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Critical Evaluation of MGH Group 1

Critical Evaluation of MGH Group in achieving competitive advantage through staffing and recruitment practices

Prepared By: M Mahmudur Rashid ID: 081709030 Course: HRM 480 Sec:1

Prepared For: Mr. Jasim Uddin (JDN)

North South University 27th November,2013

Critical Evaluation of MGH Group 2 Summary The report focuses on MGH group and the impact that its staffing has on its competitive advantage. Through the secondary research it could be concluded that staffing has a significant impact on an organization. Primary research is based on the interviews of employees from MGH group. The interviews reveal many facts about the organization. The organization focuses a lot on its employees. It has an extensive recruitment process including many tiers. Through this process they are able to hire the right talent for the organization. But hiring and retaining are not the same thing and most of the employees leave the organization overtime because of its demanding culture. So although their people are a source of their competitive advantage it is not sustainable cause they can take the same knowledge outside of the organization.

Critical Evaluation of MGH Group 3 Research Overview This report evaluates how staffing and recruitment impacts the competitive advantage of MGH group. MGH group is one of the largest conglomerates of Bangladesh headquartered in Singapore. They started their journey in 1992 by importing Gillette products. Now they provide Contract Logistics, Supply Chain Solutions, Ocean Carriers, and Airlines GSA representations, Cutting-Edge IT Solutions, Inland Container Terminal Management, Food & Beverage Retail, FM Radio, Cable Television Network, Tea & Rubber Plantation, , Commercial, & Retail Banking, Computer Reservation System (CRS) Distribution, Internet Booking Engine, and Inventory of Premium Land Bank respectively. Its operations span across India, Pakistan, Sri Lanka, Nepal, Myanmar, Vietnam, Mauritius, Madagascar, Qatar, Kuwait, Egypt, the United Arab Emirates, and Kazakhstan. The secondary data collection of this research clearly explains the value of human resource operations to create competitive advantage. The resource based view of the firm emphasizes on human resource management for creating a competitive advantage. But for human resources to be basis for competitive advantage it has to be immobile and non transferrable. As skills differ from employee to employee, its crucial that organizations hold employees with skills that bring the most profit in the organization. From our research we also observe that firm specific human resources are a better source of competitive advantage than a generalized skills human resource. But even after clear understanding of HR managers about the importance of staffing many fail to properly address the function. The primary data collection is done by taking interviews of employees from MGH group. From the primary data collection if was found that MGH is very sincere about its recruitment. They try their best to get the most talented people possible. MGH also believes that people are their power. So the business of MGH is more people focused. Their recruitment and staffing practices are in line with their long term corporate goals and it is strategically designed to meet their needs. MGH believes that their employees are a source of their competitive advantage. Some other information that came up during the process of this research is the high turnover rate of MGH group which is linked to its demanding culture. Their recruitment process lacks the personality test step, which can be used to assess employees personalities better. Most of the hiring in top management of MGH group is done through peer networking or from their existing employee base, thus they face the disadvantages that such practices bring. Because of resource constraints it has been difficult to have a more in depth research on the topic. But under the context of this research it can be concluded that staffing and recruitment is a major source

Critical Evaluation of MGH Group 4 of competitive advantage for organizations. The organization discussed here also emphasizes on those factors to have an edge over competitors. Aim and Objectives By this research I have attempted to find out how staffing helps an organization to achieve its objectives. Since the organization that I am working on is a multinational organization, it is very crucial for them to acquire and maintain the right talents. Through my research I attempted to find out the following: The staffing process of the organization Evaluate if their staffing strategy is consistent with their long term strategies Evaluate their employees opinions about their staffing process Observe their staffing strategies effectiveness in achieving their corporate goals Identify if there are any flaws in their process. Is their staffing a source of their competitive advantage or not.

