Challenges and Solutions in Contemporary Business Environment
Verified
Added on 2023/01/16
|12
|3529
|41
AI Summary
This report explores the challenges faced by contemporary business organizations in the current business environment. It focuses on the case of CSG Ltd and provides recommendations for improvement in profitability and leadership alignment.
Contribute Materials
Your contribution can guide someone’s learning journey. Share your
documents today.
environment of a contemporary business Addressing Challenges MAY 3, 2019
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
Executive Summary This report explores the case of CSG ltd company that has been previously evaluated in the part 1 using a number of strategic theories such as SWOT analysis, PESTLE analysis and VRIO analysis. The analyses had revealed two key challenges that company are facing as the causes behind the profitability decline and these are human resource challenges and lack of leadershipcommitment.ThereportexploredtheoriesrelatedtoleadershipandHRM practices to identify those appropriate and thus, can be applied to come up with a solution. The report explores the case of CSG and building upon the analysis and application of theories makes recommendations for improvement. 1
Contents Introduction...........................................................................................................................................3 Problem Statement and Research Question...........................................................................................3 Literature Review..................................................................................................................................3 Industry and Company Research...........................................................................................................6 Management Challenges & Solutions....................................................................................................8 Conclusions & Recommendations.........................................................................................................8 References...........................................................................................................................................10 2
Introduction Contemporary business organizations face many business challenges because of the complex nature of their businesses. Their internal and external business environment as when explored can reveal these complexities and the challenges they pose for an organization. The part one of the study involved exploration of the business environment of CSG Ltd to help gain understanding of their weaknesses. Currently, the company is expanding its customer base but is unable to deal with the change and facing decline in their profitability because of certain challenges that would be identified in the analyses and recommendations would be provided. Problem Statement and Research Question The company had a reduction in its profitability as revealed from the case and a major cause of the same was changes in the leadership roles and responsibilities that created a gap in a cohesive vision. Also, the people at higher levels in the organization were not found to be fully committed. The workforce still kept on increasing to meet the market demands with difficultiesfacedincoordinationbecauseofdiversitiesoftheirneeds,culturesand expectations. In order to come up with the solution to these major problems faced by the company, the research would attempt to answer a few research questions that include (Anyangwe, 2017): What are specific challenges that are faced by CSG due to which its profitability is on decline? What are the weaknesses of the company and how they can be overcome? What opportunities of creating a competitive advantage do company has? What strategies can the company use for leadership alignment? What strategies company can use to build coordination in its teams? Literature Review Theories of HRM can be divided into three categories that include descriptive, normative, and strategic theories. Strategic theories believe in the influences of both the internal and external environment of an organization on HR functions and thus, suggest formulation of strategies to manage changes in the environment. Assimilation of the experiences of the environmentscan helpan organizationfigureout thechallengesfacedand develop 3
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
contingencies to tackle them. The Harvard analytical framework for HRM is an example of a strategic theory. The analytical framework of human resource management system is defined by Harvard which identified stakeholder interests and situational factors as the influencers that assist in creation of a a human resource policy. Appropriate policies bring respective outcomes that have long-term consequences on an organisation. The workforce characteristics and interests determine the ideal HR policy that a company must have. An HR policy would state the flow of communication, employee reward system, work systems, choices and influences on employees(Luthra & Dahiya, 2015). With the use ofappropriate HRM strategies, an organization can achieve competence, congruence, commitment and cost effectiveness from its human resources(Miller& Turner, 2010).Key qualitiesor characteristicsof this framework are stakeholder perspective, mutual cooperation, commitment, and employee influence. The framework suggests