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In 2009, ABC Company was established in Wembly. The company works in the different sector which includes business industry, hospitality, offshore and remote site business and so on.
Every organization has a Human Resource department which is most important assets for an organization. Human Resource comprises the workers of an organization as well as labour economics. HR takes overall responsibility to execute strategies and policies which is related to management. HR management strategy should maximize profit and minimize their financial risk. At present every manager has to emphasis on HR strategy and has to understand their basic task.
2. HR Strategies are limited by Corporate Strategy:
ABC, a newly established company in Wembley, is running its operation since June 2009. From the very beginning this company is fighting for its survival in the leading market. This has been facing a lot of problem in running its business. The Human Resource Strategy which has been limited by the corporate strategy is considered as the main reason of their downfall.
Human Resource Management is a very important part of an organization. This is almost associated with the productivity the organization and this human resource management is the combination of the process of recruitment, retention and termination of human resource.
While talking about the strategy, here comes the words mission and vision. Without proper mission and vision, no strategy will come into a fruitful operation for a company. In developing a strategy for an organization, four key dimensions can be considered. They are as follows:
Culture: Beliefs, values, norms and organizational behavior.
Organization: The structure, job roles and reporting lines of the organization
People: The skill levels, staff potential and management capability
Human resource system: The people focused mechanisms which deliver the strategy - employee selection, communications, training, rewards, and career development and so on.
Balancing the demand and the supply for the human resources is the most important matter in the traditional approach of the HR Strategy. It is dependant upon the mission, vision, and goal and mostly on strategy (www.accel-team.com).
For an organization corporate strategy plays the important role for its success and HR management is an important part of the corporate strategy. Corporate strategy is the one which imports the latest methodologies for developing and implementing of the working strategy. The participants of the corporate level learn to integrate corporate strategy and culture with organizational structure, develop corporate, business, and functional strategies, and manage the interface of strategy and technology (Raynor, 2007).
HR management strategy is controlled, influenced and limited by the internal and the external factors of the organization. Business strategy management philosophy, labor market condition can be considered as some crucial factors. Some possible ways how the human resource strategies are controlled by the corporate strategies are shown below:
1. The fundamental requirement of the HRM strategies is the corporate strategy and its objective. The corporate strategies are responsible for the budgeting of the of the HRM management. Proper budgeting is necessary for the HR management. Corporate strategy should be very clear; otherwise it would be very difficult to develop strategy for HR manager.
2. Corporate level of an organization is the key source of finance of the HR. If the corporate level does not allow the HR management a proper budget, there will be a direct impact on the organization's productivity. Because of that proper recruitment will not be possible. Moreover, the proper training, proper knowledge providing will not be possible.
This can be said that HR strategy is controlled by the corporate strategy. But if they do not get the proper freedom to run their process smoothly, there will the direct effect on the company.
If an organization wants to stay in the competitive market, demand to them and their supply should have an effective value. And this can be done with the help of proper human resource management. But if they do not get the right power to use at the right time, the organization will be under the threat of loosing its position in the market. HR management has greater contribution to success of the organization (Holden and Claydon, 2006).
2.1 Overcome of the Limitations:
It is very clear from the above discussion that HR management plays a very important role for the success of the organization. It is also seen that this HRM might be improperly controlled by the corporate management and HRM might get some limitations. Some suggestions are given below to overcome these problems:
1. Strategies are made for fulfilling the vision and mission of the company. Strategies are made considering the whole company where HRM is a part of that. So when HRM strategies are made, there should be contact with the corporate level and there should be negotiation between them. And the decision should be taken which are beneficiary for the company. The planning, retention, new recruitment that is all these decision should be taken with the vast knowledge of the corporate level.
2. HRM strategy should be taken considering the vision, mission, and objectives of the company. If this goes other way means if this is contradictory decision the corporate strategy, there may be problem on implementing that. And it may not be beneficiary for the company as well. Conflict between corporate strategy and HR strategy can be reduce (Price, 2007) by using the following issues-
HRM must build trust on the corporate level. This will lead them to mutual understanding for future planning.
One more thing which should always be kept in mind is budget. They should always follow the budget allotted to them. If some more is needed they should always talk to the corporate level.
