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Case study: Website U-Coupon
1. Question one
Why is HR planning important and how does it support U-Coupon’s business objectives?
1.1 Importance of Human Resource Planning
Human Resource Planning refers to the process of analyzing and identifying the need for and availability of human resources so that the organization can meet its objectives (Jackson & Mathis 2008, p.45). In other words, it could be apprehended as the process of forecasting an organization’s future demand for, and supply of, the right type of people in the right number at the right place and also at the right time who are capable of effectively and efficiently completing those tasks that will help the organization to achieve its overall objectives (Aswathappa 2005, p.65). And the importance of Human Resource Planning could be understood in several areas: Future personal needs, Part of strategic planning, Creating highly talented personnel, International strategies and Avoid resistance to change and move, below we will discuss how human resource planning support U-Coupon’s business objectives in these areas to show the importance of human resource planning.
1.2 HR planning’s support to achieve U-Coupon’s business objectives
As stated in the case, U-Coupon’s business objectives in the short run will be to ensure the company’s expansive strategy to extend the business focus to at least five other major cities in Malaysia besides Kuala Lumpur and in the long run as we can say that the most important target of HR planning will be to meet the changed human resource needs in a timely manner according to the company’s changing business focus and strategies adopted in the long run.
1.2.1 Future personal needs
It is widely accepted that the first step of a complete human resource planning process is needs analysis which is the assessment of the current and future business needs (Loosemore, Dainty & Lingard 2003, p.85). And particularly in cases like what happens in U-Coupon in which the business is growing rapidly or when the organizations are operating within a very turbulent environment resulting in necessity to perform frequent reviews of the human resource planning policies to avoid the possibility of surplus or deficiency in staff strength that may restrain the growth of the business. In the stated situation of U-Coupon, the company sets its business objectives in the short run to support the company’s expansive strategy to extend the business focus to at least five other major cities in Malaysia besides Kuala Lumpur and this strategy will most probably create large demand for talents who will be experienced in the business and also need to have in-depth understanding with the markets that the company is going to enter into and in this point the company should train the current managers, promote the staffs with leadership capability and high potentials and also seek to recruit those talents that may be currently in the competitors or working in other industries to fill the needs in the futures due to the business expansions.
1.2.2 Part of strategic planning
As claimed by Bohlander and Snell (2010) that as. According to their view, human resource planning relates to the strategic planning in two major areas: strategy formulation and strategy implementation. On one hand in the issue of strategy formulation, human resource planning provide a number of inputs into the strategic formulation process in term whether the company has the particular and number of talents to pursue a given strategy. On the other hand, in the field of strategy implementation, human resource planning is also involved in the implementation strategies. Once the strategies are set, the company’s executives must do the resource allocation regarding the company’s structure, processes and human capital. So in our case of U-Coupon, it is important for the top management team to align the human resource planning with the strategic planning to facilitate the strategy formulation and implementation, for example, U-Coupon need to measure the size, features and quality of the current staff team to decide which cities could be targeted as the markets to be enter into and also during the implementation process the top management team members need to allocate the available human capital to different locations and positions with different responsibilities to the company to carry out the strategies.
1.2.3 Creating highly talented personnel
There are two different situations in which human resource planning would be important to help create a highly talented team in the U-Coupon. With the fast changing of the company’s structure and business focus due to the implementation of the expansion strategy and also the changes in the industrial environment, there could be frequent shortages in some positions and also redundancy in other positions because the company previously had not foreseen such changes. And when redundancy and recruiting new staffs happen at the same time, there is great chance that the team performance would be reduced due to the decreases of the skilled talents proportion in the team. But with a well prepared human resource planning, the company could foresee such trends and changes and redeploy some talents to other positions by training and job rotation and other measures. The second situation that also brings decreases in the number of the talented personnel is when some skilled employees come to retirement age and have to leave the company. Then it would be necessary for the company to pay attention to the management of the succession planning to select the candidate for replacement to maintain highly talented personnel in the same positions.
