Flexible Work Practices (FWP) – An effective instrument in the retention of talent: A survey of selected JSE-listed companies

Grobler, P. A.; De Bruyn, A. J. Article Flexible Work Practices (FWP) – An effective instrument in the retention of talent: A survey of selected JSE-listed companies South African Journal of Business Management Provided in Cooperation with: University of Stellenbosch Business School (USB), Bellville, South Africa Suggested Citation: Grobler, P. A.; De Bruyn, A. J. (2011) : Flexible Work Practices (FWP) – An effective instrument in the retention of talent: A survey of selected JSE-listed companies, South African Journal of Business Management, ISSN 2078-5976, African Online Scientific Information Systems (AOSIS), Cape Town, Vol. 42, Iss. 4, pp. 63-78, https://doi.org/10.4102/sajbm.v42i4.506 This Version is available at: https://hdl.handle.net/10419/218472 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ S.Afr.J.Bus.Manage.2011,42(4) 63 Flexible Work Practices (FWP) – An effective instrument in the retention of talent: A survey of selected JSE-listed companies P.A. Grobler* and A.J. de Bruyn Department of Human Resource Management (Academic), School of Management Sciences, UNISA, PO Box 392, Pretoria 0003, Republic of South Africa [email protected] Received November 2010 There is a paucity of research available on the use of flexible work practices (FWP) in South African companies. The primary aim of this study was to close this gap by determining to what extent listed companies on the JSE in the very important sectors of Finance, Telecommunications and Technology make use of these practices. A secondary aim was to establish whether companies perceived any advantages, disadvantages, barriers and solutions when implementing or thinking to implement these practices. Although neither disadvantages nor barriers were found, significant differences between the usage of these practices and some corpographic variables such as the size of staff, nature of competition and the business unit strategies followed, were found. It also became clear that although these practices were available within companies, the percentage of staff making use of them were very small. However, a number of advantages regarding the use of these practices were identified by companies, as well as a number of solutions to successfully implement these practices in companies. The study concludes that companies should seriously consider expanding the use of these practices as numerous benefits exist for the company, the employee and the larger community. *To whom all correspondence should be addressed. Introduction One of the primary challenges facing managers today is to find methods of reducing employee turnover – especially the turnover of skilled/talented employees (Ready & Conger, 2007:69-77; Meisinger, 2007:12; Robert & Börjesson, 2006: 521-549). These employees play a leading role in organisations. Normally a large amount of money and many hours are invested in their training and development. In the past, companies placed a great deal of emphasis on issues such as a neat and safe working environment, job enrichment, good communication, financial incentives, praise and recognition (MacKay, 2007:29; Döckel, Basson & Coetzee, 2006:21). However, it has become apparent that this is not sufficient, particularly for generation X and Y employees, who are now a major part of the workforce (Horgan, 2008:1). Thus, other strategies need to be devised to motivate and retain employees, such as flexible work practices (FWP), also known as flexible work arrangements (FWA) (Kelly & Kalev, 2006: 380). This concept has recently become interwoven with concepts such as work-life balance, family-friendly practices, workplace equity, worklife policies and alternative work patterns (O’Brien & Hayden, 2008:199). A number of reasons can be advanced for this new strategy:  Companies have recognised that if they need to undertake major retrenchments they will not be able to obtain the lost talent with the next economic upswing (Harris, 2009:16).  The cost of retraining new employees is enormous and retraining is time consuming (Cheese, 2008: 38-42).  The strategy plays a vital role in the retention of talented employees (Meisinger, 2007:12; Harris 2007:32; Döckel, et al., 2006:20).  The new approach helps to establish companies as an employer of choice (Kelliher & Anderson, 2008:419431; O’Brien & Hayden, 2008:199-228). Countries and businesses (both large and small) are now engaged in a war for talent (Frase, 2007:67). They have found that, in order to survive, they must not only obtain the best talent available anywhere in the world but once they have obtained the best talent they must make every endeavour to retain it (Taleo Corporation Research, 2008:14). This also applies to South Africa as explained by Richard Nefdt, Chief Executive Officer of Reality Check: “Retaining skilled employees should be a priority for South African businesses to ensure that they survive the downturn” (Harris, 2009:16). In the latest crisis, major companies in the world such as Citigroup, IBM, KPMG, UBS, Honda, Lloyds TBS, Unilever, British Telecom, ArcelorMittal, and in South 64 S.Afr.J.Bus.Manage.2011,42(4) Africa, British American Tobacco SA, Accenture, Nedbank and Citrix Systems South Africa, to mention but a few, have started to formally introduce the concept of flexible