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To: The Board of Directors

From: Learning Set 1 – BA HRM

Subject: Implications of the current economic recession for Momentum

Services Limited

Date: 11 December 2009

The implications of the current economic recession for the human resource
management of Momentum Services Limited

1.0 Terms of reference

Momentum Service Limited is a joint-venture with over 750 employees, which has been
formed for the specific purpose of providing onboard Catering Services and hospitality
support functions for Eurostar travellers.

Eurostar is an international train operating company, which runs train services between
London, Paris and Brussels. Eurostar is owned by three main national railways serving the
following countries;

• Great Britain, which is served by Eurostar (UK) Limited

• France served by S.N.C.F, which is the French National Railway

• Belgium served by S.N C.B, which is the Belgium National Railway

Eurostar does not specialise in the provision of catering services, which is why Momentum
Service Limited came in to tender the contract in order to provide on-board catering
services. Momentum Service Limited has been in contract since 1 June 2000.

2.0 Methods

This report was sustained by letters of human resource management of Momentum Services
Ltd to their employees concerning the recession.

Information on the company was accessed through Eurostar website and by one of the
company staff.
2.1 Definitions

According to (Mullins 2007, pg481) “Human resource management is a series of activities


which: first enables working people and the organisation which uses their skills to agree
about the objectives and nature of their working relationship, and secondly, ensures that the
agreement is fulfilled”.

The success of human resources management depends on the main key aspects, which are
selection and recruitment, training, performance, appraisals, retention and rewards. All these
are for the benefit of both the employer and the employee. The success of an organisation is
particularly important that the individual employee’s personality and the personality of the
organisation are in tune with one another. (Gerber et al 1998) A mismatch can hinder the
achievement of both personal and organisation goals.

The aspects of Human Resource Management can briefly be defined in the following ways;
Rewards can either be tangible or intangible, given to employees who comply with directives
such as promotion, pay rises, vouchers and so on. Recruitment is an organisational activity
which influences the number of applicants applying for a particular position. Retention is a
systematic effort by employers to create an environment aimed at encouraging employees to
remain in the organisation. This stage is normally after employees have gone through the
initial induction and training stages.

According to the (employees benefit 2004), retention was the top issue of concern for human
resource department in1999 and 2001 but it dropped to number three in 2003 in the wake of
the recession. Performance is a method of reviewing an employee’s progress at regular
intervals, usually after a six or twelve month period. An Appraisal is a face-to-face discussion
between manager and employee focussing on behaviours and outcomes, in order to
improve motivation and performance.

3.0 Findings

The economic downturn and the shrinking economy had an impact on Momentum Services
as passenger forecast received from Eurostar was expected to be lower than that of the
previous year. Crew ratios in Momentum Services where based on the Business Premier
and Leisure Select (First Class) passengers and therefore a drop in passenger activity did
have an impact on crewing levels. This was one of the main reasons as to why manpower
was to be adjusted accordingly. This information is backed up in the Rail Business
Intelligence journal published 30 July 2009; it states that there was a 5% decrease in 2009
compared to 11% up in 2007.

In the initial stages the Human Resources Management team met with union representatives
for consultation purposes on how they would deal with the high manpower working as crew
members. Letters were sent out to all crew members informing them of the current economic
downturn in the United Kingdom. Employees went through a one month consultation period
to discuss their future in the company. The main purpose of writing to crew members was to
discuss their future in the company and time slots were allocated for this to be done on a
one to one basis.

There were 52 Crew member positions at risk of redundancy and “last in first out” criteria
was to be used. The Chief Executive of Eurostar, Richard Brown announced that “the fact is
that some of our biggest business clients are from the financial and banking sector, and it
follows that as they tighten their travel budgets, we, like the airlines, feel the effects”. (Rail
Business Intelligence 2009)

Employees were encouraged to take unpaid leave or part time for short or long periods from
1 February 2009 to 31 March 2009, in order to safeguard their positions within the company.
The company would save funds this way and employees would have 50-50 chance of being
called back if business picked up. This proposition was not successful as employees were
not willing to take unpaid leave. “Alternatively, if the organisation is over-staffed, the issues
of redundancy, retirement and non-replacement of staff who leave will all have to be
considered” (Capon, 2009, p195).

