Challenges And Financial Impacts Of Adopting New Lease Standard University Essay Example

Cathay Pacific is identified among the largest airlines in Hong Kong. The new accounting standard, IFRS 16, requires recognition of lease transactions as right-to-use assets and lease liabilities by lessees; hence they should be included in the financial statements. Adopting the standard is identified to impact businesses significantly through increasing their debts and EBITDA, reducing profits or increasing losses, and increasing expenses such as impairment and depreciation.

Implementing the new accounting standards for lease will affect Cathay Pacific significantly. For example, research by PwC in 2016 indicated that the airline industry is among the most affected by the new standard, with an estimated increase in debt of 47% (Leung & Wan, 2020). This is because leasing is a common practice for airlines. Airlines often lease airport facilities, aircraft, and aircraft equipment. For example, most airlines in Hong Kong operate aircraft which are, on average, 32% operating leased and 30% finance-leased compared to 38% owned aircraft.

The airline’s indebtedness will be affected due to the standard’s effect on its liabilities and assets. By classifying its previous operating leases into right-to-use assets and leasing liabilities, it can be identified that the airline’s gearing ratio increased by 36.5% from 0.96 when hypothetically using HKAS 17, the old standard, to 1.31 when using the new standard HKFRS 16 (Leung & Wan, 2020). When the gearing ratio is high, the airline’s debt proportion is higher than its equity. An increase, in this case, indicates that adopting the new standard would expose the airline to financial risk because excessive risks can result in financial difficulties.

It is evident that adopting HKFRS 16 affects a company’s profits. In 2019, Cathay Pacific’s net profits were HKD1.7bn, a 39% decline from HKD2.8bn in 2018. HKD26 million of the decrease was attributed to the implementation of the HKFRS 16. Despite assets such as equipment, plant, and property increasing with the adoption of the standard, profits will worsen. According to Cathay Pacific’s financial position as of the end of 2019, profits worsened due to the increase in finance charges by HKD0.744bn and depression expense by HKD3.849bn (finance charges and depreciation expense in total is HKD4.593bn) (Leung & Wan, 2020). The total finance and depreciation charges outweighed the savings obtained in operating lease rentals of HKD4.507bn by HKD86 million, worsening profits. However, the operating cash flow of the airline increased by HKD3701mn as a result of the adoption of the new standard, even though its net cash flow position did not change.

By adopting HKFRS 16, Cathay Pacific would also face impairment expenses due to the risk of the increased write-down of property, equipment, and plant assets, which had increased to HKD2Obn (Leung & Wan, 2020). The residual risks will therefore affect the airline’s net profits by reducing them and making them more volatile.

Leasing is a flexible financing form that most companies use to finance their fixed assets. Companies tailor lease rentals to match income generated by the use of the asset, making it self-funding. The lease asset’s payment period often matches its economic life. Based on the case study, IFRS 16 proves to reduce leasing’s attractiveness prompting companies that depend on leasing, such as Cathay Pacific, to act in response to its negative impacts. Cathay Pacific should take some action.

One of the actions is to shift to the purchase option. IFRS 16 requirements provide significant comparability between those who borrow to buy assets and those who lease the assets. The risks that come with leasing due to the standard can lead to Cathay Pacific deciding to buy the assets rather than lease them (Leung & Wan, 2020). The airline will minimize the negative impacts of increased debts, worsening losses and profits, and gearing by taking this action. However, the airline will not enjoy the benefits that are associated with leasing. Buying may be costly, especially when assets often require renewing as technology advances, an advantage that comes with leasing. Buying also means that the airline loses the ability to use the asset for only the needed portion of its economic life. They get stuck with the asset after its use. Borrowing to buy may require supplementary guarantees not needed in leasing. I recommend that the airline determines the assets they can purchase and those that it is only possible to lease. Cathay Pacific should enter into fewer leases hence reducing the negative impact of shifting to the model of right-to-use.

