HR Consultation

The author of this report is asked to provide an interim report whereby a series of four high-level concerns and questions are answered to. The first point of the analysis is used at least two scholarly accepted business models to analyze and plan for upcoming or current trends, issues and impact from both an internal and an external perspective and how these all would affect the firm for the better or for worse. The second question asks how the current environment and mindset can be harnessed and used to change tactics and perceptions in a way that allows for a solid and progressing move forward. The third question asks the author to critically evaluate the impact of the organization’s current communication practices and how this all can be altered and honed to improve the leadership performance and perceptions from the workers further down the chain. Finally, the author is asked to provide a summary conclusion that includes proper recommendations and ideas that will help improve management, leadership and the overall development of the workforce.

Trends & Reactions

One major trend that is rearing its head, albeit mostly in the lower classes and skill level of workers, is the talk of requiring a “living wage” be paid to all workers regardless of skill level, location and the ease in which someone can be replaced should they choose to leave or if they are discharged (Clary, 2009, pp. 1063-1084). However, this concern is met with full opposition by industry professionals and experts that say that the market sets the minimum wage rate that people are paid and that artificially raising the amount paid in ignorance of market forces will only lead to bad results (Neumark, Thompson, Brandisi, Koyle & Reck, 2013, pp. 271-283). For example, if a McDonald’s worker is paid $15 USD an hour rather than the $7.25 USD to $9.00 USD they are paid now, the price of a Big Mac would necessarily have to go up to compensate. This whole nexus of activity can be depicted and analyzed using the supply and demand graphs as well as looking at the basic model of fixed labor costs and variable labor costs and how it leads to the cost of goods sold (Rein & Marris, 1975, p. 42). If the price of labor doubles, the cost of goods sold would almost double as well. In terms of the labor market, very few fast food firms would be able to pay $15 USD an hour (Young & Kaufman, 1997, pp. 463-480). As such, if this wage spike were limited to McDonald’s and Wendy’s, workers from Burger King, Taco Bell and other restaurants, as well as probably many others, would glom onto McDonald’s and try to get jobs there. The issue, though, is that McDonald’s would tend to suffer greatly as compared to competitors who do not pay the $15 USD an hour which is why it would never happen. In much the same way, saying that Wal-Mart should not buy so many goods from China and Southeast Asia is easy enough to say but the effects of Wal-Mart actually listening to that advice would be seismic and would greatly affect the prices and composition of the markets that they operate in (Matusitz & Leanza, 2009, pp. 187-205).

The other major trend that should be looked at is the cost of regulation and taxes that firms around the world will have to take into account and adjust for in the coming years. For example, a recent analysis in the United States found that the “hidden tax” of regulation in that country will cost businesses nearly two trillion dollars, which is more than half of the federal spending budget for that country (Ruttenburg, Cardi & Fenton, 2011, pp. 121-193). These regulatory costs, in addition to the costs of malpractice insurance and other costs, all trickle down to the consumers (Ruttenberg, Cardi & Fenton, 2011, pp. 121-193). This is in addition to the explicitly and specific taxes that are being paid in that same country. Other countries including those in the European Union and in other places around the world face much the same thing. While it is easy enough to say that it’s just a matter of how much the government can get away with taking, it is a little more complicated than that. Too little tax chokes off the government and their budget while too many taxes cause a drain on economic activity (Stokes, 1984, pp. 75-89). As with the aforementioned supply and demand as well as the cost of goods sold competition between firms, there is equilibrium to be had in the middle and artificially or blindly trying to alter that equilibrium is unwise and is fraught with consequences. As far as taxes go, there is what is called the Laffer curve. This curve shows what is stated above, that there is a “sweet spot” where the amount of taxes are just right and is at an optimal level for economic activity (Trandafir & Brezeanu, 2011, pp. 53-60).

Learning & Development

The proper mindset towards learning and development is necessary to keep up a workforce that is ready to act and ready to learn what is needed to remain competitive. Many firms are very hesitant to teach their people too much in terms of skills and abilities, especially as it pertains to the knowledge that can be applied with other employers and industries because they fear the employees may very well just pick up and leave. While that is certainly is a risk, it is actually counterproductive to squelch the learning of associates as there are many firms that will gladly offer such opportunities and employees will indeed tend to be more loyal to firms that trust them rather than try to treat them like ungrateful children. It is not difficult to grease the skids, so to speak, and allow employees to flourish. A common way to do this is done in the United States, and that is tuition reimbursement (Manchester, 2012, pp. 951-974). Under tuition reimbursement, students are able to pick their school of choice and get reimbursed up to a certain amount (Pattie, Benson, & Baruch, 2006, pp. 423-442). Up to $5,250 USD a year can be reimbursed tax-free to the student (IRS, 2013). Firms in the United States are not required to offer this, but many do including the more prominent and advanced companies. There is often little to no restriction on what classes can be taken and what majors can be explored.

