Scenario: Thinking of brands with a prestige; Louis Vuitton Moet Hennessy or LVMH is going to come in many peoples’ thoughts straight away. LVMH is a business organisation involved in many areas and in many countries specialized in luxury goods. In this report, the researcher as a human resource consultant in LVMH, professional consultation on various aspects of HR planning and development is needed.
- What is Workforce Planning
- Workforce planning at global level
- Purpose of HR planning in LVMH
A plan is a process of doing something and the way of doing it. It is the middle stage of current state of affairs and the future state of affairs. Whereas, workforce planning is the process of pointing out what kind of human resource organization needs, to fulfil its goals and objectives. It determines the skill, knowledge and experience required for a given job. Workforce planning helps:
- Control employee costs
- Assess talent needs
- Cost effectiveness of employees
- Efficiency of employees
- Assess human capital needs and risks.
Optimum performance, knowledge in different cultural, being pro-active are few reasons for workforce planning internationally. Above all language and culture which also include religion, peoples’ beliefs and traditional practices; are often considered as a major issue here. HR is planned at global level to increase their knowledge, skill and experience in different working environments. Globalisation has become a strong and challenging task for all the organisations. Organisations are expanding globally facing new challenges every moment. To cope up with this situation organisation needs more workforces who have experience at global level. Globalisation always creates pressure for the organisation but it is also fruitful for the organisation at a longer term as well.
Due to limited funds in this recession, LVMH plans human resource to do the same amount of work but with limited or fewer staff members. It makes replacement easy to fill with appropriate Ready to Move candidate. Filling vacancies has always been very critical as lack of knowledge about the specific work and management and also lack of experience and competencies apply. HR planning in LVMH gives a clear picture of the expenditures going to incur to train and develop their staff for the next suitable task. Rapid technological change and reduced communication costs have increased international production in LVMH.
Workforce planning does not always mean recruitment process. Hence, the purpose of workforce planning in LVMH at global level is very clear.
- Getting hold on English language as well as some international languages.
- Develop talent in working on a totally different environment.
- External and internal factors need to consider while working at global level.
- The different strategies and management practice needs to undertake while working at global level.
(1)”LVMH believes that the best way to develop its employees is not by formal training but international vertical, horizontal and geographical mobility within the organisation;” LVMH case study. LVMH believes in practical training rather than theoretical approach, which can only be done in moving workforce across the globe. The senior employees get their chance first in global mobility. HR directors are the one who decides the potential candidate who is Ready to Move.
- What is International Recruitment
- Advantages of International Recruitment
- International Recruitment, is the most important HR function within LVMH.
Recruitment is the most important aspect of human resource management. Whereas, International Recruitment means hiring or recruiting someone to work in the organisation at a global level. That person will have to be competent of international experience, knowledge and skill. He will have to be strong enough to face the global challenges and can lead the organisation in the global market. International recruitment process often depends on country of operation and is always very difficult to carry on. Language has always been a major drawback in international recruitment. As for company like LVMH they only recruit individual who can speak fluent English and also at least three different international languages to reduce their cost of training employees and increase staff efficiency in language point of view.
International recruitment has various benefits;
- Experience: Person will be experienced enough to deal with international situation. Company can also be benefitted from the experience he can share.
- Efficiency: They will be efficient in understanding organisations’ structure and working methods; resulting time saving.
- Cost Effectiveness: Additional training in managing organisations’ globally or training in different languages is not required; thus saving staff – training expenses.
- Cheap recruitment: Recruitment process is often cheap from hiring someone with international knowledge or experience, who would be able to manage the company well, rather than hiring employee from the home country. Savings in the salaries will be derived in this process.
- Culture: Knowledge in different culture of people can be studied and often counted as beneficial for the company. Corporate strategy of the business can be changed for greater good in order to maintain company’s mission and achieve goals faster.
