Global Business 4th Edition by Mike Peng

Exercise 6

Employee Retention and Institutional Change at PIGAMU 1
David B. Zoogah (Morgan State University)
The President of PIGAMU, an academic institution in Ghana, has sought to initiate institutional change toward an employee retention system based on performance. However, employees who were dismissed brought legal action, triggering a series of disputes that ended up with the President's resignation
PIGAMU is an academic institution in Ghana, an emerging economy located in Africa and bordered by the Atlantic Ocean in the south, Cote d'Ivoire in the West, Togo in the East, and Burkina Faso in the North. As a former colony of Britain, Ghana's name was changed from the Gold Coast to Ghana after independence in 1957. Even though the period after independence was marred by a series of military coup d 'etats, the country has been democratic since the late 1980s.
Ghana has a population of 23 million, 58% of which are between the ages of 15 and 64 years, and 48% female.2 Life expectancy at birth is 57 years. Economic activity measured by industrial productivity is $13.31 billion (2000 US dollars). Manufacturing contributes about 7% of GDP. GNI per capita is US$670. The human development index (HDI), a comparative measure of life expectancy, literacy, education, and standard of living for countries worldwide, indexes the well-being and the impact of economic policies on quality of life. It shows where each country stands in relation to specific goalposts, expressed as a value between 0 and 1. Ghana has an HDI of 0.526, which is relatively higher than other sub-Saharan countries, but far lower than Western and some Asian economies.3 It has an education index of 0.622. Adult and youth literacy rates are 60% and 71%, respectively.
Organizational Setting
Located in Ghana's capital city Accra, PIGAMU was established in 1961 as a joint Ghana Government/ United Nations Special Fund Project. Originally it was an Institute of Public Administration with the objective of developing the public administrative system and producing civil servants with administrative and professional competence to plan and administer national, regional, and local services. PIGAMU's activities over the last 47 years have been guided by a series of mandates beginning with the first Legislative Instrument of 1961 to the current Act of 2004 (Act 676). Tt is one of several public sector organizations in.the country that depended on government subventions, and until 2000 was in need of drastic reform. Consequently, it was selected, as part of the World Bank-funded Public Sector Reform Program in 1999/2000, to be taken off government subvention. Its status as an institution of higher learning was converted to that of a university. It was also given privileges to extend its services to the private sector. Thus, the institution's clientele and stakeholders now range from politicians and bureaucrats to mid-level personnel from the public and private sectors and civil society as well as local and international (African) organizations. All these stakeholders attend a variety of courses in leadership, management, business and public administration.
Vision and Mission o f the Institution
PIGAMU's vision is to be a world class center of excellence for training, consultancy and research in leadership, management and administration consistent with the economic and development objectives of Ghana. As a result, it sought to use competent and motivated staff along with state-of-the-art facilities to fulfill its mission of continuous enhancement of the capabilities of middle and top level executives in public and private sectors as well as nongovernmental organizations in Ghana, Africa, and other parts of the world. Its objective is to facilitate human capital development in Ghana. This is to be achieved through the training, in line with its core values of academic excellence, superior professional standards, speedy response to clientele and stakeholders, purposefulness in national character, conformity to global organizational standards, honesty, hard work, integrity, transparency, innovation, and accountability.
PIGAMU has undergraduate degree programs for working adults in public and business administration including marketing, human resources, accounting and finance, banking and finance, hospitality management, economics, entrepreneurship, and information technology. It is structured into four semi-autonomous units: (i) Public Services unit focusing on training of civil and other public servants; (ii) Governance, Leadership and Public Management, which is a graduate school; (iii) Business School modeled modelled after the US business school system; and (iv) Technology School. The Business School has Executive Masters Programs in Business Administration (EMBA), Public Administration (EMPA) and Governance and Leadership (EMGL). As of 2005, there were about 1,300 students enrolled in its programs. It also has a Center for IT Professional Development (CIPD), a Center for Management Development (CMD), a Consultancy unit, and a Distance Learning Center. Research and consultancy expertise of the institution As shown in Exhibit 1, Schools and Centers are headed by Deans, who reports to the President (Rector). The President reports to the Governing Council. Even though the institution is semi-public, governmental influence seems very limited. A new Parliamentary Act in 2004 (Act 676) granted academic and financial autonomy to PIGAMU under an 11-member Governing Council. The autonomy enables PIGAMU to function consistent with the demands of tertiary institutions.
