In addition the economic sector is linked to factors such as unemployment rate, levels of economic activities, inflation rates, interest rates and the level or types of taxes. These factors affect the organization’s recruiting, selection, reward and benefits and labor turnover rates.
Finally under industrial relations organizations have to respond to organizational climate, level of unionization, government policies and employee attitudes and behavior. Having understood the external environmental factors, it is now important to firstly understand the background of ANZ Pacific Operations and later demonstrate the association between the two.
Background
ANZ Pacific Operations previously known as Quest Limited was established in June 2002 with only 20 staff and set up the Pacific’s first 24-hour call centre. In July 2009, Quest Limited underwent a name change to ANZ Pacific Operations and the main reason for this change was to “align ourselves to our business partners (the countries we support) to ensure that we work together to achieve the goals and objectives of the Pacific”. (Managing Director, Andrew Miriklis, see Appendix). Today the organization employs 262 personnel from different backgrounds and ethnicities.
Pacific Operations is an entirely owned subsidiary of the Australia and New Zealand Banking Group Limited and provides crucial services to the Pacific (American Samoa, Cook Islands, Fiji, Kiribati, PNG, Samoa, Solomon Islands, Tonga, Timor Leste, Vanuatu and Guam) and some functions for Asia. These services include Financial Accounting, Account Reconciliations, 1st Level IT Support, Voucher Processing, Call Centre, Cards Support Services and Retail Lending Support Services.
The Pacific Operations building located at the Kalabo tax free zone at Valelevu is state of the art both from a technology and premises perspective. It is functional and practical providing a wide range of services and conveniences which enhance staff performance. These range from a gym, a family and breast-feeding room, quiet room, outdoor sporting facilities and fully equipped training room. Its state of the art kitchen and dining hall also ensures hot and healthy meals are available.
Like other ANZ business units, Pacific Operations participates annually in Hewitt’s Engagement Survey and has been in Hewitt’s Best Employer Category for the third consecutive year in 2008. Pacific Operations has also been the recipients for several Fiji Business Excellence Awards and continues to provide superior services to its customers in the Pacific and the Asian region.
External Environment Analysis of ANZ Pacific Operations
ANZ Pacific Operations like any other organization has limited or no control over the external environment therefore they continue to scan, assess, forecast and analyze it in order to address the opportunities and threats it may present. The external environment factors that constantly affect the Human Resource Management are demographic, political/legal, economic, socio-cultural, technological, environmental, industrial relations and business. We shall now look at how these factors affects Pacific Operations based on the information gathered from the interview with the Human Resource Manager.
Like any other organization Pacific Operations highly depends on its people and therefore the demographic of the organization and the environment it operates in is an important factor. It is vital to note that various jobs carried out by the organization was previously done within ANZ Fiji thus the demographics of ANZ Fiji also has an influence on them. ANZ Fiji has a relatively aging population with most of its senior personnel on the verge of retirement. This has placed enormous pressure on Pacific Operations to groom its personnel to address gaps in terms of experience, skills and knowledge created through retirement. Another challenge faced in relation to demographics is that its workforce consists of the younger population such as generation Y who are not too loyal towards the organization. There tends to be a larger employee turnover rate with generation Y and if not addressed could have an adverse effect on organization performance.
The issues do not stop there as the political and legal climate of Fiji continues to change. This forces Pacific Operations to re-look at its HR Policies so that they are in line with the legal and government requirements. When the SDL government was in power they had affirmative action in place and Pacific Operations had to adhere to it whilst recruiting, selecting and promoting staff. However after the coup in 2006, the interim government introduced the Employment Relations Promulgation (ERP) which addressed the equal employment opportunity (EEO) issues. One of the issues raised included non discrimination on the basis of age as long as candidates met the job description and specifications. Earlier this year the interim government published a gazette stating the retirement age to be 55 years. As both documents are legal it places Pacific Operations in dilemma as to which document to follow. The third factor is the high employee turnover rates as a result of the unstable political climate. Employees are resigning and migrating due to the political uncertainty and it has also become difficult to attract expatriates to occupy senior positions within the organization.
Moreover, current economic environment does not help either as there is a rise in inflation rates thus increasing the customer price index which results in an increase in cost of living. More pressure is placed on the organization as employees and unions are looking for salary increments. The devaluation of Fiji dollar has made it difficult to attract expatriate workers because now Pacific Operations would have to pay more to hire their services.
