Human resource management

Part 1 Arup Packagin" rel="nofollow">ing Limited is a large manufacturer of packagin" rel="nofollow">ing solutions. Arup’s products in" rel="nofollow">include glass, alumin" rel="nofollow">inium, plastic and paper based packagin" rel="nofollow">ing solutions. Arup main" rel="nofollow">inly operates in" rel="nofollow">in Australia and comprises of four busin" rel="nofollow">iness units. The busin" rel="nofollow">iness units are organised based on the material used in" rel="nofollow">in packagin" rel="nofollow">ing solutions: glass packagin" rel="nofollow">ing, alumin" rel="nofollow">inium packagin" rel="nofollow">ing, plastic packagin" rel="nofollow">ing and paper packagin" rel="nofollow">ing. Arup is an unlisted public company; this means it is a company that has issued shares to the public but is not listed on the Australian Securities Exchange. In 2016, Arup celebrated 50 years. The company employs around 800 people across its four manufacturin" rel="nofollow">ing plants, distribution centres, sales offices and corporate office. The sales offices and distribution centres are located in" rel="nofollow">in Sydney, Melbourne, Brisbane and Perth. Arup recently opened a sales office in" rel="nofollow">in Paris. The four manufacturin" rel="nofollow">ing plants and the corporate office are all located in" rel="nofollow">in close proximity to each other in" rel="nofollow">in Newcastle in" rel="nofollow">in New South Wales (NSW). Newcastle is located in" rel="nofollow">in the Hunter region of NSW, about 160 kilometres north of Sydney. Arup is proud to be one of the few manufacturers that contin" rel="nofollow">inues to exclusively manufacture in" rel="nofollow">in Australia. Arup believes that its in" rel="nofollow">investments in" rel="nofollow">in advanced technology have resulted in" rel="nofollow">in consistently high quality packagin" rel="nofollow">ing solutions. The management team and the Board of Directors see product quality as Arup’s competitive advantage, in" rel="nofollow">insulatin" rel="nofollow">ing it again" rel="nofollow">inst competition from cheaper production options overseas. Arup’s core values are teamwork, in" rel="nofollow">integrity, excellence and in" rel="nofollow">innovation. Out of Arup’s 800 employees, about 700 are located in" rel="nofollow">in its manufacturin" rel="nofollow">ing plants and corporate office in" rel="nofollow">in Newcastle. Manufacturin" rel="nofollow">ing employees are represented by the Australian Manufacturin" rel="nofollow">ing Workers' Union. This union has generally had a harmonious relationship with Arup management. Sin" rel="nofollow">ince it started as a plant with just 100 employees, Arup has been a strong part of the Newcastle community. It is one of the largest employers in" rel="nofollow">in the region and contin" rel="nofollow">inues to attract local employees. Sin" rel="nofollow">ince its in" rel="nofollow">inception, Arup has concentrated on high quality packagin" rel="nofollow">ing produced in" rel="nofollow">in large quantities. Arup’s customers are some of the largest food and beverage manufacturers in" rel="nofollow">in Australia. Arup has found that these customers have stable product lin" rel="nofollow">ines and their packagin" rel="nofollow">ing solution requirements remain" rel="nofollow">in mostly stable. Often the biggest changes requested by these customers are modification to existin" rel="nofollow">ing packagin" rel="nofollow">ing (e.g., larger size alumin" rel="nofollow">inium can, different coloured beverage bottle). Only needin" rel="nofollow">ing to make min" rel="nofollow">inor product changes has meant Arup has been able to main" rel="nofollow">intain" rel="nofollow">in high levels of productivity. While orders from these customers in" rel="nofollow">initially grew rapidly, in" rel="nofollow">in the last 5 years the growth has plateaued. In response, Arup’s Board of Directors in" rel="nofollow">initiated a strategic review and a risk analysis of Arup in" rel="nofollow">in 2015. After this exercise, the Board of Directors and the top management team identified their dependence on a few large customers in" rel="nofollow">in Australia as a significant risk to Arup’s future. The Board members and the top management team decided to look at expandin" rel="nofollow">ing Arup’s customer base while main" rel="nofollow">intain" rel="nofollow">inin" rel="nofollow">ing the company’s existin" rel="nofollow">ing clients. Page 2 of 11 @S Perera_FHRM In 2015, Annie Lee, CEO sin" rel="nofollow">ince 1999, retired and Franco Weller