Privatization: Review Essay

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Privatization

Basically, the changes on the fundamentals of security consequently results to changes in the laws of supporting. There is, therefore, the need for defined provision of security through services and other support principles. However, with the ever increasing inadequacy of resources, low cost but high performance services in delivery have been widely used. The limitations of service delivery in security provision are associated with the involvement of bureaucracy which leads to improper management of time and funds. The advancements in technology in the modern security systems have made it less possible for the services to be provided and maintained in domestic homes as the private sector has taken over this role. Privatization on security services is getting much attention due to its ability to further provide managerial services aimed at improving the quality of security services being provided (Kosar, K. R, 2006) Security provision firms entail the implementation of rules and regulations which is a bit different from most civil organizations which are based on performance. In security provision, confidentiality is a major element, failure to which objectives may fail to be accomplished and this would lead to loss of lives as well as national insecurity. From this point of view, privatization may not be as efficient as it seems. This is because the private sector, for instance, works by use of contracts to ensure the preparation of workforce where the contract does not take into account the possible occurrences in the future since it simply acts as a guide (Narasimhan, R. & Nair, and A. 2004).

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In a privatization event of any security service providers, certain factors have to e put into consideration. For instance, the level of confidentiality in security provision to private individuals should be of a different level, probably higher than that offered by the regular public officers. Lack of this confidentiality may pose great security risks depending on the amount of information leaked. Similarly, privatization of security providers affects the management of the organization in that the possession of management roles changes and this may cause adverse effects on service provision especially if decisions are not made wisely. Still on management, performance and efficiency may not be affected especially when the management fails to give proper specifications on security provision as well as the time frame under which the job should be executed (Cragg, M.I., Dyck, I.J.A. 1997).

It is therefore important for the SSS (Security systems solution) to first determine ways of monitoring and assessing service provision before privatizing the department to avoid irregularities in future. For example, there are certain concerns that need to be looked into a privatized security firm. Such concerns include that of avoiding engaging into a security project involving the public/civilians as required by person in charge. However, this requirement may complicate the execution of security operations intended for necessary services. Basically, this affects the ability of the security personnel to be flexible during the operation. The good thing about privatization is that it can be done partly or completely depending on the circumstances faced. There are basic four ways of privatization which means the suitable one should be determined and used (Brada, 1996, p. 187). For instance, a privatization exercise in developing countries is more likely to result to selling of shares directly instead of using stock markets to sell shares which results to sell of the assets at throw away prices leading to great losses. Additionally, disagreements may arise to the initial company and the sponsor during assessment of the assets. This could be solved by conducting studies on the same earlier before the operation starts.

In other words, privatization of security companies is not an easy task and requires consideration of various issues as well as their management. The entire operation requires a comprehensive evaluation of all the issues by looking at the benefits and risks associated with each one of them in order to make a reasonable decision. All the information regarding those issues should be made available to the decision makers as early as possible. This papers look at the issues to e considered when privatizing a security company as well as the process involved in the operation (Addison, T. and Tim, 2001)

Factors to be considered in Privatization

Privatization Defined

Kosar (2006) defined privatization as “The use of the private sector in the provision of a good or service, the components of which include financing, operations (supplying, production, and delivery) and quality control” (Kosar 2006, p.10). This definition given by the author of a report to the congress of the United States of America clearly outlines its different components. One, that privatization involves the private sector. Two, that there are different phases that can be covered by privatization namely; the supply, production and delivery of the good or service in question. This implies that the privatized phase can be the entire process or only a portion of the process. Three, that quality control is part of the obligation of the private sector that is engaged in the process of rendering of the good or service.

The definition underscores the fact that the public sector is using the services of a private company to render a good or service in its behalf. It is important to be made clear whether the private company can be controlled. And if so, by what means can the government agency control the private company without compromising the quality of its services? Another key matter about privatization is the guarantee that the private company can give that it will indeed perform better than the public agency.

Privatization basically entails the complete or partial change of possession of property from public to private ownership. Privatization has been used by several governments to improve the efficiency of their enterprises for the benefit of the public. This is because many enterprises owned and run by the government are, in most cases; insufficient thus privatization of such seeks to improve their performance hence helping beat competition in the market. By privatizing such enterprises, the quality of services provided in terms of efficiency as well as financial concerns according to government budget. The improvement of government budgets may be improved through privatization by selling off assets to obtain public revenue. In addition, government allocation of finances to the enterprise will reduce in the case of partial privatization or stop completely in the case of absolute privatization. Government expenditures such as in payrolls will therefore be low. Besides the government benefiting, the private sector is also encouraged to invest in those enterprises and this helps promote the development of capital in the local markets. Privatization gradually results to disengagement of the government in the economy which paves way for the private sector to take great part of the economy. The public also benefits from the increased competition resulting from the privatization process which then means that efficiency in service provision and reduction of consumer goods is ensured.

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In security departments, privatization is advantageous in reducing manpower in terms of workers employed and the costs involved in providing specialized training services, equipments and other facilities (Addison, 2003, P. 21). Other costs such as those of inventory will equally be reduced as well as other risks especially those involving loss of stock or value in case of degeneration. Additionally, the payment of the enterprise can be made later after the service has proved to e satisfying enough to the sponsor but this needs to be included as part of the agreement.