All Schools and Centers are staffed by well-qualified faculty (n = 100) and interconnected with a network of international faculty. Through the progressive orientation, PIGAMU performed better financially than the other six public universities in Ghana. According to the former President, PIGAMU's improved performance resulted from maintenance of a clean environment that is conducive to teaching and learning; introduction of performance-based incentive packages for staff; continuous faculty development (e.g., ten faculty members pursuing PhD degrees; nine middle/junior staff pursuing undergraduate degrees; and three faculty members on International Faculty Fellows Program); improved infrastructure and facilities (e.g., from five lecture halls in 2001 to 30 in 2006; from two office blocks to nine; from zero to four computer laboratories; a new auditorium with 640-seating capacity; and a 131-bedroom executive hostel with conference facilities); and an increased budget from 8.6 billion Ghanaian cedis in 2001 to 67.5 billion in 2006 (representing a growth of about 785% in five years). The reforms also included a changed work ethic and collaborative affiliation with international institutions and agencies (e.g., Africa Virtual University; Public Sector Management Master's Training Program funded by the African Capacity Building Foundation) for Anglophone West Africa.
Pressures Necessitating Organizational Change
Prior to the impressive outcomes above, a number of macro and micro forces compelled the government to demand changes. The macro factors relate to educational,
Political
From the year of independence to the early 1980s, Ghana had been predominantly run by military juntas. The last military coup d 'etat in 1980 stabilized the country until its return to constitutional democracy. With frequent changes in military regimes, little attention was paid to educational institutions and human capital development. Consequently, institutions such as PIGAMU that were established to contribute to economic growth through human capital development centered on business and productivity deteriorated.
Economic
The deterioration in PIGAMU was a reflection of the national economic situation. Economic pressures such as low productivity, lack of foreign investment, underperforming state-owned enterprises (SOEs), poor agricultural performance, and natural environmental disasters including drought and deforestation worsened the economic performance of Ghana. As a result, international institutions, particularly the World Bank, International Monetary Fund (IMF), and United Nations Development Programme (UNDP), advocated structural adjustments and economic liberalization programs. SOEs were privatized to foreign and local investors. In addition, legislation and regulatory policies were enacted that resulted in privatization of agricultural, service, and educational institutions.
Cultural
African countries are generally considered heterogeneous in cultural composition. They comprise of a mixture of different tribal entities with different linguistic, cultural, economic, and political reforms. belief, value, and normative systems.4 Nevertheless, there arc similarities among different African countries and ethnic cultures that suggest the existence of "Africanity"- namely, the "special configuration of various features and cultural patterns that may be encountered in the study of African modes of livelihood, beliefs, attitudes, behaviors, even in languages, and artistic expression."5 The same is true of Ghana. There are over 200 tribes in Ghana, most of which have distinct languages (e.g., Dagbane, Twi, Ewe, Ga, and Fante), dialects, lineages, and traditions. These cultural characteristics of tribes are so strong and deeply engrained in the minds of Ghanaians that they are often characterized by thinking tribe first and nation second. The tribalistic tendencies manifest in political, economic, social, and educational institutions such that jobs, school admissions, marriages, and career advancements arc often based on tribal networks. It is not uncommon for one president or executive of an institution to be sacked and his position given to another person who is a kinsman or tribesman of the boss. In fact, it is common for a subordinate to undermine a supervisor because of differences in tribal origins. Despite the Ghanaian culture or Ghanaian mentality that seeks to transcend ethnic divisions, tribalism has permeated every institution in Ghana. When a new president assumed leadership, tribalism dominated other cultural characteristics such as collectivism, strong familial ties, high power distance or hierarchical structure, male domination, and a strong focus on traditional values.