1.2.4 Reduce the resistance to change and move
As we know, individuals and organizations often resist changes though such changes will probably be beneficial to the company and to the employees eventually. Sources of resistance to change usually include: habits, resource limitations, threats to power and influence, fear of the unknown and defensive perceptions (Kern, Langlands, Stroh, Northcraft & Neale 2002, p.355). For example in term of threats to power and influence, people may resist the change because the change will reduce the power, interests or influence currently owned by them. And it is reasonable for people to protect their own interests. Due to the various source of resistance to change, it is not easy to perform changes in the organizations and what’s more many changes will come at the cost of the company’s performance, it is very necessary to avoid the unnecessary changes through good planning. As in the case of U-Coupon, with the coming expansion of the business, the company could recruit new talents with clear career life planning for them to follow and this will help avoid the changes in term of redeployment of employees from one position to another one.
2. Question two
Strategic recruitment is of utmost importance if U-Coupon were to achieve its business objectives. Critically discuss and elaborate on this.
2.1 Definition of strategic recruitment
Recruitment and selection are the avenues by which companies acquire their most important raw materials, i.e. the human resources (Zeidan & Murphy 2010, p.126). And Strategic Recruitment is the process of developing a plan that offers a firm with a methodology to identify internal and external recruitment mechanisms to attract talent who possess the competencies required for the positions available (Chra.army.mil 2010).
2.2 Strategic importance of strategic recruitment for U-Coupon
Strategic recruitment should be part of an integrated talent management strategy which is driven by the business strategy and the key elements involved in such a strategy that make the strategic recruitment of utmost importance include: Understand the implications of the business strategy, Develop an integrated set of processes to sit alongside development plans and Create an infrastructure for development (Holbeche 2009, p.169).
2.2.1 Understand the implications of the business strategy
As mentioned above, organizations plan for the future, human resource managers must be concerned with linking the HR planning and strategic planning for the organization as a whole and that is why HR planning needs to relate to the strategy formulation and strategy implementation. And as in the case of the website of U-Coupon, the company’s strategy of growing in its business coverage, then it will surely has implications for the HR planning and especially the recruitment field. Such implications may include: fast growth of the demand for employees which comes along with the gap between the supply of talents within the company and the demand for such talents and large demand for sale staffs to exploit the new markets in the five targeted major cities in Malaysia besides Kuala Lumpur.
2.2.2 Develop processes to sit alongside development plans
One significant feature that differentiates traditional staff hiring and strategic recruitment is that the later will focus on the concept of process by developing an integrated set of processes to sit alongside development of the business plans rather than just posting job recruitment notice in the job markets. As the figure below illustrates, when the strategic planning goes through the complete processes by checking the company’s mission, vision and values and then analyze the external and internal environments followed by strategic formulation and implementation, it is necessary for the HR department to align the human resource management activities with the strategic planning in every single process. For example, before the actual recruitment begins, the HR managers need to have some decisions in their mind regarding the forecast demand and supply of employees, what characteristics of the candidates should have to be easier to integrate into the corporate culture and also whether the new human resource will be gain internally or externally. That is one of the reasons why strategic recruitment is of utmost importance if U-Coupon were to achieve its business objectives because the company needs to develop an integrated set of processes to sit alongside development plans.
Figure 1 Linking strategic planning and human resources
Source: Bohlander & Snell 2010, p.52
2.2.3 Create an infrastructure for development
James Walker (1992) who is considered as the founder of the Human Resource Planning Society identifies three major methods in making people management strategy which are: a separate process, an aligned process and an integrated process. While the separate process was widely used in the 1980s in term of the standalone personnel function, the aligned level is used more frequently in the nowadays by the management by developing the people management strategy alongside the business strategy and assist to realize the business objectives. And at the top level of strategy development, people management is integrated into the business strategy with other functional strategies and in this level the focus of human resource management would be on the business issues that human resource management can support (Ingham 2007, p.147). As for U-Coupon which has an ambition to expand its business scale in the near future, human resource planning especially the strategic recruitment part not only needs to follow the business strategy but it in some circumstances it could lead the business in term of providing direction, influences and driving forces to the business strategy development. For example, U-Coupon could recruit more talents with specialized skills or high potential and train them well with the company’s culture and needed product knowledge to expand the capability of the organization which will be driving and accelerating the business strategies with increased capabilities in agility, flexibility, creativity and innovation brought by the fresh blood.
