UNIT Unit 6- HR Planning & Development Course DMS (Online

submission
only)

LECTURER Muhammad Azam VERIFIER Michael Brown

HAND OUT 27th September 2010 SUBMISSION 11th Jan-2011

DATE DATE

STUDENT TERM Sep’10 – Jan’11

1
Company Overview:

BRITISH TELECOM

British Telecom is well known as a communications Giant. It is one of the largest

company in the world specialized in telecommunications and internet. Based in UK
they have operations all around the globe serving around 170 countries. Their range of
services includes fixed line telephone services, high-speed broadband, Television and
specialized IT support services (BT annual Report, 2010).
Their global service is mostly focused around providing IT network services for
multinational organizations. They also provide support to governments institutions.
Most of their retail services such as fixed line telephone services and television are
provided for the UK consumers. As a modern business organization and leading
service provider BT is trying to improve its products and services by creating a
strategy that revolves around the customers (BT annual Report, 2010).
BT recognizes their employees as a key component to their business success.
According to BT annual report 2010 , one of their key resource is their employees,
they also plans to retain this high performing, motivated individuals to provide the
best service to their customers and stakeholders. They also believes continuous
training and development is key to the organizations future success. At the moment in
2010, BT employees around 78,000 people in the UK. They have 17, 900 full time
employees working through third party or on a contractual basis outside the UK (BT
annual Report, 2010).
The company also invests heavily on modern technologies and inventions to provide a
faster and efficient internet service for its consumers. So far they have invested £1.5
billion alone to create a structure to support a fiber optic internet all around UK.

2
Introduction:

It is a proven fact that the success of any business organization depends solely on
their human capital or employees (Morita).
Human resources management and HR strategy are the most essential part of any
modern business institution. The term modern business organization is used to
emphasize the shift in human resource planning and strategy in recent times. A
continuous change of business environment and demand from the employees requires
dynamic and effective HR strategy for the organizations success. In other words the
success of the organizations depends highly on the effectiveness of the HR strategy
1
and its implementation by the HR managers. The sole purpose of human resource
management is to create or structure a system that ensures the best use of the human
capital of the human capital of the organization and also to gain the organizational
goal (L.Mathias & Jackson 2008). According to L.mathias and Jackson (2008) human
resource management and human strategy is going through a considerable change due
to the change in the global business environment. They (L.Mathias & Jackson 2008)
also stated that human capital as well as human resource management is the key to the
success of an business organization.

The purpose of the question above is to analyze the impact of the challenges faced by
the HR managers in the modern business organizations through appropriate theories
and relevant examples. The first section of the answer is going to discuss the recent
theories linked to HR management and HR strategies. The second and last part will
attempt t implement the discussed theories into relevant examples.

Human resource management has come a long way since the start of the industrial
revolutions in the 1900s.with the fast paced and regular change in the business
environment, it is inevitable that the HR managers are at the frontline of facing those
changes or challenges.

The PESTL analysis would help to understand some of the challenges and that are
faced by the BT Human resource managers. In recent business environment the

1
L.mathias Robert; John Jackson(2008)-Human resource management –Thomson, united states.

3
Economical factor would certainly be considered as the most important topic to begin
the analysis.

ECONOMIC:

The current global economic slowdown has forced many multinational companies to
look for strategies such as cost reduction, cutting down workforce to reduce budget.
In 2008 at the beginning of current recession accounting firm Earnest and Young
reported that there were profit warnings from 111 top companies in the UK (The
guardian 2008) in the same report the Bank of England predicted that almost 2
million people will loose their employment due to this recession. Two years on in
2010, the number of unemployed people has gone up to 2.5 million in the UK ( Gov
Statistics websites, 2010). It is the same story almost all around globe due to the
global recession.
Like other large players in the industry British telecom had to take drastic steps in
order to keep itself profitable. They also had to take measures such as reducing
budgets and decreasing the size of workforce to keep the company afloat. In 2009 BT
had to reduce its labor force to 20,000 as a result of the budget cuts. The total
workforce in BT at the moment stands to 128, 000 locally and internationally (BT
annual Report, 2010). The HR managers had to face challenges such as redundancies,
smaller workforce, planning and allocating the right individuals to the right posts to
deliver the best service.
The HR managers also have to deal with issues such as reward and benefits to the
employees. They have to come up with reward strategy that co-ordinates with the
companies budget and in the same time motivates the employees to perform well. It is
not easy for the HR managers to retain the high performing employees as a part of
their human capital as there are many competitors or big players in the market such as
SKY, Virgin, Car phone ware house, all of them keen to hire skilled individuals from
that sector.
POLITCAL:
Change in the political environment also influences the businesses and the whole
economy of any country. Governments plays a key role in regulating the businesses

4
(B. Carroll & K. Buchholtz, 2008).2 The recent political environment also has
significant influence on BT and its operations. The newly elected conservative and
liberal democrat coalition government has created a lot of uncertainty in the business
environment. Tax rises , job cuts in government sectors and cap on migrant workers
are already effecting businesses such as BT. Specially the job cuts in the public sector
are made with a hope that the private sector will hire more employees and eventually
the unemployed will get some kind of employment.
As a result the HR managers are under pressure to abide by the government
regulations. Due to the new immigration cap HR managers will have the challenge to
locate the best it talents from outside the UK.

