors, as Bank of England has violated such proposal with offering inaccurate and imbalanced payment. According to Salmon (2015), the Bank of England was last year accused with the inaccurate and hypocrisy in the HR as it was revealed that about 141 employees are paid an exaggerated payroll that exceeds that of England Prime Ministers. According to bank's annual report, some of the bank's staff are paid a lavish package that includes benefits and basic salary. For instance, the Bank's Governor, Mark Carney received a pay package of £879,773, which is exclusive of the housing allowance (Salmon, 2015). This salary was almost the double of what the previous governor was paid (Salmon, 2015). Joanna Place, the Human Resources director, was paid a total of £191, 037 and a basic salary of £162,180. Such action has been termed as a hypocritical activity since the Bank has been in the frontline to criticize over and excess payment in the financial sector. However, after these allegations were raised the bank suggested that without the pensions and medical insurance contribution, only 56 staff receive a basic salary that exceeds that of Prime Minister. Although the number has reduced, it illustrates that the Human Resources need to do more to pay accurate salaries. Therefore, the Human Resources in the Bank of England need to come up with effective remuneration strategy that eliminates such excesses in the workplace.
Retention Problem
Another problem facing the Human Resources at the Bank of England is the retention problem. In most cases, many people hold the perception that the main function of the HR is to source and acquire new talent. However, most if the human resources activities are associated with the retaining the prevailing employees. According to Titcomb (2015), there is a shortage of the talent at the Bank of England's Prudential Regulation Authority (PRA), with the emerging figures showing that about one of the six staff left the institution in 2014. The annual employee turnover rate at the bank's financial regulator increased to 15.4 percent (Titcomb, 2015). Former employees suggested that some of the staff leaving the institution to do this for better-paying and easier life in the private institutions. Another factor that is contributing to the loss of talents in the institution is that the wider jobs market has improved. In addition, there is an evidence of the workers at this financial regulator working for longer hours compared to the private institutions. For instance, the PRA employees work for an average 494 hours per month compared to 263 hours per month recorded in March last year. This contradicts with bank's spokesperson who argues that the organization remains focused on attracting and retaining a wide range of talent from the employee coming from wide range of backgrounds (Titcomb, 2015). Therefore, the Bank's HR department has failed to an effective performance management to enhance company culture, reward and recognition, and training development. In other words, the HR needs to formulate effective performance management to enhance motivation, equitable remuneration, and other incentives to retain the employees and help them make a substantial contribution to the organization.
Solutions
Pay Equity
One of the many solutions that can be embraced to help the Bank of England reduces excesses in it remuneration practices is to develop more effective compensation standards and practices. These standards and practices should ensure that all compensations adhere to pay equity that considers the internal and external factors. Therefore, the employee's compensation should be based on the objective components such as a logical pay rate compared to the external market. In addition, the compensation should also be based on the subjective components such as employee's emotions (Rasch and Szypko, 2013). Such practices are importance to enhance equity and fairness within the Human Resources at the Bank of England. The compensation strategy did not consider both the external and internal factors when paying out the alleged 141 employees, and hence creating an excess in the payroll. There should be fairness for the employee wage rates for the individuals performing the similar task in the organization. Previously, this paper has indicated that the prevailing compensation for the existing bank's director is almost a double of the previous director and more than that of the Prime Minister. Therefore, there should be both internal and external equity in the organization to reduce the excesses. According to Romanoff et al., (1986) external equity requires that employer should pay a wage rate that is based on the wages existing in the external Labour markets. For instance, the bank's HR should pay the governor and other senior staff a wage rate that commensurate with wage rate in the financial sector. On the other hand, the internal equity provides that the HR should pay wages that correspond to the internal value of every job in the organization. Therefore, based on the salary of the previous governor at the Bank of England, the HR should reduce the wage of the existing governor by almost a half.