Cathay Pacific can also negotiate lease rental agreements that are flexible such that they would pay for the leased asset based on the hours of flying (Leung & Wan, 2020). This would be advantageous because the leased assets would not be included in the financial statements hence no lease liabilities. However, the disadvantage of this option is that there would be a risk of increased rent. The lessor may want to charge higher rent to compensate for the risks associated with lease agreements that are short-term. With flexibility per hour, there is the risk of the lessee terminating the contract, which can only be compensated by the lessor charging higher. The lessor may also decide to increase rent (payments) during every renewal, which can be costly. To minimize the disadvantage of this option, the airline can negotiate a leasing rate with the lessor that would last for a given agreed time, after which the lessee would be aware of the expected changes they would be ready for. This way, the option of a flexible lease arrangement would work.

References

Leung, W. S., & Wan, T. (2020). Cathay Pacific: Financial Impact and Challenges in Adopting the New Lease Accounting Standard. ACRC – Asia Case Research Centre – Devoted to advancing business education through the development of Asian case studies. https://www.acrc.hku.hk/Case/Detail/1050

Challenges Facing The Malaysian Construction Industry Writing Sample

Abstract

Practical strategic thinking is critical for organizational success because it supports the development of vital plans that match firm objectives and maintain a competitive advantage. This paper will highlight the application of strategic thinking at the firm level in the Malaysian construction industry, identify various challenges facing the industry, and various applications of strategic thinking to deal with the issue. In the paper, the literature suggests that there is limited application of strategic thinking within firms despite the extensive growth in the area of strategic thinking. Notwithstanding, strategic thinking is crucial for maintaining firms’ successful functioning in the Malaysian construction industry through various avenues. The avenues discussed in the paper include total quality management, long-term planning for work safety, and practical and comprehensive management frameworks. This paper will consult various literature sources to provide an in-depth analysis of various challenges facing the Malaysian construction industry and their solutions.

1.0. Introduction

Effective strategic thinking has proven time over time to be a vital tool for organizational success across all sectors. Strategic thinking alludes to the capacity to develop crucial plans that match organizational objectives in a certain economic setup, and this planning works in favor of firms to provide them with a competitive advantage in the current work environment. According to Kam et al. (2022), the Malaysian construction industry is deemed as the third-largest sector in the economy in the avenue of productivity ked by the agriculture and manufacturing sector. The industry is linked with other sectors in the economy, contributing to its success but also faces various challenges. Categorically, major players in the Malaysian construction industry, such as ABC Synergy Sdn. Bhd faces various challenges, such as workplace hazards that require the intervention of top leaders to plan ahead and prevent their reoccurrence (ABC Synergy, 2022). Managers have to rely on strategic thinking to deal with such challenges. In the Malaysian construction industry, strategists elicit unique abilities and skills to connect the past and the present in order to predict what may happen in the future. Notably, strategic thinking facilitates the review of issues and policies by organizational leaders and carries out long-term planning that allows goal setting and determination of priorities to optimally identify any potential risks and opportunities. Undoubtedly, strategic thinking functions as a tool for the formulation of strategy by managers, and their engagement in the process of strategic management helps the firm operate beyond any arising challenges. This exposition intends to discuss the criticality of strategic thinking and various challenges in the Malaysian construction industry.

2.0. Literature Review

Arayesh et al. (2017) contend that strategic thinking alludes to the strategic capacity that helps the top leadership in a corporation to understand their capabilities while making predictions, distinguishing them, and controlling future events. In the Malaysian construction industry, managers must firsts understand various issues facing the sector to engage in strategic thinking. The current Malaysian construction industry is faced with unprecedented risk and competition, resulting in issues surrounding its development, technology use, and budgeting (Omer, 2019). The high demand for the construction of facilities and infrastructure calls for the implementation of construction projects and maintenance of site management practices. Construction site management alludes to a special provision in contracts requiring managers to have control of construction activities and show proper management acumen to allow the smooth flow of construction activities via strategic thinking. Specifically, site management is always crucial for enabling the smooth flow of construction processes and all activities carried out at the construction site (Dixit et al., 2017). Therefore, through strategic thinking, site managers or organizational heads can engage in the process of making a progression of decisions regarding the actions the enterprise aims to take in order for it to be more successful. Thus, construction companies often undertake strategic planning processes several times and come up with documentation that works as guidebooks for the team in management to utilize later. Undoubtedly, firms should strive to make strategic thinking a continuous process that is ongoing, on a year-round status (Hill, 2022). Strictly speaking, the capacity to anticipate significant changes in the competitive marketplace of the construction industry and identify any emerging opportunities are at the heart of strategic thinking.