According to many people (Brada and Josef C. 1996) however, privatization of security companies seems more disadvantageous than it is benefiting to both parties and most importantly, the public. Their argument is based on the selfish motives associated with the private sector when it comes to gaining profits rather than providing efficient services. In most cases, privatization involves changes of mission requirements during which the agreements of the contract have to be modified among which the changes include costs. In government security departments, service personnel are always dedicated to their work as part of loyalty to their country to selflessly serve their nation. The private sectors, on the other hand, have their focus mainly on making profits rather than being loyal to their country. They therefore often change their policies and regulations to suit their own needs. In addition, the personnel involved in private security provision are not flexible especially when it comes to taking new orders from the person in charge at the project fields since they consider themselves simply employers seeking personal benefits. The government-run security companies are more accountable in service provision as compared to the private sectors. There are other risks involved in privatization of security companies where the person in charge may be at high risks due to absence or presence of certain factors affecting security. Such factors include aggressiveness, location of the company in relation to the regions that have fights. Natural factors such as mines as well as environmental concerns may also contribute to security risks. National support, from both the government and the public, also does matter including the availability or lack of infrastructure and other utilities. These risks may affect the person in charge, his personnel as well as their ability to perform efficiently in service delivery and other objectives (Davidson and Susan, 1998)

Security

The general information to ordinary civilians even in peaceful times can pose great security risks later. Similarly, workers in private security companies may sympathize with some enemies or the workers of the other party during implement security projects especially where foreigners are involved. This factor needs to be addressed fully during privatization. In addition, they may as well, knowingly, fail to give certain information that would lead to efficiency of a security operation, something which is vital during implement security projects. Instead, they may choose to provide such important information to the opposing workers hence facilitating their success at the expense of the security of their people. Where peacekeeping operations are being carried out say, through negotiation involving bargaining, leakage of information on such issues could affect the operation greatly and consequently the peace and security of the people. This gives the opposing workers the opportunity to hire more workers who could be more efficient and successful due to their use of own communication systems unlike the government sponsored communication systems that are not so effective (Singer, Peter W 2001)

Loss of control

Control of Security System Solution functioning by the person in charge is a major bridge in security. Privatization may cause loss of power of the person in charge especially in making critical decisions on the field. Additionally, all private organizations have one major aim of making maximum profits and this makes privatized security companies change their goals and objectives which may not favor the security system solution interests and the security of the people. Complications over the control and power of privatized companies comes in the sponsors are not usually part of the regular security system solution structure. Making of quick decisions at the projects field may be quite difficult regarding the conflict of interests between the regular Security System Solution and the sponsors of the company (Ricart et al., 1991, p. 63).

Performance & efficiency

The efficiency of privatization has become a very important topic of discussion and study. In other words, studies have been conducted to determine whether private companies are more efficient than the public/government.

The table (1) below shows different aspects used in comparing private and public institutions.

Table 2: a study showing ownership in private and public organizations

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Agency/property rights theoriesPublic ChoiceOrganization Theories
Property rights theory
  • Alchian (1965)
  • De Alessi (1980, 1987)
  • Borcherding (1983)

Positive agency literature

  • Aharoni (1981)
  • Kay and Thompson (1986)
  • Sappington and Stiglitz (1987)
  • Vickers and Yarrow (1988, 1991)
  • Caves (1990)
  • Estrin and Perotin (1991)
  • Fern´andez (1995)
  • Martin and Parker (1997)

Principal-agent models

  • Shapiro and Willig (1990)
  • Bös (1991)
  • Bös and Peters (1991)
  • Laffont and Tirole (1993)
  • Garc´ıa Cestona and Salas (1995)
  • Schmidt (1996)
  • Zeckhauser and Horn (1989)
  • Haskel and Szymanski (1992a)
  • Boycko and Vishny (1996)
  • Fern´andez (1984, 1985)
  • Perry and Rainey (1988)
  • Ricart et al. (1991)
  • Bishop and Thompson (1992)
  • Parker (1993, 1995)
  • Martin and Parker (1997)
  • Walker and Vasconcellos (1997)

According the study above, it was evident that the privately owned security companies are more efficient in their operation than the government firms are. The efficiency study was based on the ownership of the firms where managers in both companies were assumed to be more concerned of their own benefits rather than maximizing the capabilities of the companies. This is because their personal interests and motives have direct effects on the firms in terms of efficiency. However, in the private firms, such responses have much less possibilities compared to the government owned firms due to ownership rights which allows the owner of private firms to sell the company if not pleased with its progress especially resulting from poor management. In addition, certain threats such as of bankruptcy, possibility of takeover and that of competition in the managerial market are an added advantage towards efficient operations in the private firms as opposed to the government ones (Ricart et al., 1991, p. 63).

The studies on public schools and organizational theories revealed a similar conclusion despite the fact that the two were conducted on different approaches. For instance the study on public schools had results that indicated that most political personalities are more interested in personal benefits rather than the benefits of the nation. As a result, they end up setting certain goals on the government owned companies that will boost their political career but not favoring efficiency of the firms. On the other hand, study on Organizational theories was based on characteristics of firms such as managerial structure (Bishop and Thompson, 1992, p. 197), functioning of systems, motivational and control mechanisms (Parker, 1993, 1995; Martin and Parker, 1997, p. 175), objectives of the firm, management and even nature and location of the business (Ricart et al., 1991, p. 63).

Other general factors that affect efficiency in companies are the stiff competition in markets and most importantly, the impacts of organizational structure during privatization. Competition is a major drive towards efficiency in all companies and other economies. It is therefore wise to consider the availability of competition in the local market before privatizing any company (Ricart et al., 1991, p. 63). The implications that come along with privatization are those new decisions that the private owner takes after the operation that could have never been predicted by the government before making the sale of the firm. Such implications and decisions can have either positive or negative impacts on the firm but this depends on the person’s principles as well as objectives of the company. For example, in the Security System Solution, the management may decide to use certain layoffs that will ensure reduced chances of delays and other failures of operation in case unexpected failures in equipments or workers occur. Some of the beneficial decisions include the constant assurance of additional stores of equipments and other facilities to be used. However, not all contractors follow this ethical issue especially those concerned about personal benefits than they are on public interests. In other cases, the new contractors may not bother to increase stock as long as the minimum required stock is available. This affects the efficiency of the firm as well (Addison, T.H. Tim, 2001).

Flexibility in operational area

For a successful win over a security projects, the person in charge should have the freedom to allow for quick decisions on responding to any threat faced. In addition, all contractors regardless of whether they are Security System Solution workers or just civilians must be protected while in the security projects because they cannot provide adequate security for themselves. This is because the quick responses to threats may affect major Security System Solution operations later and therefore more contractors may be used to offer protection to the Security System Solution workers. In cases where the person in charge use contactors in security projects, they have to first plan on the provision of their security and that of communication lines since this is an important bridge in security services. They should also have back up plans in case of loss of assets and equipment during the operation, lack of cooperation and control of the contractors. Checks should also be done to control the responsibilities of the workers and the contractors as well. Other important factors to be considered are protecting facilities for the contractors, medical services and means of transportation, adequate materials and manpower. Above all, control of the administration on the operation should be ensured (Addison, T.H. Tim, 2001. P. 65).

