Employeeincentivemechanisms.doc

The employee incentive mechanisms under the financial crisisPrepared for Apex Steel CoBy AnQi, Zhu, the chief HR officer of Apex Steel CoMay, 2014Apex Steel CompanyMEMORANDUMTo: Apex Steel CoFrom: AnQi, Zhu, the chief HR officerSubject: The employee incentive mechanismsDate: May 10 2014Here is the report about human resource management of Apex Steel Company under the current situation.Three Kinds of methods will be put forward to deal with the financial problems, both suitable for the company.The report has analyzed the essential features on the worldwide steel industry and taken into comprehensive factors into consideration.It is promising that with the use of employee incentive mechanisms, the morale of staff will be emboldened to resist the risk of downhill economy.Table of contentsMemo of transmittal 1Executive summary 31 Problem identification and Analysis 3 1.1 Background 3 1.2 Actual Situation 4 1.3 Statement of key problems 52 Generation and evaluation of a range of solutions 5 2.1 Performance appraisal and Lowliest place elimination 5 2.2 Establishment of enterprise culture 6 2.3 Facilitate communication 73 Recommendation and Implementation 84 Conclusion 95 References 10 Executive SummaryThe purpose of this report was to analyze the manpower statement in current financial environment and recommend the most suitable strategy for coordinating the human resource in Apex Steel Co.This report has considered three main solutions such as Performance appraisal, Build the enterprise culture and Facilitate communication.After taking factors into consideration, it is recommended that Enhance the communication would be the most practical method due to its low-cost and the high-quality.1 Problem identification and Analysis1.1 BackgroundIn the past few years, Apex Steel Company became not only one of the best-run mining companies in the southern hemisphere, but also a Fortune 500 company in the world which was renowned as the prolificacy, High-quality and efficiency. In fact, their innovative talent management played a vital role in the development of the whole process. With highly structured tasks, employees have a clear job responsibilities goals and procedures.(Williams&McWilliams, 2014) Obviously, From Fiedlers contingency theory, Putting leaders in the right situation could maximise group performance and create a benignant communication for the direct purpose of improving the contraaperture. More specifically, the streamlined chain of command divided the organizational structure into several levels of management to operate their own business independently. To enhance work team effectiveness, it is beneficial to segment different characters of work groups to take responsible for various assignment (William & McWilliams,2014). The self-managing teams could manage and control major issues immediately and straightly to save the needless command. With the high efficiency of communication between the suppliers and customers, each class of managers in Apex Steel Co had the flexibility to address the mission and make decision without the instructions from the supreme Directors. In addition, the success of Apex Steel Co was attributed to the embodiment of fairness and the performance appraisal system. The commitment of reducing the distinction of all levels of employees without the scruple of dismissal could form a loose working surroundings. Williams and McWilliams (2014) argues that “motivation could make people persist in their efforts to accomplish a goal”. Also, The performance appraisal system in Apex Steel Co encouraged employees to acquire the maximized benefits for company for their relevant bones, which was truly reacted by the employees positively.1.2 Actual situationCurrently, the mergers and acquisitions between Chinese-makers and India-makers lead to the high-quality products and high-producing supply, which means the decrease in business opportunities for Apex Steel Co may result in the restrictive capital on welfare and bonus for employees. With the recession of economy and the demand decreased in the internal market, the labour cost need to be cut down to cope with the limited budget. Nevertheless, Williams and McWilliams (2014) also assert the formula: Job performance = Motivation * Ability * Situational constraints. It is distinct that to improve job performance, companies need to aggrandize the employees motivation by meet the physical or psychological requirement to satisfy them. Therefore, managers should consider how to create the excitant policy to motivate staff without any non-financial measures due to the constrictive internal financial statement. On the other hand, Equity theory (Williams& McWilliams,2014) indicates that people will be motivated when they are treated fairly. Fairness and integrity are the essential condition for companies to establish a positive market image and truthful reputation especially among their employees. In this case, Apex Steel Co has promised not to lay out even one employees so that the retrenchments may be a urgent task for human resources officers. Finally, the loss of talent may became threaten to the stability of operating and the loyalty in existing employees (Reichheld,2001). As a team cooperation project, the business could not eliminate the barriers and make achievements without the cohesion among the company.1.3 Statement of key problem Motivation: To satisfy the employeesFairness : To establish the reputationStability : To main the harmony2 Generation and evaluation of a range of solutions2.1 Performance appraisal and Lowliest place eliminationReducing the stafftrimmer is not only the essential components of exit mechanism in the human resource management, but also the inner requirement of competition elimination mechanism in the company.(Galbraith, 1990) Owing to the fact that the retrenchments policy will stimulate the ability to self-improvement because they feel the pressure of competition no matter from the outer to the inner. To realize the promotion of the human resource from stock to the strengthening of the quality, the performance appraisal and lowliest place elimination play the lead role in the progress of reducing salary and staff. In other words, the mechanism is responsible for increasing the instability in income proportion of employees to that of their performance, which is aimed to improve the working efficiency of workers and eliminate the employee that got the lowest score in the performance appraisal (Murphy,1992). Firstly, Apex Steel Co should pay attention to the feasibility of the performance indicators during the period of financial crisis and the decline of business. Therefore, the set of performance indicators should be revised according to the actual situation of the company instead of the impractical measures which may cause a counterproductive result and the loss of a large number of outstanding staff. Secondly to start with is the employees may attach more importance to the fairness in the process of performance appraisal. Holsapple and Joshi (2000) insist on that “quantitative and objective