Strategic Management And Global Environment: Pension Auto-Enrolment In Mercer Assessment Answer

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Question :

Project Brief

Identify, consider in depth, and address a fundamental strategic issue organization will face in the next five to ten years. 

The issue is genuinely strategic and it has the potential to materially affect the success and destiny of your chosen organization. 

Example for any organization might include business strategy content, corporate portfolio mix, executive succession, strategic management processes, responding to technological change, major shift in customer needs or capabilities, globalization of the industry, or changing workforce capabilities. 

Should be a problem finder as well as a problem solver. 

I am interested in how you identify and define the issue.

I expect you to make a reasoned, well-argued prediction of the potential impact of the issue, address ways in which it can be dealt with, identify the impact of those actions on the organization as well as the issue, and address the implications for managers who choose to ignore it. 

Beyond considering the strategic (and operating) implications of any issue you choose; your paper should also include details of any Strategic Management Models or approaches used.

Introduction 

TITLE - 1, Internal Overview (Strategic Mgmt within Mercer)

To Do - Construct a theoretical framework which integrates the basic concepts and approaches to the strategic management of your chosen organisation 

TITLE - 2, External Overview (Environmental Factors and Forces on Mercer)

TO DO = Examine the different effects that environmental factors and forces have on the chosen organisation and the strategy process 

TITLE - 3, Analysis and Results (Using specific analytical tools when applied to Mercer)

TO DO - Interpret the findings of level specific analytical tools when applied to the chosen business situation 

TITLE - 4, Recommendations (Potential solutions)

TO DO - Analyse and evaluate the strategic issue(s) and the potential solutions. 

TITLT - 5, Wrap Up (Synthesise different schools of thought)

TO DO - Synthesise different schools of thought in relation to the analysis of strategic  issues faced by the chosen organisation. 

Conclusion

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Answer :

Strategic Management and the Global Environment. Case study of pension auto-enrolment in Mercer. 

Introduction 

Mercer is an internationally recognised Human Resource consultancy brand which is known to have served a lot of clients all around the world. The company is famous and is known for its human-based approach and its "employee first" policy.  

This report will understand how mercer has put forward its view to the auto-enrolment of pension law which was rolled out by the Irish government. 

Internal Overview of Mercer 

To understand the strategic decision making of a company, it is important to understand the internal environment of the company and how it functions. The SWOT Analysis will help us in understanding this as it will allow for a better understanding of the organization and its functioning in detail. 

Strength:

  • Mercer has exceptional strength in entering new markets courtesy of its workforce, research skills and associations with the established players of the market 
  • Mercer is known to hire the best and the most exceptional workforce which will allow the organization to drive to success. The people hired are the best in their domain and have a lot of experience to deal with clients and several situations keeping in mind the need for the project (CNW, 2019)
  • Mercer has a good track record of integrating with companies by strategic mergers and acquisitions to ensure that it can control the competition by collaborating with it  
  • Mercer has one of the strongest supplier bases in the world. The suppliers are sometimes exclusively working only for Mercer and their requirements or have contracts with Mercer to provide the material on priority basis which is good in quality and low in price a swell 

Weakness:

  • The product department of Mercer is quite a week as it cannot often forecast the demand of the market well. there is a visible gap between the company vision and user requirement  
  • Mercer has to invest more in technology to get an advantage over the competitors 
  • The marketing department to needs a lot more improvement as it is often highlighted that the company does not market itself the best  
  • There is a relatively poor range of products, especially when compared to that of its immediate customers 

Opportunities:

  • Mercer's association with various governmental agencies can help gain a competitive advantage especially for the insurance areas 
  • Mercer can focus on auto-enrolment for insurance for its services 
  • Mercer has a good chance to go online and reach out to customers from all around the world 
  • Focus on creating better product offerings for the customers 

Threat:

  • The legal implications in every country are different and Mercer has to abide by them  
  • The consumer behaviour is constantly switching from online to retail and controlling this would be difficult  
  • Due to the low product standards, Mercer can face legal issues  

External Overview of Mercer

After analysing the internal environment of Mercer, it is essential to understand its external environment and all the factors which affect its market position. For this, PEST Analysis is the best tool to understand the external influence on Mercer.

