This assignment seeks to holistically analyse the critical “people issues” which impact the effective performance of a Maltese sea passenger and vehicle service company, namely Gozo Channel Company Limited. The main area of concern has been highlighted to be emanating through lack of strategic approach within Gozo Channel’s HRM, more so there is no alignment between the company’s business strategy and HR strategy. Throughout, this document will seek new recommendations through various business methodologies on how to overcome the barriers and issues which are affecting people’s performance.
The first part of this document explains what are the reasons which ultimately affect the performance of Gozo Channel’s employees and review of both the external and internal context are explored, thus identifying what the critical issues are.
Part two of this document sets out the action plan of what is required to overcome such barriers and using different models acquired and researched from the Managing People and Performance module, a detailed plan is set up to tackle each and every area effecting the performance of employees.
The elective pathway throughout this assignment is focused on High Performing Teams and one major factor being proposed with justification is motivation.
The conclusive reflection concentrates on achieving a sense of “evolution”
not a sense of “revolution” within Gozo Channel, in terms of a sound recruitment strategy, training and development.
Gozo Channel Company Limited is a government entity which for over thirty years has been providing sea ferry-transport for both vehicles and passengers between the island of Gozo and the main island of Malta. Although it operates the life-link between the two islands in a monopolistic environment, meaning without direct competition, in 2004 the government had to issue a call for a Public Service Obligation , according to the European Union transportation law, which basically “…is an arrangement in which a governing body or other authority offers an auction for subsidies, permit the winning company a monopoly to operate a specified service of public transport for a specified period of time for the given subsidy…” (Wikipedia, 2009)
1.1.THE IMPACT OF THE PUBLIC SERVICE OBLIGATION ON GOZO CHANNEL’S HR OBJECTIVES Initially in 2004, the transport authority awarded a 6 year PSO contract to GC on the basis of its provisions, resources and standards (fleet, human resources, experience and infrastructure). At that time the company was awarded an annual subsidy of approximately € 4 million.
This “subsidy” as well as the revenue generated along with the various cost cutting exercises, resulted in recurrent annual profits, which in effect meant that the company seemed to be on the right track. In 2010 though, the PSO contract attracted a host of companies and consortiums, all of whom were all eyeing the Malta – Gozo sea-ferry transport service.
This situation was seen as a major threat and created an aura of uncertainty among company employees, causing all sorts of speculation. It was the first time that the company had to compete for its “bread and butter” and speculative pressures forced GC in submitting an annual offer of approximately € 800k to ensure continuity. This drastic decrease in subsidy requires a holistic review in GC’s business strategy but more importantly the HR strategy has to be properly aligned to meet its objectives.
1.2.MY ROLE WITHIN THE COMPANY
As Human Resources and ICT Manager, analysing both the external and internal context of GC is vital to ensure the correct review of its current processes, policies and human resource capital. My role is to ensure that the HR strategy is parallel with the company’s business strategy and more importantly ensure that all employees are nurtured, motivated and trained to support such strategy, thus ensuring that GC move forward in one strategic direction.
2.1.INTERNAL AND EXTERNAL FACTORS OF THE CRITICAL ISSUE
Being a government entity the company has to deal with multiple socio-political pressures, especially in light that GC offers a life-link for the island of Gozo. In a nutshell the island of Gozo depends on GC and to a certain extent one can argue that without a permanent link, GC is practically the road which ensures intra-connectivity between the two islands. Having said that and in light of the new financial realities which the company is facing as mentioned in paragraph 1.1, I have to evaluate both the external and internal context to better understand the forces sustaining the critical issue.
2.1.1.EXTERNAL POLITICAL FACTORS
GC’s board of directors are all political appointees and their strategy and vision is determined by the government in administration. Bearing in mind that each administration normally enjoys a term of 5 years, the business strategy varies every time which in essence deters continuity.
