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HUMAN RESOURCE MANAGEMENT OF AN ORGANIZATION BASED ON MANAGEMENT THEORIES AND ITS’ CHALLENGES

Executive Summary

Cargills (Ceylon) PLC is a well-repudiated organization established in Sri Lanka. It is considered as a company build upon a strong foundation of values and ethics. The leadership of Cargills is responsible for its sustainable development in the food and agribusiness in Sri Lanka. Its continuous investments on other companies have made them a large organization, which has distributed its arms all over the country. The unique feature of Cargills is its integrated value process maintained with small farmers and entrepreneurs in Sri Lanka.

Cargills is a successful organization, which has been able to develop business approaches to satisfy the needs of our nation. It has a comprehensive and an effective system to collaborate with the customer needs to create a better services, produce good products, save energy and cost and to deliver goods and services all over the country. It also helps small farmers to achieve a good flexibility in the market as they bring the market access to them. It has activities and practices carried out throughout to give back to the community such as improving health and nutrition in Sri Lankans through their business. Most of the projects and investments on retails of Cargills have three major commitments entitled to them, which are to reduce the living cost, improve the skills of youth and bridging the regional differences.

Cargills have been considered as one of the best brands in Sri Lank and its success has been addressed by awards many times. However apart from its financial success, awards and other recognitions Cargills have come across some HR management related issues, which have been addressed in this report comprehensively with the suggestions to improve by the newly appointed CEO.

Table of Content

Executive Summary 3

Table of Content 4

1. Organizational Management 5

1.1 Management Theories 5

2. Cargills Ceylon PLC 8

2.1. Introduction 8

2.2. Business Structure and HR Management 10

2.3. Challenges in Human Resource management & solutions 11

2.3.1 Challenging and unpredictable external environment 13

2.3.2 Absence of professional advice in the organizational structure 14

2.3.3 Long chain of command 15

2.3.4 Increased span of Control 16

2.3.5 Avoiding recognition 16

2.3.6 Lack of Training and diminished capacity of HR departments 17

Conclusion 19

References 21

Organizational Management

1.1 Management Theories

Management can be interpreted as a science designed to maintain a suitable environment in which groups of people are working together toward a goal, achieving a set of objectives. When it come to the level of organizational management, it gives a sense of security to the employee and helps to maintain the better coordination among the departments, creating a positive environment to supports employees to accomplish tasks with in a proposed timeframe.

If I had six hours to cut down a tree, I’d spend the first three hours sharpening my axe.

-Abe Lincoln-

There are various frameworks and theories, which suggests different views over organizational management. In order to understand the most effective management framework for the event, each situation should be tested and evaluated to determine the effect of any management theory. These contemporary approaches toward management framework help to interpret the rapidly changing nature of the environment of an organization. Every framework suggests the requirement of objectives and goals for assessing of the organizations performance (‘It Starts with One: Changing Individuals Changes Organizations’ (Black & Gregersen 2013, p. 1)).

More recently, the role of strategy of the organization management has been discussed in the literature but the empirical studies conducted up to now have not produced any strong conclusions about the nature of the strategies and its connection between controls. In essence, from the perspective of the organization, strategies can be considered the pathways used to achieve the aims.

Figure 1: Framework of management of an organization

Source: Developed by the Author

Founded in 1960’s the contingency theory suggests that there are no universally applicable system over organizational management but a choice of control techniques which is based upon the circumstances associate with the specific organization. This approach recognize the difference and uniqueness when it comes to different business situations as each event has its own features like problems, internal / external environmental factors and challenges. The contingencies discussed over the framework are economic conditions, technological changes, cultural and political factors and demographic shifts (‘It Starts with One: Changing Individuals Changes Organizations’ (Black & Gregersen 2013, p. 1)).

Chaos Theory, which was identified in the 1980’s, propose the unpredictability in event and systems and possibility of maintaining a system without a specific direction. This theory is based upon the butterfly effect in which it explains the dramatic and unpredictable effect of a small action in one place, which could have a great impact elsewhere. When applied to organizational management it elucidates the fact that a small change in a system could potentially have a great impact on the system. This theory was vastly recognized as real and practical by many scientists and theorists and recommends the success in applying this theory for organizational management (Media 2004).

