Coursework Header Sheet

157847-43

Course INDU1047: Employee Resourcing & Dev Course School/Level BU/UG

Coursework Assignment 2 Assessment Weight 25.00%
Tutor CA Jones, PJ Reid Submission Deadline 09/03/2010

Coursework is receipted on the understanding that it is the student's own work and that it has not,
in whole or part, been presented elsewhere for assessment. Where material has been used from
other sources it has been properly acknowledged in accordance with the University's Regulations
regarding Cheating and Plagiarism.

000532454
Tutor's comments

Grade Awarded___________ For Office Use Only__________ Final Grade_________

Moderation required: yes/no Tutor______________________ Date _______________

Matilda C. Akinyemi
Student No. 000532454

Tutor: Peter Reid

Assignment 2:

Topic: With most companies and organisations in the UK experiencing a

downturn in business due to the current economic climate discuss the
following “Should companies continue with training and development
activities or should they stop to reduce costs?”

The essay will establish that there is no perfect answer to the above question, rather
the choice lies on companies to make the right decisions and choices. It will briefly
define recession, expressing its impact on business, government, market, economy,
people and their social well-being. It will explore the importance of training and
development as a gateway to organisational success, development toward employee
retention, and empowerment of the workforce by increase of skills and abilities. It will
look at the importance of attracting, retaining and motivating capable people in the
workforce. It will consider the advancement in technology and the need for strategic
training and development methods for the promotion of business goals and
objectives. It will look into the application of “cost effectiveness and cost benefit” as
a scale of measurement to determine profit or loss for the implementation of training
and development by companies. The nature of the above question requires strategic
management decision by different companies on whether or not to maintain a
continuous employee training and development schemes. The decision will depend
on several factors such as resources, financial strengths, and capabilities. The
essay will also consider other forms of service deliveries and/or training methods that
will be cost effective and beneficial, especially for the survival of the companies.
After the options have been identified, the essay will conclude with openness to
choice by companies, though it will identify people as the greatest asset in the
modern global and competitive market system.

According to Schramm (2006) traditionally, organisations depend on the knowledge,

skills and abilities of their workforce for success. Notwithstanding, the question
above identified a problem from the ‘norm.’ Therefore, it will be understandable to
expect that companies will have to prioritise and plan their spending according to
their hierarchy of needs. Most companies fold up during the period of recession due
to their inability to cope with different areas of unavoidable prevailing factors.
Recession is an economic outburst. According to Wikipedia’s definition of recession
in economics “a recession is a business cycle contraction, a general slowdown in
economic activity over a period of time.” It specified that during this period many
macroeconomic indicators vary in similar way. It affects several areas of human
activities including production as measured by Gross Domestic Product, (GDP),
employment, investment spending, capacity utilization, household incomes, business
profits and inflation. All these will trigger rise in bankruptcies and rise in
unemployment. For companies to survive the impact of the effects of recession,
measures must be taken to sustain profits for survival. This will be in conjunction
with the actions being taken by the government. In order to combat recession and
inflation, governments do intervene through the application of several measures
such as; adopting expansionary macroeconomic policies by increasing money
supply, increasing government spending and decreasing taxation. The effects of
recession can be devastating to companies if they fail to carry out strategic planning
to sustain themselves, even though such steps might be unethical when it comes to
termination of appointments. Storey (1995), defined Human Resource Management
as a ‘distinctive approach to employment management, one which seeks to achieve
competitive advantage through the strategic deployment of a highly committed and
capable workforce, using an integrated array of cultural, structural and personnel
techniques.’ On the other hand, as the companies aspire to survive the recession,
perhaps through downsizing, the effects of their actions are devastating to families.
As recorded by ‘Relate,’ the marriage guidance charity, its annual report showed
sharp increase in unemployment, redundancies, home repossessions and mounting
debts making devastating impact on family life. Over the twelve months it recorded
15 percent increase on counsellors workload, 70,000 new cases, and almost
400,000 interviews were given to people seeking for help. Research showed that
low-skilled, low-educated workers and young people have been most vulnerable to
unemployment downturn. In business as productivity falls in the early stages of the
recession, the weaker companies will be forced to close. There is also significant
social effects especially on such families that depend on wages and salaries since
they depend wholly on fixed income or welfare benefits. The loss of their jobs make
negative impact on the stability and the well-being of the families, including their
health. It was recorded that it took five years for unemployment to fall back to its
original levels, after the 1980s and 1990s recession in Britain. Though there has
been no agreed global definition, but International Monetary Fund classified global
recessions as when global per capita growth was zero or negative. In order to avoid
total disaster, companies will have to take necessary actions to avoid the economy
slipping into depression. It was recorded that the suspension of competition policy in
the United States in the 1930s added to the extension of the Great Depression.
There is no doubt that businesses and people have learned something from that
experience, and businesses are ready to take adequate steps to stop it from
reoccurring.