HR strategy must be need to make sure that performance of Human Resource is consistent with corporate strategy
3. The other thing is the power balance. The HRM should be given the proper power .There should not be any interference but should be negotiation.
3. ABC Company in France:
Preparing to Expand:
The company ABC wants to expand its business. Recently they have intended to start their business operation in France. But whenever a company wants to start a business in other country it must have to do some necessary things. The most important thing is market research that understands the temperament of the market where it wants to operate its business. It works through shrewd understanding of new customers: their characteristics, impulses and patterns. The Company needs to build a planned business map and market entry strategy.
Usually it is considered that the key to success of the business is first class business map. And it shouldn't be underestimated. On all sides of our objectives, forecasts and routes, a plan should be clear on how the company be going to take this business from paper to profit. A business plan which is well structured can make the difference between the winner and loser of the company. Each and every company runs its operation considering three questions- what is it trying to do? How is it going to do it? And when is it going to do it by? So they need to follow some guide to achieve their intended goal. Here is a few things need to know:
Summary of business: This is essential that ABC Company show their business plan to the investors.
Picture of company: Its services, why they want to offer them; to whom they want to offer.
Marketing & Sales: who is going to get their service, and why? How will customer get their service to them?
Management and Workforce: Is it required to take existing workers or hire people overseas?
Operational Considerations: Offices, factories, production facilities, locations, and management systems.
If ABC Company follows those point it will help them to do their business.
Market Entry Strategy:
Market entry for a company depends on some factors. The main concern is customers and competition with what is already there. find out the best potential customers, locations, sales leads and calculating rough sales volumes as well as find out the best agents and distributors ,Studying competitors their products, services, distribution channels and so many things influences the market entry for a new company. Calculating the primary cost and risk factor, to know about business's operational and logistical needs and contextualizing them with candidate country, recognizing the duties, regulations and other restraints, they should go through a market test, so they can easily understand the viability, transferability and profitability of services, Analyze the market. The other thing which should be kept in mind- Will the marketing techniques, product image and its associations be transplantable?
They should find out about their funding may be available Market opportunities, risks and environment, they also need Speak to distributors and producers about pricing and the market: its complication and opportunities.
All these things have more or less influence on the market entry strategy.
Whenever a company wants to enter into a new market, they need to take care of so many things. ABC Company should know about their rival companies, their business policy. That is they need to know: Who are competitors? What services do they offer? How do they price their service? Do they have more or less customers? And What advantages do they have?
Though they have some weakness but they have strength as well. Just they need to apply their strength in proper way. On the other way, they might be face Threats but they got lots of opportunity to smoothly run their business by using natural resource, land and so on.
Whenever a company wants to enter a market, they need to do the first thing is market research. Market research targets to get the knowledge about the consumer behavior. They need to do survey whether their products are going to be easily taken by the customer. Invariably, market research categorizes people by age, sex, occupation, income, opinions and daily routines. However, the scope for division and categorization is vast. That is they have to know that who are the customers? what is my potential number of customers? Will customers already know or used to a competitors products? What are the basis criteria for a customer that they will use to buy product? How can they ensure that the customer will return? What are the times, places, seasons, moods, etc, they would prefer to buy?
France has got so many business opportunities and potentials. Although it has some challenges such as customers. However,Â it is not without its challenges. Such things as insufficient market data, poor entry strategies, inaccessibility of sales channels and cultural barriers (startupoverseas.co.uk). The company ABC can enter in France following the few entry strategies, Like- Exporting, Licensing, Franchising, Foreign assembly, Multinational Corporation, Joint venture, foreign direct investment.
The business in France may face so many difficulties whether they want do it locally or internationally. The other thing which can never be neglected is about having the knowledge of French society and culture. Several issues may raise when a company wants to do the business in joint venture. Some of the things are mentioned below to have an overview of their society and culture. It's like PESTEL analysis-
Social & Cultural issues: Any company while going to expand their business in other country must have to have some knowledge about their culture. An inappropriate decision can hamper to evaluate of country's habits and customs. Learning and respecting these differences are crucial to the way of success in business. French people are very passionate about their food. The most important thing is that it differs by region and is influenced by what is grown-up locally. It is very important to respect the host countries culture and customs while running a business for a guest country (www.scribd.com).
