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PAC Risks and Recommendations

Kathleen Arroyo
University of Maryland University College
December 6, 2015

Introduction and Purpose of the Paper


This paper will summarize the findings of the first two power point presentations
comprising of a SWOT analysis of the HR department at PAC Inc. and recommendations on
changes to the HR department and incorporate them into a paper that will add an action plan of
major tasks, persons or departments accountable for the actions, and time to complete. This will
include both a narrative time line and a graphic plan. Also included in this paper will be the
metrics used to evaluate the recommended plan of action, the risks of not implementing the plan
of action, the significance of the strategic and administrative role of Human Resources, and the
description of the resources needed.
Summary from Previous Presentations
PAC is a manufacturing company in the Midwest founded in 1994. PAC manufactures
high-quality specialty components for the computer industry (Gusdorf, 2011). PAC currently
employs 835 employees. These employees need to be innovative and aware of the latest
technological advances in engineering and manufacturing. Employees need to have experience
manufacturing components and be willing to constantly learn the latest techniques and be team
players.
PAC needs to have an external auditing company come in and look through their sales
numbers, employee bonuses paid, and any extra compensation that has been given for the past
year. It is obvious the employees cannot be trusted to handle this audit internally and now there is
fraudulent sales data and unaccounted bonuses. PAC employees need to be better informed of all

changes in benefits, plans, salaries, bonuses, etc. There needs to be an open door policy
implemented with supervisors and HR and meetings to discuss issues and answers questions.
PAC also needs to diversify its customer base to boost sales and get new business. This
will also help them become less dependent on one company for most of their sales and give them
added financial security. HR personnel need to able to work together for the good of the
employees and the company. They need to be able to analyze the current strengths and
weaknesses of PAC and figure out the best approach for the future of the company in alignment
with the current and future business needs of PAC.
SWOT analysis is a preliminary analytical tool that must be supplemented with rigorous
competitive, resource, financial and organizational analysis (Chermack & Kasshanna, 2007).
These are the results of the SWOT, the rest of the PPT addresses more analysis of PAC:
Strengths- talent acquisition, business experts
Weaknesses- risk management, safety, and security, employee and labor relations, credible
activists, and culture and change champion
Opportunities- human resource development and succession planning, HR innovators and
integrators, proponents in HR and organizational technology
Threats- total rewards, strategic leaders
The first recommendation to HR and PAC will be a financial audit of all the benefits and
compensation plans that PAC administers. A study by Prawitt, Sharp, & Wood (2012) found that
financial reporting quality improves when the external auditor performs at least some internal
audit work. Employees are unhappy with some, management is unhappy with others but they

may not be costing PAC as much as they think. This would give an idea of which programs are
not financially beneficial to PAC and which programs should be gotten rid of. This will add
value to the area of information by informing PAC which programs are being utilized/not
utilized, which programs are costing the most/least, and will give upper management a much
better idea of the financial stability and security PAC has. It will also add value to the area of
workflow because employees who have great benefits and compensation are more engaged and
more likely to perform better and go farther for the company than employees who feel
undervalued.
The second recommendation is to start monthly department meetings, quarterly meetings
between all department supervisors, and encourage an open door policy for employees, all done
face to face. Employees may visit HR, their immediate supervisor, or next-level supervisor at any
time to discuss any issues or problems they have without fear of getting in trouble and
supervisors are expected to answer the employees questions or send them to the correct person
who can. This will add value to the area of people by getting everyone together face to face and
encouraging interaction and positive communication between all levels of employees. It will also
add value to the area of information by giving employees a place to ask questions and also give
feedback to make PAC a better place. Finally, it adds value to the area of workflow by
encouraging communication between departments therefore increasing productivity.
The third recommendation will be to create a new employee handbook with all the
updated benefits and compensation programs that PAC offers. This will also give updated
employee conduct expectations and help clear up any misunderstandings the employees have.
This will give employees a clear view of their benefits and also give them the chance to ask
questions about anything they are unsure about. Once employees understand all the benefits and

