Mattels Human resources managing Strategy

Q1. Identify the key elements of Mattel’s HRM strategy. Critically evaluate the HRM strategy in relation to relevant theories and models and the current external environment. What potential issues does the company face in balancing the organizational HRM strategy with divisional ‘personalisation’ of it (as discussed on page 9 of the case study)? (30%)

Mattel was the largest toy company in 1999. It had relied on majority of its success through global expansion and acquisitions. This had seen profits rise and fall over the years. Cost cutting strategies were put in place to increase profitability. When the growth by acquisition strategy backfired in 1999 under CEO Jill Barad and they reported a loss, Robert Eckert took over as CEO. Eckert changed the way company achieved profits; he did not focus on cost cutting strategies but on workforce management. He relied mainly on using Human resource management to attribute towards the company’s success. This was a key risk to make sure the company competed in the international market.

“All firms require a set of goals, resources, and capable people that are appropriate to the industry context or sector concerned” (Boxall 2003; Boxall and Steenveld 1999; Hamel and Parahalad 1994: 226). “Distinctive human resource practices shape the core competencies that determine how firms compete” (Cappelli and Crocker-Hefter, 1996).

All Human Resource strategies are different from one another solely due to the different types of organizations. There are many variations to the strategies, but two basic types of HR strategies can be identified. These are Overall Strategies such as high performance working and Specific Strategies relating to the different aspects of human resource management (Armstrong and Long (1994) and Armstrong and Baron (2002)). A list of these is attached in the Appendix. From the text reviewed [1] , five key elements are visible which form the basis of Mattel’s HRM strategy. These are unification of the workers, Motivation and discipline of the work force, development programs for the workers, a system of metrics to evaluate the performance of workers and a systematic succession strategy. Each of these have been described in detail and have been related to Specific and Overall strategies.

It is visible from the literature provided that the company’s workforce was disjointed and unmotivated. The HRM strategy tried to unify the workers and brought in cultural changes within the organisation. “Disconnected corporate silos at Mattel choked the flow of information and undermined important workforce strategies” (Alan Kaye). The unification of the several branches of Mattel [2] under one name Mattel Brands gave the business a common objective to follow. This allowed employees to focus on their own work and also allowed them to have a goal as a company and where it was heading. The training courses [3] helped to improve teamwork and motivate staff to do well in their fields. Patterson et al (1997) have reported that: “aspects of culture, supervisory support, and concern for employee welfare, employee responsibility, and training are all important variables in relation to organisational performance.” This theory coincides with the one Mattel produced for their people development.

They employed High Involvement Management and High Commitment Management plans in their HR strategy. These are development plans aim at having a skilled and competitive workforce. The learning maps have a positive impact on the company. Employees were aware of the implications of poor communication and weak team spirit on their day to day tasks. Instructor led training plans are useful in sharpening employees core competencies. These comply to Talent Management and Learning & Development strategies. These HR practices, especially the systematic succession strategy which aimed at promoting the workforce to be committed to their work. This makes sure the talent within the company is retained and staff have better career goals. This promotes attitudinal commitment towards the organisation, giving staff loyalty and support for the organisation, and also a strength of identification within the organisation (Porter 1985). It also promotes behavioural commitment which means employees tend to remain with the company over the long run and pursue its objectives. This is the Organisational Commitment strategy. Walton (1985) noted that commitment is thought to result in better quality, lower turnover, a greater capacity for innovation and more flexible employees. Guest (1998, p. 42) also suggested that the concept of organizational commitment lies at the heart of any analysis of HRM. Indeed the whole rationale for introducing HRM policies is to increase levels of commitment so that other positive outcomes can ensue.

They also employed Engagement strategy to help staff be more involved in the processes. Mattel’s training and development plans make sure employees attain the high creativity levels to successfully compete with other toy companies. This is evident as majority of toys sold by Mattel are the new inventions. Sufficient training gives workers authority over the work they do. The Simple Model of HRM (Figure 1 in Appendix) shows how HR practices leading to Employee commitment constitute better sales performance, and essential part of Mattel’s success.