As a result the Human Resource Management was left with no choice but to select 38 out of
52 positions at risk to retain their positions, but on a part-time on a pro-rota basis.

In the recession affected employee annual leave entitlements from 28 to 20 days annually.
Annual pay increments were abolished as employees were entitled to a salary increase
every beginning of the year.

Employees were entitled to ten dry cleaning vouchers every month but this offer has been
brought down to one voucher every quarter.

“For most employers, compensation and benefit programs are not static; they also change
over time depending on factors such as the economy and employers evolving workforce
needs” (Employee benefits journal; June 2004).
4.0 Conclusion

The recession had an impact on Momentum Services, where it lost almost three quarters of
its employees in redundancies. However a lot of change was made within the company in
term of incentives. According to Handy the company culture is the role culture means
everyone in the organisation has a specific job title and description and knows what they are
expected to do. In the case of Momentum Services Limited, the human resource department
had managed to save a lot of job by reducing staff and made them work on pro rata which
show a strong culture between the company and employees.

OR

The recession had an impact on Momentum Services, where it lost almost three quarters of
its employees in redundancies. Employees that escaped redundancy had to work extra
shifts because of shortage of labour, and this was due to the fact that the Company was
watching its expenses. However, business is beginning to stabilise and there is a drastic
improvement due to business picking up from their client companies. Eurostar is attracting
more passengers travelling by its Business premier and Leisure class (First Class) and this
where the most revenue comes from. Client companies can now afford to cater for their staff
to use Eurostar’s services.

5.0 Sources of information

Capon C, (2009), Understanding the Business Environment, 3rd Edition,

England, Pearson Education Limited


Gerber, P et al (1998), Human Resource Management, fourth edition, South Africa,
International Thompson Publishing (South Africa) (Pty) Ltd

Mullins, L (2007), Management and Organisational Behaviour, Eighth Edition,


England, Pearson Education Limited

Employee Benefits Journal; Jun2004, Vol. 29 Issue 2, p42-45, 4p, 2 charts


http://search.ebscohost.com/login.aspx?
direct=true&db=buh&AN=13175416&site=ehost-live [accessed: 23rd November]
Rail Business Intelligence; 7/30/2009, Issue 347, p4-4, 1/5p
http://search.ebscohost.com/login.aspx?
direct=true&db=buh&AN=43694731&site=ehost-live [accessed: 23rd November]

http://www.eurostar.com/UK/uk/leisure/about_eurostar/press_release/press_archive_
2007/2007_06_01_cremonini.jsp [accessed: 9th December 2009]

Five-year vision

Where and how do you see yourself working and living in 5 years’ time? Which
kind of lifestyle and employment?

Personal goals Professional goals

Which areas of your personal development Which academic areas do you need to work
do you want to work on? You could refer to on? You could refer to different types of
travel, health/diet, exercise/sport, a foreign communication, numeracy, IT, working with
language, creative activities, clubs/societies others and/or developing different ways of
and/or hobbies. learning. What are the best ways for you to
learn?
Assess your goals against the CSMART
Template Assess your goals against the CSMART
Template

1. Challenging: Do fitness, try to run once a 1. Improve my English: Specific because it


week because it will help me to clear my is one of the main reasons of my
mind expatriation in London and I really want to
be fluent.
2. Be confident: Achievable because the 2. Work on one of my subject every day:
work presentation will help me to work on Measurable because it will help to avoid
my shyness and practice how to speak in stress and feel more aware about my
front of people. difficulties.

Realistic 3. Time defined: After my 3 year course I


want to find a job on the subject I am
studying.

For each of your goals above you are required to use the CSMART template

C = Challenging

S = Specific

M = Measurable

A = Achievable

R = Realistic

T = Time defined

(Cameron, 2008:40)

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