The Human Resources Effective Management Approaches by Dr. Jolito Ortizo Padilla

Human Resource Management Appraches

1.       Two traditional approaches in HRD and its implications:

 

1.1   Approach to recent developments in critical HRD research and writing

 

A.      Manpower planning seeks to maintain and improve an organization’s ability to achieve corporate objectives by developing strategies which are designed to increase the present and future contribution of manpower.

There is great difficulty in forecasting demand because of the change in the following areas:

·         Technological-changes in materials, technical systems and methods of power

·         Economic- marketing and capital formation

·         Social- population trends, social mobility, and education

·         Political- industrial legislation (wages and salaries, monetary policy, training, redundancy)

 The advantages of Manpower planning are:

·         The right number of staff is recruited at each level in the hierarchy

·         Staffing requirements can be better balanced and movement of staff made easier.

·         Areas of high labor turnover are highlighted

·         Implications of changes in recruitment, promotion, and succession plans are foreseeable.

Limitations:

·         Detailed records are needed plus expensive clerical staff.

·         Problems of forecasting changes, especially technological and government policy areas.

·         Forecasts can be uncertain even for a few years ahead.

 

1.2. Formulate personal definition of HRD and shaping national policies

The traditional attitude to manpower is that it is a cost; there is greater consideration now towards the idea that it is an investment. Therefore the best use of this investment should be made so as to ensure that the manpower achieves personal satisfaction and the company achieves a maximum returns on the cost.

It is important to stress the problem of uncertainty today; changes can occur in the following more detailed analysis:

·         Production and sales targets and new products’

·         Plans for diversifying, expanding or contracting production

·         Centralization or other organizational change

·         Technological changes, e.g. mechanization, improved methods, new management techniques;

·         Changes in hours of work, holidays, negotiations with trade unions and collective agreements;

·         National policies regarding taxation and redundancy

·         Changes within company, e.g. retirements, age structure, promotions

A company must be able to recruit and retain manpower of the type and caliber it requires for efficient operation. Change is a dominant factor today. Processes, products, systems and methods change quickly. The role of the computer is increasing and there is at present a shortage of system analysts and programmers, and this will continue for a number of years. New techniques e.g. operational research, influence the organizational structure of companies and later the pattern of manning.  Some jobs need increased skills, others need less. Thus a high standard of planning is needed. The rewards to a company are high as a great reduction in cost is possible; reduction in one area in particular, labor turnover can save a great deal of money.

The organization should be designed to attain the objectives of the company. Functional objectives are set and organization planned to attain them. Each department must be staffed so that the available skills and abilities are equated with task to be done.

There may be changes in the external markets, in the supply of local labor skills, changes in comparative earnings for each category of employee. Other relevant information includes output per man hour and total man hours available. The manpower plan can then be prepared and will also include consideration policies on; recruitment; promotion and career planning; training and development and industrial relations

Reviews of the progress of plans will take place periodically, with yearly revisions as part of a longer term planning cycle. Monthly budget statements will be prepared and a comparison of actual and planned targets will be made and variances noted. Information obtained will be then fed back to earlier parts of the cycle which may then indicate the need for the changes in the plans.

1.3 Implications of 2 above for VET Current Policy

Manpower planning should be an integral part of corporate planning and top management backing is essential. The skills of individuals must be continually developed in order to meet the needs of technological, economic, and social change.

The recruitment and selection processes must be continually reviewed and evaluated, as the cost of the process is high. Many companies’ reports now contain the average numbers of persons employed over the year and the amount of wages and salaries paid to them. Labor turnover figures may also give valuable information.

First of all, existing manpower strength and work volume are analyzed and detailed forecasts made of future work volume is then related to past ratios to give forecast. This is called ratio trend forecasting.

Another method is called theoretical requirements forecasting and involves assessing and defining the type and volume of activity needed to attain desired results. Specific objectives are given to management. Existing manpower and work volume are compared with forecasted future work volume and manpower, noting probable changes in the methods. So, for each category of staff, there is a statement of present and future positions, and this enables manpower requirements to be calculated.

Personal records must be adequate and kept up to date. Records containing relevant facts must be easily available; some firms have the details on computer files.

Employment inventories are useful, and analysis into male and female just costs-advertising, job categories, part and full time is needed. The pattern of ages should be noted as it may be that many retiring shortly or many are ready for promotion. Thus the problems which may arise can be dealt with if known time. Turnover can be analyzed into reasons for leaving, length of service, age group and type. The cost of turnover is great.

An ordinary clerical job involves this costs-advertising, management time on interviewing, temporary help or overtime paid during staff shortage, reduced output during training time and trainee’s time. This could easily add up to $2000 per job vacancy. A reduction in job turnover from 10 percent to 5 percent in a firm is an enormous saving.

These changes with International Business Machine and other UK companies has a five year forward plan, broken  about fifteen main occupational groups, showing numbers to be recruited  to replace predicted staff turnover and to meet the company’s growth plans, which are based upon market research and product development forecasts. The key is a very detailed job classification, which is expressed in a four digit code for computing processing.