compensation PAC will offer, as well as what is expected of them, employees will sign showing
they have read and understood so there are no misunderstandings later. This will add value to the
area of people because it will give them a better understanding of their benefits and any updates
to them. It will also add value to the area of information because employees at PAC are
obviously confused about their benefits and compensation, and what cuts may be made to them.
Finally, it will add to the area of performance because employees who have benefits they love
and use perform better and work harder.
Summary of the Recommended Action Plan of Major Tasks, Persons or Departments
Accountable, Time to Complete
The entire transformation should take 6-12 months. This will give enough time to see a
financial change in PAC. First, surveys will be given to all employees, this will be handled by
HR and all department heads. At the same time, outside financial auditing company will be
preparing the financial audit showing the current financial state of PAC. Next, department heads
will sit down with HR and executive management to determine which programs will be kept
according to audit, employee survey, and financial auditing companys recommendations. HR
will write a new employee handbook which will then be approved by executive management.
HR and department heads will ensure every employee has a copy to new employee
handbook and that they are signed indicating understanding. HR will available to answer
questions. After 6 months, a second financial audit will be completed. Employee surveys will
also be sent out again. These will be analyzed to learn the effectiveness of the transformation.
Performance reviews will be done by supervisors on a yearly basis to communicate with
employees and give them both positive and any negative feedback.

Metrics for Evaluating the Results of the Transformation


Three metrics will be used to evaluate the transformation. The first metric will be an
employee satisfaction/engagement survey measuring the employees understanding of the new
programs and how they feel about the changes to the company. This will also include questions
about face to face communication. The same survey will be used twice, first before the
transformation to get a baseline of how the employees feel about PAC. Then the same survey
will be given six months after the transformation. This will show if the transformation is working
and whether the employees have become more engaged and more satisfied.
The second metric will be a financial audit done at least 6 months after the employees
have been informed of the changes to the benefits and compensation package and given a chance
to enroll in the new programs and start using them. This will show PAC how well the employees
are using the new programs and if they are offering the money saving changes that PAC was
looking for. If the program are not offering the cost-saving benefits that PAC was looking for,
they can be adjusted. Doing a second financial audit will show PAC how money was being
mismanaged and that PAC can survive financially while still offering its employees customized
benefits and giving them something to work forward to. It will also keep supervisors from
wrongly spending funds by keeping them accountable for money spent in their departments.
The third metric will be performance reviews. These will be conducted on a yearly basis
for every employee. This will improve employee communication with their supervisors and give

them a chance to ask questions and see if they are performing adequately. Research has
reflected that three of these aspects - supervisor communication (refers to one's immediate
supervisor and includes areas such as openness to ideas and listening), communication climate
(refers to the communication environment on organizational and personal levels), and personal
feedback (refers to what an individual knows about how his or her performance is being judged)
- are most strongly related to both job satisfaction and performance (Wanguri, 1995).
It will also give supervisors the opportunity to offer both positive and negative feedback to their
employees. The last thing the performance review will do is aid PAC in seeing how well the
employees are performing according to the standard, and if layoffs become necessary, give them
a legal reason for letting underperforming employees go while ensuring they keep the best ones.
Risks of Not Implementing the Changes
PAC cannot continue in its current state. Employees are mismanaging money and
fraudulently using the current benefits and compensation programs. Employees are dissatisfied
because they can see this. Some employees are able to use programs while others are not. PAC
has already implemented a hiring freeze, but without fresh talent they will not stay current
competitors and may lose customers. PAC is already at a big risk because they depend on one
customer for all their business, and their financial mismanagement. This needs to be fixed ASAP
or the company is at risk of having to file for bankruptcy.
Employees are not happy and the company is at risk of not only losing them, but having
them bad-mouth PAC to other potential employees and customers. New employees arent going
to want to work at PAC if they see the conditions are as bad and people say. The risks of not