American psychologists and behaviourists working in the late 1940s and 1950s,
realised that the adoption of participative methods to small groups led to attitude
change, with clear evidence on higher performance and greater commitment.
Abraham Maslow stood for the inherent potential of individuals to pursue ‘self
actualisation.’ Organisation theorists such as Chris Argyris and Rensis Likert
recognised individual organisational involvement as a motivating factor that
engenders greater performance. There are also new theories of leadership and
change which argued that different styles of leadership and change would result in
different reactions hence ‘Theory Y’ and ‘Theory X’ which stand for ‘Soft’ and ‘Hard’
approach in Human Resource Management. According to Schramm (2006), to
promote competitive advantage, a key Human Resource role is to identify, design
and implement strategic training and development initiatives. There is the need for
continuous training and development programmes within companies due to several
factors. Investment in human resources is very vital for the survival of companies
due to the nature of the current global market. Opportunities for training and
development within companies will ensure the retention of talents, intellectual capital
and knowledge management. Becker (1964), argued that “Human Capital” is a
means of production whereby additional investment yields additional output.
Becker’s book titled “Human Capital” served as a standard reference book for many
years. Other important factors are globalization and the high rate of competition for
talents and technology. All these require companies to invest in human capital as
asset. A current survey carried out by Learning and Skills Council (2001), confirms
that the British force prefers long term ambition rather than quick attitude. People
chose to improve their skills and knowledge in their existing jobs rather than for new
ones. The research called on the manufacturing companies to ‘train to retain.’
Johnson (2009), founder of CEO Strategist, said, “If you expect your employees to
be able to maximise their effectiveness and reach their potential, you need to provide
them with the appropriate skills and knowledge to be able to successfully accomplish
the goal.” He also argued that while training budgets seem to be the first to be
slashed during economic uncertainty, this may not be the best option for employers,
because employees should be viewed as ‘learning customer’ that brings personal
preferences and motivation to the workplace. Therefore, learning companies ought
to promote such environments that encourage growth for individual capability and
experience, in order to increase business performance and stability. According to
Imhoiz (2007), “Productivity at the end of the day has a multiplier effect. If you hire
good people and give them good training, and combine these with the right
processes, it makes a difference.” Even in the manufacturing industry the increasing
complexity and advancement of machinery advocates for the need for well-trained
and flexible workforce in order to compete effectively in the global economic market.
Covey (2003), in his book ‘Investing in people’ identified people as the greatest asset
in any organisation – private, public, voluntary or academic. He added that training
and talent development shift people’s behaviour toward improved behaviour
including relationships. He argued that organisational success is not due to the
efficiency of organisational structure and management systems, rather it is based on
the effectiveness of the people. He believes that people are the highest value in
business because people produce everything else.

There are both values and spin offs in the whole process. According to Mayo
(1998), Training is concerned with know-how, and should be driven by a clearly
defined need that is about improving a component of capability. Development is a
longer-term investment in people. Development takes time to become effective but it
pays off at the long run. Notwithstanding, there is nothing permanent in
organisational behaviour and companies need to continually learn and adapt to
change. Cullen et al (1978), placed training as an investment. According to him,
money spent now to train someone will keep coming back in future years in the form
of greater efficiency in other ways, though it also requires recurring expenses to
maintain and continue training for good returns, which might be seen as an expense.
In order to tackle the present economic condition employees should earn their
training and development opportunities through performance, so that companies are
able to focus on other areas that are vital to their survival. Capps, in his contribution
paper ‘two fold paradigm’ in Human Resource Planning, stated that: Organisations
need to direct their limited Human Resource training investment effectively to best
develop their human capital. He argued that top evaluated jobs are strategically
important to the survival of the organisations and need to be current to the fast
changing events. Secondly, high-performing employees should receive
developmental opportunities as a reward, in order to encourage goal fulfilment for
both the employees and the organisations. “The primary goal is to invest in training
that benefits an employee’s career as well as the organisation.” On the other hand,
according to Davis, the vice president of ‘Development Dimensions Internal,’ the
present economy has forced organisations to focus more on profits and forgot about
the importance of also focusing on their employees. Stopping training and
development will put the companies at risk for high turnover, poor performance, and
low engagement. This will also cause employee stagnation and frustration which
could lead to migration of experienced employees to other companies. Also, the
tragic lack of few technical skills can lead to a vital mistake by an employee that can
cause the demise of the company.

There are other alternatives to training and development. Ryan (2009), emphasised
the need for employers to put their mentoring programmes on track and make it
count. There is no reason why mentoring should not be counted as part of training
and development and included as part work requirements; after all managers talk
about the work during mentoring sessions, she added. Another aspect is
understanding the next generation needs and addressing them, because they are
eager to learn and grow. She also stated the need for recognition for career
counselling and advice. Employees can be guided through these schemes because
they are very good ground for learning and acquiring new skills and knowledge.
Companies should also acknowledge these skills and attribute the success to the
skills’ providers in their performance review. She added that mentoring should not
be a cover-up for poor management, rather it should be seen as part of
organisational development. Another area of interest that can serve the purpose of
training and development is in-house training provision. Anderson (2009), recorded
sharp fall in outsourcing training. He stated that “The challenging economy is
probably a significant component of this shift, as internal training resources are being
pushed to a higher utilization in order to curtain spending on external providers. This
is a significant shift as part of the efforts of companies to cut costs in order to remain
competitive. Another aspect is self-assessment of skills shortage and development,
and making individual efforts to fill the gap by undergoing a part time training or e-
learning programme.