Educational
Prior to the economic liberalization programs there were three major universities and five institutions of higher learning (i.e., other than universities). The liberalization programs provided avenue for an increase in the number of universities from three to ten; institutions of higher learning increased to fifteen. The increase in tertiary institutions was because of the introduction of private higher education. Religious organizations (i.e., Catholic, Protestant, and Muslim) established private universities. Since 2000, the National Accreditation Board has granted accreditation to over fifteen private tertiary institutions to offer degree programs in religious and theological studies, business, and other social disciplines. As private entities, they can introduce innovations in course design and delivery and also respond to changes in the labor market more quickly because they do not have the institutional history of the traditional and public universities.6
Micro Factors
Internal factors in PIGAMU also contributed to the need for change. The deterioration of physical facilities discouraged young professionals with business qualifications from joining the institution. As a result, aged professors and instructors ran the institution. Because the institution was regarded as a training or coinpetence-enhancement center, knowledge exploration was not emphasized. Another reason is that staff compensation was guaranteed because PIGAMU depended on government subvention. The leadership prior to the change focused on maintenance rather than growth of the institution. The increased number of individuals-some minimally qualified, others not qualified at all-were employed sometimes due to nepocistic reasons or political influence. Changes that could transform the institution never materialized because of previous leaders were perceived as feeble at the time 01 encountered constraints from government. As a result, the deterioration continued for several years and became so pronounced that individuals who received certificate training from the institute were perceived as inferior or sub-standard.
Consistent with the initial objective for the establishment of PIGAMU-assistance with human capital development initiatives-the government decided to partially privatize the institution. PIGAMU was upgraded to a university and a law enacted to support it. The law proposed that PIGAMU could combine a private objective and a public mandate by charging fees. It also granted PIGAMU authority to focus on its core competence-development of public employees. As a result, PIGAMU now functions as a semi public institution. It charges fees but attends predominantly to public institutions.
Institutional Transition
Leadership Change
In order to help PIGAMU achieve its objectives and to function effectively, the government appointed a new President (Rector). He had studied in Ghana and abroad, earning BSc, MSc, and PhD degrees. Prior to his appointment he had worked at diplomatic and His academic credentials suggested strong capabilities. Further, his cross-cultural experience from sojourning in Europe, America, and other African countries, and work with both private and public international institutions (e.g., Commonwealth Secretariat) suggested the new President had strong leadership abilities and competencies. His appointment was therefore viewed positively by several stakeholders including the government and employees. There seemed to be support or commendation of his appointment especially when the initiatives he introduced began to transform the organization.7
Expectations and Challenges
A number of expectations and challenges awaited the new President. The stakeholders expected him to transform PIGAMU, not only because it was now a university, but also because they wanted the institution to contribute to business productivity. PIGAMU's explicit focus on administrative and productivity enhancement expertise seemed to make it more qualified than the other tertiary institutions in Ghana. The government in particular expected the new President to transform the institution financially so that the government would no longer need to subsidize it. Employees, regardless of their performance orientation, expected him to develop the institution in a way that ensured job security. The faculty also expected the new President to develop the institution to function as a university. "It was a burden, you would imagine, to be a savior to several people," he mused in a speech. "These expectations seemed to be the least of my worries," he added, "I had numerous challenges." "If I wanted to achieve my objective-make the institution a center of excellence-I had to find a way to overcome those challenges," he continued.8
First, the human capital essential for building a center of excellence for knowledge exploration was lacking. Some faculty lacked the requisite qualifications, specifically doctoral degrees required by the Association for the Advancement of Colleges and Schools of Business (AACSB). The second challenge was how to implement whatever changes he envisioned. As an outsider, the new President was likely to meet employee resistance to his initiatives. Previous change initiatives were unsuccessful mainly due to employee resistance. The third challenge was adoption of a leadership style that could not only encourage a culture of excellence, but. also transform the institution. Even though he was conscientious with regard to his duties, he was sometimes perceived as brash and disrespectful, particularly toward individuals who were perceived as less qualified. His leadership and personality was also perceived as in congruent with the consensual leadership attributes of Ghanaians. The new President knew that an aggressive leadership style was likely to lead to resistance, but a consensual style was also not going to yield the transformation he envisioned. Previous leaders who adopted that approach did not achieve their transformation goals. The final and biggest challenge was employee retention. He knew that retaining human resources (HR) were vital to his transformation agenda and that amongst the multitude of employees was a few gems that could be harnessed to improve the institution. How to sift the wheat from the chaff caused nightmares for him. This challenge was aggravated by the lack of an HR department. Had there been one, he could have used it as a medium that would help minimize resistance to his initiatives; after all most of the changes centered on HR development.