1.4 Recommendations:

Manpower planning is part of corporate planning and seeks to maintain and improve an organization’s ability to achieve corporate objectives by developing strategies which are designed to increase the present and future contribution to manpower.

The brief point to consider is;

·         Examine the existing situation to see if manning effectiveness can be improved;

·         Plan to assess and determine future objectives of the business;

·         Determine the method of organization needed and the post needing to be filled;

·         Note the present staff, their potential and career requirements;

·         Identify requirements for manpower required

 

2.       Traditional approaches to HRD and its Implications

 

2.0   Induction and Training

2.1 Approaches of recent developments in critical HRD and research writing:  

Arrangement should be made for new employees to be introduced to the firm and to the job. A new employee must be shown where his place is in the organization. This service varies greatly among organization, but a systematic course of induction should cover:

 

·         Brief history of company, product, place in industry, present organization, names of department heads and the work of various department

 

·         The rules of working and safety and  health regulations
·         Human resources policy regarding discipline, education and training and promotion, holidays, method of computation  and date of payment of salaries and wages
·         Introduction to the new employee’s own department and a detailed summary of department’s work;

Some forms of training are needed to all employees.  It may give a wider general knowledge of new techniques or a broader outlook, but can be most beneficial to employee and employer.

An effective training program can be:

1.       Improve efficiency and morale;

2.       Introduce new techniques;

3.       Provide for succession, enabling qualified replacements to be available;

4.       Raise the standard of unskilled personnel, thus helping overcome labor shortages;

5.       Develop supervisors and decrease the amount of supervision needed;

6.       Lead to a reduction in scrap rates and improve machine utilization

Many companies do not regard training as a professional activity, and in many cases training officers are not themselves trained. Many courses are held and employees sent to college without any serious thought being given to real training needs of the company.

After identifying the development needs of the individual the choice of course must be made. Some firms have noted the waste of money on external training. Course objectives are often ill defined: these should be determined together with the staff’s qualifications and experience. Course literature is more attractive than informative and the training officers need advice on courses. A system of reporting back after each course is essential. The report should go to the training officer as well as to the departmental head. In addition, individuals must be given an opportunity to use knowledge gain.

Training needs must be assessed to determine:

1.       The jobs for which planned training is required;

2.       The number of people who need to be trained annually for these jobs;

3.       The standards of training required

When the skills and knowledge required have been noted, a training program is needed. An essential part of the program is the need to train instructional staff and design a method of controlling progress. This program should be of course periodically evaluated. The training officer therefore, advises management on training policy, basing his advice on training needs. He analyses job to identify skills; he plans programs and follows them up. He must be familiar with assessment of training needs and job analysis; he must know how to plan programs and evaluate cost of training, also he must keep abreast with methods of training, including program learning.

Training can be considered as the creation of learning opportunities.

The required needs of managers and supervisors can be said to consist of:

1.       Knowledge. Basic knowledge for the job; this usually come from education early in his work, or before employment.

2.       Skill and Experience- these are related closely to the job content. Preparation for new jobs can be made by giving person assignments, case studies, decision making exercises and management games to stimulate real conditions. Group projects and role playing can supplement planned work experience to enable a person to increase his effectiveness.

3.       Attitude- the development and conditioning of attitudes and patterns of behavior depend more upon a learning experiences. A person will for example benefit more by experiencing cooperation than reading about it, and a person’s ability to adapt change, cooperate with others and be more self confident, comes partly from the work’s situation. The development of attitudes can be quickened by organizational development training. These methods, briefly, teach a group to monitor its own performance, identify and agree problems and their resolution. Other business exercises can be operated under conditions of stress to improve the effectiveness of the individual, the group and the company.

Effective learning can take place according to Bass and Vaughn (1966) when the following four requirements exist:

·         Drive- that is the motivation of the individual who must accept and be committed to the need of the training;

·         Stimulus – the signal received and interpreted by a trainee;

·         Response- the behavior resulting from a stimulus; this can be developed through training

·         Reinforcement- information that the learner receives giving an indication of progress-ideally as soon as possible to enable more effective learning to occur.

It is important to note that a training officer must work closely with the line management in preparing programs of training which meet the needs of employees and minimize their learning problems.

Education can be considered to be instruction in knowledge and skills to enable people to be prepared for various roles in society. Its focus is mainly broadly based for the needs of the individual and to a lesser extent the needs of society.

Training relates to the acquisition of knowledge and skills for the purposes of an occupation or task. Its focus is much more narrowly based than education or development, and is job or task oriented.

Development is concerned more with changes in attitudes behavior and employee potential than with immediate skill. It relates more career development than job development. It is a learning activity concentrating on the future needs of an organization.

2.3 Implications of VET policy

The main objective is to improve current performance and provide a suitably trained staff to meet present and future needs. A person’s knowledge and skills have to be improved and his attitude and behavior modified by training and development.

 

The volume of management training and development has increased greatly in recent years  in UK and other countries and there is a proliferation of course available. These courses are not necessarily geared to the needs of the individual and, therefore, before the courses are organized, it is vital to analyze training needs.

Once the true needs are known the most effective means of training can be determined. Within the framework of overall manpower needs of the individual needs, supervisory and management succession plans can be drawn up. The needs of each individual manager must be considered and his performance appraised and weakness remedied.

