Tesco’s Strategic Human Resource Management (SHRM)
Published: Thu, 02 Aug 2018
Strategic human resource management bridges business strategy and human resource management and focuses on the integration of HR with the business and its environment. The main rational for strategic HRM thinking is that by integrating HRM with the business strategy employees will be managed more effectively, organizational performance will improve and therefore business success will follow (Holbeche, 1999). Stroh and Caligiuri (1998) suggest that strategic HR departments are future-oriented and operate in a manner consistent with the overall business plan in their organizations. Such departments assess the knowledge, skills and abilities needed for the future and institute staffing, appraisal and evaluation, incentives and compensation, training and development to meet those needs. According to this approach, people are a key resource and a critical element in a firm’s performance since they build organizational effectiveness (Holbeche, 1999).
Now this report will make an attempt to explain the importance of strategic human resource management in organizations and then it will assess the purpose of SHRM and how it contributes to the achievement of Tesco’s organizational objectives. Tesco is the largest retailer in the UK and the third largest retailer all over the world. Tesco was founded in 1919 by Jack Cohen and became Tesco plc in 1983. It has 4811 stores worldwide and 472,000 employees (Tesco annual report, 2010).
Importance of Strategic Human Resource Management
Strategic HRM adds value to organizational effectiveness by linking people, strategy, values and performance (Becker et al., 2001).Past research suggests that an organization’s employees can be a source for sustained competitive advantage and can determine the ultimate success of their organizations (Pfeffer, 1994; Prahalad, 1983).Given the importance of people in organizations; most strategic human resource departments consider the management of the competencies and capabilities of these human assets the primary goal. SHRM tends to employ progressive human resource practices in which the emphasis is on assessing the knowledge, skills and abilities needed for the future and to institute staffing, appraisal and evaluation, incentive and compensation, and training and development programs to meet those needs (Cascio, 1995). Huselid (1995) refers to these strategic HR practices collectively as ‘high-performance work practices’. Burack et al. (1994) suggests several ways that organizations can maintain high commitment and high performance among employees and ultimately organizational effectiveness: by promoting the organization’s credibility with employees; encouraging the use of participative management and employee involvement programs; focusing on high achievement, mutual trust and commitment; and developing a combined group/entrepreneurial approach to management, thereby creating an organizational culture in which individual employees are encouraged to be adaptive, competitive and successful.
Research by several scholars has shown a close association between these high performance work practices and organizational effectiveness. MacDuffie (1995), for example, found that the presence of integrated strategic HR practices was related to higher productivity and higher quality in automotive assembly plants. Terpstra and Rozell (1993), studying a variety of industries, found that the presence of strategic staffing practices was positively related to an organization’s annual profit and its profit growth. Finally, in a study of more than 1,000 organizations, Huselid (1995) found that a relationship existed between high-performance work practices and such positive employee outcomes as lower tumover and higher productivity, as well as better corporate financial performance. Research has also shown that executives company-wide view strategic HR departments as more effective partners in directing their organizations’ larger business plans (Dyer, 1983). One could conclude, therefore, that, when an organization’s HR strategy is linked to its business strategy, organizational effectiveness should improve (Dyer, 1983; Stroh and Reilly, 1994).
Purpose of Strategic Human Resource Management in Tesco
One of the key goals of strategic human resource management is to link an organization’s business strategy to its human resource strategy (Lundy and Cowling, 1996).Besides, the greater goal of strategic human resources is to support, manage and maintain high-commitment and high-performance employees (Burack et al., 1994). In addition, a strategic HR agenda is likely to have a number of key goals relating to the attraction, development and retention of talent. Further, the enabling of high performance is likely to be a key target for strategic HRM (Holbeche, 1999). However, In spite of economic down turn Tesco is expanding its business and increasing its profit year to year. The key issue behind this is its successful strategic HRM policy.
