ANTO COMETA
Analyzing and Resolving the Issues
The major dilemma as outlined by the issues and probable concerns perceived to be encountered by the company is principally attached in the organization’s view of losing its competitive edge in the market. With the introduction of new technology, international standards in the management of risks using mathematical models, sophisticated regulatory and compliance requirements resulting from laws seeking to accommodate e-transactions among others pose a tight spot in the efficiency of the organization to adeptly address the concerns of the business and the workers.
Among the six identified issues and concerns, there are three that could be deemed crucial. These need extreme focus in order to facilitate the resolution of the problem and avoid adverse consequences that may arise from those. It doesn’t mean however, that the rest are of low significance. The remaining three from the identified critical issues and concerns are developmental consequences which are also central to the dilemma.
The first critical issue relates to the financial or banking institution’s business efficiency and productivity. If the organization considered increasing the bank’s efficiency to generate higher productivity while maintaining or lowering the overheads by applying labor flexibility it could be the case that instead of achieving what is desired the converse could occur this could be considered as the worst alternative instead of being the best option. We do not shelve that there are several benefits that could be attained by applying labor flexibilization measures. The advantages by implementing such measures in the company are exceedingly significant to the operations of the business. On the firm’s end it would provide savings or profit - operational or overhead costs for not hiring additional manpower, and better resource allocation. On the part of its workers, it facilitates in the acquisition of several skills primarily related or needed for business operations. Together with the benefits that could be acquired by applying such measures, there are also negative implications that affect not only the business and but also its workers. In line with applying labor flexibility, modifying the organizational structure, processes and design follows. This is to justify or legitimize the utilization of such measures applied in the organization specifically to its workers.
However, applying labor flexibilization measures as well as changes in the organizational structure processes and design without careful analysis, strategic implementation and compatibility with the laws governing the rights of the workers could lead to further costs than rewards. If this happens, increased worker woes on employment matter leads to job discontentment. In the case of most workers in relation with the commonly used labor flexibilization measures applied in companies correlates more distressing views which are human capital exploitation and unfair labor practices. As stated in Article 247 of the Philippine Labor Code, unfair labor practices are not only violations of the civil rights of both labor and management but are also criminal offenses against the State which shall be subject to prosecution and punishment as herein provided.
There were several case studies conducted for financial institutions showed that cost reduction is just one way of profit maximization. Banks that tried to maximize profits by raising revenues while reducing costs is quite effective, but there are also those who provide higher quality services that raised costs yet also raised revenue more than the cost increases. It could be perceived that the results suggested that methods that exclude revenues when assessing performance may be misleading (Berger and Mester, 2001). Organizations should run the business in the interest of meeting not just their own needs but also other important stakeholders such as the workers since they are also contributors which have impact on the performance of the business. The best alternative is to look for other methods or have a consultation as to what would be the measures that could increase efficiency and productivity without encountering such concerns.
The second is compensation appended with the worker’s benefits. Benefits more often than not are considered to be part of the entire wage or compensation arrangement given to the workers. Companies recognize the value of benefit packages in the organization as key factors in the individual’s consideration for an employment opportunity, employee morale and motivation as well as reduction in staff turn over. Thus, the benefits offered in the organization are quite essential to the overall employment picture.
The best way to understand the needs and at the same time agree or eliminate those which could not be granted is through the collective bargaining agreement. The needs identified have varying levels of significance and appeal to the worker, however, it doesn’t mean that these various needs are conflicting since these needs is dependent on the category (age and marital status) of the worker. If the organization decides to grant the need(s) one group over the other, it could likely cause tension and discord within the horizontal dimension. The best option for the management is really to negotiate with the union in order to arrive at a mutual agreement.
As for those demands made by individuals or group which yielded high levels of productivity and made significant contributions in terms of increasing the bank’s profitability one of the usual and conventional way of adjusting or modifying the base pay in order to reflect or make it appear higher than what is given is achieved by combining benefits and other incentives either monetary or non-monetary. The objectives of determining pay may have one or more that may be in discord with each other (De Siva, 1992). These objectives can be classified into four distinctive categories. First is equity which includes the narrowing of inequalities, wage increase of the lowest paid employees, the concept of equal pay for equal work value among others. The second is efficiency which is reflected in efforts to connect or associate part of the employee’s wage to the productivity or profit, performance whether group or individual as well as acquisition of both skills and knowledge related to the execution of job functions. The third perceived objective is related to the stability in the macro-economic aspect. This has something to do with the levels of employment as well as other related factors that of could either contribute or impede the balance and sustainability of development of the economy of a country. Last identified objective is the effective allocation of labor in the labor market. This particular objective relates to the mobility of workers whether geographical or industry related since the motive of doing such is to the idea of acquiring a net gain and not only to meet the individual’s basic requirements.