The training should develop knowledge, skills, and attitudes, through various methods of instruction, demonstration and experience.

Job Rotation

This can be instituted within the department, within the company, or within another company. The   purpose is to improve a manager’s understanding of jobs other than his own and provide specific experience which will equip him for promotion. It is, of course easier to arrange for lower levels of management. Short periods in different departments were at one time widely used for induction training but it was never fully satisfactory and led to a high labor turnover. As the period was short, it did not enable the trainee to feel a sense of responsibility as he was not responsible for the results of his decisions.

Projects and Assignments

A good assignment should involve investigations into a number of departments and can reveal a person’s capabilities. Superiors should be interested and carefully examines findings. Assignments given into a group of managers will give a good experience in team working. These  courses is adopted on management courses, where members are split into syndicates to work on a problem, and here the problems of other departments become known to all.

Job Restructuring

Early management writers proclaim the advantages of specialization, particularly increased productivity. Some writers like Karl Marx and Friedrich Engels in 1850’s were not so happy with job specialization. They saw division of work as alienation of the worker which enslaves him instead of being controlled by him. Other writers have also noted that both the individual and society would also be affected adversely by too many dull repetitive jobs.

Research studies on the relationship between specialization and job satisfaction vary in their conclusion although the balance of opinion seems to indicate that there is a relationship and increased specialization can lead to job dissatisfaction. Hulin and Blood in Psychological Bulletin (Volume 69, No.1 pp41-53, USA) suggest that workers backgrounds largely determine their attitude. Those who deem work important and meaningful are aiming to progress may become dissatisfied in jobs that are specialized. Those employees who are alienated from work may prefer restricted jobs as they are easier and require little effort to perform.

2.4 Conclusion and Recommendation:

Management education deals with the theoretical aspects of management, usually acquired through formal methods of study. Management training is concerned with the practical aspects of management and implies preparation for an occupation or for specific skills and is job oriented than job orientated, and stresses potential rather than the present skills. It enhances latent abilities made evident through education and training. Training can be evaluated effectively if precise training standards are set. The five levels for achieving results should be noted. There must be scientific approach to measurement to enable the cost incurred to be justified.

 

 

The Tasmanian Forestry Industry Case Analysis by Jolito Ortizo Padilla

The Tasmania Forest Case Analysis in Economics>>>> Note that figures and illustrations are removed:

Warning: Copyright Infringement is Punishable by Law…

Executive Summary:

Changes in price of Lumber can affect the supply of timber. If the price of lumber increases substantially there will be an increase in the quantity of timber. The Tasmanian Forestry Industry has its main goals. If there is a change in demand then there will be a change in supply.

Government legislation also raises the costs of production of timber, the abolition of legal barriers to setting up business in the industry, or tax changes are some examples of how government can change the level of supply in an industry.

If Tasmanian Forestry Industry expects the future prices to be much higher, they must restrict supplies and stockpile goods; if they expect disruptions to their future production because of the occurrence of the weather occurrence they may stockpile raw materials, paying for them, thus increasing their costs and reducing supplies.

The weather conditions affect the prices of the timber. The weather plays a crucial role in determining supply, bad weather reducing supply, good weather producing bumper yields.

The Tasmanian Forest Industry priority is to put an end to the reserve making process which would have resulted in so much potential production forest being lost to the industry permanently. It needs to seek certification that will achieve the future changes of activities in the forestry development.

 Part 1- Introduction:

Australia undertook an independent strategic review of Forestry Tasmania to examine and report on the future structures, governance and business models under the Forestry Tasmania could best operate in the context of challenging market conditions and major industry changes.

There was a recommendation of the separation of the commercial and non-commercial in terms of function in Tasmanian Forestry that highlight the financial issues. The Australian government has  signed a memorandum of agreement to provide a long term sustainable management  and development of both public and privately owned of Tasmanian forest that applies a 20 year period and a review of every  five years, www. Stategrowth-tas-gov-au/forestry/transition, (2011).

Tasmania was the first state in Australia to be fully covered by the Tasmania Regional Forest agreement (RFA).

The Tasmanian Government recognizes that there are limitations with datasets describing the extent of Tasmania’s native forest vegetation and so continues to invest programs to improve the precision of this information for the future. These programs include the use of satellite imagery to detect changes in vegetation extent.

The conduct and behavior of Tasmanian Forestry Industry will be determined by their objectives and the actual market conditions. A need to produce a quality and quantity of resources should be maintained. Capital goods, equipment like modern technological innovations and investments are being used during the production process in relations with harvesting and replanting of trees, www.stategrowth-tas-gov-au/forestry/transition (2011)

Tasmanian Forest Industry deals with the government in developing and producing these natural resources. The central government and its constituent organizations take responsibility,www.helpteaching.com/questions/123837/the-key-features-of-a-command-economy-is-that-control-government (2011)

·         To allocate resources

·         Targets of production for the industry on annual level

·         How wages and income are fairly distributed

·         Long term planning to contribute in the growth of the economy

From the practical standpoint, some of these decisions have to be decentralized, either geographically or by sector, to other government organizations. In certain cases these bodies have control over the workings limited market and climatic changes mechanism.

