Conrad valves LTD is a specialist manufacturer in Coventry of various kinds of vaLVes and pumps originally for the motor industry but more recently for other branches of the engineering industry, for example aerospace and marine. A healthy export trade has also been developed. Under its ChAIrman and Managing Director (who is the major shareholder) the business has expanded its workforce from just under 150 to over 250 in the last tHRee years. However, there have been problems recently to do with quality and a number of complaints have been received from customers. As Conrad Valves depended on its reputation for high quality, this was alarming. The Chairman has recently taken over another business and has therefore appointed a Managing Director for Conrad Valves. His function is to concentrate on running the company under overall guidance of the Chairman.
The new Managing Director
The Managing Director was appointed from outside and he had two briefs: 1) to do something about improving quality, and 2) to look at the organization structure, which the Chairman described as having ‘just growed – like Topsy’.
The Managing Director was an engineer and conducted a review of the quality situation himself.
The organization structure the Managing Director found looked like this:
An hr function was conspicuous by its absence, so the managing director engaged an independent HR consultant to find out how people matters were BEIng dealt with, to examine the case for creating an HR function, and if one was needed to recommend what it should look like.
The consultant’s findings on the present arrangements were as follows:
●Recruitment – each of the functions carries out its own recruitment, having agreed with the Managing Director on the engagement of additional people and what they should be paid. Some use is made of recruitment agencies for administrative staff but sales representatives, prODuction engineering staff, operatives and technical staff are mainly recruited by advertisements. Interviewing techniques, as observed by the consultant, were crude to say the least.
●Labour turnover – this is fairly high: 20 per cent for operatives and 15 per cent for technical and administrative staff. The failure to retain a number of recent technical and operative recruits is worrying and may have contributed to the quality problems.
● Training – there is no formal training; people are recruited with, it is hoped, the required skills and experience and learn the Conrad way of doing things on the job. Some supervisors carry out induction training conscientiously but the majority don’t. Again, it was considered that this prejudiced the achievement of high-quality standards.
●Pay – operatives were paid the local going base rate (no payment by results) and staff were paid whatever it was believed necessary to recruit and retain them – there was no formal grade and pay structure. Pay was reviewed once a year, generally to keep pace with inflation and in particular to ensure that key staff were paid competitively. Cash bonuses (usually not more than 10 per cent) were paid to some staff as authorized by the Chairman. There was no performance management or appraisal system.
●Employee relations – there was no recognized trade union but a large number of recently recruited employees were union members and there was a distinct possibility that they might ask for recognition shortly. There were no formal consultation or communication processes.
●Health and safety – this was left to works management. Accident rates were fairly high.
On the basis of the findings summarized above, prepare recommendations on what should be done about HR. If this includes the appointment of an HR manager, produce a role profile and an indication in order of priority of the issues the role holder should address. If it is not thought necessary to appoint an HR specialist, indicate how the problems revealed by the study should be dealt with.
This is a fairly typical case of a firm growing rapidly and coping in an ad hoc manner or not coping at all where HR resources are non-existent. The case for an HR function is quite clear – there are serious business concerns connected with quality, and the review identified a number of problems with recruitment, labour turnover and training that were contributing to these concerns. Improving quality is not just a matter of putting quality assurance and control systems in place. It also depends on having people with the skills and the motivation to make these systems work. This is a human capital issue.
But a business case has still to be made for establishing an HR function. This has to spell out the added value that such a function can provide. Having made out the case, it is necessary to look at the role. It may be tempting to focus on the strategic business partner concept but too much should not be made of this. The emphasis should be on the practical aspects of service delivery within the framework of a development programme in each of the main HR areas where it is required, not on trying to build up the status of the function by giving it a fancy title. Any HR specialist appointed will have to earn recognition by providing sound advice and the efficient delivery of services before being granted the status of a strategic business partner.
Consideration will need to be given to making the role holder responsible to the Managing Director. but again, a business case is necessary, which might refer to the enhanced contribution a head of HR can make with the scope directly to gain knowledge of the factors affecting business strategy, to provide advice on how HR can help at the top management level, to have an equal status with colleagues and to be in a position to see the needs of HR over the whole organization rather than in one part.
Because there is quite a lot to do, some indication of priorities will have to be given. This is a matter of CHOice, but whatever choice is made, it will have to be justified in terms of the likely impact it will make on improving organizational performance. It will need to be remembered that it is inadvisable to attempt too much all at once. The capacity of line managers to absorb new ideas and carry out new practices in the short term is necessarily limited – they have other things to do. Also, there is a limit to how much HR can do at any one time.
A role profile is required, setting out the responsibilities involved in output terms, ie the key result areas. It should also list the competencies required so that a person specification can be drawn up and structured interviews can be used in the selection process.