Overall I wish to understand their staffing procedure in depth and how it synchronizes with their goals and objectives. Methodology For the purpose of this research I have conducted primary and secondary data collection. Primary Data collection included taking interview. I have conducted interviews of 20 employees personally. I have done a qualitative research rather than a quantitative one, due to the topic its more appropriate to ask questions personally and get an in depth view rather than focusing on numbers. Secondary data has been collected from books, articles and internet. I have tried to collect the most updated and recent information possible for my research.

Critical Evaluation of MGH Group 5 Literature Review Before going into further discussion about how staffing can help an organization to achieve competitive advantage, staffing has to be defined first. Strategic Staffing is the process of staffing an organization in future-oriented, goal-directed ways that support the business strategy of the organization and enhance its effectiveness. This involves the movement of people into, through and out of the organization.( Phillips & Gully,2009, p.4). Staffing decisions can have a significant impact on an organization. According to one study, 45 percent of the companies calculated the cost of turnover at more than 10000 $ per person, while 10% calculated it at more than 40000 per person. This cost is higher for jobs which require technological expertise and know-how. Its also high for service jobs. ( Mello A. J., 2011, p.333) In this age companies have a number of options for recruiting and selecting employees. Its important which method a company follows, as it dictates the cost and time needed for recruitment. Although recruitment everywhere has some common steps, depending on the type of organization and job there are variations. More complex jobs usually have more steps in recruitment. Good strategic staffing systems incorporate: Longer-term planning Alignment with the firms business strategy Alignment with the other areas of Human Resources Alignment with the labor market Targeted Recruiting Sound candidate assessment on factors related to job success and longer-term potential and The evaluation of staffing outcomes against preidentified goals

Not all attributes of an organization can be classified into being a competitive advantage. According to Jay Barney, a professor and expert in business strategy, a competitive advantage has to possess five attributes. These are: 1. The resource has to be valuable 2. The resource must be rare 3. The resource must not be easily imitated

Critical Evaluation of MGH Group 6 4. The resource must not be easily substitutable 5. The company must be organized to exploit the resource.( Phillips & Gully,2009, p.25). An organizations talent can create a competitive advantage by influencing the value of the organizations stock of talent or the efficiency of its work processes. Human capital advantage can be created by hiring and retaining outstanding people. On the other hand, human process advantage can be created by getting firms work done in a superior way. This particular advantage can be very difficult to imitate. We can take Starbucks as an example. Starbucks tries to hire people who are adaptable, selfmotivated, passionate and creative team players. They are known for treating their employees well. Starbucks staffing strategy is, To have the right people hiring the right people. Getting the right people joining your organization before the competitors can have them is also a great strategy to improve organizations competitiveness. (Phillips & Gully, 2009, p 46) Although its difficult to find out articles which directly relate staffing with competitive advantage, most of the researches that I have come across take the broader human resources functions as a source of competitive advantage. Most academics now agree that human resources can be an integral source of competitive advantage. Modern human resource management draws heavily from the resource based view of organization. In resource base view, the firm is seen as a nexus of resources and capabilities that are not freely bought and sold in the spot market (Lado A. A. , Wilson M. C. , 1994) . In this article the researchers have argued that, organizational resources that are heterogeneous and immobile form the basis of sustained competitive advantage. To achieve such resources, its important that organization staffs its operations properly. Staffing helps to create input-based competencies in an organization. Input-based competencies include physical resources, organizational capital resources, staffs, their knowledge and skills. Sustained competitive advantage depends upon the firm's ability to utilize existing stocks of resources and its ability to accumulate new resource and stocks more efficiently and effectively relative to competitors (Mahoney & Pandian, 1992; Penrose, 1959; Prahalad & Hamel, 1990; Wernerfelt, 1984) The rationale behind competitive advantage and human resource practices is based on an employees specific technical skills, knowledge and abilities required to perform a specific task . Overall, then, for firms pursuing a competitive strategy of innovation, the profile of employee role behaviors includes (1) a high degree of creative behavior, (2) a longer-term focus, (3) a relatively high level of cooperative, interdependent behavior, (4) a moderate degree of concern for quality, (5) a moderate concern for

