LONDON SCHOOL OF COMMERCE

COLOMBO CAMPUS SRI LANKA

MBA FOR EXECUTIVES

MODULE ASSIGNMENT: Managing Human Capital

Student Name Marian Amanda Perera Student Registration No. A0034SSSSSS0316

Module Lecturer Professor Mervyn Sookun Module Tutor Ms. Apsara Hewage

Date Submitted 17th April 2016 Total Word Count 4670

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To: Board of Directors

From: Human Resource Management Consultant

Subject: The possibility of restructuring the HR Practices of John Keells Group to compete more

effectively in the market

Source: www.jkcsworld.com /About-Us.html

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Table of Contents Executive Summary ........................................................................................................................ 4

1. Introduction ................................................................................................................................. 6

2. The Organisation ......................................................................................................................... 6

2.1 Historical Development of the company together with its HR Practices ............................. 6

2.2 Profile of the Company’s Human Capital ............................................................................. 7

2.3 Current HR practises and the current HR models of the Company ...................................... 8

3. Recruitment and Selection practises of the Company ................................................................ 9

3.1 Critical analysis of recruitment and selection practises ........................................................ 9

3.2 Recommendations to enhance recruitment and selection practises of the Company ......... 10

4. Human Resource Development practises of the company ....................................................... 11

4.1 Critical evaluation of the HRD practises ............................................................................ 11

4.1.1 Training ........................................................................................................................ 11

4.1.2 Development ................................................................................................................ 12

4.1.3 Learning ....................................................................................................................... 12

4.1.4 Career Progression ....................................................................................................... 12

4.2 Recommendations to enhance the HRD practises of the Company ................................... 13

5. Staff Motivation and Leadership .............................................................................................. 14

5.1 Critical Evaluation of Classical Motivation Theories ......................................................... 14

5.2 Proposed hybrid motivation model ..................................................................................... 15

5.3 Impact of effective leadership on staff morale and motivation .......................................... 16

6. Management of Change ............................................................................................................ 17

6.1 Change Management Process ............................................................................................. 17

6.2 Critical analysis of the possible Challenges in change management and Recommendations

to overcome them ...................................................................................................................... 18

7. Conclusion ................................................................................................................................ 20

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Table of Figures

Figure 4.1 Career Plateau .............................................................................................................. 14

Figure 5.2 Hybrid Motivation model for John Keells Group ....................................................... 16

List of Abbreviations

HR – Human Resources

JKH – John Keells Holdings

ILO – International Labour Organisation

HRM – Human Resource Management

IQ – Intelligence Quotient

HRD – Human Resource Development

CEO – Chief Executive Officer

KPMG - Klynveld Peat Marwick Goerdeler (Accounting Firm)

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Executive Summary

The following report identifies the current HR practices at John Keells in terms of recruitment

and selection. More effective methods such as using mass media to advertise on available

opportunities, a more suitable role specification document have been proposed to carry out the

recruitment and selection processes smoothly. The training and development requirements at the

organisation are identified next. Training programs and learning activities that are required to up

build the career progression of the employees are recommended after a critical evaluation.

Staff motivation is an important component in the HR process. Hence the classical motivation

theories are evaluated to reach a hybrid model which is more applicable to the culture at John

Keells. The effective leadership skills that would generate staff motivation are highlighted in

detail.

As the final section the possible change management challenges that would arise with the

recommendations made for the HR practices at John Keells are identified with the methods to

overcome them and carryout a successful change management process to restructure the HR

practices at John Keells Group.

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1. Introduction

John Keells Group was originated in early 1870s as E. John & Co later changed to John Keell

Thompson White Ltd with the acquisition Keell & Waldock Ltd (John Keells Group 2016). After

becoming publicly quoted in the Colombo Stock Exchange today it is known as John Keells

Holdings. The group has many sister companies under its umbrella where some of the companies

operate on their own and some still being administrated centrally by JKH. The human resources

department in the Group is centralised even though there are departments placed in each

subsidiary for the convenience and effectiveness. The HR practises and policies are mainly

developed by the central department passing on subsidiary policies whenever needed.

The following report has been prepared with the objective of improving the human resources

practises of the John Keells Group. The available possibilities to restructure the HR procedures

and policies are recommended with the anticipation of the Group will compete more effectively

in the respective industries. The different components of the HR department has been analysed

from the employee acquisition to employee retention.

