Report
How an HR strategy should be developed and delivered
in support of an organisation’s overall strategic plan?
Introduction
Mercedes Benz is a famous automobile brand and a division of the Daimler AG founded 91 years ago by Karl Benz and Gottlieb Daimler. The headquarters is located in Stuttgart, Germany. Daimler AG have offices in different countries to connect managements and to make applying of strategy process easier. In the UK, the organisation’s office is located in Milton Keynes. Milton Keynes is a great location because it is in a middle of England and it is near to the Capital City of England – London. “The best or nothing” is the slogan of the brand. Daimler AG have two divisions: Mercedes-Benz and Smart. The first represent the products such as: automobile, trucks, buses, internal combustion engines or luxury vehicles. Also, they provide services like financial services and automobile repairs.
As a new HR consultant of the Mercedes-Benz UK, I am going to produce a report to explain and evaluate the importance of strategic decisions making for the success of the overall organisation. Human Resource Management is a process of hiring and developing employees to make them more valuable for the company. The human resource management includes job analyses, managing wages and salary, planning personal needs, recruitment the right people, training, providing benefits and incentives, evaluating performance, resolving problems and communicate with all employees in the organisation. The wide knowledge of the industry, leadership and negotiation skills are core skills of Human Resource Management staff. The concept of HRM and strategy management provide the foundation for strategic Human Resource Management. The strategic HRM (SHRM) is an approach of managing people, dealing with how organisation’s objective will be achieved through HR strategy, policies and practices. HR of every organisation play a strategic role in achieving new business goals. Strategic HRM means HR coordinated with overall business objectives to improve the business performance.
According to Boxall (1996) SHRM is the interface between human resource management and strategic management. Really important point of the SHRM is to creating company that are more intelligent and flexible than competitors through hiring more talented staff and extending the skills base. Strategic. According to Purcell (1999), strategic HRM must be focused on actions that made the organisation different from its competitors. The strategic HRM shows the importance of Human Resources. People in the business are important to the success of the company. Organisations with a strategic human resources may have HR advisor in the board of directors to make actions easier. Also, they can use of HR business partners. Critics of strategic HRM thought it is a good idea in theory. Often, it is hard to implement at the organisational level. Changing the organisation’s goals and values to intangible initiatives, cared by HR department is a complex problem of strategic HRM foundations.
Advantages of the Strategic HRM can be divided into six areas:
– The valuation of assets and human capital measurements.
– Strategic HR planning.
– HR processes redesign and rigor.
– HR outsourcing of non-value added processes
– Consistent management of functions and skills.
– Human Resources development in the organisations
Internal and external factors influenced the HR strategy.
There are lots of features influencing the strategy of Human Resource Management. New trends in technology created the new rules, and by them the industry must to fit into a market to perform and be productive. Those features are split into two groups, external and internal
External
Political – Main causes of removing the diesel cars is an emission of CO2 and slowly running out of oil. Climate changes convinced politics and heads of countries to make new decisions to save the world. UK plan to ban the sale of diesel and new petrol cars by 2040. Electric cars are the golden mean that can replace the diesel and petrol cars. These decisions and situations will change the management of companies alike Mercedes-Benz. New technology will require new specialists and training for all diesel and petrol specialists to boost their knowledge about electric engines and technology and retraining them. Today, many automobile companies are hiring electric engine specialists from around the world, providing good rewards and accommodation for employees and their families.
Economic – Currently, after financial crises in the Europe, world’s economic area is variable. Although, many of developing economies are able to recover the satisfactory pace but perspective of the future is turbulent. Brexit is next big issue for the economy because the relations between branches like Mercedes in UK and EU countries could be complicated. Those things will affect the organisational strategies of the leading automotive manufacturers. Nowadays, the economy is growing, globalisation makes products easy to get, people need cars so they bought or lease them, only in UK the sale of cars is 5% increased. It is caused by bigger expectations of technology and the value of euro, depends on time of a purchase because the value of currency is not stable. The automotive industry is one of the major in the economy, consuming large amount of computer gadgets, steel, iron, textiles, rubbers, plastics etc. Supposedly, for one employee in car industry, there are seven other jobs created in other industries.
Social – People from all parts of the world have their own practice and beliefs. Culture of the east and west is significantly different. The social and cultural differences cannot be neglected by the manufacturers. However, result of new trends like globalization and new technologies make culture similar around the world. Automobile production is hardly associated with men. Lighter jobs on production can be done by women. Office jobs can be done by women or men. Our company is fitting a job to each employee, avoiding the discrimination. New technologies are changing the skill requirements because today, we can observe a growing demand for electric car’s specialists and willing to use new tool in production process such as robots. Also, today people are developing their careers and their life style allows them to buy luxury cars.
Technology – Nowadays, the technological advancement is an important element not to be ignored by automobile manufacturers. Discover of the new technologies are the methods to achieve competitive advantages in the market. Car manufacturers are affected by many innovative techniques like cloud technology. It is very helpful for storing the company’s data, analysing the data and create some new apps. Mercedes is introducing the Mercedes applications what prove the hypothesis about car as a service not only a product anymore. Internet changed the automobile manufacturers forever. Websites, online advertisement, the HR have been done some essential changes to strategy. Internet is impacting lots of industries around the world. This trend could not be ignored by car manufacturers. There is a research indicated that a total of 60% to 80% of the consumers visited the website before they go to the test driving session. Technology is changing the requirements for new employees. According to Markus Schaefer, Mercedes-Benz’ head of production “Robots can’t deal with degree of individualisation at the many variants that we have today. We’re saving money and safeguarding our future by employing more people.”
