BA/MA CIPD essay - strategy and human resource management

August 15, 2015

As their website states “OKI is a global B2B printer manufacturer dedicated to creating cost effective, professional in-house printing solutions. Building on the strength and flexibility of OKI LED technology, our portfolio of award winning printers, solutions and managed print services enable organisations of all sizes to reduce costs and their impact on the environment.”

Oki has seen various opportunities and faced challenges since its formation of which both can be termed general and industry specific. In the 1990s, the packaging industry and the U.S. economy experienced tremendous economic growth. Following this, Oki found itself vulnerable to such changes, and ended up facing two major challenges. The first challenge was related to the change in the competitive environment caused by globalization. During this time, heavy manufacturing companies were moving especially to the east to establish in countries and regions where cheap labour was amply available, and people had a good grasp of English. Firms in the United States of America had to reorganize in order to remain competitive. Oki was forced to rethink its business model as well as building a strong brand. The other challenge related to technological advancement and most importantly through the Internet and e-commerce that enabled consumers to establish business relationships globally. In the 1990s, firms in the packaging industry made sales of about $400 billion annually (Hamilton-Fazey, 2000). $ 115 billion of these sales were made in the U.S.A., with the rest being made in Asia and Western Europe (Falkman, 2000). From the statistics it can be seen the foreign markets were performing better than the U.S. market. Oki later expended its packaging product like as a response to consumer demand for specific products (Thomas and Groysberg, 2010).

I have found a number of challenges facing the division and would advise embarking on a plan to redefine the HR function as a strategic component. Many researchers and writers argue that HR ought to be a strategic partner (Jamrog and Overholt, 2004). In the new business environment HR cannot be strategic unless it is conversant of the macro business environment (Ulrich and Broackbank, 2005). However, through recent research it can be seen that HR has not progressed well into becoming a strategic partner in spite of the belief by HR practitioners that it should (Lawler and Mohrman, 2003a). Human capital has become important in shaping an organization’s effectiveness, hence the need for HR to play an important part in crafting and implementing corporate strategy to become a key source of value addition to the firm’s competitive ability (Lawler and Mohrman, 2003b). Studies have indicated that HR practices are strategically important if carefully linked to the business strategy. For instance Becker and Huselid (1998) concluded that there is a relationship between HR practices and performance of a business. Lawler and Mohrman (2003b) have also explained how the elements of the HR function relate to HR as a strategic partner. It is on this notion that Harley sought to create a structure based on performance management and compensation, employee development, and succession.

Success of the HR changes at Oki

The first challenge that we will have to tackle pertaining to the old HR function is the decentralized HR system that lead to inequitable compensation amongst employees. Oki will need to adopt a decentralized system of the late 1980s in which HR managers will report solid line to the general managers and dotted line to the corporate HR management. The decentralized system however will need to be supplemented with the competitive elements of Oki to ensure that communication is not negatively affected between the firm’s divisions, leading to performance inefficiencies. Whether owned by top managers or subordinates, decentralization and centralization are differentiated through the form of authority ownership. These two forms of structures have pros and cons. The HR function plays a definite but interconnected function on planning, compensation, maintenance, development and integration (Dessler, 2007).

The second challenge that is posed by the old HR function is the inability to comprehensively assess and compensate employees’ performance.  We need to establish that the divisional managers review employees’ performance once annually using a results-based approach, following a five band rating scale. At present there are no specific performance measures through which performance is assessed. There is no official communication system for managing information; hence the divisional managers could easily manipulate the performance results in order to hike their subordinates’ salaries. Performance evaluation based on results is perceived to be effective in attaining work efficiency and effectiveness, with functioning teams and proper feedback (Jorjani, 1998). Additionally this system is applicable in the short term if its objectives are not incorporated in the leadership culture and dynamic environment. Without an effective communication system, cooperation between divisions and employees could be impaired hence affecting the employees’ behaviour and competencies (Woehr, 2006).

In order to address the above challenges in the HR function and also reduce HR' related costs by 20%, or $2.8 million, we will have to conduct an investigation upon which to recommend a restructuring process. Our first task with the help of an advisory HR council is to establish a performance and compensation structure that ensure employees are compensated based on their contributions. Equity will exist, from the perspective of the employee, when this balance is achieved (Cole, 2004). It is worth noting that equity does not necessarily become an objective determination, but is instead subjective and perceptual in nature. It is an employee's view of his or her contributions and rewards and those of the employees he or she compares with that are critical in determining if the employee perceives inequity or equity. There always lacks a balance between what employees consider in determining wage equity and what organizations want to reward (Brick, 2006).