According to AlQershi (2021), strategic thinking encompasses the application of foresight, creativity, and insight. Categorically, foresight works by shadowing the future by foreseeing it and shaping it before it materializes, while insight acts as the perimeter pivot that works to uncover the approaches that give rise and sense to the future. For managers to think strategically, they have to conduct research, analysis, and fore thinking in order to develop a workable plan for how the organization will proceed as an entity. Thus, the capacity to think strategically offers multiple dimensions to the strategy-making process. It lays emphasis on the distinct nature of strategic thinking and planning and furthers their complementing thought processes and how they are interrelated (AlQershi, 2021).

Major activities under strategic planning and strategic thinking in the construction industry may include functions such as dealing with the construction schedules and construction materials and maintaining the health and welfare of workers. Recently, most site managers in Malaysia experienced issues ranging from waste disposal difficulties, failure to apply knowledge-based frameworks, derailed practices due to the pandemic, project delays, and budget overruns (Charles, 2021). Oftentimes, construction sites represent their own system embedded in a larger system to arrive at the primary objective of completion of a construction project. Thus, construction site managers rely on the success of the project management teams to maintain flow and the success of these work areas. Thus, construction site managers are expected to engage in strategic thinking and coordinate with the team to maintain success. Open communication regarding the project, any arising roadblocks, delays, or the potential progress of the practice. According to Ting et al. (2019), the construction industry in Malaysia is important to the growth of the country’s economy. Therefore, a need arises to develop a framework for sound site management and the performance of construction projects in Malaysia under strategic thinking to operate beyond these challenges. Cite managers can perform risk management practices to identify these issues to allow contractors and clients to use the best possible practices in construction. Goldman et al. (2017) contend that multiple scholars agree that while strategic thinking strives to come up with an organizational strategy crucial to attaining sustainability and profitability, it is often absent in multiple organizational setups and is lacking among corporate leaders.

3.0 Problem Statement

Managers in the Malaysian construction industry must engage in strategic thinking and planning to adopt risk management approaches to deal with challenging engineering and management problems like derailed practices and budget overruns on construction sites. Strictly speaking, effective and sound management practices in the construction process and site management can be achieved through total quality management. Undoubtedly, the construction site managers are responsible for controlling and directing all the activities that take place on construction sites. These activities take place within the limits of the organizational hierarchy, and the managers are expected to elicit the skills critical in providing the foundation for successful construction practices. Developing crucial plans that match organizational objectives in the current economic setup matches strategic thinking. Thus, Malaysian construction site managers should strive to maintain better cite management through total quality management to deal with the issues. Additionally, knowledge management under sound management practices may be useful in solving these challenges on construction sites.

4.0 Discussion

The use of practical and very comprehensive management frameworks

Major firms in the Malaysian construction industry must apply strategic thinking and adopt proper management techniques to deal with existing challenges and or practical frameworks that will facilitate planning for the future. Oftentimes, construction functions represent their own systems embedded in a larger system to arrive at the primary objective of completion of a construction project. Thus, managers in construction projects rely on the success of the project management team to maintain flow and the success of these work areas (Meredith, 2017). Managers in construction sites are expected to coordinate with the team to maintain open communication regarding the project, any arising roadblocks, delays, or the potential progress of the practice. The most suitable practical framework is the application of total quality management by site managers to maintain the successful operation of construction sites. Demirkesen and Ozorhon (2017) point out that it is crucial that site managers develop a more comprehensive framework critical to improving construction projects and their success rates. These approaches will improve the functioning of projects and help the firm in question gain a competitive advantage.

According to Ting et al. (2019), the construction industry in Malaysia is important to the growth of the country’s economy, and it is riddled with issues ranging from poor publicity involving cost overruns, poor workmanship, workplace accidents, unrealistic and uncontrolled schedules, unfinished construction project and conflicts calling for these strategic thinking approaches. It has often been common to see toppling bridges in the region and collapsing structures pointing to the down pit situation of the Malaysian construction industry and its recent bad impression on the minds of the public. Most of these issues have been due to the poor site management practices adopted by contractors in the Malaysian construction industry. The issues associated with construction are rising by the day, and projects are more complicated nowadays because of the large capital investment, stringent demands on quality, tighter schedules, advancements in technologies, and escalating costs (Barbosa et al. 2017). Without any doubt, many organizations often manage many projects at the same time in an attempt to attain a competitive advantage. Thus, managers should consider practical and very comprehensive management frameworks that take into account the structural, personnel, practical, and cultural aspects of site management practices to deal with an issue facing the industry accordingly (Van Zyl et al., 2017). In the proposal, the practical framework for use in site management is the use of sound management approaches.