However, there is the fear that private contractors may not follow the ethics of the Security System Solution in the projects field despite such ethics being included in the contract. For instance, private contractors may choose to leave the projects field when they are not supposed to especially when the situation is unsafe. It is easier for most of them to choose to face the consequences of such actions if at all they do not include the death penalty. More so, going into the projects field with civilians is itself a violation of the law which requires the workers to protect civilians under the human rights issue. This greatly affects the operation’s flexibility which is very essential during any consideration of security projects (Addison, T.H. Tim, 2001. P. 72).

Transition nature & process

As discussed earlier, privatization may either be complete or partly. A Security System Solution worker and others are categorized of the types of methods commonly used in security as the partial transfer of control and the complete sale of security firms.

Sale of security Firms

Sale of security industries can be done through one of the three methods; private sale, transfer of management and public floatation.

Public floatation involves selling of a property by the government but through the stock market. Sale of firms through floatation is advantageous in some ways. For instance, the ownership of the property is wide including employees who help in promoting effective commitment to the firm. Wide ownership also promotes the development of a competitive market which attracts foreign investors and permits flexibility of control of shares. This method is however disadvantageous in that it requires a strong market and stock exchange as well. Similarly, efficiency may result due to reduced employment and the impact of golden share which is not so common among foreign investors (Brada, 1996, p.67).

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Private sale involves the complete or partial sale of the firm to an individual buyer. The government gets the chance to know the buyer well enough to trust him with the property. In addition, technology advancements can be undertaken since the firm now has a personal owner who is dedicated to efficiency and success of the business. However, the buyer may concentrate more on the market resulting to loss of competition of the firm. There is also the possibility of the buyer requiring the government to provide some warranties such as tax subsidiary and control over market competition. The decision making process also gets difficult because the government hardly participates in making critical decisions after the sale. However some countries have solved this problem by using golden shares of the government, which only represents a minute part of the shares, to allow it continue taking part of the firm’s decisions (Brada, 1996, p.67).

Management buyout entails the sharing of controlling roles within the management and to some extend involving the employees as well. This way, continuous management is ensured and sensitive issues regarding the firm need not to be revealed to the public. Similarly, chances of losing control over the firm to foreigners are reduced. The management as a whole and the employees as well get financial benefits from the sale of the firm. However this method of sale requires the previous management structure to e maintained and this entails lending of finances to the new management and its employees (Black, 2011, p. 11).

Transfer of Control

The use of transfer of control has been widely used in the securities where a qualified private firm is willing to undertake a certain task. This can be carried out through a contract on management or by renting the firm or authorization to sell certain properties.

Management contract is the use of private firms to take charge of management roles for a given period of time. On the other hand, leasing and franchising involves hiring of governments assets or companies by a private investor to use the hired properties on his business. This method poses some problems in the performance monitoring exercise which is required in the securities. However, these two methods are not very relevant to this paper therefore will not be discussed into details (Black, 2011, p.12).

Factors to consider in new markets

Market entry plan

In order for a new company to successfully enter into a new market, it must be able to choose a mode that is already working in the market (Black, 2011), 12. In this case, the strategy will include partnering with a business that is already established or hiring an expert that is very familiar with the new market. The business will need a strong and well developed distribution and marketing channel, one that will offer it the much needed avenue to reach the consumers. A well established marketing channel not only helps a manufacturer reach the markets, but also receive timely feedback from the market.

Finance and Operation plan

Proper financial strategies in a business will determine how well the other implementation strategies work (Black, 2011, p. 45). Good financial planning standards require comparable financial statements that allow the organization and analysts compare what is going on in their organization with performances by other organizations in the same industry. Several indicators have been set to help compare between different companies in the industries. Comparison makes it possible to point out areas of error in the new product or service.

To protect investors, financial records and information will be comprehensive and easy to understand. Financial information will also be confidential and only enough information will be released to stakeholders. This will protect the organization from being over-exposed to competitors. Proper financial reporting standards demand that financial strategies should reveal a proper approach to the future which should involve examining the current and anticipated factors. The factors have also to be associated with customers who make the external and internal environment, and the business itself, which makes the internal environment.

Promotion

Any element important for a firm to achieve its business objectives is considered a considerable factor during marketing. The company with the best economies of scale is able to do much better than its competitors in any market and so will a company with technological resources which best suit the market. They include access to resources such as communication services and a company’s ability to achieve economies of scale. “It also involves evaluating and quantifying market potentials” (Dutka, 2004, p. 23). A proper marketing strategy must ensure that a company’s product is felt in the market, not just when it is new but in the many years that follow. These factors include ability to fight price pressure from a competing product, ability to maintain brand loyalty, how well it can hold with emergence of new products, how soon the market gets saturated, amongst many other factors. Lack of growth drivers has negative effects on a product’s performance in a market regardless of its quality or how well it can cope with pressure and competition in the market.

The Australian Privatization Experience

In the 1990s Australia used privatization in order to address two concerns. One is its ballooning national debt and the other is its concern for lack of manpower to handle some services. Way back in the 1990s, the Australian government was burdened by a 30 billion dollars debt which was equivalent to a good 30% of the country’s Gross National Product (Privatization in Australia, n.d.). After some of the state assets were sold off and the money used to pay up the debts, Australia enjoyed a debt level of -7 % of Gross National Product, compared to the 50% of Gross National Product levels of European, US and UK countries. Australia was left with only 2 Billion Dollars debt during which some states were negative in debt. The state assets that garnered the most revenues through privatization in Australia were electricity and gas, telecommunications and finance. Transport, airports, gaming and others composed of the rest. The monetary objective of the government of Australia has obviously been met. Regarding the level of efficiency in some state services, King and Pitchford (1998, p. 68) discussed two prevailing schools of thought surrounding privatization. One states that the desire for profit by private managers will ensure that they deliver better services than those in the public sector. The completely opposing school of thought is based on the premise that the lack of social incentives in the private sector will not make them effective avenues for public services and so they should remain in the realm of public offices. Although these thoughts are highly polarizing, it is a fact that privatization is gaining wide acceptance in nations globally, and that governments turn to them for one reason or the other.