As the final outcome new training methods, leadership skills, recruitment policies and

motivational theories will be identified to improve the working conditions of the employees who

are a part of John Keells Group.

2. The Organisation

2.1 Historical Development of the company together with its HR Practices

At the inception of the company the vision was to achieve higher revenues and expand its

business volumes in the market. Top level managers only considered the achievement of the

results for which they were ready to incur a cost. As a result, the employees were given tasks to

complete for which they were paid. Money was considered as the main motivator of the

employees, reflecting what Herzberg, Mausner and Snyderman (1993) describe as the hygiene

factors. The relationship the company had with its employees was contractual due to which the

employees were not working towards succession of the company but for themselves.

Executive and management level employees were recruited if they possess the required

experience in a similar role where the company is taking a minimum level of risk in recruiting.

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The culture was not allowing the employees or applicants to have equal opportunities when

being selected to the company.

The tendency towards lesser risks was impacting the overall decision making of the business

which is why John Keells moved towards the rewarding systems such as pension schemes and

insurance policies for the employees by which they would get feeling of being a part of the

company and work towards achieving the company mission. Goal congruence helped John

Keells to reach the stage where they are today in the market and everyone from the new

generation entering the corporate world wants to be a part of this prestigious company.

2.2 Profile of the Company’s Human Capital

John Keells Group employs about 19000 staff of which 82% are male and this also includes the

staff hired through the third party contractors. The top level also has a higher male representation

of which the Board of Directors have 89% and all are above the age of 50. Half of the members

of the group executive and operating committees are between age 30-50 and the rest is over 50

years (John Keells Group 2012).

There are several initiatives that have been taken up from the company in which students are

given proper training on required skills, etiquettes and other general areas to make them ready to

seek jobs. Moreover, John Keells extend their hands in supporting the career guidance

programmes held at different universities and professional institutes to sharpen the professional

skills of the students.

In addition to the above, the company strongly believe in employee engagement where the

approaches such as open door policy, ombudsperson, employee direct access to chairman via

secure email and welfare committees has been taken in to practise to enrich the employee

relations.

The policies at John Keells ensure that employees feel comfortable and consider the company

more than just a workplace. The recruitment policy makes sure that the employee hiring

procedures are methodical and ethical whilst the unbiased recruitment is reflected through the

policy on equal opportunity. All the people related decisions are made by committees and not by

individuals to eliminate any sort of discrimination. As a result John Keells has been able to

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provide a favourable working environment for all the employees in a unique culture build with

inclusivity and trust (John Keells Group 2012).

2.3 Current HR practises and the current HR models of the Company

The company conduct its business by considering the applicable laws in the country and ILO

codes where child labour as well as forced labour is fully disregarded. In addition, a regular

monitoring process via checklists and questionnaires is taken place to verify the compliance to

these policies and ethical standards.

John Keells operates in a way that they promote a performance centric culture with regular

appraisals for the employees based on which the rewards decisions are made. The HR practise is

to carry out appraisals for executive cadre twice a year and for others at least once a year

adhering to the performance management policy. Rather than depending on a feedback of a

single supervisor on the employee performance, career committees ensures a fair minded

judgement. As a part of the appraisal a benchmarking process is also carried out to look at the

learning and development, performance, rewards, future promotions and career aspirations which

reflects Storey’s Soft model of HRM (Storey 1999).

John Keells also rewards employees by providing them bonuses to settle them comfortably in

any area even if they are from outstation. As a proactive step the company has also put effort to

amend their remuneration structure based on the demographics of their employees to reduce any

possible employee turnover.

Moreover, a committed function for learning and development is maintained for all the business

units by the central HR unit. Average of 40 hours per employee, 42 hours and 36 hours for male

and female respectively has been allocated for training overall. New strategies, policies and

initiatives as well as industry focused training are carried out to develop leadership skills and

competencies considering the possible future learning needs. The belief of John Keells is that,

this provides employee motivation as explained by McGregor (2006) Theory Y because they

seek responsibilities with the confidence gained via learning and development.