Part 2- Government Policy

Tariff

Tariff tax is a tax on expenditure. The two major indirect taxes are VAT and Excise Tax.

Tariff are compose of VAT  or AD VALOREM tax. The tax levied increases in proportion to the value of the tax base. In the case of VAT the tax base is the price of the good. Most goods carry a 17.5 percent VAT charge. Excise tax or tariff on the other hand is an example of a specific tax or unit tax. The amount of tax levied does not change with the value of goods but with the amount or volume of the goods purchased, Padilla, J (2011).

Price theory can be used to analyze the impact of the imposition of tariff tax on goods. Assume that a specific tax of $1 is imposed upon timber. This has the effect of reducing the supply. Sellers of timber will now want to charge extra per tons sold. In Figure 1, this will show the vertical shift of $1 in the supply curve at every level of output. However, as many timbers are produced, seller wants to charge $1 more tons of timber and therefore there is a parallel shift upwards and to the left of the whole supply curve from S1 to S2.

Using Figure 1, we can also show the change in total expenditure before and after imposition of tariff tax as well as the amount of tax revenue gained by the government. The government will receive total tax revenue of $1 x 40 $198 million ($3.30 x 60 producers will fall from $198 million ($3.30 x 60 million) to $120 million ($3 x 40 million)

The above analysis can be extended to deal with tariff taxes. The imposition of tariff taxes will lead to upward shift in the supply curve, however, the higher the price, the greater will be the amount of tax. Hence the shift will as in Figure 2. Consumers will pay FG tax per unit whilst the incidence of tax on producers per unit will be HG.

Figure 1

 

Figure 2

 Economists say that price and income will lead to an increase in demand for a normal good such as timber. An increase in demand is shown by a shift in demand curve. In figure 3 the original demand curves D1 shifts to the right to its new position D2. Similarly, a fall in income and will lead to a fall of demand for timber. This shown by a shift to the left of demand curve from  D1 to D3. For instance, at a price of OE , demand will fall from OA to OC.

Two points need to be made. First the demand curves in Figure 3 have been drawn as straight lines. These demand curves drawn show a hypothetical (or imaginary) position. They are drawn straight purely for convenience and do not imply that actual demand curves for timber are straight. Second, the shift in the demand curves is drawn parallel as parallel shifts. Again this is done for convenience and neatness but it is most unlikely that a rise and fall in income for an actual product would produce a precisely parallel shift in the demand curve, Chan, M (2009).

Figure 3

2. Subsidy

A subsidy on good will leads to an increase in supply, shifting the supply curve downwards and to the right. This is shown in Figure 4. It should be noted that a subsidy of AC will not lead to fall in price of AC. A part of the subsidy, AB, will be appropriated by producers because of the higher unit cost of production of higher levels of output, (shown by the upward sloping supply curve). Prices to consumers will only fall by BC.

Figure 4

Taxes, Subsidy and elasticity

The extent to which the tax incidence falls on consumers rather than producers depends upon the elasticity of demand and supply. Figure 5 shows a situation where either the supply curve is perfectly elastic or the demand curve is perfectly inelastic. In both cases, the vertical shift in the supply curve, which shows the value of the tax per unit, is identical to the final price rise. Therefore all the tax will be paid by consumers, Padilla, J (2011).

Figure 5

Figure 5 on the other hand, shows two cases where the incidence of tax falls totally on the producer. Producers will find it impossible to shift any of the tax onto consumers if the demand curve is perfectly elastic. Consumers are not prepared to buy at any higher price than the existing price. If the supply tax curve is perfectly inelastic, then the supply curve after imposition of the tax will be the same as the one before. Equilibrium price will therefore remain the same and producers will have to bear the full burden of the tax.

Generalizing from these extreme situations, we can conclude that the more elastic the demand curve or the more inelastic the supply curve, the greater will be the incidence of tax on producers and the less will be the incidence of tax on consumers. So far as the government is concerned, the taxation revenue will be greater, all other things being equal, the more inelastic the demand for the timber taxed. For instance, if demand were perfectly elastic, the imposition of an indirect tax would lead to quantity demanded falling to zero and tax revenue being zero. At the opposite extreme, if demand were perfectly inelastic, consumers would buy the same quantity after the imposition of tax as before. Hence revenue will be equal to the tax per unit times the quantity demanded before imposition. If the price elasticity of demand lies between these two extremes, its imposition of a tax will lead to a fall in quantity demanded. The higher the elasticity, the larger will be the fall in quantity demanded and hence the lower will be the tax revenue received by the government, Chan, M (2009).

The same analysis can be applied to subsidies. In general, subsidies tend to be given where the policy objectives is to reduce the price of goods. The largest fall in price will occur when either demand is highly inelastic or supply is highly elastic. If demand is very elastic or supply is very inelastic, there will be very little, if any change, in price following the granting of subsidy. This is because producers will not pass on the subsidy to consumers. This will absorb the subsidy, which will allow them to increase their profits.

