Mattel; toys and games
Mattel, the world’s largest toy company, designs, manufactures, markets, and distributes a wide variety of toys and games in 150 countries. The company founded in 1945 by Elliot and Ruth Handler has developed its size, products and workforce in the last 60 years. By 1999 the company was No.1 in the toy industry. The CEO Jill Barad’s growth-by-acquisition strategy has resulted in heavy losses. Robert Eckert, who replaced Barad in May 2000, has decided against a cost cutting strategy to increase profits. The company now seems focused in achieving its strategic goals through its workforce management. In the following paragraphs, I would like to discuss the key elements of the Mattel’s HRM strategy, its evaluation in relation to the theories and models and the current external environment and lastly the issues the company is facing in balancing the organisational HRM strategy and its divisions.
Key Elements of the Mattel’s HRM Strategy
Before Eckert, Mattel does not seem to have any formal HRM strategy, however, under Eckert the HR practices developed and flourished enormously.
The key elements of Mattel’s HRM strategy are;
The idea behind this was to retain the home grown talent enabling them to make strategic decisions to quickly and effectively respond to the changing conditions.
Evaluation of the Mattel’s HRM Strategy with Reference to Theories and Models
There are different models and theories of HRM strategy upon which companies rely in order make best use of its work force. Mattel does not seem to adopt any particular model or theory; rather it seems to have taken a strategic approach to turn the ailing company to profit. In order to critically analyse Mattel’s HR strategy it is necessary to consider the concept of HR strategy, its models and its theories.
Models and Theories of HR Strategy
Mattel’s HRM strategy seems to be issue based rather than the formulation of a complete and integrated strategy (Grundy 1998; Hall and Torrington 1998). Mattel perceived changes in the environment, developed a resultant strategy and turn this strategy into action. It is true that, due to the volatile nature of market, it was difficult for the Mattel to formulate a single HR strategy and strictly follow it as Mintzberg (1994) argues that strategy is ‘formed’ rather than ‘formulated’.
Models of HRM
Michigan School (Fomburn et al 1984) say that the HR systems and the organisation structure should be managed in a way that is congruent with the organisational strategy. They suggest that the human resource cycle consists of generic process i.e. selection, appraisal, rewards and development.
The Linear Model
This indicates that the overall HR strategy is derived from the business strategy and generates specific HR strategies in key areas. This happens in conjunction with systematic reviews of the internal and external environment of the organization which identify the business, organizational and HR issues that need to be addressed (Milmore et al (2007).
Theories of the HRM
According to Torrington & Hall (2002), there are three theoretical approaches to the strategic HRM;
Universalistic Approach – suggests that there is ‘one best way’ of managing the human resources to improve the business performance.
Contingency theory – deals with the relationship of the policies and strategies with the circumstances of the organisation. It is essentially about the need to achieve fit between what the organisation is and what it wants to become.
Resource Based approach – focuses on the quality of the human resources available to the organisation and their ability to learn and adapt more quickly than their competitors.
In the light of the above models and theories, Mattel does not seem to have adopted a particular model or a theory. However, as per the case study it can be suggested that Mattel has followed the resource based approach and a linear model for its success because it focused on the available human resource and addressed the HR issues it was lacked. Mattel has rightly understood the importance of its workforce and took the strategic steps to save its entity. Heavy investment in the field of employees training suggests that Eckert seems to have taken a conservative approach towards bringing the company to its status quo. Initiatives were taken in order to beat the then challenges. However, despite this, Mattel does not understand the HR planning which involves right people in right jobs and at right costs. One important aspect of planning is to have a systematic recruitment of employees. For recruiting, Mattel did not adopt a structured approach for recruitment and selection. Effective management of recruitment would have reduced risk and uncertainty by acquiring the best people using systems within the organisation to match capabilities and market requirements. In doing so, Mattel would have considered the cost issue which must have been justified with the pressures of the business environment. Though, excessive spending on development programmes is good idea, it may not always bring the required results as just focusing on the current employees may lead Mattel lose the fresh talent.
It has also been observed that Mattel has not taken into account balanced approach between earning profits and developing its employees. The company has not made the required profits within the first two years yet spending on development programmes was risen. It doubtless that that human resource is the major asset (Armstrong 2006) for a company but there are also other issues which need considerations i.e. current market environment, achieving set targets and acquiring new businesses.
Mattel’s HRM Strategy and the External Environment
Organisations respond differently (Edward & Rees 2006) to the changing circumstances in highly competitive world and especially in this economic downturn; it has become extremely hard for most of the organisations to survive solely by improving its work force. In the difficult times, organizations generally adopt the cost-cutting strategy (Torrington and Hall 2002) in order to meet the changes and sustain themselves. However, Mattel under Eckert seems to have taken a conservative approach as it discerned that a cost-cutting strategy is not always suitable because it may result in losing the services of best people the company holds. Therefore Eckert decided to develop the people to an extent that they have the ability to beat the market challenges so that the company may run smoothly and generate good profit on long term basis.
Mattel workforce management against the cost-cutting strategy has been successful. It is noticed that while developing and managing the workforce Mattel’s does not seems to have taken into consideration the competition from the giant competitors e.g. Hasbro which has defeated Mattel in the past and could do it again.
Balancing the HRM Strategy and its the Divisional Personalisation
The issues Mattel is now facing in balancing the organisational HRM strategy with its divisions are as none of the units seemed to work in achieving a common goal for Mattel. The company is facing the problem of divisional autonomy. The company is not against the idea of individual personalization keeping in view the political, economic, social and technological factors of countries in which they operate. However the real issue is to what extent autonomy should be given in order to achieve integration between corporate and divisional HR strategies. In these circumstances neither a complete separation of powers nor a tight central control would be suitable rather a balance between the two would be appreciable.
