Issues faced in human resource planning
This project work which is on HRM practices in LVMH, is written based on specific tasks that relates to HR Planning and Development, Training and development and Recruitment and Selection . Other HR functions like Motivation, Performance Management, Reward Management, Industrial Relations and Workplace Health and Safety are outside the scope of this study. The tasks are three and the writer intends to fellow it task by task. In the introduction, the researcher gave a brief summary of the company of discuss by reviewing some aspects of the company’s performances, especially in the area of HRM. The company which is LVMH is a multi-national company with presence in all part of the world.
The tasks one of the projects is on the differences between HR models and the model used by LVMH. An analysis was carried out to determine the different models with reference to their advantages and disadvantages. The second task is on ‘Learning and Development’ and an analysis of what LVMH could do to improve on its learning and development policy was discussed. Lastly, the third task which is on ‘Recruitment and Selection’ takes a look at the differences between Recruitment and selection. The recruitment and selection process is also reviewed by this work and the sources available to HR Managers when sourcing for applicants to man their organisation.
To conclude this project, the writer will outline his findings and recommend possible HR policy options LVMH could use to achieve its corporate objectives.
LVMH: Louis Vuitton Moet HennessyLVMH - the name is unique in symbolizing a world of elegance, luxury and champagne. It's a name that hints at a richly-colored world where haute couture and perfumes rub shoulders. It is the very essence of what France means abroad. Who doesn't know the brand names Guerlain, Givenchy, Kenzo, TAG Heuer and Dom Perignon? They are all part of the LVMH portfolio that runs from Watches to Champagne, from Fashion to Cosmetics. Let's not forget their Internet ventures with, for example, Sephora.com, an on-line Perfumery. The LVMH group is the uncontested world No. 1. It is steered by the firm hand of its emblematic head Bernard Arnault and has a presence in some 100 countries, still displaying a keen desire to innovate and energize the luxury market with an ever-faster growing distribution network.
According to Puchkuv(2009),”the group is made up of 50 companies managing 450 subsidiaries. These companies are the foundation of the group. Each company has its President and its Executive Committee. Each company has its subsidiaries which report directly to it either through the President or through an International Director in charge of supervising the activities of the company’s subsidiaries...”
With its Group Structure, HR Structure, Career Development, International Mobility, and International Transfer Policies, just to mention a few, LVMH is poised to meeting the global challenges that Multi-National companies grapple with in the world’s dynamic competitive market.
1.0 TASK 1-hUMAN rESOURSE MANAGEMENT models
1.1 differences between best fit, resource-based and best
Human resource models are a group of strategic techniques used by both small and large organisations in their HRM practices. To ensure that a thorough difference is established between these models, they will be examined at individually.
BEST fit MODEL
The Best Fit model also known as the Contingency or Appropriateness model, assumes that organisations HR strategy will become more efficient when it is linked/ tailored to its surrounding context or environment of the business. This model considers two important factors, Internal and External Fit.
The assumption here is that Human Resource policies must be coherent. Avoid policies which work in opposite directions i.e. . . . . Encouraging teamwork then rewarding individual performance. Make sure that practices are in proportion to the organisation i.e. stage of development / resources.
According to Guest-Future of Work (2001), “Consistency is King”:
- Consistency across practices i.e. if you use expensive selection procedures, then you need to
Invest in training / work satisfaction to reduce churn.
- Consistency across employees i.e. treat similar groups of employees the same.
- Consistency over time i.e. employees hate it when they are treated differently day to day.
This fit is linked to the operations strategy/marketing strategy etc…i.e. the competitive Strategy of the overall business. Schuler & Jackson (1987) developed the connection between Competitive advantage, employee behaviours and HR practices.
BEST FIT STRATEGIES
Company A - Differentiation Strategy
Product Development ~ creativity / risk oriented /Cooperative behaviour
HR Practices ~ select highly skilled / minimal controls / invest in training /appraise long-term /IT systems in place / economy of SCOPE / Justin-Time / integrate product with workforce
Company B - Cost Leadership
HR Practices ~ less attractive / reward high output / want predictable behaviour / many controls / appraise short-term / minimum training /economy of SCALE
CRITISM OF THE MODEL:
Can overlook employees interest
There is always tension
Can be too focused at the expense of productivity , performance etc(J Curve: When Implementing Change)
Assumes one best fit solution and makes little room for adaptability (Marchangham & Wilkinson:2002)
The Resource-Based model adopts an internal perspective to explain how a company’s unique bundle or collection of internal resources and capabilities represent the foundation upon which value-creating strategies should be built (Imafidon 2005).