Part 3- Market Trends

Trend is a general long term movement in the time series value of the variable over a long period of time. The variable (Y) is a factor that we are interested in evaluating for the future. These variables are observed over a long period of time and any changes related to time are noted and calculated and a trend of these changes is established. There are many types of trend; the series may be increasing at a slow rate or a fast rate or these maybe decreasing at the various rates. Some remain relatively constant and some reverse their trend from growth to decline to growth over a period of time.

Figure 6 (PLOT) c/o Abbas

Seasonal  variation

Seasonal variation is a pattern that repeats over time period longer than one year. These variations are generally unpredictable in relation to the time of occurrence, duration as well as amplitude. The measure we use to identify cyclical variation as the percentage of trend and the procedure used is known as residual trend. There are four components of time series. Since the time period considered for seasonal variation is less than one year, it can be excluded from the study , because when we look at time series consisting of annual data spread over many years, then  only the secular trend, cyclical variation and irregular variation are considered, Padilla,J (2010). 

Figure 7- PLOT

Forecasting

Accurate forecasting is an essential element of planning of any organization or policy.When a projection of the pattern of future economic activity is known and the level of future business activity is understood, the desirability of an alternative course of action and the selection of optimum alternative can be examined and forecast. The quality of such forecasts is strongly related to the relevant information that can be extracted from past data. Hence, the time series analysis method helps in making accurate predictions and also in situations where the future is expected to be similar to or at least predictive from the past, Chan, M (2009).

Part 4- Structural Modeling

Regression Analysis is an extremely useful toll especially in problems of business and industry. While using regression analysis for making predictions, the following assumptions are made:

1.       There is an actual relationship between the dependent and independent variables

2.       The values of the dependent variable are random but the values of the independent variable are fixed quantities without error and are chosen by the experimentor.

3.       There is a clear indication of direction of the relationship. This means that dependent variable is a function of independent variable.

4.       The conditions are the same when the regression model is being used. In other words, it simply means that the relationship has not changed since the regression equation was computed.

5.       The analysis is to be used to predict values with the range for which it is valid.

In using linear regression model, a single variation is used to predict another variable on the assumption of linear relationship between the given variables. The variable to be predicted is called the dependent variable and the variable on which the prediction is based is called independent variable, Chan, M(2009).

Forecasting

Forecasting models have either an implicit or error structure, where error is defined as the difference between the model prediction and the true value, Further, serious data snooping methods in the domain of statistics requires to be applied to data supplied to a forecasting model. Also, diagnostic checking, as defined within the field of statistics, is required for any model which uses data.

The application of any technique for forecasting requires the use of a performance measure to evaluate its quality. Mean Absolute Deviation (MAD) and variance are the best measures. However, MAD does not lend itself to further use variance is preferable as variances of independent (uncorrelated) errors are additive. MAD is not additive Chan, Michael (2009).

Part 5 Future Industry Prospects

The Tasmanian government issued a policy for maintaining a permanent native forest estate which states the utmost importance of sustainable management of Tasmania’s native forest. It recognizes different types of mechanisms that are ecologically sustain forest management. The policy has primary elements in line with the sustainable forest management practice under the Forest Practices Code to ensure that the right practice is correctly followed an get the best sustainable return from the forestry operations. It also develops a comprehensive, adequate, and representative forest service reserve system to securely protect nature conservation values, www. Stategrowth-tas-gov-au-data.pdf-file/007188135/policy-for-maintaining-a-permanent-native-forest-estate (2011)

The Tasmanian Government has had a formal policy in place since 1996 to regulate the extent of clearing and conversion of the native forest estate.  This policy does not aim to maintain a native forest estate exactly as it is because forest condition will change from place to place and from time through regeneration after fire or harvesting or through natural succession as forest age. It is about reservation of native forests and how native forests are maintained as native forest and managed for variety of reasons.

The forest community retention levels and the property conversion limits need to be applied in a practical and meaningful way. For this reason, the levels and the limits may be exceeded where the conversion of native forest does not result in the loss of significant nature of conservation values in an IBRA bio-region. The forest be considered to be representative of that forest community and it is incapable of returning to an intact condition by natural regeneration with the mitigation of existing threatening processes. The forest in question is part of an approved property management plan. Clearance of the forest in question would result in a more appropriate and practical management boundary, provided that the annual property conversion limit is not exceeded by more than 10 percent. Expert opinion indicates that the threshold is being triggered as a result of inadequate mapping, inappropriate community classification of the nature of fuzzy IBRA bioregional boundaries rather because of depletion of a bio-regionally significant community, www. Stategrowth-tas-gov-au-data.pdf-file/007188135/policy-for-maintaining-a-permanent-native-forest-estate (2011)

 Part 6- Conclusion

It has been long recognized that the market for timber are the primary determinant of profitability. The principal reason for this is Tasmanian Forestry Industry has to induce the economies of scale in managing the forests. Deforestation without replanting of trees will diminished the natural resources which results to depleted environment. Quarrying is the most blatant signs of forest depletion. The lower costs are due partly to economies of scale. In productions of timber, purchasing and administration pertaining to Tasmanian Forestry Industry operations.

This is also partly due to experience effect, whereby the cost of most timber decline by a fixed percentage as shown in the time series analysis each time Tasmanian Forest Industry experience in harvesting and selling them.

