Problem Description
Discuss about the HR Issues In Ford Motor Company.
The Ford motor company is a motor company that was founded in the year 1936 in Michigan USA. The organization deals with the sale of SUVs, commercial and luxury cars (Yang, Sudik, Wolverton & Siegel, 2010). Over the years it has been involved in the production of tractors, motorbikes and other automobiles. The company was developed after the need to develop automobiles that the normal working citizens with average incomes. This was the time that America was facing industrial revolution and few people could afford an automobile at the time. Cars during this period were considered a luxurious item and only the rich could afford cars. Up to now, the company still enjoys this recognition due to its mass production of cheap cars (Koshino, Nakagawa & Takahashi, 2011). The company enjoyed the privilege of producing vehicles that were used in the second world war. These vehicles were specifically designed for war and could handle the difficult terrain and the weight of the items being supplied to the troops in the war. These vehicles were used as field ambulances and firefighting pumpers during the war.
Today, the Ford motor company enjoys a large audience of customers all over the world. It has been able to establish itself in over the seventy countries all over the globe. The company has continued to produce cheap and luxury cars for its customers. Through this, the company is able to produce cars that match the needs of its customers. It has invested a lot in the modern technology to produce cars that are worthwhile to the customer (Wu, Dufour & Sun, 2010). To be able to manage the needs of its customers, the company has employed over seventy thousand employees to take care of the customers. It ensures that there is a good relationship between its employees and its customers. These employees are customer friendly and ensure that all the needs and the issues that the customers have been solved. To ensure that this is possible and the customers remain loyal to the company, it has ensured that the employees are also fully satisfied with their jobs. Through the company’s human resource department, the company has invested heavily in employees’ wages (Laudon & Laudon, 2011). It has increased wages and introduced bonuses for employees that work over time. Through this, employee retention rate has increased and productivity has increased. Skilled employees who are crucial to the company have been able to be retained. The human resource department has ensured that employees are content with their jobs through creating better relations between the employees and the company, allowing employees to have unions so as to be represented during the making of important decisions. The company has employee retreats that give the employees an opportunity to interact with each other create good relationships between them. Through this, they have been able to provide a positive working environment for the employees which is crucial for any company (Beigel, Collins, Ratliff, Schoon, Schroeder, Smith & Subhransu, 2010). The company has been recognized among the top employers in the world. By investing heavily in the human resource department, the company clearly understands that this department is crucial as it acts as an interface between the company, employees, and customers.
Over the years despite the success of the company, the company has been various challenges that are slowing it down. These challenges are from the various departments in the organization but the most affecting it are HRM related. One of the issues that the company has faced is a loss of profits. Over the past few years, there has been a trend during the presentation of the annual financial reports. The reports indicate that the profits have reduced over the years (Andrianesis, Liberopoulos, Kozanidis & Papalexopoulos, 2011). The sales have reduced and the debts have increased. There is a need to carry out serious steps and activities to end this issue as it could lead to the downfall of the company. The company made a profit of net worth 2.5 billion dollars which were lower than that of the previous year. The number of cars in different countries across the world also decreased. The Ford motor company made a total amount of seventeen billion dollars from the sales of its vehicles (Lee & Choi, 2011). This was a bit lower than that of the previous years. The debt also increased by two percent. From the reports, it was clear that the organization needed to do something so as to increase its profits. This had affected the company as there was a complainant, from the employees’ officials claiming that most of the employees had not been paid their salaries. The company’s raw materials suppliers claimed that there had not been paid their dues for the past one year and this was greatly affecting them (Maynor, 2011).
Loss of profits is a major issue to the human resource department as it is mainly caused by HR related issues. Loss of profits occurs when the expenditure used in the production process is more than what is gained from the sales of the products (Rummler & Brache, 2012). Entrepreneurship is all about making profits not losses. Loss of profits is caused by many factors in an organization. These factors include employee turnover, recruiting the wrong employees, low employee productivity, employee absenteeism, and human and computer errors. Other factors that cause loss of profits include miscommunication in the organization, vendor errors and contract noncompliance (Isaak, 2016). Recruiting the wrong for a certain job will always cause issues in the organization. These employees may lack the knowledge and experience required for the job (Hancock, Allen, Bosco, McDaniel & Pierce, 2013). Recruiting the wrong employee can cause more damage to the organization than one thinks. The competition in the marketplace is so stiff that every organization needs to make sure that it gets the value for money in everything it does. The cost estimated for recruiting the wrong employee is extremely high. The researcher has proved that recruiting the wrong employee costs an organization over two times the basic annual salary of the employee. this increases the expenditure that the organization uses on the production of its products and services. This is because the organization has to cater for the expenses of the employee in terms of salary, cost of recruitment, cost of interviewing and the cost of time spent on the employee. all these costs are crucial to any organization and when added up they become too expensive to cater for. This cause the organization to have losses since they expenditure they are using in the production process is greater than the money they are getting from their sales. Also, the effect is still seen when the organization discovers the employee does not match the requirements. This means that the HR has to repeat a new recruitment process to hire a qualified candidate which is an expensive affair to the organization.