King and Pitchford further discussed that another key issue in privatization is the type of service in question. If the service is more of a public service than a profit generating venture, it is better left in the hands of the government. Examples that were cited are prison services, ambulance services and toxic waste disposal. The authors argued that putting them in the hands of the private sector could only damage the greater good since their desire for profit would countermand the need to render the service in high quality which normally would entail high cost. King and Pitchford (1998, p.162) gave the measure on “social harm” as a general standard in the decision making process on whether to privatize or not. If the privatization of a particular service or agency will generally tend towards greater social harm, then it would not be a good idea to privatize that service.

How will social harm come about? The authors’ argument about social harm is that it will naturally grow from the need of the private company for higher profit and lower costs. When the service or the main function of the agency is put within the context of the need for higher profit and lower cost, it will become easy to see if there is a possibility for greater social harm or not. Putting into the spotlight the prison services, it can be seen that the desire for higher profit and the tendency to cut costs will make the prisoners have to bear lesser and poor quality services; so the authors argued that it is best to leave prison services to government. The argument goes true for government services in the same situation. Privatization may be done primarily to raise much needed funds and to unload the burden of operating high maintenance operations. Australia had compelling reasons to privatize. This may not be the situation that UAE finds itself and thus will not find a compelling reason to privatize (Brada, 1996, p.74)

ADT Australia Security Services

ADT Australia is a complete security solutions provider that serves private clients and the government of Australia (ADT, 2009, p.4). They have a wide range of electronic and security solutions that are needed for a safe and secure operation of both government and private institutions, large and small. The company is a reliable private sector partner when it comes to security services solutions, including policing the community where contracts are arranged. The company has a track record of efficient and effective work. Their services include home security, small business, commercial, and industry expertise. They provide security services and systems solutions to critical government infrastructure such as “Australia’s ports, power plants, dams, reservoirs, water treatment plants, gas, electricity and oil plants” (ADT, 2009: critical infrastructures, p.1). They equip government offices with electronic security devices and provide security systems solutions that are lauded for their effectiveness and increasing work efficiency in those offices. This private company provided most of the security services and systems solutions requirement of the government of Australia. Those services and solutions are the partner of government in keeping the offices protected, safe and working at world class levels.

The overall UAE and Abu Dhabi economy

The United Arab Emirates has a very healthy economy that has been weaned away from a heavy dependence on oil. As of 2009 figures (CIA fact book, 2010, p.2), export revenues from oil and gas has lowered to 25% of Gross Domestic Product. The country has one of the highest per capita GDP at USD 38,900.00. The country has a public debt ratio of 54% to its GDP, the range where most European, US and UK countries’ public debts hovers. The country has a very healthy investment in general. Overall, the United Arab Emirates, under the leadership of Abu Dhabi as its seat of government, is one of the most economically healthy countries in the world (Oxford University Press, 2007, p. 1).

The challenge that the country is facing is in the setting up and maintaining its infrastructure and its corresponding human capabilities to support the growing economy. At the moment, there is no compelling reason for Abu Dhabi to privatize any of its agencies or offices for monetary reasons. However, there is a strong need to use the services of some private companies to render some services, instead of just hiring expatriate workers. This is the very situation that is faced by the Security Systems Solutions Section.

The option to privatize Security System Solution section

Extensive discussion has been made in this study how Security Systems Solutions section is beleaguered by unmet project deadlines, failed expectation and a management that is fast losing its credibility. The questions that need to be answered are: Is there a chance of privatizing the contracting function of the Security Systems Solutions section? What is the macro environment that surrounds the section which it could utilize in order to perform better? Could the section draw up on certain factors for things to get going in its favor?

Using PESTEL analysis (Oxford University Press, 2007) let us look at the macro environment; how it stands towards the privatization of the contracting function of the Security Systems Solutions section in Abu Dhabi. Analyzing Table 1 below shows that almost all macro-environment supports the privatization of the contracting function of the Security Systems Solutions section. From the political and economic perspectives we can see that the Emirate of Abu Dhabi and the country are actively engaged in privatization. This is not a new concept for them and had benefitted from diversifying its economy in cooperation with private firms all over the world. This is a key factor of the shift of the national economy from being highly dependent on oil and gas to one that is now a major player in the regional economy of the Middle East.

From the social perspective, it can be seen that the strategic move of opening some parts of the country opened the minds of both the locals to foreign cultures and of the foreigners to Islamic culture. Even though several discomforting situations had to be overcome, but year by year we can see a growing tolerance and appreciation of the differences in cultures that is now resulting to a more open social acceptance of different cultures in the country. Technologically, we can see that the country is advancing forward, especially with the ongoing wiring by the government to its citizens for easy communication and access. There is a limitation as regards the environment but this is something almost all countries are facing. The only drawback could be the restriction in the legal perspective to privatize strategic and critical services. The way to manage this is a thorough security check on the company that will be awarded the contracting function and ensuring that they have loyalty towards the UAE, and that they have high profit interest to get and retain the contract. On top of that, confidentiality agreements should be drafted and signed with severe sanctions for any violation that could be escalated to the country level. Another fail-safe measure is for Security Systems Solutions section to be an approver of any staff that the contracting company will assign to handle their account. A monitoring and evaluation will also be a standard operating procedure.

Table 1- Pestel Analysis

LocalNationalGlobal
PoliticalAbu Dhabi actively supports privatizationUAE leaders actively promotes privatizationStable political condition highly favored abroad
EconomicHigh dependence on expatriate workersA favored entry point to the underpenetrated ME marketsExporter and importer of financial capital
SocialOpenness to presence of foreignersImproving human capabilityA preferred workplace by westerners and workers from developing countries
TechnologicalWorld class workplace technologies availableNation getting wiredCutting edge oil and gas technologies
EnvironmentalConstricted wildlife habitatRising waste management and pollution concernsHigh ecological footprint
LegalDemand for better services by the Security Systems Solutions SectionRestrictions on privatizing strategic and critical servicesPrivatization an accepted government strategy

Human Resource Management

HR Management Amd Strategic HR Managment

Human Resource Management (HRM) is the management of various activities designed to enhance the effectiveness of an organization’s work force in achieving organization’s goals (Nankervis et al, 2008, p. 162). On the other hand organization strategy can be defined as the overall plan that top management engages in so that overall objectives of an organization can be achieved. Human resource management strategy involves coming with a comprehensive plans on the kind of people the organization needs so that it can achieve a competitive edge and how it should deal with them so as to increase their skills, make them comfortable and also retain them.