Resources are inputs into a company’s production process, such as capital equipment, individual employee's skills, patents, brand names, finance and talented manager. These resources can be tangible or intangible. Capabilities are the capacity for a set of resources to interactively—or in combination—perform a task or activity.
Thus, according to the Resource-Based model, a company’s resources and capabilities are more critical to determining the appropriateness of strategic actions than are the conditions and characteristics of the external environment. Thus, strategies should be selected that enable the company to best exploit its core competencies, relative to opportunities in the external environment.
Five steps of the Resource-Based Model
The Resource-Based model of above-average returns is grounded in the uniqueness of a company’s internal resources and capabilities. The five-step model describes the linkages between resource identification and strategy selection that will lead to above-average returns as shown in the figure above.
Companies should identify their internal resources and assess their strengths and weaknesses. The strengths and weaknesses of company resources should be assessed relative to competitors.
Companies should identify the set of resources that provide the company with capabilities that are unique to the firm, relative to its competitors. The company should identify those capabilities that enable the company to perform a task or activity better than its competitors.
Companies should assess or determine the potential for their unique sets of resources and capabilities to outperform its competitors in terms of returns. Determine how a company’s resources and capabilities can be used to gain competitive advantage.
Locate and compete in an attractive industry, determine the industry that provides the best fit between the characteristics of the industry and the company’s resources and capabilities.
To attain a sustainable competitive advantage and earn above-average returns, companies should formulate and implement strategies that enable them to better exploit their resources and capabilities to take advantage of opportunities in the external environment than can their competitors.
However, taking advantage of or exploiting resources and capabilities in the new competitive landscape may not always result in a company achieving a sustainable competitive advantage and above-average returns. The potential to achieve a sustainable competitive advantage will be realised when company resources and capabilities are:
Valuable, allowing the company to exploit opportunities or neutralise threats in the external environment
Rare or possessed by few, if any, current and potential competitors
Costly to imitate such that other companies will be able to obtain them only at a cost disadvantage relative to companies that already have them
Non-substitutable as there are no strategic equivalents
Core competencies are resources and capabilities that serve as a source of competitive advantage over a company’s rivals and represent the dominant influences on the appropriateness of a company’s strategic actions.
One strategy that may enable a company to transform or develop its resources and capabilities into core competencies is to organise itself to take advantage of them through firm-specific patterns of combinations of its human resources. Using these resources companies may be able to better utilise their managerial competencies to better organise and manage diverse, complex operations, develop and communicate a strategic intent and mission or to reengineer products to better meet changing customer expectations.
BEST PRACTICE MODEL
The argument of this model is that organisations will see performance improvement if Best Practice model is implemented in its HR strategy. The method here is to identify best practice, give HR a high profile, get top level commitment, sell it, measure it, and reward champions. In Best Practice, a HR department uses methods that are accepted universally. The assumption here is that companies will see performance only if they identify and implement the Best Practice.
Rugulis (2000) question whether the practices typically assumed to be 'good' are actually beneficial to workers. They argue that the literature is underpinned by unitarist thinking and also that the notion of 'best practice' is problematic despite its superficial attractiveness
Much agreement / tradition on basic best practice.
Recognition of .bad Practice.
Established rules of thumb for selection; training; appraisal methods.
No need to re-invent HR models. It’s out there.
Difficulty arises when we go beyond these straightforward practices.
There is great diversity of .best practice which moves away from uniformity.
Pfeffer (1994) listed 16 practices for .competitive advantage through people.. Danger of becoming an end in itself at the expense of company goals / interests.
Can be Conflict between benefit to company & benefit to worker i.e. reengineering& downsizing. Employees may lose their voice.
Truss (2001 found that the informal organization played a significant role in the process and implementation of HR policies and that successful organizations do not always implement 'best practice' HRM even if intended. Conversely, Hughes (2002) argues that empirical support for universal HRM is growing
an overview of lvmh human resoure practice
LVMH as a multinational company appreciate the Role HR plays in achieving its sets goals. It organises its HRM around five main world zones, namely France, Europe, the Americas, Pacific Asia and Japan. The role of corporate HR is to normalise certain procedures, to define strategy and to give an impetus to company’s team. Regarding guidelines, corporate HR proposes but seldom imposes (Puchkuv, 2009).
