MBA 7000 – People & Organization

AITKEN SPENCE PLC

By
Student NAme
Cardiff Met ID –2016****
ICBT ID –BT/MBACMU/06/0*

Cardiff Metropolitan University

May, 2018

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Table of Contents
Executive summery.....................................................................................................................................2

1. Introduction to the company...................................................................................................................3

2. Introduction to the industry....................................................................................................................3

2.1benefits of the industry......................................................................................................................4

2.2. Challenges common to the industry.................................................................................................5

3. Industry group norms and behaviors.......................................................................................................6

4. Motivation factors & motivation strategies.............................................................................................7

5. Leadership & management of the company............................................................................................9

5.1. Challenges faced by the company..................................................................................................10

5.1.1High Labour Turnover................................................................................................................10

5.1.2. The job did not meet expectations of employees....................................................................11

5.1.3. Growth opportunities not available.........................................................................................11

5.1.4. Inefficient staff will create cost to the company......................................................................12

5.1.5 Meet the deadline and working with budget schedule............................................................12

5.2. Current strategies to overcome the strategies...............................................................................12

5.3. Recommendations to the issues.....................................................................................................13

6. Conclusion.............................................................................................................................................15

References.................................................................................................................................................16

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Executive summery
Current report discusses the challenges of industry which carry out out-sourced work in Sri
Lanka and the strategies to win and survive within the industry. Here with, I have selected
Aitken Spence Corporate Finance (Pvt) Ltd which is the subsidiary of Aitken Spence Plc and
executing with Financial Accounting Outsourced. The report sheds light on the addressing out
sourcing, financial accounting out sourcing, service providers’ challenges and different
motivation strategies, value chain analysis, and product life cycle.

1. Introduction to the company

Aitken Spence PLC is one of Sri Lanka’s oldest and most successful diversified conglomerates
with a history going back for over 150 years (www.aitkenspence.lk). It was listed in Colombo
stock exchange since 1983, Aitken Spence has operations in seven countries spanning South
Asia, the Middle East, Southern Africa and the South Pacific.

Aitken Spence Corporate Finance (Pvt) Ltd is incorporated in 2009 to carry out accounting
section of all subsidiaries of the group as shared service concept which; centralized accounting
division for all SBU to minimize the cost of accounting function as a supporting activity of the
value chain. The goal of Shared Services was to optimize the cost base & enable the F & A
operations to become more efficient. The key driver & benefit of Shared Services was increased
productively for all the various business unites & regions. Taking individual business where
there was no critical mass & moving them to a more industrialized modal unable better
economics & allowed us to capture significant scale effects. Furthermore, centralization provided
a springboard for additional economics & allowed us to capture significant scale effects and for
additional process improvement with technology.

In 2013, it has expanded their operations to Thailand and Australia as a financial Accounting
Outsource division to increase revenue beyond their objectives. Initially, they have started with
twelve numbers of small and medium enterprises and nowadays it has expanded to 50 companies
of Thailand. But still they are operating few companies of Australia due to number of
constraints.
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2. Introduction to the industry
Today, business process outsourcing; which includes outsourcing of business activities to third
party and it is becomes a major source of competitive advantages. (vaidyanathan, 2008) It will be
help the business to focus on their core business activities and reducing cost of investing to
perform all activities of the business process. It is growing industry to carry out outsourcing
activities. BPO industry is expanded to IT, human resource management, customer services,
accounting & financing, procurement. Main outsourcing provider in the world is Chaina
(atkearny, 20018) then India and Sri Lanka is in eleventh place in to twenty companies in BPO
sector. In Sri Lanka, there are so many companies execute BPO operations. Such as Infomate
(Pvt) Ltd, BPO connect, Aitken Spence, Heyleys as well as there are Indian ownership
companies such as Goudhope, WNS .etc..

Business process outsourcing is practical approach of value chain analysis which is a term for the
activities within an organization that add value to purchased inputs of material Business
operations are value creating activities. So that it is business activities are called as value
activities. The purpose of value chain model is to help management to understand the activities
within their organization that should add value and add cost to the company. According to the
value chain analysis, Financial Accounting activity is a supportive activity which represent in
infrastructure. So that companies analyzed the activities create competitive advantages and
which will be cost to the company. If an activity creates competitive advantages, they will
improve and take it to survive in the industry. In other hand if such activity will create cost to the
company, it will increase the price of the product and affect to the company sustainability. So
that such type of activates will be outsourced which is the trend of the today dynamic
environment.