indicators” should be taken into measurement to reduce the influence of artificial factors on the performance appraisal. In the progress of evaluation, whether the examiners and the examinees should strictly abide the companys performance appraisal system and publish the results and procedures. In the fair and just environment, the negative impact on employees will be the lowest according to the results of the pay cut and layoff. Last but not least, the feedback is the most important ring in the performance management when the assessment is tied to the layoff and pay cut. (Bernardin & Beatty, 1984) Attaching more importance to the performance feedback is beneficial to the analysis and summary about the work during this period. Also. It is useful to understand the employees psychological state to make the company more stable efficiently and enhance the companys cohesion. On the other hand, it still exists some issues such as the huge amount of work and the difficult of assessing the individuals contribution. For example, the performance appraisal is not suitable for any position and the set of goal will lead to the controversy as well as the lowliest place elimination may cause the examinees go astray into a mechanized method.2.2 Establishment of enterprise cultureAs the soft power of the enterprise, the corporate culture is inevitable for the development of cohesion among the employees to promote the working efficiency. Keat(1991) Puts forwards that persisting the development of the enterprise as the guideline is crucial to “structure the unique enterprise culture”. As a result, the company should analysis and satisfy the employees demand to improve their sense of worth. Implementing the people-oriented business ideas by creating a suitable working environment will be advantageous for employees physical and psychological health to throw themselves into their work. (Gibb, 1987)For instance, trying best to improve the employees amateur lives by carrying out the abundant and entertaining cultural activities could arouse the enthusiasm of the production. Also, some cultural brochures, websites and meetings could responsible for enhancing the publicity about the excellent cases to cultivate team spirit. However, the restrictions of building enterprise culture to progress the slight increase in the motivation of production. To deal with this issue, enterprise culture should play the role of a spiritual pillar and form a impregnable benefit community in the long term.2.3 Facilitate communicationIn the global situation, the development of business has a negative impact on sales revenue in Apex Steel Co. When the company suffer the barriers, some employees will give up this industry while the vast majority of employees will choose to move forward together with the company. By contrast, If the senior management inform the business difficulties under the current financial statement for the employees frankly and sincerely and give an example: take pay cuts initiatively.Most of the staff would be able to accept the business decisions instead of a significant shock to the company. In additional, Williams and McWilliams puts forward that one of the primary tasks managers should face to improve the efficiency is managing one-on-one communication.(2014) It is beneficial for enterprise to pacify the mood of the staff to pay attention to communicating with the employees. Also, Apex Steel Co could hold some kinds of activities to motivate and inspire the confidence of their employees to increase the cohesion. Only giving a psychological preparation to the employees, can the methods of adjusting be carried out successfully. On the one hand, the company require to show the present situation and make employees aware of sharing the subsistence with the company. On the other hand, the company ought to turn to the “investment in human relationships” to retain the core talent whit the spiritual motivation.(Johnson,1970) Taking the services as an example, the sales manager who controls the key customer resources is the core talent to get away from the declining financial condition for the future development. Nevertheless, the shortage of the investment in human relationships is the uncertain factors because of the various characteristics and special conditions.3 Recommendation and ImplementationThe last solution may be the most suitable one to deal with the three major problems mentioned before. To satisfy the staff and mobilize the enthusiasm of manufacturing, management officers have to show the respect and trust to the employees which needs to stay close to the grassroots to understand the demand of them and provide assistance. The “position power” of management could also give the spirit reward.(Williams & McWilliams,2014) As a matter of fact, The praise form leaders shows not only the affirmation and recognition of employees but also functions as the bridge between the relationships because the barriers between the suspicion of them could broken down and employees could obtain the sense of accomplishment and pride. Such as the most successful e-commerce website in China: Taobao, the CEO: Mayun involved himself in working and traveling together with his employees to create a relaxed working place and a harmony office relationships. To maintain the harmony of the internal organization, facilitate communication which based on the rules and regulations adopt the emotional investment to “cultivate the collective consciousness” of the workers and the spirit of solidarity. (Peneder, 2003) The case of commercial banks in Jordan indicates that strengthening the education for employees stimulate the potential sense of mission that interrelate closely to the enterprise. Last but not least, from the opinion of Williams and McWilliams, equity theory states that “the gap between workers and executives will be wide due to the perceived lack of fairness”.(2014) In Apex Steel Co, the best method of reducing the impact on pay cut is reducing the same ration of salaries in the senior management. It is inevitable for a company to eliminate the privileged and reflect the principle of “Just，Fair and Open”.Each level of managers should focus on the comprehensive solutions to control and implement the actions. The supervisors should play the role of the examiners and take charge of the performance appraisal and evaluation. The department managers need to devote themselves to setting up the goals of contribution as well as the general managers should control the whole progress of appraisal and determine the result of merit rating for human resource officers. The executive president should in charge of communicating the employees through chatting and accepting their suggestions to decision-making. The president and CEO could engage themselves into the construction of the enterprise culture and organize activities to enhance the perception of affiliation. Under the circumstances，employees may have the sense of crisis and competition and increase the enthusiasm for production because of the fair appraisal from the supervisors and the control from managers. However, the care from se