Language: Language may become a barrier in doing business in other country. The company ABC wants to do the business in France. So they should keep in mind that the French people may not understand English as their mother tongue is French. So language may become a crucial issue in case of marketing and distributing. So for the smooth running of the company the product name or service name should be change according to the host language.
Economic system: Economic system of the host country can play an important role in running the business of a guest company. A countries economic system represents the degree of intervention in business. Different countries have different tax system for the companies though the host country has the unique business policy. Every country's government has unique policy to run business within this country. So before starting a business in other country, the company should acquire a vast knowledge about the economic system of the host country.
Currency rate fluctuations: Currency conversion is another thing which plays important role. Because very frequent fluctuations in currency rate may cause some unexpected changes in the business. So while running a business in foreign country, the guest company should always be aware of that.
Legal Environment: When a company wants to establish a business in abroad, the management must have adequate knowledge of legal environment. They should have knowledge of local country's law, international law and its own country's law. If they fail to obey the law while running the business, it may get shattered.
Legal & Political issues: Legal and political factors also have the impact on the business .There are some rules and regulations for the guest countries running their business in host countries. So the corporate level should have proper knowledge of the political atmosphere and the rules and regulations of the host country.
Relationships & Communication: Each and every country has its own business policy. French business behaviour gives more importance on courtesy and degree of formalities. Gaining mutual trust is very important for the running the business smoothly. While communicating the French people gives importance to their social status, educational level and which part of the country they were raised. They always appear in direct mode. Because they are not afraid of anything (www.scribd.com).
Business Meetings Etiquette: While there is a meeting with the French people, there must be an appointment before. The appointment should be made at least 2 weeks before. The appoint may be of telephonic or in writing. They usually do not want any schedule during the month of July or August. This a vacation time and they do not want to spoil the vacation (www.scribd.com).
Business Negotiation: French business emphasize good manners and a fair degree of formality and Maintain direct eye contact while speaking. They always try to avoid the high pressure tactics of the business. They are very conscious about what they are doing. For this they always try to analyze each and every proposal irrespective of time and the decisions are made at the top of the company. They always like to make agreement comprehensive, more precise and a worded contract.
Business Cards: When a company enters a market, they need publicity. So they exchange their Business cards after the initial introductions without formal procedure. On the other side they translated their business card into French. French business cards are a little bit bigger than many other countries business card. (www.kwintessential.co.uk).
3.1 Analysis of Porter`s Five Forces Model:
Porter's Five Forces Analysis model helps to understand the environment of the host country where the company trying to enter into. This analysis gives idea of five main issues (www.slideshare.net).
Risk of entry by competitors: When the new entrant is a potential one, it might be taking away the market from the established one. When the short term prices don't equal with the marginal costs, then it can be happen. But in this case brand loyalty plays an important role.
Bargaining power of buyers: In recent time market buyers have no influence to have low price. Customers are unable to force the company to offer them cheap price. But customer can choose the same product from the other company. But in case of suppliers that is other thing.
Threat of Substitute
Bargaining power of suppliers
Bargaining power of buyers
Threat of new entrants Substitute
Intensity of rivalry
Fig: Porters five Forces model.
Bargaining Power of Suppliers: Suppliers can create pressure on the industries they are associated with. They may have the bargaining power. These impart a threat to the companies. This can also change the customers' preferences.
Substitute products: The substitute product may be present at the market. So customers may switch to other products. So the new entrant may be effected by the substitute product (www.internetnews.com).
Competitive Rivalry: For pricing policies, all competitor are too much aggressive, The entrant should consider about these things while they entering the new market. (Hill C.W. and Jones G.H., 2004).
While entering a new market, ABC Company may face so many problems. Some of the factors which can be a barrier to the company for entering into a new market are shown by the analysis of Porter's Model.
4. Evolution of Recruitment Process of ABC Company:
Human resource is the most important part of a company. They should be recruited properly that is the person who is fit for the post should be recruited to lead the company to a fruitful stage. The aim of the recruitment process is to make a positive and valued contribution towards the work of the company. The best one is selected for the company through this process.
