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Strategic Human Resource Management is a modern day business concept that has been now been widely used the organization; the crux of the concept is that all the human resource activities of the companies should be aligned with the organizational corporate objectives. In this assignment we are required to select an organization of our choice and then analyze their strategic human resource practices, we are required to see that how the practices and strategies of human resources department are aligned with the company's objective. What are the areas that are performing well and what the areas that need the improvement are? For this I have selected leading telecom company of UK. Vodafone has been the market leader with their continued growth in UK and other parts of the world.
This paper will analyze two dimensions, one is their strategies for recruitment, selection, learning, development and training and I shall explain how these strategies are maximizing employee performance and are linked with corporate strategies. The second part of this paper will present the performance management processes of the organization we shall how this organization manages the performance of their employees and how human resource department is managing the employee relations.
Introduction to the Company
Vodafone is a leading telecom player in the UK and other parts of the world including India. The products and services they provide are of high quality and high standards and the market they are operating is highly competitive. The nature of competition requires the management of the company to have a strategic clarity and all the business operations should be working in same direction. Their service portfolio includes mobile phone connection including 2G and 3G networks, broadband internet in homes and on mobiles (www.vodafone.com, 2011).
In order to understand the strategic human resource activities of the organization is very important to understand that what company all about is. Their vision values and business orientation are the key drivers that are driving the human resource management department (www.vodafone.com, 2011).
They see their future in outstanding data services and products - backed up by the best customer experience in the business. Their journey has already begun, with things like Mobile Internet and Mobile Broadband. And their Vodafone at home fixed broadband service. And their targets are big, which means millions of customers using their data services every day (www.vodafone.com, 2011).
They are focused on speed to market, they relentlessly priorities and pursue the outcomes that matter to our business.
They make things simple for their customers, partners and colleagues.
They are reliable and transparent to deal with. They deliver for others, and trust others to do likewise
Literature Review of Strategic HRM:
Strategic Human Resource Management is a modern day business concept that is now being practiced in many of the organizations, its acceptability and practice is increasing with the time as organization have realized that this management philosophy is actually adding value to business profitability in many indirect ways .
As we know that human resources are one of the most important resources of that a company can have, their ability to participate in development of companies sustainable competitive advantage is unquestionable, in past the human resource management has been a separate department with no influence and participation in strategic management of the company. Whatever have been the corporate strategies companies were not linking the human resources management with it. The result of which was the disintegration of company's objective and human resource management, this scenario made the human resource participation in sustainable competitive advantage limited. (Appleby & Mavin, 2000).
With the evolution of modern business era, that has started from 1980s, the management practitioners and commentators has been feeling the need of taking the companies to one direction, and they have also realized that it very important that human resource department should be made part of the strategy formulation process and their human resource strategies should be made while keeping in mind the business strategy of the organization. Therefore the researchers came up with the concept which is called the Strategic Human Resource Management, that enables the HR department to derive their practices from the corporate strategy and they are also made part while making the business strategy (Armstrong, 2006).
Strategic Human Resource Management requires the dept being proactive rather than being reactive, they are required to adjust themselves according to the human resource need of the company. They are also required to foresee the upcoming needs of the company and then plan beforehand accordingly (McMahan et al., 1998).
Strategies for Recruitment, Retention, Training & Learning
Vodafone is a market leader in their category, they have a competitive advantage because of their diversification in products, services and marketing strategies, therefore their corporate objective is to sustain their marketing leader position with the help of their diversification. Below is the snapshot of HR strategies for various HR functions of the organization that tells us the organization is linking their business strategy with their human resource strategy:
Recruitment & Selection
Vodafone's recruitment and selection process is aligned with their business strategy, as they are in the business of providing services and their market position is a leader with differentiations, therefore when they recruit individuals on different seats, they have set of core competencies that are required for each position and they check these while hiring someone(Armstrong, 2006).
Their selection process makes sure that the right person with right set of capacities and attitude is selected, for example if they are hiring for the position of customer service they would make sure that person being hired has the soft skills, the empathic attitude and is not aggressive in nature. They have devised a set of such soft skills that are evaluated on each of the hiring and these skills vary from position to position. For managerial level position they make sure they hire someone with good analytical skill along with flare of leadership in them. So in Vodafone the entire selection process is linked with the corporate objectives (Armstrong, 2006).
Compensation & Benefits
Vodafone's entire compensation and benefits are also linked with business strategy, their remuneration systems and annual appraisal systems are derived from corporate strategy. Since our case company is working in highly competitive environment and they have to maintain their market leadership position therefore they have designed their compensation system that encourages the quality individuation to work in this organization. They provide they employees with state of the art facilities and salary packages so that the best in the industry are attracted to work in the company and then they play their part in making the organization a market leader (Armstrong, 2006).
His annual appraisal system is also managed strategically, in Vodafone, every department has their quarterly and annual objectives, and these objectives are then used to make the individual and team's quarterly and annual objectives. Now when performance appraisal is done, Vodafone's human resource department makes the objective achievement the part of the appraisal system and all the increments in salary and bonuses are linked with the objective achievement in teams and individuals. For their objective achievement calculation they make sure that performance objective are time bound, quantifiable and measureable (Armstrong, 2006).
Training & Development
Training and Development is an important component of their human resource strategy. They keep on adding value in their human resources by training them on hard skill and soft skill whatever is required by the nature and role of the job. The processes start from indentifying the training needs of each of the department. They after understanding the objective of the each of the department for the coming year, asks the relevant managers to identify and evaluate the individuals in their teams that require the training and development in certain areas of their job. These training needs can be of soft skill and also can be of hard skills that are directly related to the job (McMahan et al., 1998).