Another method that firms can use is to leverage their human capital to create a huge knowledge base whereby information goes from being trapped in the heads of employees to being put to “paper” if you will (Brown, Dennis, Burley & Arling, 2013, pp 2013-2023). Ways this can manifest include flow charts, shortcut lists, tutorials, and walkthroughs so that any foreseeable event and issue can be notated for the future based on what happened with prior events and people. There is no need for ten people to learn the same thing the hard way when one person can write it down and help prevent the same happenstance with the other nine. Human capital, even if it is hard to put a value and a price on it, is invaluable and absolutely cannot be ignored by a firm because doing so leads to a grandiose amount of wasted motion, time and money (McIver, Lengnick-Hall & Ramachandran, 2013, pp. 597-620).

Communication Strategies

Many executives and business leaders hold the view that their words and orders are sacrosanct and that any questioning of orders or failure to follow the same is strict insubordination and should be dealt with accordingly. These are the same people that think that “top-down” is the only way to go in terms of corporate communication and that is simply unwise, to say the least. Communication should move up, down and laterally (Abdullah & Antony, 2012, pp. 17-26). While the chain of command and following the order of supervisors is a good thing to enforce, it should be coupled with getting people to “buy-in” to what they are doing and why the firm’s management feels it is necessary (Mom, Van Den Bosch & Volberda, 2007, pp 910-931). The whole “don’t ask questions, just do it” mentality may work with children but fellow adults will bristle at it or at least be confused. Indeed, it is important to give a good overview of changes before they happen, why the changes are happening and what people can do if they are confused or resistant to the change. An even better tactic is to involve mid- and lower-level managers and subject matter experts (SME’s) in the process so that the changes executed are done with the full knowledge, information and consent of the people that will in large part be in charge of implementing it rather than those same managers simply being told what to do and they are given no input (Gomez-Perez, Erdmann, Greaves & Corcho, 2013, pp. 1933-1945)(Arthur, 2011, pp. 191-215).

Summary & Recommendation

As noted throughout this report, there are regulatory, taxation and people concerns that all firms must deal with and learn to harness properly. Some of the factors involved are within the control of the firm while others are going to happen no matter how the firm reacts and when. With the latter, the key is to react timely and in the right way. There a number of things that the firm should do to remain on the cutting edge of the business world. First, the employees must be made to understand what their role is. While the employees should have a voice and should not be afraid to say anything that would or could help the business in the long run, they have to understand that the decision-makers are the ones empowered to do what they are doing and any final decisions should be honored and respected. There is a difference between not giving buy-in and being insubordinate and any employee who fails to take notice of where that line is should be dealt with appropriately. Second, while the first point is important to remember, employees should not be treated like children and should be allowed to blossom and expand their horizons even with the chance that they may not stay with the firm over the long haul. In the end, the best and brightest people will stay so long advancement and learning opportunities exist.

Third, the firm has to keep in mind that the societal and cultural chatter is not always indicative of what should be done and why as a lot of that chatter is misguided and illogical rhetoric and invective. For example, it may be a “feel good” statement to say that fast food workers should be paid $15 USD an hour to employees but it makes no business, economic or mathematical sense to do so. On the same note, there is no way the government would require such an egregiously high wage increase for low-skill work. This not to say that the firm should be confronting or accusatory about this topic as this would only inflame the public. However, the din of speechifying about this will eventually fall. It will no doubt arise again in the future, but it is a cycle and this should be taken into account for both the valleys and peaks of that cycle.

Conclusion

In the end, it is clear that there is very much an anti-business and anti-capitalist message that is bouncing around the media and societal spheres around the world. The fact that employees are over-stepping their proverbial lines and/or engaging in economic and business action hyperbole that they know nothing about, it is also true that calling those folks on it would be dangerous. Instead, businesses need to keep their nose to the grindstone and make their existing employees feel welcome and wanted. For employees who take this generosity and reject it, then separation will likely need to occur, at least it might. The key is to follow a process and give people a chance but also to react in the right way if/when they reject it. Employees should not be treated as the enemy by the employer and the same thing can and should happen in reverse. If either party violates that principle, there will be a reaction and/or a correction by one or both parties and this correction can be damaging to either or both entities.

References

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