Changes
After several weeks of critical reflection the new President (hereafter "the President") decided to initiate his changes. Even though his ultimate goal was to implement the HR initiatives, he knew that those initiatives had to be preceded by structural changes and supplemented with academic initiatives.
Structural Changes
The President began by advocating for legislative changes that would enable the institution to support itself financially. In 2004, Parliament enacted a new law (Act 676), which gave PIGAMU (1) autonomy to charge fees, (2) power to train public servants, and (3) authority under an 11-member Governing Council to develop programs and services consistent with its university status (i.e., leadership, management and administration) for both the public and private sectors. The Governing Council provided new leadership infrastructure that was consistent with the President's vision.
Academic Changes
The President initiated programs that would enable the institution to achieve its objective as a center of excellence. First, he brought in foreign faculty from all regions of the globe (e.g., Africa, Asia, Europe, North America, and South America) to teach. Second, he set up new schools-business, technology, governance- and hired qualified faculty to help run them. Professors from the USA and Europe were appointed as Deans of those schools. They in turn marketed the University at local, regional, and international conferences. They also succeeded in gaining international accreditation from the prestigious AACSB. The accreditation enhanced PIGAMU's image and motivated foreign faculty to visit the institution. In addition, the President insisted on continuous development; encouraged faculty members who had graduate (i.e., master's) degrees to pursue doctoral degrees before they were qualified to teach. Employees who did not have college degrees were required to obtain undergraduate degrees. For example, in-service programs were established for staff. With these programs, the institution improved its image from one of low quality to a center of excellence. Press reports suggested PIGAMU was being transformed.9
Human Resource Changes
The third set of changes focused on HR. Prior to the appointment of the new President, PIGAMU did not have an HR department; it had a personnel department that performed such operational functions as recruiting and selecting (often through familiar and friendship networks, and operative workers); distribution of wage and salary checks; and dismissal, albeit rarely, of employees for egregious offences. The lack of an HR department suggests that strategic and efficient human capital functions-skill acquisition, allocation, maintenance, and development, as well as performance management, communication, employee involvement, and compensation-were nonexistent. The President recognized that his principal objective-making PIGAMU a center of excellence-required HR initiatives, which could be effectively and efficiently implemented by the HR department. So, he initiated programs to enhance HR within the institution. First, he focused on improving working conditions. Although peripheral, working conditions fulfill attitudinal, behavioral, and financial benefits. He believed good working conditions can stimulate involvement, commitment, identification, and engagement of employees and external stakeholders. He also believed that maintenance of a clean teaching and learning environment was essential to knowledge generation and distribution. Such an environment could attract consulting opportunities and induce potential students to enroll in its programs. The second initiative centered on performance management. As mentioned, performance of staff and faculty were not managed prior to the appointment of the President. Attendance and punctuality were arbitrary and capricious. Staff reported to work when they wanted, spent more time for lunch breaks, and closed earlier than the scheduled work day. Further, productivity was not measured. In fact, some workers did not even have work to do. They merely reported to work in order to get a pay check at the end of the month. With regard to faculty, knowledge generation through research and publication, an index of academic productivity, was not emphasized. Due to the seniority culture, the faculty (especially senior faculty) could not be dismissed for poor performance. Knowledge dissemination through teaching was also not evaluated. Consequently, the faculty relied on old and disproven theories and models.