Of the two, the nature and sources of experience of economies of scale are by far the best known, and it is therefore not our intention to do anything more than draw the attention to its significance and to emphasize that these economies of scale can provide a significant input to the pricing decision.

The less well known experience effect, however, is of equal and in some instances even greater, strategic significance. The concept is based on the discovery that costs decline with cumulative production and that this decline is measurable and predictable. The origins of the effect can be traced to the idea of learning curve, which recognizes that the time needed to perform a task decreases as workers become more familiar with it.  In the 1960’s however, evidenced emerged to suggest that this phenomenon was limited not just labor costs, but applied also to all total value added costs including administration, sales, harvesting and distribution, .

“That each time cumulative volume of timber doubled, total value added costs fell by constant and predictable percentage. In addition, the costs of purchased items usually fell as suppliers reduced prices as their costs fell, due to experience effect. The relationship between costs and experience was called the experience curve which is observed and studied by Padilla, J (2010) to all forestry industry.

The experience effect has a variety of sources which are identified by Padilla as:

1.       Greater labor efficiency

2.       Work specialization and methods improvement

3.       New production processes

4.       Obtaining better performance from existing equipment

5.       Changes in resource mix

6.       Greater product standardization

7.       Forestry redesigns

Abelle and Hammond (1979, p113) point out that the results of substantial concerted effort and pressure to lower cost during the production of timber if left unmanaged , costs rise. Thus experience does not cause reductions but rather provides an opportunity that alert the Tasmanian Forestry Industry managements can exploit. Consequently strategies resulting from market opportunity should explicitly address how cost reductions are to be achieved.

The strategic implications of the experience curve are potentially significant in the Tasmanian Forestry Industry, since by pursuing a strategy to gain experience faster from replanting to harvesting, it lowers it cost base and has greater scope for adopting an aggressive and offensive pricing strategy and sound management of forest, Abelle and Hammond, (1979).

The main strategic message from the experience curve is that if costs in real terms decrease predictably with cumulative output, then the forest has a potential to achieve a lowest costs and higher profits.

 Part 7- Recommendation

In order to determine whether or not a variable qualified as a key success factor which would be required to measured), the following question was asked: “Will continued failure of Tasmanian Forestry Industry prevent attainment of management’s responsibility for advancement in this key Australia’s Industry which is a leader in a strong, competitive economy, even though results in all key result areas are good?

A range of key success factors emerged from this project:

·         Profitability

·         Market position

·         Product leadership

·         Productivity

·         Personnel development

·         Employee attitude

·         Public responsibility

·         Balance between short run and long run goals

While these might be generally applicable, it is their precise definition within the context of Tasmanian Forestry Industry activities that determines how critical they are. This highlights a fundamental aspect of designing any control system; it must be highly situational, if it is effective. In other words , it must be tailored to the specific characteristics of the situation, which means the TFI objectives ,I operations, TFI managers and TFI environment.

References:

Abelle, R and Hammond, C (1979),- Strategic Management, Planning, Implementation and Control, pp113, Pearson.

 Chan, Michael (2009) Statistics for MBA, 2^nd edition, pp.35,67,89,90, University of Hongkong Press (Prentice Hall)

Padilla, J (2010) Strategic Management 1^st edition, pp279, 279, Nanyang University Press, Prentice Hall

 www. Stategrowth-tas-gov-au/forestry/transition,;2011, September

www. Stategrowth-tas-gov-au-data.pdf-file/007188135/policy-for-maintaining-a-permanent-native-forest-estate ; 2011, September

www.helpteaching.com/questions/123837/the-key-features-of-a-command-economy-is-that-control-government , 2011, September

Wilson, R. (2011) The Academy of Management Journal , 10 Data Points: Information and Analytics for Work; Vol. 53. No.4 (August 2010) pp110-117

 

 

 

Human Resources Effectiveness of Hershey Company .. by Jolito Padilla

Hershey Company

1.       Introduction:

The largest producer of chocolate in North America, Hershey Company reported first quarter 2014 sales up at 6.5 percent to $3.5 billion and profit of $83.6 million on March, 2014, the strong quarter in a row for company.  Advertising expenses for the quarter increased by 46 percent as a company continued to promote iconic brands such as Hershey’s Kiss and Reese’s products (www. Hershey.com).

Some of the Hershey’s premium products of have faltered lately as customer switched   lower price products. So, the company plans to discontinue their Cacao Reserve brand as their Starbucks chocolate partnership. But Hershey has its online gift business, which featured seasonal products and gifts that could personalized by the consumers.

2.       Identification and Analysis  of the major forces shaping Hershey’s  HR agenda

Hershey needs a clear aims and objectives that will determine the nature of inputs, the series of activities to achieve outputs and the realization of organizational goals. Feedback about the performance of the system and the effects of its operation on the environment are measured in terms of achieving the aims and objectives.

Basic principles of organization and management apply in any series of activities in any of organization , Padilla, J (2010). For example:

·         Attention must be given to the design of the suitable measure

·         The common elements of management-clarification of objectives, planning, organizing, directing, and control-apply to a greater or lesser extent in all cases.

