Evaluation of key positions and employees management level in manufacturing industry - The Czech case

sustainability Article Evaluation of Key Positions and Employees Management Level in Manufacturing Industry—The Czech Case Petra Horváthová1,* , Šárka Velˇcovská2, Lenka Kauerová2and Friðrik Rafn Larsen 3 1 Department of Management, Faculty of Economics, VSB-Technical University of Ostrava, Sokolsk á tˇr í da 33, 702 00 Ostrava 1, Czech Republic 2Department of Marketing and Business, Faculty of Economics, VSB-Technical University of Ostrava, Sokolskátˇrída 33, 702 00 Ostrava 1, Czech Republic; [email protected] (S.V.); [email protected] (L.K.) 3School of Social Sciences, Faculty of Business Administration, University of Iceland, Sæmundargata 2, 102 Reykjavík, Iceland; [email protected] *Correspondence: [email protected] Received: 2 December 2019; Accepted: 24 December 2019; Published: 27 December 2019   Abstract: Humanresourcesmanagement,especiallythekeyemployeesmanagement,hasfundamental influence on companies’ sustainable business, which has to be considered as the priority of any business functioning. The aim of this paper is to evaluate current level of the key positions and employees management in the Czech business environment and to propose a process of its effective implementation and application in practice. Online questionnaire survey was provided using 105 companies operating in manufacturing industry of the Moravian-Silesian region as the sample. Statistical methods of data analysis were used. Fisher exact test, coefficients Phi and Cramer’s V were counted to test relations between variables. The survey results include an evaluation of the present situation as it comes to the use of the key positions and employees management system as well as an identification of interests in new system implementation. There was a low rate of use of given system in these business, with two thirds of companies showing an interest in implementing the new system. The process of implementation and the use of the key positions and employees in practice was proposed. The process is suggested in the way to make its content and form be a certain guide and help for companies to realize particular activities of this process. It would contribute to the successful realization of complex and systematic approach towards the work with the key positions and employees. Keywords: key position; key employee; process; system; management; manufacturing industry; sustainable business 1. Introduction Sustainable entrepreneurship based on the principles of sustainable development also includes social sustainability, expressed in personnel policy, which includes management and care for all employees, but especially the key ones, as the functioning of the company is based on them. If the company fails to properly manage and maintain them, these employees may leave the company, which may have significant implications in very sensitive areas such as business strategy, achievement of goals, company culture, or the morale of ordinary employees. The company may suffer significant financial loss by the departure of key employees, its economic (and thus environmental) sustainability or even its existence may be jeopardized. On the other hand, well-managed, strategically linked Sustainability 2020,12, 242; doi:10.3390/su12010242 www.mdpi.com/journal/sustainability Sustainability 2020,12, 242 2 of 14 and well executed management of key employees and positions becomes a significant competitive advantage for successful companies and can contribute to its sustainable business. Those companies, which understand the significance of sustainable HR management and quality (mainly the key human resources), and companies, which determined themselves to take care of the key positions and employees and to accept it to be one of their basic priorities (having finances to do so), should use a complex and systematic approach [ 1 ]. Such approach directly includes and connects mainly processes of identification of the key positions, the key competences, acquiring the key employees out of internal and external sources, employees qualification development and consequent sustaining in company [2]. It is necessary to take into account that key positions and employees management do not act alone and separately in the company; they are always very closely connected with the management of talented employees (talent management). One of the main contributions of talent management, more effective planning of the key positions is as well as gaining the employees from internal sources including their motivation. The result of well-functioning talent management, which has to be based on the model Develop-Deploy-Connect (DDC) is then the existence of sufficient amount of candidates—key employees—prepared to work at the key positions. Contrary to traditional linear model of talent management, the model DDC does not focus only on gaining and maintaining but mainly on developing employees’ skills, their deploying to such positions where those will be able to use their potential and knowledge and their connection with people who can help them with task fulfillment, too [ 2 , 3 ]. Quality and sustainable management of the key positions and employees is, thus, conditioned by quality processes of talent management (acquisition, development and retention). To find out the real situation in the area of management of key positions and employees, the authors decided to carry out a research study, which will evaluate the attitudes of manufacturing companies in one of the regions of the Czech Republic to this issue and also propose a process of effective implementation and application of key positions and employees management in practice. To the best of authors’ knowledge, there are no research studies, which would deal with the rate of the usage of the key positions and employees management system in companies, neither in the Czech Republic, nor abroad. The structure of the article is as follows. The literature review provided first followed by research methodology explanation; further, there are results presented and proposal for the process of implementation and application of the key positions and employees system is given. 