Executive Summary
The current economic downturn has occasioned new threats and opportunities that pose new challenges to American Operators Inc. The challenges American Operators Inc. currently faces are common across the manufacturing industry. However, others are unique to American Operators Inc. These challenges include; depressed demand, how to maximize the cost-benefit relationship using the existing system, how to insulate the company from future shocks, how to internationalize their market and how to tap into the anticipated future growth. To ensure American Operators Inc. meets these challenges, the Human Resource (HR) department has developed a 5-year Strategic Human Resource Plan that is in congruence with the Corporate Strategic Goals. It focuses on four key areas; recruitment and retention, employee succession, work system and design, and training and development. I am confident that this plan will ensure American Operators Inc. survives the current economic downturn and exploit the opportunities presented by the economic downturn both locally and internationally.
Introduction
The Human Resource (HR) Strategic Plan establishes activities, plans and priorities for human resources management for AOI in view of the prevailing circumstances and operational environment. The HR Strategic Plan is fully integrated with the 5-year Corporate Strategy Goals of AOI. The HR Strategic Plan will adapt to any changes that will be made in the business priorities of AOI. Consequently, the HR Strategy will be reviewed annually to incorporate any changes. The HR Strategic Plan represents an important step in securing the survival of AOI through the recession and its future success both locally and internationally.
Current Operating Environment of AOI
There has been an economic turndown since last year. The economic downturn has put a damper on imports and exports. Subsequently, it has reduced demand for industrial cranes that are used in loading and unloading cargo from ships, trains and trucks. This has adversely affected AOI revenue stream and resulted in underutilization of production capacity and human resource. In fact, there are no new orders for industrial cranes while other orders that were in the production pipeline have been cancelled. However, it is anticipated that the economic downturn will eliminate weak competitors thus creating a more lucrative future for AOI if it survives the recession.
AOI HR Strategy
The first priority is surviving the recession. AOI can only benefit from the opportunities presented by the economic downturn if it survives the recession. After the recession, the focus will be expanding our market share and presence both locally and internationally. In addition, there is a need to make AOI less cyclical to cushion it from future economic shocks. The strategies that will be employed during the economic downturn will be different from those that will be employment after the economic downturn. During the economic downturn, the key priority is cost reduction in order to stay afloat. However, after the recession the key priorities will be growth and expansion both locally and internationally, diversification and operational efficiency. The HR Strategy plan encompasses; recruitment and retention, employee succession, work system and job design, and training and development.
Recruitment and Retention
AOI operates in a highly specialised industry that requires a unique skillset. Many of the crane production workers at AOI are highly skilled and they cannot be easily replaced. Therefore, recruiting and retaining skilled and high potential employees are essential for the current survival and future growth of AOI. Currently, there is a need to reduce human resource costs. The existing revenue streams are not sufficient to sustain the wage bill as well as other administrative expenses. However, it is important to retain highly skilled employees because it is difficult to replace them. Therefore, retrenching highly skilled employee is not a viable option. Production workers form 70% of our current work force. The HR department will allow older employees to reduce the amount of hours they work. This will reduce the wage bill. AOI should also take advantage of today’s wireless technologies and allow managers and sales staff to work remotely in any location. This will significantly reduce commuter allowance paid to employees. It will also reduce overhead costs such as utility expenses and investment in real estate. The HR department will develop an Employee Share Ownership Plan (ESOP) to replace some monetary benefits paid to employees. Replacing monetary benefits with non-monetary benefits will reduce the wage bill. In addition, it will reduce employee turnover since they will feel they are part of the company. The HR department will freeze new recruitments during the economic downturn. Responsibilities and tasks for positions left vacant will be delegated to existing staff to reduce idle time.