LVMH COPORATE HR STRUCTURE:
CORPORATE HR DIRECTOR
PACIFIC ASIA-HR DIRECTOR
BUSINESS GROUP- HR DIRECTOR
It can be seen from the above figure that Employees report to their Companies while the Companies in turn report to the Business Group. Also, the Business group will have to report to the Zones -France HR Director, Japan HR Director etc, while the Directors at the Zones will have to report directly to the Corporate HR Director.
The main goal of Corporate HR is to ensure information flow and to harmonize procedures, while leaving final decisions to the company, up to a point. The regional director ensures that internal rules and regulations coherently applied within his/her zone.
LVMH being a global company has basic principles for Career development and International Mobility. For instance, when it discovered that its HR lacks international experience it decided to create a pool of global managers with a working knowledge of international markets. LVMH believes that the best way to develop its employee is not through training but through mobility. Its career development goal is to make mobility process of its employee smoother particularly international moves.
The appraisal method of LVMH is not based only on a workers ability to achieve set goals but also on his ability to propose new ideas and implement it.
On its international recruitment policy, the company as a group have been lacking because before now, it gives high consideration to French nationals. In order to support international business growth, it now trains and develops staffs of any national with international business exposure and experience through its international transfer policy.
1.3 an analysis of the method used by lvmh in their human
resourse planning and development
It should be noted that all the above models of HR have their merits and demerits and according to Laursen (2002) in its study of 726 Danish firms with more than 50 employees. He found out that HR practices influence innovation and performance more when applied together than as individual practices. Based on this, the researcher believes that LVMH does not apply only one model in its HRM strategy. This is sequel to the fact that its HR practice has the features of both the Resource Based and the Best Practice models. To further buttress my argument, both models and their evidences in LVMH’s HR practice is analyzed.
This model, basically, states that a firm should consider its internal resources and try to align it with its HR practice. This is evidenced in LVMH’s International recruitment strategy. The company now recruits international managers within its existing staffs by training and developing them through international assignment-‘International Mobility’ Policy. Also, the company ensures that its employees are given the necessary opportunity to contribute towards the organizational growth by giving fair treatment to employees at all levels to encourage increased performance.
In the Best Practice model, it is argue that firms which employ this strategy, base their HR strategy on generally acclaimed HR practices. LVMH as a company ensures that each Zones, Group and Company is given some latitude in HR decisions as it affect their local operation. Also, by ensuring that employees on international assignment have home based salary in a country not their own the company’s reward system gives consideration to local cost of living.
On its International Transfer Policy, the International Transfer Department of LVMH prescribes the process and procedures of HR but allow some flexibility at the company level. This is to allow local companies to fit local HR practice of their place of assignment to LVMH S’ Corporate HR policy.
In conclusion, it can be seen that LVMH as a global player in the world of Elegance does not limit itself to just the Best Practice or the Resource Based models but also constantly develops models that suits its own organizational context.
2.0 Task 2-learning and development
The study of how learning took place probably began before the Middle Ages; certainly it goes back to the times of the very early philosophers. It is still going on today and a vast bank of information has accumulated as a result. Most of this information is the result of research carried out by great psychologist and or those associated with or working with psychologists, studying human behaviour and behaviour of other living creatures. According to the words of Donald, (1997 ;154) learning can be defined “as a process of developing new knowledge, skills, attitudes and values through participation in formally organised learning situations and natural social interaction”.
Also in another vain Imafidon, (2005) argue that the term Learning should not been used in an organisational context but rather training should be used. He also said that training is often distinguished form learning because learning is thought as been broad in scope while training is not. He went further to define training as ‘any organisational oriented procedures which are intended to help learning among organisational members’
From the above, it can be seen that learning and development help in the acquisition of more knowledge and competence which help in the effective and efficient performance of workers assigned task thereby leading to the achievement of organisational objective and the satisfaction of the personal needs of employees.
2.1 MODERN THEORIES OF LEARNIG
According to Donald (1997), there are five theories of training. These are
1. KOLB’S LEARNING CYCLE: This theory which was postulated by Kolb in 1985, claimed that students and trainees in the classrooms of training establishments and educational institutions were being processed under the authority of the teacher or trainer, while the learner is play a passive role.
