Report Purpose

This report has been compiled by the Director of Human Resources at the request of the Board of Directors. Following on from the recent study of the organisation by external consultants, a number of problem areas have been identified in relation to HR practices, policies and implementation. It is the purpose of this report to analyse the findings of the study compiled by the consultants and recommend the courses of action necessary to address the problems identified

The Problems Facing ITC

The organisation is currently comprised of four separate functions: administration, production, retail, and customer service. These functions are spread over a number of sites with administration and production sharing a single site, retail function operating from several locations, and customer service spread across three call centres. The problems which are facing the organisation vary depending on the function and location.

The administration function of head office and the production function of the factory are both based on the same geographical site. Although the functions are working in close proximity to each other they are very different in terms of working conditions, practices, and pay systems. These differences are creating tensions across the departments and leading to a “them and us” culture. Some of the differences identified include; bonus scheme in the factory but not the head office, poorer working conditions in the factory compared to head office, lack of subsidised canteen for factory staff which is available to administrative staff. Some problems are common to both functions such as lack of promotion opportunities for internal candidates and poor general perception of staff abilities by managers. As well as these, the factory also suffers from a blame culture apparently fostered by poor product quality.

The retail outlets have a separate set of problems. There is potentially a discrimination problem in the recruitment and selection processes employed for managerial staff. There are currently no female managers of retail outlets and there has been at least one complaint of discrimination referred to a trade union by an unsuccessful female candidate for promotion. This complaint has received the backing of a number of the individual’s colleagues.

The call centres are very highly pressured, time-oriented environments in which to work. There are significant pressures to deal with customer enquiries quickly and to sell as many new packages as possible. Pressure is exerted by supervisors whose salaries are dependent on the abilities of the centre staff to generate income through sales.

Across the organisation there is a general feeling that staff are underpaid in relation to competitors and not valued as an asset of the organisation. There is an increasing trend towards trade union membership which is probably a sign of growing disaffection within the workforce as a whole. There are also a growing number of customer complaints, mainly directed at retail and customer service staff as they are the customer-facing part of the organisation. These complaints are generally centred on lack of knowledge of products on the part of retail staff and poor customer service from the call centre staff.

As detailed there are a multitude of different problems facing ITC with the lack of consistency of treatment of staff across the organisation and poor communication of organisational values being major contributing factors. The morale of the workforce is low and there is a lack of loyalty to the organisation demonstrated by high levels of staff turnover. It is not purely a matter of low salaries as it has been recognised that staff leave the company to work for other organisations for little in the way of additional reward. The managerial and supervisory staff also appear to be unable and/or unwilling to tackle the problems which leaves the staff with no alternative but to seek advice and assistance from the trade unions. The consultants reported that there is no inherent problem with the quality of the core workforce but that the managerial staff are not sufficiently competent to be able to recognise and build on the attributes of the workforce. This combination of factors and problems could potentially all be explained within the concept of employee engagement. The main thrust of this report will, therefore, concentrate on the implementation of an employee engagement programme as an initial means of addressing the issues currently facing ITC. Other means of tackling the identified problems over the longer term will also be discussed and recommendations made.

Employee Engagement

The CIPD (2009) define engagement as –

“…creating opportunities for employees to connect with their colleagues, managers and wider organisation. It is also about creating an environment where employees are motivated to want to connect with their work and really care about doing a good job.”

Why is employee engagement relevant to ITC? Almost all examples quoted in the consultant findings demonstrate an out-and-out lack of employee engagement; moreover, the opposite appears to be the case. At this point, it is important to note that a global survey by BlessingWhite Intelligence (2008) on the state of employee engagement found that that “Indian workers are among the most focused and satisfied in the world”. In the Asia-Pacific groupings, full engagement for Indian employees reaches 34% in comparison to the lowest of only 10% for China. Moreover, over 65% of respondents said ‘yes’ when asked if, assuming they had the choice, they would hope to remain within their organisation in 2008. From this, the apparent lack of employee engagement and retention issues apparent within ITC would appear to point to something we are doing wrong as a company.

The first question should be: Why is employee engagement important? Links between employee attitudes, employee management and business performance have been repeatedly demonstrated in CIPD (Nov 2009) research, and the Aberdeen Group (2009) reported only this year that 82% of ‘Best-in-Class’ organisations attributed employee engagement initiatives directly to transformations in revenue and / or profitability.

