People’s Home Gadgets (PHG) is a young company competing in the consumer electronics and appliances industries. The company has a large selection of items which range in the price spectrum from very low cost to very high end. Recently, the company has hired a full-time director of HR. Paula Hillman. Paula comes in at a time when the company is experiencing issues with their sales representatives, who record a high turnover rate of 70% annually. The following paper explores the alternative HR systems that the new HR head can apply to reduce the turnover rates. Also, the text includes the main strategic performance driver for PHG and how its customer service representatives contribute to it. In addition to this, the essay covers an HR system design meant to realize its strategic performance.
Nature of the HR system that Paula should employ
As a new HR manager, Paula anticipates creating an HR system that will motivate PHG’s customer service representatives to retain their position at the company. The management at PHG noted that the high turnover by the representatives at the company could be attributed to frustrations over payments. PHG applies a merit-pay system that involves paying its sales representatives commissions based on the sales they make. However, the company which is known for its low costs forces its representatives to lower the prices of the commodities they are selling in certain instances. This results in the sales representatives cutting into their take and home pay. Therefore, the HR system that will be implemented should also include strategies that maintain the low-cost policy of the business besides encouraging employees to stay in the company. The HR head could implement a Human Resource Information System (HRIS). The system should incorporate several factors aimed at minimizing turnover rates. Some of these factors include; raising hiring standards. Recruiting the appropriate personnel from the beginning is an excellent way of reducing turnover (Andriotis, 2017). Workers with the right qualifications that match with the organization culture will possibly stay on. Applying an HR software that aids with recruitments eases the procedure of raising the hiring standards with minimum wastage of time and money. In this case, Paula needs to employ an HRIS that contains recruiting features targeting potential applicants with prior experience in customer sales representation and are aware of the value that a low-cost strategy brings to the business.
PHG’s Key Performance Driver
One of the key performance drivers for PHG is that it strives to be a low-cost leader. When compared to its peers, PHG offers the lowest prices for its appliances. The company maintains its competitive edge by selling its products at a relatively lower price which in turn results in improved performance of its sales records. In addition to the low-cost strategy as a driver of sales performance, PHG also provides a unique one-on-one customer service (Wiener, 2019). PHG’s focus is on customer service and costs. The company’s concern is not only on the financial burdens customers experience but also the substantial amounts of information that customers must process to make a purchasing decision. PHG enjoys several benefits for being a low-cost operator, one of them being higher profitability. Since the company sells its appliances and products at a competitive price and on a lower cost basis, its profit margins are more significant than their peers selling at a higher price. The low-cost performance driver also helps in increasing the market share of the company.
Customer Service Representatives and their role towards achieving a Low-Cost Strategy
The customer service representatives are essential as they contribute towards the company realizing its low-cost strategy. The representatives are the ones who primarily interact with the customers and negotiate with them the prices of the appliances. They have some discretion regarding the final amount that the appliances and PHG’s products will sell for. Also, the representatives are paid on a commission based structure which motivates them to work harder as an improved performance results in an increase in the salary. In addition to this, the representatives are taken through training sessions before being assigned their sales roles (hok, 2019). It is through these sessions that the representatives, receive product training to learn more on the new products they will be selling. The training sessions also ensure that they are knowledgeable and can respond to queries from the customers. PHG ensures they have instilled the low-cost culture of the business to the representatives during these training sessions.
PHG’s HR System Design
PHG’s goal is to maintain the low-cost policy of its appliances and products. The company will have to design an HR system that is driven towards achieving its strategic performance. Different factors will have to be analyzed before incorporating them into the HR system; The work environment is one of them; Paula should apply the following strategies in her design for PHG’s work environment.; creating a work environment that is attentive to the workers’ work-life balance, engaging both business partners and employees in the design of the workspace. Also, the workspace should be branded with artwork that enforces the company’s mission and values. The company should design a culture of health and wellness into the space. The system also ought to include how PHG plans to retain competent employees especially the customer representatives. Replacing workers is becoming quite expensive for the company especially since they are recording a high turnover rate. They need to find ways to reduce employee turnover rates. They could; apply a bottom-up approach in sharing information and making decisions. Employees whose voices and ideas are considered by the top management feel appreciated hence less reluctant to leave. Using questionnaires and surveys can also work in gauging the worker’s feelings. Employee attitude and behavior can also be improved as a strategy to enhance the company’s HR system. One of the ways to do this includes; sharing good practices and ideas between employees. Employees feel good when they see their work practices and ideas being praised. PHG should ensure that its workers have the chance to display and share their best work.
PHG being a low cost-oriented company ought to quickly develop an HR system that targets to minimize the turnover rate. Doing so will help them even further in their course of achieving low costs since expenses in recruiting and training new employees will also reduce. The HR head has different strategies that they can use to retain competent workers within their workforce and also train them on how to operate to achieve the company’s goals.