join" rel="nofollow">ined as the new CEO of Arup. Franco was given a mandate to take the expansion in" rel="nofollow">initiative forward. The Board of Directors encouraged the hirin" rel="nofollow">ing of a senior manager to handle strategy and busin" rel="nofollow">iness development. This position reports directly to the CEO. Brenda Petersen started as Head of Strategy and Busin" rel="nofollow">iness Development in" rel="nofollow">in April 2016. Sin" rel="nofollow">ince join" rel="nofollow">inin" rel="nofollow">ing Arup, Brenda has been workin" rel="nofollow">ing tirelessly to attract new customers outside Australia. Brenda’s most promisin" rel="nofollow">ing leads have come from Europe. Most potential clients were impressed by Arup’s high quality products. After months of hard work, Brenda has been able to secure packagin" rel="nofollow">ing orders from a group of clients in" rel="nofollow">in France and Belgium. Orders will start in" rel="nofollow">in September 2017. Brenda is confident that this is the begin" rel="nofollow">innin" rel="nofollow">ing of a new market for Arup’s products. At Arup’s Board meetin" rel="nofollow">ing in" rel="nofollow">in February 2017, the CEO, Franco Weller, reported these new developments to the Board of Directors. The Chairman and the Board were pleased with this outcome and asked the top management team to develop plans as to how this in" rel="nofollow">initiative will be taken forward. The top management team (see figure 1 below) met early this week to discuss the implications of these new customers to Arup’s busin" rel="nofollow">iness strategy. At the management meetin" rel="nofollow">ing, Brenda presented the new strategic in" rel="nofollow">initiative. She emphasised the followin" rel="nofollow">ing factors in" rel="nofollow">in relation to the new customers:  The new customers require mostly paper and plastic packagin" rel="nofollow">ing products at this stage.  Unlike the customers in" rel="nofollow">in Australia, these European organisations are medium sized and offer a wide variety of products. This means the orders for packagin" rel="nofollow">ing products are likely to be smaller and more varied.  These customers usually change their packagin" rel="nofollow">ing designs at least once a year, so stable product designs that Arup is used to will need to change.  The European customers are offerin" rel="nofollow">ing a higher price than Australian customers. Even when freight costs are taken in" rel="nofollow">into consideration, Arup’s profit margin" rel="nofollow">ins are likely to be higher from these European customers compared to those in" rel="nofollow">in Australia. Brenda ended her presentation, emphasisin" rel="nofollow">ing that it was critical to ensure that the first orders in" rel="nofollow">in September 2017 are completed on time and to high standards. She said that the first orders should be seen as a first step towards attractin" rel="nofollow">ing more orders and potentially more European companies willin" rel="nofollow">ing to buy Arup’s products. The followin" rel="nofollow">ing is a transcript of the conversation that took place after Brenda’s presentation. Franco: I agree with Brenda. We need to make sure that those first orders are perfect. In my discussions with the Board of Directors, I requested permission to recruit a General Manager to be in" rel="nofollow">in charge of these European customers. This manager will report directly to me and will work closely with Brenda. The Board approved it. Franco showed the proposed organisational chart (see figure 2) to the top management team. Page 3 of 11 @S Perera_FHRM Jeremy: This might look like we are just addin" rel="nofollow">ing another manager to the top management team (refers to the proposed organisational chart), but this is a more significant change. For the last 50 years, we have worked with large organisations, our orders are large and design changes are very min" rel="nofollow">inor. Do you thin" rel="nofollow">ink we have the capability to handle the design requirements of these customers from Europe? Franco: I agree that expandin" rel="nofollow">ing our customer base in" rel="nofollow">into Europe is a significant strategic change for us. But it reduces our reliance on a few customers in" rel="nofollow">in this region. To answer your question, I don’t thin" rel="nofollow">ink we have the design capability at the moment. We need to develop that quickly in" rel="nofollow">in order to get to production in" rel="nofollow">in September. Gabrielle: From an HR perspective, this is a huge change. Our employees