In order to monitor performance levels, Metrics were incorporated. This is very useful as aids in monitoring performance and helps in setting company targets and goals, both short term and long term. Guest and King (2001) found that many senior managers were not aware of the research on performance, and it is therefore unclear what is informing senior managers’ choice of performance initiatives. From the theory above it proves the fact that these Metrics were beneficial in deciding which initiatives needed to be deployed and on which sections.

All the sections mentioned above relate closely to two human resource models, namely The Fomburn, Tichy and Devanna model of HRM and the Guest Model of HRM (See figure 2 and 3 in the Appendix). These models relate how HRM practices can achieve superior results in individual and organisational performance.

The Fomburn model was developed in 1984, this model emphasised the relationship of different activities within human resources. It consists of four constituent parts namely selection, appraisal, development and rewards. These activities are solely intended to increase the company performance. It is a relatively simple HRM model as it only focuses on the four key practices mentioned above and does not take into account the stakeholder interests, situational factors and strategic choices by the management (John B, 1999). It does however put strong emphasis on the coherence of internal HRM policies and matching these with the organisation’s external business strategy. This strategy is evident in from the text in the Mattel Corporation but some key practices are missing from the model. The Guest Model more appropriately describes their HRM strategy.

Guest’s Model states that if an integrated set of HRM practices is applied with the aim of achieving goals of high commitment, quality and flexibility then this will result in superior individual and organisational performance (John B, 1999). The Guest Model has six components as opposed to the 4 in the Fomburn Model. These are: an HRM strategy, set of HRM policies, set of HRM outcomes, behavioural outcomes, a number of performance outcomes and financial outcomes (See Figure 3 in Appendix). This model relates the close link between HRM strategy and general business strategies [4] . The Guest model emphasises that HRM practices be designed in a way that lead to HRM outcomes of employees of high quality and high flexibility. This leads to a skilled workforce who enables the company to produce high quality services and products. The model argues that only when all three HRM outcomes (commitment, quality, flexibility) are achieved a behaviour change can be expected. This model coincides with the strategy employed by Mattel as they put in place measure to ensure their workforce were inventive and gave dedication to the company to achieve these targets.

Mattel introduced all three Overall Strategies for High Performance Management, High Involvement Management, and High Commitment Management (Please refer to Appendix for full description of there).

The HR strategy has aided the company in moving closer to success and profits, more than the cost cutting strategies had done over the previous years. Human resources seemed to have been totally ignored over the past decades and putting emphasis on them proved highly successful. This has been clearly evident from the text reviewed and through the theories used to back this.

Q2. With reference to relevant published sources and organisational examples, provide a critical analysis and review of the changes that were made to performance management within Mattel instigated by Eckert, the CEO. How can Mattel ensure the sustainability of its approach to performance management? (22%)

Performance management is: ‘The development of individuals with competence and commitment, working towards the achievement of shared meaningful objectives within an organisation which supports and encourages their achievement’ (Lockett J, 1992).

Robert Eckert initiated performance management within Mattell. Changes initiated to the management, as mentioned in the article (Gina Ruiz, Shaking up the Mattel Toyshop, Workforce Management) included notifying supervisors with a set of objectives, a feedback system notifying customers of their performance and coaching in several topics [5] , a talent management system.

Looking at the management plans, firstly the one putting employees first. With the several initiatives under the talent management system gives the workers great opportunities for career advancement. Eckert quoted that due to these changes, internal promotions increased by 25% and 75% of open positions were filled internally. This is a very sound initiative as this promotes the employers and gives them a vision to improve their performance, in the greed of getting rewarded with promotions. With this initiative managers get to monitor talent and further develop it to create better managers for the future. The company incorporates a 360 degrees feedback system. This has been defined as the systematic collection and feedback of performance data on an individual or group derived from a number of the stakeholders on their performance. (Ward P, 1997). This feedback forms the basis for development and reflects aspects of individual behaviour as these are based on the experience of individuals.