Though LVMH is based in Paris, they are a global giant and is spread globally across three continent and among 58 countries worldwide. Their business has been divided into five different world zone across the globe which made international recruitment essential. The international recruitment process of LVMH benefits from all the advantages of international recruitment. Employees are moved globally to maintain the company’s standards everywhere the same with its goal to fulfil and also their corporate mission (2)”to represent the most refined qualities of western products around the world,” LVMH group mission.
As for LVMH international recruitment process is a very difficult HR functions as well. Often it is hard to find someone who is the right person, for a right task to perform in the right place of work. Their different cultural view make the company even hard to get benefitted from their involvement in planning and implementation of strategies. Recruitment is kind of a long term investment not in terms of asset but in terms of quality work to lead the company further to its values and mission. Thus it can be supported that international recruitment is a significant step in HR management within LVMH.
- What is international mobility
- Need for international mobility
- Importance of international mobility in LVMH
International mobility means employee who are professional in any field of that company work in order to satisfy corporate and client needs in a different working area than its own. Often employees are transferred from one place to another around the world to make the company more virtual and certainly more widespread in the future. The faster growth of globalisation and the pressure to compete with its competitors, international mobility now take place in most of the big companies. International mobility is a combination of the points such as:
- Talent management: This is the process of selecting candidate, setting their objectives and identifying their individual role in retention strategies and repatriation planning.
- Reward aspects: This is the process of fixing base compensation and benefits; and their expatriate policy of a candidate.
- Procedural aspects: This consists of risk management which is nothing but immigration requirements and contractual arrangements; cost management and administering the international mobility process.
Situations vary from company to company and with its HR policy to what extent international mobility is required. Massive company like LVMH, who performs around the world, international mobility also take place due to seasonal shortage of workforce in any particular country. Common holiday appeal is also a well known factor; as most employees want holiday during the summer school holiday period or in the Christmas time. During these periods of time, it is often wise for LVMH to transfer or appoint professionals in the same field but from different area into those places. This is only possible for internationally mobile workforce that a person in France can go for a summer holiday in July and in his place a person from Australia can join work, where he might need holiday in his summer time which is in December.
Too many or too less professionals always create conflict in achieving tasks. Thus international mobility gives a chance to balance things accordingly. Due to recent fall in many luxury companies; LVMH is in lack of confidence in hiring new employee to follow new strategies. Rather they are into developing their market following their previous own strategies performed by existing employees which were proven to a success earlier. In this point financial factor is also a main problem as they are less likely to afford any new mistakes.
Many people want to migrate to a different country to work. Thus companies face problems in finding themselves a skilled worker. A company like LVMH gives them the chance to migrate. However after certain time people want to come back to their home country to settle down which is also possible for employees in LVMH as international mobility is not always undertaken. People migrate for increased salary which might be far less to LVMH. A manager in the UK, and a manager in India, who are performing the same task same hours a week might have a huge difference among their salaries. In this way it is a savings for the company to achieve such employees.
In today’s crisis, it is difficult for the companies to find a good employee; therefore, nobody wants to leave their professionals. Therefore international mobility is a must for the company to run their business. For LVMH to succeed in its competitive market, they need to recruit internationally mobile employees to reach their target and objectives to fill their expected corporate goals.
- Career development and expatriate compensation scheme
- Benefits to the managers of LVMH from the scheme
- Benefits to LVMH from the scheme
(3)”The international mobility policy is part of a career development scheme”, LVMH case study. LVMH has exciting career development prospects; as it does not provide high compensation levels to its expatriates, since the company is cutting its cost to be more cost efficient. Its vision is not to attract its employees by economic incentives, though LVMH pay a very high rate of salary. The employees receive their salaries according to the international standard rather than based on the country of work. LVMH also offer their employees the chance to perform their task with more freedom. Effectively employees get convinced to work outside from their home country due to various challenges he can undertake as well.
The career development and expatriate compensation practice of LVMH is beneficial for both the company and its expatriates. As for its expatriates’, the competitive raise in the salary after each year or a specified time, motivates them. Their salary is based according to the percentage of their expenditure and also 30% savings to their salary money to send back home. Expatriate receives a relocation allowance which is equivalent to a month of their gross salary prior to the arrival in the new country of work.