The use of total quality management

According to Coelho et al. (2022), many organizations have implemented total quality management (TQM) as a philosophy vital for endorsing the quality of output and enhancing their competitiveness. Adopting TQM is a critical part of effective strategic thinking as it can secure the future of construction industries through articular organizational elements like teamwork,

and customer satisfaction, or more intangible and technical aspects like culture via its successful implementation. Notably, total quality management intends to ensure that every employee on the construction site performs their duties diligently and according to set standards. It is the site manager’s role to maintain this quality high by practicing sound cite management practices. A common issue in the construction industry is the rigidness of control systems leading to a lack of flexibility and poor quality management. Specifically, managers often have the capacity to alter the individual parameters on a construction site in an attempt to reduce or increase the time available for project completion. This gives the site managers an opportunity to deal with any other arising issues, but the rigidness may result in the delay of other projects. The high reliance of the construction system on the resources of other systems to maintain this flow may be a significant cause of challenges to site managers. Various parts play different roles in construction, and the delay of one part may cause delays in the entire system as a whole due to poor management, poor planning, and lack of strategic thinking. For instance, the failure of a subcontractor to supply the right amount of materials at the right time may slow down the entire construction project, which may arise from poor planning (Effective construction site management, 2021).

Besides, the Covid-19 pandemic had also crippled the operation of the construction industry and its management efforts in Malaysia. This is another significant challenge that is still affecting the industry even after the easing of lockdown and restrictions. Specifically, the rampant spread of the virus and the rising caseloads raised a public health emergency which forced the Malaysian government to issue a public order (James, 2020). The movement control order of 2020 led to the closure of businesses, and pursuant to the PCID regulations of 2020, the construction industry did not fall within essential services and thus was impacted by the MCO. However, only construction works of critical services such as traffic control and repairs were exempted from the movement control order. An exemption was only given to work regarding maintenance and demanded the cessation of construction activities on Malaysian construction sites. The architecture or manager, at this point, was forced to issue instructions regarding vacating the work premise as ordered by the government and ministry of health requirements to curb the spread of the pandemic leading to the derailing of construction activities (Michael and Charles, 2017). The recent reopening of the economy calls for strategic planning, thinking, and complying with the procurement process to assist the construction industry’s recovery. The success of most construction projects relies on compliance and raising such issues at any point in the procurement process. The compliance issues may be legal, involving remuneration and eligibility to work for workers or industrial regarding imports and exports compliance. Thus, a sound procurement procedure with the help of competent management helps deal with discussed issues to allow smooth processes in construction sites. Categorically the highlighted role of site managers is stipulated within construction firms, and the use of total quality management tools will not only support recovery but maintain competitiveness and secure the industry’s future. Construction managers must have skills critical in offering the foundation for a successful construction process. Thus, the application of total quality management as the primary practical framework helps maintain just-in-time operations, re-engineer’s business processes along with certain business needs, and facilitates knowledge management within construction sites usable in solving the most critical issues (Karim and Qamruzzaman, 2020).

Long-term planning and its component within the avenue of workplace safety

Tool inventory management

Long-term planning is a critical part of strategic thinking that will help firms in the construction sector to be competitive and operate within set objectives. Tool inventory is carried out by managers to offer oversight and accountability to ensure the tracking and return of tools on construction sites. Undoubtedly, inventory management saves money via the reduction of tool hoarding and losses (Perry. 2018). It also makes issuing and returning equipment a quicker process to save time directed to other construction functions.

Tool scheduling

Tool scheduling involves keeping track of equipment across multiple construction locations to eliminate time consumption. Using tool scheduling facilitates checking out and efficient return of tools. Besides, billing clients for tool usage helps recapture the tool cost at the construction site and makes construction management easier.

