Developing Skills for Business Leadership
Cenlow limited is an instant coffee manufacturing company that is planning to shift to London in order to capitalise the estimated profitable market. Its intention to relocate is basically due to expanding the market of its products and services. However, there are certain HR issues that should be borne in mind of the company’s officials such that they can smoothly relocate. Also, the relocation efforts are inclusive of several necessary details that the officials of Cenlow limited is supposed to be aware of. The tasks and elements of relocation includes: minimizing material handling and people management. Doing so will help Cenlow limited to effectively relocate. However, Cenlow limited is prone to certain costs that it has to bear as a result of relocation. Some of its relocation costs are: stamp duty, refurbishment cost, rent and insurance. The workers might also be reluctant to move thus creating HR issues for Cenlow limited. The potential HR issues are: job security threat to settling-in period. Thus, the required assumptions to be made prior to relocate are: occupancy permit by the officials, staff planning and existing insurance coverage is acceptable by all stakeholders.
Consumers’ preferences towards coffee are enhancing each day. The rise in economic growth of the coffee manufacturers is a result of increase in the consumers preferring coffee over the available substitutes. However, Bratton and Gold (2000) denote that profitability of the individual companies is dependent on: effectively managing raw ingredient cost, efficient operations and effective marketing. Several large coffee manufacturing companies in UK experiences facilities in purchasing, distribution, manufacturing and marketing. Besides the latter factors, Dessler (2011) determined that company location is also necessary to be critically determined in order to experience accessibility by wider customers. Considering that consumer taste and population growth drive demand in consumer sector while economic growth in hotels and restaurants is building demand in the commercial sector, the choice of location will help in ensuring high market profitability (Holden and Beardwell, 2004). The instant coffee manufacturing industries in US and UK is highly concentrated, each of which is competing between each other to build market advantage.
The intended marketing activities of Cenlow limited to launch new product in an improved pack can be acknowledged. Also, the relocation policies to Westfield Avenue, Stratford is considered to assist Cenlow limited in expanding business in profitable boundaries and earn high profit. However, certain human resource specification should be borne in mind that has been mentioned underneath.
1.0 Analysing the task elements of relocation
Selection of the correct location is the sole ingredient of a business’ success. According to Mathis and Jackson (2003) the most obvious factor for the relocation of the business tends to start with the things which are ‘physical’. However, the foremost asset of any business is its employee. Therefore, the decision of shifting premises has been driven by different other factors like, consolidation, expansion and other financial incentives. Thus, the main reason behind the relocation of a company is to provide its company and business an appealing environment in order to uplift their efficiency and productivity. Hence forth, for the planning and execution of relocation the organisation should involve the staff to the fullest. Torrington et al. (2009) stated that such practice does not highlight the shifting of equipments and furniture by the employees, but to make them aware of the full-fledged schedule and the impact of the new environment. Cenlow Limited, the instant coffee manufacturing company, where the management is looking forward to relocate the firm from Sheffield to Westtfield Avenue for the expansion of the product range and wider market reach. Barak et al. (2009) suggested that with the complexities of the modern market, the key factors on which a business needs to focus on are: people, furniture, plant and machinery, early involvement, minimize material handling.
The most effective way of involving the employees for relocation is to nominate the ‘move champions’. Here, the individual staff will be nominated to interface between the move managers (Becker et al. 2007). Thus, the Cenlow Limited will be facilitated with an internal employee who will manage the move of the firm. Therefore, the relocating business will be benefitted with an independent move manager or a removal specialist that provides the move management services.
The chief cost element of relocation has been referred to its furniture. Bowen et al. (2010) stated that relocation often leads to a demand for new furniture, as sometimes the existing furniture doesn’t seem to meet the design requirement of the recent business layout. However, the CEO of the Cenlow Limited must come out with effective strategies to minimize the cost margin of relocation. Thus, the management of the firm should survey on its waste disposable agents, to remove the unwanted materials from breaking down into component parts and to offset the cost of disposal. However, the particular practice will serve to ensure the accuracy of the audit trail.
Plant and machinery
The efficiency can be acquired by grouping all the machineries required to manufacture the similar products or parts that are engaged in the production process of coffee (Brewster, 2008). However, the people be struck by the ejected materials of the plant. Therefore, part of body can be trapped between the rollers or pulley drivers. Hence, the management of the particular company has to come up with effectual plans to relocate the equipments of the firm.
Minimize material handling
When the elements are being required to relocate from one location to another, preference has been given to sliding or rolling rather than carrying and lifting. The CEO of Cenlow Limited should concentrate on the low cost ideas for the relocation of the business (Buyens and De Vos, 2001). Hence, whenever possible the management can configure on the process to handle a particular product efficiently.