Critical Evaluation of MGH Group 7 quantity, (6) an equal degree of concern for process and results, (7) a greater degree of risk taking, and (8) a high tolerance of ambiguity and unpredictability.(Schuler R.S., Jackson S.E.,1987) Some researchers argue that human resources can be a source of competitive advantage, but only when the workers can not take their valuable knowledge and skills to rival companies. This doesnt happen when the knowledge and skills can not be transferred to other organizations, meaning the skills are organization specific only. So firm specific human capital is believed to sustain competitive advantage. General human capital is believed not to support competitive advantage. ( Campbell B.A., Coff R. & Kryscynski D., 2012). From our above discussion it can be comprehended that staffing and human resource practices should be a major concern for organizations. Because only staffing can give organizations a kick start in the process of achieving sustainable competitive advantage. But a recent research gives us a different view on this topic. A survey of 33,000 employers from 23 countries found that 40% of them had difficulty finding and hiring the desired talent (Manpower Inc., 2006), and approximately 90% of nearly 7,000 managers indicated talent acquisition and retention were becoming more difficult (Axelrod,Handfield-Jones, & Welsh, 2001). A study by Rynes, Brown, and Colbert (2002) found that staffing scenario demonstrated the largest differences between academic findings and the beliefs of managers. It means that although staffing should be one of the most important strategic mechanisms for achieving competitive advantage, organizational decision makers do not understand staffing or use it optimally. Given that the war for talent is very real and relevant to organizations around the globe, it is critical that organizations and organizational scholars recognize the value of staffing. It is clear that staffing is a crucial source for sustained competitive advantage for an organization. It is crucial to hold onto these employees when they have a general skill structure which can be transferred into other organizations. Unfortunately, many organizations still are unable to reap the benefits of proper staffing. Staffing Systems: Because of the broad scope of organizational staffing procedure, its not possible to describe all of it in this report. But we will go through staffing in brief:

Critical Evaluation of MGH Group 8 Temporary and Permanent Employees: Before recruiting an organization has to decide what kind of employees it wants to recruit. It depends on the current staffing needs. So an organization has to accurately assess how long the shortage is gonna last and how many employees they need. Temporary employees usually get more pay, but they are not paid when there is no work to be done. On the other hand, permanent employees have less pay per hour, but their job is secured whether there is work or not. Temporary employees give more flexibility to recruiters as they can expand or contract the workforce by their will. Organization these days also subcontract or outsource their jobs to other organizations. This is done on project basis. Large organizations can also move their employees from departments to departments. Some organizations have in house temporary organizations which gives them high flexibility. These employees also show increased dedication to the organization and they are well versed into technicalities of the organization and its processes. Internal Versus External Recruiting: Once an organization decides to hire permanent employees, the first question they are faced is to hire from internal sources or external sources. Internal hiring means recruiting employees from the organization to other posts. External hiring means hiring from external sources. Both have some advantages and disadvantages shown below: Internal Recruiting: Advantages The organization already has performance data on the employee Promotion from within motivates employees Training and socialization time is reduced Much faster and less expensive than external recruiting Disadvantages Can become very political Dysfunctional conflict may arise Employees who are not selected can suffer from diminished morale and performance Can become inbred through extensive internal recruitment.

Internal recruiting can be used for organizations which wants stability and has less challenges from the external environment. If time and money are limited than internal recruiting can also be beneficial.

Critical Evaluation of MGH Group 9 External Recruiting: Advantages Facilitates change and tends to be more useful Can allow an organization to expand its knowledge base Bring a fresh approach In the senior level, candidates are recruited for history of bringing about significant change in other organizations Have a wide range of prospects to choose from. Disadvantages Can expensive and time-consuming Employees outside the organization need a longer socialization period Unknown people about whom the organization has no idea Can have detriment effects on the morale of inside employees.

