A survey conducted by PWC, Price Waterhouse Coopers (2007), stated that leadership development proves to be a big challenge. HR professionals continue to wrestle with understanding the best ways to keep people in the pipeline and develop leaders for future succession planning. Increasingly recognized as becoming strategic business partners within their organizations, HR professionals are expected to provide the essential frameworks, processes, tools, and points of view needed for the selection and development of future leaders.
Across the globe leadership development has been identified as a critical strategic initiative in ensuring that the right employees are retained, that the culture of the organization supports performance from within to gain market position, and that managers are equipped to take on leadership roles of the future so that the organization is viable in the long term. Charles Handy (1999), asks is leadership an innate characteristic, and are leaders born or made?
This point could be argued as there are differing and disparate management styles within Unique Party, whereby each manager has good and bad traits, as opposed to having an all-pervasive suite of skills, either gained through training or from natural ability. Mabey, C. (1995) contends that the HR function must have a strategic approach to training and development, to attempt to identify the dynamics in an organisation which demonstrate that the development of self and others is being taken seriously at all levels and that such investment is having a positive impact on individual and corporate performance.
Unique Party’s HR Manager has identified this necessary training, and has successfully justified the expenditure to the company’s owners and has implemented the strategy into the business training and development policy (Figure 2). Key managers are now undertaking professional training, some to degree level; others have been placed on specific supervisory and leadership training.
Those who have completed their training have demonstrated tangible and beneficial differences which have impacted successfully and positively on the organisations costs, general people management, and have resulted in improved morale throughout their respective areas of responsibility, increasing expertise, creativity, productivity and ultimately profitability. Unique Party have been unsuccessful in the past at recruiting and retaining high calibre personnel.
Several factors have led to this issue, namely inadequate salaries offered, over-stating positions to the extent that potential suitable candidates have been discouraged from applying for positions they could have comfortably undertaken, believing that they were not capable of fulfilling the requisite duties. Tyson, S. (1995) contends that employment levels directly affect HR policies. The availability of labour influences recruitment policy, reward policy, and training policy. The unemployment levels create the general climate of economic activity.
Skills and labour shortages or conversely abundant cheap labour, can influence strategic decisions on locations, acquisitions and expansion plans. Unique party have an abundance of manual labourers, and are within the regional salary scale expectations for this type of work, however more skilled positions are prone to shortages of labour, as the organisation historically has not maintained pace with the salary scales for the region and targeted demographic group. Clear and current reward policies must be implemented by HR to attract individuals to any business. Organisations must be in the labour market to compete successfully in it.
Wage rates are the product of market forces, i. e. supply and demand. Unique Party have often advertised positions without pre-communicating salary scales, only to receive an abundance of applicants who after being made offers of employment, have subsequently turned such offers down due to the overall package not meeting recognised market expectations, even the lower quartile packages. Since the arrival of the HR Manager into the organisation, appropriate remuneration strategy has been built into the business policy for recruitment, and is one of the most important elements within (Figure 3).
Armstrong, M. (1991) suggests that through the use of a ‘compa-ratio’ (short for Comparison Ratio). a measure can be taken of the average salaries in a grade to the extent to which they deviate from the target salary, and thus suggest where action must be taken to adopt a more generous policy. The formula for calculating the ‘compa-ratio’ is derived from dividing the midpoint of the salary range, by the average of the market value salaries for the role. (Figure 4 – example).
Armstrong, M. (1991) goes on to contend that market rate pressures must be absorbed, and that there is a need for the HR strategy to keep pace with what other companies pay to preserve equitable internal relativities, i. e. maintaining the market valuation of salaries. Providing that market values are met, Palmer Mabey, C. (1995) contends that this HR strategy should enable the recruitment, motivation, to retain staff of the right calibtre tro ensure business success.