2.1.2.INTERNAL POLITICAL FACTORS
Moreover the majority of GC’s employees have been politically “hand-picked”, meaning they were not employed on the basis of skill and/or merit but on merely nepotism. These two factors form an integral part of the company’s critical issue and though they are based on different levels of the company’s structural hierarchy, the source is the same i.e. Political.
2.1.3.EXTERNAL ECONOMIC FACTORS
GC currently has 214 employees, of which approximately 80% reside on the island of Gozo and since its inception GC has been always regarded as a leading employer, providing the ever needed employment boost to Gozitans . According to the latest statistical data gathered from the National Statistics Office (May 2013); Gozo has a rate of 10.6% of the overall registered unemployed and with limited employment opportunities in Gozo, many Gozitans seek employment alternatives in Malta. Being a government entity also means that the trade unions have their fair share of influence on the external economic context in terms of collective bargaining and legislation, such as Family Friendly Measures , COLA etc.
2.1.4.INTERNAL CULTURAL FACTOR
One of Malta’s leading trade unions, namely Union Haddiema Maghqudin enjoys the 50+1% of the GC’s employee membership; thus is currently the main recognised trade union representing the employees in three sections namely, Seaborne Officers, General Staff and Line Managers. GC together with UHM negotiates collective agreements which stipulate policies, procedural systems and regulate grades and pay structures.
This stringent and rigid systematic approach intertwined with a unionised culture, with a strong “job for life” mentality spreading from top to bottom, restricts the change management concept of the company. This is further attested through the low employee turnover within GC, which is practically zero and only attributable to natural wastage .
Today’s market offers an array of Human Resources Management Systems which are systems and processes that intersect HRM and Information Technology. Although GC has invested in HRMS comprising of the following two packages; payroll, time and attendance, there is lack of a proper Human Resources package that allows ease of access for performance appraisals, benefits administration, recruiting and learning management, performance records, scheduling, absence management and analytics.
2.2.HUMAN RESOURCES FUNCTION WITHIN GOZO CHANNEL
Coupled with the main factors mentioned above, GC’s HR has a specialist approach leaning towards a “Personnel” role rather than that of the more dynamic and strategic role of HRM . Guest (1987) identifies the differences between Personnel and HRM as shown in Table 1 below.
Time and planningShort-term, reactive
ad hoc marginalLong-term, proactive, strategic, integrated
Psychological contract ComplianceCommitment
Employee RelationsPluralist, collective, low trustUnitarist, individual, high trust
Structures and systemsBureaucratic/mechanistic, centralised, formalOrganic, devolved, flexible
RolesSpecialist/professionalLargely integrated into line management
Evaluation criteriaCost minimisationMaximum utilisation (human asset accounting) Table 1 – The differences between personnel and human resource management
The traits listed by Guest (1987) under Personnel, are parallel to GC’s HR functions and the drawbacks are further highlighted in Gratton and Truss (2003) three-dimensional people strategy model whereby GC’s position is weak both in the vertical and horizontal alignment.
Figure 1 – Gratton & Truss (2003): The three-dimensional people strategy
The HR department has no influence on GC’s strategy and the functions are merely day-to-day administrative matters relating to staff driven by rigid
procedures which have little discernible relationship with today’s realities; hence the alignment in the “mere tactics speak” position in the Gratton & Truss (2003) three-dimensional people strategy model as depicted figure 1.
2.3.MANAGEMENT AND COMPANY STRUCTURE
This lack of strategic approach is further compounded by the fact that GC has no Chief Executive. Furthermore there is lack of leadership throughout the management team and people management seems to be focused on the HR department only, rather than integrated throughout the entire management structure.
The company is currently driven by 4 department heads namely, Operations, Commercial, Human Resources and Finance, and although the structure is flat and ideal, there is lack of cohesion between them and each department is individually driven towards its own goals.
Sumantra Goshal (2004) refers to the downfall of Enron and explains how Andrew Fatsow’s (former Chief Finance Officer of Enron) “…designed Enron’s management system around a firm faith that employees pursued only their own self-interest…” quoting Fatsow’s philosophy that “You must allow people to eat what they hunt…only then will they hunt well…” Although the context of Enron is not related to GC’s context, it does show that when you ignore the company’s goals and pursue individualistic targets; the results lead to disastrous consequences.