Predictive tool maintenance

Predictive maintenance helps remove the uncertainty that is associated with preventative maintenance and efforts to optimize safety quality control of tools. Its primary benefits include enabling the completion of the routine calibration of tools on schedule by construction managers, the compliance by workers concerning tracking specific equipment and enabling regular maintenance to extend tool and equipment life (Perry, 2018).

Tool and equipment safety

Tool and equipment safety form a significant part of strategic thinking and sound planning to make sure that construction industries function smoothly. Over the years, site managers and employers have reported millions of workplace injuries on construction sites. Proper equipment and tool safety maintenance are primary components of site management practices. Strictly speaking, the Occupational Safety and Health Administration (OSHA) points out that the primary causes of industrial accidents and injuries on construction sites are the failure of equipment and misuse of tools (Sehsah et al., 2020). Thus, maintaining equipment and tool safety by construction site managers is crucial to minimize these atrocities. Construction site management efforts stipulate approaches directed toward tracking the repair and maintenance of industrial equipment by doing so within repair schedules (Perry, 2018). Arriving at this objective is critical to make sure that the recorded numbers of tool and equipment breakdowns are few, the sites experience higher tool life, and lower number of accidents by maintaining safety at construction sites. This serves as a critical source of success, quality functioning, and competitiveness of firms in the construction sector of Malaysia. Managers should plan within these avenues to maintain high-quality operations within construction sites.

5.0 Conclusions

This exposition highlighted the criticality of strategic thinking and various challenges in the Malaysian construction industry. Effective strategic thinking stresses the capacity to develop crucial plans that match organizational objectives by managers and leaders in a certain economic setup, and this planning works in favor of firms to provide them with a competitive advantage in their current work environment. From the report, the current Malaysian construction industry is faced with unprecedented risk and competition, resulting in issues surrounding its development, technology use, and budgeting. The high demand for the construction of facilities and infrastructure calls for the implementation of construction projects and maintenance of site management practices. This can only be achieved vii engaging in strategic thinking and planning by engaging in proper practices that support competition and the sound function of construction firms. Through strategic thinking, effective planning is vital in helping firms apply practical and comprehensive management frameworks, partake in total quality management, and adopt long-term planning and its components within the avenue of workplace safety. Adopting total quality management is an important part of effective strategic thinking as it can secure the future of construction industries through particular organizational elements like teamwork and customer satisfaction or more intangible and technical aspects like culture via its successful implementation. On the other hand, the practical framework for use in site management is the use of sound management approaches that will impact successful operations. However, enhancing the safety of tools and the workplace environment is vital in eliminating dangers in constructing workplaces and associating the environment with the effective use of tools to enhance competitiveness. Thus, it remains incumbent upon managers in Malaysian construction firms to adopt strategic thinking and planning via total quality management effects and sound management practices to solve any arising challenges on construction sites

Reference

ABC Synergy. (2022). ABC Synergy Sdn Bhd Construction Company. Retrieved from https://zaubee.com/biz/abc-synergy-sdn-bhd-3ze74jov

AlQershi, N. (2021). Strategic thinking, strategic planning, strategic innovation and the performance of SMEs: The mediating role of human capital. Management Science Letters11(3), 1003-1012

Arayesh, M. B., Golmohammadi, E., Nekooeezadeh, M., & Mansouri, A. (2017). The effects of organizational culture on the development of strategic thinking at the organizational level. International Journal of Organizational Leadership6, 261-275.

Barbosa, F., Woetzel, J., & Mischke, J. (2017). Reinventing construction: A route of higher productivity. McKinsey Global Institute.

Charles, S. H. (2021). A resilience-oriented guiding framework for managing post-disaster reconstruction projects (Doctoral dissertation, ResearchSpace@ Auckland).

Coelho, C., Mojtahedi, M., Kabirifar, K., & Yazdani, M. (2022). Influence of Organisational Culture on Total Quality Management Implementation in the Australian Construction Industry. Buildings12(4), 496.

Dixit, S., Pandey, A. K., Mandal, S. N., & Bansal, S. (2017). A study of enabling factors affecting construction productivity: Indian scenario. International Journal of Civil Engineering & Technology8(6), 741-758.