work practices (FWP) into their organisations as part of their human resource management system (Sunday Times/Careers, 2009; Knowledge Resources, 2009; Beeld (Sake) 2009; Sexton, 2008:1). There is no doubt that the present worldwide economic crisis will have a major impact on the way in which companies will be managing their workforces in future (Sunday Times/Careers 2009). In facing this new dilemma, companies are making innovative adjustments to their overall business strategies, such as introducing flexible work practices to ensure they survive and remain competitive in their industries (Harris, 2009: 16). The South African scenario For some years South Africa had been experiencing serious losses of skilled people in a number of critical industries, such as the financial sector, telecommunications and technology. This process has become known as the “brain drain” (Beeld Sake 24, 2009:12). These sectors can be seen as important building blocks in the development of any country (South Africa. The Presidency, 2008:3-80; Eigenhuis & Van Dijk, 2007; Jansen, Steenbakkers & Jägers, 2007). Although there are a number of reasons for these losses, the important factor appears to be the working environment (Esterhuizen & Martins, 2008). According to the World Competitiveness Report 2008/2009 (World Economic Forum, 2009:10), of the 134 countries participating in the project, South Africa obtained an overall rating of 45 out of 134. This can be regarded as an outstanding rating because South Africa remains the highest ranked country in Sub-Saharan Africa and continues to receive excellent results in complex areas such as the availability of the latest technology (37th), innovation (37th), the quality of private institutions (25th), financial efficiency (24th), and business sophistication (33rd) (World Economic Forum, 2009:303). However, a number of negative factors pertaining to the workplace also exist, such as labour market flexibility (88th), hiring and firing practices (129th) and labour-employer relations (119th). As the competition for talent among countries and rival companies increases, our advantage in the industries mentioned earlier is under threat. Hence, devising management strategies such as flexible work practices to prevent further losses of skilled staff in these sectors is vital for the future development of South Africa and requires immediate attention. Aims of the study In view of the important role played by flexible work practices in the retention of skilled staff as suggested by the above discussion, the aim of this study is to achieve the following objectives:  to provide an overview of flexible work practices  to empirically assess the extent to which these practices are utilised in the financial, telecommunications and technology sectors in South Africa  to establish the perceptions of companies regarding the advantages and disadvantages when implementing or thinking of implementing flexible work practices and  to establish the potential barriers and possible solutions to successfully implementing flexible work practices Value of the study Despite the heightened interest in research in this area internationally, not much has been published locally, which means that South Africa is lagging behind (Odendaal & Roodt, 2002:76, Hloma & Ortlepp, 2006:30). As no empirical research exists with regard to FWP in the general industrial sector of South Africa, this study aims to contribute important knowledge in this area. It will enable companies to overcome barriers in this regard, and to successfully implement these practices in their organisations. Flexible work practices (FWP) theory FWP defined According to a literature review, the concept generally refers to greater flexibility in the workplace (Mathis & Jackson, 2003:86-87; Price, 2004:198-202; Stredwick, 2005:211-233; Gilmore & Williams, 2009:354-355). The BNET business dictionary defines FWP as follows: “it is a generic term for employment practices that differ from the traditional norm in terms of hours worked, the length of a contract or the place of work”. Mullins (2007:804) sees it as “a range of flexible working practices designed to help employees balance work and home life”. One can safely state that FWPs enable both the employee and the supervisor to customise work schedules, work arrangements and responsibilities to accommodate family responsibilities, other personal circumstances and the employer. Types of FWP Although initially seen in the 1960s as a concept that includes activities such as shift work, overtime, part-time and temporary work, it soon evolved to include activities such as flexitime, a compressed work week, telecommuting and virtual working. These practices originated from the cost-cutting strategies pursued by companies, the entry of women into the job market and the rapid development of technology (Ministry of Manpower Singapore, 2001:1-33). Table 1 provides a classification and brief description of FWPs found in companies/organisations today. S.Afr.J.Bus.Manage.2011,42(4) 65 Table 1: Classification of flexible work practices Source: Adapted from O’Brien & Hayden (2008:227); Ministry of Manpower Singapore (2001:1-23). Reasons for FWP There is no doubt that the increasing use of flexible work practices worldwide can be attributed largely to two factors. Firstly, the nature of the workforce has changed. It has become more diverse, for