2.1benefits of the industry

Major advantage of BPO is utilizing of talented professional knowledge in other countries.

Because some countries are highly specialized in IT functions such as India. So any company in
any country can get their expert knowledge trough outsourcing.
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In addition cost reduction by outsourcing costly activities in the business. So, they can reduce
cost infrastructure, employees. As well as, they can expertise knowledge at lower cost than
hiring high salary employees as well as can reduce the head count of employees.

In addition company can gain and retain competitive advantages focusing trough core activities
of the business.

Further it is become a largest job providing industry for all country. As India with high
unemployment rate can reduce their unemployment rate doing other country work.

And also it is a best answer for the brain rotation one country to another country. The employees
did not want to migrate to another country to supply their service; they can build up their own
business through IT.

Further exporting service to other country will increase the profitability in steady way due to
gain of exchange rate. This will also become a major source for gathering foreign currencies to
the country.

2.2. Challenges common to the industry

BPO is also such a risk of business (Hanzah. 2012) due to lack of confidently and flowing of
information to third party. So that company financial data will also leak to other parties.
Sometimes it will become a source of hacking information. Further outsourcing of online
payment transaction will be week fall of robbery. There are some companies handling online
payment outsourcing.

BPO is also highly connected Information technology. Therefore the outsourcing companies
should heavily invest on IT. If the companies handling financial accounting outsource, they
should work on client interface through remote desktop.

There is a challenge of deciding which activity should be outsourced (Hanzah, 2012) according
the value chain. It is also some kind of a madding and buying decision.

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Since industry is in growth stage of the product life cycle, it is a challenge of new entrants.
Therefore companies should maintain lower pricing strategies to compete with each other.

And also economic crisis of the client companies will also affect to the outsourcing industry.
Nowadays, there is an economic crisis in Thailand. So it is costly to outsource their work. So
they are moving to in-house working of accounting function.

Maintaining a quality of work is also a significant challenge in accounting function outsourcing

with highly talented staff. So it will become cost of financial (salaries of the employees) and cost
of reputation. Because, if one company is doing it works with expected quality, that image goes
to Sri Lanka as overall. In other hand, bad image is also maintaining as a country not a employee
or employer.

There are difference in accounting practices in preparing recording financial transactions

although there is harmonizing accounting standards (Jeno Beke, 2011). If there are international
Financial Reporting Standards (IFRS) with accepted by all countries, countries adapted those
standards on their own culture. So the analyzing and doing accounting activities also become
change to the companies.

There is a challenge to dealing with inflexibility of BPO partners. Some companies are
outsourcing their work with unbearable conditions and schedule without flexible. So fulfilling
those kind of activities is also a some kind of a headache.

There is a time difference between the countries. Company like USA has one day time zone gap.
So, there is a barrier to maintain best communication system with them. So, one country people
should scarify their time while working night shifts. For eg working hours of WNS is 1.30pm
-10.30 pm for UK and 6.30pm -4.00am for USA. Finally it will be affected to work life balance
of employees so the output will become inefficient.

3. Industry group norms and behaviors

Norms can be identified as informal guidelines and code of conduct that provide some direction
to execute business activities. It is essential for the quality of human resources, organizational

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culture and responsiveness to the success of an organization in the ever-changing business
environment. As well as it is need to be maintain industry norms and behavior of the industry
since the BPO is connecting with other countries with different believes and norms in various
cultural bag ground. So that soft skills is an essential part of the BPO industry (Verma, 2009).
So that maintain relationship is also some kind of a risk.

Normally, people in China, Japan, and Thailand like countries are very sensible and quality
focusing. So executing business with them should be with tactful.

Further all companies in Sri Lanka are doing BPO with collative manner and they are focusing
on as a country not the company to capture BPO market as a best source of income. So that Sril
Lanka has increased their place as 14 in 2014 to eleventh place in 2018.

