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Homage’s existing HR practices

The company is now at some cross-roads. It needs to decide on a number of options:

Option 1 : One of the directors thinks that the best option going forward is take on the competition from China and Europe by making the company’s own manufacturing capability more efficient and more modern. He argues that while Brexit has its negatives, it also has positives for a company such as Homage. He thinks that Brexit potentially gives the company a breathing space from competition from countries in the EU - like Poland and Romania, at least in the short term. That breathing space will allow it to consolidate its domestic market and allow it to become a stronger force on the international market in the longer term. 
If the company decides to take up this option, they will have to review and replace some of their rather out-dated manufacturing plants, and acquire more modern, and more efficient ones. The relevant costs and savings are detailed in Appendix 1.

Option 2 : Another director has a different opinion. He thinks that a better option for dealing with competition is to merge with or take over one of the larger ones located within the EU. This will give the company a foothold in the large EU market after Brexit takes effect, and will therefore potentially give it a competitive edge. He has identified two such possible targets, and Appendix 2 has a summary of their last two years’ financial statements. 

Irrespective of the option taken up, there is no doubt at all that a significant shake-up of the company’s workforce and the way it is managed will be required. One move they are considering for example is to set up an HR function and bring in-house many of the activities that can usefully be done internally from their current out-sourced arrangements. Among many things, they think that such a move may help them in dealing with the whole issue of managing the redundancy scheme that will surely have to be done. Deciding who to make redundant and who to retain will be a huge task, given the close interconnectedness between many of the employees. Preparing a streamlined workforce that is professionally selected, well-trained/qualified and motivated for the huge task of rebuilding the company going forward will be another challenge. 

Several directors currently running the company are also approaching retirement age. Even though there is currently no compulsory retirement age limit, there is nevertheless some concern that not sufficient planning appears to be taking place. 

The managing director has asked you to look at the company in detail and write a report to him covering a detailed review of :


HR Function : 
a.Review Homage’s existing practice with regard to HR activities. and identify and discuss key areas of weakness/concern.
b.Outline and briefly discuss the possible ways in which the setting up of an effective HR Function/Department could help the company in its current predicament as well as in the future. Indicate in your report which areas, in your view, will require priority attention.
Finally, provide a well-balanced summary of arguments for and against  a company having its own fully functional HR Department as opposed to having it outsourced, and given the circumstances of Homage Engineering, make a recommendation as to whether or not to establish one.

Homage’s existing HR practices

The company Homage Engineering plc does not have its own Human Resource Department, the company takes the assistance for payroll administration from an outsourcing firm that mainly specializes in payroll administration. For its recruitment/selection of senior staffs, the company is completely dependent on a local recruitment agency. For other ordinary posts the company practices internal recruitment, the management puts up a notice on the internal notice board about the vacant position, they encourage their staffs to suggest or recommend their friends, family and known to apply for the vacant positions. The management selects the candidates through the recommendations from the already existing employees. The same practice is being followed in all the four factories across UK, therefore there is a local and family like environment in the organization.

The main concerns of Homage is the HR practices it follows, every organization should have Human Resource Department, because there are variety of essential activities that are carried out by human resource department, like recruiting, staffing, payroll activities, training and development. One of the main drawbacks of Homage is that the organization does not have a Human resource department.  It recruits its senior staffs with the help of local  the  From the review it is know that the company lost its main customers because of the recession of 2007/2008 according to the latest accounts the sales of £15m and the profits were less than £2m. Even after the end of the recession period, the company’s profit is not growing.

The areas where attention needs is the productivity of the company needs to be enhanced. For better and efficient productivity, the company needs to hire efficient and skilled employees. The company is now not in position to hire employees rather it is considering to terminate some of the employees. The HR practices of the company needs attention, it is very clear that the present employees of the company are inefficient. Even after the recession the company is running in loss, so it is very important for the company to hire efficient employees by practicing the right and standard method of recruitment and selection unlike the one practiced now in the company hires its senior staff through local recruiting agency and other  staffs through recommendations. The employees are very less motivated so the leadership management in the company is also questionable, the fact that most of the employees are closely related can be held responsible, it might not be possible to be strict in such situations (Stone  and Deadrick 2015). Another  major concern can be said that there should be training and development sessions given to the employees for increasing their efficiency. Family like environment is not always good for professionalism, the company should get rid of the family like environment, it could be the reason for less productivity (Shammot 2014). None of the employees earlier have joined any Union but now they are planning to form a union, which is not good for that organization because the employees are related to each other, they might call for strike that would not be beneficial for the organization (Glaister 2014).