Methods of Recruting: Small organizations usually recruit informally. Job openings can be advertised through word of mouth or directly by the supervisor himself. In larger organization internal recruitment is more formal as they do this through a formal job posting. External recruiting can also be done informally. It is almost a norm at executive level. A recent survey of executives found that 64 percent of them got new jobs through peer networking. The number of CEOs hired from outside the organization in 2000 had doubled from 1990 levels. .( Phillips & Gully,2009, p.338). Recruiting by large organizations is primarily done by advertising on media. These include the newspaper, magazines and internet etc. Internet has been the fastest growing recruitment media in recent years. As internet is worldwide, it gives the recruiter a wide range of applicants to choose from. A survey of graduate and undergraduate students revealed that 75 percent use the internet for job searches. In 1998 almost 70 percent HR professionals were already using the internet for recruiting. Internet recruiting has become increasingly popular with recruiters and is believed to cut the search process time by 75 percent.( Phillips & Gully,2009, p.338-339). Recruitment can also be done through the existing employees of the organization. For example, consumer product giant Johnson & Johnson rely on their employee referral program to make new hires. ( Phillips & Gully,2009, p 340)

Critical Evaluation of MGH Group 10 Organizations can also take help from other organizations to recruit them. In foreign countries organizations feel more comfortable to hire from recruitment agencies. In our country its still not very widespread but there are some recruitment agencies like Grow n Excel that help organizations by providing recruits. Usually such organizations tend to be more efficient and effective when recruiting cause they its their business and they specialize in these operations.

Many organizations use college and university recruiting to attract large number of qualified applicants. In Bangladesh organizations show biasness to some certain university graduates. In popular universities they hold on campus seminars and recruitment for attracting fresh talent. For example, companies such as Unilever, Airtel, Uniqlo and Viyeallatex group hold seminars in North South University to attract talents from here. Selection: Employers often use tests and other selection procedures to screen applicants for hire. The types of tests and selection procedures utilized include cognitive tests, personality tests, medical examinations, credit checks, and background checks. Companies can legally use these tests, but they are not supposed to use to them to discriminate based on race, color, sex, national origin, religion, disability, or age. But in our countries perspective, discrimination in job selection procedure is very widespread. Discrimination is done based on gender, CGPA, age and altruism. Employment tests are supposed to be validated for the jobs they are being used to hire for and for the purposes for which they are being used. This practice too cannot be seen in the context of Bangladesh. Online Pre-Employment Tests Depending on the type of test, employment testing can be conducted online or in the employer's office. Online employment tests are often used for pre-employment testing and assessment. Utilizing online testing eliminates the need for the candidate to visit the company's office or for the company to have to administer the test. Organizations such as British American Tobacco, Standard Chartered and Unilever hold online employment tests in Bangladesh Personality Tests Personality tests assess the degree to which a person has certain traits or dispositions or predict the likelihood that a person will engage in certain conduct.

Critical Evaluation of MGH Group 11 Talent Assessment Tests Talent assessments, also called pre-employment tests or career tests, are used to help an employer identify candidates that will be a good fit for jobs. Talent assessments help predict a new hires performance and retain ability. Pre-Employment Physical Exams Employers may require a pre-employment physical examination to determine the suitability of an individual for a job. Cognitive Tests Cognitive tests measure a candidate's reasoning, memory, perceptual speed and accuracy, and skills in arithmetic and reading comprehension, as well as knowledge of a particular function or job. Drug Tests There are several types of drugs tests that candidates for employment may be asked to take. The types of drug tests which show the presence of drugs or alcohol include urine drug tests, hair drug or alcohol testing, saliva drug screen, and sweat drug . Data Analysis For the purpose of my research I have conducted interviews with 20 employees of MGH group. In this section we will be discussing their opinions about their recruitment process. Below we will discuss the recruitment process that the group follows for their recruitment: Job Advertisement: The first step in the recruitment process is job advertisement. MGH group usually gives vacancy advertisements in A potential employee can also send his Curriculumn Vitae by their website, but usually they dont have any vacancy announcements there. In this case the CV will be used when they hire again Written Exam: After screening through CVs the applicants are called for written exam. Written exam usually consists of three parts which are math, critical reasoning and English. The exams follow the multiple choice question pattern.