Lack of leadership and people management is down to the fact that Line Managers tend to shirk such responsibility, but more so the main factor is lack of ability, hence the staffing issue mentioned in paragraph 2.1.2.
2.4.POLICIES & PROCEDURES
GC has an SMS manual containing specific management procedures ranging from
safety and environmental policies to people management policies. This manual is inclined to seaborne staff and the systems and procedures are rhetoric and “institutional” rather than practical.
This goes to show that there is lack of communication between GC’s management and critical feedback, which is brought up during internal audits, management reviews, accident reports, etc., is not discussed and analysed correctly. Therefore the planning and implementation process of the ISM cycle is not maintained which eventually is why we are faced with such a situation whereby procedures are not in tune with the current requirements and realities.
2.5.TRAINING AND DEVELOPMENT
GC has no appraisal and evaluation system in place apart from stringent procedures for seaborne personnel, in line with the required standards of the maritime legislation. Therefore there is no manpower flow and no training strategy, albeit the occasional course organised ad hoc or as required.
The downward process is non-existent and as highlighted management has no focal point in which all downward processes are channelled through. This is also coupled by the fact that lateral communication between management is also obscured by inter-personal conflicts. These conflicts are down to various reasons, such as lack of motivation, internal politics, greed, and selfishness, but the main factor is that management has no cohesion and everyone works within his own “castle” rather than in teams – a scenario where no one seems to share information.
3.ACTION AND IMPLEMENTATION PLAN
Having analysed the critical issue in the first part of this document, the tasks ahead have been clearly defined. I have set out a plan to change the mind-set of the current HRM system. This plan tackles 4 critical areas which are highlighted further on in section 3. The table below illustrates GC’s action plan showing the timescales for the implementation of each critical area.
Critical IssueTime Frame
3.1 – HRM StrategyBeginning of 1st QuarterEnd of 1st QuarterYearly
3.2 – HR Function and People ManagementBeginning of 2nd QuarterEnd of 2nd QuarterContinuous
3.3 – Enhancing the Performance of Human CapitalBeginning of 2nd QuarterEnd of 2nd QuarterContinuous
3.4 – Measuring & Validating The PerformanceBeginning of 2nd QuarterPeriodically as required Table 2 – GC’s Action Plan
3.1.HRM STRATEGY TYPE
It is noticeable that GC’s HR strategy is not aligned with its Business strategy not to mention that the latter is in essence unclear due to the volatile state of the political implications as mentioned in section 2. Thus initially, the first action is to identify a clear vision to implement organisational goals. The “Line of Sight” model adapted from Higgs, in Rees & McBain (2004) ensures that GC’s business strategy is aligned with its people management policies and practices. On the basis of the issues mentioned in section 2, GC requires three types of HR strategies as defined by Higgs,M (2004); cost strategy, capability strategy and commitment strategy.
Figure 2 – The line of sight model
As a result of the new PSO, GC has to ensure that part of the business and HR strategy has to focus on high revenue generation with the least possible level of man power cost.
Parallel to this, GC has to also be strategically aligned to ensure that employees are nurtured, trained and motivated to cater for future capability demands.
Together with the cost and capability strategies the company must also ensure that employees are committed towards the company’s strategy and goals.
3.2.HR FUNCTION AND PEOPLE MANAGEMENT
Implementing the above three strategies requires changing the mind-set of the HR function from a specialist role to a strategic role. It is essential that all Heads of Department, Line Managers and Masters are fully responsible for people management and share this responsibility.
This way a greater emphasis will be put on these roles to become the implementers of the HR policies and thus it is imperative to also improve communication between departments through shared responsibility and better knowledge of what is happening. Furthermore this gives an opportunity for all involved to be accountable for any actions taken, thus taking ownership of their problems, bring them closer to employees by helping them better understand the pressures they are facing, gives them a sense of empowerment and helps them to improve as managers by understanding better the processes and their position within GC.