Long term consequences such as organisational effectiveness can be achieved with the employee

learning and development because the company accepts that the employees are an asset for the

company rather than a cost. Therefore, individual well-being and reward systems will ensure that

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the HRM system will achieve its outcomes such as congruence and commitment leading towards

stakeholder interests as explained in Nyambegera (2005) by the Harvard Model for HRM. This

philosophy all together will gratify sustainable competitive advantage through lifelong learning.

3. Recruitment and Selection practises of the Company

3.1 Critical analysis of recruitment and selection practises

As a foundation to reach the company vision of creating businesses that are leaders John Keells

acquire employees with high skills and competencies. The recruitment procedure is supported by

a role specification document which includes the required competencies, experience and

qualifications for a particular job role (John Keells Group 2012). Relying fully on this document

and not often amending this document taking current business situations in to consideration

creates a gap between the current business requirement and the requirement specification.

Advertising of the job vacancies are done on well-known websites such as Top Jobs and cv.lk as

well as on LinkedIn. The company also uses executive search firms such as KPMG to recruit

executive and higher cadre employees. Mass media advertising such as on newspapers is used to

publish available vacancies at a minimum scale. Educational institutions and career guidance

programmes at universities is also used to identify young talents from which the suitable

candidates are recruited if there is an available vacancy.

Equal opportunities are awarded for job seekers where even the differently-able persons are

given the chance to be a part of the John Keells family. More flexible options such as shifting to

a job role within the Group have given rise to internal recruitment.

In the selection process John Keells makes sure that they invest in the best suited person for a

particular job role. For executive cadre selections as the first phase IQ and personality tests are

given to the candidates as most of the companies in the industry. In the latter part of the selection

phase subject related or job role related presentations or face to face interview questions are used

to identify the best from the rest.

It is evident that till date the company has not taken any out of the box methods to recruit or

select the best employees but rather used the accustomed methods where the similar companies

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in the industry also work with. This probably has created a drawback in reaching the objectives

of the company as there may be more skilful and competent employees out there who were not

properly recognised.

3.2 Recommendations to enhance recruitment and selection practises of the Company

As the recruitment and selection identify who should and who should not be taken in to be a part

of the Company it is important to first identify the proper need for recruitment. Planning process

makes sure the underlying costs for recruitment are spent effectively. A proper recruitment

process will also makes sure the selection process to work out smoothly.

John Keells already uses a role specification document in the recruitment procedure but

completely relying on this document would give wrong indications in some scenarios. It is

important that the HR regularly amend this document based on the business and external

environment factors such as government policies, education levels and technology development.

The feedback of a previous employee will add value as input for this document in a situation of a

replacement of a position. This might support to select the best employee who is more suitable

with the required skills and qualities. For example if the previous employee has left due to

working late and not having a way to go home because he/she lives far, when selecting the new

employee people who are willing to work late and who are comfortable in a such working

environment can be recruited.

More advertising on mass media of the available vacancies would interpret the policy on equal

opportunity better as job seekers in rural areas who do not have access to internet will only have

access to newspapers. Moreover, in Sri Lanka even though the literacy levels are high the

language barriers still prevail. Therefore discriminating based on language needs to be

eliminated where such applicants can be taken in to provide proper training on language. This

could be beneficial for the company if their rest of the skills and competencies would be superior

to other applicants.

Turning to executive search firms to recruit applicants would promote objectivity as applicants

would not be aware of the company they are actually applying to. This would reduce any

irrelevant applications coming in, as the tendency of applying without fitting for the role is high

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when the company name is known and especially if the company is one of the best in the country

as John Keells.

At the selection process it is important to separate the best fit for the job and organisation

through valid assessments and testing methods. The IQ and personality tests are not always

sufficient if they are not fitting for the job role. It is important to identify the other facets such as

innovativeness, creativity and honesty in addition to the educational qualifications via the

assessments. As experience and qualification will also not define a better employee, perceiving

employees with self-confidence, openness and adaptability to a certain culture through

psychological tests is crucial.

Case studies are also a better way of understanding the candidate’s attitude as it would require

them to identify the problems, prioritise and provide solutions allowing the company to

recognise the problem solving skill. In addition, the leadership skills need to be identified in

order to empower the employees and allow team work. In a situation of an interview a hybrid of

structural and situational interview would make sense in most of the cases as structural would

make sure the questions are general to all, and situational would allow to throw in questions to

know more about the employee character and work attitude which is the ultimate objective in the

selection process.