A lot of organizations are now in search of sustaining their competitiveness in the market by means of increasing the pay given to the employee. The type (s) of pay are mostly related to performance measures, this is primarily done in order to sop up the costs of labor of the organization at the same time motivate and recompense the employee for the performance. The conventional way of companies in order to secure increased wages and reward their employees is through job appraisal and promotion. However, due to the limitations on resources as well as achieving higher positions in the organization not to mention that current developments in the organizational structure becoming less hierarchical due to market demands and types of flexibility employed in the company, incorporating pay increases based on performance is perceived to be more attractive and effective rather than rewarding the worker through promotions this could be deemed as the best alternative option. One of the methods or strategies that is gaining acceptance throughout different industries particularly in the services sector in order to increase the productivity and profitability of the company at the same time rewarding the worker is through performance-based pay. Moreover, the trend in paying the employees is not for the output produced or even for the labor input rendered but simply for the time spent on the job (Blinder, 1990).
There are several theories in human motivation which incorporates pay or pay system as a driving force in motivating their workers to achieve, increase levels or maintain satisfactory performance. The systems of pay given to the workers are now being integrated as part of the human resource management of organizations. This is primarily done in order to achieve the business strategies and objectives whether financial or employee-related since both directly affect the operations of the business. Pay is viewed as a matching element or a dependent variable to the employee’s performance and productivity, by increasing or providing additional pay based on increased productivity and performance is an indication that the company could its financial profitability and could achieve its business objectives.
Its is noteworthy to take into consideration that in designing or structuring a performance pay system, the type of system should highly promote the kind of performance that the organization requires and not just to increase its revenue. Fundamental principles should be laid out and that the objectives and targets should be quite measurable or realizable. Furthermore, the achievement of the performance pay system should be supported by operative approaches and strategies so not to establish that the targets and objectives are impossible to attain. As necessary, employ consultation or increase the involvement in the decision making process or designing of the system. By employing such actions, it could generate efficient or effective ideas, approaches and strategies that could contribute or lead to the achievement of the goals. The organization should also have a feedback mechanism to review the processes, procedures, outcome among others of both pay system and the targets and objectives. It is a excellent avenue in determining and assessing the key factors of either success or failure.
Lastly, skills and competencies which encompass the general productivity of the organization in delivering the required output needed for the business. In order to address the issues concerning the skills and competencies of its workers, organizations should also provide trainings since these are quite beneficial to the company and its workers in achieving their goals both monetary and non-monetary, this could be perceived as the best alternative over a negotiated agreement. To reinforce the training programs, the company should employ Total Quality Management (TQM). TQM which consists of continuous improvement activities involving everyone in the organization, managers and workers alike in a totally integrated effort toward improving performance at every level ( Goetsch and Davis, 1997). It could be integrated as part of the organizational and professional development program. In a quality organization everyone is constantly learning. Management encourages employees to constantly elevate their level of technical skills and professional expertise. People gain an even greater mastery of their jobs and learn to broaden their capability (Scholtes as cited by Goetsch and Davis, 1997). The required set of skills and competencies are basic not only because these are elements essential to the execution of the assigned functions and tasks of the worker in order to achieve the desired output needed for the operations but also important for innovation and alignment of current and future goals and strategies of the organization.
References
Blinder, A. 1990, Paying for Productivity, The Brookings Institution, Washington
Berger, A. and Mester, L. 2001, Explaining the Dramatic Changes in Performance of U.S. Banks: Technological Change, Deregulation and Dynamic Changes in Competition (Working Paper), The Wharton School, University of Pennsylvania
De Silva, S. 1998, An Introduction to Performance and Skill-based Pay Systems, International Labor Office, Geneva
Goetsch, D. and Davis, S. 1997, Introduction to Total Quality – Quality Management for Production, Processing and Services, Second Edition, Prentice Hall, Ohio
The Philippine Labor Code, Department of Labor and Employment, http://www.dole.gov.ph
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