An equitable pay structure is the basis for effective compensation systems. The system should enable workers meet their needs, businesses meet margins, and governments attain their goals of social welfare and economic growth (Cummings and Worley, 2009). The main objective of coming up with such a pay systems is in order to maximize workers’ pay satisfaction. An equitable pay system determines the relative wage paid to employees serving in various positions in an organization (Coventry, 2004). As much as equity perceptions are subjective, and there is no system that will be seen as equitable by all employees, an equitable pay structure should designed in such a way that majority of employees view their wage as equitable.

The right HR structure for Oki

I advise that a robust system is created that ensures employees commitment and competencies are improved as well as succession planning to provide well prepared future managers. I will ensure that in designing the new HR structure, the council objectives and results enhance the division’s strategic position in the firm and further that it fits into Oki’s anticipated corporate culture.

HR Function which is decentralized is incapable of adding best value to Oki in the new era marked by uncertainty and with challenges such as competitors and their clients demanding greater degree of flexibility in production, logistics and delivery.  Also compounded to the HR decentralized structure is the misalignment of people and the Organisation’s values.

In performance planning, a Management by Objectives (MBO) like approach should be used. This is the process in which a superior and the subordinate jointly identify the objectives desired to be accomplished by the subordinate in terms of the overall results expected, and then use the same to measure and evaluate the subordinate’s performance (Saleemi and Bogonko, 1997). Managers are to then make pay and incentive adjustments based on the employees’ performance in an equitable manner. The management team at Oki needs to approve a new leadership development approach referred to as 3600. The approach involves evaluation, identifying deficiencies, planning for each employee’s development and implementing the plan. Assessment for the new approach should be conducted after every two years. Succession planning is done every year with HR evaluating candidates who are to take key positions and guide them on how to quickly attain the required qualities for the new positions aimed at enhancing support for the company’s new strategies. In adopting a new HR structure, the committee has to ensure that the two options are fronted and then one best option among the two: centralized and hybrid chosen after critically making various considerations.

A centralized HR structure is one where a few senior managers handle the main areas of authority in the head office. Essential business processes are rapidly and efficiently optimized in a centralized HR unit. Consistent processes for payroll, recruiting, onboarding, recognition,  benefits, performance management can be easily developed and co-ordinated.  Company wide communications of changes and updates such as process improvements, administrative HR processes, procedures and supplier changes are easier to develop, communicate and co-ordinate from within a department or section rather than from regional offices or various locations.The managerial functions of planning, organizing, personnel and finance are not delegated with adequate authority. This is because the senior managers at the top are not ready to delegate more work to their subordinates (Byars, 2008). The advantages of centralization include: quick decision making and easy coordination, top managers are able to take a broader view of problems and their consequences, different departments and functions are properly balanced especially in relation to allocation of resources, owing to better skills and experience of senior managers better decisions are likely to be made at the top, during crisis decisions are taken more quickly with no need to seek authority, standardized policies, regulations and procedures can be developed throughout the organization, and lastly it is possible to reduce overhead costs by reducing the number of managers (Noe et al., 2007).

Similarly, Kefalas (1998) quoted in Beechler et al (2007) focuses on the tension between thinking globally and acting locally and maintains that global mind-set is typified by high levels of both conceptualization (the expression of fundamental ideas that depict a phenomenon and the identification of the major relationships between these ideas and the whole) and contextualization (the adaptation of a conceptual framework to the local environment) abilities.

I would like to propose the following which when embedded within the current model of LMD Program will surely allow the managers and ‘selected talent’ to better understand the various facets of their placements abroad through the prism of cross-cultural global mind-set paradigm.

  • Change Management and Coaching – managing change well within the business and dealing with opposition along the way, using coaching and mentoring to manage staff and motivate them.
  • Personal Leadership Style
  • Creating a Positive Environment through Change
  • Achieving Goals through Resource Management
  • Managing the Performance of Others through Coaching and Feedback
  • Managing Conflict
  • Challenging & Dealing with Under-Performance

 

Testing the relationships that Kefalas (1998) proposed, Arora, Jaju, Kefalas, and Perenich (2004) observed that managers are more adept at thinking globally (conceptualization) than they are at acting locally (contextualization). Their study also shows that, of all demographic characteristics measured to predict managers’ global mind-sets, training in international management, manager’s age, foreign country living experience, family member from a foreign country, and job experience in a foreign country has the most statistically significant impacts.