Many organizations are dependent on their managers and the value of the managers is highly appreciated. According to management defined as a set of activities directed at the efficient and effective utilization of resources in pursuit of one or more, a manager is a person responsible for directing the efforts aimed at helping the organization achieve its goals (Nankervis et al, 2008, P. 163). For an organization to achieve certain goals, managers must perform specific tasks which will also be channeled to the other employees. In pursuit of these objectives the organization normally requires the availability and efficiency of these resources. Managers are very critical in an organization since they plan the daily business on how the organization is to be run.

Managers facilitate the production process by laying down procedures on how tasks are to be carried out in a particular sequence. It is also important to note that managers are the decision makers in their organizations. This means that they are the initiators of ideas on how the organization must be propelled towards achievement its goals (Zikmund, 2003, p. 109). They also suggest corrective action in the face of a crisis so that such problem can be solved amicably. Still under decision making, the manager decides how resources of an organization can be allocated to various tasks and activities so as to make sure projects are finished as scheduled. Mangers are also concerned with how information is transmitted in and outside an organization. This ensures that managers acts on behalf of the organization to get information to and from the organization. He or she is the spokesperson of the organization (Nankervis et al, 2008). A manager also builds good working relationship with staff under them, communicates organization goals to them, motivates and coaches them to improve the morale of workers.

Human Resource Planning

Human resource planning is a process of finding out the outcomes of an organization’s strategies on employees. It is important to strategize on how the organization can achieve competitive edge in the face of competition through the use of human resource. This usually involves activities done by HRM to ensure the welfare, training and development of the employees.

Global Economy

Global economy is also called world economy and refers to the sum total of all economies of all the countries in the world. It can also be looked at as the sum total of all national economies. Most of the times, it is expressed in monetary terms like dollars but economists are reluctant to use formal exchange rates when doing their work. Global economy has turned to reality especially in 21st century due to the sprouting of information in society which has been brought about by information technology. Globalization which can be defined as the manner, in which the world is seen as a small village, has enabled many organizations to do business abroad. This means that nowadays even emerging or small businesses are in a position to compete with big businesses since information technology has enabled them to access global markets hence being put in the same level as their competitors. Teleworking, whereby employers work at the comfort of their home has brought big changes in their businesses and organizations. People do not need to go physically to their offices nowadays and this has brought about advantages and also disadvantages.For example, employers do not need to have a lot of capital to set up an office but can do so with the little they have since the employers will work at home. On the side of employees they need not to worry about commuting to the offices and also no one is supervising them and hence do the job at their own pace (Bolick and Nestleroth, 1988, P. 202). The changing nature of employment is also seen where the employers advertise vacancies online and also applicants apply online. The other thing is business process out sourcing.

Effective management of human resources has a great impact on the success of any organization. When employees are rewarded well, they feel motivated and they increase productivity and reduce chances of having strikes and things like go slow. Hiring of qualified employees ensure that the organization will be up to its tasks and will deliver good quality services and products. Good training and developments means that the company or organization has the capacity to handle emerging technologies with diligence. In addition to this it will be in a position to avoid ill advice or outdated advice to its customers (Edstrom and Galbraith, 1994, P. 165).

Demographics

Demographics in the areas of human resource management has been proved to change over time especially in the 21st century.For instance you can find that women are now doing the jobs that were previously dominated by men like driving a big track. The same case applies to men who are currently doing jobs that were previously dominated by women like nursing.

HR Planning In Security System Solution

Given the fact that security System Solution is a big company there is therefore need to come up with strategies of keeping the human resources on track to make sure that standards are met through good performance.

Recruitment and Selection

The most significant aspect of the management of any organization and at any level is management of staff. The overall performance of an organization depends to a great extent on whether the staff performs the work willingly. This in turn will depend on how the management handles the staff that is in selection, training, motivate and deal with their problems. The aspect of management that deals with staff matters is known as the personnel management. This department is concerned in increasing the effectiveness of human performance in an organization. Selection on the other hand refers to a certain applicant meeting the needs of the employer for a certain position depending on what the position requirements are and what the employer is looking for. However, there are quite a number of sources where a company can obtain staff like advertising in newspapers, interviewing, appraisal and employment agencies (Ibid, 1997, p. 13). The word appraisal commonly known as merit rating refers to the regular assessment of how well a worker is doing his job. It is subject and its purpose is to assess ability for the purpose of promotion and to award extra pay for extra effort. Basically, the most qualities assessed in appraisal are the quality of work performed, the quantity of work and the dependability and initiative. In most organization, appraisal is normally carried out once in a year. The advantages of appraisal are that it gives recognition to workers of greater ability and also compensates for some of the disadvantages of job grading. It also improves morale and this makes it the most outstanding method of promotion (Gardner and Palmer, 1997, p. 98).

Interviewing

This refers to asking questions to applicants who qualify. The purpose of interviews is to access character and personality. It is also aimed at accessing the ability to perform the duties of the job. It also gives detailed information about the applicant (Gannon, 1979, p. 165). All the same, the employer determines the requirements of the job and this varies from one organization to another. The selection process is done by the management. This involves taking the most qualified applicant for the job among the many interviewed people.

Recruitment Sources

Recruitment is a very important aspect of personnel management as it ensures that the organizations demands for man-power are met by attracting potential employees. One of the common ways in which recruitment is done is by advertising in the national and local newspapers. Advertisements should give as much as factual information as possible stated in precise and accurate facts. Another source of recruitment is through present employees. A personnel officer can contact employees to look for a suitable candidate who can be employed for a particular position. This source is most suitable for unskilled and semi-skilled employees. Professional magazines are another suitable source for jobs requiring highly skilled people of professional level like doctors, lawyers and engineers. Employment agencies also assist their registered members to obtain employment or change positions. The use of these bureaus saves the time of advertising and informs the candidates at a short notice.