2. Literature Review Key position is to be determined by four criteria. Naturalness—short-time failure of employee working at this position can bring a serious impact on economic or business indicators, e.g., yields, profit, loss of competitive advantage, limitation of operation, putting process, products or services in danger, etc. Uniqueness—position demands such competences being now or in the future unique and specific for the company. Demand—for such position, there is or will be a huge demand in the labor market in the future. Strategic impact—failure of qualified employees working at concrete positions would influence the company success in the future considering a longer time horizon [4]. According Skills-Based Workforce Segmentation Model based on the most prominent conceptual HRM architectural model [ 5 , 6 ] defines key positions as those having higher skills value and higher skills uniqueness. Valuable skills may create lower costs, increase revenue, contribute to innovation, or enhance internal company efficiency. They comprise up to nine key value drivers—revenue/sales, stakeholder relations, cost and efficiency, quality, innovation, organizational capability, reputation/risk management, financial, and processes/systems. Various roles will comprise one or more of these value drivers, with their impact ranging from localized to widespread across the organization. Some of these value drivers may be more important than others to the achievement of the business strategy at a particular point in time. Unique skills are organizational specific, unlikely to be found in the open market, hard to replace, and may be difficult for competitors to imitate or duplicate. These skills Sustainability 2020,12, 242 3 of 14 need to be nurtured over time, given that they are not developed and acquired overnight. Hence organizations are more likely to invest in the education, training, and development of these skills [6]. Companiesshouldpay eminent attention to the keypositionsbecauseanindividualperformanceof those positions has deciding impact on the entire company performance and sustainable business [ 7 , 8 ]. The fundamental premise to define the key positions is the fact that the company cannot fully function without it [ 9 , 10 ]. Those positions are considered as core of the future company success adding that there is a significant need to pay attention to gaining, evaluation, development and sustaining of the individuals of those positions, thus the key employees through entire company [ 11 ]. Without the key employees the operation of the company is put in danger in significant way because without those employees some activities cannot even be provided [ 12 ]. The key employees play a significant role as the best performing part of HR, have quality professional knowledge and skills, which they can share with other colleagues of less competences [ 13 , 14 ]. Such employees are special also because of the high level of self-control and self-reflection. The quality of the key employees influences not only entire company performance and sustainable business but its good reputation, brand and company capital’s value as well [ 15 ]. Once those leave, unique know how is disappearing from the company as well as their knowledge, abilities, skills experiences and long-term relationships [ 16 , 17 ]. Therefore, each company should manage those positions and employees in a way not only to keep the current key employees but to train own successors for those critical and strategic positions as well [ 10 , 18 , 19 ]. The significance of the key positions and employees is supported by the statement that the fastest way to make shareholders’ wealth grow and improvement of long-term company’s sustainable business is to have the key employees’ performance became higher [20,21]. Significance of the key positions and employees is confirmed not only by literature review mentioned above, but by many studies and researches as well. For example, the study North American Critical Talent Practices Survey says that definition and assigning the critical positions will play more significant role in the future, as it comes to company competitiveness, than it has been in the past and at present time [ 22 ]. By the study Rewriting the Rules for the Digital Age. 2017 Deloitte Global Human Capital Trends, companies currently facing the changing context of labor force and labor world should pay big attention to the human capital strategies, thus to how they organize, manage, develop and maintain their employees, mainly those talented and key ones [ 23 ]. As it comes to the Czech business environment, e.g., the research Czech CEO