With the increase in competition and vacancy rate of the business, more and more owners are looking forward to the office moves. A business has to come across several factors when determining to relocate a new branch or operation. However, the staffs of Cenlow Limited have to balance on various factors while making the decision (Budhwar, 2011). The employees have to understand the criteria’s in which the business would like to restructure and modernise its operations. Therefore the staffs have to focus on the following factors like: convenient location for the employees, the price tag, operating cost, easy access to the raw materials, to mitigate a wider market reach.
Convenient location for the employees
When the business has to undergo relocation, the management of the firm needs to relocate some of the most valued and experienced team members, for a structured setup. Therefore, the location of the new layout needs to be convenient so that the employees can easily have a regular visit to the firm (Cheddie, 2011). To ensure that the experience member will feel free train a group of qualified and skilful employees from the scratch level.
The price tag
The cost of shifting the business along with equipment, merchandise and furniture can devote a huge cost to the business. None of the moving company would like to deliver such a huge cost in the brief period of time (Dyer, 2011). Therefore, the effective way of delivering the practice in the recent business days is to follow the 24-foot truck process. Hence, the staffs have a huge responsibility of making a correct selection of the suitable location, where the criteria will be fulfilled.
The staff of Cenlow limited needs to find out the tax advantage or disadvantage of the new preferred location. Guest (2009) mentioned that generally a firm has to pay a state tax of 7% on the commercial leases, which will result in the increase in the monthly rental cost considerably. Thus, the staffs need to prefer a suitable location which will serve the brand with minimum expenditure on the tax system.
Easy access to the raw materials
The preferred location should be located in such a site where there will be an easy access to the raw materials. Therefore, Huselid (2005) stated that the Cenlow limited, should seek to prefer a location near the coffee plantation, in order to make the maximum utilisation of the raw materials and reduce the transport cost.
To mitigate a wider market reach
The selection of the preferred location needs to be appropriate, so as to make sure that the potential customers will be able to grab the maximum services availed by the Cenlow limited. However, according to (Ichniowski et al. 2006), the sole aim of the business relocation is to meet the large market of the potential customers. Therefore, the new layout of the business needs to create an impact on the financial capability of the company and eventually on its production line. As a result of such practices, the firm will be benefited to expand the packaging and the product range internationally in the near future.
In order to relocate the office of Cenlow limited from its current position to London, will defiantly requires some added financial burden. However, most of relocation costs are dependent on the policies and regulations of the intended market. Taxes and other tariffs might be low in developing market but often high in developed economies like London. In this respect, Jackson and Schuler (2007) determined that while there are several services available to relocate hassle free, there is also certain hidden cost involved that businesses are unaware of. The following are the costs that Cenlow limited have to experience in order to relocate to Westfield Avenue, Stratford.
- Stamp- duty:
It is normally charged on property transactions. Although taxes are charged at different rates, at UK the stamp duty charges are generally on a higher scale. Even if Cenlow limited desires to resume business in a small office room of a building, it has to shell out substantial amount from its accumulated reserve as stamp duty (Kanter, 2009). However, once paid, Cenlow limited can regain its lost money from sale of its instant coffee product in the market. Considering that the market of London is considered to be profitable, Cenlow limited will soon be able to experience product acceptance and earn desired revenue.
- Increase in service charge:
The service charges of shifting office furniture and other equipments to a newer locations entails consumption of money. Although, the service charges are quite flexible and depends on the bargaining power of the employer, yet Cenlow limited have to give away a certain portion of fund as service charges. Khatri (2010) added that service charges keep increasing thus developing financial hurdle for the employer.
- Refurbishment costs:
Miles (2011) identified that the refurbishment cost is dependent on the individual business needs and the quality level in demand as its office design or fit out. Although not much designing is required to be undertaken by Cenlow limited considering it mainly deals with out-house business, a nominal percentage of money have to be spend as refurbishment costs.
In case Cenlow limited desires to take possession of a place by rent, it has to pay a certain portion as rent. In this respect, Nahapeit and Ghoshal (2008) pointed out that leases that extend beyond five years are subject to rennet review every five years. The same applies to both new and sub leases. Thus, as rent Cenlow limited have to bear the expense until it owns a certain office place. However, a lease hold land is also subject to rent that Cenlow limited is required to bear as an expense.
- Office insurance:
In order to prevent any adverse impact on the business, Cenlow limited is supposed to insure the same. The insurance amount can be collected if Cenlow limited faces any damage or loss of property. However, the insurance amount can initially be a financial burden for the firm although its after effects can be favourable for the company.
