Electronic Applications was found in 1972, its headquarters are on San Francisco and it is a major producer of silicon chips. The company’s sales, profit and stock price have grown fast on the past years while the human resources policies have remained unchanged. The main problem the company is facing nowadays is the high turnover ratio closed to an average of 30% on the past three years. The fact that the company is based in an area where many of its closest competitors have offices facilitates employee’s movements from one job to another. This high turnover is mainly affecting positions among the electrical engineers in the R&D department. The key factors behind this high turnover are more related to the fact that there is no career development programmes inside the company than to salary issues, as a wage survey has revealed, Electronic Applications pays 5-8% above the market. Recently the company has hired Harold Sweeney:
On the medium term he would need to upgrade the company’s human resources policies, at the moment are mainly reactive. On the short term he would need to tackle the high turnover ratio, specially taking into account that one of the company’s section chiefs, Helen Morgan is reviewing the possibility of moving to another company. 2.Problem Statement
Electronic Applications has not got a Human Resources policy in place that goes accordingly to its position in the market and its actual growth. On the past years the Human Resources policies have only been reactive. On the medium term, the key questions, the Human Resources department needs to answer, are following ones, in order to align its strategy with the company’s one: -What are Electronic Applications’ major strategic issues over the next three years? -What are the most critical needs and challenges will face over the next three years? -What critical skills, knowledge and experience will be needed to meet these challenges? -What staffing levels will be required?
On the short term a more practical approach needs to be taken in order to reduce the high turnover ratio. Being the lack of career development programmes the main reason for employees to leave the company more in detail issues were identified: -In the appraisal there is no section dealing with future potential or future goals -No rewards for supervisors who develop their subordinates
-Mo human resources planning to identify future jobs
-No centralised job information or job position system
-No career path or career ladders
-Attitudinal barriers against women in management positions 3.Alternatives with pros and cons of each alternative
These are the alternatives we propose to the Board of Directors of Electronic Applications: 1. - To align the human resources department’s strategy with the company’s one 2. - To establish an effective Career Development Plan
3. - To implement an employee’s compensation programme based not only base compensation (salary) but including, as well, pay incentives and indirect compensation/ benefits. We will analyse each of the three options:
1. - To align the human resources department’s strategy with the company’s one In order to do that we will define the organizational architecture following Galbraith’s star model, identifying five organisational components: strategy, structure, rewards, processes and people. We will then identify the areas of the company that need to change to facilitate strategy execution and we will check if the culture of the company is in line with its architecture. Pros and Cons: The con of this approach is the difficulty for many senior executives to recognise the economic value and benefit to their customers of this approach. However if HR creates mechanism so business results quickly follows and measure effectiveness in terms of business competitiveness, recognition will not take longer to follow. 2. - To establish an effective Career Development...