This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.
For an organisation of your choice, demonstrate how effective its human resource management is in achieving competitive advantage for that organization.
This assignment is about Human Resource Management and is concerned with the way in which organisation manage their people and would demonstrate how effective is human resource management is in achieving competitive advantage for that organisation. After reflecting upon related literature on the resource-based view in context of HRM, author would explore and analyse HR practices at Google and try to discuss how HR systems facilitate the development and utilization of organisational resource and capabilities.
Gaining and retaining competitive advantage is critical to organisational success. Although there are many ways to gain competitive advantage, one of the main source for competitive advantage could be people or human management.
Storey (1995) supported the importance of HRM and elucidated that HRM is a ‘…….distinctive approaches to employment management which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce using an integrated array of cultural, structural and personnel techniques'
While there is no denying the fact that Human Resource Management is important, but traditional definition of HRM by Dessler (2005), Human resource management ‘…….is the process of acquiring, training, appraising and compensating employees and attending to their labor relations, health and safety, and diversity concerns' is a bit outdated and now in 21st Century. HRM has adopted a cross functional approach and expanded its scope beyond Dessler (2005) definition. Strategic HRM theory, which is a part of HRM, posit that an organisation' human resource assets are potentially the sole source of sustainable competitive advantage (Redman and Wilkinson, 2009).
A lot of work has been done in this field by renowned researcher Porter (1985); Barney (1991, 1995); Boxall and Purcell (2003); Allen and Wright (2007), which author of this assignment would discuss and use in depth. Prahalad and Hamel (1990) also argued that people are the only real source of ‘core competence' and thus of continuing competitive advantage. Before we discuss the how HR practice achieve sustainable competitive advantage its worth understanding the rationale underpinning the resource based theory. Resource based theory (Barney, 1986a, 1991) suggests that competitive advantage depends ultimately on an organisation having resources that are:-
* Non Substitutable and
* Non imitable
Miller (1987) consider SHRM as a special branch or HRM which is directed towards creating and sustaining competitive advantage through people management at all levels in the business.
It can be argued that successful firm not only rely on technology, patent or strategic position but how they manage their people effectively.
MacMillan (1983) elucidated that gaining a competitive advantage requires an understanding and anticipation of potential barriers, information system, preemption potentials, infrastructure requirements, calculated risk, general management challenges, and punch and counterpunch planning. While there are very few companies that gains competitive advantage there are fewer companies that explore human resource management as the best tool for sustaining and developing competitive advantage.
Achieving competitive success through people involves primarily changing how workforce and employment relation is perceived as. Human Resource management entails seeing the workforce as a source of strategic advantage. According to Michael Porter' now famous framework, the five fundamental competitive forces that determine the ability of firms in an industry to earn good returns are "the entry of new competitors, the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers, and the rivalry among existing competitors." (Pfeffer, 1995). Drawing parallels form Michael Porter's theory in order to achieve above normal returns a company could create barriers to entry by recruiting the right people with desirable skills and retaining them within the organisation. In case of Google studies and surveys suggest that most of its cost advantage comes from its very productive, very motivated, and innovative workforce.
Google is one of the leading internet technologies and advertising companies in the world. The company specialises in internet search engines and related advertising services. The company primarily operates in the US, the UK and other countries. It is headquartered in Mountain View, California and employs about 20,222 people (Datamonitor, 2009). The innovative company is not just known for excellence in technology, but is also known for its exclusive innovative HR practices and culture.
Google is ranked 1st and 4th on the ‘100 Best Companies to work for' list of Fortune 2009 and 2008 respectively, a global business magazine published by Times Inc. Fortune conducts employee survey in US with more than 80,000 employees from more than 350 companies responded the survey conducted by Great Place to Work institute. Cultural Audits are performed at various selected organisation which includes detailed questions about demographics, pay, and benefits, and open-ended questions on philosophy, communication, etc.
Google name its HR Practice as ‘People Operation' and it respect and value employee relationship. Google people operation practice not only keep employee motivated, but also increase their efficiency and productivity.
Vice President, People Operations
Laszlo Bock leads Google's people function globally, which include all areas related to the attraction, development and retention of "Googlers."