Consultation refers to the process of approaching a suitable person who is already working somewhere else and convince the person to move and join your company (Gannon, 1979, p. 187). This is usually done for high level positions. Posters can also be displayed outside the factory or office or on the notice boards that are normally found in most towns. Schools, colleges and universities usually post their graduates to various places of work but this is only for junior officers a position that does not require experience.

Training Ang Development

Training and development is a planned effort to facilitate employee learning of job related behavior in order to improve employee performance. The most common training programs are; orientation training, technical skill training and management development training. Orientation training is usually a formal program designed to provide new employees with information about the company and their jobs. Technical skills training are oriented toward providing specialized knowledge and development in the use of methods, processes and techniques associated with a particular trade. Management development programs focus on developing managerial skills for use at the supervisory, managerial or executive levels (Verma and Boyer, 2000, p. 143).

Induction

Induction training is close to orientation in the fact that it is meant for preliminary preparation to an employee when he or she takes a new position. The aim is to assist incoming workers to get to a level same as that of other employees or workers. It is also expected that employers get to know the target expected of him or her at this juncture. Also an effort is made to introduce the new employee to other senior staff including the layout of the organization. Assessment centers may be defined as part of an ongoing recruitment process whereby many activities are taken or are subjected to the job applicant to identify more weaknesses. This may take all the day or even longer depending on what they want to test the applicant. This part of recruitment is mostly subjected to those applicants who apply for managerial positions and consumes a lot of resources in terms of time (Verma and Boyer, 2000, p.87). It may include things like aptitude test which may be verbal (oral) or even written to determine the speed of reasoning of the applicant. At this point the applicants are also tested to determine their management ability in the given organization. A question can be tailored according to the way the organization carries its activities to see how that applicants can handle such situations.

Training

Training needs are determined by the market segment and also the products and services the company or organization is offering. For instance emergence of a new product in the market may trigger development of training a specific number of employees so that they can have the capacity to advice the customers on how to use it (Verma and Boyer, 2000, p. 87).

Management by objective can be used to evaluate manager. This is done by giving managers some objectives to achieve in a given time frame. If this is achieved on time there is no reason why the manager should not be rewarded by means of increasing the salary, promotion and being given gifts such as CEO of the year.

Management Development Programs

For the sake of the success of any organization the management team is core and this makes it reasonable for management team to come up with programs like management trainees programs which assist in developing future managers in organizations. Young people are trained on how to become managers of the future and successful ones are employed after the training.

Management of Performance

In today’s organizations its crucial for the human resource managers to take their part in ensuring the success of the organization by keeping track of the performance.This means that performance need to be managed.

Performance Appraisal

Performance appraisal is the process of defining expectations for employee performance, measuring, evaluating and recording employee performance relative to those expectations and providing a feedback to the employee (Kirby, 2005, p. 64). Performance appraisal is meant to positively influence the employee performance and development. It can also be sued in determining merit promotion and salary increment. Performance appraisal can be undertaken using either of the following methods:

  1. Performance rating scale – Where supervisors are asked to rate the performance of an employee on a scale of 1-10.
  2. Critical incident – In this case poor and good incidences are recorded and at the end of a given period the supervisor evaluates the employee’s performance based on these incidences.
  3. Management by Objectives – Employees are given objectives to attain over a given period of time. When the period expires, the manager evaluates the employee based on the level of attainment of the preset objectives.

On the other hand performance measurement can be defined as a process where managements come up with standards within which procedures and acquisitions must reach the required or the targeted outcomes. This means that for every standard outlined, the manager must be able to measure performance attained. The means of measuring performance may include; quantity produced, money collected for service rendered, amount of material used, profits, return on investment or quality of output. Performance reviews attempts to assess the act on the work. The results of performance review resolves if the employee is going to be promoted or whether something needs to be done to improve the performance (Kirby, 2005, p. 64). A corrective action is a kind of change meant to counter a weakness seen in management. They are response as a result of complaint by client.

Building Quality Organisation

The Quality Imperative

Quality imperatives are the very important factors that drive organizations towards quality improvement. This section discusses the major factors behind the materialization of quality issues in the last fifty years, and to which extent has become an important aspect that can threaten organization’s survival. According to Beckford (2002, p. 345), the three main factors are: the economic, the social, and the environmental imperatives.

The Economic Imperative

When evaluating the world market today with that of fifty years ago, it is evident that there are major changes in demand, competitive level, labor and material costs, and customer buying behavior. After the completion of the Second World War, production companies were dealing with customers with high demands, who could accept any products, whether good or bad. With affordable production requirements and lack of stiff competition, the main concern was production in large quantity at the expense of quality. Customer’s unawareness also contributed to the trend of accepting products with poor quality. There are also significant upsurge of labor and material cost and emergence of well informed customers who make buying decisions in line with quality products (Narasimhan & Nair, 2004, p.76). All these changes have forced manufacturers to change their methods of production and chase for new solutions in order to survive. “The Gurus promise that achieving quality will reduce cost and improve productivity, and certainly many of the tools will lead towards these things” (Beckford, 2002, p.77).

The Social Imperative

Providing bad quality products implies that organizations are wasting human resources. The human capital, skills, and talents need to be used wisely by giving employees proper work security. Workers need to be good steward of organizational resources, and likewise, managers have to be good steward of the human resources. Managers have to ensure that employees are socially responsible and assigning them tasks relevant to their capabilities (Bullen, n.d). More so, improving quality of workers minimizes costs and thus increasing the general productivity, which is an essential managerial goal.

The Environmental Imperative

Governments and authorized environmental entities are applying obligations on organizations with regards to reducing environmental damages. In order to achieve this, organizations are encouraged to enhance their business processes and some time the type of raw materials they use so as to minimize environmental degradation. This implies that improving quality of the business process and using better quality materials result to a better environment.