4. Motivation factors & motivation strategies

A major challenge for organizations in the present as well as in the future seems likely to be an
ever more urgent search for competitive advantage (Guest et al, 2003). In order to meet this
challenge, the organization must acquire and utilize valuable scares and inimitable resources.
Human resources belong to that category and if they are effectively deployed through most
suitable human resource practices the organizations can gain competitive advantage. One of the
key tasks for organizations will therefore be the effective management of human resource.

Herzberg et al. (1959) found two general types of work motivations: intrinsic and extrinsic
factors. Intrinsic motivation includes interesting job, recognition, control, self-growth, warm
interpersonal relationships, and extrinsic motivation includes security, high pay, promotion, good
working conditions, leadership style, social status.

There are different type employees with different personality. Therefore their motivation factors
are also different. Some people are self- esteem; which is the degree of people like or dislike.
Further some people believe in themselves and expect success and take more risks and use
unconventional approaches. In other way, some are more susceptible to external influences and
depend on positive evaluations from others (Robbins & Judge, 2013).

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According to the group policy, they give bonus in two times for the year. Comparing with other
SBU, they give only per month salary as bonus. However, others give three or five month salary
as bonus. That inequality affects the internal transfers within the group.

Nowadays, they hire people on two-year contract basis. Those employees cannot enjoy total
employee benefit as permanent employees. The management can revise their contract according
to manager’s consent. Therefore, they have a job security problem. Job security is something
that, which provide a secure to the employee that his job is not losing him. Security of
employment signals a long-standing commitment by the organization to its workforce; Norms of
reciprocity tend to guarantee that this commitment is repaid. However, conversely, an employer
that signals through word and deed that its employees are dispensable is not likely to generate
much loyalty, commitment, or willingness to expand extra effort for the organization’s benefit.
From this concept employee has a confident about his job. He can learn many things relate to the
job because he knows that this is my permanent job. Also from this Job Security a strong
relationship can be developed. Because automatically employee is going to think that “this is my
company”. It increases the loyalty and the commitment of the employee. In the other hand
sometimes their jobs depend on face interest of their supervisor. Some employees are loyalty.
They are waiting for conditions to improve.

Motivation is important because of its significance as a determinant of performance and because

of its intangible character .From the employee side it helps to keep Job Satisfaction with the
employees. According to the Maslow’s Hierarchy of Needs, Self Esteem is a valuable one.
Organization can also get the maximum contribution from the motivated employees.
Management’s main objective is utilizing the resources in maximum level to achieve
organizational goals. This concept of motivation provides positive reinforcement for it

Motivation is the process that account for an individual’s intensity, direction and persistence of
effort toward attaining a goal. There are so many theories to motivate employees. Aitken Spence
uses combination of those theories.

Aitken Spence has executed different type of motivational strategies for FAO division such as
job enlargement, job enrichment and job rotation in a temporary basis to utilize the idle time of

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employees. They are using implications of common theory of X and Y theory; which McGreger
proposed two distinct views of human being as negative (theory X) and positive (theory
Y).Theory X says that employees are inherently dislike to work and therefore they must be
directed. Theory Y says that employees are like to work and they are creative as well as they can
perform self –direction.

To facilitate FAO division has best supervision system; which all reports has gone through
quality checking system and adhere ISO 90001 SGS standards too. In addition, Self –
determination theory which provide significant benefit to the company and which means a theory
of motivation is concerned with the beneficial effects of intrinsic motivation and the harmful
effects of extrinsic motivation. With that they have provided foreign training opportunities in
Thailand which is client of FAO operations.

5. Leadership & management of the company

Organizational structure and spam of control are main component of the company to lead and
manage the company it is directly affect o the success of the operation. Aitken Spence Corporate
Finance (Pvt) Ltd as departmentalized structure according to the function of the company as
follows.

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According to the structure of the company, leadership style and response to the problem will be
different from department to department. Here with discussed only the FAO division.

5.1. Challenges faced by the company

5.1.1High Labour Turnover

The major issue of the FAO division is high labour turnover. The labour turnover is a natural part
of business in any industry. However, FAO division has high labour turn over with
approximately 40%. Excessive turnover decreases the overall efficiency of the company and
comes with a high price tag. Employee turnover is expensive and the impact is not only for
financial but also adversely affects employee morale. Labour turnover can have significant costs

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to the company. It is not only the key employees are an important asset but also every worker
performing the day-to-day work of a company can cause a loss to the business.

