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Introduction - Describe P&G and somehow show that HR of the company is very important and has been the key reason in the making the company successful. Describe - HRM topline Theory and add P&G part in the theory.. In every theory - end with conclusion by demonstrating how P&G's model is making that successful or delivering results
What is Human Resource Management
What is Strategic HRM
Why it is important and its main functions and objectives
Objectives of HRM
Activities of HR
1. Recruitment and selection
Select the best person for the job- right person approach
Culture fit model
Flexibile person approach
Which model is used by P&G and how it works for it.
Web based recruitment
How does P&G recruits.P&G recruits at first level and promotes internally which works for P&G
What policies make P&G Hr so effective
Equal opportunity employer
Common recruitement policies and procedures
Policy adopted by P&G
Overall conclusion of P&G's HR and how it has been successful. May be indirectly as SWOT
Recommendation for HR
Procter & Gamble is the world's biggest consumer good company and amongst the biggest companies in with world amongst sectors (Forbes annual reports). The annual current sales is approx $80 Billion with 300 brands in it's portfolio amongst which 23 brands have an annual sales of more than $1 Billion. P&G has 138000 employees operating in almost across the globe and has been a strong performer since it started 170 years ago. P&G operates in multiple consumers good industries including detergents, shampoos, perfumes, soaps, skin care, cosmetics etc. P&G has a vast and diverse portfolio of products whereby 3 billion times a day P&G brands touches the lives of the people around the world.
P&G has a rather unique Human resource strategies e.g. "promote from within" philosophy means that people are recruited at the entry level and then through strong training, development, continuous coaching and mentoring people are promoted within the company to the highest levels. This P&G approach is rather uncommon as a large number of other companies are focused on hiring experienced people at all levels within the company. Due to the above mentioned reasons, P&G has been selected as the company to be evaluated for HRM evaluation.
Any company's performance is driven primarily by it's people and similarly for P&G's it's top or amongst the top performance has been driven by it's strong, highly capable people. Although training, coaching and experience is vital to HRM in any company but the initial step of attracting the right talent i.e. recruitment and selection of the people with right attitude, capabilities and skills is the first and foremost step in this 'Chain of HRM'. P&G is often called as 'company for leaders' due to ex-P&G people being CEO's of companies like Boeing, ebay, GE, Microsoft etc.
2. Human Resource Management
Human Resources Management (HRM) is strategic and consistent approach to the management of an organisation. It is a function within an organisation that focuses on recruitment of, management of, and providing the direction for the people working in the organisation. The people working in the organisation individually and collectively contribute toward the achievement of the objective of the business. In simple words we can say that HRM is about employing people, developing their capacity, utilizing, and maintaining and compensating their services in tune with the job and organisational requirements.
HR has evolved to Strategic human resource management means formulating and executing human resource policies and practices that produce the employee competencies and behaviours the company needs to achieve its strategic aims. (Dessler, 2008, page 13)
HR is the backbone of any organisation. Its main function is not to recruit people but there are various functions which are performed by HR such as:
As a Service provider: Hr acts as a service provider for an organisation where its main activities are to recruit new people, provide trainings and other development opportunities.
As a Regulator: It also works as a regulator where HR tasks is to set the base rules which Managers have to follow in order to manage there subordinates when it comes to company policies such as Pay, promotion, performance appraisals and other company policies.
As an Advisor: It also acts as an Advisor to advice on HR strategies required by the organisation.
As a change agent: It is also responsible for devising the policies which helps in moving the organisation forward by taking car of its employees and investing in people and the managing the changes.
HRM at P&G
Human resources at P&G is considered at the utmost importance with being an integral part as one of the 3 pillars of P&G values. P&G has a global HRM structure rather local one.
In P&G, one of the priorities for HR at global level is to develop HR capability. This is being achieved by creating interdependencies within the HR community across the company. A sophisticated network of ten communities of practice, each focusing on a different area of HRM activity (such as remuneration or employee relations) has been established. These communities are international, and are resulting in less difference between countries in HRM policies due to the collaborative nature of policy development and implementation.