4. Human Resource Development practises of the company

4.1 Critical evaluation of the HRD practises

4.1.1 Training

Currently John Keells provides on the job training for cadres lower than managerial level.

Usually a new employee is taken through an induction program to familiarise the working

environment and culture. After which the employee is taken through a basic training such as

sitting next to Nelly, where the current working methods and practises are taught by a senior

employee. This method has its own disadvantages because the new employee would adapt all the

blunders the experienced employee has been using. The opportunity to bring in fresh ideas of

working by the new employee is limited in this method. In addition, the expected strategic

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outcomes of efficiency and improvement in that job role will not be achieved through this

technique.

For a managerial role and above mostly the induction program is carried out deeper where the

decision making structure and other related procedures are communicated from the senior

management. In addition, for the Managers there are one to two day trainings probably with the

company CEO or a senior manager to familiarise with the organisation operations.

4.1.2 Development

The company considers talent as their biggest asset. Therefore the employees are given

opportunities to get them exposed to cross functional activities by which they open multiple

career paths. Moreover, tools such as development centres, leadership development programs

and talent chats are also promoted by the company in supporting the employees to identify their

future career progress and build them towards it. Coaching and mentoring the employees to

understand the competencies required for their career development is also provided for the

current employees. (website)

The top level employees are also put forwarded to external programmes by which they are

encouraged to identify their inner strengths to be used positively in their personality

development.

4.1.3 Learning

The company currently maintains a learning portal where the employees are given the

opportunity to engage in their learning activities much easily as a click of a button. The senior

employees have the ability to track the learning progression of their subordinates also nominate

them to any of the relevant trainings on offer. In addition an e-library is also on offer on this

portal where e-book summaries under different categories are made available for the employees

to enhance their knowledge and support their career development.

4.1.4 Career Progression

The company has so far supported the employees in progressing on their career ladders. Through

training and development as well as opening opportunities to learn by themselves John Keells as

a Group has contributed to the employee development. Funding required for post graduate

studies for certain employee cadres are also provided by the company to motivate the employees

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to grow personally. This progression has allowed the businesses to grow and the talent to move

across the business leading to enhance the performance of the Group.

4.2 Recommendations to enhance the HRD practises of the Company

In order to make effective HRD practices it is important to make them in line with the company

strategic objectives. The need for training, development and learning can only be identified after

the examining the existing resources. Categorising the employees who require training based on

their capacity and capabilities is also crucial in enhancing the training and development. For

example, there are visual learners and auditory learners who learn faster in one way than the

other. Identifying them would increase the effectiveness of training.

The opportunities given to the employees to learn by themselves via the portal should not be

limited to the workplace subject matters but rather should include modules that would allow the

individuals to develop their personal skills which might help them in future or add value to their

personal life.

The trainings carried out in the company should not be limited only to the beginning of a career

of an employee. Employees should be reviewed as to their requirements and any hints identified

during appraisals should take forward to support the employees in making themselves

comfortable in challenging areas where by the organisation efficiency would improve.

Creation of career plateau (Byars & Rue 2006) can be achieved by categorising employees based

on their current performance and likelihood of future promotions. Employees who have high

performance currently but does not have a possibility of receiving promotions also known as

‘Solid citizens’ can train the ‘Learners’ who does not perform well currently but have future

possibility of getting promoted. Then learners would be improved and replace the ‘Stars’. As

John Keells invest a lot for graduates to develop as professionals, training them through the elite

employees in the company would lead the graduates to become the stars in the organisation.

Employees who are not performing well and have no likelihood of promotions in future (dead

wood) need to be examined why they have reached this point. Moreover, appraisals can be

carried out to see whether they have not got proper development and reconstruct their training

sessions more effectively.

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Figure 4.1 Career Plateau

(Byars & Rue 2006)

5. Staff Motivation and Leadership

5.1 Critical Evaluation of Classical Motivation Theories

It is critical to keep the staff motivated in any organisation. Understanding the different factors

that would motivate employees would allow organisations reach efficiency in organisation.