Similarly there are the socio-cultural issues that affect the organization. Pacific Operations needs to support the views of the community on women issues such as employment and promotion opportunities. As women are a large customer base for the bank, Pacific Operations must consider the issues in their policies. The other segment of socio-cultural issue is the workforce diversity whereby people of different age, race, religion, culture and so forth have different needs that the organization to address. The change in employee mindset towards further education, career opportunities, their parental responsibilities and work life balance have also created challenges for Pacific Operations to tackle.
The rapid changes in technology keep the banking industries very competitive and therefore Pacific Operations needs to be on par with the latest technology. ANZ was the first bank to introduce Internet Banking and is seen as the leader in Fiji for introducing new technology. Therefore HR planning becomes vital for Pacific Operations in terms of having the right people at the right place at the right time and training the existing staff to be aligned with the latest technological requirements.
Furthermore, the government and community have always required co operations to show support towards initiatives concerning the general environment. Pacific Operations also has a responsibility towards supporting the initiatives by introducing ways in reducing energy consumption and working towards a greener environment.
The next factor that has an impact on Pacific Operations is the industrial relations. At the moment only 25% of employees in Pacific Operations are unionized and so the union has very limited influence on the organization. With low union presence it places greater responsibility on the HR department to address employee issues. EEO in the ERP needs to be adhered to in order to avoid industrial actions whereby no persons is discriminated against or unfairly treated at Pacific Operations.
Finally there are also business factors that Pacific Operations needs to consider. The competition in the banking industry has constantly forced Pacific Operations to restructure to be more efficient and effective. Recently the Reserve Bank of Fiji announced that all banks must have a profit margin of 4 % come December 2009 thus forcing banks to reduce interests on loans. This reduction has caused Pacific Operations to re-look at their structure and operations.
Upon understanding the impact of external factors on Pacific Operations it becomes crucial to understand what steps the organization is undertaking to address the issues raised. Firstly one needs to understand that Pacific Operations policies are the same policies used by ANZ Fiji. Secondly most policies are global ANZ policies and some have been tailored to address Fiji’s legal requirements. Lastly policies are designed either proactively based on global requirements or are a result of reactive action.
The concerns arising with regards to demographic issues such as retirement are being resolved through the Transferring of Knowledge Program. This program adopted by Pacific Operations involves senior personnel who are on the verge of retirement to produce a manual. This manual will include information on how to perform tasks effectively and efficiently. All staff within the organization will be trained according to the manual thus allowing Pacific Operations to function successfully.
As far as high turnover rate is concerned Pacific Operations have great policies in place. These include annual leave and holiday policy, sick leave policy which offers unlimited sick leave, and carers leave policy whereby you can take days off to take care of your sickly loved ones. Other policies include financial assistance policy, study leave policy, stock sharing policy, medical insurance policy and several other policies apart from attractive pay and benefit packages. Although these policies exist it has become difficult to retain staff with last year’s turnover rate being 15%. However this has currently reduced to 0.8% largely due to the current global economic recession. In addition, the retirement age dilemma caused by the two different legal documents mentioned earlier has been solved by allowing employees to choose their retirement age. Those willing to retire at age of 55 are allowed to do so and those who intend to retire later are given the leeway.
Furthermore the difficulty in hiring expatriates due to political uncertainty and devaluation of Fiji dollar is being addressed by promoting local staff to fill those positions. At present a program is underway to place local staff in senior management positions in a few years. Additionally, the rise in cost of living is being resolved by paying the staff Cost of Living Adjustment (COLA) pay as well as performance based pay.
Pacific Operations is trying to champion the rights of women by promoting them to senior management. Currently 16% of senior managers are women which the organization intends to raise to 50%. Apart from this they have policies in place such as EEO policy and bullying and harassment policy. Those employees seeking more of a work life balance and further education needs are addressed through flexi hours and part time work. The paternal leave policy allows fathers to be with their wives for the first few weeks after birth. Other policies consist of study assistances policy, career break policy whereby staff can take three years leave to further their education and various other policies to address the challenges arising from socio-cultural issues.
Moreover, to address the challenges raised by technology, Pacific Operations is training their staff locally and sending them abroad to be in par with technological changes. There are also overseas based teams that come to Fiji to train and assist in any technological issues from computer set up to upgrading programs.