Expatriates receives additional benefits such as paid education for their children, paid home leaves, temporary housing for up to a month, and also last but not least loans for housing deposits or purchasing automobile.
Employees would not have to worry about their cost of moving as it is covered by LVMH. Employees get paid holidays depending on their home country’s labour law. Depending on the personnel and their job title, some of them receive much generous home leave allowance like travelling in the first class instead of economy class. Their security benefits would always remain the same as their home country; where LVMH sometimes end up paying a double contribution in the social security.
LVMH provides huge benefits for its internationally mobile expatriates in healthcare. LVMH provides health insurance to approximately 95% of its employees and their family in the same standard as they can get in their home country. Life insurance and disability protection also proves that the level of cover is highly reputable.
As for the company, LVMH often calculate the salary of its expatriates based on the home country. This provides the cost effectiveness of the company. Internationally mobile expatriates are a kind of investment in longer term for the company as future profit will be achieved through the successful completion of any international assignments.
The various benefits of international mobility for a company apply in LVMH too. Employees who are motivated and work internationally brings extensive skill and knowledge to the company. Since, employees do not work in same country for a longer time, thus their efficiency level remains at its full all the time.
LVMH offers a competitive rate of benefits to all its expatriates in career development through international mobility. As it has been mentioned in the earlier tasks, LVMH’s policies of attracting its expatriates are very much different and broad from the other companies. For providing many facilities to its internationally mobile expatriates, LVMH also get highly skilled international manager with many years of experience in working at a global level.
Due to its competitive rate of benefit offered to its expatriates, employees often get greedy and expect more from the company which may result conflict with the company’s mission and objectives. They might start requesting for an early or frequent transfer to different countries to be eligible for the benefits. Some under-developed or developing country staff might want himself to settle down in the developed countries for greater good. Some people get very excited of the various benefits they are going to receive and thus do not concentrate on working effectively and efficiently, leaving company’s purpose for international mobility undone.
It could be suggested that LVMH can make a change in its recruitment policy. Candidates should get the job via several assessments:
- They should fit for the job applied
- Their previous references should be assessed
- Their quality of the idea for the job should be measured
- They should be hired for a probation period to carry out a task
- Based on the task completed they could be made a permanent staff
- They would not be entitled for the benefits as a temporary staff
Further recommendations could be advertising the vacancies in public Medias. People often get attracted when they hear about vacancies. Prior to selection, candidates should be briefed about the job and its rewards. Employees should sometimes get the chance to work in their home country as well.
- Advantages of international transfer policy
- How employees could be motivated
The international transfer department of LVMH makes the policy for international transfer. The policy then followed by the HR Directors’ to transfer LVMH’s employees at a global level. Due to the different standards made by the department, it is often very easy to pick people who are eligible for an international transfer.
The various benefits could be:
- Has an unique standard to assess the candidates
- Is fair for all
- HR Director cannot separate anyone from the policy
- Based on the potentiality of the candidate
- Information flow and is harmonised
Maintaining the standards in the international transfer policy, the international transfer department refer LVMH’s expatriates by gathering information about them from its wide international networks. Based on the references and recommendations to the HR Directors; the policy work as a helpful benchmark. International transfer policy strengthens the company by assisting company’s HR teams.
Employees can be motivated as it is a fair policy. Constant rise in international assignments need more international employees. Various benefits offered to the employees through international mobility are framed by the international transfer policy. It is an internal part of LVMH’s management concept. (4)”International transfer policy has a clear mandate to spread the group’s key values which are preserving, autonomy and encouraging entrepreneurship;” LVMH case study.
It is a process of achieving future career development in LVMH. The mission and vision which are widely spread by the policy increase the level of motivations among the expatriates. Expansion in the policy could be developed due to the increased number of international transfers made. International transfer policy helps to achieve goals by motivating LVMH’s expatriates to be effective in their task, and to complete it efficiently.