and managers are used to workin" rel="nofollow">ing on large orders and long production cycles. We have always praised and rewarded productivity. This kin" rel="nofollow">ind of change requires a complete min" rel="nofollow">indset transformation. Basically, we need to rethin" rel="nofollow">ink how we approach work. Brenda: Yes, but it will make us a more versatile producer of packagin" rel="nofollow">ing solutions. Remember, in" rel="nofollow">innovation is one of our core values, but our in" rel="nofollow">innovations have been small and in" rel="nofollow">incremental. It is time we really lived that value. Jose: You know that we are all committed to the expansion strategy. It is just that this is all happenin" rel="nofollow">ing quite fast and we don’t have a lot of time to get our act together. I suggest that we work in" rel="nofollow">in smaller groups to work out what this means for each of our functions. That way we can have a more concrete discussion when we meet again" rel="nofollow">in this Friday. Franco: You are right, Jose, that is a great idea. I will leave it up to you all to work out the smaller teams. Check with Brenda if you have any questions. Brenda will email in" rel="nofollow">information about the September 2017 orders to you. As usual, my door is open if you have any questions. We all need to work on this if we are to make this happen by this September. Gabrielle, General Manager, Human Resources, was the first to speak as the other managers walked out of the conference room. “Brenda, I really need your help to work out what employees we are goin" rel="nofollow">ing to need. Sin" rel="nofollow">ince the new customers will mostly use our paper and plastic products, it will be great if Manju and Chris can join" rel="nofollow">in us.” “I’ve got about 30 min" rel="nofollow">inutes”, said Chris. “Same here, I can spare about 30 min" rel="nofollow">inutes and then I have a production meetin" rel="nofollow">ing”, added Manju. Gabrielle, Brenda, Chris and Manju sat down. The followin" rel="nofollow">ing is a transcript of the conversation that took place among these four managers. Brenda: First and foremost, we need to recruit a General Manager to head the European Division. Someone who is familiar with both plastic and paper Page 4 of 11 @S Perera_FHRM production at the very least. Added bonus if they have experience in" rel="nofollow">in glass and alumin" rel="nofollow">inium packagin" rel="nofollow">ing. Gabrielle: Yes, and it is a new position. It will be like mixin" rel="nofollow">ing Chris’ and Manju’s jobs to create a new job. So I will need to do a job analysis first. Chris: Then we need some factory workers. Manju and I can give you an estimate of employee numbers you need. But do you realise that the factory workers we need to work in" rel="nofollow">in the Europe product lin" rel="nofollow">ine will need a different skill set to the factory workers that we have at the moment? Gabrielle: Yes, and we also need to work out whether it is actually a new position or very similar to the job description of our existin" rel="nofollow">ing factory workers. Chris: We haven’t looked at the job descriptions of our current factory workers for several years. Those might need updatin" rel="nofollow">ing as well. Manju: Most of our supervisors look at job descriptions as bureaucratic paper work. I am afraid sometimes they shift tasks around without considerin" rel="nofollow">ing the job descriptions or lettin" rel="nofollow">ing HR know. Gabrielle: This is not a good look. A few min" rel="nofollow">inor changes are fin" rel="nofollow">ine, but if there are significant changes we do need to update those job descriptions. Brenda: I thin" rel="nofollow">ink one other thin" rel="nofollow">ing we need to reflect on is whether we want to take the same specialisation approach with the factory workers who will be workin" rel="nofollow">ing in" rel="nofollow">in the European production lin" rel="nofollow">ine. Given our long production cycles, our factory workers are train" rel="nofollow">ined in" rel="nofollow">in one specialised task. They rarely see the big picture as to how it all come together as a fin" rel="nofollow">inal product. The specialisation approach helped main" rel="nofollow">intain" rel="nofollow">in our really high levels of productivity, but that approach may not work with the new venture. We may want to thin" rel="nofollow">ink about some cross-train" rel="nofollow">inin" rel="nofollow">ing and job rotation options. Chris: That is a great idea. Specialisation kept our productivity high but I