Employee engagement spills into the concept of the ‘psychological contract’. The ‘psychological contract’ is a popular framework within which aspects of the employee relationship can be studied (Bratton & Gold, 2007; 14). Guest and Conway (2002) define it as “the perceptions of the two parties, employee and employer, of what their mutual obligations are towards each other”. These obligations tend to differ from individual-to- individual and are often imprecise / unspoken and inferred “from actions or from what has happened in the past, as well as from statements made by the employer”(CIPD Nov 2009). This contract forms the basis for ’employer brand’ (CIPD Jan 2009); positive brand can of course help promote recruitment and improve staff retention levels. For the latter reasons, ITC should pay close heed to this contract. After all, taking account of the emotional needs of the employee ought to be a consideration when we consider they are the only resource within our organization that can simply “walk out”, taking their skills and possible opinions of negative employer brand with them.

Customer service issues

With regards to the consultant reports of customer service issues, several studies have found that employee engagement is an important variable on this front. The CIPD (2009; 2) reported that Visa Europe figures show that employee engagement levels ran parallel with an increase in customer satisfaction. Likewise, it seems intuitive that an increase in customer satisfaction would henceforth lead to an increase in financial performance. In a recent study within the customer service industry by Chi and Gursoy (2009), empirical support for this link was indeed presented. On the engagement level, while they found employee satisfaction did not appear to impact on financial performance directly, they did find an indirect relationship between the latter, with customer satisfaction acting as the mediator. Storey, on the other hand refers to engagement as EIP (employee involvement and participation) and stated that it is

“…thought to contribute to improved levels of worker satisfaction and commitment and, subsequently, organisational performance.”

From this it would appear that engaged and satisfied employees are a requirement for customer satisfaction, with customer satisfaction being the strongest indicator in financial performance. It would also appear, however, that all three variables are required to be woven into the same fabric for overall business success. For ITC, without employee engagement / satisfaction, there will little customer satisfaction, and without customer satisfaction there will be no success. The obvious lack of ITC employee engagement at this moment in time is a worrying factor with regards this tripartite equation. Therefore, the obvious question should be how do we tackle employee disengagement, how do we go about driving employee engagement?

Employee engagement drivers

According to the CIPD (Nov 2009), there is no absolute list definitive of engagement ‘drivers’. Their research has shown, however, the key employee engagement drivers are:

§ Opportunities to feed employee views upwards

§ Feeling well-informed about what is happening in the organisation

§ The employee believing that their manager is committed to the organisation

Most writers agree that one of the most important factors at play with regards employee engagement is reciprocal communication between management and the requirement to keep all employees well informed, etc. As you might imagine, these factors are also very much involved in the psychological contract; it is also suggested that, in a crisis, “mutually recognised expectations are best shaped by honest communication and solid information” (Dietz 2009). At this moment in ITC history, we might be described as being on the verge of crisis point.

Intranet 2.0

A technology that appears oddly lacking in ITC since its inception is Corporate Intranet. All of the key engagement drivers suggested above can to some extent be addressed with the implementation of an Intranet solution. This of course would not solve all of our problems, but it would at least supplement any other measures we ultimately put into place. This Intranet should not be of the antiquated variety (known as Web 1.0), that is, typified by static pages, existing with the sole purpose of providing information. We should be embracing all that Web 2.0 tools have to offer (i.e. highly dynamic / interactive internal social networking tools, instant messaging, wikis, blogs, discussion forums, and RSS feed technologies, etc.). Intranet 2.0 is still very much in its infancy, so the ability to introduce a rich networking environment is very much in line with core business strategies of innovation and creativity. We also have a largely young workforce, and Web 2.0 technology tools are something the younger generation have grown accustomed to, and this acquaintance can be employed to our advantage in the recruitment field.

When it comes to the employees’ call to connect with managers, the desire to believe in their commitment, and having the opportunity to have views fed upwards, the sharing medium of Intranet 2.0 is ideally suited to help facilitate these key engagement drivers. Web 2.0 tools flatten company hierarchy by providing a transparent path of communication between employees at all levels, from the Company Director down to the shop floor worker. It can provide staff across geographical location, irrespective of position or intellect, the opportunity to ‘float’ ideas on new product ranges, best practices, working procedures, etc. via live suggestion boxes. These ideas can appear in real time and will open to further comments / suggestions by all staff. Intranet 2.0 can also provide a channel for feedback on organisational news announcements, strategies, etc. This type of feedback can help “…managers to gain insight into the needs and motivations of employees” (BlessingWhite Inc. 2008). Indeed, employee attitude surveys can be a regular feature of the system, the results of which can used to measure employee engagement and gauge feeling amongst the workforce, all of which can help ITC identify areas to focus improvement towards.

The contribution such an Intranet can make as a training and development tool cannot be underplayed. It can provide the workforce with the most up-to-date product information, tutorials, and marketing material, etc. This information does not have to appear in the way it did pre-Web 2.0, where static pages were displayed across the organisation, meaning each employee would be required to wade through pages in order to arrive at the relevant ‘nugget’ of information. Intranet 2.0 provides levels of personalisation to the point of providing “each employee with news updates focused on their job role” (Nielsen, J. 2009). This would be of particular benefit when it comes to areas such as the customer complaints we have been receiving from the call centre regarding staff not being “up-to-date” on products. For example, this type of system has the capability to consistently display individual staff with the most “up-to-date” products details and Q & A scripts, etc.

