HRM Contribution To The Organisations Corporate Strategy Management Essay
The rationale of the report is to explore the models & theories that are associated with Human Resource Management (HRM). The report will look at the contribution HRM makes to an organisations corporate strategy the report will focus on the Material Solutions(MS) department Bombardier Transportation (BT). (See appendix .1) Bombardier Transportation is the global leader in the rail equipment manufacturing and servicing industry. Its wide range of products includes passenger rail vehicles and total transit systems, locomotives.
“Our mission is to be the world’s leading manufacturer of planes and trains. We are committed to providing superior value and service to our customers and sustained profitability to our shareholders by investing in our people and products. We lead through innovation and outstanding product safety, efficiency and performance. Our standards are high. We define excellence-and we deliver”.
Bombardier Transportation’s overall strategy is based on the mission statement with strong emphasis to achieve both business orientations through its HRM strategies:
Core values and leadership
Stability through the protection of business
Value add by using TQM, Continuous-Improvement ,kaizen, lean, Six Sigma.
People Development via investors in people.
The importance of both the PM&D and HRM strategies is to achieve competitive advantage for the organisation by deploying practices that are horizontally & vertically aligned to meet the business orientation. The influence of these on both employees and the organisation performance will be critically analysed. Beer et al (1984), stressed that in the emerging face of international competition, organisations must recognize the value of investment in human resources as major source of competitive advantage.
The report will also look at areas where improvements could be made with regards to employee contribution and performance.
HRM contribution to the Organisations corporate strategy
According to Fojt, (1995); Tovstiga, (1999) “the recent raise in the status of knowledgeable workers has highlighted the focus on human resource as the key to the organisations productivity”. The Life Cycle Model (Sisson & Storey, 2000) (see appendix .2), states that a Business can move between life cycle stages and the HR practises that are in place should be aligned with this.
The Competitive Strategies and HRM Model (Schuler and Jackson, 1989) (see appendix. 3), through cost reduction, quality enhancement and innovation, provides three strategies an organisation can deploy to obtain a competitive advantage, (Marchington and Wilkinson 2002). To create and sustain competitive advantage an organisation must first create competitive strategy and sustain the business performance through implementation of the strategy. The Competitive Advantage model (Schuler and Jackson, 1989), is part of BT HRM strategic planning and of the organisation to analyse the Innovation Business strategy with supporting HRM policies and practices, having long term focus, sophisticated methods of recruitment, development, rewards and highly trained specialists in rapidly changing markets to produce adaptable products and services.(See appendix.3). BGC Matrix, Purcell, (1992), BT would be classified as a Star, due to its high market share, greater formalisation and emphasis on training and sophisticated management.
BT’s mission statement clearly defines that the business strategy is based on the investment of employees as one of the key factors, which impacts the strategy of the organisation. According to Torrington, Hall, Taylor (2005), “Human resource management (HRM), is the basis of all management activity”. Organisation have their own products or service which are unique to the market and business strategies which reflects the aims and objectives, However, ” the basis of management is always the same, getting the people of the business to make things happen in productive ways, so that the business prospers and people thrive”. (Torrington, Hall, Taylor 2005),
The consideration of external and internal factors determines the HRM strategy in delivering the organisational aims and objectives. These are categorised as, political, competitors, customers, market forces, environmental and technology. Culture and structure of the organisation, processes, location, and both short and long term goals of the organisation are internal factors.
BT’s organisational approach has both short and long term strategies; Short-term Operating plan has a cycle of 1 year and is reviewed annually. The Long-term strategy is a 5 year plan; both these strategies run parallel to each other. According to Porter (1996) “Alignment requires a shared understanding of organizational goals and objectives by managers at various levels and within various units of the organizational hierarchy. A firm’s ability to seek and maintain a competitive advantage rests on its ability to acquire and deploy resources that are coherent with the organization’s competitive needs”. Torrington, Hall, Taylor (2005), defines three key theoretical perceptive approaches to Human Resource Strategic planning.
The fit or contingency
A lot of information exist providing arguments, which are for and against each of these theories. According to Conway (2000), examination of the organisational approaches as “high commitment management HRM has roots in both the configurationally and the universal theoretical framework”. Marchington and Wilkinson (2002, p177), both claims interest over the last decade to the model “high commitment” or best practice HRM, due to the work conducted by US academics. Both approaches consider HRM practices should complement each other. However, according to Purcell (1999), “what is most notable about the best practice model is there is no discussion on the company strategy”.
Guest and Conway et al (2000), stated that the “best practice” perceptive of HRM strategy has been further supported from various publication since 1994 using different methodology. Torrington, Hall, Taylor (2005) pp20. Guest (1989) explores this perceptive further, by basing his theory model of 4 HRM policies as goals, integration, commitment, flexibility and quality, to deliver the organisation objectives.