thin" rel="nofollow">ink some of our workers found the work to be min" rel="nofollow">ind-numbin" rel="nofollow">ing after a while. Recently, Joe who has worked on the factory floor for 15 years told me that he could stack boxes in" rel="nofollow">in his sleep! Manju: Yes, but I thin" rel="nofollow">ink sometimes they take that as somethin" rel="nofollow">ing to be proud of. On our floor, the teams really see themselves as packin" rel="nofollow">ing team, raw material team etc. They take pride in" rel="nofollow">in their section’s output. That’s great, but the downside is that they get in" rel="nofollow">into all sorts of turf wars because they see themselves as their section and not as part of the whole paper packagin" rel="nofollow">ing team. Gabrielle: Another aspect we need to thin" rel="nofollow">ink about in" rel="nofollow">in terms of the new production lin" rel="nofollow">ine is how rigidly we want to control factory workers’ schedules. With long production cycles, at the moment the supervisor sets the tasks weeks ahead and there is little the factory workers can do to change anythin" rel="nofollow">ing. With shorter production cycles, we may need to let the team decide how to swap tasks around to get higher productivity. Chris: Yes, that is an in" rel="nofollow">interestin" rel="nofollow">ing poin" rel="nofollow">int, somethin" rel="nofollow">ing we need to reflect on. Page 5 of 11 @S Perera_FHRM Brenda: You know somethin" rel="nofollow">ing that I saw when I visited our potential customers and their food and beverage factories? They start each day with a group meetin" rel="nofollow">ing. The supervisor talks with each team. Tells them about their performance the previous day; for example, in" rel="nofollow">in production he tells them about the number of units completed and how many had to be thrown out as defects. Then they talk a little about that day’s performance goals. They also chat a little about social thin" rel="nofollow">ings related to employees. For example, someone’s partner is in" rel="nofollow">in hospital, someone’s child started kin" rel="nofollow">indergarten. All in" rel="nofollow">in all, it only takes about 5 min" rel="nofollow">inutes. I thin" rel="nofollow">ink it is somethin" rel="nofollow">ing we can thin" rel="nofollow">ink about adoptin" rel="nofollow">ing with this new production team. Manju: I have been thin" rel="nofollow">inkin" rel="nofollow">ing about somethin" rel="nofollow">ing like this for a while. I like that idea. Brenda: Before Franco started, when Annie was our CEO, we used to do these Town Hall meetin" rel="nofollow">ings every quarter with each production lin" rel="nofollow">ine. Annie would talk to glass packagin" rel="nofollow">ing one day and then the alumin" rel="nofollow">inium packagin" rel="nofollow">ing the next. It was a good way to lin" rel="nofollow">ink employees to the big picture and show why their work really matters. I don’t thin" rel="nofollow">ink we have done that sin" rel="nofollow">ince Franco started; we have all been busy with the new strategic plan. I am goin" rel="nofollow">ing to suggest to Franco that we need to restart that. Gabrielle: Great ideas, but I am concerned that if we adopt these new strategies only with the new production team, we will end up with two different factories under the same name; two different cultures really. That would divide our team. Teamwork is one of our core values. So, as much as possible, as we thin" rel="nofollow">ink of strategies for the European production lin" rel="nofollow">ine, we should see whether we can adopt these with our existin" rel="nofollow">ing factory workers. This “mornin" rel="nofollow">ing team catch-up” idea for example, I thin" rel="nofollow">ink if we do it, we should do it with the current employees too. Chris, Manju and Brenda nodded their heads in" rel="nofollow">in agreement. PART 2 Factory Workers for European Packagin" rel="nofollow">ing Section After their in" rel="nofollow">initial management meetin" rel="nofollow">ing to discuss the expansion of Arup’s customer base to in" rel="nofollow">include European customers, (see part 1 of the case study), the senior managers were encouraged to form small teams to work on changes required in" rel="nofollow">in different functions of the busin" rel="nofollow">iness. Chris (General Manager, Plastic Packagin" rel="nofollow">ing), Manju (General Manager, Paper Packagin" rel="nofollow">ing) and Gabrielle (General Manager, Human Resources) formed a small team to work on human resource activities related to the planned expansion. The followin" rel="nofollow">ing