- Schedule of conditions:
Schuler et al. (2013) stated that the schedule of conditions relates to the present state of the place where the business is yet to set up. Cenlow limited is willing to resume business in London not knowing the current condition of the office area. As it might cost high to refurbish a office place to start a full-fledged venture, Cenlow limited have to be prepared for scheduling of conditions. The cost of refurbishment is based on the rates charged by the service provider, thus not enabling Cenlow limited to forecast the scheduling costs.
Building network with the suppliers and buyers in the capital might be cost-intensive. In other words, the Cenlow limited might have to pay in return of service gained from the suppliers. The service charge is thus an additional burden for Cenlow limited.
While relocating any business, Cenlow limited is prone to face certain HR issues. Such issues might prove to be of demerit for the brand and often create adverse organizational implications. The following are the potential HR issue of Cenlow limited that the brand must be aware of:
- Reluctance to move:
Schuler and Jackson (2007) pointed out that the common HR issue of relocation is that the staff might be reluctant to move. The staffs who have been working at Cenlow limited might find it convenient to operate in the current or original place rather than the potential market. The customers might find it facilitated to communicate to work in original location and less convenient in current location. The current location might be far from their home or they might fear that hierarchy might alter as a result relocation. Considering that the shift might not be favourable for the business, the chances of openly accepting the relocation initiative might not be liked by the staff of Cenlow limited. The officials might thus find it difficult to push them to accept the relocation policy and motivate them to work even better. Tyson (2006) determined that drop in job performance might thus a result of dissatisfied workforce.
- Fear of job security:
Some staff might feel that while shifting to a separate place, they might be retrenched. Whitfield and Poole (2011) denoted that the new office might be in favour of just a few as there are chances that most of the staff will be retrenched. The current fear might drop the motivation level of the staff in fear that any time they will be asked to leave. It is a common perception among the staff that as the company is shifting base, they will tend to replace its existing staff with more technically sound staff base. Thus, relocation can arise fear of job security among the staff of Cenlow limited leading to fall in their productivity level. Wright and McMahan (2012) added that often company are forced to narrow down its current staff base in order to ensure market sustainability. In any case, the current staff base of an organization feel threatened to lose their present position and being suddenly replaced by some other technically competent staffs.
- Settling-in Period:
Tyson (2006) determined that during relocation, staff might take some time to settle into their new environment before a company can reap the benefits of increased productivity. After relocating the business, the staff might primarily feel difficult to suit themselves within the current environment. As a result of non-adaptability, the staff might at times operate as against the current HR specifications. The staff of Cenlow limited is no exception and might also be prone to face hurdles regards to settling down. In other words, the settling-in period might be a HR concern for the staff of Cenlow limited.
The above are the HR issues that could be faced by the staffs of Cenlow limited. Although the relocation policies could be in favour of Cenlow limited, the staff might feel job security threat or not willing to move. Such level of dissatisfaction among the staff would directly influence the productivity level of workforce in turn lowering organizational productivity. Thus, it is the duty of the officials of Cenlow limited to reduce any form of fear or other inhibitions among its workforce such that they benefit from the move. In this respect, Tyson (2006) acknowledged the significance of clearing the reason behind relocation and its impact so that the staffs do not feel fear to move.
In order to prevent from being disturbed as a result of relocation, the officials of Cenlow limited might have to make certain assumptions. The prior assumptions will prevent Cenlow limited to freely relocate to London and experience the desired facility. The international packaging options and new product launch of Cenlow limited can only achieve success if it makes certain assumptions, as mentioned under:
- The new location building managers be made responsible to obtain necessary planning and occupancy permits:
Both the employees of Cenlow limited and the building managers must document all their respective relocation activities. Considering that there be an instance where there might be breach of job role, it is better to be sure of what should be exact responsibilities with regards to relocation. Both parties are required to sit together and decide upon the financial obligations and other relocation laws to be undertaken by both. Instead of just being verbal regards the contract, a proper documentation should be done. Khatri (2010) added the necessity of reviewing the polices in order to make sure that neither parties are facing any issues with regards to meeting the occupancy rules.
- Staffing plan will remain in force for the next 3 years, by which time additional office space will be acquired to house new staff:
In order to prevent the staff from feeling pressurised regards job loss or reluctant to move, the officials of Cenlow limited should be able to plan its workforce for the next 3 years. Within the 3 years, the company will not change over its workforce or add fresh staffs. Khatri (2010) also determined the need for planning workforce size for the next 5 years. Within the planning process, it is necessary to consider that additional office space will be available for potential staffs. Doing so will smoothly implement the set HR plans and thereby making its current staffs to be aware of their current and future workplace conditions. Besides the latter assumptions, Khatri (2010) identified the significance for the officials of the company intending to relocate to plan its office layout, space allocation and budget for office equipments and furnishings. Doing so will prevent Cenlow limited to be within the budget and experience the desired relocation facility.