that line managers should take responsibility for aligning competitive strategies of an organization to achieve strategic goals and should commit to ensure that the workforce follows the policies(Agyepong, 2010). Another HRM model called matching model identifies five major functions of HR that include selection, performance, appraisal, rewards, and development. As per this model, the HRM processes are dependent on programs and procedures used by an organization. This model is an example of a descriptive theory of HRM as it identifies HRM aspects as ingredients of the organization that are aimed to achieve a common objective. Normative theories take more of a prescriptive approach which explores principles and perspectives and suggest policies that are mutually promoted by people in the organization. These theories follow ethical principles of attitude and behaviour that people should have in order to have a successful human resource management practice. The theories can be universal, configurational or contingency. The universal approach involves identification of best practices that are proven to be successful globally and thus are seen as effective. The universal theories also define standard metrics for measuring organisational performance such as market share and profits. A number of best practices have been identified byPfeffer including employment security, high wages, selective recruitment, employee empowerment, employee ownership, incentives, information sharing, skill development, cross-functional utilization, , wage compression and so on. These practices can be used by any organization 4
and they do not carry the biases of culture, behaviour or environment and thus, are seen as universal principles(McMahon, 2013). However, not all companies are same nor do they operate in the same environment. The contingency theory recognizes this fact and underlines the differences between companies in terms of their size, age, technology adoption, industry, location, and ownership. The theory believes in the existence of a complex interaction that happens between different human resource variables that can influence its performance. Contingency theory suggests creation of a best fit between the organizational capabilities and the environment it operates in. Any circumstantial challenges faced by an organization are thus considered while building a contingency plan to deal with the changes. A configuration theory integrates multiple perspectives coming from different theories to gain a combined intelligence which can help an organization achieve a greater level of performance in its operations. Thus, it combines the practices and perspectives of classical, behavioural, scientific, and contingency theories. An example of such an integrated theory is called Vroom’s theory which describes motivation as the outcome of combination of valence of rewards, performance expectancy, and instrumentality of receiving award. However, this theory failed to have organizational considerations. Another integrated theory by Lawler's states that the motivation in people can be achieved at three different levels that include individual, interactions, and psychological. At individual level, a person motivates oneself and at the interaction level, the role of the person within the organization creates an influence on the person. Psychological level of influence is achieved when an individual has multiple interactions with oneself and the organizational environment(FLOCY, 2017). Human resource management models can be both hard and soft. Hard models identify tight controlandeconomicvalueofworkforcewhilesoftmodelsfocusoncohesionand commitment from employees. Hard model takes more traditional view and sees humans as the economic resources who can be controlled through rules, regulations, and disciplinary actions. On the contrary, the soft model emphasises on motivation and inspiration that can create valued assets from the workforce and help an organization achieve a competitive advantage through the practice of high performance, high commitment, high skills, and adaptability in the human resource(Ihuah., 2014). Key features of a soft HRM model are flexibility, team building, and culture management. If this theory has to be taken as the base for the development of the HR policies then the employees would be expected to work in a 5
self-guided environment and there would not be any major supervisory control over them (Percy, 2018). A resource based theory defined by Armstrong recognize the role of the resources in creating strategic capabilities for an organization. Through proper learning and development of the workforce, companies can create strong competitive advantages which is a sustained use practicesandstrategiesthatarenoteasytoimitateforcompetitionandthus,gives sustainability(GLA, 2017). A systems theory is another integrated theory which believes in existence of sub-systems within an organization and the relationships between them. A system can be open allowing companies to interact with its external environment or closed in which they are not. Some key ingredients of this system can be identified for an organization such as goals, interactions, processes and communications. This theory can be very useful in understanding and working on challenges related to structure, relationships, and interdependence between people. HR discipline can also work on the principles of ethics such as respect for