Survey 2018 dealt with this topic. It considers the qualified key employees management the strategic task, which should be paid attention to by the management of each company [ 24 ]. In the Czech business environment, systematic approach towards the key positions and employees management is not being applied sufficiently [25]. According to the authors opinion, one of the reasons why such approach shows rare application in the Czech business environment can be the absence of instructions how this process should be implemented and applied. Therefore, the authors decided to prove this conclusion by the research, the aim of which is mapping the current approaches to the key positions employees management in middle and big companies of Moravian-Silesian region operating in the manufacturing industry. Then the identification of companies’ interest in the key positions and employees management system served as a stimulus for proposing the procedure of implementation and application of this system in practice. 3. Sample and Methodology The survey was conducted to find out whether and in what extent small and medium-sized companies operating in manufacturing industry of the Moravian-Silesian region manage the key positions and employees. Its objective was to determine the state, way and length of the use of the key positions and employees management system in companies, to evaluate satisfaction with this system, to identify reasons for non-use of the system, and to find out interest of companies in implementing new management system for the key positions and employees. Sustainability 2020,12, 242 4 of 14 Primary data were collected in April 2018 using an online questionnaire survey based on a structured questionnaire. In the introductory part of the questionnaire the respondents were explained what the system of managing key positions and employees means, what is the principle of the system and what are its benefits. The questionnaire included three identification questions (length of an company existence, current number of employees, foreign owner/shareholder) and six questions on the subject of the research, which were closed (system usage/non-use, length of the system usage, evaluation of success and benefits of system used, interest in implementation of a new system) or semi-closed with the possibility of writing own response. Semi-closed questions were used to find out the current way of managing key positions and employees in the company and to identify the reasons for non-using the system. The target group for the research consisted of all medium-sized (51–250 employees) and large companies (more than 250 employees) operating according to the CZ-NACE classification in manufacturing industry in the Moravian-Silesian region. As of 31 December 2017, it was a total of 366 companies, of which 259 (i.e., 70.8%) were medium-sized and 107 (i.e., 29.2%) were large companies [ 26 ]. The sample included 105 companies (i.e., 28.7% of the target group) selected by the quota sampling technique with respect to the above-mentioned size structure of companies. The final sample structure is presented in Table 1. Competent representatives of the personnel departments of the companies were interviewed. Table 1. Structure of respondents. Variable Absolute Frequency Relative Frequency Length of an company existence 2 to 5 years 20 19.0% 6 to 10 years 27 25.7% 11 to 15 years 36 34.3% more than 15 years 22 21.0% Current number of employees 51 to 250 employees 75 71.4% more than 250 employees 30 28.6% Foreign owner/shareholder yes 23 21.9% no 82 78.1% Data were processed and analyzed in IBM SPSS Statistics 23.0 program. For selected questions, the second level grading according to the respondent’s identification characteristics or relevant variables was performed. Fisher exact test at 0.05 significance level was applied to test the differences between variables. This test is suitable for nominal variables in the analysis when sample size is small [ 27 ]. The hypothesis H0 presumes no statistically significant differences among variables; the hypothesis H1 presumes dependency of variables. Cramer’s V coefficient and Phi coefficient were counted to prove the strength of relationship between variables. The Cramer’s V coefficient is used for nominal variables when the number of rows or columns or both in the contingency table is higher than 2. The Phi coefficient ( ϕ ) is a measure of association for two binary variables, i.e., for a 2 × 2 contingency table. These descriptors were used to interpret the coefficients: 0.00 and under 0.09—negligible association, 0.10 and under 0.19—weak association, 0.20 and under 0.39—moderate association, 0.40 and under 0.59—relatively strong association, 0.60 and under 0.79—strong association, 0.80 and under 1.00—very strong association [28]. 