Company should have to recruit new employees for at least every two months. It is not only the
expense to recruit and train a new employee, but can also incorporate indirect costs such as a
resulting decline in productivity due to inefficiency and inexperience of newly appointed
workers, as well as loss arising due to defective work and increased wastage in time. Because
new recruits take more than six months (Opatha, 2009) to provide as much value to the
organization as the company is expending to train the employee. Lack of cooperation and
coordination between old and new workers resulting fall in quality of the service and increased
cost of service.

5.1.2. The job did not meet expectations of employees

It has become all too common for a job significantly vary from the initial description and what
promised during the interviewing stage. When this happens it can leads to mistrust. The
employee starts to think, what else they are not being truthful about? When trust is missing, there
can be no real employee ownership. Most of employees in the FAO division are coming to
interviews for other department, and then allocated to FAO due to arising of immediate vacancy
and they are not satisfied with their exposure of assigned work. Some employees want to take
good experience in the different area.

5.1.3. Growth opportunities not available

A lot of good talent has lost due to the lack of ladder to climb them. There are many graduates in
the company. They do not have opportunity to get the exposure. Therefore, they are willing to
leave from the company by taking one year training. This problem creates within the structure of
the problem. According to the structure, there are huge gap between first layer and second layer.
Eg : accountant should report to AVP and One Senior Process associate (SPA) and thirteen
process associates (PA). This type structure does not show the clear path of ladder for
employees. So, leaders are unable to handle their subordinate efficiently.

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5.1.4. Inefficient staff will create cost to the company.

Existing staff does not perform well due to lack of immediate supervision. So, there is a problem
of over staff. If there are additional staffs, they are unable to complete assigned work on time
with expected quality. So, it will be created cost to the company.

5.1.5 Meet the deadline and working with budget schedule

FAO division is connected with one client in Thailand which is also outsourcing country work.
So, they should have to submit report to their clients and we should also meet the deadlines. So,
the time schedule will not be flexible for some companies.

5.2. Current strategies to overcome the strategies

Company has identified the reason for the issue. Such as, low salary. So that they have paid high
salary than other division of the subsidiary, but it is lower the industry rate. And also they have
suggested paying quarterly bonus withstanding of profit arising from foreign operations. But it
was not executed. The duty is specific and no innovative thing due to achieving specific schedule
every month. As well as hiring fresh graduate to do this will be also increased turnover due to
they are inherently seeking new thing for their carrier advancement.so that company has
allocated some duties of other departments such as MIS, Tax reports and also provide training
opportunities.

Addressing the un satisfaction work in FAO division, the company is hiring employees at higher
rate than other divisions on contract basis for one year. Employees who completed one year
contract, the company hire them for permanent carder only for FAO project under condition of
two month resignation due to project is also going on two year contract basis. So that, both
employees and FAO project also at a risk.

Group HR division and top management of the company has discussed and taken a decision to
sort out structural problem by giving promotions to employees. Here they have recommended
other two SPA who completed two years. But unfortunately those employees were resigned
before getting their promotion.

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There is a performance evaluation system common to the group and specific to the division. But
the all subsidiaries are following specific key performance indicators and common system
consider only as HR requirement. Current KPI is calculating error percentage of journal review
and financial statements. So that , it is consider only quality factor and identified best performed
employees as who are maintaining error percentage below 1 % as follows.

Company Errors in FS &

Ref no Employee Name Entered lines Errors in lines Error %
name Detail Schedule

1 Shama Takebishi 700 10 2 1.71%

Nisho Dine 500 5 1 1.20%
Daikyo 3000 20 3 0.77%
average 1.23%

Company has conducting meeting to communicate and discuss the monthly schedule beginning
of the month and submit the schedule with requests to change considering holidays. But this will
not always flexible due to client expectations. And also employees are not highly sensible to
meet the dead line due to lack of measuring on time delivery for their KPI.

5.3. Recommendations to the issues

Main issue of high labour turnover can be reduced by hiring experienced employees at industry
rate. As well as company can provide other benefit as bonus, vehicle allowance as financial
benefits and giving training is also helped to develop them for improving efficiency.