Tesco has a well-established and consistent strategy for growth. The rationale for the strategy is to broaden the scope of the business to enable it to deliver strong, sustainable long-term growth by following customers into large expanding markets at home – such as financial services, non-food and telecoms – and new markets abroad, initially in Central Europe and Asia and more recently in the United States (Tesco, 2010). To materialize its growth strategy Tesco invests huge amount of money in its people which links its business strategy to HR strategy. Tesco has a five-year people strategy that it continually develops and update. Top management of Tesco asks its people every year what’s important to them and they consistently reply the same four things: a manager who helps them, opportunities to get on, an interesting job and to be treated with respect. Tesco’s whole strategy is focused on how to get better at these (Pinkerfield, 2007). That means Tesco ensures a careful supervision of its employees, offers a good career prospect, provides motivational forces for performance improvement and values its employees. In a nutshell, the purpose of Tesco’s strategic human resource management is to get the full potential of its employees through its HR strategy for achieving its business growth strategy.
1.3 Evaluation of Tesco’s Strategic Human Resource Management
Strategic HRM has gained both credibility and popularity over the past decade, specifically with respect to its impact on organizational performance (Paauwe & Boselie, 2003). As an International organization, Tesco has strategically integrated HR into its overall business plans. Managers have been to utilize aspects of HR in their decision making. This has shown high commitment to HR, attempting to gain acceptance from all employees, and offering to all employees basic and extended training (Beardwell, 2004).Tesco is committed to providing opportunities for people to get on and turn their jobs into careers. Last year it had more people on development programs than ever before. Tesco has continued to develop apprenticeship training in the UK. Tesco believes that even in difficult times it is essential to invest in future talent. That’s why this year, while many other businesses were cutting their graduate schemes, Tesco increased its graduate intake to 810, including 535 in Asia. As a leading global company, Tesco aims to offer the very best training and development for all its employees. The Tesco Academy helps provide an opportunity to get on for its entire people. It develops thousands of world-class leaders through excellent training in leadership, managemental employee to understand their role and importance within the organization (Tesco, 2010).
There is an increased need for a higher value to be placed on employees, and therefore get the best performance from the employees. Tesco views that ‘No-one tries harder for customers’ and ‘it treats people how they like to be treated’. These values are interlinked and underpin everything going on at Tesco. Tesco realizes that by managing people well – in a culture of trust and respect – they will in turn try their hardest for customers. By offering competitive pay and benefits and an opportunity to develop a long-term varied career with good training, Tesco is able to keep its people motivated, committed and excited about working at Tesco (Tesco, 2010).
By today’s standards, supermarkets are labour-intensive businesses, which mean that how they manage, develop and reward staff, really matters (Carrington, 2003).The successful strategic HRM of Tesco is one of the main reasons behind its success. Attracting, retaining and motivating staff is core to Tesco’s people strategy. One of the key developments in the way supermarkets do business has been the close correlation they now draw between employees and customers. As Clare Chapman, head of Tesco HR, points out, staff loyalty is directly related to customer loyalty. What she says she wants is not the functional loyalty whereby people turn up to work every day, but the emotional loyalty that means they bring their brains in which them. The way to get this she suggests is by constantly reviewing how you reward your staff and by listening to them (Carrington, 2003).
From the above discussion of Tesco’s strategic HRM this report can conclude that the strategic HRM of Tesco plays a significant role in achieving its organizational objectives. In this age of economic down turn Tesco is increasing its customers, expanding its scope worldwide, and increasing its revenue because of mainly having its well-trained, valued and motivated workforce. The people of Tesco build a sustainable reputation for the organization through better customer service which in turn contributes in retaining its market share worldwide.
2.1 Business Factors that underpin Human Resource Planning at Ford Motor Company
Ford Motor Company, a global automotive leader based in Dearborn, Michigan-USA, manufactures or distributes automobiles across six continents with about 198,000 employees and about 90 plants worldwide. Now this report will analyze the business factors that underpin the human resource planning at Ford Motor Company.