A career path should provide for recurring local and global assignments and the ideal career path should alternate between local, global, local, and again global assignments. For example, SmithKline Beecham follows a policy that requires candidates for senior management positions to have a “2+2+2” experience, that is, hands-on experience in two businesses, in two functions and in two countries. With each new assignment, these managers broaden their perspectives and establish informal networks of contacts and relationships (Paul 2000, p. 197).

There are currently many approaches that are appropriate for coupling management development processes with business requirement both within the MNC and various subsidiaries or enterprises, but the primary approaches can involve any one or a combination of the following strategies:

Shareholder wealth, creation – economic, value added; business unit strategies; strategy implementation; core competencies and competitive capabilities; organisational transformation; and globalization forces.

These approaches, moreover, ensure that development in context is maximised, and that executive attention and organisational resources produce widespread results. In describing global mind-set, for example, Jeannet (2000) underscores the capacity to assimilate across domains and defines global mind-set as a state of mind able to understand a business, a particular market, or an industry sector on a global basis. An executive with a global mindset

has the ability to see across many territories and focuses on commonalities across markets rather than emphasizing differences among countries. According to Jeannet, global mind-set is not a linear extension of the multinational mindset but diverges significantly in terms of thinking patterns, responses, and cognitive skills. In addition to applying global mind-set to the individual level, Jeannet also applies it at the corporate level and characterizes corporate global mind-set as the cultural aspects of a company that define the extent to which the firm has learned to think, behave, and operate in global terms (p. 199) quoted in Beechler et al 2007.

Effective management development, therefore, requires contingent integration of knowledge from many organisational fronts.

Beechler et al (2007) states that while these assignments and other activities can be used to build cosmopolitanism and cognitive complexity, they can also lead to less desirable outcomes. Research shows that an international assignment does not necessarily lead to a global mind-set. Sometimes, it can lead to an increase in prejudice and cultural stereotypes. Learning from experience in an unfamiliar context may be particularly difficult since the cues people give about areas of conflict or to indicate the existence of a problem vary from one culture to another, as does the way in which they provide feedback.

The survey results give us a harsh look at our own LMD program which is sadly lacking in grasping the reasons of its ineffectiveness but it is not that we still do not feel we need to re-haul the LMD program to make it more global in context and in light of the ambitious plans to seek global revenue outside UK from 30 percent currently to over 50 percent. We are aware of its shortcomings and as the CEO has stated that we need to revitalise the LMD Program to meet the organisation’s medium to long term goals and ambitious revenue targets in the next three to five financial years. 

A proactive HR function is therefore needed to effectively manage the international assignment and the expatriate’s experiences so that they lead to positive outcomes (Boyacigiller et al. 2004).

The increasing complexities of operating this business under accelerating rates of change in a competitive global environment impose ever greater demands on the development of managerial talent. The CIPD Annual Survey Report 2012 showed that 72% of organisations in England reported a deficit of management and leadership skills.  43% of managers rate their own line manager as ineffective according to a survey of 4,496 managers, in The Business Benefits of Management and Leadership Development, CMI, February 2012.

So the best way we distinguish ourselves from the ‘has beens and also rans’ of the corporate world is by showing that we can dedicate time and energy amply in planning, designing and carrying out of development activities.

As a business practitioner, our message is that management development initiatives must be created to embrace and exploit the conditions for managerial learning. This means that they must be conducted in context and represent an articulation and elaboration of the linking between development experiences and the company’s business imperatives. It also means that more attention should be placed on arranging the learning environment in a way that it will facilitate the collaborative learning. This may mean greater use of intact teams and task forces and involve a greater range of collaborators and accountability in the development process. Though the Global HR Director has purposely highlighted through the work done that change albeit notable is taking place in some quarters, it is still certainly the case that it is reflecting more ‘ what should be’ than ‘what currently is’.

Sustainability of the changes

Employees in an organization will not readily embrace change. Change can result to losses to employees that are affected by it. It is necessary that in the process of planning for change, management acknowledges that there exist barriers for implementation and ensures these are avoided (Fenwick, 2003). With anticipation that the new move have been recommended by  HR, we will attain its objective of redefining the HR function as a strategic partner, the employees should be prepared (especially psychologically) for the changes and be made to readily accept them. To achieve this, management should be able to convince them how beneficial this initiative is to the whole organization. HR design and structure cannot be offer a competitive advantage except if it is owned and implemented by management and subordinates (Christensen, 2006).