Connell and Voola (2007) views Resource-based theory as knowledge to a critical resource that can lead to a competitive advantage. The resource based approach puts emphasis on internal resources, “human capital” to sustain a competitive advantage, rather than the alignment of current human resource strategic advantages. Benefits from the characteristic of competencies and the resources and capability of a work organisation, in an effort to sustain the competitive advantage, long term organisation focus is on the skill mix, attitude, knowledge and competence of its employees.
Briggs and Keogh (1999), draws the attention to the importance of planning for the future today, “Maintain that business excellence is not just about ‘best practice’ or ‘leapfrogging the competition’, but about the intellectual capital and business intelligence to anticipate for today’s future”, (Torrington, Hall, Taylor (2005) pp39. ) Bombardier HRM strategy has elements of all perceptive approaches as discussed above. Suggesting there is not one approach that could be identified as meeting the organisational orientation and needs. However, indications are Bombardier HRM strategy has elements which are Resource based, encompassing some of the key factors required to deliver the BT organisational strategy. Such as integration, of HRM and strategic planning, to ensuring HRM policies are cohesive.
There have been numerous debates on the linking of HRM policies to the organizational performance, based on different perspectives, best fit (Schuler and Johnson, 1987: Miles and Snow 1984) and best practice (Pfeffer 1994:1998), make a case performance is increased when the HRM policies are coherent to business strategy. These approaches assume HRM polices impact all the employees in the organisation, Marchington and Grugulis, (2000) challenged this notion pointing “organizations are complex with many different types of employees who may be managed successfully through diverse sets of HR practices within single organisation”.
Purcell and Boxall (2003), argues, that based on the evidence ‘best fit’ is what organisation do, in comparison to the ‘best practice’, based on descriptive research, it demonstrates that context such as economic and socio-political factors influence labour management. Wright and Boswell, (2002), the persistent subject in HRM is the achievement of high performance, the idea this can be addressed by applying HR policies in certain bundles or combination. The bundle first identified by MacDuffie (1995), has difficulty in providing a distinctive set of HR policies can be implemented successfully for all organisations. Pfeffer (1994; 1998), developed a list 16 best practices, which were narrowed down to 7 in (1998), considered to be significant in achieving high organisational performance:
High Compensation based on Organisational Performance
Reduction of status differential and sharing information.
Kinnie; Swart; Rayton; Hutchinson and Purcell (2004)
Training and Development
Why training and development of employees is considered to be important to Bombardier in the growth stage of the life cycle theory. According to McCelland (1994), studies the organisation which considers development issues as part of their business strategy found it value add and helped in maintaining competitive advantage. BT’s organisation strategy clearly defines development of its employees as key factor.
BT recognises the need for training & development of its employees to sustain the competitive advantage, and growth of the business, in improving performance, skills improvement, knowledge, retention, recruitment, succession planning, and the future growth of organisation by competitive are an advantage to “human capital”. Purcell et al (2003) AMO model states that training and development is a key part of ensuring that employees have key skills to do their jobs and the chance to contribute. The AMO model clearly links the increase in employee opportunities via T&D increases motivation at work. Chartered Management Institute, view that “today’s managers are clearly more motivated by environments that foster innovation and staff development,” cited in (Mullins 2007). Hutchinson and Purcell, (2003) suggests the unlocking of the black box, of the Ability Motivation Opportunity (AMO) model (See appendix .4), provides a theoretical advantage which leads for organisational high performance through discretionary behaviour and is decisive in achieving employee engagement leading to job satisfaction and positive psychological contract. Gaining employee opinion and behaviour would lead to greater commitment to the organisation.
The Performance Management Process is carried out every year, between the line manager and employee. Objectives set are based on departmental goals as well as any training and development identified for the employee to achieve the departmental objectives and career development. The PMP is reviewed after six months. BT utilise PMP in the training and development of employees, the objectives of PMP is employee contribution to the company’s success, it promotes and reinforces core values and leadership attributes, individual development, by encouraging employees to take the lead in career planning and self development by supporting their efforts by feedback and coaching.
2. Areas where improvement could be made in terms of employee contribution and performance.
In rhetoric the process of the PMP is a very effective tool the line manager and employees are given timescale to complete the document. However, in some areas of the organisation the reality is the process rarely gets completed on time or if at all, creating lack of trust and confidence the employees have in their managers, therefore becoming less motivated, resulting in low performance.