In P&G, the HR mission is the catalyst for 'unleashing the power' of the strategic human capital of the corporation, and is the primary driver for linking the Company's strategic business direction with organization and individual capability.
The P&G HR function is more a strategic HR function that accomplishes this through high leverage leadership and functional mastery in the management of:
1) Partnerships with Business Leaders;
2) By Driving Change and Managing Transformation;
3) Through The Ability to Create and Manage Culture;
4) By the Management of HR Practices/Delivery of HR Systems with Excellence;
5) Through Personal Credibility and Influence of Individuals and Groups.
Roles and Competencies at P&G
[Balady,H P&G HR, 2008]
The above model from P&G HR clearly describes the roles and competencies of into 4 areas as 'Strategic focus', 'Operational focus', 'processes' and 'people', all build around PVP's of the company. The important part in understanding of this model is the specific focus that P&G HR gives into different roles within HR. e.g. the importance of driving change and managing transformation to be a 'change agent' in driving 'strategic focus'.
3. Activities of HR
Human Resource Planning
Recruitment and Selection
Training and Development
Performance Management and Appraisal
P&G Success Drivers and PVP's
In terms of activities of HR - it is vital to understand the P&G 'success drivers' and 'Purpose, Values and Principles' (PVP). The P&G 'success drivers' together with P&G's PVP's are the most important part of P&G's overall HR model in all the HR activities across all organizations, functions, regions globally.
Throughout the hiring process P&G is looking for behaviours that demonstrate these competencies for success at P&G, these are called as P&G's Success Drivers.
Power of P&G Minds: This is the ability to out-think, out-invent and out-play the best competitors over time for the benefit of consumers. P&G looks at the applicants to display infinite curiosity and be eager to create - this desire helps form the ideas that will move the business forward.
Power of P&G People: This is the competitive advantage that P&G's people and people-systems create when they work together. P&G strive to create an environment that fully leverages the individual talents for the value of all.
Power of P&G Agility: This is P&G's ability to be fast, flexible, responsive and versatile in complex and rapidly changing business environment. This is to be ready to meet change head on and to be rigorous in employees execution.
At the core of this model is P&G's PVP. It's about integrity and character, about building trust by being open, straightforward and candid with each other, our consumers and business partners.
1. Human Resources Planning
"The systematic analysis of the company's resources ,the construction of a forecast of its future manpower requirement from this base, with special concentration on the efficient use of manpower at both these stages and planning necessary to ensure that the manpower supply will match the forecast requirement."
"Human Resource Planning is the "process of analyzing an organisation's human resource needs under changing condition and developing the activities necessary to satisfy these needs"
It comprises of three main activities to be performed:
Human resource requirement
Forecasting of future states
Developing plans of actions
Importance of Human Resource Planning:
It is important to make sure that the organisation has a right people,at the right place ,at the right time with the right skills & tools and experiences and on the right job as well.
To obtain and retain the best qualified along with highest quality and most productive people for an organisation.
To make best use of Employees talent
To anticipate human resource utilization
Tools of Human resource planning:
Job Analysis: "The procedure of determining the duties and skills required of a job and a kind of person who should be hired for it"
"The process of obtaining information about jobs"
Job Description: "A list of job duties, responsibility, reporting relationship, working condition and supervisory responsibility"
What the worker does
How the worker does it
Why the worker does it
What standard of performance will be expected as normal
In what condition the work has to be carried out
Job Specification: "A list of jobs human requirement that is, the requisite education, skills, personality"
HR Planning at P&G
The HR planning within P&G is done by the different departments, business units and MDO's separately both for external and internal needs. In terms of P&G hiring culture it hires people from base level and then promote people from within therefore P&G has significant internal vacancies too other than external vacancies. P&G has a strong policy of job rotation where people work on assignments and then move onto next assignment or higher in their career enabling them to get diverse experience and grow skills and capabilities. This approach increases the level of HR planning activity within P&G significantly.
