Business Environment and Context

Subject: Case Studies
Pages: 10
Words: 2134
Reading time:
8 min
Study level: College

The selected company of interest is Cochlear Limited, which is an Australian company specializing in manufacturing biotech products to aid hearing loss. The company primarily manufactures three types of products, such as Nucleus, Hybrid, and Baha. The problem is the lack of employee engagement at the company, which diminishes its performance. The company’s competitiveness is heavily reliant on its ability to innovate and advance its technology, which is hard to achieve considering the fact that current engineers are highly experienced but ready to retire in a few years. The company lacks diversity and equality among its engineers and employees in general, which is important to resolve since the company aims to expand and enter new markets. It is stated that “by implementing strategic workforce planning (SWP), organizations can build out a comprehensive talent management process that supports both HR objectives and employees’ needs during hiring, training, and talent development” (Betterworks Systems Inc., 2019, para. 3). Cochlear needs effective strategic work to improve employee engagement as well as diversity to ensure that the given organizational goals are met.

Business Profile

It should be noted that Cochlear is a medical device business with manufacturing plants located in Australia and some European nations. The company was founded in 1981, and its largest market in America. The business wants to lead the market, lead the research and development, improve diversity, increase employee engagement, and maximize reinvestment (Cochlear Limited, 2021).

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Mission and Vision

Cochlear’s mission statement: “We help people hear and be heard. We empower people to connect with others and live a full life. We help transform the way people understand and treat hearing loss” (‘About Cochlear: Our mission,’ 2021, para. 1). The vision statement is to “innovate and bring to market a range of implantable hearing solutions that deliver a lifetime of hearing outcomes” (‘About Cochlear: Our mission,’ 2021, para. 1).

Environment – PESTLE Analysis

Firstly, the political environment is mostly stable since Cochlear primarily serves Europe, North America, and Australia. Secondly, economic conditions are improving after the pandemic, where “record sales revenue up 19%” (Cochlear Limited, 2021, p. 5). Thirdly, social factors revolve around diversity and gender equality, which needs more improvement at Cochlear. Fourthly, technology is a cornerstone of the business’s success, which requires more R&D. Fifthly, for legal matters, “eight new products and services achieve FDA approval over the past 18 months” (Cochlear Limited, 2021, p. 5). Sixthly, the environmental factors include the increase in deafness across the globe, where it is stated that “by 2050 nearly 2.5 billion people are projected to have some degree of hearing loss and at least 700 million will require hearing rehabilitation” (WHO, 2021, para. 1). In addition, since the company’s employees are mostly Australian, the engagement objective is hindered by the fact that “the proportion of employees showing high discretionary effort – willingness to go above and beyond for their employer – has fallen to 16% in Australia, below the global average of 16.5%” (Moore, 2021, para. 4). Therefore, the demand for a hearing aid is growing, and employee engagement and retention are becoming more challenging.

The current financial situation is strong considering the impact of the COVID-19 pandemic, where sales are record high (Cochlear Limited, 2021). The business is heading towards expansion by focusing on reinvesting its profits into the research and development of new technologies and products. The majority of current customers include Americans, Canadians, Europeans, and Australians. However, since hearing issues are becoming more common, developing nations are likely to become new customers. New technologies include hearing aid products, which are more integrated and smaller in size, which means it is mostly about engineering and processors (Cochlear Limited, 2021). The business is certainly growing after the economic downturn due to the pandemic.

Workforce Planning Framework Stage 2: Current Workforce Data

The workforce profile overview reveals that the majority of workers are coming from Australia. The number of workers globally is equal to 4000 workers, and 350 of those are researchers and developers of Cochlear’s products (Cochlear Limited, 2021). The company highly values experience due to the intricate nature of the business, especially for its full-time engineers, which is why the age of the workforce is older on these positions in ranges of 38-49, how for the majority of administrative positions are between 25-35 (Cochlear Limited, 2021). Since the given workforce plan will focus on researchers and engineers, there are highly qualified with Masters and PhDs in engineering, biology, and medicine. Due to their age, they are highly experienced, and most of them stayed loyal to the company with a mean experience of 15 years. Their experience heavily benefits them due to Cochlear’s focus only on three of its products, which is their strength. However, the lack of experience of working with other types of hearing aid products is their weakness. The projected long-term leave requirement is more than 28 days, which means long service. The engineering staff is mostly satisfied, but the underlying incentives are rooted in the short-term incentive (STI) plan (Cochlear Limited, 2021).

The current workforce of engineers at Cochlear is highly stable and does not require retention efforts besides the ones already incorporated at the company. For example, the company has a short-term incentive (STI) plan to benefit more employees (Cochlear Limited, 2021). However, the fact that the majority of currently loyal older workers will soon leave the company due to retirement and their age means that the replacement will be needed. It is stated that “overall, just 9% of Australian workers are considered ‘engaged’, showing both high discretionary effort and high intent to stay with their current employer” (Moore, 2021, para. 4). Considering the importance of experience for Cochlear due to its precise focus on specific solutions, the current workers in Australia show low levels of engagement and loyalty. There is no seasonality in the hearing aid market, but the business is expanding and growing, and the technology is rapidly advancing, which means that engineers at the company will have to become more effective at their R&D efforts (Cochlear Limited, 2021). The SWOT analysis of the current workforce can be accessed in Table 1 below.

Table 1: Current Workforce SWOT.