Critical Evaluation of MGH Group 12 Free Writing: This is another written exam which the successful candidates of first exam have to go through. In this exam they are given a random topic on which they have to write and essay on. The time limit for this exam is thirty minutes and the essay has to be of thousand words Group Discussion: The group discussion sessions usually hold ten people in a group. They are given a topic and they have to discuss the topic in the group. In this phase they study the recruits behavior in a group setting. Presentation: A topic is given on which the potential employees have to do presentation right then. Most of the people that I have interviewed shared that this step is the hardest of them all because managers from the organization cross question the employees, they try to do everything possible to make interviewees commit mistakes. Usually the question answer session is very harsh. Panel Interview: Panel Interview is the next step in recruitment. This is also a very rigorous process where the employee is evaluated on his knowledge, skill level and personality. The panel usually consists of a manager from finance department, a manager from the human resource department and another manager from any of their businesses. This mix can change from year to year. Interview with the HR Director: In this step the HR director takes the interview and the director mainly tries to find out if the potential employee is fit for the organization or not. Managing Director Interview: Its the final step of the process in which the managing director of the company takes the interview. In this stage they dont focus on evaluation that much. This is the step where negotiation and terms of contract is discussed. In the recruitment of management trainee in 2011, there were eighteen people selected for traineeship from a pool of 300 people.

Critical Evaluation of MGH Group 13 Internal Recruitment: Usually MGH collects trainees once a year and after the traineeship, these executives are posted in to different departments. MGH hires top executives from its internal employee base. Once the traineeship is completed an employee gets promoted based on his skills to higher positions as he gets achieves more experience over time. Evaluation of the recruitment process: During my interviews I have tried to find out the opinion of MGH group employees about their recruitment process. Basically I have tried to link what we have read in this course with the actual recruitment of MGH group. From our previous discussion we have comprehended that staffing can be a source of sustained competitive advantage for an organization. Below I will present my findings from the interviews. The majority of the employees believed that the recruitment process is efficient of MGH group. When asked about why they think so they gave the following reasoning behind their claims: The process has enabled them to fill their vacancies timely So far it has been able to deliver desired talent to the organization Its expensive to hold so many steps for recruitment but the benefits outweigh the costs The whole process gives them a very good idea about the potential employee prior to recruitment

When asked about if the hires can perform their jobs accordingly, they said most of them if not all are able to perform the jobs that they are hired for. One or two employees also added those that do lack performance initially pick it up during or after the traineeship period. Its because of the culture of MGH that employees have to perform. They further added that MGH has zero tolerance for errors. Their culture is performance driven The recruitment process of MGH is in line with its corporate goals. MGH recruits highly motivated and self driven employees for their jobs, which goes with the companys goal of constantly thriving for new opportunities. The people that I interviewed stated this fact in different ways. Some said that MGH tries to hire ambitious candidates who can take the business further. Another interviewer added that to work in MGH you have to constantly thrive for new opportunities. Lastly I asked them if they believe that recruitment of these people give them a competitive advantage or not. What I tried to find out is that if they think that their people are a source of their competitive advantage. In the answer of this question all of them added that yes, they believe that the

Critical Evaluation of MGH Group 14 people they hire give them an edge over their competitors. They further added that, MGH believes that people are their power. They take people carefully through this extensive process due to this belief. People are essentially what make MGH the organization that it is. During my research I came upon some facts which I didnt inquire about, but they came up as I talked to the employees. The employees shared that MGH has very high turnover of people. People often leave their job at MGH to other companies. For example, of the 18 management trainees recruited in 2011 only 4 were still working at MGH, the other 14 left for jobs in other organizations. As I came upon this information I enquired about the reason behind this phenomenon. The employees shared that MGH is too performance driven, the overall culture is constantly pressurizing the employees to do more. MGH gives employees frequent career growth, many find it difficult to cope with rapid changes and this constant push to the next level.