Now the world is facing economic downturn. The automotive industry is one of the main sectors to suffer from economic recession. As the financial crisis persist, both credit availability and consumers’ weakened confidence have contributed to a drastic decline in vehicle sales. So, the demand for vehicle sales goes down. Consequently, Ford Motor Company reduced its employees for reducing overhead cost and improving its balance sheet.So, the HR planning of ford is greatly affectedly by economic recession.
The changing characteristics of workforce or demographic projections have significant implications for managing human resources, thereby increasing the importance of human resource planning. The changing demographics mean there will be fewer entry-level employees, so competition among employers will increase. In addition, the changing demographics signal changes in the abilities, skills, interests, and values of tomorrow’s work force. From its inception Ford always emphasize on creating a diverse workforce which underpins its HR planning process.
Customer preference and technology
Consumer demand for more fuel-efficient and cleaner vehicles continues to grow. To accomplish fuel-economy goal, Ford is focused in the near term on implementing the most cost-effective fuel-efficiency technologies across a large volume of vehicles and on introducing new products that offer improved fuel efficiency without compromising style or performance. In 2009, for example, it began implementing the EcoBoost„¢ engine, a key technology in its fuel-efficiency strategy that uses gasoline turbocharged direct-injection technology. EcoBoost will deliver up to 20 percent better fuel economy, 15 percent fewer carbon dioxide emissions and superior driving performance compared to larger-displacement engines. Besides, Ford is continuing to design and introduce advanced technologies that improve fuel efficiency, reduce emissions and lessen dependence on foreign oil (Ford Sustainability, 2008/09). Initiating new technology and new products require multi-skilled human resources which affect the HR Planning of Ford.
Growing or declining organization
Human resource planning is greatly influenced by whether the organization is growing or declining position. In a growing organization human resource planners just look for needed skills and abilities. But in a declining organization they need to look at the cost associated with employees. During the third quarter of 2008, Ford reduced its salary-related costs by about 15 percent, which included the involuntary layoff of some salaried employees as it faced huge amount of loses at that time because of recession (Ford Sustainability, 2008/09).
2.2 Role of HR in Acquisition
Now this report will assess the expansion of Ford Motor Company through acquisition of Land Rover, a British four-wheeler luxury brand, and how HR plays an important role in this expansion. During the end of 19th century the automobile industry was subject to serious macroeconomic pressures. The major trends of global consolidation and fragmenting consumer demand, fuelled by rising incomes and increasing development costs driven by tighter environmental legislation and increasing competition, provided the backcloth for strategic decision-making. Ford wanted to extend its market to include the growing and potentially profitable luxury car sector. The Ford brand itself was, and is, associated with mass-market vehicles rather than luxury vehicles. Its US-based luxury brands, Lincoln and Mercury, do not sell well outside the United States and were associated with an ageing buying population. The option of creating a new brand was rejected on the grounds of cost and the time needed to establish a new brand successfully in a highly competitive market (Scheele, 2004). The remaining option was external acquisition of existing luxury brands. In this situation ford acquired Land Rover in 2000 from BMW.
Ford initiated a new HR plan for Land Rover to become successful because nine months earlier its then owners, BMW, had made some fairly far-reaching changes in Land Rover’s management team. Most of the old directors had been removed and replaced with BMW nominees (Dover, 2004).This exceptional situation cleared the way for the introduction of an entirely new team responsible for integrating the company and enacting the necessary changes. Ford assembled a very strong team of Ford insiders from around the globe, and Bob Dover, from Aston Martin, was sent to run the company. To soften the impact of an international influx of new people and demonstrate opportunity, internal staffs were promoted into senior management roles (Lummis, 2004).
Mergers will be more successful if companies have the ability to appoint an implementation team from both traditions who enjoy complementary functional backgrounds capable of enacting necessary change within the right timescale (Krishnan et al., 1997).Besides, it is essential to build a leadership team capable of implementing change and aligning businesses around common values in situations in which people from different national cultural backgrounds can work together (Testa and Morosini, 2001). The integration approach adopted by Ford for the Land Rover acquisition was a hands-on approach. Ford developed a multi-cultural leadership team for land Rover who were able to respond quickly to any macro and micro environmental changes.