As P&G hires the people externally from base level and has a global approach to overall HR activities including 'the kind of people P&G looks for globally' therefore at P&G the 'job analysis' and job 'standard' are pretty standard while the job description differs from one function to other (e.g Marketing, sales). This is apparent on the P&G global career (www.pgcarrers.com) website while comparing a job posting from Marketing to purchasing. Internally too this approach is followed. The 'job analysis' is primarily defined around the success drivers.
2. Recruitment and Selection
Recruitment is an organisational activity that aims at "head hunting and stimulating potential candidate to apply for previous and foreseen vacancies."
Thus, recruitment intents to influence the quantity and the type of candidate for a certain vacancy.
Whereas the process of recruiting aims at increasing the quantity of candidates , the aim of short listing is to reduce this number by choosing the candidate who best meets the criteria of the offered vacancy.
Factors affecting recruitment
The following are the 2 important factors affecting Recruitment:-
1) Internal Factors: Recruiting policy, Temporary and part-time employees, Recruitment of local citizens, Engagement of the company in HRP, Company's size, Cost of recruitment, Company's growth and expansion
2) External Factors: Supply and Demand factors, Unemployment Rate, Labour-market conditions, Political and legal considerations, Social factors, Economic factors, Technological factors
Figure 2: Factor effecting Recruitment
Recruitment and Selection at P&G
P&G is one of the largest multinationals in the world with operations in 80 countries with a current workforce of 138,000. P&G has been performing very well and growing consistently over the years especially since the year 2000. The company's performance is linked to it's expansion and therefore need to more human resources.
Altogether, P&G's internal structure, expansion plans and strong reputation has supported it being a global magnet amongst the talented HR pool globally and helped to balance the external factors well.
'Nearly a half-million people apply for P&G jobs every year. We hire less than 1%. We attract top talent because of P&G's reputation as a great company for leaders, and we identify the best applicants by using a proven recruiting process that measures intelligence, assesses character and leadership, and predicts success at P&G.'[P&G CEO - Annual report 2009]
Sources of Recruitment:
Internal source: Promotion, Transfers, Employee referrals, Upgrading, Retried and Retrenched Employee
External sources: Campus Recruitment, Advertisement, Employment exchange, Private employment searching firms, Executive Recruiters , Web sites, Unsolicited Applicants
Selection: It means whittling down the applicant pool by using the screening tool, Test, Assessments centres and checking references. The purpose of selection process is to select most suitable candidate who meets the requirement of the job in an organisation best. In order to meet the company goal we have to assess the candidate in terms of age, qualification, skills, experiences etc. Selection is usually a series of hurdles or steps. Each one has to clear successfully before applicant move to the next step.
Figure 3: Process of selection
P&G has the culture of 'built from within' where the recruitment and selection is done at the base level of management or associate. For the base level recruitment most employees start through 3 ways - Career Academy, Internship or direct full time role.
With 'career academy' P&G organizes seminars specific to functions where candidates can apply and participate in a few days event and may be selected through the end of the seminar. With internships - candidates apply for a few months temporary assignment where the candidate is the opportunity to judge company before it accepts the role and P&G can assess the candidate's suitability. With full time roles candidates get the opportunity to get a job directly for a full time role at 'entry or base level' generally with a probationary period to qualify. All this recruitment has a common recruitment and selection process with minor differences.
Step 1: All P&G applications are applied online through P&G careers website for a specific vacancy
Step 2: Completion of the online assessment - Success Drivers Assessment (67 multiple choice questions, no time limit) together with 'Diagrammatic test' (15 questions, takes approx. 30 minutes).
Step 3: Take Reasoning test at P&G offices -Diagrammatic, logic-based and numerical content - 40 questions, 65 minutes
Step 4: Interviews - At P&G offices - Typically two rounds of interviews.
Step 5: Hiring decision
P&G hires people in different functions including Marketing, Sales, Strategic purchasing, R&D, Engineering, Manufacturing and although the job profiles are different for every role but P&G's hiring model is largely based on it's 'Success Drivers' and ' Purpose, Values and Principles (PVP)'. However strong the capability, experience and background of the candidate is - the success drivers and 'PVP's are the most important criterias upon which a candidate is judged.