Once the training needs are indentified then human resource department manages the training calendar of the year, in which all the required training are mentioned and employees are sent for on job and off job training. Human resource department also have the eye on the upcoming expansions and technological developments in the market so the relevant employees can be trained before the time and they are ready to work when there is any technological advancement and change in the organization.
Human resource department of the organization put special emphasis on developing the learning culture within the organization. Employees are encouraged to share their experiences and learning with each other so that team members can have a learning culture in the organization. Since Vodafone is working in different geographical regions of the county, therefore they make sure that employees are encouraged the learning's regarding technical and marketing knowledge with each other, so that employee of one region can learn from the experience of the other region (Armstrong, 2006).
As discussed above they also send employee on training, they also send different employees of different department to their different geographical markets so that they can have the training of various situations and have the understanding of various markets, that rotation also helps employees and increase the learning within the organization.
Since attracting and retaining the quality employee is challenge for the organizations working in today's competitive market, therefore Vodafone have the policy of having a clear and well defined career path for each of their employee. This clarity of career path makes it clear for employee that where they should see themselves after spending different number of years in the company. The department also makes sure that all the career advancement of the employees are based on their performance and every top performing employee should have the advancement in their career, this policy helps to control the employee turnover and encourage employees to work hard and perform as they would have the chance to grow (Armstrong, 2006).
Vodafone is working in competitive environment and to stay ahead of competition it is very important for organizations to have the fast and correct decision making. Therefore the human resource department put the special emphasis on empowering the employee for timely decision making.
For this purpose they have worked in devolution of power, decentralization of decision making and flatter organizational culture. They have been working on the dimensions on giving the employee the power of making the less critical decisions and top management should only be making decision that are or critical nature are of strategic importance. This empowerment of employees gives them sense of responsibility, increases their commitment towards the organization and save the precious business time that is required to take the decision from top management (Armstrong, 2006).
As it is very important for organizations working in competitive business environment, Vodafone's human resource practices also work in the same way, they try to retain their quality employees to go to the competition. Their retention strategies revolve around the good compensation and benefits, pay per performance, rewards and increments on good performance and then having the well defined promotional system that gives the chance to every employee to perform and build their careers and then grow. Their retention policy is derived from the strategic objective of the organization to be diversified in their business, and same is the case in their human resource management (Armstrong, 2006).
Performance Management & Employee Relations
Below we shall see that performance management is done in Vodafone, these lines will presented the different methodologies and practices that are being adapted in the performance management section of strategic HRM of company.
Determination of Performance Targets
The first step in strategic performance management of the organization is to determine the required performance targets of the organization for the year. These targets are derived by combining number of activities, first of all market analysis is done; the management analyze the external environment so that market growth trends and competitors market share can be understand.
Once this step is done management have the background information for dominating the organizational performance for next year, then the next step is to decide and agree upon the performance targets, once the corporate level targets are decided then these targets are divided into department level targets. These department level targets are then reflected in individual level targets and objectives.(Wall, 2007).
Encouraged Individual Commitment
Vodafone has realized the importance of encouraging the employee commitment towards organizational objective, as without this commitment employees will not be able to achieve the performance that organization is expecting them to achieve.
Once organization is able to make the organizational objectives the target of the individual then we can see the success rate of achieving this objective is high. Therefore Vodafone increases the employee commitment to the organizational objectives by involving them in the objective making process (Rheem, 1996). It has been the practice in the Vodafone that managers and teams decide their performance targets themselves and once these are approved by the management their personal commitment to these targets is high. They strive and struggle more to achieve the targets that has been made in consultation with them (Wall, 2007).
Delegation, Mentoring and Coaching
There are some other activities that play their role in strategic management of the performance of the organization, Vodafone on the also using the three of the activities that are delegation of power with responsibility, proper mentoring and feedback system, and coaching (Wall, 2007).
Vodafone believes in delegation of power to the employees that are responsible for achieving certain targets, as responsibility comes with authority, same is the philosophy that is applied throughout the Vodafone. Their culture is devolution of power so de-centralization, they try to give maximum power to their employees so that they can achieve their responsibilities with given authority.
Vodafone also believes in mentoring and coaching of employees, managers are encouraged to act as mentor for their team members, this also involves on job training for the teams, this systems encourages learning environment in the organization(Armstrong, 2006).
Monitoring and Feedback
Monitoring and feedback system is an important part of the organizational performance management; same is the case with Vodafone. They have proper monitoring and feedback system that helps us monitoring the performance and individuals and teams. They have a quarterly performance management system that relates the performance of the employees with their objectives of that quarter. After the evaluation and monitoring of the performance of teams then feedback is provided to them. That system helps the organizational performance on the track and helps the organization to stay on their performance objectives throughout the year (Wall, 2007).
Vodafone handles the underperformance of their employees by having a proper monitoring system, they first evaluates the performance of the employees, then if team members are found to be underperforming then they see that if there is any training needs. If there are training needs then employees are sent on training, after the trainings their performance is again monitored. If performance is found satisfactory then it is ok, if again performance is not found satisfactory then employees are replaced to other jobs.
Vodafone puts special emphasis on managing good relations with their employees; they believe that their employees are their more important assets, their human resource policies are more focused towards managing their employee's relations with the organization. Their performance evaluation, benefits and compensation system is targeted towards retaining their employees and maintaining their motivation with the organization.
Strategic human resource management is the modern concept that is in practice by different by different organizations, in this paper we have observed the strategic human resource management practices by one of the leading organization in UK. We have observed their organizational objectives with relation to their human resource management activities. The focus of the paper has been on the recruitment & selection, training and development and learning functions and their relationship with organizational strategy. It has also been observed that how performance management system is working on strategic guidelines provided by the organization and how it is playing role in competitive advantage.