SOCIAL and LEGAL challenges:

BT is a multinational company with business spread over 170 countries. They have
different HR strategies for each of their international operations. However UK is one
of the most culturally diverse nation with people from all over the world. Their
workforce includes employees from all ethnic origins. The HR managers views it as
their strength, but in some cases a wrong HR decision might create tension among the
workforce. And one section of the employees might not offer to help the other
departments due to the ethnic differences, this might create a major issue for the HR
managers.

Apart from the government legislations the other challenge HR managers has to face
is from the labor law. Legislations such as employee rights, health and safety
regulations, fair treatment policy are some of the major issues that are needs to be
addressed by the HR managers. The employees of BT works on a range of locations
or in lots of different situations such as outdoors fixing cables and providing door to
door customer service. As a result the HR managers needs to ensure that the
employees meet the health and safety regulations and trained adequately to meet the
customers need.

2
(Archie B. Carroll &Ann K. Buchholtz, 2008)- Business and society-ethics and stakeholder
management, Cengagae Publications.

5
TECHNOLOGICAL:
In 2009 alone BT has spent £1.5 billion on new technology and research to provide
faster fiber optic broadband connection for its customers in UK (BT annual Report,
2010). Its not only for their customers BT believes in investing on their people as
well. As a result they have introduced new employee management systems, that
increased their efficiency and productivity. recruiting individuals online, tracking the
employees progress, productivity, training and development, and monthly
performance analysis are some major function of that HR management system. This
has reduced the burden from the HR managers substantially and helped to reduce the
HR workforce by halve. But in some cases processing this large amount of data and
making accurate decision based on the output becomes the biggest challenge for the
HR managers.

6
2
Introduction :

The term HR Management consists of many activities that helps nay organization to
achieve its goals. Especially the HR managers needs to carry out activities such as
Planning HR strategies, Staffing, Developing, Motivating staffs, Maintaining and
Managing employee relationships effectively in order achieve the best result for the
companies (Torrington et al, 2008). The aim of this question is to explore the HR
activities that contributes towards the success pf a chosen organization.
According Torrington et al (2008), the key role of the HR managers can be identified
based on the key objectives they are planning to achieve for their organizations. Some
of the key objectives that are related directly with the HR roles are described below.

Staffing and people Management:

The first and the most important role HR manager has to fulfill is to make sure that
the organization is properly staffed and have enough skilled individuals to meet the
organizational needs. It also involves motivating the employees by listening to them
and meeting their needs. The HR managers also needs to recruit the right person for
the right job and provide them with adequate training to retain them in the future. As a
part of the staffing objective they have the task of researching the employment market
in order to recruit the most skilled workforce in order reach the organizational
objectives (Torrington et al, 2008). These selected skilled workforce are considered as
one of the most important resource for the organization. They are called the human
capital of the organization. For example British telecom considers its employees as a
key resource to achieve its targets in the UK. Their HR managers are trained to recruit
the most skilled and talented individuals from all around the globe.
Performance Management:
After recruiting the essential workforce, the HR managers needs to ensure that this
highly skilled employees are committed to perform to the highest level. Planning the
training and development system is one of the vital roles the HR managers has to
perform if they wish to increase the employee performance. Besides training and
development the other important issue is rewards and benefit system. When the

7
Management fails to get the best out of the employees or if they cannot make a deal
with the workforce in the organization the HR managers works as a negotiator
between the management and the employees(Torrington et al, 2008).
Managing Change:
In a modern business organization change is considered as a part of the day to day
operation. Change may occur on organizational level or cultural change can effect
employee performance directly. It is the HR managers responsibility to address those
changes effectively in order achieve organizational goal (Torrington et al, 2008).

Other roles and functions:

The other important HR functions includes HR strategy and planning. An effective
and a structured HR plan ensures the organizations success in the future. Recruitment
and selection process are an essential part of any effective HR strategy . However
training and development ensures employee motivation and best
performance(Torrington et al, 2008).

