Elements of human resources systems

¶ … HR System

One of the most important elements for any business is the human resources department (HR). This is because HR plays a vital role in ensuring that the various concerns of the employees are met, so that the business can be able to maximize its profits. Yet, beyond this obvious function HR plays a more important role. Where, during times of mergers and acquisition, it is essential in helping to ensure that the staff / management of both companies are: able to merge the different policies / procedures into one. In most situations, the HR department is able to effectively able to merge the two different cultures into one hybrid that will create the desired effect. However, there have been those times that merging two different companies can be very challenging. This is because the managers / staff of both companies have completely different views and attitudes surrounding the business. Once this occurs, the ability of the HR department to effectively merge the various policies / procedures into one becomes more difficult. At which point, the chances decrease that the merger will be successful, as these differences are too difficult to fix. A good example of this can be seen with the merger between Daimler and Chrysler. Where, the new company would be touted as a merger of equals. With Chrysler able to have a foothold in the European market, while Daimler Mercedes would benefit from access to the North American market. The problems with the merging the two companies became apparent, as Chrysler would have a more aggressive management strategy towards the automobile industry. This clashed with the traditional, conservative values that Daimler had become known for. The HR department was never able to mold, the two different attitudes about management style. At which point, the company would see a decline in sales and market share, as the two different views created conflict that would hurt the overall bottom line. This is significant, because it shows how implementing any kind of merger or acquisition requires: that the HR department is able to successfully merge the two cultures into one. (Mathis, 2008)

In the case of We Will Hang Onto it Savings, their merger with Lenders Are Us Bank could prove to be problematic, as two different atmospheres surrounding the practices of lending are merging together. Where, Hang Onto it Savings is purchasing Lenders Are Us to prevent the company from going into liquidation. This is because Lenders Are Us engaged in a number of questionable lending activities over the last several years. Once the economy began to slow, is when they fell into a precarious financial situation. To make the merger of the two different businesses work requires that the HR department implement a strategy; that will encompass the views of both companies. To achieve this objective, you must examine the possible challenges of: merging the two companies, identify the most effective elements of an HR strategy and make possible recommendations for successfully merging the two entities. Together, these different elements will provide the greatest insights, as to how an effective HR plan can increase the chances that the merger will be successful.

The Possible Challenges of Merging the Two Companies

The last three years show that management must be able to adapt to changes that are occurring in the economy. The merging of the two companies could prove to be problematic based upon: the overall culture of conducting business and the attitudes on lending, among the staff. The reason why is We Will Hang Onto it Savings has a consistent history of engaging in more responsible lending practices. As a result, during the housing boom they did not engage in risky lending activities. This is different from Lenders Are Us who engaged in a variety of loan practices that were considered to be more risky. When the economy was strong this caused their overall bottom line to increase. However, once the housing market imploded was when the total amounts of delinquent loans would rise sharply, forcing the company seek out this merger. There are several obvious challenges that will be faced with merging the two companies together to include: providing direction for employees, reducing costs, improving efficiency and ensuring a strong pool of talent to draw off of. When looking the first issue, providing direction to employees, it is clear that the new merger will create confusion where the employees of We Will Hang Onto it Savings, will have different practices / procedures, in comparison with employees of Lenders Are Us. This could involve everything from: the way that deposits are booked to how earnings are reported to shareholders.

When looking at the second issue, reducing costs, it is obvious that the merger should reduce costs dramatically. However, because there are a variety of departments and the overall way the two entities were structured, means that the practices of the various departments at Lenders Are Us, could be vastly different from We Will Hang Onto it Savings. During the early stages of the merger, this could lead to irresponsible lending practices by employees of Lenders Are Us, as they assume that the business model will compliment We Will Hang Onto it Savings.

When looking at the third issue, improving efficiency, this highlights how the employees and management of Lenders Are Us, are engage in lending practices that will damage the long-term stability of the financial institution. This could be problematic; because the staff / management could resistant to such changes, as they feel that the different ways to improve lending practices / productivity are punishment for the irresponsible activities of the past.

When looking at the fourth issue, ensuring a strong pool of talent to draw off of, shows how reaching out to those professionals that could complement the business, is essential from the very beginning. The recent negative publicity surrounding Lenders Are Us could prove to be problematic, as the different college graduates and financial professionals are reluctant to interview with the company. This could be out of fear that the merger could cause a sharp reduction in benefits or the view that the company is in financial distress. This is problematic, because with the larger talent pool to draw off of, due to the high unemployment rate would normally mean that the company would have a variety of talented employees to choose from. However, given the negative publicity surrounding Lenders Are Us and the headlines about why the merger is occurring. This could cause some applicants to think twice about applying.