In order to implement this change in the management’s work ethic, it is essential that all those involved in managing people undergo training in the EIRA legislation, leadership skills and more importantly making them aware of GC’s policies, regulations and processes.
3.3.ENHANCING THE PERFORMANCE OF HUMAN CAPITAL
Gratton & Ghosal (2003) define human capital as “…an umbrella term comprising the intellectual, emotional and social capital of individuals and organisations…” GC’s bottom line employees lack motivation, drive and in some cases ability which in hindsight is attributable to the fact of a futile recruitment system mired further by political intrusion.
Effectively GC’s HRM should aim at developing its human capital and at the same time enhance their performance to a high level of output. “The Bath
people and performance” model by Purcell et al (2003) is the perfect model to adapt in order to achieve High Performance from employees.
Utilising the best abilities and skills of each employee as well as motivating them through various incentives such as pay incentives, promotions & training and also by giving employees an opportunity to participate through feedback will aptly help motivate staff. Moreover it is essential that employees are managed, encouraged, respected and trusted.
On the basis of this model GC’s HRM has to take a pro-active approach from the entry level of each individual and form a process based on a risk-based approach to examine historical events and future plans. The guidelines for such action should be based on cycle as shown below in figure 4. This way each individual employee will be monitored in an effective way and trained according to his/her competence needs, therefore training is vital for humans, to develop ability, to perform procedures, to operate systems.
Figure 3 – The Bath people and performance model
Figure 4 – GC’s HRM Guide for Action for Human Capital
3.3.1.EFFECTIVE RECRUITMENT AND SELECTION
It is essential that GC has a proper recruitment and selection policy in place which works independently and “politically free” from external or internal interference. Jackson and Schuler (2000) define the terms “recruitment” and “selection” as “…Recruitment involves searching and obtaining qualified job candidates in such numbers that the organisation can select the most appropriate person to fill its need…” and “…Selection is the process of obtaining and using information about job applicants in order to determine who should be hired for long-or short-term position…”
Thus the selection board has to be fully knowledgeable and must have a clear path of the tasks, abilities and qualifications required for the relevant job so as to ensure that the right person/s has been selected. The model shown in figure 5 adapted from Briscoe (1995) identifies all the stages
required to have an effective recruitment & selection policy in place.
For starters, GC’s HR has to “asses the need for the job” through effective planning tools. A model which aptly covers such area is “The process of Human Resource Planning” by Armstrong (2006) shown in figure 6 below. This model identifies four key stages; business strategic plan, resourcing strategy, demand or supply forecasting and human resources plans, which in effect knits the action and implementation plan of this document leading to the four critical issues of HR resourcing, retention, flexibility and productivity.
Figure 5 – Recruitment and selection process adapted from Briscoe (1995)
Figure 6 – The process of human resource planning
3.3.2.TRAINING AND DEVELOPMENT
Mabey and Salaman (1995) effectively links both the Business and HR Strategy to Training and Development arguing that “…unless attention is paid to all six dimensions shown in the figure, then the quality of training and development will be impaired and their business impact will be flawed…” In essence this is another vital step to ensure that the HR strategy is aligned with the Business strategy thus developing human capital to attain high performance. The performance evaluation process of employees is not intended to castigate people but should effectively help the development process.
Therefore effective appraisals and psychometric tests coupled by constant monitoring, would greatly assist the HR department in understanding individual training needs and requirements, as well as keeping in line with the company’s strategic training and development plan. A clear example of the lack of strategic human resource planning within GC is experienced in the marine engineering section.
Malta currently lacks human resources in the marine engineering sector, which has been in decline over a number of years mainly through lack of interest from students to pursue such a career. This was further tarnished by the fact that the maritime authority failed to endorse the Higher National Diploma in Marine Engineering course and thus the few students who had applied for such course were forced to change career direction.