2.3 Human Resource Plan for Ford Motor Company
There are different types of human resource planning-short-term, intermediate-term and long-term, in different types of organization. Here this report will develop a short-term HRP for Ford Motor Company.
Forecasting demand and supply
The demand of jobs involves predicting which employees will leave the job and creates vacancies, which jobs will be eliminated and which new jobs will be created. For identifying job demand Ford will collect data about how many jobs created last year and will project it for the planning year. Besides, Ford will receive line managers Predictions about how many and what types of jobs will be eliminated or created in the short term.
For supply side, Ford will determine the desired characteristics of employees who fill (or vacate) the jobs of interest. Then the availability of those characteristics in the organization’s current work force and in the external labor market must be assessed. The particular characteristics of current and potential employees that is inventoried and tracked by human resource planners.
Objectives of HRP at FORD
Short-term human resource objectives at Ford include increasing the number of people who are attracted to the organization and apply for jobs (increase the applicant pool); attracting a different mix of applicants (with different skills, in different locations, etc.); improving the qualifications of new hires; increasing the length of time that desirable employees stay with the organization; decreasing the length of time that undesirable employees stay with the organization; and helping current and newly hired employees quickly develop the skills needed by the organization.
Recruitment & Selection
For getting the right people Ford will advertise its requirement through different channels: website, newspaper, employee templates or notice board for internal recruitment. Ford normally practices ethnocentric staffing policy in its international operation. After getting applicants Ford selects the right person through different test: psychological test, personality test, technological skill test, aptitude test, etc.Diversity is the key priority in Ford’s recruitment planning.
Training and Development
To get better service from its newly recruited employees Ford will arrange huge range of training and development programs for employees. All employees are encouraged to invest in their own professional development by developing an Individual Development Plan, or IDP, to help them meet current and future goals. Ford will provide a comprehensive range of learning and development resources that align with ONE Ford. These include web-based and classroom training, special projects and task forces, as well as mentoring and coaching to foster functional and technical excellence, encourage teamwork, promote Ford values and enhance its ability to deliver results. Ford has created internal “colleges” that provide education and training in areas ranging from finance and information technology to product development and marketing. IT will also offer the Salaried Supervisor Institute/Program (SSI) for new or experienced leaders who want to enhance their ONE Ford skills.
In conclusion it can be said that Ford Motor Company takes a defensive strategy in their human resource planning as the company’s balance sheet was not enough well in last few years due to economic recession. As a result it downsizes its some plants to reduce employee cost and just recruited new people who are highly technically efficient.
2.4 Evaluation of Human Resource Plan
The human resource plan of a company can evaluate to identify how well the objectives were achieved. Ford implemented its HRP in its business strategy. Most importantly, it established a number of Employee Resource Groups (ERG) as a part of HRP to support, outreach and develop employees who share ethnicity, race religion, life experiences, disabilities or backgrounds (Ford, 2008/09). In January 2008, it announced “One Ford,” which aligns its efforts toward a common definition of success. One Ford provides consistent goals and expectations for employees, whether they work in Michigan or Shanghai, with a clear focus on the skills and behaviors must demonstrate to accomplish One Team, One Plan, and One Goal. All members of the global team are held accountable for incorporating One Ford into their daily work (Ford, 2008-09).
One Ford is designed to help every employee achieve his or her fullest potential as they work together to move the business forward. Over the last year, it has incorporated One Ford into its people processes, beginning with employee development. It revamped its employee leadership and professional development programs to align with One Ford, providing employees with Web-based and classroom training to foster functional and technical excellence, encourage teamwork, promote Ford values and enhance its ability to deliver results. Ford’s performance management processes ensure that employee objectives and behaviors align with One Ford. In the current economic environment, it is more important than ever to invest in employees, strengthen their leadership skills and recognize them for delivering results that cultivate success. Consequently, Ford became profitable in 2009 & 2010 and its successful HRP significantly contribute to this success.