Henri Fayol’s administrative theory discusses the duties of management in granular level with great importance directed more toward the management layer. According to his theory, the management has five roles including, planning, organizing, commanding, coordinating and controlling. Forecast and planning is the stage of anticipating the future of the organization accordingly. Development of resources is considered as organizing when commanding is explained as running the institutions processes. Coordination is the alignment and cooperation within the group toward the aim and finally, control is considered the stage where appropriate rules and processes are maintained to perform the mentioned other four stages (Otley 1999).

Every theory of organizational management has an important view and unique set of aspects discussed when it comes to managing an organization. The real management of an organization should be a combination of all the accepted and effective aspects of the theories using the essence as a paradox.

2. Cargills Ceylon PLC

2.1. Introduction

Cargills (Ceylon) PLC is a top ranked corporate, considered as the forefront of the development and innovation of effective marketing of food industry in Sri Lanka. Cargills (Ceylon) PLC remain spearheads in food marketing and have dispersed their branches around the island, due to their continuous sectorial growth.

Cargills distributes its manufactured brands and is partners with almost 2,000 Sri Lankan companies by investing on retails of reputed food/nonfood brands, like Cargills Food City, Cargills Supremo, Cargills Finest, Cargills Kist and KFC. Among these, the brand “Food City” is the largest supermarket chain in Sri Lanka and considered the third most valuable brand in the country (Cargills Ceylon PLC 2017).

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Figure 2: Brands of Cargills Ceylon PLC retails

Source: Developed by the Author (based on online available forms)

Cargills (Ceylon) PLC was originally named “House of Cargills” at its’ establishment in 1844. The pioneers of the company were William Miller and David Sime Cargill which was originally commenced as a small business which now has developed in to one of the largest companies in Sri Lanka which owns many retails (Pirraglia W). Initially for 140 years, Cargills imported majority of the products including clothes, food, alcohol and pharmaceutical products since their focus was to serve the country’s elite community and expatriate. Today Cargills give priority to Sri Lankan products as they buy local farm products and focus to serve the average Sri Lankan. Cargills obtain a wide variety of food commodities directly from over 10,000 small holder famers and entrepreneurs through a sustainable value system on fair trade principles making the purchasing network the largest in the agribusinesses in Sri Lanka. This market driven agribusiness value chain was developed based on the Cargills agribusiness model, which has given world recognition to the corporate (Pirraglia W). The Cargills business model have a unique feature of providing their farmers a minimum price which is calculated to be 20% above the actual cost. They bring the market to the farmers who lack the knowledge on market strategies. They work toward poverty alleviations, by providing a guaranteed income for the farmers throughout the year (Alissa Barron, Michael Shuman & Wendy Wasserman 2009).

Cargills is a well reputed organization in Sri Lanka and its’ excellence has been addressed many times over many awards and the most significant of them all was the World Retail Awards won in 2009 at Barcelona. (Alissa Barron, Michael Shuman & Wendy Wasserman 2009). The rest of the awards and nominations are as follows (Cargills Ceylon PLC 2017).

  • Global Business Leadership, IIFA
  • Most Respected Business Entities in Sri Lanka, LMD
  • Top Ten best performing Companies in Sri Lanka, Business Today
  • Platinum Rating: Corporate Sustainability Index (Sting Consultants)
  • Innovative Financing, UNIDO
  • 4th most valuable brand – Cargills Food City: Brand Finance Index
  • AAA rating for Brand Value- Cargills Food City: Brand Finance
  • Best customer & supplier relations, Best Corporate Citizen Awards, Ceylon Chamber of Commerce
  • Best economic performance, Best Corporate Citizen Awards, Ceylon Chamber of Commerce
  • Best knowledge integrator – National Business Excellence Awards
  • CIMA Business Leader of the Year
  • Asian Retail Leadership Award
  • In compiling to the ranking of 2014/2015 financial year, Cargills has been ranked number (Julfikar, Saha & Rana 2016).