The selection and recruitment of the staff of the right quality at the right time is a very crucial thing for the company. In the company ABC, some wrong recruitment procedure has been done which are discussed below:
One of the most important thing about the recruitment is the selection of the right people for the right post. But the company did not follow the principle properly. Here in case of the ABC company, Ashley Jones was skilled in administrative work, she has no experience in marketing field. But she had been appointed as one of the key person in marketing field. This has created a great downfall in her performance. She was missing her monthly target which had a direct impact in the whole productivity of the company.
ABC Company did not emphasize on job analysis. Job analysis means a process where they can find out and understand the particular job in details and relative significance of particular job. If ABC Company follows their job analysis, then they can be sorted out before. Again training is major part of recruitment. If ABC Company follows their trained Ashley Jones in a proper way then the problems can't be happen which leads to decrease their productivity.
There should be a good reward and remuneration system for the employees. A well remuneration system is highly advised for the better performance of the employees. Moreover, if there is a reward system for the employees , they will be more motivated to give their best for the company. The payment system and the reward system were not so good .As a result of this the performance of the employees were going down. The consequence of this was the low productivity of the company.
The recruitment process should be very fair enough. The candidate should be recruited according to their merit. They should be provided adequate information about responsibilities before recruitment. But ABC Company select by referencing which does not met the recruitment policy.
The recruitment should be broadcast and advertised publicly. An open recruitment guide lot of opportunity to get skilled person between different candidates. But ABC Company has done the recruitment internally. For this more skilled persons did not get the chance.
4.1 Way of Effective Recruitment:
For more effective and good recruitment process in future some policies can be suggested. Those may be as follows two different ways -
i) Internal Recruitment
ii) External Recruitment
Internal Recruitment: It is the most favorite source of applicants in stable and developed companies. It needs a strong support from other HR Processes; because of these the unmanaged internal recruitment process can guide to disappoint the managers and employees in the organization. The succession planning and strong performance management is needed to make sure the success of the internal recruitment.
External Recruitment: The great advantage of this process is a greater pool of application for an advertised post. From this the right person can be selected for the post. They will be needed some training. Here the company has the opportunity to select the best ones for it. If the company uses their skilled employees for the interview of the business, then they can recruit the best applicant from the huge applicants (Mushtaq, 2009).
Documentation: Recruiters have to maintain the appropriate documents for recruitment process. They should also have the adequate knowledge about the responsibilities for the post. Then they will be able to recruit the best candidate. Documentation helps to make a short list among all applicants. Employee specification should not change during recruitment process (ezinearticles.com).
Search in Schools: The Company must build a good relationship with local schools, colleges and universities to attract graduates for trainee positions and always be ready to interview the candidates.
Recruit online and given advertisement in newspaper: A company can give advertisement in the newspaper as well as in the internet. They recruit online. For this it will emphasized on qualification of different people.
Use Job Center Plus: Job centre Plus can also may play an important rule for the recruitment in a cheap and fast way. The company can advertise about their vacancy through the job centre plus. The interested candidates can communicate with the company through the job centre plus.
Job analysis: job analysis very important in case of recruitment. Through this the candidates can be given proper training, their performance can be reviewed. For an effective recruitment process job analysis is necessary.
Impartiality: The recruitment process should be fair enough. There should be no partiality in selecting candidates. The most appropriate candidate should be selected (Mushtaq, 2009).
These suggestions could be more helpful for the recruitment process of the company ABC. They can have a look on the figure below which depicts the clear picture of a recruitment process:
Competency or Position Analysis
Pool of Aplicants
Fig: A typical strategic recruitment process
Source: Nankervis, A, Compton, R, Baird, M, 2005, Strategic human resource management, 6th ed. Cengage, South Melbourne.
5. Effect of redundancy on employee:
Redundancy of employees in the corporate world is one of the most haunting things for the employees. This is related to the financial condition of the company. Sometimes the company may not be able to bear the no of the employees associated with it. So it may take the decision of redundancy for some of the employees. Then it becomes a nightmare to the employees. It directly affects the employees' performance, their behavior, increases the mental stress, leads to decreasing productivity, overall their attitude gets hampered (Kempen, Steinruck & Patmore, 2008).
The employees remain always in insecurity of losing their jobs. So they become less interested to their job and their productivity gets ruined. The relationship between employees and the company management becomes the worst. But on the other side the company loses some efficient employees which may be huge pushback for the company (http://www.scribd.com).