is an excerpt from a meetin" rel="nofollow">ing that took place among these three managers. Gabrielle: Thank you for bein" rel="nofollow">ing part of this team, Chris and Manju. I really appreciate your in" rel="nofollow">input. Your experience in" rel="nofollow">in production and your understandin" rel="nofollow">ing of the factory worker position will be of great value as we plan what HR needs to do to support this expansion. Page 6 of 11 @S Perera_FHRM Today, I would like to focus on two issues. First, recruitment and selection of factory workers for the European Packagin" rel="nofollow">ing section. Second, we need to brain" rel="nofollow">instorm ideas about how we set remuneration for these factory workers. Chris: No problem, Gabrielle. Manju and I ran the numbers and then we had a chat with Brenda. We thin" rel="nofollow">ink you are lookin" rel="nofollow">ing at about 150 factory workers for the new European Packagin" rel="nofollow">ing section. Gabrielle: That is goin" rel="nofollow">ing to be challengin" rel="nofollow">ing. Accordin" rel="nofollow">ing to Brenda, I need to have these employees in" rel="nofollow">in place at least by August. That gives me less than 5 months to recruit and place 150 factory workers. Manju: Yes, it is goin" rel="nofollow">ing to be challengin" rel="nofollow">ing. Have you given some thought to recruitment? Gabrielle: Yes, and I also looked at our current employee demographics and externally what the labour market is like. Here is a quick summary of our current factory worker demographics (See Tables1 and 2). Chris: This confirms what we see every day on the factory floor. Our factory workers are mostly men and more likely to be over 30 years of age. You said you looked at some labour market in" rel="nofollow">information, Gabrielle, anythin" rel="nofollow">ing in" rel="nofollow">interestin" rel="nofollow">ing there? Gabrielle: Yes, I looked at unemployment figures on the Australian Bureau of Statistics website. I narrowed them down to where we are, the Hunter region of New South Wales. Unemployment is lowest among men aged 30 to 55, our typical factory worker. It looks like that segment of the labour market is pretty saturated. But, somethin" rel="nofollow">ing that may be useful is that highest unemployment, about 20%, is among youth, those aged 18-24 who live in" rel="nofollow">in this region. I found a report that identified rural youth unemployment hotspots, and Hunter region is one of them. Manju: Well, there’s an opportunity for us. We should specifically target those 18-24 year olds in" rel="nofollow">in our recruitment efforts. The other group we can focus on is women. It will be good to in" rel="nofollow">increase the number of women among the factory workers. Gabrielle: I agree. However, in" rel="nofollow">in the past, these are two groups that we haven’t had much success attractin" rel="nofollow">ing. Often our recruitment practices attract men who are in" rel="nofollow">in their 30s or older. Our turnover is quite low, so we have never had to recruit large numbers like this before. To attract a large number of applicants, we really need to thin" rel="nofollow">ink of some creative recruitment practices. Chris: Yesterday, I was lookin" rel="nofollow">ing at our employee survey responses from December 2016. I thought the survey results to some extent can explain" rel="nofollow">in our low turnover. Nin" rel="nofollow">inety three percent of our current factory workers strongly agreed with the statement “I am proud to work for Arup”. And Gabrielle, you will like this, 94% strongly agreed with the statement “I would recommend others to work here”. Page 7 of 11 @S Perera_FHRM Manju: That is excellent news. We can use our current employees to get the message across to potential job applicants. We do have a strong reputation in" rel="nofollow">in the region as a large, desirable employer. However, I agree with Gabrielle, we really need to thin" rel="nofollow">ink creatively about our recruitment practices in" rel="nofollow">in this in" rel="nofollow">instance. Young people or women do not necessarily see factory worker positions as attractive. Gabrielle: I can ask Sandra, who handles recruitment, to come up with some specific suggestions. We usually ask for at least one year experience in" rel="nofollow">in a factory environment, but I don’t thin" rel="nofollow">ink we need that for these European packagin" rel="nofollow">ing factory worker positions, do we? Manju: No, Chris and I chatted about this. I don’t thin" rel="nofollow">ink it matters whether the applicants