Whereas currently GC’s position has been as a mere spectator over such issue, this calls for a more pro-active approach by highlighting such awareness with the authorities concerned and by ensuring that the maritime authority and MCAST provide endorsed courses, opportunities for sea time to students and more importantly courses are sustained. Moreover GC has to be directly involved in promoting the marine engineering career in schools and career expos, thus investing in the future of human capital – becoming an employer of choice.
Figure 7 – Mabey and Salaman strategic training and development model
3.3.3.PERFORMANCE MANGEMENT AND REWARD SYSTEMS
GC has to adopt a more business based approach to HRM and should include reward systems. Armstrong (2000) describes performance management as a “cycle” as shown in figure 8 below. It defines a clear plan of how to manage performance in four stages; plan, act, monitor and review. The monitor and review stages are intertwined with the training and development performance evaluation process.
This cycle starts by planning and agreeing a set of targets with an employee, whereby it is fundamental to maintain the performance agreement realistically and it should include “team-based” bonus elements rather than a high level of “individual” performance to avoid having a “silo mentality” Higgs, in Rees & McBain (2004).
Figure 8 – The phases of performance management
The model below shown in figure 9 below, further explains Armstrong’s performance management system.
Figure 9 – Phases of a performance management system
A key element in achieving high morale of employees, job satisfaction, low absenteeism, enhanced productivity and high performance is down to
motivation. Maslow (1954) identified a hierarchy of needs as shown in figure 10 below; which ranges from physiological needs, safety, love, esteem and self actualisation.
Figure 10 – Maslow’s Pyramid
Porter et al (2003) link these needs to general rewards and organisational factors as shown below in table 3. This table more importantly identifies the organisational factors for each level of Maslow’s pyramid. Although Maslow’s theory defines satisfaction as the main contributor to motivation it does not guarantee high work performance. This theory though does form an integral part to attain a motivated work force and further facilitates to understand better what factors are effecting individual employees. This theory therefore has helped me clearly define another important issue which effects performance management within GC – equity and fairness.
184.108.40.206.ENSURING EQUITY AND FAIRNESS
Having the characteristics of a government entity, lack of motivation within GC is commonly effected through lack of equity between staff; in other words employees tend to become de-motivated when they feel that they are not rewarded for their work, efforts or perhaps even for the reason that they are rewarded on the same level as others who work far less than them. Adams (1965) Equity Theory tries to find the correct balance between the “inputs” and “outputs” of an employee. In other terms it defines the “fair balance” to ensure high performance as well as content and motivated employees.
According to this theory Adams (1965) identifies what are the typical “inputs” and “outputs” of each individual and thus helping to identify the balance or imbalance which currently exist in GC. Such “inputs” include; effort, loyalty, hard work, commitment, skill, ability, adaptability, flexibility, tolerance, determination, enthusiasm, trusts in superiors, support of colleagues, and personal sacrifice while the “outputs” are mainly; financial rewards (such as salary, benefits, perks), recognition, reputation, responsibility, sense of achievement, praise, stimulus, sense of advancement/growth, and job security. A similar theory but has a greater impetus on motivational impact is the Herzberg et al (1959) Two-factor Theory.
Frederick Herzberg identifies two factors which he calls “Hygiene” (factors of dissatisfaction) and “Motivation” (factors of satisfaction) and claims that unless you eliminate the employee’s dissatisfaction/s and moreover help him overcome such dissatisfaction/s; you can never motivate the employee. Although this theory could transmit effective motivation on an individual context, it could backfire unless “Hygiene” factors are tackled fairly, with equity and consistently. For example if an employee is dissatisfied on the basis of working as a Mooring Man , one can assume that by changing his grade; motivation will be achieved.
Overall though such decision could create an aura of unrest between groups of staff who would view such judgment as unfair and thus pretend similar treatment in their regard, notwithstanding the fact that collective agreements would not allow such practise and in reality high performing teams can never be achieved
through such methods.
