Norge Portugal is an international Norwegian company set up in Lisbon, Portugal in 2001 (McGuire 123). The company deals in selling, maintenance and repair of refined equipment for textile industries. The company is well renowned for ‘total service’ to its customers, where they focus on satisfying the customer in an aim of achieving customer loyalty. Despite starting operations almost a decade ago, the firm retains a remarkably small customer base and is smaller compared to other company bases in different countries. However, the company remains profitable mainly because of favourable reputation amongst customers.
Norge Portugal, has four key areas that are a source of revenue, they include: Norge equipment sales, sale of spare parts, commissions from selling equipment from other companies, and fee from services. The company’s decisions were executed by Lars Jorgensen, the Managing director, Jao Silva, administrative director, and Norge International’s Vice President of HR (McGuire 123). Therefore, this case analysis will identify and analyse the problems experienced at the subsidiary company. Also, alternative solutions and recommendations will be highlighted with an aim of making the company a high performer both locally and internationally. The analysis will be divided into three phases (A, B, and C), called problem identification, analysis, and solution phases
Problem Identification Phase
Problems, Issues, and Challenges
Even though, the company is profitable from the large margins associated with its offerings, it fails to expand because of HR problems. Analysis of the case brings forth the notion that the company’s HR system has not evolved with the demands of the business. First, there was a significant problem with personnel functions in the company. The VP of HR who provides most of ideas for the company is not a professional HRM, nor stationed in the country. Therefore, it is impossible for him to understand the problems faced by the company and staff first hand. Second, the administrative assistant, Mr. Jose Silva, has too much on his plate; hence staffing issues. Apart from being the administrative assistant, he had to take duties in diverse administration, legal, accounting, control, and finance. This has a potential of duties being neglected or company objectives not fulfilled because of overworking of the manager (Holbeche 34).
Similarly, the managing director, Mr Lars Jorgensen, ventures frequently into technical and operation part of the company, and does not attend to the management part. This signifies the third problem where organizational chart and job description is not well defined. Employees including even the management have no specified duties, hence they do jobs they feel comfortable, not according to company goals. Fourthly, there is no union in the company. While some successful companies operate without unions like Wal-Mart, it is still infringement on employee rights, since they have no avenue to air their concerns (Holbeche 35). This is the reason that most employees, including the best workers, complained of unfair compensations. Lastly, there are performance evaluation issues. There was no proper way of determining ranking employees’ performance. This resulted in many skilled workers complaining of being underpaid or not properly rewarded. Hence, the implementation of the ‘grading system’ to alleviate the problem.
Problems explicitly stated in the case
In reading the case, there are three issues openly raised, all of which relating to HRM. The first issue raised is the absence of specialized personnel, where every manager had no specific duty. This is clearly brought out by the managing director, Mr Jorgensen, who apart from management he participates in customer services actively. Secondly, there was no dynamic HR where job functions were not clearly defined, hence objectives hard to be identified and completed. Thirdly, there were staffing issues with most employees being overworked. For instance, technicians in the north had to travel long distance as far as Lisbon to satisfy customers. Also, the administrative assistance, Mr Silva, is seen to work in many crucial departments apart from his stipulated administrative role.
However, the underlying problems brought out in the case are many. There is a problem of proper organizational structure where there is no leadership ladder to champion organizational goals and strategy formation. This is clearly seen when Silva told Jorgensen about some ideas he wanted to implement, Jorgensen had nothing to say, yet he was the managing director. There is also the issue of trust where Silva had to threaten employees through pay delay until they returned a survey conducted in the company. Also, Silva brought another aspect of absence of teamwork, where Silva did not include department heads when implementing the grading system. Lastly, there is the issue of job satisfaction. Absence of employee unions and proper remuneration system is likely to result in high employee turnovers and loss of skilled workers because of unsatisfied compensations.
Classification of Problems
The listed problems can be categorized into short term and long term problems. Short-term are those tactical in nature and include (Eigenhuis and Dijk 18): staffing issues, job description issues, employee rights, and teamwork. Also, according to Eigenhuis and Dijk (19), long term problems are strategic ones and are highlighted in the case as job evaluation problems, unstructured payment schemes, and absence of a leadership ladder, and lack of trust between management and employees.