4. Results and Discussion In accordance with the objective of research study, the results are structured into three following areas: (1) The current state of use of the key positions and employees management system in companies, (2) satisfaction with the existing system of managing the key positions and employees and (3) interest in implementation of new management system for the key positions and employees. Sustainability 2020,12, 242 5 of 14 4.1. The Current State of Use of the Key Positions and Employees Management System in Vompanies In this part of the research study, respondents were asked whether, how long and in what way they are currently using the management system for the key positions and employees. The management system for the key positions and employees have implemented only 21.0% (i.e., 22) of respondents from the 105 companies addressed. The system is used by 37.0% (i.e., 10) of companies operating on the market for 6 to 10 years and by a quarter of companies (i.e., 5) operating for 2 to 5 years. Almost 90% (i.e., 51) of companies existing 11 or more years do not use such management system. From the point of view of property structure of the companies, it was found that the system is applied in 34.8% (i.e., 8) of companies with a foreign owner or shareholder and only 17.1% (i.e., 14) of Czech companies. Further, huge companies over 250 employees use the system more often (30.0%, i.e., 9) than medium-sized companies with 51 to 250 employees (17.3%, i.e., 13). It is obvious that the management system of the key positions and employees is more common in huge companies, in companies with a foreign owner or shareholder and operating on the market for less than 10 years (Table 2). Table 2. Use of the management system for the key positions and employees by type of company. Characteristics of Company Use of System Absolute Frequency Relative Frequency Yes No Yes No Length of an company existence 2 to 5 years 5 15 25.0% 75.0% 6 to 10 years 10 17 37.0% 63.0% 11 to 15 years 4 32 11.1% 88.9% more than 15 years 3 19 13.6% 86.4% Current number of employees 51 to 250 employees 13 62 17.3% 82.7% more than 250 employees 9 21 30.0% 70.0% Foreign owner/shareholder yes 8 15 34.8% 65.2% no 14 68 17.1% 82.9% It was confirmed by Fischer exact test that there is no statistically significant relation between the use of the system and length of the company existence, property structure of company or actual number of employees, Exact Sig. >0.05. Therefore, the hypothesis H0 is accepted. Respondents who have the management system for the key positions and employees were asked about length and way of the system use. Approximately half of companies (54.5%, i.e.,12) respondents work with the system for less than 2 years, 45.5% (i.e., 10) respondents have the system for 2 to 5 years. It was also found that 54.5% (i.e., 12) of companies apply the system based on the established procedure and 45.5% proceed non-systematically, with respect to their current needs. The dependence of way of managing the key positions and employees on length of the system use was confirmed (Exact Sig. =0.000) , the value of the Phi coefficient (Phi =0.833) indicates a very strong association between the variables. Therefore, we reject the hypothesis H0 and accept the alternative hypothesis H1. Companies using the system for a short period of time (up to 2 years) apply a non-systematic approach (83.3%, i.e., 10), while companies working with the system for 2 to 5 years have the established procedure to manage the key positions and employees (100.0%, i.e., 10 of respondents) (Table 3). Sustainability 2020,12, 242 6 of 14 Table 3. Way of managing the key positions and employees by length of the system use. Way of Managing the Key Positions and Employees Length of the System Use Absolute Frequency Relative Frequency Less Than 2 Years 2 to 5 Years Less Than 2 Years 2 to 5 Years based on the established procedure 2 10 16.7% 100.0% non-systematic, according to actual needs 10 0 83.3% 0.0% Way of managing the key positions and employees does not depend on length of the company existence, on size of the company (i.e., current number of employees) or on property structure of the company, Exact Sig. >0.05. Therefore, the hypothesis H0 is accepted. Respondents without the system of managing the key positions and employees reported the reasons for non-use of the system. Two thirds (68.7%, i.e., 57) of them do not know the system, for 15.7% (i.e., 13) the system is organizationally too demanding, 8.4% (i.e., 7) companies do not consider the system suitable for their business and 7.0% (i.e., 6) of respondents see the problem in lack of personnel resources. 4.2. Satisfaction with the Existing System of Managing the Key Positions and Employeesthe Current State of Use of the Key Positions and Employees Management System in Vompanies Respondents using the key positions and employees management system were also asked how they are satisfied with the system. Exactly half of them evaluate the system positively and consider them almost or fully successful and contributive for their company, while the remaining 50.0% (i.e., 11) perceive the system almost or fully not successful and not contributive. Statistical analysis using Fischer exact test has shown that there is no dependence of the system’s evaluation on size of the company, on length of the company existence or on property structure of the company, Exact Sig. >0.05. Therefore, we accept the hypothesis H0. On the contrary, a statistically significant relationship between the evaluation of the system and length of its use was confirmed (Exact Sig. =0.000), Cramer’s V value =0.937 shows a very strong association between the variables. There is also a relationship between the evaluation of the system and existing way of managing the key positions and employees (Exact Sig. =0.002), according to Cramer’s V =0.776, a strong association between variables is proven. In these two cases, therefore, we reject the hypothesis H0 and accept the alternative hypothesis H1. The longer use of the key positions and