2. SOCAIL LEARNING:
This kind of learning as Donald puts it is ‘natural’ learning. According to him, he used the term ‘natural’ because firstly, what is learned is instinctive and spontaneous, rather than specified and planned and secondly because the learning most often takes place in the learners natural, informal situations.
3. SOCIAL AND ORGANISATIONAL CULTURE
The assumption here is that as organisational members interact together in an organisation, the result is that its own set of norms and values that are shared by every one member is learned.
4. GAGNE’S ‘HIERARCHY OF LEARNING’
In his attempt to explain this relationship between simple and complex forms of learning, ranging from primitive to complex forms of learning Gagne (1977) maintained that there are eight hierarchically ordered forms of learning, ranging from primitive learning.
5. TRANSFER OF LEARNING
The transfer of learning refers to the process in which previously acquired learning influences current learning.
2.2 approaches towards managing learning and
development in a multi-national coumpany (mnc)
The approaches towards training/learning and development are significantly the same in most Multinational companies. Firsly, the companies identifies trainning needs through a number of ways. The need could be identified through an advisory committee, asseseement centres, attitude survey, group discussions, employee interview, exit interview management request, observation of behaviour, performance appraisals or through the use of skill test. once the need is established the company the make the necessary steps to implement a training program that will give the best result.
2.3 learning and development techniques
ADENIYI (1995) had identified the following as some of the techniques used for the learning and development of members of staff. They are
2. Programmed instruction
3. film/video tapes
4. Job rotation
6. Planned work activity
8. Case study method
10. Role play
13. Job enlargement and a host of others.
2.3 Learning and development process
The learning and development process starts when a company identify the need for trainning which could be for better performace or for the future role such an employee is envasiege to play in the organisation. The learning objectivre is to equip the leraner with requisite skills and knowledge to perform the job
2.4 lvmh strategy on learning and development
LVMH’S strategy on learning and development is based on internal transfers and assignment to their workers, Puchkuv (2009). This strategy can be classified as job rotation and programmed instruction. The company appreciating the impact a good learning and development programme would do to its company and the staffs in question ensures that other methods are considered in contextual situations.
2.5 suggestion on what lvmh could do to inprove on its
For any organisation who hopes to survive in this ever changing global business environment, such companies must consider its hR as a key strategic factor for the attainment of the company’s goals and objective. For LVMH to achieve this fate, it must ensuer that it properly design a learning and development proramme for the member of staffs to ensure a consistent group in the companies busineses all over the world. also, the company should make necesary effort to encourage their empolyees to constantly develop themselfs the both the companies benefit and indidual gorwth of the workers. Finally, it must ensuer that its trianning and development programme a done in the most suitale manner that encourages staffs to want to develop themselves.
Task 3 - recruitment and selection
Recruitment for several reasons is regarded as one of the most important personnel function. Firstly, it attracts people’s attention to the organisation and invites them to consider the possibility of employment. The image of the organisation that is projected by the recruitment advertisements and follow-up literature has to be consistent with the self-image that the organisation wishes to project publicly. Secondly, it brings people into the organisation to be interviewed and sometimes to undergo occupational tests, which are steps that can lead to employment. Thirdly it can be a costly process that sometimes results in failures.
Recruitment as Beach, D.S. (1980:702) puts it “is the development and maintenance of adequate manpower services; it is to create a large pool of persons who are willing and available to work for a particular organisation. The aim of recruitment is to ensure that the organisations demand for manpower is met by attracting potential employees in a cost effective way (Cole, 1991)
3.1.0 recruitment process
The recruitment process begins when a genuine vacancy is identified and ends when applications are attracted to the organisation. A list of processes were outlined by Graham, (1990) as follows
examination of vacancies
consideration of all sources of suitable candidates
making contact with those candidates and
From the above process it can be seen that the process starts after a vacancy is identified and a job requisition sent to the personnel department outlining the job specification and the person specification. The personnel manager then considers the sources of suitable candidate either from internal or external sources. The next stage would be to place an advert in the most reliable and cost effective way or place an advert notice on the company’s bill board if the candidates are within the company and lastly, applications are attracted.
The process must be carefully planned because the success or failure of any organisation are largely determined by the calibre of its work force and the cost of direct and indirect cost of bad recruitment is serious
3.1.1 SOURCES OF RECRUITMENT
The sources from which employees are to be recruited will vary with the type of job to be filled. A computer programmer, for example, is not likely to be recruited from the same source as a machine operator. Basically, there are two broad sources of recruitment (internal and external). The internal sources are those presently working in the company. An organisation’s present employees constitute a common source for filling its vacancies above the beginning level. The external sources on the other hand can be gotten through the following external sources.