example, with more single working parents than ever before requiring a balance between work and home. Secondly, the current business environment in which companies find themselves is extremely turbulent (Davis et al., 2007:32-37). In the present economic climate, for example, companies are asking their employees whether they would like to move to a four-day working week and accept a 20% pay cut by temporarily changing their conditions of service (Sunday Times/Careers, 2009). In this way, a company can cut its costs in an effort to improve performance on existing capital while still retaining its talented/skilled employees. Benefits of FWP Implementing these practices has benefits not only for the employer but also for the employees and the community at large (Mullins, 2007:620-621). Table 2 summarises the benefits that emerged from numerous studies on different types and sizes of organisation. 66 S.Afr.J.Bus.Manage.2011,42(4) Table 2: Benefits of implementing flexible work practices for the employer, the employee and the community at large EMPLOYER  increased competitive advantage due to higher productivity and fewer staff problems  enhancement of recruitment and retention  maximum use of facilities and equipment  round the clkock custoimer service  access to global expertise  cost savings e.g. office space  the “settling in” period may be less disruptive when employees arrive at different times  supports pooling of ideas  staffing levels can be varied to meet fluctuations in products and services EMPLOYEE  improved morale  higher producytivity  decreased employee tardiness and unscheduled absences  less stress commuting to the office in peak traffic times  suits domestic lifestyle needs  improve quality of working life  employees will feel more empowered COMUNITY  reduced traffic and [pollution (possible Carbon credits and participation in Clean Development mechanisms)  employment opportunities for the disabled  more prosperity in rural area  increasing sense of community focus Source: Adapted from Meisinger (2007:12); Harris (2007:33); Döckel et al. (2006: 20-22); Sandler (2008:10-11); Sandler (2006:S1-S4); Wilson (2007:1); Roberts (2005:1); Kettleborough (2009:6); Shyrme (2002:1-4); O’Brien & Hayden (2008:19); Stredwick &Ellis (2008:30) Problems/Challenges facing companies in implementing FWP Although a number of benefits do emanate from implementing these practices, there are a number of problems/challenges that companies need to note. Table 3 indicates a few of these problems/challenges, as identified in the literature. Despite the drawbacks indicated in Table 3, the popularity of these practices among employees and companies globally cannot be ignored, as explained by Galinsky, Bond and Hill (2004:21), who state that “in a nationally representative sample surveyed in 2002, 79% of US workers report that they would ‘like to have more flexible work options’ and 61% would prefer to reduce their working hours”. According to Meisinger (2007:12), “an increasing number of organisations offer employees non-traditional scheduling options”. The application of these practices as part of the formal human resource management processes can therefore not be ignored. How would a company/organisation go about implementing such practices and eliminate the problems/challenges indicated earlier? Implementing FWP successfully Implementing flexible work practices successfully within any organisation is a complex, dynamic and challenging process. For managers, their staff and the organisation to cope, certain guidelines need to be available and to be followed. The ultimate result should be a stable new environment which incorporates the desired changes. A model designed by Robert A Paton and James McCalman suits this need perfectly (Paton & McCalman, 2008:108). The model, which is known as the Intervention Strategy Model (ISM), consists of a number of steps: problem initialisation, the definition phase, the evaluation phase, the implementation phase, feedback, problem conclusion and an environmental development loop (see Figure I). S.Afr.J.Bus.Manage.2011,42(4) 67 Table 3: Problems/challenges facing companies in implementing flexible work practices Source: Adapted from O’Brien & Hayden (2008:225); Kelly & Kalev (2006: 379-416t); Kettleborough (2009:4); Ministry of Manpower Singapore (2001:1-23) Source: Paton & McCalman 2008:108. Figure 1: The basic phases of the Intervention Strategy Model (ISM) Problem Initialisation Definition Phase Evaluation Phase Implementation Phase Problem Conclusion Feedback Environmental Development Loop 68 S.Afr.J.Bus.Manage.2011,42(4) The model is seen as valuable as it is interactive and integrative and at each step permits both exchange of data and feedback. The model can also be used in both the private and the public sectors. The individual steps in the model will be discussed briefly from the perspective of flexible work practices (Paton & McCalman, 2008:108120).  Problem initialisation In this step the company identifies the need to implement FWP. Issues that might initiate such a move could include: the loss of talented staff, increasing competition from competitors and the worldwide financial crisis. Having identified the need to implement FWP, a project team consisting of all stakeholders such as line managers, employees, the computer division and unions, will need to be assembled. This group will be known as change agents. The team will be responsible for handling the transition from the old to the new. It is important that the support of top management should be obtained. Initial communication to the staff about the new project is also vital.  