Problem Analysis Phase
This phase involves analysis of the companies HR policies, business strategies, the financial performance, and the SWOT of the company. The three analytical aspects will provide crucial insight into problems that affect the company, and how they can be alleviated.
HR policies
The company has a total of 57 employees who are in charge of servicing the entire country. However, some staff were brought in from other subsidiary companies like Spain, nearby. This implies there were issues with staffing. However, Mr. Silva applied context specificities and company specificities to hire extra staff to combat the problem. He hired secretaries to support each director in their works, and also an accountant was hired to specialize on accounting. However, the company was still able to hire staff without degrees as long as they knew technicalities in the business.
The work force of the company is divided into four departments: sales, administration, service and maintenance, and customer control (McGuire 124). Each department had heads through whom the administrative assistant, Mr Silva, had to consult before administrating tasks. Also, the Managing director, Mr Jorgensen, had to use these heads to keep at par with happenings in the company. The problem, however, is that Mr. Silva and Mr. Jorgensen liked to bypass the heads, and did as they pleased. For instance, when implementing the employee evaluation system, Mr Silva did not include the team leaders.
In the service and maintenance teams, there are three teams reporting to Henrique Fonseca. The teams were in charge of customers from different regions of the country. However, customers mostly originated from the northern part of Portugal, with one regular customer from Lisbon—Southern Part. This might be disadvantageous to teams in the north dealing with the single customer as they had to travel longer distances. Silva’s department, administration, deal with personnel, legal, general and cost accounting, finance management, and treasury. Therefore, the department handles a lot of tasks resulting into likely underperformance and objectives of the company not attained.
The personnel function of the company has also been evolved into a system that recognizes high performing employees. However, implementation of the system was done by the administration assistant who got no input from the managing director. The idea was brought about by the HR VP who is centred in Norge multinational, outside Portugal. Furthermore, it was carried out without input from the four departments in the company. From this description, it is evident that there is no clear organizational structure in the company.
Business Strategies
The company focuses on customer service, in a system termed as “Total Service”. The service aims at: focusing on the happiness and satisfaction of customers. This is highlighted in the case where, at least once per annum the technical team of Norge inspects the client’s factory equipment. While, this can be termed as time wasting and unnecessary, Holbeche (47), posits that attention to customers creates a bond that will even go further to make them overlook high prices of offerings. Also, the company never hesitates to assist clients with problems even if they have competitor’s equipment. This is effective as apart from getting extra source of revenue, it builds trust in the sense that clients acknowledge that the company is a giant and a leader in their niche (Holbeche 51). Lastly, it has a unique selling proposition of increased productivity. This is extremely crucial for creating loyalty amongst clients who want proof of productivity claim (Holbeche 53). The NPI (Norge Production Index) is a very important component of productivity claim.
Financial Analysis
The financial performance of the company can be determined through four aspects. They are: profitability, solvency, liquidity, and stability (Eigenhuis and Dijk 28). The company is profitable as it can earn short term income from the daily maintenance and services that they offer. Long term finances are also lucrative because even if they have few customers, the ones who buy equipment buy them at above average prices, which bring substantial margins. Loyal customers also contribute to the profitability of the company.
The solvency of the company is also exceptionally high. Therefore, the company can pay creditors in case of debts. The strength of solvency is shown by the strong international presence of the company. Norge is a multinational company in many countries, and, therefore, will have no problem to use part of its assets to offset debts. However, the liquidity of the company might be average or tending to low. This is because it deals in products whose demand is seasonal, hence difficulty in getting cash quickly. Despite, questions on liquidity, the stability of the company is high with its ability to operate for a long time without problems (Eigenhuis and Dijk 29). This is indicated by positive revenues, more assets, and many subsidiary companies internationally that function profitably.
SWOT analysis
Strengths
Presence of international subsidiary companies hence strong financial base
Experienced and educated personnel who can offer quality services to clients
Presence of a unique selling proposition in terms of NPI, which is an index that enables the company stand out in the textile equipment industry through predicting production increases.
Focus on customer satisfaction, which creates customer loyalty.
Weaknesses
Absence of unions to deal with employee problems
No leadership ladder to identify leadership and accounting officers
Absence of proper job description forcing employees to do tasks not related to their skill
Maintenance and sales teams concentrated in the northern part of the country leaving the southern part unattended.