opening communication lines means the departments will not function together as a whole and
upper management will never learn what the employees really want. It will also allow for the
continuation of mismanagement of funds.
PAC is also at risk of lawsuits if they do not fix their benefits and compensation program
and start offering employees the same benefits across the board. Perceptions of justice are an
important consideration for organizations as past research has shown that when employees feel
they are treated fairly, positive outcomes result and negative outcomes can be avoided
(Westerman & Westerman, 2013).
Legally, they have to provide certain things and they have to offer all employees the same thing.
This has not been happening, the employees have noticed, and it is not only bringing down
morale but it is also bringing potential lawsuits. The risk of not updating the employee handbook
and ensuring the employees understand, while also following through gives these employees an
easy way to file a lawsuit. This could bankrupt the company.
Description of the Significance of Both the Strategic and Administrative Role of Human
Resources
The strategic role of Human Resources will be to facilitate the transformation in PAC.
Human Resources needs to advocate for the changes and the employees to align the business
with its goals and move it into the next level not only as a competitor but a leader in the
manufacturing business. PAC has been in business for years, but is still a small company
working out of one factory. The employees are restless, business is stagnant. It needs Human
Resources to look at all the angles and help upper management realize their business goals. In

making the employees more satisfied and engaged, they will be helping the company become
more productive and make a better name for themselves.
The administrative role is also very important, especially at this point. PAC needs to get
its paperwork straight, financial numbers do not look right and lawsuits are pending. If layoffs
come, there is no accurate way to determine who should go. The administrative role in
facilitating this transformation will show PAC how they are spending their money, and what the
employees really feel. It will give them a solid idea of which way to move the company towards.
Legally, it will help to prevent these lawsuits.
Resources Needed for the Transformation (People, Time, Money, and Support from the
Top)
Obviously, for this transformation to take place the executive management at PAC needs
to be full supportive. Previous studies indicate that the success of any quality improvement
programme depends much on top management commitment and leadership (Ebrahimi &
Sadeghi, 2013). This will require money and a serious time commitment from Human Resources
and the department heads. Money will need to be allocated to recruit and hire an outside
financial auditing team. Human Resources will need to have meetings with them and time to
review their audits. Face to face meetings will have to take place at least twice a month between
Human Resources, upper management, and department heads. A computer program will be used
to generate the employee surveys, and each employee will have a log on. This will cost money
and need to be put into the budget. Department heads will need to ensure employees have time to
take the surveys, they are available to answer questions, and that they sit down and discuss the
new employee handbook with employees. Performance reviews should be done by supervisors

and should not be rushed. The supervisor should have enough time to sit down with each
employee and review their performance while giving the employee a chance to ask questions.
Summary and Conclusions
PAC will be conducting a transformation due to severe mismanagement of funds, pending
lawsuits, and a general downturn of their business. The transformation will consist of three
metrics to measure effectiveness: a financial audit, an employee engagement survey, and
performance reviews. Human resources will have general control over the entire transformation
but it will involve communication between all departments. If PAC does not implement these
changes they risk filing for bankruptcy and having to close their business. These changes will
help PAC increase communication, make their employees more engaged, and align their business
with their future goals.
References
Chermack, T. J., & Kasshanna, B. K. (2007). The Use and Misuse of SWOT Analysis and
Implications for HRD Professionals. Human Resource Development International, 10(4), 383399. doi:10.1080/13678860701718760
Ebrahimi, M., & Sadeghi, M. (2013). Quality management and performance: An annotated
review. International Journal Of Production Research, 51(18), 5625-5643.
doi:10.1080/00207543.2013.793426
Gusdorf, M. (2011). PAC resources, inc.: A case study in hr practices. Society for Human
Resource Management. Retrieved from https://learn.umuc.edu/content/enforced/88768-005308-