2.2. Business Structure and HR Management

Figure 3: Stakeholders’ structure

Source: Developed by the Author

The company has provided employment to 8,738 personals according to the Cargills annual report 2014/2015 Cargills (Ceylon) PLC 2017). Cargills have created a safe working environment for their employees and have been reported to treat them with dignity and respect. The company uses a focused and an effective human resource plan to recruit candidates as the necessity of the manpower and requited employees has been given equal opportunities (Noe et al 2007).

Cargills is committed to maintain a talented group of team members and have created an environment in the workplace to allow the employees to contribute to the collective success and the development of the organization. The trainings provided for the employees and initiatives related to practices, remunerations, talent management and other affiliated benefits are maintained within the company to fulfill human resource related objectives to cope up with the challenging economic situation (Cargills Ceylon PLC 2017).

Under its policy of human resource development, in order to develop a talented work force, Cargills have taken an effective approach such as allocating trainings per year and providing performance and career development reviews to the employees. It has helped the organization to develop a team equipped with knowledge and competencies who have a mindset to handle the business challenges. Since majority of the employees are young they have devised training programs such as the “in-house certificate programme” to equipped them with an effective set of skills. Similar procedures are taken toward the young employees and have proven its ability to manage personals from different generations. They also provide these workers with opportunities to go abroad to work and enhance their performance (Alissa Barron, Michael Shuman & Wendy Wasserman 2009).The employees were granted safety in the work place as manufacturing systems are managed with a safety management and reasonable precautions according to ISO and statutory requirements. In addition, as part of the annual training curriculum training on Occupational Health and Safety modules is carried out to educate the employees (Noe et al 2007).

Figure 4: Current Structure of Cargills

Source: Developed by the Author

2.3. Challenges in Human Resource management & solutions

Despite all the success expressed through its triumphs, awards, ranking and financial success, there are few issues in the areas of HR management which should be addressed promptly before they lead in to significant problems in order to be a 100% success in the competitive business world. The summary of the proposed management plan for Cargills is as follows,

Table 1: Organizational management framework for HR management of Cargills Ceylon PLC

ElementObjectiveStrategy
Competitors / external environmental influence & unpredictability in security of the employee
  • Maintain job interest of the employee
  • Provide a supportive environment to the employee.
  • Inundating the employees with inspiration and motivation
  • Exercising the transparency of the company
Wrong organizational structure- Absence of professional advice
  • Receive advices over company development by professionals
  • Recruit a team of professional advisers
Wrong organizational structure-

Long chain command

  • Increase the communication among employees
  • Fast decision making
  • low compensation cost
  • Develop a short chain of command
Wrong organizational structure-

Increase span of control

  • Increase opportunities for the lower authorities
Strategies are not taken as it changes with the chain of command
Avoiding recognition of the employee accomplishments
  • Maintain job interest and increase the performance of the employee
  • Rewarding the top performers
Lack of Training and Diminished capacity of HR departments
  • Talented staff allocated for HR duties
  • Provide HR management related trainings

Source: Developed by the Author

Figure 5: Effects of productive HR management

Source: Developed by the Author

2.3.1 Challenging and unpredictable external environment

The foremost challenge is the retention of Cargills team members by being reliable against the unpredictable nature of the industry and continuously changing external environment. One such example is the influence created by the competitor brands. Cargills has developed competitors like John Keels over the years with the development of the state of life in Sri Lanka as average people tend to spend lavishly over products and lead a luxurious life. As the competition in the business raises with other rival companies, it is a challenge you have to overcome in order to maintain the reputation and the sales of the company. Competition do give positive attributes for the development of the organization like, force for innovation, customer service improvement, complacency and educational effects like giving a clear and comprehensive understanding over the organizations core market. However, if the challenge put upon the company is sudden and significant it will create issues in the organization, as the influence created by the change in external environment is enormous. There is a possibility of that happening to Cargills, given the careful analysis of the competitor brands. The negative aspects of this kind of a situation will affect the employees of the company. In such kind of a situation the employees will feel the need to leave the organization since better opportunities are provided to them by other organizations and to possibly avoid any company layout due to the financial instability.