Consequently, the President instituted performance management for staff and faculty. Staff was evaluated for attendance, punctuality, and productivity. In fact, extra-role behaviors such as supporting and helping coworkers, staying beyond the work day, loyalty, and obedience were included in the performance indicators. In order to observe staff for such behaviors, the President sometimes visited departments unannounced and outside of work hours (e.g., before 8 am and after 5 pm or 6 pm). Employee performance was measured through a recording system. Expected behaviors were tallied and aggregated at the end of the month. Wages were determined based on that record. With regard to academic performance, the faculty were expected to develop themselves through participation in national, regional, and international conferences; to produce and publish research; and to improve teaching. In addition to evaluating every faculty member's teaching at the end of the teaching period, annual reports were required. Those who were found deficient were warned for a number of times. If no improvement was observed, they could be terminated (if they were not tenured). Tenured faculty could also be dismissed for very poor performance. Foreign faculty who received poor evaluations were not invited in future as visiting professors. The third HR change was instituting a reward system that was tied to performance. The incentive package was intended for staff and faculty conditioned on productivity and profitability. This initiative was particularly unappealing to many employees because it linked remuneration to performance. Prior to the President's appointment, faculty and staff were rewarded by seniority, a compensation system that did not link performance to the strategic objectives of the organization. The President believed that the return on investment under such conditions was very low. As a result, he changed it to performance-based compensation.
The fourth initiative was employee involvement. In contrast to the past, durbars were held every Friday to facilitate congeniality, collegiality, socialization, bonding, and shared identity. A durbar is an event in which members of a community gather for ceremonial purposes. Traditionally, it was an occasion when the African chiefs met their subjects to celebrate, share information, and strategize on the future of the community. The President used durbars to not only celebrate accomplishments, but also to engage in collective strategy development. Further, durbars were avenues for staff and faculty to interact, thereby minimizing the divide between academics and non-academics. Employees, particularly the staff, seemed to anticipate the durbars for a number of reasons. First, they enabled the staff to solicit advancement advice from faculty. They also afforded opportunities to develop external social networks (i.e., outside of the employees' departments). Third, employees obtained updated information about the performance of the institution through which they could infer job security. Above all, the durbars provided opportunity for employees to demonstrate engagement; staff and faculty could provide suggestions to the President. Overall, the President believed the durbars were mechanisms by which he could cultivate a high performance work environment. Durbars enabled groups that shared a common identity to promote and support one another.
In addition, the President mandated communication initiatives. He communicated daily with staff and faculty through notices. Department heads were not only informed of the policies in advance, but they were also instructed to inform all employees within their purview. Even though employees appreciated dissemination of the information, they did not seem to to like the unidirectional or top-down approach. Further, some employees perceived that he did not tolerate excuses for inability to distribute the information. In fact, some employees seemed to resent the fact that some policies were not discussed at executive or academic council meetings. Nevertheless, the President perceived that policies that required speedy actions could be slowed down at Council meetings, thereby hindering the progress of PIGAMU.
The final initiative focused on retention. It proved contentious and as discussed below very consequential. This initiative involved retrenchment of several employees. "How do I get people who are not contributing to the objectives of the institution but rather are draining it off the payroll?" he wondered in a speech. "Of course, it is Africa and you cannot ask them to leave like that," he continued.10 Given the tribalistic and superstitious Ghanaian culture, the New President first devised a retention criteria based on performance of employees. Unqualified employees were retrenched. "I decided to retrench them with pay," he added. "Why?" asked the moderator." "Because I did not want to create chaos; the transition had to be smooth and that was the only way of doing it, I thought," he responded. The retrenched employees were on payroll for two years at the end of which they were terminated. All other employees were informed of new policies and standards of excellence.
Problems
Shortly after the changes were initiated problems began to emerge. The style of leadership of the New President, though results-laden, was disapproved by some employees. First, he was perceived as dictatorial. The grapevine indicated that any employee who dared to question a policy, initiative, or program was summarily dismissed, punished, or disparaged publicly. Several faculty members were victimized as a consequence. This style seemed to invalidate the transformation initiatives. Staff and faculty began to question the value of suggestions if they could be victimized as a consequence. It seemed conflicts could not be amicably resolved. As a result, dissatisfied employees explored alternative mechanisms of conflict resolution: legal action.