people, procedural fairness, and transparency. A work ethic system can be designed accordingly and manners or qualities of behaviour can be defined for the workforce. Stakeholder approach is another way to see HRM practice in which an organization is seen as a community that consists of a combinationofmultipleinterestsofstakeholderssuchasemployees,customers, shareholders, and authorities. Effective cooperation and coordination can be achieved through appropriate use of communication methods. Industry and Company Research In the previous part of the research, a number of tools and techniques were used to analyse the case of CSG that helped discover key causes and patterns of problems and challenges. The SWOT analysis revealed some weaknesses of the company such as culturally diverse staff, limited market presence, and lower brand identity. With VRIO analysis conducted on its resources, it was found that the company had a competitive advantage in the areas of technology and brand value. The analyses had revealed that workforce diversity and business environment changes are two major challenges that the company needs to work on. The analyses had also revealed some opportunities for improvement such as adoption of ethical work practices, enhancing sustainability of the business, stakeholder involvement, and leadership alignment(Copeland, 2014). 6
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
While there are many HRM theories that can guide the actions and policies for the company to resolve its challenges of workforce alignment, the company is also facing a major difficulty in achieving alignment and commitment from leadership positions. Thus, it is important to also explore the leadership theories that can help gain this alignment to enhance organizational performance(Lloyd Walker & Walker, 2011). There can be three types of leaders including authoritative, constructive and situational as per common theories of leadership. Authoritative leaders are control oriented and take decisions on their own which are then propagated as the agenda to follow in the workforce. This type of leadership was used by traditional organizations that have hierarchical structures carry strong position.This leadership idea works on fear and thus, is not motivational which is a dominant weaknessofthisstyle.Constructiveleadersaresupportiveandtakeviewsoftheir subordinates when taking decisions.These leaders are only appropriate for managing a workforce that is highly goal oriented and self-directed. However, no single form of leadership would suffice the needs of all kinds of human resources and thus, a situational leadership can be used which provides flexibility to the leader for choosing an appropriate style of leadership depending on the situation(Andersson & Thylin, 2009). Situational leadership has given rise to many flexible theories of leadership that identify different ways human resource and organization can be managed by leaders based on different situations and environments of the organization(Burke & Barron, 2012). As per Jung’s theory, a leadership can be defined as a combination of four logics that include production, administration, development, and integration. Different leadership styles can be assumed to achieve excellence in each of these areas between a team of leaders in an organization.Anorganizationcanhaveateamofrevitalizers,creators,productivity managers, and growth managers. Revitalizers believe in shared participation and cohesion. These leaders are understanding of people and are sensitive to their needs which makes them supportiveandhavethecapabilitytomotivatepeople.Theyhavegoodaptitudefor negotiation, conceptual abilities, and building consensus. This leadership position is most effective in a stable environment which is subjected to change(C, 2009). Creators or builders rely on innovation and creativity. They are fast movers who take decisions quickly and are guided by the shared vision of an organization. It is most appropriate leadership style when an organization is going through turbulent times and involves high technical knowledge in the leader. Productivity managers believe in analysis 7
and establishing of control. Teams handled by such leaders are logical and analytical. Thus, one needs to have the aptitude for analytics and logic. This strategy is often used in organizations that are mature and have pressured margins that have to be improved. Typical strategies that a leader would use to manage challenges at this stage include consolidation and fine tuning of strategies. Growth managers are the drivers of organizational objectives who have high knack for marketing and sales. These leaders can help company settle down in a highly competitive environment and are most influential when the company is focused on increasing the market share and getting more customers(Kriger & Zhovtobryukh, 2016). Management Challenges & Solutions There are two key challenges that are faced by the organization and these include lack of human resource productivity that is also affecting the profitability of the organization and lack of commitment and alignment from the leaders. Various theories that were discussed on HRM and on leadership styles could helpidentify solutions to these problems for the company.The exploration of HRM theories revealed that there can be certain best practices that can be used by the organization and can be made as the standard practices include in the HRM policies that