Effective construction site management. (2021). Proforma Safety International. Retrieved from https://www.proformasafety.com/the-importance-of-effective-construction-site-management/

Goldman, E. F., Schlumpf, K. S., & Scott, A. R. (2017). Combining practice and theory to assess strategic thinking. Journal of Strategy and Management.

Hill. B. (2022) Why Is Strategic Thinking Important to the Success of Business? Retrieved from https://smallbusiness.chron.com/strategic-thinking-important-success-business-4661.html

James T. A. (2020). Coronavirus Closes China to the World, Straining Global Economy. The Wall Street Journal. Retrieved from https://www.wsj.com/articles/coronavirus-closes-china-to-the-world-straining-global-economy-115806897933

Kam, K. J., Lim, T. S., Lee, L. H., Soon, L. T., Leong, B. T., & Kamarazaly, M. A. B. (2022). Survival Strategies and Challenges Faced by Subcontractors in Malaysian Construction Industry. Malaysian Construction Research Journal15(Special issue 1), 22-37

Karim, S., & Qamruzzaman, M. D. (2020). Corporate culture, management commitment, and HRM effect on operation performance: The mediating role of just-in-time. Cogent Business & Management7(1), 1786316.

Michael P. & Charles B. R. (2015). Expecting the Unexpected: The Force Majeure Clause. Paris Energy Series No. 9. Retrieved from https://www.whitecase.com/publications/article/paris-energy-series-no-9-expecting-unexpected-force-majeure-clause

Meredith, J. R., Shafer, S. M., & Mantel Jr, S. J. (2017). Project management: a strategic managerial approach. John Wiley & Sons.

Omer, M. S. (2019). Level of risk management practice in Malaysia construction industry from a knowledge-based perspective. Journal of Architecture, Planning and Construction Management9(1).

Perry. D. (2018). Essential Elements of a Successful Construction Site. Retrieved from https://www.constructionbusinessowner.com/strategy/4-essential-elements-successful-construction-site.

Sehsah, R., El-Gilany, A. H., & Ibrahim, A. M. (2020). Personal protective equipment (PPE) use and its relation to accidents among construction workers. La Medicina del lavoro111(4), 285.

Ting, S., Khoo, H., & Wong, S. (2019). Project Management Development in Malaysia: A Case Study. Department of Civil Engineering, University Malaysia. Retrieved from https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.517.1572&rep=rep1&type=pdf

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Challenges Of Designing A Fully Inclusive Hybrid Work Plan Free Sample

1.0 Introduction

Technology is changing, so the working environment has also been changing, seeing some companies embrace remote working. During the Covid 19 p pandemic and in adherence to the WHO regulation of social distance, companies had to adopt remote working. However, such an approach to the working environment is a good reflection of a hybrid working environment that has been advantageous and with challenges at times (Brocke et al., 2018). Usually, having strategic human resource management is key in ensuring that workers all work towards attaining the goals and objectives of the company. As more and more people in the workforce split their time between the office and remote locations, managers must find innovative ways to keep their teams productive and cohesive. Designing efficient hybrid models need consideration of several elements. Each model can be tailored to the requirements of individual departments (Mras et al., 2017). Over time, it became obvious to many companies that are increasing employee flexibility, including enabling some employees to work from home, either sometimes or permanently, improved staff morale and productivity. The essay examines the specific challenges associated with a hybrid work plan in the working environment.

2.0 Discussion

2.1 Benefits of Hybrid Work Plan System

Strategic human resource management, which is essential in the management of employees, plays a crucial role in ensuring that the responsibility of employees is well structured to ensure that they meet their goals and objectives. A hybrid work plan has been one of the major improvements that have been made to ensure that such strategies work effectively and efficiently (Raghuram et al., 2019). According to Brocke et al. (2018), a hybrid work plan adopted by most companies has been beneficial. For instance, the approach has been crucial in ensuring the employee’s well-being. Evidently, staff members were exposed to the benefits of working from home during the epidemic. Working from home, whether full- or part-time, has been increasingly widespread in recent years (Cherubini et al., 2021). Many workers value the company’s emphasis on their health and family life as a major benefit.