Solution: This can be addressed by inundating the employees with inspiration and motivation about their work, their contribution to the success of the company and how Cargills play a role in the partnering the development of the country. By creating an environment based on trust and honesty within the organization, it will provide a sense of reliability on the organization toward the perception of employees. Exercising the transparency is another approach, which can be taken toward the improvement of reliability. Practices like openly sharing company information on the relevant matter and educating the employees about the tactics of the rival companies will reduce the substantial stress carried by the employees about the situation as they feel more secure and as a team member in the organization.

2.3.2 Absence of professional advice in the organizational structure

One major downfall in the business structure of cargills is the absence of the advisor role as an organization. Every prosperous organization requires a team of expertise on the field as professional advices are needed to manage complications and issues in the business.

Solutions: A committee of professionals should be allocated as the advisors of the company to advice on a basis of frequent and accumulated manner as their service is needed to assist in the operations of the organization, to provide expertise knowledge when needed, to advocate the organization to the community and when conflict rises they provide guidance for the leadership to assess the situation. Their supervision is also required when organizational plans are developed as the desired results can be obtained by incorporating their professional oppositions.

2.3.3 Long chain of command

The chain of command is long in Cargills Corporation, due to the high variety of authorities assigned to give command and supervision to the employees at all levels. The organizational designers have developed the structure in a way the organizations’ departmentalization is based upon the groups allocated according to the tasks to obtain the strategies to reach the objectives of the company. As the length of the command chain is long, information do not pass promptly through the authorities, as it has to reach many layers. This makes the decision making process slow leaving the company at a competitive disadvantage against the companies capable to make fast decisions.

This have played negative for Cargills, when it comes to implementing ideas of the employees who stays in the lower layers of the chain of command. By the time it reach the top authority, a competitor would have already established the idea in to practice. This reduce the features of a teamwork as they were not treated equally and they cannot contribute for the company development. Since the duties and responsibilities are dispersed through so many parties, the lower level of command gets a narrow set of responsibilities. The initiative is limited for the lower parties as they have to seek the supervision from the higher management. It limits the ability of those employees to be innovative and change according to challenging conditions.

 

Also the high compensation cost is an added disadvantage to the company as they maintain many layers of managers and supervisors who handle a limited area of responsibilities and yet they demand for a high compensation package because of the conditioned aligned with standard pay for the title. Also, miscommunications tend to happen because of the increased layers of management and due to interpretations made by each managers. The original message was not passed down to the lower layers of the chain of command due to the lack of open and flowing communication and it make a big influence over the company development as the labor of the organization lies at the lowest layers.

Solution: The problem can be addressed simply by developing a short chain of command by altering and removing the organizational layers, which were identified as less important, and job roles, which can be divided among the other existing parties. These changes would control the limitations discussed above and will make the decision making process fast and accurate, build a strong relationship among all the levels of employees, will increase the speed of the disclosures and will ultimately improve the employee satisfaction.

2.3.4 Increased span of Control

This kind of an issue occurs only in larger companies which recruit more than 100 employees like Cargills due the high number counts for the “managers’ span of control”. The supervisors are asked to control more employees than they can, making it difficult for the supervisors to maintain good relationships with the subordinates as they are unable to maintain disclosures with each and every one of them individually and to closely examine activities. Consequently, the employees working in such companies do not have much authority to perform at their job or to make decisions productively.

Solution: With the reduction of the chain of command the span of control, get increased automatically. It may not appear as a solution, but as the number of subordinates increase for one supervisor, it will give more responsibilities and recognitions to the supervisors. In that situation, more opportunities were created to the employees in the lower layers of command to reach in to the levels of their superiors. All these scenarios will increase the motivation of the average employee to contribute their effort to bring the company to a success.