Political:  Mercer has a client base established internationally. Every government is different and so is their conduct. While Mercer enjoys a good international presence with ease of doing business as well. however, with a change in the laws in a country, there are a lot of changes which are reflected on its working such as tax, labour laws etc. For its working in Ireland, Mercer has to now focus on the auto-enrolment process to ensure that it complies with the Irish government. 

Economic: the economic conditions of the country in which Mercer is operating has a huge impact on the way it sustains itself. Economic conditions often can either help the company grow, it can act as a bottleneck to its growth as well. The economic activities often create a lot of differences in the way it operates vis-à-vis its usage of resources, talent management and client relations.  

Social: the level of acceptance that the company enjoys within a specific geographic region often defines its success. Mercer has been quite accepting everywhere t has established its base. Their regard for the norms and the cultural acceptance has often worked in its favour which has been helpful for the company to grow.  

Technological: every company needs to move along with time. In the 21st century if a company is not digital it may not have a future to sustain. Mercer has to act in the same manner by implementing disruptive technologies for allowing better operations and eventually saving a lot of time, money and resource to the organization at any point of time. 

Analysis of the Auto-Enrolment Decision Process and Impact on Mercer 

The current situation of the Irish government applying the auto-enrolment process to organizations is a big change. This ensures that all the employees receive a payment which has already been auto-debited with their pension at a rate of 15%. All companies are required to maintain this account to aid the employees and prepare them for their retirement. This came after the Irish government passed a law which made it mandatory for all the companies to do so at the earliest possible, or maximum by 2022 (Heins & Haddock, 2015)

The dynamic of this law are multi-faceted and the impacts can be felt in several ways. For example, the major impact that has been observed on the employees of Mercer is the widening of the gender pay gap. More and more women are opting out of the scheme. As a result, again, men may earn less on the long term but their pensions plans are relatively less obscure and sorted through the time. This is creating a lot of confusion and employee fall out as the company has to the re-enrol employee who has opted out after every 3 years. Mercer is facing this problem as well as it has noticed how its employees are not decisive of their position on this and are making decisions without complete information.

While the employees chose to make their decision, it is the employer who has to face the consequences from the government. The government is constantly keeping a check on all the registered companies and their employees to ensure that everyone gets the benefit of the process. It is highly likely that the companies can be penalised for any choice that employees make without informing the companies at any point in time (MERCER, 2016)

Recommendations 

Mercer has taken this situation quite seriously by bringing out all its top guns to respond to this legislation. The major issues which Mercer identified in this law were:

  • The eligibility threshold 
  • The mandatory nature of the compliance 
  • The state of employees and their respective plans have not been identified; permanent, freelancer or contractual  
  • The provisions for auto-escalation (Peck, 2018)

It is quite clear that parts of this law have been termed unreasonable by several organizations across Ireland. The major issue is its permanent status and how it is being enforced by the law as well. in every organization, there are people who would prefer to have their money now and invest in a better pension/retirement scheme than keep t with the company. However, this law makes it difficult to do that.  

Mercer has identified the possible solutions to this situation:

  • Mercier proposes to lower the threshold for the amount being set aside for the pension fund. It has been observed that the employees are not satisfied with a reduced paycheck and would prefer to have their money now than save for later (or for a scheme they find is better suited to their needs) 
  • The age limit too should be relaxed or should be made flexible. It has been observed that young workers are less likely to drop than people who are with families and need the money urgently. Hence, the companies should be given the flexibility to arrange this option as well 
  • The term "employee" should be clearly defined since a lot of companies hire people on a contract or freelance basis who are normally not on payroll.. these employees should also be given the option of a pension fund or should be dropped from the scheme owing to the nature of their permanence in the organization (MERCER, 2019)
  • The employees should be given an option to decide on the money they want to keep aside. The 10% rate is quite vague and it may be a little expensive for some employees and for some employees it may be a little cheap as well. the employees should be able to decide for themselves on how much money do they want to keep. Giving this flexibility will ensure that they do not drop out of the scheme.