The most effective Elements of an HR strategy

Because the merger of the two companies and their overall philosophies are different, means that before the merger occurs, the HR department must have an effective plan in place. To achieve this objective HR personal must: examine the current situation at both companies. This is accomplished by creating possible allies on both sides that could be useful in implementing: an effective plan, training / development, have an effective evaluation process and ensuring that the employee benefits go beyond the expectations of employees. When looking at the first element of examining the current situation at both companies; requires that HR personnel begin interviewing the staff / managers, about the overall culture and traditions within an organization. This would involve looking at the total compensation packages, disciplinary records, policies / procedures for the company and interviewing the staff about different issues in the workplace / what they would like to see implemented. Once extensive research has been conducted on both organizations, HR personnel would have a better idea as to how different or similar; the culture is within each organization. This is an important first step, in helping to identify what specific issues could be faced, when implementing one HR plan for the entire organization. It will also tell you what possible ways that the plan could be improved, to address those issues that are most important to the staff / management. This is significant, because if you know what issues are most important to both organizations, you can begin to implement both into the new HR plan. At which point, soliciting the cooperation of the staff to change the culture of the organization, can help create a plan that will work effectively. (Kroon, 1995)

The second element, of creating allies on both sides, is imperative to ensuring that the HR plan is successful. This is because the plan needs to have supporters within both organizations that can push for changes from within. Where, during the staff meetings and discussions with employees / managers, they can emphasize how important it is for everyone to embrace the new HR plan. Any kind of opposition to the plan, would allow these people to playing critical in helping to identify key issues that could stand in the way of ensuring compliance. This is important because it can help to make certain that the HR plan can be smoothly implemented in both organizations. Where, initial resistance to such changes, can be addressed early and the staff / management can understand how important the plan is: to the organization's success in the future. (Kroon, 1995)

Once the plan has been created, you must begin training / development as soon as possible. This means, that HR personnel must begin to training the staff on the new policies and procedures that will be implemented. Under ideal circumstances, the HR department would want to begin training as soon as possible. This is because there will be a window, between the time frame that the merger is announced and when the actual deal occurs. The reason why is, various regulators as well as the shareholders will need time to: examine the merger, debate about it and vote on it. In most cases, these kinds of mergers can usually take a few months to occur. Given the circumstances surrounding the merger, what more than likely happen is this time table will be increased. This because the regulators will want We Will Hang Onto it Savings, to close the transaction for Lenders Are Us as soon as possible. As a result, this means that once the plan has been implemented, various HR personnel must have access to both companies immediately. (Kroon, 1995)

While, training is an important part of any plan, you must also consider the long-term impact that the plan will have on the business. In this aspect, you are looking at the different skills that each employee / manager brings with them and then evaluating how these skills can be implemented, to benefit the new company over the long-term. This is important, because the more effective that HR personnel are: at identifying those who are most suited for particular position, means that the new organization can be able to develop future leaders / managers. At which point, the company can begin to use its own pool of talent, to identify leaders / staff who could play a major role in helping to build the organization in the future. (Kroon, 1995)

To successfully begin implementing this plan; means that during the initial interviews with staff and employees, HR personnel should be seeking out the key allies that they can use as a part of the training. Once these people have been identified, the HR department can create a committee with these key personnel helping to create the policy. This is important, because when you have allies in both companies that helped to create the plan, it means implementing and training are easier. As key allies and staff in an organization, can say how they were actively involved in the process. Once this takes place, is when the plan will more widely be accepted by employees.

Yet, in order for any kind of plan to be effective requires: that you have a process of evaluating the opinions of employees and managers. Once the training program has been implemented, you want to have periodic surveys to evaluate employee / management attitudes. One way to do this is to have the managers and employees, fill out anonymous surveys on what issues are most important to them and how the current plan is addressing these issues. You would then take the process of evaluation one step further, by having the employees fill out surveys on their managers. The idea is to identify a variety of possible issues that could affect the organization in the future such as: the ability to lead, effectiveness at motivating the team to achieve its goals and how favorable / unfavorable the employees view the management. This is important, because these views that the members of the staff have about their supervisors / managers; will play a major role in determining how productive the team will be. Where, those managers who are viewed in a favorable light will be able to encourage members to go above and beyond their duties. Once this takes place, the organization will begin to see large increases in productivity. Those managers and supervisors that are viewed in a negative light will have trouble motivating their employees, to do the minimum requirements of their job. This is because, the negative perceptions about the management / supervisor will cause employees, to believe that they only thing that these people care about is themselves. At which point, the employees begin to engage in similar kinds behaviors as management. Once this occurs, it is only a matter of time until the entire organization will loose it dominance and market share. In the case of Lenders Are Us, the management / supervisors could engage in similar types of management practices, which caused the company to face a variety of financial challenges. In many ways, once could infer that the decline in the overall quality of loans was a direct result of the views that managers / supervisors would instill upon the staff. Where, responsible lending practices were disregarded, so that the company could achieve its objectives at all cost. This is problematic, because once such situations begin to occur, these kinds of attitudes are a like a cancer that will slowly eat away at the financial foundation of the organization. At which point, it is only a matter of time, until the economic fortunes of the company will change, with the up and down swings of the economic cycle. This is when the company would begin to face the most severe challenges, as the attitudes / viewpoints that management were taking, cause the financial viability of the company to be brought into question. In the case of Lenders Are Us, one could effectively make the argument, that management took this kind of attitude when it comes to the staff. Over the course of time, this attitude would cause earnings to become more volatile. (Kroon, 1995)