After the economic downturn, the HR department will develop an internship program that will be used to identify high potential fresh graduate who will be retained by AOI upon expiry of the internship period. 10 graduates with technical skills and knowledge will be admitted to the internship program annually. The skill set required by AOI is specific. Therefore, in house training of fresh graduates is the most viable means of acquiring skilled employees. Employee motivation is important in managing employee turnover. The HR division will develop an appraisal system that will identify skilled and high potential employee for promotion to motivate them. In addition, an appraisal system will ensure all employees strive to achieve the objectives and aspirations of AOI. Workers with an exceptional performance rating will be entitled to higher wages compared to workers with a satisfactory review rating. In addition, there will be an incentive program which is tied to the overall performance AOI. The incentive plan is to share up to 10 per cent of after tax profits of AOI equally among employees. The profit sharing incentive will encouraging team work among workers in pursuit of the common mission of AOI thus creating goal congruence. The HR division will benchmark with other Industrial crane manufacturers to create a competitive reward structure. Skilled workers will be paid a wage that is 10 per cent above the prevailing market rate. This will reduce their motivation to move and work for our competitors.
Employee Succession
Employee turnover can only be reduced; it cannot be eliminated. Employee mobility for highly skilled employees is high due to mismatch of supply and demand. Therefore, there is a need to develop a succession plan to ensure a vacuum is not created by exiting employees. Our ability to take advantage of future growth opportunities is hinged on our skilled human capital inventory. The HR department will develop a comprehensive succession plan with three key components; replacement planning, identification of high-potential workers and employee development. Employees with potential will be earmarked to fill positions that will be left vacant in the future. HR department will evaluate characteristics and critical competencies of employees to identify employees who can be moved to key positions. AOI will develop a coaching and apprentice program to develop the skills of new employees. The progress and performance of junior employees will be reviewed periodically to identify employees who have developed sufficient skills replace employees who leave the company. Continuous training and development is necessary since it enhances employees` knowledge and skills. Continuous evaluations will be conducted to assess employees’ skills and development needs. Training will comprise of both in-house training and external training. This will build the skill set of new employees and ensure employees keep abreast with recent developments in industrial cranes.
Work System and Job Design
The HR division will evaluate tasks and responsibilities carried out by each employee and the interrelatedness of tasks. Non-value adding tasks will be eliminated. This will not only reduce labor costs but will also eliminate other costs associated with those tasks. The HR department will identify related managerial responsibilities to identify managerial positions that are similar in order to reduce its top management. Adopting a lean management structure will reduce the wage bill significantly since managers are the highest paid employees. Besides, a lean management structure is more receptive to change than a bloated management structure because it has less beauracracy. It should be appreciated that the end of the economic downturn will usher unprecedented changes and opportunities for growth. In addition, AOI will adopt a job specialization system. Job specialization increases efficiency, saves time, improves accuracy in production and reduces production costs. Moreover, it is easier to evaluate performance under specialization since every employee is responsible for a single process in the production chain . Therefore, it is easy to associate an employee with a given process.
Training and Development
AOI seeks to expand to both locally and internationally. This would create a need for more employees who will work in the existing plant and other plants that will be developed. Therefore, there is a need to develop a comprehensive plan for training and developing staff. It should be appreciated that AOI deals in a specialized industry hence it is difficult to recruit highly qualified individuals. HR will develop a plan to train and develop new employees with technical skills. HR department will conduct training needs analysis. The training needs analysis will include; organizational analysis, operational analysis and person analysis. Organizational analysis involves assessing the internal environment and how employees fit in the organization objectives and goals . Operational analysis involves determining the skill set employees are required to have to achieve organizational goals and objectives . Operational analysis will be necessary in evaluating the required skill inventory. Person analysis entails evaluating the knowledge, skills, characteristics and critical competencies of all employees. This process will enable the HR department determine the employee training needs. The HR department will ensure continuous training and development by conducting training seminars, action learning and encouraging appreciative inquiry, action learning. The HR department will develop a formal induction program for new employees. An employee handbook will be designed which will guide employees in the work. HR department will also embrace on-job training. New employees will be attached to an experienced co-worker for a period of at least 6 months before they are allowed to work on their own.
References
Aguinis, H. (2008). Performance Management (2, Illustrated ed.). New Jersey: Pearson Prentice Hall.
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Blanchard, N. P., & Thacker, J. W. (2007). Effective Training: Systems, Strategies, and Practices (3, illustrated ed.). Upper saddle River, NJ: Prentice Hall.
Mathis, R. L., & Jackson, J. H. (2010). Human Resource Management (13, illustrated ed.). London: Cengage Learning.