Opportunities
Specialization of tasks and qualified personnel assigned results in satisfied employees with little absenteeism or lower turnover
The southern part of Portugal is a potential market that could boost revenues
A proper leadership ladder boosts trust, teamwork, and confidence among employees and management.
Suggestion mechanisms in the company boosts employee satisfaction, and protection of employee rights
Threats
Intense competition from local companies who understand clients, and produce cheaper products
Economic downturn, which forces many clients to shut down, or order services or goods on credit
Employee dissatisfaction and poaching from competitor companies since the job evaluation system is not efficient.
Solution Phase
The strategic and tactical problems identified in the case can be solved through many ways apart from the staffing and implementation of the grading system that the company adopted. Therefore, alternative solutions that can be explored, by Mr Silva and Mr Jorgensen, to combat problems listed in this case include:
Hiring of a HR manager to deal with personnel issues in Norge Portugal. This is will also promote identification of personnel needs, highlighting functions of personnel, and their improvement.
The tedious ‘grading’ evaluation system can be eased by monthly appraisal systems where employees can be graded on jobs completed, team work skills, and attitude. This would quickly help in identifying employees liable for promotions, or rewards.
Apart from hiring other personnel to deal with overworking, the company should introduce employee training classes to educate personnel on the need to stick to roles assigned. For instance, Mr. Jorgensen will thus be able to focus on his managerial role.
A suggestion box or system should be installed to be reviewed weekly so as to note areas of employee concerns, and also to promote inclusion in the company. This will avoid mistrust as seen when Mr Silva threatened employees with delay of salary if they did not return surveys in time.
In looking at the listed alternative solution sets, the best two are inclusion of appraisal forms in evaluation of performance, and provision of a suggestion system. Appraisal forms according to Eigenhuis and Dijk (38) are used by even the management for self-evaluation. Hence, low marks in the form for both the employee and manager results in a need for corrective measures. Corrective measures include: counselling, offering leaves and offs, introducing motivating techniques, and even laying off for persistent low performances.
A suggestion system is a method where workers have a way of airing out their views without feeling threatened. This might include suggestion boxes for dropping secret complains or letters, and even hiring a confidential manager. The suggestions should be seriously considered and implemented. This creates confidence and trust amongst employees and therefore, feels included in the daily running of the company.
Recommendations
In light of the listed problems that are likely to spring up after hiring extra personnel and introduction of the grading system, it is recommended that the management of Norge Portugal:
Introduce graduate trainee programs to combat the inadequacy of lacking academically qualified personnel.
Set up a marketing department that will be in charge of looking for new markets and strategizing in acquiring new clients
Set up a Human Resource department dealing with employee affairs
Streamline the reward and motivation system to be internationally accepted.
Conduct monthly business strategy meetings where performance of the company evaluated, and corrections made where there is a problem.
Action Plan
The recommendations should be implemented instantly to avoid any repercussions from altering an already functioning system. Graduate trainee programs should be organized by Mr. Silva the administrative assistant, and when ready an advertisement in the media done. Advertisement should be made a month prior to selection of best candidates. Applications should be reviewed two weeks prior to the actual interview date, and best candidates selected based on performance in universities. Selected graduates are to be trained for six months before posting in various company positions.
The directors, managers and Norge international should also meet for two weeks discussing the introduction of both marketing and HR department. Each department will have a head, and tasks will be outlined after a consensus from Norge directors. The expected starting time for the functioning of the departments is in two months. A reward and motivation system should be started as soon as possible and every month, employees should be rewarded on performance. Finally, business meetings should be done monthly with the secretary being Mr. Silva. Recommendations from the meetings are to be implemented latest a month after the meeting.
Works Cited
Eigenhuis, Ap, and Rob van Dijk. HR Strategy For The High Performing Business : Inspiring Success Through Effective Human Resource Management. Kogan Page, 2008. eBook Collection (EBSCOhost). Web. 17 June 2012.
Holbeche, Linda. Aligning Human Resources And Business Strategy. Elsevier LTD, 2009. eBook Collection (EBSCOhost). Web. 17 June 2012.
McGuire, Stephen J. J. "Norge Electronics (Portugal), S.A." Thunderbird International Business Review 49.1 (2007): 123-139. Business Source Complete. Web. 17 June 2012.