The Strategic Importance of Quality

Quality plays an active role in different stages of decision making. Beckford (2002, p. 360) asserts that such management decision making can be implemented in four different levels: operational, administrative, strategic, and normative levels.

Quality in Operational Level

Operational level of management is concerned with the daily activities carried out in an organization that help in achieving organizational objectives (Laudon, 2006, p. 148). For instance, in manufacturing industry, these activities include designing, machining, welding, and packing. Any delays or errors result in glitch in the final output, which can be a product or service or anything else. Different quality tools can be used at this level to reduce errors and increase production. These tools are discussed in section 5.0.

Quality in Administrative Level

Administrative management involves controlling, directing, and allocating operational resources toward achieving the organization’s goals. Administrative managers are required to take appropriate action when a situation that requires critical decision arises. Thus, poor quality in this level will adversely affect the degree of output from the operational level. It is imperative that top managers ensure that sufficient quality management system is applied in the administrative process within their companies. By doing so, they will guarantee the system’s ability of meeting customer expectations (Beckford, 2002, p. 321).

Quality and Strategy

Organizational goals, plans, policies, and human resources are things that are not supposed to be taken lightly. These aspects are likely to remain within the company’s lifetime and thus the decision process should be determined by strategies. Quality is an important determinant in strategic planning. It acts as a foundation of plans and proper communication structure (Swift, et al., 1998, p. 96).

Quality and Normative Decision

Normative decisions are those decision concerned with future changes which an organization is required to integrate within its strategic plans. These decisions need to be taken in advance to ensure that the organization survives. For example, existence of customer acceptance of a certain level of product quality might change in future. This change should lead to immediate action in the quality level; otherwise, the organization is deemed to fail in meeting customer expectations (Beckford, 2002).

Quality Philosophies

Quality management concepts mostly originated from individuals who successfully applied several statistical techniques and management knowledge in quality improvement. Those researchers and practitioners are known as “gurus”, since their philosophies and tools have been tried and adopted in the current quality practices (Beckford, 2002, p. 321). This section looks at the philosophies of such gurus.

Edwards Deming

Deming is always considered as the “father of quality control”. Deming argued that a lot of effort should be placed on the management and business processes, in addition to workers’ performance. He outlined that 15 percent of quality issues originate from employee error and a significant 85 percent are due to poor management and lapses in business processes. Deming said that the management is required to correct system faults and develop an atmosphere that increases quality and enable employees to perform well. This calls for proper direction and supervision within the organization (Reid & Sanders, 2007, p. 87). In his philosophy, Deming introduced 14 principles that can guide organizations in realizing quality improvement.

Philip B. Crosby

Crosby believed that quality is free and stressed that there should be proper inspiration and planning. He argued that the cost of preventing errors is lower than correcting them and therefore organizations should be ready to implement quality measures in order to meet customer requirements. He invented the term “Do it right the first time” and the principle of “zero defects”, stressing that no errors should be assumed (Reid & Sanders, 2007, p.145).

Other Gurus

Other gurus who also played a big part in quality improvement include: Feigenbaum (overall quality control), Ishikawa (systems approach, cause-and-effect diagrams), Juran (created the notion of cost of quality), Shingo (defect avoidance), Taguchi (emphasis on product design quality) (Beckford, 2002, p. 281). Despite having different philosophies, the fundamental thing is improving quality.

Communication of philosophies

When examining philosophies or concepts from different thinkers and scientists, it is essential to outline the common aspects between them. These common principles represent extract results that those people came with, and have high degree of accuracy. The following are some of the points that most gurus agree with: quality is an important aspect in company success; quality realized by individual effort; quality is a continuous requirement; and quality is a total concept.

Quality Tools

Quality is an application plan that requires tools and techniques in order to be measured. By incorporating problem solving and statistical process control tools and techniques in quality improvement, different members of organization can be able to evaluate and determine the performance within their organization. In addition, it will help in making the right decisions with the aim of improving performance. The following subsections explain some of the quality techniques and tools.

Statistical Process Control

According to Beckford (2002), Statistical Process Control is “a quantitative approach based on measurement of process performance” (p.305). It is an essential method of identifying errors among processes in the manufacturing industry. Histograms, Control Charts, Run Charts, and Normal Distribution Curves are the common Statistical Control tools. In this case, we consider the use of Histograms.

Histogram is an important arithmetic tool that helps in evaluating process performance using frequency distribution graph. The output of a process is normally represented by a pattern similar to the behavior of that process. If the pattern or rather distribution goes over or below the normal expected shape, then it implies that there are some defects in the process (Hradesky, 1995, p. 96). Histogram shows whether the distribution is normal or symmetrical in nature. Figure 1 illustrates a normally distributed variable.

Histogram
Figure 1: Histogram

Benchmarking

Benchmarking is the method of constantly comparing a company’s strategy, products, and business processes with other top organizations in the same industry. This is deemed as a way of enabling an organization to learn how others achieved excellence and thus setting new strategies to match out or even improve the whole process (Swift, et al., 1998, p. 74). In principle, benchmarking technique can be started by asking some questions and trying to get their answers. For instance, how are going to classify our self and what are we going to measure? What criteria shall we use to compare our self with the other firm? How to gather data about our competitor? When benchmarking is applied, a company can be able to realize some benefits with regards to cultural change, process improvement, and employee participation in different methods of improvement.

House of Quality

House of Quality is an important tool that supports quality deployment. It is used to define the requirements from market research and translate them to products and services that reflect quality (Swift et al., 1998, p. 82). The House of Quality technique encompasses the following six major components:

  1. Customer Requirements: Incorporate the customer needs before building the product.
  2. Planning Matrix: Relationship matrix include customer needs, technical requirement, processing requirements, and product features.
  3. Technical Requirements: The requirement in which the company needs to perform in the specific product or service.
  4. Inter-Relationships: The connection between technical requirements and customer requirements.
  5. Roof: It shows the effect of any new requirement need to be developed in the rest of technical requirement.
  6. Targets: The conclusion from the entire matrix

Pareto Chart

Pareto chart is used in Pareto analysis. Pareto analysis is a method used to determine quality problems in line with their level of importance. The concept in this technique is that only certain quality issues are significant, while several others are not important. Thus, by developing a Pareto Chart, the causes of bad quality can be categorized in decreasing order by considering their respective percentage of defects. For example, figure 2 shows how the percentages of defects (A to E) can be represented in a Pareto chart. In essence, Pareto proposes that if the first two causes are worked out, the problem can be solved.