Definition phase This phase entails an in-depth study of the change situation from both a historical and a futuristic perspective. The project team will meet regularly to discuss issues such as the impact of FWP on the culture of the organisation, its systems and possible difficulties in future, and who will participate, for example, which division or level of staff in the company. Depending on the type of system to be used, the traditional nine-to-five working arrangement will change when FWP are introduced. Other matters to receive attention at this stage will be: the formulation of objectives, for example, what is to be achieved, the success criteria, for example, how is success to be measured (cost savings, productivity increase) and the identification of constraints, for example, available resources (people, equipment, money).  Evaluation phase This phase generates and evaluates the potential solution options. The project team identifies the different types of FWP that could possibly be used by the company. Different options could be generated by means of brainstorming, the Delphi-method, interviews, focus groups or structured meetings. Once a number of options have been identified, they must be evaluated. This process can take place by means of computer simulations or network analysis. Issues to be considered here are: can the company afford it, is there time to train the staff (supervisors and employees), has the process been fully communicated and is it understood by the staff. If any problems arise during this phase, the matter can be referred back to the definition phase (see Figure I).  Implementation phase If all goes well in the previous step, the foundation of an achievable strategy to deal with the change will have been laid. At this stage, the objectives will be clear, the options selected and the systems well defined. All that remains is to package the outcomes into a coherent whole and introduce the system. According to Kettleborough (2009:6), the issues to be addressed here in respect of FWP include the following:  Ensuring that an effective monitoring system is in place before the FWP are implemented.  Having a well-developed human resource information system (HRIS) in place which will enable the company to access employee information quickly and effectively.  Compiling a proper policy document that is aligned with all the other structures, processes and procedures in the organisation.  Developing an effective multimedia communication system to keep employees informed on a regular basis.  Assisting both the employees and management to have an effective up-to-date electronic HR manual in place aligned with other relevant policies and procedures.  Developing a high degree of trust between the parties.  Installing a number of web-based tools that will allow more frequent interaction with employees in remote areas.  Training all managers in their responsibilities.  Establishing a formal process whereby employees can apply to participate in the scheme and also make provision for an arbitration process should a manager not approve an individual request.  Monitoring the benefits gained regularly and also identifying possible problems with the system. According to Paton & McCalman (2008:118), three basic implementation strategies are available: pilot studies, where a small group of staff are involved in implementation and parallel running, where the new system is phased in and the old one is slowly phased out, or a big bang approach, where the total system is implemented as soon as possible. It is important to note that old systems and practices die hard and that it will take time for new systems to be fully accepted. However, good communication and proper support to those affected will contribute to the ultimate success of the project. It is vital that management should also be willing to terminate the plan, should it fail to meet its goals. The issue could also be referred back to the definition phase, as indicated in figure I.  Feedback As indicated previously, the model makes provision for feedback between the definition, evaluation and implementation phase. This is necessary should problems arise during any of these steps, such as the availability of sufficient time to train staff. If this is not possible, a return to the definition phase would be required. S.Afr.J.Bus.Manage.2011,42(4) 69  Problem conclusion Once the change process has been implemented, the project team could be dissolved.  