Pacific Operations has taken drastic steps towards a greener environment. Policies are in place to ensure that all lights and computers are switched off when not in use. In addition there is minimal photocopying and printing done to reduce paper wastage. The organization also initiated the 1 degree campaign.
With the absence of union pressure, Pacific Operations has taken the responsibility of addressing staff issues fairly as they know a satisfied employee would lead to a satisfied customer. Moreover in order to reduce their profit margins the organization has adopted a policy of freezing recruitments. Take for instance when someone resigns, the importance of that particular work is gauged and a decision is made whether to dissolve find someone to do the job. This candidate is sought from within the organization. There are several issues that have an impact or influence the performance of HRM within Pacific Operations but they also have several policies in place to address these challenges.
Pacific Operations is able to successfully address the impact of external environment through their policies. How they tackle issues need to be recognized as they always to try to ensure that their employees are genuinely satisfied because their satisfaction will rub off to the customers. Our group would have done nothing differently except for two scenarios.
The first scenario is the employee turnover rate, especially the younger employees who tend to leave the organization quite early. Since the global economic recession, the turnover rate has reduced to 0.8%. However when the recession is over the turnover rate could very well rise again. Although they have attractive pay and benefits with several great policies in place they have the difficulty in retaining their staff. The group decided that since Pacific Operations is a subsidiary of ANZ and a global bank, the staff can be transferred to positions in other countries for a period of 3 years. This would keep the employees happy and remain loyal to the organization. Furthermore the organization can employ job enlargement, job enrichment and job rotation to reduce the turnover rate.
The second scenario the group feels needs to be addressed is the retirement policy. At present ANZ Pacific Operations is following both legal documents but this can create confusion for the employees. There needs to be consistency in retirement time and therefore the group recommends that Pacific Operations follow the global retirement policy. Additionally these or concerns can be raised with the government to address the contradicting laws concerning retirement age. Apart from these recommendations the group truly believes that ANZ Pacific Operations have a sound system in place to deal with external environment influences.
Conclusion
To conclude, the external environment is becoming more and more complex in nature. In an era where the external environment so greatly affects a company’s ability to compete, co operations have realized that employees are their valuable resource and therefore they have to generate policies in order to motivate and enhance their potential to guarantee the organization’s success.
Organizations need to respond to a rapidly changing global environment, and to any company continued success is dependent on attracting and retaining high-quality individuals who can respond effectively to this changing environment.
The dynamic nature of external environment poses several challenges towards ANZ Pacific Operations daily. The challenges discussed in this essay are just the tip of the iceberg but there are an unlimited number of influences the external environment has on the organization. Pacific Operations has been flexible, allowing them the ability to quickly respond to the external environment through their use of policies.
The key point is that an organization needs to be in tune with its often turbulent external environment. There must be a strategic fit between what the environment wants and what the organization has to offer, also a strategic fit between what the organization needs and what the environment can provide.
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APPENDIX
ANZ Pacific Operations Organizational Structure
(Source: Lancaster Fong, Communications Analyst ANZ Pacific Operations)
Interview Questions
- Please give a brief history of the organization
- How has the organization evolved?
- What is the current staff number?
- What is the current staff turnover rate?
- Please give a SWOT Analysis of the organization
- Strengths
- Weaknesses
- Opportunities
- Threats
- What is the purpose of Human Resources in the organization?
- How does HR contribute to the overall organization performance?
- What are the organization’s HR policies and procedures?
- eg. Recruitment, Selection, Training and Development, Performance Appraisals etc.
- Do ANZ’s overall policies govern your organization’s HR policies or are they separate?
- Please explain what and how the external environmental factors have affected the organization’s HR policies.
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Demographic eg. age, population
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Political/legal eg. political instabilities such as coups
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Economic eg. global recession, inflation, interest rates
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Socio-cultural eg. women, workforce diversity, changes in career preferences, changes in product/service preferences
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Technological eg. changes in technology, advances in communication
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Environmental eg. workplace beautification, OHS
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Global eg. new markets affecting HR policies
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Industrial eg. government policies such as the Employment Relations Promulgation
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Business eg. business restructuring methods such as redundancies, early retirement packages etc.
- To what extent was the organization prepared to tackle the factors or influences of the external environment?
- What steps had the organisation taken to respond to these external environment influences in managing HRM?