Hiring of employees only for FAO project can be risk minimizing strategy for the company. But
it will not be employee satisfaction strategy. Satisfied employees will perform well. Normally,
Aitken Spence has sufficient rate of labour turnover within the group, so that, there are so many
vacancies in the group. So, it is suitable for hiring employees on permanent basis for the project
and if there is any failure, those employees can be allocated to vacancies arising from other
sectors of the group. It will be mitigated the risk of company and employees as well.

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Company should create proper structure within the company by facilitating job enlargement and
job rotation. As well as there should not be keep huge gap between one layers to next layer. It
will be create confidence to employees about their carrier advancement

Current performance evaluation system is not enough to identify best employees since it is only
consider quality factor. So, the KPI should consider both quality and quantity factors. ( Opatha,
2013). So, it will increase the efficiency of the employees. Suggested system is as follows.

Employ Total time Productivity Meed the

Company Detail Error %
Ref no ee Entered lines allocation Total Time ratio dead line
name Time (quality)
Name entering (quantity) (quality)

1 Shama Takebishi 700 700 180 880.00 1.71% Yes

Nisho Dine 500 500 90 590.00 1.20% No
Daikyo 3000 3000 360 3,360.00 0.77% No
4,830.00 57.50% 1.23% 33%
statistics ** standard time for one line is 1 min weightage 0.5 0.3 0.2 1
** Allocated Total standard time (60*7*20=8400) 28.75% 0.37% 6.67% 35.78% KPI
detail & FS preperation time depend on size of company

Allocated
Size Line
Time (min)
XS 0-200 60
S 201-600 90
M 601-1200 180
L 1201-1800 240
XL 1801-2500 300
XXL 2501-5000 360

Sending report on time is also an essential requirement this type of business. So, that forcing
employees to meet the dead line with utilizing their time efficiently and with good commitment
is essential. So that I have recommended it should be included in calculating KPI. Because
company ISO policy has clearly mentioned that company is proving services to meet the
customers’ expectations with accuracy, on time delivery and adding value to the customers.

6. Conclusion
Business process outsourcing or in –house decision will create major competitive advantages to
the company with identifying correct section which should be outsourced. Today, doing all thing
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in- house is become a outdated concept to survive in dynamic environment. So that BPO creates
huge market for taking advantage with maintain their position in star place in BCG metric.
Therefore, he industry is highly competitive and it can be captured the market providing quality
service by fulfilling clients expectations.

It is essential motivated staff to keep the business functions smoothly. So, the greatest
management principal is that the things that get rewarded get done. The only way employees will
fulfill company dream is to share in the dream. Furthermore, the group should keep the liner
way to reward the employees of every subsidiary.

The company should implement proper and favorable way to evaluate the employees. Then, they
can satisfy the employees’ moral to increase the productivity. The company should consider each
employee separately when they give the promotions. The company must treat the each employee
equally.

The company should try to keep valuable employees by motivating them. The company should
give the opportunity to climb the ladder by giving proper training to the employees.

As an immerging industry BPO become a highly attractive market to increase the revenue
generated from oversea. Identifying critical treats and capabilities of the companies, it can be
sustain within the industry by gaining competitive advantages.

Aitken Spence has started with handling 10 companies and it has expanded to 50 companies in
Thailand by maintaining quality service and building best relationship with their client. Further,
they are developing their employees to meet the expected standards of the business.

References

Opatha, H. (2009). Human resource management, Colombo: University of Sri Jayewardenepura.

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Atkearney.com. (2018). Cite a Website - Cite This For Me. [online] Available at:
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Sri_Lanka.pdf/7d3033a4-5935-41d8-bf99-a1462bf7d553 [Accessed 28 Feb. 2018].

Verma, S. (2009). Soft skills for the BPO sector, Delhi: Pearson

Robbins, S. and Judge, T. (2013) Organizational behaviour, Johanneshov: MTM

Ghodeswar, B. and Vaidyanathan, J. (2008), Business process outsourcing: an approach to gain

success to world class capabilities, Business Process Management Journal, 14(1), p.23-28

Maelah, R., Aman, A., Amirruddin, R., S. and Hamzah, N. (2012), Accounting outsourcing
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Beke, J. (2010), International Business Accounting Standardization and Hungarian Practice,

International Business Research

Guest E.D. & R.Peccei (1994) “The nature and causes of effective HRM, British journal of
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