Theory Y people according to McGregor (2006) would prefer work and hold responsibilities. But

if the employees are not getting the required job satisfaction no matter how hard they work the

efficiency levels would be low. Empowering employees will not sufficient as work life in a

company should be a balance of status, open communication and future career prospects for the

employees to be motivated. Motivating factors such as job rotation among different departments

may not be possible at John Keells as employees are specialised most of the time. Through more

skill development and training job enrichment can also be achieved. Even though money has

been identified as a hygiene factor by Herzberg, Mausner and Snyderman (1993) there is an

impact on motivation as high performance in a workplace is always expected monetary rewards.

When considering the Maslow’s hierarchy of needs in the Sri Lankan context, the first three

levels can be considered as sufficient to motivate majority of the Sri Lankan employees and there

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will be a very limited segment that would want to satisfy the ego needs and self-actualisation

needs.

5.2 Proposed hybrid motivation model

Motivation levels will vary based on the cultural and behavioural backgrounds of the individuals.

Therefore John Keells first need to understand the local culture. The Hofstede and Hofstede

(2005) Cultural model can be used as a base for this analysis.

In Sri Lanka people tend to work for themselves, even though they are pushed towards working

in teams, it is still new for the employees because the culture is more individualistic. In addition,

the culture is still high masculine with gender wage gap and fewer females in management. As

discussed in section 2.2 there is only 11% female representation in the board of directors at John

Keells Group. The power distance is also gradually reducing specially with the initiatives such as

dedicated email for the Chairman by John Keells, but it is not totally eliminated.

The motivation therefore should be achieved from an individual point of view in the local culture

where the physical, security and social needs are the most important levels to provide motivation.

The type of people are more of theory Y and money is somewhat considered as a motivation

factor than a hygiene factor. As a result when conceptualising the ideal motivation model for

John Keells the components such as, individual needs, money, safety and social needs should be

put together for effective employee motivation at the workplace.

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Figure 5.2 Hybrid Motivation model for John Keells Group

Maslow, A. H., 1997 (Author’s Work)

According to McClelland (1987) the needs for achievement keeps an individual motivated.

Hence perceiving achievements in challenging environments leading to recognition is an ideal

way to keep the employees motivated who prefers more work and responsibility (Theory Y

individuals). In addition the lesser masculinity within the company will keep the female

employees motivated as they would feel secure and see a future ahead of them to progress in

their careers.

5.3 Impact of effective leadership on staff morale and motivation

Leadership is different to the management of employees because in management the employees

are ordered to get done the work. This approach would have worked for Theory X people as

explained by McGregor where the people need to be controlled as they dislike work. In a culture

where people are likely to be in Theory Y category much control would de-motivate and lead to

inefficient work practices. Therefore a person who handles such employees should contain the

leadership qualities where they can influence people to attain goals and inspire them to overcome

challenges.

Blake and Mouton’s grid (Cecil and Rothwell 2007) has provided a systematic way to

conceptualise leadership and the best outcome of their model is the Team Management. This is a

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balanced leadership concept where the concern for people and the concern for the results are

both at high levels. This would lead to achieving employee motivation due to the high empathy

received from the leaders. As a result of the motivation achieved, employees will put more effort

to complete the tasks and leaders’ role will be to clear the obstacles, conflicts and add creativity

making tasks easier for the employees.

Effective leadership will build trust and respect between the employee relationships, where there

will be interdependencies between the organisation and the people. More commitment is also

expected from the effective leadership as employees are motivated by the strong bonds created.

John Keells also has taken initiatives to inspire people through leadership development as the

motivation created will make employees feel “more than just a workplace”, the HR vision of

John Keells. (website-workplace)

Care should be taken that if leadership is lacking in an organisation it would lead to employee

de-motivation as they do not have guidance. Hence the company will face problems such as high

labour turn over, employee clashes and ultimately unachieved workplace goals.

6. Management of Change

6.1 Change Management Process

The change management process can be organised based on the Kurt Lewin’s three stage theory

to change (Cummings and Worley 2013). The initial step would be to understand the need for

change and communicate it clearly among the employees. Appointing change agents for the

upcoming change would build a mind-set that the change is necessary and they will be

responsible in promoting the change throughout the organisation. The expected outcomes from

the change as well as the benefits for the employees need to explained for them be change-ready.

The training and development programmes that are going to be introduced as a part of the HR

restructuring initiative at John Keells Group should be communicated beforehand as it would not

be surprise for the employees.