With the pay structure in place, the organization can determine whether or not it wishes to use pay as a means of motivating extra role behaviour in its worker’s. Most of the time this is a challenging task that may create more problems than it can solve. In many cases, an organization may defeat the purpose of the system by attempting to develop a system of pay motivation which often creates high levels of perceived inequity (Jaques, 1961). The basis for wage increase spells out how wages will be changed from one period to another and it is a critical aspect in a compensation system so as to avoid frustration among workers (Granovetter, 1985). A compensation system is aimed at retaining the high-quality employees, attracting high-quality employees, motivating extra role behaviour in employees, and ensuring there is adequate role behaviour is among employees. Satisfaction by an incentive system is a critical determinant of an organization’s ability to attract and retain employees (Tzafrir, 2006). If employees are relatively satisfied with their wage system, such employees will tend keep working at the organization and show adequate role behaviour. Pay equity and pay adequacy determine pay satisfaction and . Pay equity refers to the degree to which an employee feels that the pay level is fair as compared to others. Pay adequacy refers to the degree to which an employee’s pay level meets his/her financial need (Kelber, 2004).

Reflection

Through this course I have been able to understand strategic international human resource management themes as applied both in the global and national spheres. This together with other theoretical models, frameworks and the learning objectives relating to HR are key concepts that I will find important when I eventually start working. Through discussions, case studies and seminars, my conceptual, critical and analytical skills have been sharpened enabling me to appreciate the position of the HR function in strategic management. Whenever I read through a business magazine or newspaper column discussing a given company’s HR function, I am able to pick out the HR concepts learnt in this module and relate them to the case. It is through this module and the Oki case that I have learnt that it is the way the HR function is crafted and implemented which determines whether it will become a strategic component hence a key source of value addition to the firm’s competitive ability. Through the case, I am able to have a deep understanding on how one can design an HR function and explore its relevance in line with the company’s objectives.  It gives me an innate look at the workings of HR services within larger and SME organisation and how HR best meets the challenges within the organisation and serves the strategic vision and operational requirements.

Partnerships also need to be forged with customers where we need to use management development for stakeholders outside the company. Ten percent of the slots on the LMD Program should be dedicated and held for customer and supplier accounts. These slots can be intended for customers and suppliers to sit through and learn similar principles and concepts as those learned by employees. These programs can also be attended by the CEOs of important customers. By inviting these senior officers from customer firms to attend, the development experience is used to build unity of commitment between the business and its customers. Customer presence creates a different type of accountability that has characterized most development efforts. A final partnership issue involves that between HR and top management. Traditional management development activity as in this case has been owned by the HR or organisation development function. Top managers may have participated symbolically in short segments but the ownership rested with the HR group. Conversely, it is now the right recommendation that the most successful development efforts will be those where top management assumes a primary role in design and delivery and so HR role is vital in this endeavour to revitalise LMD Program.

Effective management development, therefore, requires contingent integration of knowledge from many organisational fronts. Beechler et al (2007) states that while these assignments and other activities can be used to build cosmopolitanism and cognitive complexity, they can also lead to less desirable outcomes. A proactive HR function is therefore needed to effectively manage the international assignment and the expatriate’s experiences so that they lead to positive outcomes (Boyacigiller et al. 2004).

The increasing complexities of operating this business under accelerating rates of change in a competitive global environment impose ever greater demands on the development of managerial talent. The CIPD Annual Survey Report 2012 showed that 72% of organisations in England reported a deficit of management and leadership skills.  43% of managers rate their own line manager as ineffective according to a survey of 4,496 managers, in The Business Benefits of Management and Leadership Development, CMI, February 2012.

So the best way to distinguish themselves from the ‘has beens and also rans’ of the corporate world is by showing that they can dedicate time and energy amply in planning, designing and carrying out of development activities. The recommendation proposed here would be that of decentralisation of HR functions for the delivery of development efforts. As a result of this vital change carried out, it may lead to responsibility for the design, production and evaluation of specific development initiatives to be found at the organisation’s business unit. Post change and overhaul of this development initiative; the decentralized unit closer to the front will presumably make training resource allocation that would best fit their particular business needs. This structural change may help to increase the accountability of the development function, since most scarce unit funds will be devoted to development and the value-added (or lack thereof) of management development programs, this may be salient to key management decision makers such as HRD and the CEO.

As business practitioners, HR department’s message should be that management development initiatives must be created to embrace and exploit the conditions for managerial learning. This means that they must be conducted in context and represent an articulation and elaboration of the linking between development experiences and the company’s business imperatives. It also means that more attention should be placed on arranging the learning environment in a way that it will facilitate the collaborative learning. This may mean greater use of intact teams and task forces and involve a greater range of collaborators and accountability in the development process. I have purposely highlighted through the work done that change albeit notable is taking place in some quarters, it is still certainly the case that it is reflecting more ‘ what should be’ than ‘what currently is’.

 

Bibliography

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