In case of the ABC Company if it happens, the company will be affected hugely and total productivity may be decreased and which will lead the company to great loss.
6. Benefits of Performance Appraisal:
The total and the best productivity of a company depend on its employees' best performance. The performance of the employees can be measured by one of the best and valuable human resource tools and that tool is none other than performance appraisal. Performance appraisal is nothing but a process and this process is started with the job planning and how it will be done. Several ways can be chosen for the performance appraisal which will lead to a positive improvement of the performance management system (DeNisi, 1996)and these are discussed below:
Motivation: Motivation can do a miraculous change in the employees' performance which will lead to the best productivity for the company. The main aim of the performance appraisal is to motivate the employees to give their best. The performance appraisal process first imparts into the employees what is 'superiority' and then secondly to make them understand that they are superior performer of the company. The employees will be highly motivated to give their best.
Compensation change: Good and healthy payment and reward system may change the total performance of the employees. There is no measurement how much they should be paid for their performance, but it can be evaluated according to the setting standard.
Training: Performance appraisal is a tool which motivate the employees to perform there at their best. Performance appraisal specifies the areas where the performance needs to be improved. So according to that proper training can be given in that area to reach the goal.
Communication: The other crucial thing which may lead to the effective performance of the company is the communication between the employees and the management. Without proper communication it would never be possible to evaluate the performance of the employees. Performance helps to increase communication between managers and subordinate (www.trainingsys.com).
Appraising goal: Each and every company has its mission and vision. The goal is to be set for the best performance from the employees. Performance appraisal makes the employees to set their own goal to acquire the company's goal.
Analyzing poor performance: Each and every company sets its organizational standard. But all the employees may not meet the set standard for them. Performance appraisal innovates and can make the performers who do not meet the standard to do their best for the company so that it can achieve its goal(http://findarticles.com).
The benefits of the performance appraisal can be said according to Murphy, 1995 as- The performance appraisal acts as a bridge making tool for communication between the management and the employees. As a result the employees come to what are expectations of the employer from them. The management can also know what are difficulties of the employees to perform their best .Then they can take the proper decision solve the problems of the employees. Moreover, the performance appraisal helps the employees and the employer to do the work with their mutual co-operation. Again performance appraisal reminds the employees about their role and responsibilities (www.dotnetspider.com).
From the above discussion it is clear that if ABC company uses this tool, they would be much benefited and will smoothly proceed to their target.
6.1. Appraisal of Reward Management: A reward system is always motivational to achieve the best from the employees to reach maximum productivity. The employees can be rewarded in two ways-one of which may be the base pay, bonus, incentive, commission and so on. And the other may be the indirect reward. This is non monetary reward. They may given the promotion, distinct recognition, gifts and so many other things. The work environment includes physical space (Wright, 2004).
Ability / Skill
Source: Purcell et al (2003)
Effects of the reward system are discussed below:
Greater impact: The performance of the employees are some how depends on reward system as well as salary system. This may act as the tonic to boost up the employees to give the best for the company.
Increase the employment relationship: it may help them for mutual understanding and more engaged to each other. They work with mutual co-operation.
Increased engagement as part of the process: The reward system makes the employees more engaged and loyal to their work. Their engagement with work may make them more motivated and may make them a part of decision making and sometimes part of implementation of the decision.
Increase productivity: The employee become more involved and loyal to the company as a result of indirect the indirect reward system. Their involvement become more effective to the total productivity. An experience employee of a company most of the times can represent the low cost solution to critical things whenever needed.
There may be some negative impact of the reward system as well. Those are discussed below:
i) The reward system in the form of promotion and empowerment may lead the employee to be more reluctant to their job and sometimes they may do the miss use of their power.
ii) When an employee become more secure about their job in the form of reward, their productivity may become down going . As they become sure of it that there is nothing to lose if they do not do their duty properly, this may lead them to lose their efficiency to work(www.strategic-human-resource.com).
Human resource strategy plays an important role for a company to become a successful one. If the company needs to be in a leading position, their HR strategy needs to be implemented in a proper way. As a company's success depends on the employees , they should be recruited in a proper way and the candidate should be the best one. All this procedure is done by the HR department of a company. So they should motive the employees in an effective way so that the company may become a successful one in the leading market.