The lack of focus in conducting the PMP for last for 2 years is evident for Material Solutions. The causes for the lack of focus PMP can be identified with a number of issues, lack of necessary training for the Line managers to carry out or insufficient time and the lack of support from HR. Westwood (2001), states that a lot of money is spent on training that does not last long and on people who may not need it. To avoid unnecessary cost to the department, the author recommends that a Gap Analysis is carried out for the team; to identify appropriate training needs to bridge the current gap of knowledge to carry out other team members duties (See appendix. 5). BT management should ensure that PMP’s are carried out in accordance with procedure i.e. conducted once per year and reviewed every six months. This will ensure staff are aware of their key roles and responsibilities.
The PMP objectives set are based on department goals and training and development identified is for the employee to achieve the objectives set. The importance of complying with the guideline of the PMP to people development achieves Bombardier business orientation. The author recommends the Leadership program (See appendix .6) for the line manager as a further improvement. This will provide the line manager with necessary tools to recognise the training and development needs of the team; this will in turn motivate staff in order to increase contribution and performance. In order for staff to be contribute effectively they need clear direction on what is required of them along with the necessary skills and tools to do the job The line manager must be supported by HR and senior management (Appendix.7), through integration of both business strategy and HRM practices and policies horizontal and vertical alignment. There is a need to account for succession planning both vertically and horizontally. The successful execution of the PMP process will lead to achieving employee engagement, to job satisfaction and positive psychological contract. The gaining of appropriate employee opinion and behaviour would lead to greater commitment to the organisation; the ability of the business to attract and retain the suitable employees will be effect organisational performance. (See appendix. 8, 9)
As a study by (Kidd and Smewing (2001) indicate ‘respondents who saw their supervisors as engaging in feedback and goal setting behaviour were more committed to their organisation as were those whose supervisors trusted them with the authority to do the job.” Renwick, (2003), investigation concludes across multiple organisations view the role of line managers, as the willingness to carry out the HRM role; this was evident in the manner of professionalism and attitude displayed towards both HR and employees. CIPD, (2005), report highlights the positive effects employees can have on the performance of an organisation through the involvement of the line manager in guidance coaching communications.
There are many types of rewards within organisations from monetary, non-monetary and psychological payments all of which are an exchange for the work employees perform. The problem being is deciding which reward system best suits the business; many writers agree that a pay reward system should align with the business strategy so by Bombardier developing payment systems that enhance the employees contribution will in turn improve employee performance and employee contribution.
There are many elements of payment from,
Basic rate of payment
Benefits like car, pension, sick pay, accommodation, travel and other
One point that does need to be highlighted is whatever methods are used to determine payment levels and packages it needs to be perceived by the employee as equitable. This leads on the equity theory by Adams J.S (1963) which states that we are very concerned that rewards or outputs equate to our inputs so these seem fair when compared with rewards given to others.
BT should also look to improve employee involvement and communication. As currently communication tends to come from one direction that doesn’t lend itself for the employees to respond. Employees including myself are actively seeking to be involved in organisations decision making particularly at the customer level, encouraging two way communication will enhance employee motivation and in turn their performance. Heller et al (1998) suggest that participation is a process that allows workers influence over their work and conditions. Better two way communication will enable employees to share ideas with each other and management which will go a long way to give job enrichment and emphasis on teamwork. Engaging the workforce will in turn improve performance and contribution.
The importance of people management development is paramount in sustaining competitive advantage for the organisation. The author has explored the different theories and models associated with ‘best fit’ and ‘best practice’ and resource based perceptive approach to organisations. Through analysis the author has gained an understanding of the importance of the contribution that HRM makes to the organisations corporate strategy.
The roll-out of HRM policies and practice to the role of line manager is integral improving the organisational performance through the efforts of the staff and will be seen as the implementers of change in key areas such as behavioral, development. BTS MS, will require realignment of both business strategy and HRM practices and policies. Firstly to ensure and the line manager has the relevant training and development through the Leadership program to ensure business orientation is meet. Providing the line manger with necessary tools to recognise the training and development needs of the material solutions team members and develop and deploy the relevant strategy to create an ‘end-to-end’ delivery process from our suppliers to customers to further stabilize and improve outbound delivery performance.
The author would conclude that BT, business and HRM strategy vertical and horizontal are aligned in rhetoric, however, the evidence would indicate the lack of cohesion in what is required of management for the successful implementation people development process, and the support provided by various supporting functions at operational level within the organisation is more rhetoric than reality. Although PMP has links to Business strategy this is reflected at operational level, the lack training for the line manager and also ownership of the PMP process is apparent.
The report also highlights key areas where improvements can be made in order to improve employee contribution and performance. This mainly centres around conducting the performance management process in the correct way in order to maximise the potential of the workforce and also the importance of employee communication and its positive effects on the success of the organisation and on employees themselves.