Laszlo joined Google from the General Electric Company, where most recently he was a vice president of human resources within GE Capital Solutions. He had earlier served as vice president of compensation and benefits for GE Commercial Equipment Financing. Before GE, Laszlo was a management consultant at McKinsey & Company, serving clients in the technology, private equity and media industries on issues of organizational design, talent acquisition and development, and cultural transformation. Laszlo's client work also extended to broader business growth and turnaround strategy. Earlier, he worked as a compensation consultant at Hewitt Associates, an HR consultancy. Laszlo earned an MBA from the Yale University School of Management and a bachelor's degree in international relations from Pomona College (Various Google Sources, 2009).
People are at their best when working in small teams without being too constrained by management, according to Google's vice-president of people operations Laszlo Bock. (Peoplemanagement.co.uk, 2008)
Google culture is unique and these unique HR practices make the company an incredible work place. Google tries to maintain small entrepreneurial team culture. Although Google have more than 10,000 employee world wide it still maintain a small company feel within the employee. Sharing ideas and opinion is encouraged in company. For example everyone eats at office café for lunch and get chance to interact with team member across different teams. Googlers are free to ask question directly to Larry Page (Co-founder and President - Products) or Sergey Brin (Co-founder and President - Products). The concept is not only to create best search engine but also to create a great workplace. A key component of the Best Companies evaluation process - Culture Audit, Google states, "There is no hard data that can ever prove that a free lunch and a multicultural, campus-like environment contribute to the organization's success and profit. What can be proven is that Google is growing at an immense pace - retention of employees is high, attrition is low and revenues are strong. People are eager to work at Google and applications to our job openings are exceedingly high”. (Great Place to work, 2009)
Google's corporate philosophy embodies such casual principles as
* you can make money without doing evil,
* you can be serious without a suit, &
* work should be challenging and the challenge should be fun. (Wikipedia-Google, 2009)
Below are some examples of the best HR practices in Google, which not only makes it different but also build a competitive advantage for the organisation.
ü Thank God it's Friday (TGIF)
TGIF is a weekly company meeting which brings the Googlers under the one roof to interact and discuss with their colleagues. The meeting was started by Larry Page and Sergen Brin where they perform different activities, which cultivate employee satisfaction on every step of the way:-
1. Welcoming New Googlers (Nooglers)
2. Provide news about Google and Google related events
3. Question and Answer session
4. Celebrating team accomplishments
The environment in the meetings has been very friendly where no question is considered off-limits or in other words each member is encouraged to ask or discuss anything at any level.
ü Dedicated Forums and Email List
Google care for the employee is evident clearly from this example.
1. Official Google Blog
Official weblog of Google with news of new products, events and glimpses of life insideGoogle
2. Google Ideas
Googlers regularly submit their ideas, thoughts and suggesting for improvement ranging from product to services that it offers.
ü Quarterly - Kick off meeting
In these meetings Sales Vice President discuss different product and team's performance on quarterly basis. The objective of these meetings is to provide an idea to employee about ‘where are we' and ‘where do we want to go'. Google Quarterly Kick off meeting is a global sales and operation conference where entire Google's sales force participates in a three day training workshop, lecture from senior leaders and guest speakers. Like TGIF each invite is encourages for candid discussion and one to one Q and A session with Google's top management team.
ü 20% project
The 20% project is a unique program for Google engineers, which encourages them to dedicate 20% of their time on a project outside their typical work responsibilities that would potentially benefit the company. The 20% project encourages continual innovation by allowing engineers to spend time on Google related projects that they wish to pursue. By enabling employees to recharge their creative energies, Google provides an opportunity for employees to move into new areas of work while also broadening their knowledge base. (Great Place to work, 2009)
Google proclaims to be aggressively inclusive in hiring, where ability is given preference over experience. Google believes in diversity and have office around the world (Asia Pacific, Americas, EMEA) where Google staffers communicate from Turkish to Telugu. Regardless of the location, product or service Google nurture an invigorating, positive environment by hiring talented, local people who share our commitment to creating search perfection and want to have a great time doing it. Google always tries to avoid bureaucracy so that people can do what they feel and make sense. At Google, management knows that every employee has something important to say, and that every employee is integral to Google success. Google provide individually-tailored compensation packages that can be comprised of competitive salary, bonus, and equity components, along with the opportunity to earn further financial bonuses and rewards. Googlers thrive in small, focused teams and high-energy environments, believe in the ability of technology to change the world, and are as passionate about their lives as they are about their work. When Googlers are not at work they are motivated to pursue their extra-curricular activities and interest which might range from cross-country cycling to wine tasting, from flying to frisbee. (Various Google Sources, 2009)
Recruitment and Selection at C:\Documents and Settings\Himanshu\Desktop\google_logo.jpg
Google Inc utilizes its staffing practices to gain a competitive advantage. Larry Page, Google Co-founder emphasizing on the Google Talent acquisition comment
“We don't just want you to have a great job. We want you to have a great life. We provide you with everything you need to be productive and happy on and off the clock.”