3. Training and Development
Training: "Planned activities on the part of an organisation to increase job knowledge and skills or to modify the attitude and social behaviour of its member in ways consistent with the goals of the organisation and the requirement of the job"
A systematic formulation of training program which qualifies employees to identify not only the problematic environmental issues but also the best way to treat them. It is necessary for the empowerment of the work force to be recognised as an essential factor for planning and maintenance of environmental management practices in organisation
Purpose of Training:
In an organisation there can be variety of purposes for Training such as:
Induction: This is an introductory training which is provided to an individual to become familiar with the physical and cultural situation in which he or she will be expected to operate.
Skill acquisition: The main aim of this is to implant and develop new skills and abilities in an individual. It is not easy for every organisation to recruit people who are already trained in required skills.
Skill development: It is provided to update a persons knowledge or skills at any stage in his career or wheneve a change occurs in a work environment which makes it necessary. Due to an increasing rate in technology the need for skill development is becoming more frequent.
Increasing motivation: It is required so that the individual can work as per the required patterns and standards of the organisation. It helps the individual to understand what they are expected to do at work and why they are expected to do it in a certain way.
Attitude change: It is one of the most difficult to achieve through training. This type of training is provided in conjuction with team building and motivation development excercises. It is used to define the attitude that the workers adopt or develop in relation to the organisation and there work within.
Team-building: In team-building exercises it helps the individual to realise the objectives of the organisation without itseld being capable of delivering the whole result.
Types of Training:
There are three places where training can take place:
In-company , on-the-job
In-company on-the-job consists of teaching and coaching by managers and team leaders at the desk. It is the best way to develop and practice specific managerial, team leading, technical, selling and other jobs required by the organisation.
In-company off-the-job training can be provided in special training areas or centres which has specific training equipements and staff for the same. It is the best way to acquire advanced skills which is required to know more about the company procedures and products.
It is useful for the development of certain skills such as team-leading, managerial and other technical and social knowledge. External trainings should be able to provide quality of instruction that it might be uneconomical to provide internally.
Development : It means to prepare people to perform work hard beyond that which currently engages them and to accept responsibilities 'greater than they now have' It can also be defined as 'involving acquisition of broader knowledge and skills'
Difference between Training and Development
Generally short one -to three-hours session
Generally long two -to three-days sessions
On-siteplant,office,laboratory or Class rooms
Off -site education centres, resorts, motel ,university
Lower management and supervision
Middle level and upper level management
Specific skills, task ,usually job Centered
General knowledge ,theories applicable to wide range of application
Emphasis on taking action
Emphasis on knowledge accumulation and process activities
Training and Development at P&G
P&G has a very strong training and development plan as P&G's culture is to 'build from within', which means an organization that is not hiring the talent at higher level needs to get have a very strong training and development plan to keep the organization updated otherwise the company will fail.
P&G in every function has a combination of 'on the job' training from the very first day together with the function specific 'in-company' or 'external off the job' training.
In an interview with Mr. Vineet Garg - Senior Purchasing Manager: He get's 'on the job training' from the very first day together with 8-10 'In-company off the job' and 2-3 'external off the job' trainings annually on an average.
P&G has powerful tools and systems in place like 'Global Career and Skill development system' that keeps track of the all the trainings happening across all functions globally together with the online enrolment possibility. Every employee needs to go through annually a 'Work and Development plan' review with higher level managers and 'training and development' is a vital section in this working document. P&G has a combination of general business trainings accessible to all functions and trainings specific to the function and role. Most key trainings are defined at the Corporate HR level to have standard process across the global.
4. Performance Management and Appraisal
Performance management is a process that unites goal setting, performance appraisal and development into a single common system whose aim is to ensure that the employee's performance is supporting the company's strategic aims. The feature that distinguishes performance management is that it explicitly measures the employees's training, standards-setting, appraisal and feedback relative to how his or her performance should be and is contributing to achieving the company's goals.
Why Performance Appraisal is so important?
Performance appraisal is important due to number of reasons which are as follows:
Performance appraisal is important in order to appraise the employee for its pay and promotion decesions.