Furthermore, the hybrid approach is better for workers’ well-being in terms of health and safety because fewer people are in the office. When there are fewer people in a smaller space, the chance of an outbreak is diminished. The likelihood of workers contracting an illness from a co-worker is low. The convenience of having one’s own home means that unwell people can stay there and recuperate in peace.

The benefits of hybrid work would also be argued to enhance productivity and reduce overhead costs. Having workers who can occasionally or regularly work from home has the potential to cut costs in areas like electricity and office rent. Many companies have adopted hot desking rules and relocated to smaller quarters to save money on rent. Furthermore, a hybrid work plan enhances the expansion of talents. The opportunity to adjust recruiting standards is offered with hybrid work models (Brocke et al., 2018). Companies would be at a disadvantage in the war for talent if they did not offer hybrid work arrangements to employees. This also makes it easier for businesses to hire people who require flexible hours due to child care or other commitments. Employers may win over and keep the best new hires by giving them the freedom to establish their work schedules (Verma & Singh, 2022). Due to the flexibility of hybrid work arrangements, many candidates can be considered for open positions (Konovalova et al., 2022). The flexibility of hybrid work arrangements also allows companies to use the talents of people in different time zones.

2.2 Challenges Facing Hybrid Work Plan System

2.2.1 Communication

Collaboration fosters creativity, strengthens bonds, and creates happier employees and a more pleasant workplace. However, remote communication and collaboration might become disconnected with so many Zoom sessions and in-person meetings. The digital technologies required for hybrid work may make some people anxious or unfamiliar. Clearly, reliance on technology leads to severe problems with communicating with others. Although many of us overcame technological obstacles when we first converted to remote work in March 2020, the transition to hybrid working can be rocky

initially (Capgemini, 2020).

Besides, the difficulty of coordinating a group’s efforts increases dramatically when its members are dispersed across geographic distances and/or time zones. Researchers have warned of the potential of “faultlines” developing in the workplace between face-to-face co-workers and those who do not. Due to the time and effort required to connect with co-workers in different places, those working remotely may feel excluded from regular office conversations and decisions. As people become accustomed to being on the outside looking in, they are more easily dissuaded from participating in important deliberations and decisions (Ali et al., 2018).

2.2.2 Infrastructural Hurdles

Technical difficulties are the most obvious difficulties of any remote or hybrid work arrangement. This could be because of a lack of internet connection or an insufficient power grid. Organizations running on a restricted budget would struggle to equip each employee with cutting-edge computers and programs. When working with a Remote Desktop Infrastructure, employees can become very frustrated due to issues like latency.

Within the framework of the hybrid model, firms have a wide range of options for how they can function. Today’s employees have a special issue: they often have to divide their time between the office and their homes or other locations (Capgemini, 2020). For instance, before hosting a face-to-face and virtual meeting, the organizer should ensure sure everyone involved has access to the necessary materials.

2.2.3 Culture

The happiness of an organization’s employees is significantly affected by its culture. Having employees from different backgrounds can be challenging since it might hinder efforts to develop a strong, united business culture. When members of a global team are located in different parts of the world, it can be difficult to pull everyone together under a single set of guidelines. In-house and remote workers often interpret an organization’s values and norms differently. The dynamics of meetings, office parties, and other forms of workplace interaction and communication change significantly when conducted digitally compared to in person. The challenge is keeping workers invested in and committed to the company’s mission (Raghuram et al., 2019).

This is a predicament causing top leaders great concern as the pandemic persists and the prospects of getting everyone back to work look dim. After the initial days and months of working from home, many companies were relieved to find that their employees remained productive and invested in their work (Raghuram et al., 2019). The personnel had presumably worked closely together in the years before the pandemic, giving them a wealth of expertise in working together efficiently and a deep acquaintance with the organization’s values, norms, and expectations. One of the most pressing issues in today’s businesses is how to quickly and effectively integrate new hires, whether interns, entry-level workers, or seasoned executives, into the organization’s established norms and values. Further, in talent-scarce industries like technology, consulting, or finance, a company’s culture can be crucial in communicating the company’s USP to prospective workers (Joshi et al., 2020). If workers seldom or rarely come into the office or spend time together, the company will lose its distinctive “feel” and will have trouble competing for talent with other companies.