Environmental development loop The last component of the model consists of an environmental development feedback loop linking the final outcome and the new environment with the initial situation. The purpose of this loop is to illustrate that the change cycle is never complete. As a result of the dynamic environmental factors that have developed over time it will become necessary for new changes to be made to the existing FWP package and the process will start again. Research design Research approach In order to achieve the best results from this research, a quantitative descriptive research approach was adopted. Descriptive research provides a complete and accurate picture of the situation, whereas quantitative data can be used to describe the situation in terms of frequencies, central tendencies and dispersion (Struwig & Stead, 2001:7-8). The advantages of this approach are that it saves time and money, gets accurate results, ensures confidentiality for individual respondents and does not require very large samples (Anderson, 2004:201-233). Research strategy The research was conducted in the South African context, specifically among companies listed on the Johannesburg Stock Exchange (JSE Limited). Three industries are represented, namely telecommunications (comprising wireless telecommunication and fixed-line telecommunication services), finance (comprising banks, investment instruments, real estate, life insurance and general insurance), and technology (comprising software and computer services and information technology hardware). These companies were identified from the official list of companies from the JSE website at http://www.jse.co.za. The researchers decided to approach the companies in these sectors as they are important building blocks of a country’s growth, as indicated earlier. The listed companies also play a major role in determining the future direction these sectors will take in South Africa. Participants and sample As mentioned earlier, the population for this survey consisted of all the companies listed on the JSE in the three sectors, telecommunications, finance and technology, during April 2009. The number of listed companies in the three sectors were 4 (telecommunications companies), 84 (finance companies) and 17 (technology companies). The total population consisted of 105 companies. However, the population had to be adjusted to 85 companies for the following reasons: A number of companies are holding companies with no more than four staff members; some of the companies had been suspended from the JSE; and a large number of companies indicated from the outset that they did not wish to participate. As explained above, the final population was 4 companies in telecommunications, 64 companies in the financial sector and 17 companies in technology. The data were collected by means of a questionnaire. The HR Directors of the companies were contacted by telephone and informed about the survey. If they had no objection to participating, a questionnaire was sent to them via email for completion which they could return either by email or by post. A total of 25 usable questionnaires were returned, representing a response rate of 29,4%. The returned questionnaires came from telecommunications (4 questionnaires), finance (16 questionnaires) and technology (5 questionnaires). For the purposes of this exploratory pilot study, the responses can be deemed to be representative of these three sectors on the JSE. In Table 4, some demographic information pertaining to the sample is given. From this table it is clear that the majority of the respondents are senior HR leaders (Group Human Resource Managers) at their companies and as such are in a position to influence decisions pertaining to HR issues such as the use of FWP. The companies are also major employers, with 52% of them employing between 1001 and over 7500 employees. They are also relatively old companies, with 96% of them between 10 and 100 years old, and they should therefore have well-established HR systems and processes (Withers, Williamson & Reddington, 2010:65-67). Their assets and turnover are also significant and they can therefore be seen as major players in the South African economy. Most of the companies (75%) are also in the maturity/diversification phase of development. In other words, they are well established in terms of their market share (Kleiman, 2009:911). However, the markets in which they operate are highly competitive (84% of the companies), while the pace of technological change relating to their products/services is changing very rapidly. In these circumstances only the best HR practices would suffice (Kleiman, 2009:11). The majority of the companies have relatively flat structures, with few layers of management, but 20% of the companies have an unconventional structure such as a matrix structure. Only 28% of the companies have a relatively tall structure with many layers of management. Measuring instrument After an intensive literature review, a questionnaire was compiled. The questionnaire consisted of the following sections:  Section A: Background information relating to the company and respondent  Section B: Use of technology in human resource management practices  Section C: Flexible work practices (with subsections pertaining to type of practices, potential advantages, potential disadvantages, present barriers and possible solutions) A four-point Likert scale was used in Section C of the questionnaire. 