3. Question three
What selection procedures would you use for U-Coupon? Justify your answer.
Most organizations take a series of consistent steps to process and select applicants for positions, and different companies with variables in term of company size, number of people needed, electronic technologies used and many other influential factors will have different set of selection procedures (Jackson & Mathis 2008, p.231). This also corresponds with Torrington’s and Hall (1998)’s view that although the search for perfect method of selection continues, HR managers continue to use a variety of imperfect methods in order to cope with the demands of the jobs.
3.1 Concept of strategic selection
In the case of website of U-Coupon, it should focus on the hiring and selection of the key human resources, so it should precede strategic selection which aligns employment activities with the organization’s business strategies to produce a positive contribution to organizational performance (Stone 2011, p.236). In term of the determination of the adopted selection procedures, the company could follow the two principles: Validity and Reliability.
3.2 What kind of people needed?
Suppose that website of U-Coupon has similar structure and business model with many other typical electronic commerce businesses, we can conclude that two kinds of staffs are the core employees of the company and also their expansion are critical in the implementation of the business expansion strategy: sale team and the engineers. The forecast of the increasing need for these two kinds of staffs is reasonable: on one hand, the sale team need to be expanded greatly due to the current strategy to extend the business coverage from the capital only to another five other major cities in Malaysia, then as an internet website that facilitates group purchases, it is important to have more local sales team members to exploit the new website members and customers and business partners who are interested and obviously their performance has close relationship with the success and speed of the implementation of the strategy; on the other hand with the expected increasing number of the customers and retailers who are all end users of the website in the near future with the implementation of the strategy, it is also important the expand the technical (engineer) team to cope with the increasing visiting to the website as if the website encounter some technical problems such as being attacked by hackers (who could be from competitors) then the customer confidence and royalty built up by the sale forces could be rendered obsolete.
3.3 Recommended selection procedures and justification
A full-scale selection process includes ten steps as below, and the shadowed five steps are steps that generally would not incurred much cost to the company, and the task of identifying the selection procedures would be to pick up some or all of the rest six steps according the needs of different positions.
Table 1 Steps in the selection process
Source: Stone 2011, p.241
22.214.171.124 Selection procedures for sale staffs
As we know, sale staffs have a high turnover ratio; this is due to the nature of the positions because not many people would enjoy working in sale positions for a lifetime which is tiring with high pressures. So that the selection procedures of sale staffs besides the four regular steps that would not cost too much to the company only use another three stpes: Tests (Interest tests and Personality tests), Interview and Medical examination. The medical examination is a must for any positions. The interest tests and personality tests are important to find out those who could be working with passions and could sustain pressure to achieved the set sale targets; and the face to face interview is also important for HR department to select the suitable candidates who posse the necessary physical conditions such as fine physical appearance. But further Background investigations, Preliminary screening by HR dept and Final selection by line managers are not necessary in order to save up costs.
|Reception of applicants|
|Tests (Interest tests and Personality tests)|
|Placement on the job|
Table 2 Selection procedures for sale staffs
Source: adapted from Stone 2011, p.241
126.96.36.199 Selection procedures for engineers
In term of the selection of the engineer candidates who are small in numbers but are also critical to the website’s success which had been mentioned above, we recommend the full-scale selection process to be executed in selecting the engineers. In term of test, the HR department could use the aptitude test to test the special abilities that are required in the specific engineering positions. Background investigation is also important as by investigating the shortlisted candidates’ past work and study experiences, the HR manager could check with the referees who are well acquainted with the applicants’ work and study such as the applicants’ supervisor. The Preliminary screening by HR dept and Final selection by line managers are also necessary as engineers are important to the company’s expansion strategy.
|Reception of applicants|
|Tests (Aptitude tests)|
|Preliminary screening by HR dept|
|Final selection by line managers|
|Placement on the job|
Table 3 Selection procedures for engineers
Source: adapted from Stone 2011, p.241
4. Question four
How would you set pay rates for U-Coupon? Would you adopt pay for performance or skill-based pay?