Weakness and concerns of Homage

According to Breaugh (2017) there are many functions that an HR department performs that in an organization, their functions include, recruiting, staffing, training, development, taking care of the wages and salaries of the employees, bonuses and incentives. Setting up an HR department would .They can themselves judge the eligibility of candidates by not depending on the recommendations (Stredwick 2013). The HR department would recruit the employees, and the management. The organization will no longer be dependent on another firm for payroll activities if they have their own HR department. If there is any problem from the Unions which might occur in Homage because the employees there are planning to join union, in such scenario there has to be a HR department that resolve the grievances of the Union, will do negotiations where ever required. HR managers duty is to boost the morale of the employees, which is very important for the organization to meet its objectives and goals. It is the duty of the HR department that the employees given proper training and development, that can make the employees skillful and keep them motivated (Rao 2014).

Every organization should have their own HR department, an outsourcing HR agency would not know the organization better than an internal HR department. An outsourcing agency might perform all the tasks that they are paid but they would never belong to the organization, it would lead to poor performance. The outsourcing HR agencies are often offsite, which leads to so many problems including the communication problems because it creates a distance between ge the organization and its employees, leaving the employees frustrated.  The HR department bridges the gap between the organization and the employees. The outsourcing agencies usually lacks the knowledge of the organizational culture of the organizations. They are not aware of the requirement of the company in terms of workforce, depending on them in such cases might lead to recruitment of less efficient employees which would lead to less productivity. Having HR department will solve such problems, because the HR department would very much know the requirement of a particular position.  In addition, there are chances of information leaks, an outsourcing agency cannot be trusted in this regard (Liu 2014). Outsourcing agencies perform similar tasks for many other organizations, so there are chances of them making mistakes in the important activities like payroll activities. They might have other priorities as well but having a HR department within the organization will solve such problems, there would be less chances of HR department making mistakes because they would know all the staffs better than an outside agency (Aswathappa 2013). It may happen that the executives might give too much control over company’s HR functions to the outsourcing agencies after they get the service, too much dependency and loss of control in HR functions is not good for the organization (Stone and Deadrick 2015).

Benefits of having an HR department

Conclusion

Role of an HR is undoubtedly very important for an organization, they perform a number of tasks and duties like, recruiting, staffing, training and development, leading and directing, the HR department looks on the payroll activities like, wages and salaries, incentives and bonuses of the employee. It would cost a lot of many to the organization if they hire another agency to perform all these functions, having own HR department will also cost a lot of amount but there would be increased efficiency in the overall performance of the organization.

Recruitment is very important task that is performed by the HR department, the performance of the organization completely depends upon the quality of workforce. Selection of the employees on the basis of recommendations is not at all effective method of recruitment, Homage might have efficient staffs that are recruited in the same manner but the management of Homage completely ignores the chances of them getting more efficient workforce, that they can get through external recruitment. Moreover this system of recruitment is not fair, because there are no standard criteria to recruit the staffs from among the recommendations. The company is dependent on a local agency for hiring senior staffs, senior staffs perform many important functions and Homage should hire senior staffs by itself. The company could not anticipate that recession would last long, therefore they the required layoff was not done. The organization should have done redundancies in order to reduce its expenses on the wages and salaries of employees that are not less efficient than the others. If the organization had taken the step initially it would not have to face problems that now can arise because of the formation of trade union. Trade unions are good, but for an organization where all the employees are related to each other because of the faulty HR practices, might be harmful for the organization. The organization might have to face situations like strike. If there had been a HR department, the organization might have thought of redundancies, because the HR department would have suggested for redundancies way earlier and the process of might have become easier.  

References

Aswathappa, K., 2013. Human resource management: Text and cases. Tata McGraw-Hill Education.

Breaugh, J.A., 2017. to Recruitment. The Wiley Blackwell Handbook of the Psychology of Recruitment, Selection and Employee Retention, p.12.

Glaister, A.J., 2014. HR outsourcing: the impact on HR role, competency development and relationships. Human Resource Management Journal, 24(2), pp.211-226.

Liu, H.C., 2014. Effects of human resource outsourcing on service innovation in public sectors. Acta Oeconomica, 64(Supplement 2), pp.13-24.

Rao, T.V., 2014. HRD audit: Evaluating the human resource function for business improvement. SAGE Publications India.

Shammot, M.M., 2014. The role of human resources management practices represented by employee's recruitment and training and motivating in realization competitive advantage. The Retail and Marketing Review, 10(2), pp.18-37.

Stone, D.L. and Deadrick, D.L., 2015. Challenges and opportunities affecting the future of human resource management. Human Resource Management Review, 25(2), pp.139-145.

Stredwick, J., 2013. An introduction to human resource management. Routledge.

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