Loss of profits is also caused by increased employee turnover. (Hancock, Allen, Bosco, McDaniel & Pierce, 2013). Employee turnover may be voluntary, involuntary, desirable and undesirable. Voluntary turnover may be the wish of the employee to leave the organization to find better pastures while involuntary may be because of laying off workers and also firing workers (Hogh, Hoel & Carneiro, 2011). Employee turnover has a great impact on an organization as it creates difficulty in filling the empty position left by the employee. this means that the organization will carry out a recruitment process to try and find the best-qualified person to fill the gap. The recruitment process means that there will be a lot of spending in the process. The cost caused by employee turnover include hiring costs, cost of training requirements and the staff time devoted to the recruitment activities (Hom, Mitchell, Lee & Griffeth, 2012). This expenditure may minimize the number of profits made by the organization since they will have to spend more money on this process. Employee absenteeism is also another factor that causes an organization to make more loses (Ybema, Smulders & Bongers, 2010). This may be a behavior that is intentional for an employee to miss work. Excessive employee absenteeism has a major effect on the organization as it reduces productivity and has a major effect on an organization’s finances. Loss of productivity due to employee absenteeism is very costly to any organization. This is because these employees are being paid their wages and there is also the cost spent on employee temporary workers to replace the absent workers (Mowday, Porter & Steers, 2013). Also, there is a cost that is incurred in managing absenteeism. Such costs will always reduce the profits in an organization.
Errors will always cause loss of profits in an organization. Errors may be human errors or computer errors. Human errors are those that are caused by the employees in the organization. Humans are bound to make errors and there is nothing that one can do to stop these errors other than minimizing them (Epstein, Groeneveld, Harhay, Yang & Polsky, 2013). Human errors in an organization are mainly caused by miscommunication between employees from different departments. The employee may misread data input the wrong information. Also, they may not fully have a clear understanding of the software that they are using causing errors. Despite the employees of an organization being so much diligent, there are bound to make errors at a certain point. Computer or machine errors may occur at different times. During computing the data, the computers and software used may produce the wrong results misguiding people. Errors are very costly to resolve in any organization. In the Ford motor company, if an error is made during the production of vehicles, it would cost the company millions of dollars to rectify the error. This means that they have to recall the cars that they had already sold to their customers so as to rectify the error. By doing this means that the company is making losses instead of profits.
Loss of profits has a great effect on the company. The company has already started experiencing the effects of loss of profits. Loss of profits may lead to reduced operations, bankruptcy, and increased debts. Loss of profits means that there would be enough money to pay the wages of the employees. This is because the organization is spending more money on the production process and receiving less money in terms of profits. This will prompt the organization to borrow money from banks and investors to be able to sustain the costs. Debts, when used correctly, is an effective tool to help the company grow. When the sales reduce, revenue collected also reduces and also the expenditure used in the production process increases, this means that there will losses experienced and the organization will be forced to rely more on credits to carry on (Hylander & Ehrlén, 2013). These debts if not managed well will lead to a decrease in the valuation of the business and loss of profits. This may lead to auctioning off the company due to the debt incurred. Loss of profits may lead to reduced operations in the organization. Operations that require a lot of capital to be carried will be eliminated to save cost. Some operations such as the recruitment process for new employees will be halted as this is an expensive process. This may also involve closing the underperforming business facilities. Loss of profits may force the organization to lay off some of its workers. This is because it will be unable to manage the wages of its employees. The effect of this will be a loss of skilled workers who are crucial to the organization. The effect to this is that it will reduce productivity in the organization.
As stated, the organization faces the challenge of loss of profits that is mainly HR related. This is because it is caused by HR issues such as employee turnover, employee absenteeism, recruiting the wrong employees, low employee productivity and human and computer errors. There is a need for the Ford motor company to take on serious actions upon the issue of loss of profits before it’s too late. The consequences of not curbing the issue at the moment will be so intense later on. There is a need for the development a program that focuses more on the employees to minimize the challenges caused by the employees. This program should address the issue of employee turnover, absenteeism, and low employee productivity. There is a need for the company, FORD MOTOR, to understand that the employees are core factors of the company as it through them that the organizations are able to run its functions. It is through them that it is able to interact and maintain the loyalty of the customers.
The program should encourage the company to raise the wages of the employees. By doing, employees will feel motivated to work harder and will become more productive. This also gives the company an advantage as it will be able to demand more of its employees. Employees who are well paid are always committed to their jobs and loyal (Hee & Ling, 2011). There is a need for the company to reward the employees for their hard work. The company needs to compensate them for the hard work done. This will be done by introducing bonuses. By doing this the employees will feel motivated to work and the turnover rate of employees will reduce and increase their productivity. Rebalancing the workload is also a step that the program should offer. Some jobs are stressful, monotonous and extremely difficult to handle (Van der Aa, Bloemer & Henseler, 2012). The program should explain the steps on how the company will offload such jobs and equally share it with other employees. through this, they will be able to manage employee absenteeism and turnover rate. The most important step will be encouraging friendly relationships among employees. employees will feel motivated to work with each other as there will be no grudges created among them. To enable such relationships, the company needs to invest more in employee retreats to so as they can bond with each other (Yang, Wan & Fu, 2012). By doing this, employees will find no reason to leave the company or miss work and will be more productive.
To reduce human and computer errors, the company needs to carry out regular audits in their technology. To eliminate human errors means eliminating human and that is not the solution. The solution to this monitoring employee to eradicate errors. The auditors will be able to identify the source of errors and eliminate them once identified. By carrying out these steps, the Ford motor company will be able to increase its profits for the next financial year.
Conclusions
FORD MOTOR faces a big challenge of loss of profits and there is a need for the company to take serious actions so as to curb it. The problem is mainly caused by issues related to HR such as employee absenteeism, increased employer turnover rate and recruiting the wrong employees. the FORD MOTOR needs to create a program that focuses on solving the issues. The program will focus on ways to increase employee retention rate and ways to recruit the best workers. having an audit team to carry an auditing process so identify the source of errors and eliminate them.
References
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