Although a number of legal actions challenged the initiatives, one action was prominent and eventually proved damaging. A retrenched employee brought action against the President for illegal dismissal. The proceedings lasted several years but was eventually dismissed. However, before that case was dismissed, it was revealed that the President was not academically qualified as a professor. First, a newspaper revealed that an institution in a southern African country-not PIGAMU-conferred the professorship to the President. However, the President later admitted that "he's not a prof."12 That seemed contrary to the rules and regulations of the institution. By PIGAMU's convention, "nobody could use any foreign title unless it was verified by its Academic Board."13 To rectify the situation, the President then applied for Full Professorship. He submitted a letter to the Deputy President and Dean of Academic Affairs of the Institute in which he sought PIGAMU's appointment as a professor. The letter was circulated to members of the PIGAMU Governing Council and was leaked to the press. Based on that, a relative of a former employee who was dismissed as part of the new President's HR initiatives took legal action challenging the qualifications of the President. The lawsuit requested the court to order the PIGAMU Governing Council to declare the position of President vacant and to take all necessary steps to appoint a neiu President, because the latter's application showed inconsistency with the rules and regulations that the current President had insisted should be adhered to without exemptions. The current President who always insisted that the rules and regulations that existed before he came into office should be followed was perceived as subverting them. Legal actions and press reports that uncovered unsavory and unethical academic practices negatively affected the image of the institute. The bad image was seemingly affecting the functioning and growth of PIGAMU.
Compounding the situation was the concern other executives of the institution (e.g., Governing Council members) had about the bad publicity. Maybe this concern influenced the Chairman of the Board not to sign the appointment letter for the President's second term.14 The court dismissed an application by the editor of the newspaper who filed the case seeking the court's order to restrain the President as a professor.15 Nevertheless, the effect was damaging. Concerned about his position, the President filed a counter suit, alleging that PIGAMU should confirm his appointment for the second term. In response, the PIGAMU Governing Council challenged the competence and leadership of the President. It produced some evidence of plagiarism misconduct of the President to support its case. PIGAMU also alleged that the President was not leading by the rules and regulations of the institution. the President seemed dishonest for dismissing students for intolerable behaviors-plagiarism-when he exhibited the same behaviors. By that standard, he was also to be dismissed. In fact, one newspaper magazine reproduced the article from which the President had plagiarized. Other accusations included naming a building complex at the institute after his hometown without approval from the Governing Council.16 The President was perceived to be running the institution in a way that had contravened its rules.
Obviously, the climate was perceived as very hostile. In fact, many employees seemed to work in fear of being victimized, since the alleged misconduct of the President (e.g., plagiarism) was leaked by employees of the institution. The psychological effects of these legal actions seemed to have had an effect on the President. His attitude toward staff and faculty (including visiting professors) as well as students was very abrasive, insensitive, and condescending. His distrust intensified. As a result, he resorted to threats of arbitrary dismissal of of the institution and their own careers. The climate was so toxic that productivity was diminishing. Given that environment, the President could only resign. He did so in 2008. Although the government appointed a new successor, PIGAMU no longer enjoys the enormous goodwill it once enjoyed.
1) This case was first published as D. B. Zoogah, 2012, Employee retention during institutional transition: A case study of PIGAMU, in J. C. Hayton, L. C. Christiansen, B. Kuvaas (eds.), Global Human Resource Management Casebook (pp. 203-216), New York: Routledge. ©Taylor Francis. Reprinted with permission. This case was based on the institutional transition of a real organization in Ghana. However, for confidentiality reasons, the actors were disguised. Data from interviews with employees, internet sources, newspaper archives,TV news, conference participation, and visit of the author to the institution were used to develop the case. It was not sponsored by the institution.
2) http://databank.worldbank.org.
3) http://hdrstats.undp.org/en/countries/country_fact_sheets/cty_fs_GHA.html.
4) A. K. Awedoba, 2007, Culture and Development in Africa, Accra, Ghana: Historical Society of Ghana.
5) Awedoba, 2007, p. 21.
7) Comment by TV interviewer during interview with the new President (Rector), accessed on July 7, 2010.
8) Keynote speech at IAABD conference, Metrop