On the whole, the impact of recession goes beyond employees training and
development. Drastic measures such as downsizing and redesigning are being
applied. According to Cameron et al. (1991), on certain conditions employee
involvement becomes necessary in order to ensure the organisational survival.
Strategic downsizing is viewed as rightsizing. The purpose is to reshape the
organisation by establishing core and peripheral employees. Two types of workers
will emerge – core workers with guaranteed job security and flexible workforce
thereby redesigning the ‘flatter structures’ to ‘flexible structures.’ Thompson and
Davison (1995), expressed the implications as follows: Breaking bureaucracies into
smaller units. Disaggregate to increase ‘flexibility.’ Rational strategic planning to
deal with unpredictable environments. Downsizing to the essential core by removing
layers of middle management. Kanter (1989), referred to these as “disorganisation
with tactical planning.”

The actions of British Telecom to its workforce since 1992 demonstrates the above
paradigm. BT applied the method of downsizing on its workforce between 1992 to
1996, though it was a voluntary downsizing exercise but the scale was enormous.
According Doherty et al (1996), between July 1992 to March 1996, BT cut its
workforce from 244,000 in 1989 to 120,000 at a cost of £24 billion. This made an
enormous impact on the lives of those who lost their jobs as well as the survivors.
The survivors expressed decrease in motivation and lack of confidence in the
company. Their loyalty to the company diminished as job insecurity increased.
Again, in May 2009, BT announced its plan to lay off 15,000 employees after a loss
of £134 million. Donoghue (2009), in his BBC report, stated that BT suspended its
graduate recruitment activity in light of the current economic environment and
headcount pressures. Though on 24th August 2009, David Woods, announced that
BT will resume recruitment in due course. Woods (2009), stated that, as part of its
drive for cost-cutting, BT offers its staff a year sabbatical leave with quarter of their
annual salary upfront. All these actions are strategically oriented to cut costs.

In conclusion, the essay recognised that the principle goal of any company is
survival. It is obvious that companies are being faced with unforeseen threats in the
global market behaviour more than ever. BT’s decisions for downsizing, suspension
of graduate recruitment, sabbatical leave and flexibility work scheme, have the
interest of both the company and its employees at heart, but it has to survive. Of
course BT was not alone in its actions, several other companies are taking the same
measures. Most companies could go out of business if strategic measures are not
taken on time, and the impact will be detrimental to the national economy. BT in its
fight for survival also applied the flexible working option which has enabled up to
4,000 employees since 1980s, Higginbottom (2001). This option benefited several
workers on part time and contract schemes. The present economic situation has put
demand on companies to prioritise their needs in order of preference. In an answer
to the above question, the primary goal for any company should be to embark on the
training that will benefit both the company and its employees. On the other hand, as
stated above, there are several other approaches to training and development,
including valuable methods of effective service delivery that should be encouraged.
Most importantly, any preferred option by companies should be based on ‘cost
effectiveness’ and ‘cost benefits’ in order to prioritise needs.

References:

1. Anderson, C. Business Intelligence, September 2009, page 54.

2. Atkinson, J. S, and Meager, N. (1985). Changing Patterns, London:
National Economic Development Office.
3. Adrain Hamilton, The Independent, Tuesday 13 October 1992.
4. Becker, G.S. (1964) 3rd Edition, Human Capital: A Theoretical and
Empirical Analysis. University of Chicago Press.
5. Capps, C. J, Human Resource Planning, 28.1 page 21.
6. Covey, S. R. Investing In People, Nursing Management Vol. 9 No.10
March 2003.
7. Cullen J. G, et al, Training and Development Journal January 1978.
8. Donoghue, A. (2009) e.Week Europe UK.
9. Grieves, J. (2003) Strategic Human Resource Development. SAGE
Publications.
10. Higginbottom, K. People Management, 27th September 2001.
11. Http://en.wikipedia.org/wikipedia.org/wiki/Recession, 2nd March 2010.
12. Imhoizi, D. Coioisight/10/2009.
13. Johnson, R. Supply House Times, July 2009.
14. Kenneth, R. International Monetary Fund, Financial Times, 5 April 2002.
15. Mayo, A. Creating A Training and Development Strategy. Institute of
Personnel and Development 1998.
16. Mckeown, ASTD Press, December 2009, page 5.
17. O’Toole, J, and Lawler, E. III (2006). The New American Workplace, New
York: Palgrave MacMillan.
18. Ryan, R. HRFocus, October 2009 page 9.
19. Schramm, J. SHRAM Workplace Forecast. Alexandra, VA: Society for
Human Resource Management 2006.
20. Schramm, J. SHRAM Workplace Forecast. Alexandra, VA: Society for
Human Resource Management 2006.
21. Storey, J. (1992), Development In The Management of Human
Resources, Oxford: Blackwell.
22. Vaitilingam, R. Economic and Social Research Council, 17 September
2009.
23. Vaitilingam, R. Economic and Social Research Council, 17 September
2009.
24. Woods, D. HRVISION, 27 August 2009.