The ability to retain talent is particularly critical in the fierce competitive toy industry. Companies can be made or broken by the innovation and creativity of their talent (Julie Livingstone) [6] . The management changes within the company which address this issue are tangible to ensure creativity is kept to the standards required to compete with other companies. Mattel invested a sound amount into training and redevelopment of staff through training for performance management, skill development courses [7] and The Global Leadership Program [8] . These programs focus at talent throughout all levels of the corporation. This has ensured communication across all levels and the exchange of information with one another. Eckert himself quoted “True sharing of knowledge is going on for the first time.” The reason for concern is that majority of the statements are quoted by the staff themselves. The sales figures show that in 2005, the sales were down by 13 percent. But in spite this decline in sales MacArthur states the situation would be worse without these performance management strategies.

Case studies done at the company are more dedicated towards the toy business and more emphasis is put on lectures being given by the company executives. A writer specifically writes case studies for the company which deal with Mattel’s products and problems. This is an effective way of getting good literary work on the company which can form the basis of analysis for the company. These articles prove successful for improvement initiatives.

Performance management focuses on future performance planning and improvement rather than on retrospective performance appraisal. It functions as a continuous and evolutionary process, in which performance improves over time; and provides the basis for regular and frequent dialogues between managers and individuals about performance and development needs (Armstrong M, 2000). In order for Mattel to ensure that its performance management sustains with times and proves productive, they have to ensure that they continuously update objectives accordingly, keeping current market trends in mind to ensure their targets are in accordance with the current demand. Continuous learning approach should be adapted to ensure the learning trends focus on the further development of employees.

The core way for Mattel to ensure how the performance management is performing is to ask the personnel involved (Managers and supervisors). This should review how the system worked and what were the positives and negatives. The Human resources should hold responsibility for ensuring best analysis is kept of the measures in place. Views of customers also need to be incorporated into the performance management programs to make the sales performance of Mettel better. These views aid in answering what customers want and what the company needs to do to accomplish these. This should be based on the Sears professional model for employee customer chain (Please refer to the appendix Figure 4)

The literature that has been reviewed provides sufficient evidence to support that the changes brought forward by the Mattel Management under Eckert did pave ways for successful people development which aided in a stronger workforce of capable and creative employees and managers. A sense of unity was created with effective communication in between all levels clearly visible. However the sources reviewed are Mattel based and may have some sort of biasness present in them, this may be ignored as compared with the theories read and they seem feasible.

Appendices

Figure 1 : A simple Model of HRM

A simple model of HRM and performance (Source: D. Guest (2000) ‘Human resource management, employee well-being and organisational performance’.

Figure 2

Selection

Performance

Human resource development

Appraisal

Rewards

The Fomburn, Tichy and Devanna model of HRM (Source: Fombrun et al.,1984)

Figure 3

Guest Model of HRM (Source: Guest D, 1989)

Figure 4

OVERALL HR STRATEGIES

(Michael Armstrong, Strategic Human Resource Management, A Guide to Action (2008), 4th Ed.)

High-performance management

High-performance management aims to make an impact on the performance of the organization through its people in such areas as productivity, quality, levels of customer service, growth, profits and ultimately, the delivery of increased shareholder value. High-performance management practices include rigorous recruitment and selection procedures, extensive and relevant training and management development activities, incentive pay systems and performance management processes. As a bundle, these practices are often called high-performance work systems (HPWS). This term is more frequently used than either high-involvement management or high commitment management, although there is a degree of overlap between these approaches and an HPWS.