employees management system by respondents, the more positive evaluation of the system. Further, those respondents who manage the key positions and employees using the established procedure evaluate the system positively, 83.4% (i.e., 10) of them consider the system almost or fully successful and contributive. Conversely, 90.0% (i.e., 9) of companies managing the key positions and employees non-systematically assess the system almost or fully not successful and not contributive (Table 4). Sustainability 2020,12, 242 7 of 14 Table 4. Evaluation of current system by length of the system use and way of managing the key positions and employees. Evaluation of Current System Length of the System Use Way of Managing the Key Positions and Employees Absolute Frequency Relative Frequency Absolute Frequency Relative Frequency Less Than 2 Years 2 to 5 Years Less Than 2 Years 2 to 5 Years Based on the Established Procedure Non-Systematic, According to Actual Needs Based on the Established Procedure Non-Systematic, According to Actual Needs fully not successful and fully not contributive 3 0 25.0% 0.0% 0 3 0.0% 30.0% almost not successful and almost not contributive 8 0 66.7% 0.0% 2 6 16.7% 60.0% almost successful and almost contributive 1 2 8.3% 20.0% 2 1 16.7% 10.0% fully successful and fully contributive 0 8 0.0% 80.0% 8 0 66.7% 0.0% 4.3. Interest in Implementation of New Management System for Key Positions and Employees The key question of the survey, which was answered by all 105 respondents, was focused on identifying respondents’ interest in implementation of the key positions and employees management system that would minimize the barriers for its use or would be more efficient in comparison with the current practice applied in the company. Respondents’ reactions were positive; most of them (65.7%, i.e., 69) are interested in such system. Interest in implementing new management system for the key positions and employees does not depend on size of the company, length of the company existence, property structure of the company, or the fact whether the system is currently used by companies, Exact Sig. >0.05, therefore we accept the hypothesis H0. However, respondents without previous experience with such system (68.7%, i.e., 57) have shown a slightly higher interest in implementation of new management system, compared with respondents who currently manage the key positions and employees (54.5%, i.e., 12). Interest in implementation of new management system depends on length of the system use (Exact Sig. =0.000, Phi =1.000), on way of managing the key positions and employees (Exact Sig. =0.000, Phi =0.833), on evaluation of current system (Exact Sig. =0.000, Cramer’s V =0.937), and on reason for non-use of the system (Exact Sig. =0.000, Cramer’s V =0.450). In these cases, therefore, we reject the hypothesis H0 and accept the hypothesis H1. According to Phi and Cramer’s V coefficient values, a very strong to relatively strong association between the variables were indicated. Companies using the system less than 2 years (they are the companies managing the key positions and employees rather non-systematically and considering their current system almost or fully not successful and not contributive), have shown a clear interest in implementation of new system (100.0%, i.e., 12 of respondents). Companies that have so far managed the key positions and employees non-systematically have also confirmed interest in new system (100.0%, i.e., 10 of respondents). In addition, new system is attractive for companies that consider their current system almost or fully not successful (100.0%, i.e., 11). If we focus on companies with an established procedure of managing the key positions and employees, only 16.7% (i.e., 2) of them are interested in implementation of new system. Analysis of the reasons for non-use of the system at present has shown that new system is particularly interested in companies that have not yet been aware of such system (82.5%, i.e., 47). Among companies that consider the system too demanding, 46.2% (i.e., 6) of them are interested in new system. One third (i.e., 2) of companies mentioned as the main barrier a lack of resources (especially personnel) and 28.6% (i.e., 2) of companies that have not yet considered the system suitable for their business were interested in new system (Tables 5–7). Sustainability 2020,12, 242 8 of 14 Table 5. Interest in implementing new system by length of the system use and way of managing the key positions and employees. Interest in Implementing New System Length of the System Use Way of Managing the Key Positions and Employees Absolute Frequency Relative Frequency Absolute Frequency Relative Frequency Less Than 2 Years 2 to 5 Years Less Than 2 Years 2 to 5 Years Based on the Established Procedure Non-Systematic, According to Actual Needs Based on the Established Procedure Non-Systematic, According to Actual Needs yes 12 0 100.0% 0.0% 2 10 16.7% 100.0% no 0 10 0.0% 100.0% 10 0 83.3% 0.0% Table 6. Interest in implementing new system by evaluation of current system. Interest in Implementing New System Evaluation of Current System Absolute Frequency Relative Frequency Fully Not Successful and Fully Not Contributive Almost Not Successful and Almost Not Contributive Almost Successful and Almost Contributive Fully Successful and Fully Contributive Fully Not Successful and Fully Not Contributive Almost Not Successful and Almost Not Contributive Almost