3.1 Purpose of Human Resource Management Policies
It is universally acknowledged in the corporate world that HRM policies play a significant role in achieving the objectives of an organization. In this phase the report will analyze the purposes of HRM policies in Nokia telecommunications. With more than 100,000 employees in more than 100 countries, Finnish-based Nokia is the largest maker of mobile telephones in the world.Nokia has achieved 40 percent market share of the global handset market and industry-leading profit margin of 20-25 percent during the transition period of technological change and intense competition and its HRM policies played a pivotal role in this achievement.
Motivate and engage employees are the key purposes in Nokia’s HRM policies.Nokia HRM policies comprises four elements to motivate and engage the employees and maintain his or her satisfaction and well-being at work. They are:
- The Nokia way and values;
- Performance-based rewards;
- Professional and personal growth; and
- Work-life balance.
The Nokia way and values
The company emphasizes the importance of:
- respect – treating colleagues with trust and dignity, in order to help to build an open and honest spirit at the workplace, and also respecting customers, business partners, the environment and the community;
- achievement – recognizing and celebrating individual and shared successes;
- renewal – fostering change and development, and having the passion and courage to look for new ideas beyond existing products, services and ways of working;
- management and leadership – creating commitment, passion and inspiration through collaboration and coaching, and ensuring focus and efficiency by setting targets, fulfilling goals and reviewing results; and
- employee participation – encouraging open discussion and debate through, for example, the annual globally conducted Listening to You employee survey, and Ask HR feedback channel on the company’s human-resources Intranet, where every employee can comment or ask questions about Nokia’s people practices and processes, even anonymously, and receive a prompt and openly published response.
Nokia’s total-compensation package is tailored to each country and typically consists of elements such as annual base salary, incentives, bonuses, possible participation in equity-plan and other local benefits. Nokia’s total compensation is based on a pay-for-performance philosophy. Results through consistent performance and proven, relevant competencies are rewarded.Nokia aims to provide a competitive global reward structure that uses international and local market information, but also takes into account the employee’s overall position and “any significant economic influencers”.
Professional and personal growth
Nokia employees are encouraged to create their own development plans, take part in on-the-job learning, and take advantage of the various courses and other learning opportunities available. Through its global network of learning centers, Nokia aims to offer a consistent standard of training and development to all its employees. The Learning Market Place Intranet contains information on all Nokia’s learning opportunities, including e-learning and classroom training. The company also has a full suite of training programs for new and experienced managers.
All Nokia vacancies, with the exception of very senior positions, are advertised internally. Employees are encouraged to improve their competencies through job rotation. Internal job opportunities, the possibility to register on the company’s internal candidate pool and other services for job-seeking inside the company are available through the company Intranet.
The Nokia performance-management system, named Investing in People (IIP), is closely aligned to the company’s strategy and planning processes. It involves formalized discussions between employees and their managers, twice a year. Employees are encouraged to “own” their IIP, to understand what is expected of them and how their individual achievements support the company’s overall strategy.
Nokia offers various services, programs and guidelines to support employees’ efforts to achieve a healthy work-life balance that reflects their changing needs and life situations. The various aspects may alter by country according to local needs, legislation, employment market and common practices. Typically, they include teleworking, mobile working, flexible working hours, sabbaticals, study leave, health-care services and recreational activities (Pollitt, 2004).
Finally it can be concluded that Nokia’s employees are satisfied working at Nokia as they are respected, reasonably paid, and offered a sustainable career. The purpose of Nokia’s HRM policies is to value employees and achieve organizational objectives.