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Strengths:
  • Experience
  • Qualifications
Weaknesses:
  • Readiness to retire
  • Adherence to status quo
Opportunities:
  • Diversity
  • Innovative talent
Threats:
  • Influx of inexperienced workers
  • Low engagement

Workforce Planning Stage 3: Future Requirements

The future projection of Cochlear is to innovate, lead the market, expand its presence, and meet the increase in demand. Technology is changing rapidly, and Cochlear’s competitive advantage is based on its ability to constantly improve its existing three products by making them better, cheaper, and more effective. Although there are 4000 workers at the company, the most critical ones are 350 engineers, who are responsible for the R&D. The current engineering staff is close to their retirement, has no young individuals, and is resistant to novel changes. However, it is hard to find and fill these positions due to the nature of the job requiring an advanced degree in relevant fields as well as experience in this intricate and unique industry. In addition, the current STI is focused on short-term motivation and does not harness an engaged, committed, and loyal workforce due to the lack of younger workers and non-adherence to the long-term objectives of Cochlear.

The company seeks to become a global leader in hearing aid, become diverse and innovative, none of which is possible under the current workforce framework. Less than a third of the staff are female, and an even lower fraction is occupied by ethnic minorities (Cochlear Limited, 2021). Therefore, it is important to align the workforce plan with Cochlear’s objectives. The plan needs to attract more women, minority groups, and younger workforce with advanced degrees and appropriate experience. A more detailed analysis for R&D engineers at Cochlear can be accessed in Table 2 below.

Table 2: Hard-to-Fill Role: R&D engineers.

Role: R&D engineers
Link to Strategic Intent and target: Cochlear wants to create more equality and diversity among its employees. The company wants to increase engagement among its employees, and it wants to innovate more actively due to rapid developments in technology. The current engineering staff needs to become more inclusive for younger individuals, women, and ethnic minority groups. However, the experience of the current staff is invaluable, which is why the engineering team needs to be expanded by the addition of newer, more diverse engineers.
Now In 2 years In 5 years In 10 years
Projected demand (how many of this job group will you need each year? This is your ‘best guess’ and should be revised as circumstances change) 350 400 450 500
Potential actions to address any shortages
It is important to hire more engineers with diverse backgrounds in order to ensure that there will be no shortages and experience loss when the majority of senior engineers retire. Within the next few years, an active recruitment process needs to be conducted with two goals in mind, which are diversity and creativity.
Provide a summary of your analysis and conclusions drawn from the data you have examined.
The analysis revealed that Cochlear’s current engineering staff is not diverse and innovative enough to adhere to the organizational goals. The company is planning to grow internationally, entering new markets, which is why diversity will be needed. In addition, there are social factors, which mandate more equality among the employees. The hearing aid market is heavily dependent on technological advancements, which is why the company is planning to heavily reinvest into its R&D. The allocated resources need to be used to expand, diversify, and change the current engineering staff without losing the current engineers’ experience and knowledge.

Workforce Planning Framework Stage 4a: Gap Analysis

GAP #1 – The engineering workforce lack diversity and equality.

Rationale – The analysis reveals that less than a third of all engineers are women, and even less fraction is comprised of ethnic minority group members.

Goal – Develop a strong diversity promotion recruitment plan without abandoning the principles of meritocracy and fairness.

GAP #2 -Large percentage of the engineering workforce is eligible for retirement.

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Rationale – Throughout the R&D operation, there are high percentages of employees who are eligible for retirement, and a significant impact is expected.

Goal – Develop mechanisms through succession planning to ensure the business is able to continue providing quality services to its clients.

GAP #3 –The company’s workers, including engineers, show low levels of engagement.

Rationale – The Australian workforce is exhibiting a declining trend of low engagement, which affects performance.

Goal – Develop plausible action plans to improve engagement without short-term incentives but long-term ones.

Workforce Planning Stage 4b: Action Plan

The detailed action plan is presented in Table 3 below.

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Action Plan.
Table 3: Action Plan.
Action Plan.
Action Plan.

Workforce Planning Stage 5: Monitoring and Evaluation

In order to effectively and accurately disseminate the information to the engineering workforce, it is important for the chief human resource manager and CEO to contact the group directly. In other words, direct face-to-face discussion and presentation will be held because the plan is critical to Cochlear’s future success as an enterprise. The workforce plan will be evaluated monthly by the upper management on the progression of several metrics. These will include the number of applicants, number of final offers given, number of new recruits, senior engineers’ job satisfaction, the cost of the plan implementation, and the progress on training and development endeavors. It is important to note that the human resource department will be conducting weekly evaluations as well without the involvement of upper management. The plan reporting mechanism will focus on presentations, meetings, and in-person discussions with the senior managers.

It should be noted that all key processes will be closely supervised and monitored in order to ensure that plan is being realized and adhering to the timelines as well as cost boundaries. It will be possible to increase resource allocation or change the incentives in LTI by the needs of the recruits as well as senior engineers since the company intends to reinvest all of its profits into R&D (Cochlear Limited, 2021). However, the engineering team will review the recruits and their progression, but the management will conduct the evaluations, such as small project assignments, engineering tasks, and tests. It is expected that the senior engineers’ performance will be adherent to the plan because they will be offered generous benefits if their team shows top performance in R&D efforts.

Conclusion

In conclusion, Cochlear is a medical device company, and its competitiveness is heavily reliant on technological innovations. Therefore, the only and most important job category is comprised of its engineers, who realize the R&D. The problem is that the current engineers are soon to be retired, and no new replacements are available. The lack of diversity is also an issue, which is why the proposed workforce plan will focus on the transfer of experience, expansion of the engineering team, and diversity promotion.

Reference List

About Cochlear: Our mission (2021) Web.

Betterworks Systems Inc. (2019) ‘Using strategic workforce planning and employee engagement for a higher performing organization’, Betterworks, (May). Web.

Cochlear Limited. (2021) Cochlear Limited: Annual report 2021. Web.

Moore, S. (2021) ‘Gartner HR survey shows a quarter of Australian employees are seeking a new job’, Gartner, Web.

WHO. (2021) Deafness and hearing loss. Web.