01-2158-OL4-7981/PAC%20Resources%20Inc%20A%20Case%20Study%20in%20HR
%20Practices-Student%20Workbook_FINAL.pdf?
_&d2lSessionVal=ezcuni8cv1u1dZ0fGpjuwxMQA
Prawitt, D. F., Sharp, N. Y., & Wood, D. A. (2012). Internal Audit Outsourcing and the Risk of
Misleading or Fraudulent Financial Reporting: Did Sarbanes-Oxley Get It Wrong?* Internal
Audit Outsourcing and the Risk of Misleading or Fraudulent Financial Reporting: Did SarbanesOxley Get It Wrong?. Contemporary Accounting Research, 29(4), 1109-1136.
doi:10.1111/j.1911-3846.2012.01141.x
Wanguri, D. M. (1995). A Review, an Integration, and a Critique of Cross-Disciplinary Research
on Performance Appraisals, Evaluations, and Feedback: 1980-1990. Journal Of Business
Communication, 32(3), 267-293.
Westerman, C. K., & Westerman, D. K. (2013). Whats Fair? Public and Private Delivery of
Project Feedback. Journal Of Business Communication, 50(2), 190-207.
doi:10.1177/0021943612474991
Appendix
SWOT Assessment Chart

HR Domains and Roles

Strength,
Comments/Description on Your Finding of
Weakness, Opportunity the Strength, Weakness, Opportunity or
or Threat?
Threat

Human resource development opportunity


and succession planning

Someone new has just been brought in


from the outside to head HR. This means
new ideas, the chance to change policies
the employees disagree with, and updating

HR to reflect the business goals of PAC


and help PAC become a successful
company in the future. Employees have
been dissatisfied with current HR
practices for a long time and this brings
an opportunity to change them.

Risk management, safety and weakness


security

Vasquez is so focused on performing


ergonomics checks and changes he is
never available for anything else, and
workers comp claims havent changed. He
hasnt a risk analysis plan to save money
or even discovered why there are so many
claims.

Talent acquisition

strength

New engineers and CAD specialists have


just been recruited and hired from major
universities, giving PAC new talent and
ideas. They can also help people who have
been working there a long time and gain
experience from those same people.

Total rewards

threat

The compensation and salary levels are


still too complex and employees are not
happy with benefits they are receiving.
Employees dont really understand the
merit-based system and only see favorites
getting bonuses. The employee paid share
of health insurance keeps rising, and now
Cliff wants to know if smokers can be
denied insurance through PAC.

Employee and labor relations weakness

Employees are very dissatisfied and union


reps are back to see if the employees want
to unionize. By moving lunch and shift
schedules, PAC is creating unfair labor
practices and giving the unions more to
latch on to.

Strategic leaders

threat

There is a lot of toxic leadership at PAC,


and it seems everyone is out to help
themselves and their department. People
just keep passing requests on to other
departments without anyone doing any
actual work. Department heads are
passing out bonuses to themselves and
people they like with no regard for anyone
else.

Credible activists

weakness

Right now everyone is only advocating for


their department and with the layoff
rumors everyone is trying to throw
everyone under the bus. They need to
come up with a strategic plan for their
departments and employees that works for
the entire company as a whole.

Business expert

strength

PAC has been around for a while and has


established clients. They know what
technology needs to be manufactured and
marketed to customers.

Culture and change champion weakness

PAC hasnt changed anything about the


way the company operates or tried to get
any new business. They also havent been
keeping up with technological advances
because they have been standing on their
Made in the USA motto and their one
customer who is most of their business.

HR innovators and integrators opportunity

HR can always change and bring in new


ideas. Bringing in a new HR head gives an
opportunity to bring new ideas and plans
to the table.

Proponents in HR and
organizational technology

Again, this is an opportunity for the HR


personnel at PAC to really become an HR
unit. They have been functioning as

opportunity

separate departments instead of working


together. The new head of the HR
department needs to assert dominance and
bring everyone together to give this
company and its employees a chance.

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