Human Resource Management Report: Analyzing Problems at Arabco Company

This report analyzes the human resource management (HRM) issues at Arabco Company, focusing on the problems caused by changes in HR policies. The primary issue is excessive employee turnover resulting from a new HR manager's decision to lower employee salaries. This led to decreased employee commitment, reduced product quality, and a decline in consumer loyalty. The report critically examines the impact of these policies, including the loss of experienced employees and managers. It identifies key functions of the HR department, emphasizing the need to increase employee salaries, provide incentives, and implement a reward structure to retain skilled employees. The report stresses the importance of recruiting skilled candidates with competitive salaries and providing effective training to improve product quality and regain market value. The analysis highlights the negative consequences of the implemented HR strategies and suggests strategies to improve employee commitment and overall company performance.

Running head: HUMAN RESOURCE MANAEMENT
Human Resource Management
Name of the Student
Name of the University
Author note

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1. According to the above scenario, analyze the causes of the problems in the Arabco
Company.
The issue faced by Arbaco Company is excessive employee turnover due to various
reasons. The chief reason behind excessive employee attrition of the mentioned company
includes change in the HR policy by the newly appointed HR manager, Karim Imam. In order to
enhance the total revenue of the company by decreasing the cost, Karim lowered the salary of the
employees. As a result, a good number of employees were leaving the organization. In order to
deal with this turnover, the new HR, Karim Imam, started to appoint employees who were ready
provide service within the low salary range. Due to lower salary, the commitment of the
employees decreased and hence the quality of the products of the company also decreased.
Moreover, the employee turnover rate gradually increased. All this imposed a highly negative
impact on the overall revenue of the company.
The chief reason behind the decrement in the commitment of the employees is the
lowering of salary by the new HR. It is unethical to make an employee invest the same amount
of effort while his or her salary has been reduced (Cascio, 2018). Majority of the employees felt
that the sudden salary reduction policy of the new HR unfair. This, in turn, reduced the
commitment of the employees. Reduction in commitment resulted in high employee turnover.
Since the salary of the managers was also reduced, 5 project managers had also resigned from
the company. Since managers play a vital role in maintaining the productivity and quality of the
company, resignation of the manager further deteriorated the quality of the manufactured
product. This, in turn, reduced the consumer loyalty of Arbaco Company to a great extent.
2. Do you think the new policies set up by the HR manager were helpful for the
Company?

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The new HR manager of the company had lowered the salary of all the employees in
order to reduce the overall expense of the company. The chief target of the HR was to enhance
the profit of the company by the end of the year by reducing the cost. While implementing this
policy, he was aware of the fact that several employees may resign due to reduction of the salary.
In order to deal with the massive amount of employee turnover, he had implemented the strategy
of hiring new employees who were ready to work at a very low incentive. Thus the strategy of
the new HR manager was to maintain the productivity of the employees, the quality of the
products along with reducing the production cost. All these steps were taken by Karim, for the
benefit of Arbaco Company.
However, the HR of the company was unable to predict the negative aspects of lowering
the salary of the employees. Reduced salary decreased the commitment of the employees
towards the organization. As a result of the quality of their work also got reduced. Several
complaints regarding the quality of the product delivered to the consumers were filed. Thus
reduced quality resulted in the decrement of consumer loyalty of the company. Besides that,
since the salary of the managers was also lowered, 5 managers left the organization. Considering
the fact that all the five managers played a major role in managing the business of the mentioned
organization, the absence of them further deteriorated the condition of the organization. The third
major issue faced by the organization due to the implementation of the new policies was
excessive employee attrition. Since a lot of employees were leaving the organization, the above
mentioned company was suffering from the loss of experienced and highly skilled employees.
This, in turn, reduced the competitive advantage of the company in the global market. Moreover,
recruitment of new employees was both times consuming and expensive. Besides that, they
lacked the skill and talent of the experienced employees who had left this organization. Thus it

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can be said that the new policy imposed a highly negative impact on the overall revenue of the
company. Due to this policy, the company loosed consumer loyalty along with experienced
employees and managers. Thus the new policy implement by the HR was not at all helpful for
the company.
3. Identify the key functions of the HR department to be carried out? What role
should
the HR manager plays especially in recruiting and selection of employees in the
organization?
Considering the fact that Arbaco Company has already gone through a major loss of
market value due to decrement of consumer loyalty, at this point of time, the chief goal of the
HR department of the mentioned company should be to enhance the quality of their product in
order to gain back the consumer loyalty. In order to enhance the quality of the product, it is very
crucial to enhance the commitment of the employees of the organization (Kumari, 2012). Hence
the first step taken by the HR department of the company is to increase the salary of the
employees. Apart from that, the HR department should also provide various incentives and leave
facilities to the staffs, in order to ensure a perfect work life balance of the employees. In order to
encourage and retain the skilled employees, a reward structure should be implemented. Meetings
should be conducted on weekly basis to assess if any types of dissatisfaction are taking place
among the employees or not.
Apart from that, the quality of the products should be monitored on regular basis to
ensure high quality products are being delivered to the consumers. Unlike the policy is taken by
him initially, the HR manager should select and recruit employees on the basis of their skills. In

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order to recruit highly skilled and efficient candidates, lucrative salary should be offered. Newly
recruited employees should be given effective training in order to enhance their capacity to
deliver quality performance along with enhanced productivity (Berman et al., 2012). The training
process should be monitored regularly to find out issues related to the training session if any.
Thus, by implementing the above mentioned strategies, Arbaco Company will be able to regain
its market value in the global market.

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Reference list
Kumari, N. (2012). A Study of the Recruitment and Selection process: SMC Global. Industrial
Engineering Letters, 2(1), 34-43.
Berman, E. M., Bowman, J. S., West, J. P., & Van Wart, M. R. (2012). Human resource
management in public service: Paradoxes, processes, and problems. Sage, 12-35
Cascio, W. (2018). Managing human resources. McGraw-Hill Education, 56-59