·         Essential financial, legal, human resources and administrative functions must be carried in the organization.

These common features make possible the application of general principles of management and organizational behavior of those people that comprises the organization. While general principles and prescription s apply in Hershey, differences in the input-conversion-output process and in the series of activities involved in this process. The nature of inputs, the throughputs and the form of the output will emphasize characteristic features of a particular organization. These features highlight alternative forms of structure, management, methods of operation and behavior of people employed by or working in different types of organization (Padilla, J, 2010).

Whatever the type of clarification of Hershey has, the transformation or conversion activities may themselves be viewed as separate organizational sub-systems with their own input-conversion-output process interrelated to, and interacting with, the sub-systems.

The interrelationship and interdependence of the different parts of the system raise the question of the identification of this sub-system. What are the boundaries that distinguish one sub-system from other sub-systems and from the system as a whole?

In Hershey, these sub-system are identified and the task management to coordinate the sub-system and to ensure that the activities of the organization as a whole. In practice the boundaries are drawn at the discretion of the sub-system are identified, therefore, in a number of ways, although there is a degree of similarity among the alternative models.

However, these sub-systems are identified; it is a task of Hershey management to coordinate the sub-systems and to ensure that the activities of the organization as a whole are directed towards the accomplishment of its goals and objectives. Hershey therefore has five main interrelated sub-systems as a basis for the analysis of work organization.

1.       Task- the goals and objectives of Hershey: the nature of inputs and outputs, and the work activities to be carried out in the transformation or conversion process;

2.       Technology- the manner in which the tasks of the organization are carried out and the nature of work performance : the materials, systems and procedures, and equipment used in the transformation or conversion process;

3.       Structure- patterns of organization, lines of authority, formal relationships and channels of communication among members; the division of work and coordination of tasks by which series of activities is carried out;

4.       People- the nature of the members undertaking the series of activities: for example their attitudes, skills and attributes; needs and expectations; interpersonal relations and patterns of behavior; group functioning and behavior, informal organization and styles of leadership;

5.       Management – coordination of task, technology, structure and people, and policies and procedures for the execution of work: corporate strategy, direction of the activities of the organization as a whole and its interactions with the external environment.

The study of Hershey as open systems serves to indicate both the common features and the main distinguishing features between different types of organizations. It provides a useful framework for the comparative study of organization. The system view of organizations enables Hershey manager to view their own organization in perspective and to compare it in meaningful terms with other types of competitive organizations. Managers cannot afford to take narrow, blinkered view; they need to adopt a broader view and recognize interrelationships between various activities and the effects that their actions and decisions have on other activities. The Hershey’s framework of five main interrelated sub-systems is task, technology, structure. People, and management-provides a useful basis for the analysis of organizational performance, and effectiveness. Attention should be focused on the total work organization and the interrelationships between the ranges of variables which affect organizational performance (Padilla, J, 2010).

The analysis of organizational effectiveness requires an understanding of relationships within the organization’s structure, the interrelated sub-systems and the nature of its external environment. Irrespective of the identification of sub-systems, the nature and scale of the series of activities involved in converting inputs to outputs will differ from one organization to another in terms of interrelationship between technology, structure, methods of operation and the nature of environmental influences. Contingency models of organization highlight Hershey’s interrelationship and provide a further possible means of differentiation between alternative forms of organization and management (Mann, S, 2003).

3.       Ethics and Responsibility

Hershey commitment to social responsibility extends beyond their school to both their products and supplier relationships. The company is actively involved in the International Initiative Foundation, designed to eliminate child labor or forced labor such as World Cocoa Foundation, which supports environmental projects that include nonchemical pest management practices and which encourage sustainable farming practices to support ecosystems in the region.  Hershey also closely monitors its supply relationships and purchases palm oil from suppliers with membership in the Roundtable on Sustainable Oil (www. hershey.marketonline.com).

Hershey role as an environmental steward is also evident that its plants use recycled water that is later purified for various landscaping projects. Changes in product packaging have resulted in lighter materials and less waste during the manufacturing process and Hershey extensively recycles materials from their different factories in the world. Hershey monitors greenhouse gas emission from operations and has installed energy efficient lighting in all of their plants.

With revenue in excess of $8 billion, Hershey continues to produce chocolates and confectionary products. Hershey has recently expanded its global presence via joint ventures in China and India.

4.       Review of Hershey’s Business and HR Strategies:

SWOT Analysis

In order to evaluate the nature of the business environment and its strategic capability; Hershey may undertake SWOT analysis which focuses on Strengths, Weaknesses, Opportunities and Threats facing the organization. The SWOT analysis provides convenient headings under which to study Hershey in its environment setting and provide a basis for decision making and problem solving.