As this Intranet 2.0 proposition is based on helping the flow of communication across the entire organisation, then logically, we would require all staff to have appropriate access to such a system. Head Office, call centre and retail staff are likely to have ready access to PC, laptop, mobile phone technologies in order to do this. In the factory, however, such access is very likely limited. To get around this, deployment of PCs / touch-screens at specific locations throughout the factory is recommended; perhaps inviting factory floor staff to use the system during lunch breaks, etc. Following the suggestion that we allow all employees across the site access the canteen, situating access in this area would also make sense.

Web 2.0 technologies and business performance

Beyond the obvious communication-flow benefits of Web 2.0 technologies, recent findings by the Aberdeen Group also provide positive figures for their business performance benefits. Saba (2009) reported that they found that 52 % of organisations who employed social networking tools, blogs, and wikis achieved ‘Best-in-Class’ compared to only 5% for those who did employ them. They also provided figures for Web 2.0 tools in relation to employee engagement. They found an 18% average year-on-year increase in employee engagement for organisations employing Web 2.0 technologies in comparison to a mere 1% for those who did not

Options for Change

Short-term

An employee engagement programme and corporate communications strategy should both be developed as a matter of urgency to stem the tide of disaffection and high levels of turnover within our workforce. This will undoubtedly require a certain level of upfront investment but will, I believe, begin to pay dividends at a very early stage. Part of this investment may have to include outlay for extra personnel and equipment to implement these solutions as we currently do not have the specialist staff available in-house to fully utilise the technology required for this communications systems implementation, nor the staff to adequately implement an employee engagement programme.

Long-term

An organisation-wide job evaluation scheme is required as a means of rationalising the pay scales of the separate functions into one transparent system. The use of bonus payments to boost the wages of certain sections of the workforce should be reviewed and possibly abolished. Exact costs of this proposal are difficult to predict until the completion of the job evaluation exercise, but it may well be a cost-neutral option with increases to basic salary costs being offset by reduction in bonuses. Any subsequent increase in the overall salary costs which may arise would hopefully be countered by increased productivity.

A scheme which would encourage secondments between departments should be developed. This would allow staff to gain a better understanding of the operations of the other functions within the organisation. This scheme could also be of benefit in assisting to identify personnel with potential for promotion or who could perform better in a different role.

The hierarchy in the factory requires a radical overhaul with a view to rationalising the management structure. The ratio of managers to supervisors is far higher than the ratio of supervisors to production workers. The potential savings gained from this approach could be used to increase the salary of the supervisors in return for taking on greater responsibility for operations in their sector. This would create a more prestigious role for the first line supervisor and a more strategic one for the remaining managers.

A process is required which will recognise the potential leaders and managers of the future from within the existing workforce. Learning and development for staff should be a core principle of the organisation. Staff with the potential to move on to other roles within the organisation should be identified, encouraged and developed in order to achieve this.

There is also a need to introduce learning and development opportunities for staff who do not necessarily wish to move on to other roles. Members of staff may be satisfied with the role they are performing but it is still necessary to ensure that there are opportunities for personal growth and satisfaction within that role.

The emphasis on speed in dealing with customer enquiries within the call centres should be replaced by an ethos of efficiency in dealing with those enquiries. This would be a more cost-effective approach as an enquiry dealt with efficiently initially is less likely to generate future similar enquiries from the same customer and reduce complaints of poor service.

Conclusion

Being an “Employer of Choice” is not simply about offering the best salary. The whole package must be seen as appealing in order to attract and retain the correct calibre of staff who share the vision of the organisation and who want to actively contribute to its success. It has been stated (CIPD, 2009) that:

“Engaged employees are more likely to act as organisational advocates than disengaged employees and can play a powerful role in promoting their organisation as an employer of choice.”

For this to work, staff must feel that their views are welcomed and they are valued as individuals. This should result in higher levels of motivation and increased morale which, in turn, should reduce staff turnover. Our aim is to spread the word about how good ITC is to work for and hence attract the maximum number of high calibre candidates for posts who then want to stay with the organisation to reach their full potential. We also have to accept that by attracting the highest calibre of candidate we will inevitably lose a number of high-performing staff over time as they wish to progress beyond what the organisation can offer. We must be prepared not only to embrace this, but actively encourage it, and accept that for the organisation to grow there will be a certain degree of turnover of ambitious staff. The upside of this is that there will be regular opportunities for existing staff to progress through the organisation increasing levels of loyalty and improving morale.