Transparency and Communication Culture
In addition, to help the Bank of England mitigate the problem of the compensation, it is important to enhance pay transparency and communication culture within the organization. According to Rasch and Szypko (2013), "Pay transparency partially mediates the relationship between communicative organizational culture and pay fairness" (p.71). Therefore, the HR in the Bank of England should be among the communicative organizations that increases the chances of the employees to understand the pay practices, and consequently, enhance their belief that they ae paid fairly. The excess payments revealed in the case of Bank of England may have adverse consequences for the employees who may feel that they are not paid fairly. Consequently, this problem is anticipated to increase the employees turnover if it is not addressed properly. Rasch and Szypko (2013) argues that employees who have a better understanding of their pay are more encouraged to be engaged in the decision-making process and hence improve their performance towards achieving the organization's goals. Therefore, it is significant for the HR to facilitate good communication with regard to the compensation practices and encourage the employees communicate upward.
Challenging and Rewarding the Employees
Concerning the retention, several performance management practices can be utilized to build the talent and reduce the employee turnover at the Bank of England. Such practices of the performance management include, reward schemes, keep challenging the high performers, engaging them, and offer chances for the advancement within the organization. One of the effective practices involves uninterrupted challenge for the employee through practices such as reward and talent-building schemes. According to Nohria et al. (2008), workers are usually motivated by the tasks that are challenging to them and allow them to learn and grow. They are usually demotivated by the jobs that seem to be monotonous and does not help them to grow and learn. In this case, it is vital for the Bank of England's HR to provide challenging duties to the employees in the organization to help them make a positive contribution to the organization. Engaging employees to more challenging duties helps them to develop a different and more processing ability. Providing reward to the employee is also another practice that motivates the employees and helps them to achieve the organization goals as well as their career goals. Various studies have shown that employees usually respond well to the reward schemes such as incentives and recognitions (Vucetic, 2008). However, not all reward schemes are effective in motivating employees and hence retaining them in the organization. Maclean and Redman (2006) argue that the reward managers must identify and focus on the unique needs of the employees since every employee has different needs. Therefore, it is important for the Bank of England to challenge the talented employees and reward them to ensure that they are comfortable in the origination and does not have the desire to find new challenges in the external environment.
Reward Strategy
The reward management need to formulate an effective strategy that can help to motivate the employees through the rewards among other incentives. The prevailing situation of the Bank of England is that the employees are leaving the organization because their talents are not natured or appreciated. Therefore, it is important to enhance a reward and recognition system that involves acknowledgement, increasing responsibilities, and promotions. In this case, the reward management should be in a position to determine whether it will exercise extrinsic or intrinsic motivation, or both. Extrinsic motivation is defined as the practice that is based on the goal-driven reasons such as benefits or rewards earned when an employee carry out a particular task (Lin, 2007). On the contrary, the intrinsic motivation is based on inherent pressure and satisfaction acquired from carrying out a certain activity. For instance, the reward and recognition system should define whether the employees are happy or passionate when they conduct a particular task. In the case of the Bank of England's HR issue, it is important to utilize both the intrinsic and extrinsic motivation strategies. This is because; two types of motivation have a significant impact on employees' intentions on a task and their actual behaviors (Lin, 2007). However, the reward management should ensures that the motivation practices utilized shed light to the specific and unique needs of the employees to ensure that every employee is satisfied to work in the organization.
Thank-you Cards
An example of a specific form of the reward and recognition strategy in the workplace is the development and provision of the thank-you-card to enhance the efforts of the employees. The thank-you-card are effective in improving intrinsic motivation of the employees by enhancing their mechanism in three distinct ways. First, the employees view these cards as a reward or a gift from their employers and hence feel motivated to improve their performance in achieving the organizational goals. The second reason is that these cards helps the employees to define the nature of their employers and consequently induce the employees to care and make their employers happy through working hard (Bradle et al. 2011, p.2). The third reason is that thank-you cards are effective for the best performers that they produces a sense of conformity and consequently enhance their behavior response. Such activities are effective in motivating employees especially those who have the problem of underperformance.