HR activities contributing towards the success of British Telecom:

The author will implement two different HRM models to discuss the HR factors that
contributes towards the business success of British telecom

Fombrun Model
(Source of the image: –Internet, http://www.reply-mc.com/2008/03/20/hr-blues/
accessed 19/12/2010)

8
The HR model by Fombrun et al(1984) is one of the most applied in modern business
organizations, It is popular for its simple structure that is easy to aplly in any
organization big or small (Gold & Bratton, 2001)3.The simplicity of the model comes
form the effort by Fmbrun et al to(1984) draw a connection between the key activities
of HRM. The shows the connections between HR functions such as selection,
employee performance, appraisal development and rewards. According to Bratton and
gold (2001) these HR activities are key to the organizations success or survival. These
are some of the most basic HR functions that HR managers in any company needs to
perform as a part of creating an effective HR system.

In this time of global recession and highly competitive market the HR department of
BT has the urge to select the most skilled and qualified people from the job market. in
this case the selection process itself works as a competitive advantage for the
organization. BT believes in a smaller and efficient workforce that can deliver the best
customer service. It is stated clearly in the BT annual report 2010 that they work with
specialist recruitment agencies to attract talented individuals people and their HR
departments also runs an effective retention service to make sure that these talented
individuals stays with them and contributes towards the organizational success (BT
annual report 2010). The other key feature performance and appraisal of the Fombrun
model then comes in function that helps to understand the employee performance and
identify their training needs.

Performance and appraisal is also utilized as a tool to determine employee rewards by

the HR managers in British Telecom. there are various types of rewards for their
highest performing employees depending on their skill and sector of performance.
However, employees with lower performance or below standard are provided with the
necessary training and support to increase performance and productivity. On top of
that BT ensures that their employees are trained to most recent technology and knows
how to deal with certain situations. Due to this reason the BT human resource team
runs a very effective learning and re-skilling schemes that helps to improve their
employees skills. In 2010 alone more than 5000 employees took part in such schemes

3
Jhon Bratton and jeffrey gold (2001), Human Resource Management:Theory and
ractice, Routledge. P-17

9
to gain professional knowledge and qualifications to enhance their current skills (BT
annual report 2010).

Guest Model:
The other HRM model that is followed by the HR managers in BT are the Guest
model. David guest first developed this model (1989, 1997) in order to provide a
better design based on the previous HRM models. Guest (1989) suggested that main
HRM activities such as HRM strategy, Policies, performance and other outcomes
such as financial outcomes can achieve organizational goals as well as increase
employee performance if they are incorporated together. If theses main elements of
Guest (1989) model are utilized in a integrated manner than they helps to increase
employee performance which ultimately leads to the organizational success.
BT has a large work force that needs to be managed both centrally and locally. The
Guest model is reflected in most of its HR management process. BT management
thrives on improving its employees skills and performance based on the financial and
performance outcomes. This whole process is a part of their on going HR strategy. So
it is clear that these main HR function of BT are integrated by the HR managers to
improve employee performance which would influence BTs success both in UK and
abroad. Every year BT reviews its employees salaries and rewards based on their
performance. After one of the recent salary reviews in 2010, BT management
decided to increase salaries for their employees in the UK (BT annual report 2010).

10
3.
Introduction:
Human resource planning can be defined as a method of identifying and evaluating
the HR need of any business organization to acquire organizational target. It also
means that the right type of workforce is available in order to deliver organizational
success at the right time(I L.Mathias & Jackson 2007)4. An accurate HR plan consist
future process and outlines the HR availability for a long period of time. It also
forecasts the influence of the organizations business strategy on its human resources.
HR planning and strategy plays a vital role in the business strategy of British
Telecom. As people are considered one of the most important resource of BT, the HR
managers needs to make sure they have a HR plan that meets the demands of the
business and designed in accordance to the BT business strategy.
Some of the HR planning methods that are used by the BT human resource managers
to achieve organizational success are described below.

Employee selection:
BT has a general selection process that aims to attract the most talented and skilled
individuals form the job markets. The individuals are attracted by the employment
and benefit packages offered by BT. Selecting the right skilled individuals are in the
heart of HR planning of BT. As it is discussed above BT uses specialized recruiting
agencies that identifies those individuals for them. However, the recruitment and
selection process is conducted by the BT human resource department. So far this
method of selecting g employees as a part of the HR plan has been very effective and
generated positive results for BT.
Retention Plan:
The main purpose of any retention plan is to keep its best and skilled employees in the
role and reduce employee turnover or stop loosing its best employees to the

4
L.mathias Robert; John Jackson(2007)-Human resource management, cengagae learning, united
states.

11
competitors. Employee turnover can effect any business strategy directly. As it is
difficult to find replacements and train them to fill a position emptied by some one
migrating to a rival company. Due to this fundamental reason BT realizes that
retaining its skilled workforce is most important to achieve organizational objectives.
They have a very efficient retention plan that offers rewards and benefits towards
their employees. Employees are rewarded based on their performance and receives
regular technical or professional support that has a positive influence on their job
satisfaction and motivation. A survey in 2010 discovered that 71% of the BT
employees were proud to be a part of the organization which is a rise form 59%
recorded in 2009 for the same survey. They also offer a very attractive salary and
pension plan that is good enough to retain most of its workforce for the future form
other competitors in the market. This sufficient and well organization retention plan
by BT also ensures that the HR needs for the future are met accordingly and the right
people are retained to carryout the tasks in future to gain organizational success.