As mentioned above, sale team and the engineers are the core employees of the company and are critical in the implementation of the business expansion strategy, based on the different nature and features of the positions; we will recommend different pay rates setting for them.
4.1 Pay for performance for sale staffs
Pay for performance, also known as incentive pay, means tying at least part of compensation to employee effort and performance, whether it is through merit-based pay, bonuses, team incentives, or various gain-sharing or profit-sharing plans (Daft & Marcic 2008, p.310). And data also shows that since the 1990s, there have been an increasing number of firms using pay for performance and with now about 70 percent of the companies are offering incentive pay. There are at least three major reasons why the website of U-Coupon should adopt Pay for performance as the kind of pay rates setting for sale staffs.
4.1.1 Encourage performance through extra pay
The performance of the sale people has direct and close relation with the success of the company’s expansion strategy in the five targeted major cities because only with more and more number of customers and retailers joining the U-Coupon through the effort of the sale people, then the success of the business of the company could be ensured and if in contrast the growth of the business in the new market is slow then it may be forced out by the competitors which already are doing business in the cities. And when the company is requesting the sale people to work harder and get more customers interested in the group purchases, the company also needs to pay extra to the extra efforts contributed by the sale people.
4.1.2 Low correlation between skills, qualifications and performance
The second reason is that there is low correlation between skills, qualifications and performance. Though some candidates may have high education background and some special skills, but these would not necessarily suggest that they could outperform the others in the sale jobs. So skill based pay would not be effective in setting the pay rate in the sale and marketing positions.
4.1.3 Money does matter in motivation
Though there are enormous theories and researchers suggesting that Money is not important to all employees. High achievers, for instance, are intrinsically motivated. Money should have little impact on these people (Bridge, O’Neill & Cromie 2003 p.64). But the majorities of people are not intrinsically motivated and are still considering money as very important motivators especially for the lower end jobs like the sale jobs. It is not practical and viable for U-Coupon to depend on skill based pay method regardless of the performance.
4.2 Skill-based pay for engineers
A skill-based pay method is usually defined as a pay system in which individuals are paid for the number, type, or depth of the skills they have developed (Kelada 1996, p.179). In other words, in this type of pay rate setting, pay or pay increase is determined by the variety of skills acquired or by the number of jobs that an employee is able to master. It is recommended that skill-based pay is used for engineers in pay rate setting for U-Coupon, two reasons are given below.
4.2.1 Performance is difficult to measure
On one hand, the website engineering jobs are not like sale jobs, their performance could not be easily by regular indicators or key performance index, what is more the most important job that the engineers should do is to ensure the smooth operation of the website; it is hard to measure the performance of the engineering job. So that U-Coupon could not use the performance pay to decide the pay rate of the engineers.
4.2.2 Encourage the engineers to progress in learning
In the website engineering and programming jobs, there is great demand of a range of professional skills is high and tasks to be performed are flexible and need to be done by those who posse the most innovative skills. So, it is important to use the skill-based pay to encourage the engineers to learn in a continual manner. And this in return will enhance the effectiveness of the business expansion strategy.
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Zeidan, F. Y. & Murphy, B. 2010, Handbook of Human Resource Management in Government. 3rd edition, San Francisco: John Wiley & Sons, Inc, p.126
 Validity refers to the ability of a test or other selection technique to measure what it sets out to measure.
 Reliability refers to the extent to which a set of selection procedures or measures are consistent and dependable.