Moving on to the next stage which is the change implementation change is the most crucial step.

Change should take place in a way that it is accepted by the employees and they should not feel

that the changes are being imposed on them. Working hand in hand with employees at this stage

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would allow John Keells to understand the employee attitudes and manage change more

effectively. More care should be taken in a stage where cultural change is implemented as the

culture is what binds the entire organisation together. Any misstep would be costly to the future

growth of the company.

As the final stage the implemented change needs to be normalised within the organisation

through refreezing. Benefits achieved from the change initiatives for example, benefits achieved

from the training programs provided, leaders appointed and the promoted less masculinity

culture should be highlighted. Kirkpatrick’s four stage training evaluation model can also be

used at this stage to examine the reaction for the training provided (Kirkpatrick and Kirkpatrick

2009), the level of learning achieved by the employees which influenced their behaviour and the

outcome of the trainings in terms of performance results can be evaluated to know the

successfulness of the change took place.

6.2 Critical analysis of the possible Challenges in change management and

Recommendations to overcome them

In any organisation when a change process takes place it is bound to have resistance from the

employees. John Keells being one of the oldest companies operating in Sri Lanka has built up its

own culture over the years.

The employee composition contains higher percentage of older employees who has been

working in John Keells for more than 10 years who would not prefer changing their ways of

working and training would seem unnecessary for them. Their attitude towards training would be

negative and when they have more work to get done participating in training programmes are

considered as a time killer.

The initiatives taken to train the graduates and bringing in to the employee cadre would also be

considered as time and money consuming. The mind set of some Sri Lankans is that the younger

generations join the company to take the training but later joins a new company where the

investments made on trainings are actually turn out to be a cost. The implementation of the

change will therefore be impacted from the different mind sets of people where they will try and

argue the disadvantages of having the change in the company.

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The increase of female employees in the company will not be accepted by the current culture at

John Keells. Having a female employee as the senior manage would discourage the male

subordinates and also would create problems for the female manager carry out her work

smoothly without providing their support.

The above challenges need to be handled well in order to make the change successful. As the

first step feedback can be taken from the employees as to what sort of training that they require

to work in John Keells and to develop their personal skill level. These inputs can be used to

structure the training programme scope where the employees would feel a part of it. A separate

launch programme can be held to make the employees be aware of the benefits of going through

these trainings. As a benefit for the employees John Keells can introduce an intranet portal

where the employees will be interactive with each other, get to know the each other in the John

Keells group and share their knowledge through videos and posts. This would help to change the

mind set of wasting time for trainings as everyone will be part of it. The portal can also be used

as a mode to reach the employees, address their concerns and motivate them.

The attempt to bridge the gap between gender discrimination should be supported by sharing

inspirational stories of women where the mind set of male employees would change and start to

respect their female bosses. According to a research done by McKinsey & Company (2012) high

gender diversity has a favourable impact on company’s operating profits due to different

leadership approaches by men and women leading towards an effective combination of

leadership behaviour which adds value to the company. These facts can be shared within the

organisation through the intranet portal where the employees would see the benefits of working

in collaboration with both men and women.

On the other hand, the female employees should have a favourable working environment by

giving consideration to work life balance as most of the working women have kids to take care.

Introduction of a day care for children would be a relief where they will work well without being

discouraged. Allowing flexible working hours would encourage women to work as well as

manage their household activities.

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7. Conclusion

In conclusion, this report caters the current HR requirements arising within the John Keells

Group. As the author of this report, I was able to identify the current HR practices within the

organisation accurately, by which the current recruitment and selection practices are criticised in

suggesting more suitable HR practices. In the mid-section of the report, existing training and

development practices are discussed where more comprehensive training initiatives are

recommended to support the employees to progress in their career ladders.

Evaluation of the classical motivation theories are followed by in order to propose a best fit

motivation theory for the John Keells Group. The current culture, organisational structure and

the work practices have been considered when developing the hybrid motivation model to make

sure a positive impact on the organisation. This section is concluded by scrutinizing the impact

of effective leadership on employee motivation.

As the final section of the report, the process of managing change is identified. The possible

challenges the company might have to face when implementing the recommended changes

discussed in the content of report are highlighted followed by proposed recommendations to

overcome the challenges and effective way to carry out the change management process.

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