Discussion The main findings from my research are as follows: The recruitment of MGH group is strategically linked with their corporate goals The recruitment is well thought out of and they recruit the best talent possible MGH is a goal driven company Some of these goals can be overwhelming for the employees The high turnover of this organization is due to their demanding culture They believe that their staffing is a source of their competitive advantage.

These findings concentrate on the employees perspective of the organization. But during my research I found out some flaws in their recruitment. During their recruitment they dont do any personality tests of the employee. As HR students we know there are a number of tests to find out the personality of employees. The Briggs Myers and Isabelle Jungs typology test is the most prominent among these tests. Not only MGH most of the conglomerates of Bangladesh hold no personality tests for recruitment. Its not even due to the cost or other factors. Human resource managers tend to evaluate potential employees through their observations. But their observations can be biased or problematic. Although the personality tests themselves are not free of errors, but its important for an HR manager to use all the resources at his disposal to recruit the best talent for their organization.

Critical Evaluation of MGH Group 15 But overall it can be said that MGH accept their workforce as a major source of competitive advantage. They are strategic about their recruitment and the top management involve themselves extensively in this process. But as we have learnt from our research the manpower that an organization cannot hold on to is not a source of a sustained competitive advantage. As the turnover rate of MGH group is high it it cant be stated that there workforce is a a source of sustained competit ive advantage for the organization. Conclusion The scope of understanding staffings impact on competitive advantage is too broad to evaluate only on a single organization. Due to time and resource constraints it was difficult to come out with a dependable conclusion. Its also difficult to go to the organizations and make them share information. But within the limitations it can be positively concluded that staffing is a source of competitive advantage for MGH group. Although the sustainability of this advantage is questionable, as employees leave so thus the group include more employees in its workforce. So that might offset the affects of high turnover.

Critical Evaluation of MGH Group 16 Reference list Axelrod, E. L., Handfield-Jones, H., & Welsh, T. A. 2001. War for talent, Part 2. The McKinsey Quarterly. DOI: 10.1177/0149206306293625rly, 2: 9-12. Campbell B.A., Coff R. & Kryscynski D., (2012). Rethinking sustained competitive advantage from human capital. Academy of management review,37 (3): 376-395. Doyle A. Employment Tests. Retrieved November 27,2013 from Gully M.S. , & Phillips J.M., (2009). Strategic staffing.Strategic staffing. New Jersey, NJ: Pearson Education Gully M.S. , & Phillips J.M., (2009). Business and staffing strategies. Strategic staffing. New Jersey, NJ: Pearson Education Gully M.S. , & Phillips J.M., (2009). Business and staffing strategies. Strategic staffing. New Jersey, NJ: Pearson Education Gully M.S. , & Phillips J.M., (2009). Business and staffing strategies. Strategic staffing. New Jersey, NJ: Pearson Education Gully M.S. , & Phillips J.M., (2009). Business and staffing strategies. Strategic staffing. New Jersey, NJ: Pearson Education Gully M.S. , & Phillips J.M., (2009). Business and staffing strategies. Strategic staffing. New Jersey, NJ: Pearson Education Lado A.A., & Wilson M.C., (1994). Human resource systems and sustained competitive advantage: a competency based persepective. Academy of management review,19 (4) :699-727. Retrieved from Mahoney, T. A., & Deckop, J. R. (1986). Evolution of concept and practice in personnel administration/ human resource management (PA/HRM). Joumal of Management, 12: 223-241. Retrieved from

Critical Evaluation of MGH Group 17 Manpower Inc. 2006. Confronting the coming talent crunch: Whats next? Retrieved November 27, 2013, from Mello A.,J.,(2011). Staffing. Strategic human resource management. India: Cengage Learning. Schuler R.S., & Jackson S.E.,(1987). Linking competitive strategies with human resource management Practices. Academy of management EXECUTIVE, 1 (3): 207-219