Once you know the situation at both companies surrounding employees and managers, you want to begin implementing pieces of the HR plan that will immediately address the needs of employees. What more than likely happened is the benefits plan at Lenders Are Us; could help the top managers, by providing them with lucrative pay packages / rewards. While, the staff receives low salaries and has very little benefits including: health and retirement services. Then, when you combine this with the fact that Lenders Are Us is in a very difficult position financially, meant that they more than likely reduced benefits once economic conditions began to change. Part of the reason for this was because the financial position of the company became worse over the last two years. Combine this with the rising costs a health care; meant that many employees would more than likely lose their benefits, as part of helping them deal with the various challenges. At the same time, management more than likely continued to receive lucrative pay packages. This would contribute to the possible disconnect between the staff and management of Lender Are Us. Where, the employees have to suffer a sharp reduction in benefits, while management continues to be rewarded. In many ways, one could argue that the reduction in benefits would cause the overall pool of talented employees, to give a half effort or to seek employment with competitors. Over the course of time, this would lead to a hemorrhaging of the talent pool, as the best and brightest are seeking employment elsewhere. (Kroon, 1995)

To address these issues, means that the new company must provide employees with a generous benefits plan, while at the same time reducing the overall size of management compensation. One way to achieve this objective is: to eliminate the generous pay packages that are offered to managers. Where, in addition to their base salaries, many will often receive other benefits to include: an expense account, stock options, defined benefit plans, life insurance and special discounts. When you combine all of these different elements together, it means that the overall levels of compensation between managers and employees are extreme. In the case of Lenders Are Us, managers were more than likely paid large salaries and benefits. This action will dramatically reduce costs, as the total amounts of compensation per manager, could have been used to provide a lucrative pay package for the entire staff. For the merger of the two companies to work, requires that some kind of balance is applied to employee / management compensation. Otherwise, an attitude of haves and have not's will take place between managers / employees. This dramatically decreases the chances that the merger would work, as this could create a rift within the new company. (Kroon, 1995)

Once HR personnel have identified, what are the most important elements of a benefits package, through surveying the staff / managers at both companies. They must begin implementing the suggestions of the staff. At the same time, a balanced approach must be taken towards that management, where they will no longer be given lucrative benefits, based upon their position. Instead, the total amounts of executive compensation will depend on several different objectives that must be achieved each year to include: responsible lending practices, increasing the total amounts of customers / reserve deposits, increasing transparency of the organization, improving productivity on the manager's team and receiving favorable evaluations from employees. These different elements will create a seismic shift in management / employee relations, as managers must show that they have the employee's best interest in mind. Then, they must demonstrate that they have the ability to effectively lead their team, to increase their overall bottom line. This will not be accomplished using the shoot from the hip lending practices of Lender Are Us. Instead, managers must show they are delivering responsible growth to shareholders. Where, they no longer are going in and offering loans to anyone, to meet their objectives. In the new company, managers must demonstrate that each loan was underwritten from a financially prudent standpoint. Then, when you include the elements of receiving favorable reviews from the team members (as a part of the compensation package), means that the managers in the new entity must be able to lead and work with everyone within the organization. (Kroon, 1995)

Once this new policy has been established, HR personnel must simultaneously deliver to employees increased amounts of benefits to include: health insurance, life insurance, retirement savings, a pay scale that will reward those who go the extra mile, child care services, tuition assistance and employee discounts on a variety of services. When you are providing more benefits to employees, while placing restrictions on management compensation, you are creating a shift in the culture of both companies. This is because the changes are so extreme from both businesses; that unorthodoxed approaches must be used to show that they will take place one way or another. Once this perception takes place, is when the employees will see that upper management is concerned about their well being and acknowledge that these issues are important to them, by providing more benefits. Combine this with the improved accountability of managers, means that you have a created a form of checks and balances between management / staff. Where, those individuals who are the worst managers will be discovered through employee evaluations of the manager. At which point, these people can be replaced and have more effective managers in place. In the short-term, this will cause the overall amounts of costs to rise, due to severance and providing more benefits to employees. However, once these up front costs have been paid, is when a new system will be in place to address employee concerns (while they are small). At the same time, you are ensuring that managers are held accountable for the actions of their team, by tying their overall levels of compensation to performance. Over the course of time, this will cause costs to fall, as managers / employees are seeking out ways to provide the company with responsible levels of growth. As a result, the long-term costs will decrease, while the overall profit margins and productivity will increase. (Kroon, 1995)