- New office furnishing will arrive by date:
The officials of Cenlow limited should make sure that its new office furniture’s should arrive by date. If required it could also fix a supply date with the suppliers who would supply the required furniture’s by time. However, if the furniture’s do no reach by time, Cenlow limited should make a plan to relocate its current office furniture. In either of the latter cases, focus should be that its operations are not hindered as a result of lack of furniture’s or other assets. Only then will the brand be able to soon resume business after relocating to London.
- Existing insurance coverage is acceptable:
Cenlow is supposed to aptly design its risk management plan such that it is able to remain aware of its insurance coverage. All details of the insurance plan should be made known to the officials of Cenlow limited and such that they know in what situation can they be able to demand the insurance amount. If required, Cenlow limited can buy another insurance to secure all possible damages and not be unaware of any hidden details.
Barak, M., Maymon T., and Harel, G. (2009). “Team Work in Modern Organizations: Implications for Technological Education”. International Journal of Technology and Design Education, 9: pp. 85-101
Becker, B.E., Huselid, M.A., Pickus, P.S. and Spratt, M.F., (2007). “HR as a source of shareholder value: research and recommendations”. Human Resource Manage, 36 (1), pp. 39±47.
Bowen, D.E., Gilliland, S.W. and Folger, R., (2010). “HRM and service fairness: how being fair with employees spills over to customers”. Organ Dyn Winter, 28, pp. 7±23.
Bratton, J., and Gold, J. (2000). Human resource management. Mahwah, N.J.: Lawrence Erlbaum.
Brewster, C., (2008). “Strategic human resource management: the value of different paradigms”. Manage Int Rev Special Conference, 2, pp. 57±83.
Budhwar, P. (2011). “Strategic Integration and Devolvement of Human Resource Management in the UK Manufacturing Sector”. British Journal of Management, 11(4): pp. 285–302.
Buyens, D., and De Vos, A. (2001). “Perception of the Value of the HR Function”. Human Resource Management Journal, 11(3): pp.70–89.
Cheddie, M. (2011). “How to Become a Strategic Partner”. HR Focus, 78(8): pp. 1–14.
Dessler, G. (2011). Human resource management. Upper Saddle River, NJ: Prentice Hall.
Dyer, L., (2011). “Studying human resource strategy: an approach and an agenda”. Ind Relat, 23 (2), pp. 156±179.
Guest, D.E., (2009). “Human resource management and the American dream”. J Manage Stud, 27, pp. 377±397.
Holden, L., and Beardwell, I. (2004). Human resource management. London: Pitman.
Huselid, M. A. (2005). “The Impact of Human Resource Management Practices on Turnover, Productivity, and Corporate Financial Performance”. Academy of Management Journal, 38, pp. 635-670.
Ichniowski, C., Kochan, T.A., Levine, D., Olson, C. and Strauss, G. (2006). “What works at work: overview and assessment”. Ind Relat, 35, pp. 299±333.
Jackson, S.E. and Schuler, R.S., (2007). “Understanding human resource management in the context of organizations and their environments”. Annu Rev Psychol, 46, pp. 237±264
Kanter, R.M., (2009). “Transcending business boundaries: 12,000 world managers view change”. Harvard Business Review (May±June), 61, pp. 159±164.
Khatri, N. (2010). “Emerging Issues in Strategic HRM in Singapore”. International Journal of Manpower, 20(8): pp. 51–2
Mathis, R., and Jackson, J. (2003). Human resource management. Mason, Ohio: Thomson/South-western.
Miles, R.E., (2011). “Human relations or human resources?” Harv Bus Rev July±August (65), pp. 148±163.
Nahapeit, J. and Ghoshal, S., (2008). “Social capital, intellectual capital, and the organizational advantage”. Acad Manage Rev, 23 (2), pp. 242±266.
Schuler, R.S. and Jackson, S.E., (2007). “Linking competitive strategies with human resource management practices”. Acad Manage Exec, 9 (3), pp. 207±219.
Schuler, R.S., Dowling, P.J. and DeCieri, H., (2013).” An integrative framework of strategic international human resource management”. Int J Hum Resour Manage, (December) 4, pp. 717±764.
Torrington, D., Hall, L., and Torrington, D. (2009). Human resource management. London: Prentice Hall Europe.
Tyson, S., (2006). “Human resource strategy: a process for managing the contribution of HRM to organizational performance”. Int J Hum Resour Manage, 8 (3), pp. 277±290
Whitfield, K. and Poole, M., (2011). “Organizing employment for high performance: theories, evidence and policy”. Organ Stud, 18 (5), pp. 745±764.
Wright, P.M. and McMahan, G.C., (2012). “Theoretical perspectives for strategic human resource management”. J Manage, 18 (2), pp. 295±320.