2.2.4 Connecting

Strong personal and social interactions at work are crucial to feeling accepted and safe in one’s work environment. The effectiveness of a team is crucial to its overall performance (Cherubini et al., 2021). The benefits of hybrid teams are enhanced by their members’ ability to maintain open lines of communication and build trusting relationships regardless of whether they meet in person or digitally. However, the difficulty of combining remote and in-office workers depends not on the size of a company’s team but on the nature of the work. Teamwork is essential; it keeps an organization running smoothly and inspires breakthrough innovations. It may not be realistic to expect workers to develop ideas independently (Joshi et al., 2020).

Numerous studies have shown that an employee’s excitement for their work directly correlates to their productivity and, ultimately, the success of their firm. Gallup found that disengaged workers are 17% less productive than those who were engaged. The study also found that a rise in employee engagement is correlated with a 21 percent rise in profits (Raghuram et al., 2019). However significant they may be in dissolving distinctions between introverts and extroverts, distance and time zone differences have a much more direct bearing on the phenomenon of passive disengagement (Konovalova et al., 2022). Often, stronger, more organic ties are formed when people gather together in person for a common purpose. It has been shown that both formally established routes and more casual means of spreading information inside a corporation are equally effective. Face-to-face communication between co-workers has increased efficiency (Brocke et al., 2018).

Communicating problems does not only involve technological obstacles and poor planning. The even more significant problem is how working remotely may strain or even destroy personal connections. Women and minorities face additional challenges when building and maintaining professional networks and mentoring links (Raghuram et al., 2019). According to research, supportive social networks are linked to better mental health (Brocke et al., 2018). Consequently, this can make employees unhappy, decreasing their dedication to their professions and increasing their propensity to look elsewhere for satisfaction.

2.2.5 Business Process Compliance

Businesses are placing a greater emphasis on business process compliance to enhance efficiency and meet the requirements of government authorities. Under the hybrid work plan, employees may be too preoccupied with their tasks to ensure that each step of the hybrid process is carried out properly. If this happens, the company may struggle to meet the regulations vital to its operations (Konovalova et al., 2022). Hence, the quality of data collected is negatively impacted when procedures are not followed. As a result, businesses should also consider the contexts in which they gather internal output measures. This integrity can only be maintained if employees strictly adhere to their superiors’ policies and procedures.

2.2.6 Other Challenges

The other challenges arising from a hybrid work plan are the lack of safety when working from home, privacy, internet challenges, and lack of sufficient infrastructure. According to Capgemini (2020), working from home has had many challenges, and one of the ever-experienced challenges that have made it challenging for the strategic management team is how to manage the infrastructural system. Often home working staff might lack sufficient furniture to help them conduct their responsibilities. This might include a lack of quality working office such as appropriate chairs. To some extent, the long-term effect of lacking, for instance, good office chairs are back pains, a factor expected to influence the health and safety issues of the employees.

On the other hand, the other issue expected to affect the hybrid work plan is the privacy of working from home. Working from home exposes the company’s privacy issues as a staff is forced to log in and use company services and privacy structures away from the office, which might expose the company to cybercrime. This can be based on the different sources of the internet used at home, which further exposes the company to security issues. The other major issue of great concern in the hybrid work plan is the lack of work-life balance. It is highly expressed that staffs working from home never tend to have a work-life balance as they might opt to work throughout (Cherubini et al., 2021). The expected outcome of such a lack of work-life balance is poor performance.

3.0 Conclusion

The hybrid work plan system adopted by companies has shifted towards enhancing productivity and ensuring freedom in the working environment. However, issues have been associated with communication, connection, adherence to organizational policies, cultural adherence, and infrastructural challenges with the hybrid work plan system. Often, larger companies can solve these issues by implementing all worker-requested infrastructure upgrades. Companies should also invest in digital adoption technology to solve the challenges. There are a lot of unanswered questions about hybrid work, but many of them can be addressed. Maintaining an open dialogue between management and staff and developing new approaches to employee empowerment and motivation are essential for any successful business. Besides, companies should be willing to invest in the company’s culture and create a hybrid work environment based on the values that the company’s brand stands for. Companies should also provide employees with technological resources for simple, convenient remote collaboration. The success of a hybrid workplace depends on its employee’s ability to stay connected at all times, making it crucial to use effective conferencing and communication solutions.

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