Strength	-          Hershey iconic brands such as Hershey, Bar, Kisses and Reese are easily recognized within the domestic market. -          Hershey concentrates advertising revenues on these brands while also promotes the health benefits of flovanols in its dark chocolates products -          Hershey products are sold to more than 2 million retail outlets, including wholesale distributors, chain grocery stores and convenience stores. Hershey direct research on consumer preferences supported via the Hershey Center of Health and Nutrition developed in 2008. Many of the ingredients which are used for Hershey products are grown in West Africa, South America, and the Far East. -          Hershey has five operating segments by geographic regions: 1) United States 2) Canada 3) Mexico 4) Brazil 5) and other International locations (India, Korea, Philippines. Japan and China. -          Hershey sales increased by 5.2% in 2013 -          Hershey employs about 13, 450 full time and 2, 000 part time employees and approximately 47% of the workforce is covered collective bargaining agreements. -          Hershey announced a joint venture with Lotte Confectionary Company, a leading confectionary company in Korea, to produce products for China. The manufacturing facility, that is located in Jinshan, China is designed to produce Hershey and Lotte products that are tailored to the needs of Chinese and Asian market.
Weaknesses	-          Some of the Hershey’s premium products has  faltered lately as customers switched to lower price products. -          Due to lower commodity prices total charges to Hershey Supply Transformation Program have been forecasted downward from $665 million to $640 million -          The company close their online gift business, which featured seasonal products and gifts that could personalized by the consumer
Opportunities	-          The establishment of Hershey Center of Health and Nutrition that involved in scientific research and also collaborates with external organization that develops products to support both weight management and heart health. -          Due to increased consumer preferences for healthy and organic products, the company portfolio of healthy snacks has expanded to include Payday pro energy bars and sugar free such as Twizzlers (www.marketonline.com).
Threats-	-          Key Industry competitors like Nestle, Cadbury and Mars has an aggressive marketing and research and development structures -          Nestle acquisition of medical nutritional business of Novartis, Gerber baby foods and Jenny Craig, a company with an established brand of nutritional weight management products. -          The consumer increasingly awareness of nutritional value of various product ingredients with purchase decisions reflecting a preference for organic non-adulterated products. -

 

5.       Measurement of HR effectiveness

The ultimate measures of HRM function of Hershey is the contribution it makes in meeting the objectives of the business and to improved organizational performance. But achievement in the area of HRM is difficult to measure and it is not easy to establish satisfactory methods of assessment. There is also a more general problem of assessing managerial work where the end-product results from the efforts of other people, Patton (2005). Cost is obviously a consideration but should not be viewed in isolation. Not every activity in Hershey can be identified clearly as making a contribution to profitability. Hershey believed that a balance should be maintained between the more easily identified financial costs of HRM function and the less readily apparent but very important long term benefits such as morale and job satisfaction of staff as well as their attitudes, behavior and performance. Over a period of time however, some quantified measure may serve to provide management with an indication of effectiveness. Hershey includes staffing costs, turnover, and stability indexes; internal promotions and staff development; errors in work; levels of absenteeism and sickness; timekeeping; accidents at work; the number of grievance hearing, dismissals, labor disputes, employment tribunal cases; complaints from suppliers or customers.

Hershey’s one way to review the performance and potential of staff is through a formal performance review system. An effective system offers a number of potential benefits to both individual and the organization but there are number of important questions to be addressed. Consideration must be given to the design and implementation of the system, methods of appraisal, and the problem areas. Hershey emphasized that it is particularly important that a formal system does not detract from manager’s responsibility for reviewing performance on a day to day basis and that it should be seen as part of Performance measures strategy.

According to Slater, 2009, “Recognition that employees from the lifeblood of a company has highlighted the strategic role that the human resources department should now play.” Hershey believed that HR professionals have the opportunity to add value to business. Greater attention is placed on issues such as how well a company executes its business plan, employee well being, corporate culture and organizational structure. Although, the customer is still king, Hershey realize that it is their employees who deliver the performance of value to customers.

Hershey’s sound HRM policies help foster good employment relations. It is necessary to take account of the institutions and parties involves, and their ideologies and motives. There are two major and contrasting perspectives of work organizations, and the explanation and outcomes of conflict-the unitary and the pluralistic perspectives. These contrasting views influence the nature of employee relationships and the management of human resources. Good management strategies are important for effective employment relations that are founded on a combination of legal and behavioral dimension.

6.       Conclusion and Recommendation:

Hershey success is based on the essential process of management is that proper attention be given to the efficient use of resources, in particular human resource? In recent years there has been increasing attention to a strategic approach to “human resource management” and also to the idea of human capital. However, it is important to remember that it is people who are the most important asset of any organization. Effective HRM requires strategic integration of people management policies and successful implementation if it is to impact on organizational performance.

Hershey success in the field of Human relationship stems from good HRM policies and practices which should be based on underlying philosophies of managerial behavior and employee relations. The range and scope of HRM activities are wide, and a shared responsibility among top management, line managers, and supervisors and the HR manager. As an element function, HRM is part of the generality of management and part of the responsibility of all managers and supervisor. HRM has top operate at a strategic level and in partnership with line managers.

 

References:

Mann, S “Doing Things Differently”. Professional Manager, vol. 12, no.3, May 2003, pp32-5

Patton, F, 2008  “ “An Integrated Model of Management and Managerial Development, Journal of Management Development, vol. 7 no.3 , 2010, pp 29-39

Padilla, J, 2010  Strategic Management, 2^nd edition. Pp 23-26

Slater, The Quality of Working Life, 2008,: Managers’ Health, Motivation and Productivity, pp354-355