have any experience or not. From our perspective, the three most important attributes are; first, bein" rel="nofollow">ing fit and healthy. At times the factory worker role can be physically demandin" rel="nofollow">ing. There is heavy liftin" rel="nofollow">ing and repetitive movements in" rel="nofollow">involved in" rel="nofollow">in the job. Second, attention to detail. Our product quality depends of workers’ attention to detail. And third, takin" rel="nofollow">ing safety requirements seriously. Workin" rel="nofollow">ing on a factory floor can be hazardous. That is extremely important. Chris: Yes, and they must be willin" rel="nofollow">ing to do shift work. Our mornin" rel="nofollow">ing shift starts at 6.00am and the afternoon shift is from 3.00 in" rel="nofollow">in the afternoon until 10.00pm. Not everyone will be willin" rel="nofollow">ing to start that early or work so late. Manju: And teamwork, we are lookin" rel="nofollow">ing for people who enjoy workin" rel="nofollow">ing in" rel="nofollow">in a team environment. Gabrielle: I agree Manju. That’s important. I thin" rel="nofollow">ink general knowledge and experience usin" rel="nofollow">ing basic tools will be nice to have as well. I thin" rel="nofollow">ink we have covered a lot of in" rel="nofollow">information about recruitment and selection of the factory workers for the European Packagin" rel="nofollow">ing section. Now to my second poin" rel="nofollow">int, pay and benefits. Any ideas? Chris: Well, like our current factory worker position, this new position will be covered by the Manufacturin" rel="nofollow">ing and Associated Industries Award. We have always kept the base pay slightly above the Award rate; I suggest we do the same here. Manju: Yes, I agree, bein" rel="nofollow">ing slightly above the Award rate helps in" rel="nofollow">in attractin" rel="nofollow">ing new applicants. But, I have been reflectin" rel="nofollow">ing on this. The factory workers in" rel="nofollow">in the European Packagin" rel="nofollow">ing section will have a wider skill set compared to our current factory workers. They will work with both plastic and paper products. So, should their base pay be higher than our current factory workers? Gabrielle: Ideally yes. But if we do that, a large number of current factory workers might want to transfer to the European section. It can create staffin" rel="nofollow">ing issues in" rel="nofollow">in your departments. Chris: One way to resolve this issue maybe to thin" rel="nofollow">ink of some payment that is in" rel="nofollow">in addition to base pay. For example, I am thin" rel="nofollow">inkin" rel="nofollow">ing of a skill based in" rel="nofollow">incentive that we can pay based on completion of different types skill train" rel="nofollow">inin" rel="nofollow">ing. Page 8 of 11 @S Perera_FHRM Manju: That’s a good option. But let’s also look at the total remuneration package. It is not always about the money, is it? We can add some benefits to their total remuneration package that can attract new applicants as well as retain" rel="nofollow">in them once they are hired. CASE STUDY QUESTIONS Please ensure that you have read the complete case study (i.e., both Parts 1 and 2) before you answer these questions. 1. What specific recruitment practices would you recommend to Arup Packagin" rel="nofollow">ing Limited to in" rel="nofollow">in order to reach applicants aged 18-24? What specific recruitment practices could Arup adopt to reach potential female applicants? Justify your recommendations. 2. Drawin" rel="nofollow">ing on the meetin" rel="nofollow">ing excerpt in" rel="nofollow">in Part 2 and other case material, list the selection criteria you would recommend to be used to select applicants for Factory Worker - European Packagin" rel="nofollow">ing position. Justify your recommendations. 3. Identify selection methods to measure each selection criteria you recommended in" rel="nofollow">in response to question 2. In choosin" rel="nofollow">ing selection methods, take in" rel="nofollow">into consideration time, cost and the large number of factory workers that need to be hired in" rel="nofollow">in this case. Justify your recommended selection methods. 4. What type of in" rel="nofollow">incentives and benefits could Gabrielle and the team use in" rel="nofollow">in order to attract applicants to the Factory Worker European Packagin" rel="nofollow">ing position? Suggest at least 1 in" rel="nofollow">incentive and 2 benefits. Justify your recommendations. Use approximately 350-400 words per question in" rel="nofollow">in your response.