Pareto Chart
Figure 2: Pareto Chart

Baldrige Awards

Baldrige Awards is a regional quality program which was developed by the United States. The award has developed a general protocol for quality, and many firms use the criteria in their application form as a basic management conduct for quality improvement programs. It is similar to ISO standard, but the later is more concerned about scope. Bildrige Awards is more comprehensive program than ISO standard, and addresses more specific aspects like human resource dimension. Generally, when talking about certificates, Bildrige Awards is considered to better than ISO standard and harder to get (Swift, et al., 1998, p. 81).

Six Sigma

Previously, rejection of three items out of one thousand was applied and acceptable by different factories. This was known as Three Sigma standard. Today the standard is not acceptable any more. For the last three decades, a new standard called Six Sigma has been approved. It is more accurate than the old one because it accepts three defects or errors out of a million items. Six Sigma is a very thorough technique that applies acceptable quality principles and techniques. Non Six Sigma companies spend more money in fixing problem than those who apply Six Sigma standard (Reid & Sanders, 2007, p. 142). This is simply because applying Six Sigma standard requires major improvement in performance by having close interaction with customers, workers and suppliers, and applying high level of training to all employees from top to bottom levels.

HRM Influences

Human resources can be considered as the main element in achieving quality improvement. Specifically, the HRM department can play an active role in applying Total Quality Management (TQM) in organization. This can be achieved by implementing TQM in the HRM department as the main quality agent and creating HRM values that enhance quality orientation in the rest of organization. In many organization, HR department lead the quality improvement programs. This can be explained by representing the different duties in HR department like selections, staffing, and motivation and so on (Bowen & Lawler, 1992, p. 174).

Strategic Alliances and Methods of Managing Quality

Strategic alliances are important creators of wealth. Organizations enter into relationships with suppliers, clients, and other companies with the aim of achieving competitive niche in quality, innovation, and cost. To achieve the expected interaction of these alliances, the partnering parties must build long-term relationships (Laudon, 2006, p. 63). Managing quality in such alliances requires new quality control, intensive supplier prerequisite systems, and shared technique and development information. This section looks at supplier development, TQM, ISO 9000, quality assurance, and skill based quality management in line with quality improvement.

Total Quality Management (TQM)

TQM is an incorporated managerial effort to enhance quality in terms of functions and process at all levels of management (Reid & Sanders, 2007). It can be considered as a system approach concerned with applying quality issues in every interaction between the basics of the organization. Hradesky (1995, p. 109) asserts that TQM is a philosophy, a set of tools and process whose result guarantee consumer approval and constant enhancement. It is something that all participations in the organization should be involved in. Some important elements of TQM can be summarized as follows:

  1. Designing of critical business success factors
  2. Implementing of cultural change, values which match to strategic planning
  3. Align the organization with internal customer satisfaction
  4. Initiate a suitable sizing which is matching of human resources to functional requirements
  5. Implementing of techniques and standard such as, Quality Function Deployment and ISO.
  6. Establishment of quality management scheme which includes strategy, measures and work orders thus Quality Assurance.

ISO 9000 Series

ISO 9000 series are quality management systems standards which were developed in early 1940 as quality standards for defense industry (Beckford, 2002, p. 231). These standards are the core of quality system standards applicable to a board range of industry and economic sectors. They are not standards for products as some people think. Instead, they are standards for governing quality management systems. ISO 9000 is divided into different series; for example, ISO 90001 is concerned with quality system and models of quality assurance, ISO 90002 involves quality system and assurance in production and installation, ISO 90003 is about the same but mainly concerned with quality testing and inspection. ISO 90004 is the most relevant in this study, since it talks about quality tools; it is the general guideline for services, processes, materials and quality improvement. An organization can realize the following with regards to ISO certification: customer loyalty, improved market share, higher stock prices, reduced service calls, greater productivity, and cost reduction (Swift et al., 1998, p. 99).

Quality Assurance

Quality Assurance is about making sure that quality is realized through applying systematic quality improvement program. This ensures that there is confidence in product or service in order to guarantee a given condition for quality strategy. The government is tasked with ensuring quality certification within organizations. In addition, Quality Assurance program documents quality plans, processes, and procedures which are adopted from quality standards and it is important that an organization follows these steps (Stair & Reynolds, 2006, p. 146). It should lead the organization in processing planned and continuous improvement. Much of Quality Assurance is not about economics; it is about corporate culture to get everything to be done in right way. It can be started by applying ISO 9000 which has been discussed before.

Skill Bases Quality Management (SBQM)

At some part of this report, the different fields where quality management can be applied have been mentioned; for instance, in processes, strategic planning, relationships, and so on. SBQM is applied when the quality of product or services depends on the employee’s skills and level of education. This is very common in services sector where applying customer requirements depend on the skill of the technician, or in teaching, the level of student understanding depends on how good the teacher is.

Beckford (2002) asserts that SBQM “is an approach to the construction of an effective and manageable quality management system (QMS) based on development and recording of the skill base of service organization” (p.279). This can be achieved through defining the necessary skills and level of education required by the system before employing people. The best-fit people in specific departments are then chosen. By doing this, the organization can achieve SBQM approach which is part of TQM.

Conclusion

This report has discussed different issues in quality improvement and emphasis has been placed on the privatization of the security systems of organizations. The advancements in technology in the modern security systems have made it less possible for the services to be provided and maintained in domestic homes as the private sector has taken over the role of privatizing security systems. The factors to be considered before making the decision of privatizing the security systems have also been discussed with some of them being considering the security offered, performance and efficiency just to mention but a few. Since the decision of privatizing security systems is a sensitive issue, it is important that it is critically analyzed before making the decision.

Generally, investing in quality issues deserves attention from all organization especially the profit-oriented organizations. The reason is the fact that investing in quality, in overall view, helps in fixing problems, maintaining, and increasing of customer attitude.

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