2.3.5 Avoiding recognition

Cargills provide performance and career development reviews to their employees as a mean of evaluating the employee performance and hoping that the reviews will help the employees to improve their performance given that fact that the review contains the details. However, this process lacks a system of recognition for the top performers in the company. When employees are not properly recognized for their achievements and accomplishments they feel their effort and dedication put to contribute the company have not been valued. Therefore, they do not motivate themselves furthermore as their progress at work is not recognized.

Solution: If Cargills adopt a system to reward the top performers by incorporating the idea of “better pay for better work” the best performers will feel appreciated for their hard work and will feel motivated to work more and more effectively for the success of the company. This will also influence the mediocre or average performers to get motivated and the salary increase can be used as a bait to get the best performance out of such employees. Based on the evaluation results, the employee strengths can be recognized in order to use them for the development of the organization. To sustain the motivation, Cargills have to constantly asses and identify the facts of de motivation as it inspires the employees to take risks and to unleash their synergistic potential. There should be a steady, open and consistent communication where employees receive a comprehensive and constructive feedback. Management should focus on improving the employee weaknesses while celebrating their accomplishments and should be able to guide the subordinates accordingly.

2.3.6 Lack of Training and diminished capacity of HR departments

Budgets for training on areas such as the supervisions related to handling employee problems and effective communication practices among the employees have been drastically reduced by majority of the companies. Due to that the supervisors lacks the skills and guidance they require to manage the subordinates. Cargills Company also lacks the training in the areas of supervision even though it has successful annual trainings to educate and train other employees to improve their skills and talents. Also, in the early days, Cargills employees were able to communicate with their HR professionals within their organization if the intermediate supervision (the supervisor) is not able to help solve their queries. With the changes in the priorities of the company and with the technological advances the HR support has been outsourced and have been computerized to administer most of the human resource functions.

Solutions: It is essential that the organization maintain a talented staff for the HR duties who are skilled in training, employee relations, counseling and other relevant commitments. Continuous trainings and practices should be carried out to train the supervisors on how to handle HR issues and evaluate each training to ensure the expected knowledge and skills grasped by the trainees. The mentoring of the supervisors will also go a long a way as it will help them with advice and support on how to do their job effectively. The training needs should be examined carefully before facilitating the training programmes and the employees should be encouraged to speak out their views and to point out the areas they have deficiencies which require training.

Figure 5: Proposed structure for Cargills

Source: Developed by Author

Conclusion

An organization is considered as an open system, which operates and interacts within the environment. The system reaches for management to maintain the stability. Therefore, the system looks for management in order to input from the external environment, the communication process, to reenergize the system and to transform processes.

The management of an organization is considered the procedure of designing an environment and maintaining it with the purpose of effectively reaching the selected aims/objectives of the organization. Since managers of an organization carries all the duties related to panning, organizing, controlling and leading, management is considered an essential feature of an organization.

The concept of management has developed over the time in to paradox of modernized theories to meet the requirements of the organization helping to provide a proper satisfaction and higher productivity level. Over the past 100 years most of the evolution of theories took place and have emerged with a very contemporary management practices. Initially practices adapted with the classical management perspective have changed in to a contemporary applied perspective in the beginning of 19th century. This provides the higher management with an array of useful method, techniques and approaches to overcome issues and enhance their performance as an organization.

With the understanding of the role of employees’ contribution to make the organizations’ a success or a failure, the higher authorities put a significant importance over the human resource management within the company. Given the fact that people drives the organization, the companies today have taken over some practices for the welfare of the employees. As long as the concept is followed with careful supervision, the management is leading the right pathway to develop a people based organization. By mastering the “art of people”, the management can succeed any complication they may come across as there is no other ways of building an organization, which illuminates a high performance.

Creating a motivating organization is considered a significant challenge for the leadership and the management of an organization. The key to drive employees toward hard work is “motivation” and can only be adapted by applying features like creativity, stewardship, experience and most importantly by the faith over the fellow employees.

References

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