Its is very important to translate employer's strategic goals into specific employee's goals which can only be reviewed periodically by performance appraisal.
It gives and opportunity to the boss and the subordinate to develop a plan for correcting any deficiencies and to reinforce the things the subordinate does right.
Performance appraisal is very useful for career planning process. It provides an opportunity to review employee's career plan in the light of his or her strengths and weaknesses.
Steps in Performance Appraisal
Performance appraisal process contains three steps:
Defining the job: During this process the boss and subordinate would agree on his or her duties and job standards.
Appraising Performance: Comparing the subordinates actual performance to the standards that have been set by using some type of Rating form or method.
Feedback Sessions: Here the performance and progress is discussed and plans area made for any development which is required.
Methods of Performance Appraisal
There are various ways by which performance appraisal can be done. The various techniques which are used in various organisations are as follows:
Graphic Rating Scale Method
Alternation Ranking Method
Paired Comparison Method
Forced Distribution Method
Annual Confidential Report
Critical Incident Method
Behaviorally Anchored Rating Scales
Management by Objectives
Performance Appraisal Techniques used in P&G
P&G's core to the performance appraisal is work the 'Work and Development plan' (W&DP) system that P&G has globally across all organizations, functions etc.
In terms of the 1st step steps in performance appraisal i.e. 'Defining the job' - with W&DP the employee and his/her one level up manager and 2 level up manager agrees on the work and development plan for the year ahead, which defines clearly the actions together with deadlines i.e. 'defining the job'.
In terms of 'Appraisal performance' this W&DP document is review on a quarterly basis to monitor/track the performance. The performance appraisal is done using Forced Distribution method in which feedback is collected by using 360-degree feedback method.
P&G use ratings to assess contributions relative to others at job level, in order to manage compensation and career progression according to the company's principles, as follows:
- Reward competitively
- Reward for performance
- Support the business
For these ratings P&G uses forced distribution method, in this method various percentages are allocated to several performance categories. The portions in each category need not be symmetrical. In Procter and Gamble the top 5%, middle 90% and bottom 5% method is used to rate the employees in various categories.
Forced distribution methods are more unforgiving than most other appraisal methods. With a forced distribution system you are either in the top 5% thus getting an 'A' ranking or you compromise in the middle 90% with a 'B' ranking or you are in the bottom 5% with a 'C' ranking and needs improvement.
Altogether with the critical analysis of P&G HR especially into its organizational effectiveness due to recruitment & selection, training & development, performance management & appraisal is delivering a competitive advantage to P&G.
The above approach is very well reflected in the analyzed HRM activities of P&G. One of the key to successes for any large multinational is to drive simplification to manage any business aspect in the company at global level. In this case the simplification is meant for the HR activities, policies etc. P&G has demonstrated an excellent example a true global 'HR', which drives significant simplicity and efficient management of HR through well defined global policies, processes and practices. This standardized approach also gives company the competitive advantage in terms of multiple areas like moving people around, driving common mentality and meeting organizational goals.
The most important One of the critics or arguments could be around the policy of recruitment i.e. 'build from within' policy where the company restricts itself from obtaining the 'experienced' talent from the market, which could often look critical in staying ahead of competition. Infact with P&G it is working in the other direction where P&G experienced people are working as the heads to various multinationals, while no examples on P&G side. Due to manage this policy (or strategy) - P&G needs to put significant efforts in 'retention' and 'training and development'. On the positive side - this strategy is a very strong motivational aspect for the employees as in most cases employees will not see their bosses from what have been their competitor companies in the past.
The overall conclusion is supported by the results we see from the performance of P&G driven by the HR of the company.
I would not recommend P&G to change its strategy, training progarm is strong, no of applicants are high, External agents, P&G has been market leader coming up with new things, balance between strategy successful, motivation point is strong, results are good, compared to opening the new approach, P&G might lose some of the benefits, specific culture of built from within, P&G policy is very strict,
Culture of P&G is different from other industry, most the companies have no restriction in hiring experienced graduates at any level such as Unilever, Henkel, Reckitt Benckiser