70 S.Afr.J.Bus.Manage.2011,42(4) Table 4: Demographic information of the sample companies (N = 25)  Position of respondent (72%) of the respondents are senior human resource managers in their respective organisations  Number of employees Small companies (< 1000 employees) = 12 companies (48%) Medium companies (between 1 001 and 7 500 employees) = 6 companies (24%) Large companies (> 7 501 employees) = 7 companies (28%)  Age of the company 1 company (4%) < five years old 21 companies (84%) between 10 years and 49 years old 3 companies (12%) > 75 years old  Annual turnover 76% of the companies had a turnover of between R200 million to more than R1 000 million 14% of the companies had a turnover of between R25 million and R100 million 4% of the companies had a turnover of between R5 million and R10 million 4% of the companies had a turnover of between R2 5 million and R5 5 million 16% of the companies did not indicate their annual turnover  Approximate value of the total assets 73% of the companies had assets of between R200 million to more than R1 000 million 26% of the companies had assets of between R25 million and R100 million 8 % of the companies did not indicate their approximate value of total assets  Stage of development of the company 75% of the companies are already in the maturity and diversification phase of development 25% of the companies are in the growth phase 4% of the companies did not indicate their stage of development  Nature of competition in the markets in which the companies operate 84% of the companies operated in highly competitive markets 12% of the companies operated in moderately competitive markets 4% of the companies operated in a low degree of competition  Pace of technological change in companies 76% of the companies indicated that the pace of technological change is rapid/very rapid 24% of the companies indicated that the pace of technological change is moderate 4% of the companies did not indicated markets with minimal competition  Company structure 52% of the companies have a relatively flat structure with few layers of management 28% of the companies have a relatively tall structure with many layers of management 20% of the companies have an unconventional structure (e g a matrix structure) The researchers opted to use a questionnaire for this survey because they considered it financially more viable and quicker to administer. There are no interviewer effects and no interviewer variable and it was convenient for the respondents (Bryman & Bell, 2003:142). In this survey no formal pretest was conducted but inputs were obtained from staff in a human resource management department at one of the largest universities in South Africa. It was decided to follow this approach as the staff are specialists in the different areas covered in the questionnaire. Statistical analysis The data were analysed by means of a statistical package called SPSS (SPSS INC, 2003). Firstly descriptive statistics such as frequency distributions were generated to be used in sections A and B of the questionnaire. Secondly, owing to the small sample size and ordinal scale data, non-parametric tests (Kruskal-Wallis) were performed to test for significant differences between groups as defined by the corpographical variables. Significant levels of 0.05 and 0.10 (5% and 10%) were used. The binomial test, a test that determines whether the proportion of responses in two groups differ statistically significantly from 0.5 , was used to determine whether the respondents perceived specified aspects to be a significant advantage, disadvantage, barrier or solution in the subquestions contained in question 24. Results and discussion Business practices followed in the companies In Table 5, the business practices of the companies participating in the study are indicated. It appears that the use of formal strategic planning activities, with a written mission statement, business unit strategy and HRM strategy, is fairly prevalent in the companies. Table 5: Business practices of the sample companies ( N = 25)  Use of formal strategic planning activities in companies 56% of companies made a great deal of use of formal strategic planning activities 32% of the companies made to some extent use of formal strategic planning activities 12% of the companies made to a minor extent use of formal strategic planning activities  Decision making power is centralised 56% of companies have to some extent centralised decision-making power 36% of companies have to a great extent centralised decision-making power 8% of companies have to a minor extent centralised decision-making power  HR’s role in strategic decision-making 56% of companies indicated that their HR professional was not part of the team responsible for strategic decision-making 44% of companies indicated that their HR professional was part of the team tasked with strategic decision-making  Mission statement 87% of companies had a written mission statement 4% of companies had an unwritten statement 4% of companies had no statement at all 4% of the companies did not indicate  Business unit strategy 87% of companies had a written business unit strategy 8% of companies had an unwritten business unit strategy 4% of companies had no business unit strategy at all  HRM strategy 66% of companies had a written HRM strategy 20% of companies had an unwritten strategy 12% of companies had no strategy at all  Stage which the HR person is involved in the development of the business unit strategy In 44% of the companies HR professionals are involved from the very outset in the development of the business unit strategy for the company In 24% of the companies HR professionals are only involved through subsequent consultation In 16% of the companies HR professionals are involved at the implementation stage only In 16% of the companies HR professionals are not consulted at all S.Afr.J.Bus.Manage.2011,42(4) 77 companies should therefore take up the challenge immediately! 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