3.2 Impact of Regulatory Requirements
Human resource policies of Nokia in different countries are influenced by the legal requirements of those countries. Now this report will analyze the impact of regularity requirements in UK on Nokia’s human resource policies.Nokia-Uk, develops its pay structure according to the Employment Act, 2008 and never pay below minimum wages to any hourly employee. According to Sec 19a (1) of this act, “A notice of under-payment must, subject to this section, require the employer to pay a financial penalty specified in the notice to the Secretary of State within the 28 day period”. In this case Nokia is trustworthy company to the UK authority. Some of the UK Acts which affect HRM policies of Nokia are mentioned as follows:
Human Rights Act 1998: The Human Rights Act 1998 was brought into effect in Nokia.The Act provides among other issues, a right to fair trial and a right to respect family life. It provides for the enjoyment of the rights and freedoms under the European Convention of Human Rights without discrimination on specified grounds, including sex, race, color, language, religion, and national or social origin. According to this act, Nokia offers flexible working hours to its employees, allows paternity and maternity leave, different safety services, study leave, etc.
Race Relations Act 1976: This makes both direct and indirect discrimination on the grounds of race, color, nationality (including citizenship) ethnic or national origin unlawful. The law covers people from all racial groups, including white people.Nokia HRM policies strongly discourage any activity relating to racial discrimination.
Equal Pay Act 1970: This deals with equal pay and prohibits different pay for men and women doing the same work, work rates as equivalent, or work of equal value.Nokia is always liable to this act and develops its payment structure accordingly.
Trade Unions and Labor Relations (Consolidation) Act 1992: This legislation protects employees from discrimination on the grounds of trade union activities or membership, or of non trade union membership.Nokia encourages the voice of trade union as a part of its HRP policies.
Employment Relations Act 1999: This Act includes a number of “Family Friendly” measures and includes legislation to cover the European Parental Leave Directive. The objective of the Parental Leave Directive is to provide a balance between work and home life. The Act provides employees with rights to parental leave, time off work in family emergencies as well as simplifying and improving maternity rights.
In the previous section, HRM policies of Nokia have been covered and from the analysis of different regulatory requirements it can be concluded that a number of HRM policies of Nokia in UK has been derived from these regulatory acts and legal environment.
4.1 Impact of Organizational Structure on Human Resource Management
Organizational structure means three things: the formal division of the organization into sub-units (horizontal differentiation), the location of decision-making responsibilities within that structure (vertical differentiation) and the establishment of integrating mechanisms (Hill, 2005). Organizational structure affects significantly on HRM of different organizations. Now this report will analyze the organizational structure of Unilever and its impact on HRM.
Unilever is one of the world’s oldest multinational corporations with extensive product offerings in the food, detergent and personal care businesses. In 1996, Unilever introduced a new structure based on regional business groups instead of a decentralized structure. Within each business group are a number of divisions, each focusing on a specific category of products. Thus, within the European business group is a division focusing on detergents, another on ice cream and frozen foods and so on. These groups and divisions have been given the responsibility for coordinating the activities of national subsidiaries within their region to drive down costs and speed up the process of developing and introducing new products.
The regional or divisional structure of Unilever has enabled the company to develop specialized workforce. Because of specialization Unilever offers handsome pay structure to the employees. For developing specialized skilled workforce Unilever develops a succession planning. Each division of Unilever has got autonomy and divisional manager reports to the regional manager. It allows the regional manager to analyze the performance of divisional managers and employees. As each group works as a team, there exists a good relationship among management and employees and ultimately employees are offered flexible working hours, different health and safety scheme, etc.
4.2 Impact of Organizational Culture on Human Resource Management
Organizational culture is the norms and value systems that are shared among the employees of an organization. Just as societies have cultures, so do organizations (Hill, 2005). Unilever’s success has been based on mainly high levels of employee productivity and product quality. The company attributes its productivity to a strong organizational culture and an incentive scheme based on performance.Unilever always practices a participative management culture where employees are encouraged in decision making process. There is an open door HR policy between workers and managers which boost employee morale and performance.Unilever believes that any gains in productivity should be shared with employees in the form of higher pay. In Unilever, production workers have been awarded a semiannual bonus based on an employee’s level and quality of product. That means the organizational culture of Unilever shapes its payment and reward structure. All the employees are considered equally to the company irrespective of gender
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