Google place great emphasis in how we attract and hire the very best talent - because at Google, people are the most important asset. Google take hiring very seriously and make consensus based decisions.
‘Googleyness' is one of the qualities that Google explore and measure in Nooglers, which is defined as the ability of the candidate to work effectively in small team in a flat organisation structure and efficiently reply to fast-paced dynamic environment. Google gives a huge level of responsibility in early career as compared to other organisation. When graduate join Google, they have impact on business very quickly.
In addition to challenging hiring process Google Inc. use compensation practices to gain a cost/efficiency competitive advantage to drive their search for innovative products and services.
Google's compensation philosophy is to deliver pay in ways that support its primary business objectives, which includes supporting the company's culture of innovation and performance and attracting and retaining the world's best talent.
To achieve these objectives, Google has developed its compensation programs on a pay-for-performance platform intended to provide "start-up-like" reward opportunities for strong performance as well as downside exposure with underperformance. This philosophy applies to all Google employees, with increasing proportions of "leveraged" or "at-risk" compensation being tied to increasing levels of leadership and responsibility (Great Place to work, 2009).
Employee Compensation for Google shows that software engineers at Google receive a median salary of $81,239, about $8,000 less than their top competitor, Yahoo. However this trend changes when comparing employee compensation for senior level software engineers. People in this upper level position at Google have a median salary of $111,996, about $5,000 higher than the median salary of $106,728 at Yahoo. When researching Google'sMedian Salaries by Years of Experienceyou can see that the median salary for people with less than one year of experience is $73,800. After twenty years or more at Google, employees earn a median salary of $122,084, a $48,000 increase over twenty years. (PayScale, 2009)
Google's co-founders and chief executive officer were offered a raise in 2006 by the company's compensation committee, but the three turned it down and are sticking with their current annual salary of $1(CNNMoney.com, 2006)
Many young professionals aspire to work with Google. No doubt with excellent work and fun environment, top in class compensation and bonuses, flexibility to work on projects Google has proved its image as one of the best motivating employer. Who wouldn't want to work atGoogle?Google HR practices offers excellent ‘work - life balance' and employee tend spend most of their time at work.
Managing human resources effectively leads to an improved ability to attract and retain qualified employees who are motivated to perform, and the results of having the right employees motivated to perform are numerous. They include greater profitability, low employee turnover, high product quality, lower production costs, and more rapid acceptance and implementation of corporate strategy. (Schuler R. S. & MacMillan I. C., 2006). No company in the world but Google offers expensive perks like free food, free fitness center, free barber shop that comes to you, free car wash while you work, free pool table, games room, lap pools for exercise, volley ball courts, company massagers, USD 5000 compensation for hybrid car, free laundry, free doctor on site which create engaging insanely great working environment in corporate world and in return Google gets tremendous productivity, loyalty, creative products and sustainable growth with good profit margin. Studies and surveys suggest that most of its cost advantage comes from its very productive, very motivated, and innovative workforce.
Appendix 1 Top 10 Reasons to Work at Google
1. Lend a helping hand.With millions of visitors every month, Google has become an essential part of everyday life - like a good friend - connecting people with the information they need to live great lives.
2. Life is beautiful.Being a part of something that matters and working on products in which you can believe is remarkably fulfilling.
3. Appreciation is the best motivation, so we've created a fun and inspiring workspace you'll be glad to be a part of, including on-site doctor and dentist; massage and yoga; professional development opportunities; shoreline running trails; and plenty of snacks to get you through the day.