1. Advertisement: newspapers, trade journals, radio, television, billboards, posters and even sound truck have been utilised.
2. Public employment: Job Plus
3. Private employment agencies: Connect Personnel Ltd
4. Educational institutions: CECOS London College.
5. The internet.
The best medium to use will be the one that captures the company’s target audience the most.
The selection process is the second stage in the process of filling a vacancy; it is the assessment of the candidate by various methods and making a choice, followed by an offer of employment. Imafidon, (2005), defined selection as “the process of sorting out or eliminating those applicants judged unqualified.
3.2.0 selectiion process
Below are the processes of selection in a sequential order
Short listing of applicants
Making the decision :choosing the best candidate
Making an offer of employment
The process starts after the receipt of applications letters from potential employees and the HR department prepares a list of those that meets its job specification requirement. The next stage which is the selection test comes in different ways; Intelligence, Aptitude, Attainment and Personality tests (Cole A.A; 1991, 408). The Interview stage comes immediately after the selection test and can be done by a person who is in charge of recruitment or by a panel of highly skilled personnel in the organisation especially those from the department that made the job requisition. Lastly, an interview is conducted; the best applicants are chosen, issued an offer letter and finally induced into the organisation.
DIFFERENCE BETWEEN recruitment and selection
Although both recruitment and selection are part of the process of filling a vacancy, there are still significant differences between the two. The table below outline some of the differences between recruitment and selection
starts when a vacancy is noticed
ends when applications are received
creates a pool of applicants
it is positive to the employee
1.Starts when applications are received
2. ends when candidates are inducted
3. reduces the pool
4 it is a negative process to the employee
Fig 2; Differences between selection and recruitment
3.4 recruitment: the most important human resource
function in lvmh.
It can be argued that recruitment is the most important HR function in LVMH. The reason is that the company places a high premium on the recruitment activities of the company because of the significant impact a successful or a failed recruitment exercise will have on the company’s performance and productivity. This view can be buttressed with the way LVMH’ s Corporate HR Director manages its function by ensuring that adequate information is passed down the ladder to his subordinates in different regions, company groups, subsidiaries and individual companies. Also, because of the fact that LVMH as a global company appreciates the harm a failed recruitment process could cause their organisation, it ensures that the corporate HR policies are strictly adhered to by their subsidiaries and allow some degree of flexibility to allow for local content. Thirdly, from the fact that the company organises its HRM around five main zones clearly shows the importance of HRM in LVMH as the most valuable HR function. lastly, from the fact that the company now discovers that its human resource lacks international experience in competing in a global environment, it most attract and keep the right calibre of staffs to fill up its vacant positions at all times.
4.0 FINDINGS AND RECOMMENDATIONS
The writer during the cause of carrying out this work find out that LVMH as a company has a good Hr structure that a Company of its size should have. Also is was discovered that
1. The company has more home country nationals in its top hierarchy.
2. The Corporate HR policy of LVMH is imposed on its regional or subsidiaries all over the world
3. The highest amount of LVMH’s sales comes from America
4. The company uses both the Resource Based models and the Best Practice models in its HR planning and development strategies
5. The company’s International Mobility policy is an important aspect of its HR
Based on the above findings, the writer therefore recommends the followings
1. The company should as a matter of policy ensure that its Corporate HR managers are evenly distributed among its five zones
2. LVMH should ensure that its HR policies are made to suit individual company’s territory HR policies
3. The company should make sure that American as a region with the highest amount of sales be made to be well represented when formulating its policies
4. The company’s use of both the Resource Based and Best Practice should be made to suit the company’s overall personnel objective
5. The company’s policies on HR should be reviewed as much as possible to meet with changing global HRM practices the world over.
The personnel function of LVMH been the most important activity in any organisation should be made to meet the organisational context of the company. LVMH as a global player must consistently improve on its personnel training and development if it must succeed.
In conclusion, it can be seen that the researcher has dealt with the different tasks from task 1 to task 3 to make the work more logical. The researcher has also ensured that areas that have being researched into have a direct bearing with the research questions.
Based on the findings of this research, the researcher therefore recommends that further research should be carried out to review the impact of LVMH’s reward package on its international employee’s performance.
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