High-involvement management

The term ‘high involvement’ was used by Lawler (1986) to describe management systems based on commitment and involvement, as opposed to the old bureaucratic model based on control. The underlying hypothesis is that employees will increase their involvement with the company if they are given the opportunity to control and understand their work. He claimed that high-involvement practices worked well because they acted as a synergy and had a multiplicative effect. This approach involves treating employees as partners in the enterprise whose interests are respected and who have a voice on matters that concern them. It is concerned with communication and involvement. The aim is to create a climate in which a continuing dialogue between managers and the members of their teams takes place in order to define expectations and share information on the organization’s mission, values and objectives. This establishes mutual understanding of what is to be achieved and a framework for managing and developing people to ensure that it will be achieved. The practices included in a high-involvement system have sometimes expanded beyond this original concept and included high-performance practices. For example, as defined by Benson et al (2006), ‘High-involvement work practices are a specific set of human resource practices that focus on employee decision-making, power, access to information, training and incentives.’ As noted above, high-performance practices usually include relevant training and incentive pay systems. Sung and Ashton (2005) include high-involvement practices as one of the three broad areas of a high performance work system (the other two being human resource practices and reward and commitment practices). The way in which high involvement made an impact was explained by Guest (1997). He suggested that the commitment and flexibility provided by highly involving action lead to behaviour changes among employees. Because the employees show high levels of motivation, commitment and organizational citizenship, they adopt better-performing behaviours, leading to lower absenteeism and turnover rates, increased productivity and higher levels of quality.

High-commitment management

One of the defining characteristics of HRM is its emphasis on the importance of enhancing mutual commitment (Walton, 1985). High-commitment management has been described by Wood (1996) as ‘A form of management which is aimed at eliciting a commitment so that behaviour is primarily self regulated rather than controlled by sanctions and pressures external to the individual, and relations within the organization are based on high levels of trust.’ The approaches to achieving high commitment as described by Beer et al (1984) and Walton (1985) are:

The development of career ladders and emphasis on trainability and commitment as highly valued characteristics of employees at all levels in the organization;

A high level of functional flexibility, with the abandonment of potentially rigid job descriptions;

The reduction of hierarchies and the ending of status differentials;

A heavy reliance on team structure for disseminating information (team briefing), structuring work (team working) and problem solving (quality circles).

Wood and Albanese (1995) added to this list:

Job design as something management consciously does in order to provide jobs that have a considerable level of intrinsic satisfaction;

A policy of no compulsory lay-offs or redundancies, and permanent employment guarantees, with the possible use of temporary workers to cushion fluctuations in the demand for labour;

New forms of assessment and payment systems and, more specifically, merit pay and profit sharing;

A high involvement of employees in the management of quality. As defined above, high involvement and high-commitment management have many similarities.

SPECIFIC HR STRATEGIES

(Michael Armstrong, Strategic Human Resource Management, A Guide to Action (2008), 4th Ed.)

Specific HR strategies set out what the organization intends to do in areas such as:

Human capital management – obtaining, analysing and reporting on data, which inform the direction of value-adding people management strategic, investment and operational decisions.

High-performance management – developing and implementing high performance work systems.

Corporate social responsibility – a commitment to managing the business ethically in order to make a positive impact on society and the environment.

Organization development – the planning and implementation of programmes designed to enhance the effectiveness with which an organization functions and responds to change.

Engagement – the development and implementation of policies designed to increase the level of employees’ engagement with their work and the organization.

Knowledge management – creating, acquiring, capturing, sharing and using knowledge to enhance learning and performance.

Resourcing – attracting and retaining high-quality people.

Talent management – how the organization ensures that it has the talented people it needs to achieve success.

Learning and development – providing an environment in which employees are encouraged to learn and develop.

Reward – defining what the organization wants to do in the longer term to develop and implement reward policies, practices and processes that will further the achievement of its business goals and meet the needs of its stakeholders.

Employee relations – defining the intentions of the organization about what needs to be done and what needs to be changed in the ways in which the organization manages its relationships with employees and their trade unions.