3.4.MEASURING & VALIDATING THE PERFORMANCE
Parallel to implementing the above recommendations, GC’s HR must ensure that management systems are in place to validate and measure the performance of such recommendations.
In order to maintain constant focus to ensure that GC’s business activities are aligned to its vision and strategy, an ideal strategic system is the Balance Scorecard Kaplan R S and Norton D P (1992). This model will assist GC’s management to asses the performance of the organisation while also helps identify what should be measured. Kaplan and Norton describe the balance scorecard as “…The balanced scorecard retains traditional financial measures.
But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation…” The balance scorecard is also an idealistic strategic tool for GC since the company has an important role as mentioned earlier, therefore the vision and strategy should be intertwined with the four core areas, namely Financial, Internal Business, Innovation & Learning, and Customer.
3.4.2.KEY PERFORMANCE INDICATORS
The Balance Scorecard Kaplan R S and Norton D P (1992) will also enable GC’s HRM to develop its KPI. For example absenteeism can be strategically measured to evaluate to what extent this problem is within GC. In hindsight anything can be measured through KPI and GC’s management has to be intrinsically focused on measuring performance on the basis of directional, financial, qualitative, and quantitative characteristics.
GC’s management must review, analyse and discuss the performance of each department to ensure that policies and procedures are effective and not defective towards the performance of the company. The review process is intended to highlight any deficiencies which had been spotted either through KPI, incident reports, customer feedback and employee feedback.
Moreover processes may be amended to incorporate new legislation and perhaps to evaluate whether the company has adequate resources. A clear example within GC is the new STCW 2010 legislation amendments which will effect GC from two different angles, namely human resource competencies in terms of certification and adequate resources to provide proper hours of rest periods to employees.
4.HIGH PERFORMING TEAM (ELECTIVE PATHWAY)
In today’s ever demanding world of technological advancements and competition every company has to ensure that each individual employee must be motivated and managed appropriately to achieve a high output of performance. As clearly defined in section 3 of this assignment the following characteristics are vital to reach a level of having high performing teams within GC.
The key characteristics to achieve high performing teams are: participative leadership by involving and engaging employees, effective decision-making, open and clear communication thus ensuring that employees use effective communication methods and channels, valued diversity in terms of valuing the different experiences and backgrounds in teams which contribute to a diversity of viewpoints thus leading to better decision making and solutions, mutual trust, managing conflict by dealing with conflict openly and transparently and not allowing grudges to build up and destroy team morale, clear goals developed by SMART criteria, defined roles and responsibilities, team building events to promote bonds between employees, and a positive atmosphere with an open culture which is focused on future goals.
This assignment and module has effectively allowed me to understand better what the critical issue is. It allowed me to recognise the negative effects of having a non-strategically HRM system coupled by external and internal political interference, which in essence renders the company’s strategic vision as a volatile state of mishmash.
The “empowerment” given to me through this assignment to write down specific grievances which I have personally experienced through my current role as Human Resources and ICT Manager has enabled me to dig deep within GC. For starters my appreciation of the “human element” within GC has helped me explain why motivation through fairness and equity is vital in order to achieve a high performing team, something which is currently lacking due to the political cloud hovering over GC.
Moreover it is essential that there is a strategy of “evolution” and not a strategy of “revolution” with GC. The positive effects that a proper recruitment system yields helps achieve results but through this module I realised the importance of training and development which are vital to augment the knowledge and competencies of GC’s human capital, helping themb to work towards achieving GC’s goals and objectives while at the same time safeguarding GC’s future planning.
Overall the importance of aligning GC’s HRM to its business strategy is critical to achieve the correct synergy to implement all the processes mentioned in section 3 of this assignment. Consequently the action plan mentioned in section 3 has to be strictly adhered to, in order to change GC’s direction which is slowly destroying its “livelihood” as well as the “livelihood” of its employees. This statement further motivates me to push for the changes required by becoming a catalyst of this change in management strategy and as a result achieve the goals required to overcome any risks which eventually will effect GC employees and the Island of Gozo.
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