4. Work and play are not mutually exclusive.It is possible to code and pass the puck at the same time.
5. We love our employees, and we want them to know it.Google offers a variety of benefits, including a choice of medical programs, company-matched 401(k), stock options, maternity and paternity leave, and much more.
6. Innovation is our bloodline.Even the best technology can be improved. We see endless opportunity to create even more relevant, more useful, and faster products for our users. Google is the technology leader in organizing the world's information.
7. Good company everywhere you look.Googlers range from former neurosurgeons, CEOs, and U.S. puzzle champions to alligator wrestlers and Marines. No matter what their backgrounds Googlers make for interesting cube mates.
8. Uniting the world, one user at a time.People in every country and every language use our products. As such we think, act, and work globally - just our little contribution to making the world a better place.
9. Boldly go where no one has gone before.There are hundreds of challenges yet to solve. Your creative ideas matter here and are worth exploring. You'll have the opportunity to develop innovative new products that millions of people will find useful.
10. There is such a thing as a free lunch after all.In fact we have them every day: healthy, yummy, and made with love.
ALLEN, M., AND WRIGHT, P. (2007) "Strategic management and HR", in L.P. Boxall, I. J. Purcell and P. Wright (eds), The Oxford Handbook of Human Resource Management, Oxford: Oxford University Press
BARNEY, J., 1986, ‘Organizational culture: Can it be a source of sustained competitive advantage?' Academy of Management Review, Volume 11, Pages 656-665
BARNEY, J., 1991, ‘Firm resources and sustained competitive advantage', Journal of Management, Volume 17, Issue No. 1, Pages 99-120
BARNEY, J., 1995, ‘Looking inside for competitive advantage', Academy of Management Executive, Volume 9, Issue No. 4, Pages 49-61
BOXALL, P. and PURCELL, J., 2003, Strategy and Human Resource Management, Palgrave: London
CNNMoney, 2006, Google leaders stick with $1 salary, Accessed 28th November 2009, Available World Wide Web: http://money.cnn.com/2006/03/31/technology/google/index.htm
DATAMONITOR, 2009, Google Inc. Company Profile, Publication Date: 9 Jun 2009
DESSLER, G., 2005, A Framework for Human Resource Management, Prentice Hall: UK
GREAT PLACE TO WORK, 2009, Great Place to work institute best companies list, Accessed 10th November 2009, Available World Wide Web: http://www.greatplacetowork.com/best/100best2007-google.php
MACMILLAN I. C., 1983, Seizing Competitive Initiative, The Journal of Business Strategy, pages 43-57.
MILLER, P., (1987), "Strategic Industrial Relation and Human Resource Management: Distinction, Definition and Recognition", Journal of Management Studies, Volume 24, Issue No. 4, pages 347-61
PAYSCALE, 2009, Google: Company Salary Review, Accessed 28th November 2009, Available World Wide Web: http://www.payscale.com/research/US/Employer=Google,_Inc./Salary
PEOPLE MANAGEMENT, 2009, People work best in small teams, Says Google, Accessed 28th November 2009, Available World Wide Web: http://www.peoplemanagement.co.uk/pm/articles/2008/06/people-work-best-in-small-teams-says-google.htm
PFEFFER J., 1995, Producing sustainable competitive advantage through the effective management of people', Academy of Management Executive, Volume 9, Issue No. 1
PORTER, M., 1985, Competitive Advantage, Free Press: New York
PRAHALAD C. K. AND HAMEL G. (1990), ‘The core competence of the corporation',Harvard Business Review, pp.79-81
SCHULER RANDALL S. & MACMILLAN I. C., 2006, Gaining Competitive Advantage through Human Resource Management Practices, Human Resource Management, Volume 23 Issue 3,Pages241-255
REDMAN, T., 2009, Contemporary Human Resource Management: Text and Cases, Prentice Hall: Italy
STOREY, J., 2001, Human Resource Management: A Critical Text, Routledge Publication: London
Various Google Sources, 2009, Accessed November 2009, Available World Wide Web: <http://www.google.com/intl/en/jobs/lifeatgoogle/index.html>, <http://www.google.com/intl/en/jobs/locations.html>,
Wikipedia - Google, 2009, Accessed 28th November 2009, Available World Wide Web: http://en.wikipedia.org/wiki/Google