Training and Development
For the Bank of England to integrate the performance management function and the human resource development function, it needs to advance the existing training development to address the HR challenges. Nohria et al. (2008), confirms that the HR executive should be focused on training and other auditable initiatives. The presence of high employee turnover in the organization illustrates that there is a problem of training employees in the manner that they adopt to their position and cherish their presence. Therefore, it is important for performance management to facilitate acquisition and development of the employees to enhance competition in the contemporary global environment. An effective training is required to build the employees who are not only proficient in the product knowledge and technical services but also are capable of team building skills, critical thinking skills, learning abilities, and job rotation. Currently, the organization embraces training and development programs such as graduate training programs to acquire new and fresh talents from the graduate. However, more training and development are required to ensure that the organization can retain such talents. The company need to focus on creating a work environment through training and development to allow the employees to drive their own development and careers. The Human Resources department should ensure that the leaders in the institution have the required tools and skills to support the employees and hence enhance customer benefits. The organization's HR leads the development, supervise the implementation of the firm's procedures, and polices for the induction, training and development for all directors. This illustrates that the company has focused on ensuring that the leaders have the required skills and tools to motivate the employees.
Review Process
However, the Bank of England should ensure that the leaders have the tools to assess the performance of their employees to identify their performance, enhance, and develop skills that can help them in the long term. Therefore, the HR management need to determine the most effective review methods. Such methods include the graphic rating scales, behavioral anchored scales, and mixed standard scales to review the employee's behaviors. In addition, it is significant to focus on the objective by management and balanced scorecard to determine the results of the employees. On the other hand, comparative approaches such as paired comparison, ranking, and forced distribution can be used to measure the performance of the employee and develop strategies to improve on the weak areas.
Conclusion
This paper have shown that human resources challenges facing the Bank of England include the retention problem and inability to offer balanced and accurate remunerations. On the retention problem, the Bank of England is experiencing the shortage of talents and has a high level of employee turnover, and hence necessitates an effective retention strategy. The company has also been accused of having payment excesses despite criticizing other players in the financial market for high pays. Therefore, the paper has concluded that it is possible to mitigate such problems. Such challenges can be overcome through practices such as: 1) developing more effective compensation standards and practices. 2) performance management include, reward schemes, training and development, keep challenging the high performers, engaging them, and offer chances for the advancement within the organization. The important thing to note while implementing the solution provided is that the employees have different needs and thus, the HR should address those needs.
References
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Romanoff, K., Boehm, K., & Benson, E. (1986). Pay equity: internal and external considerations. Compensation and benefits review, 18(3), 17-25. Print
Rasch, R. (2013). Perception is Reality: The Importance of Pay Fairness to Employees and Organizations. World at Work Journal, 64-74. Print
Lin, H.F., 2007. Effects of extrinsic and intrinsic motivation on employee knowledge sharing intentions. Journal of information science.
MacLean, P. J., & Redman, D. G. 2006. From Hiring to Firing: a No-nonsense Guide to Managing Employee Performance. Silver Creek Press
Nohria, N., Groysberg, B. and Lee, L., 2008. Employee motivation: A powerful new model. Harvard Business Rev
Vucetic, J. 2008. Becoming a successful techpreneur. Place of publication not identified: Xlibris Corp.
Titcomb, J. (2015, January 4). Fears of brain drain at Bank of England's PRA as staff leave - Telegraph. Retrieved May 4, 2016, from http://www.telegraph.co.uk/finance/bank-of-england/11322367/Fears-of-brain-drain-at-Bank-of-Englands-PRA-as-staff-leave.html
Higginbottom, K. (2015, January 21). HR Challenges Facing The Banking Sector In 2015. Retrieved May 4, 2016, from http://www.forbes.com/sites/karenhigginbottom/2015/01/21/hr-challenges-facing-the-banking-sector-in-2015/#5e1380325f1e
Salmon. (2015, June 15). Bank of England pays 141 workers more than David Cameron | Daily Mail Online. Retrieved May 4, 2016, from http://www.dailymail.co.uk/news/article-3125626/Bank-England-pays-141-workers-PM-Lavish-salaries-perks-medical-insurance-revealed-annual-report.html