serve as the guidelines for the workforce to follow them for performance. Soft theories of HRM suggest that it is important that human resources are seen as assets that need motivation and training instead of treating them as economic units that are used to generate profits.Benefits of this theory are that it allows a leader to take a more supportive role and a self-guided environment can be created for the employees to enhance their motivation and remain ethical.The company can also have defined HRM policies that are targeted to achieve high levels of productivity and motivation through the application of best practices, ethical principles and strategies for motivation. The company would not succeed in achieving its strategic goals without the support from the senior management that serves the organization as leaders and thus, it is important to have a proper alignment from leaders. As per the Jung’s theory, different leadership styles could be identified that can fit into specific situations.The strength of this tool is that it allows a leader to be flexible and choose appropriate style as per the demand of the workforce. As the company in consideration is already mature and is going through the major phase of change and is struggling to gain more revenues through enhancement of profits and increase in the market share, the company can have leadership profiles like productivity managers and 8
growth managers.Productivity managers would be able to help the company improve its profits while growth managers would help it gain more market share. Conclusions & Recommendations This research explored the case of CSG Ltd which is facing a decline in the profitability and sales of the organization. A number of analysis models were used to identify challenges and causes of problems in the company. It was found that the major problems faced by companies were due to lack of human resource productivity and lack of leadership commitment and alignment(Wick, 2017). A number of human resource and leadership theories were then explored to understand the intricacies of such issues and toidentify solutions. Two key strategy sets were identified that were focused on improvement human resource assets and leadershipcapabilitiesiontheorganization.Basedonthisunderstanding,certain recommendations can be made for the organisation that would help it in achieving its strategic objectives and resolve problems it is currently facing(Kolzow, 2014). These include: A situational leadership can be used by the senior management of the company in which some people would be acting as productivity managers while others could becomegrowthdriverssothatmultipleobjectivesoftheorganizationcanbe achieved. The workforcecan be mademoreactiveand self-directedthrough inculcating principles and providing them proper training on processes and systems so that they can take their own decisions The company can formulate a sound HR policy that is supportive to the needs of employees as the stakeholders of the company and also takes care of the objectives of the organization that need to be achieved. 9
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
References Agyepong, S. A., 2010.The applicability of the Harvard and Warwick models in the development of human resource management policies of large construction companies in Ghana,s.l.: Loughborough University. Andersson, M. & Thylin, K., 2009.Leadership in situations of uncertainty.s.l.:University of Gothenburg. Anyangwe, X., 2017.STRATEGIC HUMAN RESOURCE MANAGEMENT:A Cross-Cultural Managerial Approach,s.l.: CENTRIA UNIVERSITY OF APPLIED SCIENCES. Burke, R. & Barron, S., 2012.Leadership Theories and Styles.s.l., Wileys. Copeland, M. K., 2014.The Emerging Significance of Values Based Leadership: A Literature Review,s.l.: St. John Fisher College. C, S., 2009.Human Resource Management Functions: Managerial, Operative and Advisory Function,s.l.: Your Article Library. FLOCY, J., 2017.Responsible leadership: A behavioural perspective,s.l.: Singapore Management University. GLA, 2017.Professional Development Plan: SET YOUR DIRECTION,s.l.: Global Leadership Acceleration. Ihuah., P. W., 2014.A review of soft and hard approaches of human resource management and the success of real estate development in Nigeria,Ihuah, PW: Salford University. Kolzow, D. R., 2014.Leading from Within: Building Organizational Leadership Capacity. s.l.:IED. Kriger, M. & Zhovtobryukh, Y., 2016.Strategic Leadership for Turbulent Times. s.l.:Springer. Lloyd Walker, B. & Walker, D., 2011. Authentic Leadership for 21st Century Project Delivery.International Journal of Project Management,29(4), pp. 383-395. Luthra, A. & Dahiya, R., 2015. Effective Leadership is all About Communicating Effectively: Connecting Leadership and Communication.IJMBS,5(3), pp. 43-48. 10
McMahon, G., 2013.Performance Management: Chapter 7 in Human Resource Management,s.l.: Dublin Institute of Technology. Miller, R. & Turner, R., 2010. Leadership Competency Profiles of Success Project Managers. International Journal of Project Management,28(5), pp. 437-448. Percy, S., 2018.The Top Three Business Priorities For Leaders Over The Next Three Years. [Online] Available at:https://www.forbes.com/sites/sallypercy/2018/11/27/the-top-three-business- priorities-for-leaders-over-the-next-three-years/#34a75d304ec9 [Accessed 9 February 2019]. Wick, D. A., 2017.Leadership Harmony – 5 Dysfunctions of a Team – Conflict Resolution Model,s.l.: Positioning Systems. 11