Horizontal progression plan:

BT utilizes this process of horizontal progression as part of their HR plan to develop

the career of their best performing employees and develop new skills for their
managers. In other words horizontal progression plan contributes towards retaining
the best employees as well. It is a combination of job rotation and transfer inside the
organization to develop the needed skill of the employees.

12
4.
Introduction:

Anderson (1994) suggests that the purpose of recruitment and selection process in any
organization is to locate, attract and finally select eligible candidates from the labor
market to meet the organizations human resource needs, and thus achieving
organizational success (Beardwell & Claydon , 2007).5 It has been discussed earlier in
this assignment that the skilled workforce is the most valuable asset for any business
organization. The human capital of the organization plays the most important role to
improve performance and productivity of the organizations.

Selection process is followed by the primary recruitment system that includes calling
the suitable candidates for interviews or short listing the candidates. The whole
process of recruitment and selection generally involves activities such as assessing
the applications and resumes, picking up the applications that meet the job
descriptions, calling for an interview, selecting the successful candidate and
orientation of the new employee. however, this generalized employee recruitment
strategy varies form organization to organization. For example large organizations
such as BT with employees over hundred thousand has a vast and range of
recruitment strategies.

Recruitment and Selection Strategies Adopted by BT to Select Management:

BT is one of the oldest and largest telecommunication company in the world. Its
people or human capital is considered they key element to its survival and success for
the past years. BT has a general recruitment and selection strategy for most of their
jobs in the UK, normally attracting skilled individuals to participate in the selection
process and selecting the best employees through screening and other tests (BT

5
Julie Beardwell, Tim claydon;2007-Human resource management-5th edition , a contemporary
approach, Pearson Education limited.

13
website/career, 2010). Besides the normal recruitment process they have separate
recruitment programmes for specialized sections such as engineering, support,
research, undergraduate and MBA recruitments and apprenticeships.
The management candidates are selected through another specialized selection
process that is designed to meet the management requirements of the organization.
Most of the management selection is done internally, management jobs are advertised
internally and applicants are picked based on criterions such as length of service,
skills, qualifications and knowledge. A lot of the internal selection are a part of the
employee development process or carrier progression plan. The main reason BT
selects most of its managers internally through promotions because it ensures that
their skilled employees stays with them for a longer period. As result the human
capital of the organization stays intact. However some senior management post in
directorial level are filled through direct recruitments, for example senior executives
re chosen from the industry based on their track record and industry performance.

14
5.
Introduction:
Training is a process that helps the individuals to acquire new knowledge, skills, and
other aptitudes through a systematic process. This learned skilled are utilized by the
individuals to perform their given task effectively in the work place. According
Armstrong (2006) training and development is the increasing urge of exploring one’s
capability and strengths through acquiring or learning new knowledge and academic
lessons. Some of the well known benefits can be categorized as better quality products
or services, higher productivity of the employees, more flexibility and less
supervisory role for the HR department. It also improves employee motivation
enormously.

In most of the organization training is considered as the most important part of the
employee development process. For bigger organization such as BT, which deals with
technology and communication, training has become the most important part of their
HR strategy and planning. Training not only develops the employee performance it
also influences the overall performance of the company.

The three main training and development methods adopted by the BT HR department
to improve their staff and organizational performance are discussed below.

Coaching:

BT has a very strong and exclusive training scheme that supports coaching and
apprenticeship. Specially its engineering and technical teams relies highly on this type
of training programmes. coaching and apprenticeships is the first choice of the HR
managers in BT as it helps the for the new recruits to receive training while on the job

15
from the more experienced and skilled staffs, it is also cost-effective. It is also easier
for the managers to supervise or monitor the progress of the trainees.

Mentoring:

One of the most used training scheme by BT managers is called mentoring. As

coaching and apprenticeship is already used by the managers in most of the BT
departments it is easier for them to adopt mentoring scheme for employees who are
serving in the company for a certain period of time. Most of the mentoring schemes
are based on employee performance. Mentoring scheme was successful among 70%
of the participants and produced positive results for BT, including increasing
productivity and organizational performance.

On the Job training:

The BT HR team uses performance appraisal system to determine most of its training
and development needs. It also designs the appropriate training system required for
the employees. On the job training is the result of performance appraisal system that
has been used by BT since its beginning. It is mostly considered as a form of formal
training that involves both managers and senior employees.

16