According to Armstrong, all international firms are facing the extent to which their HR policies should converge (worldwide basically to be the same in each location) or diverge (to be differentiated in response to the local requirements). Laurent (1986) commented that multinational organisations need to struggle consistently in managing people on a worldwide basis in order to build, maintain and develop the corporate identity. Yet, and in order to be effective locally, they also need to adopt those ways to the specific cultural requirements of different societies.
The cultural differences have produced a slogan “think globally and act locally” and Mattel should act on that principle while balancing the powers with its divisions. This means an international balancing act (Bartlett and Ghoshall 1991) is required which will lead Mattel to balancing coordination, control and autonomy which are critical to its success.
Mattel has succeeded in its workforce strategy to bring the company to profits so far. Through its employees training, performance management and succession planning, the company not only developed strategic workforce but also set a base for its better future and existence on the globe for a longer period. However, in order to maintain a consistency in its development as a whole, Mattel needs to show more commitment and strategic approach towards the turbulent global market. The current global recession has not only forced the companies to reduce their workforce but also forced them to close down their businesses or merge into the others e.g. HBOS and Halifax.
The survival and growth of a business (Tyson, 2006) depends upon the quality of the human resource within the organization as well as how well they perform. Performing well is not enough for a multinational organization; management of this performance is also needed. Through a proper performance management system the employees are assessed what they have done already and what is needed to be done. In Mattel, Eckert has also introduced some changes for the optimization of its workforce and retain the home grown talent. Below is critical analysis of the Mattel’s performance management and the ways in which Mattel could ensure the sustainability of its performance management.
Critical analysis and review of the Performance Management in Mattel
Performance management (Armstrong, 2006) is a systematic process for improving the performance of individuals and teams. It is a means of getting better results by understanding and managing performance within an agreed framework of planned goals and competency requirements. It is basically about what to achieve and in what time to achieve.
When Eckert took over there was no single performance management system. Employees only knew what they individually have to achieve but knew nothing what Mattel wanted to secure as an organization. Eckert brought some changes in the performance management where a single performance management system was devised for all the divisions. Performance of the employees was measured and the performance management was introduced to the employees across the world. Supervisors received a set of objectives which supported the corporate goals. Through a 360-degree feedback system, employees came to know how well they are performing. Individual coaching led the employees to improve in certain arrears.
These changes were very much reasonable in a firm especially without any performance management system. However, it seems that some issues have not been considered at all while introducing the performance management system. For example employees reward system and the performance rating is missing. Although a succession planning was set up to promote those who had the potential leadership qualities, yet promotions in bigger organizations do not take place so frequently rather it take years. If employees are given quick and reasonable reward for their achievements they not only feel pleased to perform well but also look at what they are contributing to the achievement of the corporate goals (Gilmore & Williams 2009).
Employees’ performance rating was not put in place which is also useful in managing the performance of the employees. —to sum up judgments about people indicating who are the exceptional performers, the under performers and who are the core performers so that the action can be taken. Good performance rating i.e. exceptional, well balance, acceptable and unacceptable performance not only motivates the employees but also helps them understand how well they are performing.
In addition to that Mattel has to work more vigorously towards aligning the individual objectives to the organizational objectives by establishing a high performance culture and ensuring that individuals uphold the corporate values.
According to Armstrong World Industries performance management is empowering, motivating and rewarding the employees to do their best and in view of Fli Lily & co performance management is basically focusing employees task on the right things and doing them right and aligning the individual’s goals with the organizational ones.
In the light of the above mentioned examples, Mattel need to consider giving discretion to the employees allowing them to work the way in which they like so that they feel free to innovate new products and employ new ideas. Purcell and his team at the Bath University, school of management (2003) state that discretionary behaviour refers to choices that people make about how they carry out their work which leads the people to make extra effort and care towards innovation and productivity.
Mattel also needs to have an effective performance planning in which the employees should improve the performance and develop the required competence. Furthermore Mattel should encourage the employees to make a personal development plan and ensure that this plan is updated on regular basis.
The basic idea behind Mattel’s performance management is to enable every individual to respond to the changing circumstances and make instant and better decisions if the need arises. Through this the company also ensures that any future loss of experienced employees would be compensated without any delay from the skilled workforce in queue.
Sustainability of Performance Management
In order to sustain the performance management for a longer period Mattel needs to establish an effective and formal review policy i.e. once or twice in a year. As performance management is a continuous process, it needs to be reviewed properly. Use of praise could also help in sustaining the high performance management culture.
For the performance management system to be effective, Mattel needs to take note of several factors i.e. its size, market sensitivity and a good linkage between performance and rewards.
Mintzberg (1994) cited in Derek Torrington, Laura Hall & Stephen Taylor (2002) Human Resource Management fifth Edition Pearson Education Ltd, and previously Prentice Hall Europe
Greg L. Stewart & Kenneth G. Brown (2009) Human Resource Management linking strategy to practice first edition John Wiley & Sons Inc
Michael Armstrong (2006), A Handbook of Human Resource Management 10th Edition Cambridge University Press
Laurent (1986) cited in Michael Armstrong (2006), A Handbook of Human Resource Management 10th Edition Cambridge University Press
Milmore, Lewis, Sounders, Thornhill and Morrow (2007) Strategic Human Resource Management contemporary issues 1st Ed Pearson Education Ltd
Sarah Gillmore & Steve Williams (2009) Human Resource Management first edition Oxford University Press
Tony Edward & Chris Rees (2006) International Human Resource Management (Globalization, National System and Multinational Companies), 1st Edition, Pearson Education Ltd.