Successful and Almost Contributive Fully Successful and Fully Contributive yes 3 8 1 0 100.0% 100.0% 33.3% 0.0% no 0 0 2 8 0.0% 0.0% 66.7% 100.0% Table 7. Interest in implementing new system by reason for non-use of the system. Interest in Implementing New System Reason for Non-Use the System Absolute Frequency Relative Frequency We Do Not Know the System The System Is Too Demanding Lack of Resources, Especially Personnel The System Is Not Suitable for Us We Do Not Know the System The System Is Too Demanding Lack of Resources, Especially Personnel The System Is Not Suitable for Us yes 47 6 2 2 82.5% 46.2% 33.3% 28.6% no 10 7 4 5 17.5% 53.8% 66.7% 71.4% Sustainability 2020,12, 242 9 of 14 As follows from the survey results, the rate of utilization of the management system for the key positions and employees in medium and huge companies of the Moravian-Silesian region, operating according to the CZ-NACE classification in the manufacturing industry, is low. Only 21.0% of companies addressed apply the system. Only a small number of respondents evaluated their experience with the system (22), but it is more important to consider that a large number of companies have no experience with such a system. Therefore, there is the potential to implement it and streamline the processes of managing key positions and employees in these companies. Of the 22 companies that have experience with the system, nearly half of them (45.5%, i.e., 10) manage their key positions and employees in a non-systematic way and exactly half of companies perceive their existing system almost or fully not successful and almost or fully not contributive. The key finding of the survey is interest of companies (65.7%, i.e., 69) in implementing new management system for the key positions and employees, which would minimize existing barriers for its use or would make the existing system applied in the company more efficient. Interest in new system has been mainly shown by those companies whose experience with their current system is rather short-term, based on a non-systematic approach and rather negative. The companies that have not yet managed the key positions and employees due to lack of knowledge of the system, perceived high organizational difficulty or lack of resources (especially personnel) also demonstrated interest in new system. These companies do not consider mentioned barriers as unrecoverable and believe that an effective management system for the key positions and employees would be able to eliminate them. Interest in implementation of new management system for the key positions and employees was expressed by medium and huge companies, by Czech companies as well as by companies with a foreign owner or a shareholder, by companies that are relatively young as well as those that have been operating in the market for a long time. Statistical dependence of interest in new system on the type of company was not confirmed. Thus, it can be stated that the key positions and employees management system could be applied across sectors in different types of businesses in small and medium-sized companies operating in manufacturing industry of the Moravian-Silesian region. In order to obtain more detailed information beyond the outputs of the research study, the results of the research study were subsequently discussed in two focus groups with a total of thirteen HR and TOP business managers (medium and large) participating in the study. The discussion confirmed the conclusions of the research study, i.e., that the management system of key positions and employees can be found more in large companies, in companies with foreign owners or shareholders and operating on the market for less than ten years. The reason for this situation is, according to the focus group participants, mainly because companies do not know the system, they do not know how to work with it. Representatives of those companies that use the system have described in detail the benefits of using the system for their businesses and thus, further boosted the interest in implementing the key positions and employee management system that would minimize the barriers for its use, or would be more efficient in comparison with the current practice applied in the company. Representatives of those companies that use the system but mentioned the main shortcomings in their systems—not a high-quality and detailed strategy of key positions and employee management, which negatively affects the functioning of the whole system, sometimes inaccurate performance and potential evaluation of employees in the process of acquisition of talents, which is reflected in the next talent management process, namely in development of talents, where the proposed talent development activities do not correspond to the actual educational gap of employees involved in the talent management system, or key positions and employee management. As a result, those responsible for the system do not have feedback and cannot initiate improvements to the system or remove partial deficiencies. According to the focus group participants, not only these most important but also other shortcomings of the system could be remedied using a well-elaborated process of key positions and employees management system. This is connected with the most important output of the focus groups, i.e., their participants showed a strong interest in a kind of “manual”—a tool that would be help to implement a system of