In my opinion, electric cars or Artificial Intelligence will do a really big changes to the whole market in next few years, and business need to be prepared for the changes. In the same time when the technology brings more threats, specialists are controlling it and they make it more secure. The technology is affecting the recruitment and selection process, monitoring employees and supporting performance management. The internet ads make it easy to recruit new employees. Social media can be useful for check candidates to make a good selection of employee who will achieve goals for the company. Data of each worker in the cloud can help to monitor an employee and support the performance of the business.
Legal – According to the SMMT Driving the Motor Industry’ report, automotive industry accounts for 4% of GDP (£60.5 billion), currently provides employment for more than 700.000 people in the UK. The most important factor affected the industry is CO2 emissions regulations and other vehicles emissions standards. Under this regulation, the fleet average to be achieved by all new cars is 95 grams of CO2 per kilometre by end of 2020. In UK by the end of 2040 all diesel and new petrol cars will be banned. All regulations and laws are focused on improving the situation around the world e.g. different changes of weather caused by environment pollution. Automobile manufacturers are hiring specialists to control the projects to make it more safe for people. Leading manufacturers are proactively improving the quality of products and services to gain competitive advantages in the market.
Environmental – There are huge concerns about the industries around the world which are polluting and damaging the natural environment. Also, consumers are becoming more environmental conscious and before purchase they considering the car manufacturers by the lowest CO2 emissions. However, the companies become more responsible for their products, decreasing the CO2 emissions or planning the electric cars productions. Corporate Social Responsibility is important and Mercedes brings and supports lots of initiatives such as skill development, quality education, awareness, health and sanitation, rural development and welfare, environment and conservation of natural resources and sports. In last years, many people came to UK from other countries to work and live so the demography is changing and sale of cars increasing. Also people are moving to UK because of demand of electric engine specialists in the electric cars tight market.
SWOT
Strengths
1. Mercedes is a global leader of luxury cars with strong brand value.
2. Mercedes invests a lot of money in manufacturing and brand building because it is a financially strong company.
3. Innovation’s leader e.g. first to introduce diesel engines, fuel injunction or anti-locking breaks. Successfully, introducing the new technologies and trends within business.
4. More than £10 billion allocated for research and development.
5. Presence in motor sport such as F1 as McLaren Mercedes time.
6. Productions in over 20 countries across the world.
7. Mercedes holds patents on most of the safety features.
8. Signification presence in sports and motorsports through sponsorships and participation.
9. Company is a pioneer in advertising and marketing and creates brand awareness through TV, newspapers and magazines and online advertisements.
10. Mercedes as a leader in innovation is responsible for internal combustion engine, air bags and more.
Weaknesses
1. Competition means limited market share for Mercedes and as a result it decreases the profit of the company.
2. Any minute issues in a global car brand is magnifying by media and people around and affecting the brand reputation.
Opportunities
1. Being focused on developing the future technologies and trends such as electric vehicles and AI to successfully introducing it.
2. Building a global brand and reputation, development of the company, presence in different markets.
3. Still increasing luxury automobile market and increased income can be a good opportunity for Mercedes Benz.
4. Position of the brand can be used to create a good strategy to prepare business for any issues and bring more new customers to company
Threats
1. Government policies for the automobile sector such as banning the diesel and petrol cars can cause business losses for Mercedes Benz.
2. Increasing fuel prices are a big threat for the company because it can discourage a customer to buying a new car.
3. Competition of global automobile brands is intense.
Financialization
Labour market cash cows
Dependency theory
Contingency model
Key strategic and operational considerations of the organisation.
Engagement
Communication
Innovation
Project Management
Culture
Contemporary theories supporting HR strategy and meeting business objectives.
Modern view on Human Resource management first gained in 1981 because of the introduction for MBA course at Harvard Business School. Harvard’s HRM courses developed other interpretations of this subject. Idea spread to other countries in the 1980s and 1990s to New Zealand, Australia and Northern Europe, especially in UK, Ireland and Scandinavia. Personnel Management was focused on managing a workforce from an administrative standpoint. The Human Resource treats employees as a resource much like a factory, a machine or cash. While the HRM means the governance of workforce of the company in a thorough and structured manner, the SHRM is a managerial function which involves framing of HR strategies in a way to direct employees toward achieving the organisational goal.
Universalistic perspective means the best of HR practices, suggesting that business strategy and Human Resource Management policies are mutually independent in defining the business performance.
The contingency perspective means the fit between business strategy and Human Resource Management policies and strategy. Implying that business’ strategies are followed by Human Resource Management policies in determining business performance.
Configurationally perspective posits a simultaneous internal and external fit between external environment, business strategy and HR strategy. Telling that business strategies and Human Resource Management policies interact, according to organisational context in determining the business performance.
Change management models supporting HR strategy.
Kotter’ 8 – Step Change model
– Create Urgency
– Form a Powerful Coalition
– Create a Vision for Change
– Communicate the Vision
– Remove Obstacles
– Create Short-Term Wins
– Build on the Change
– Anchor the Changes in Corporate Culture
Lewin’s Three Step Change model
– Unfreeze
– Change
– Refreeze
Change management and flexibility.
Higgs theory
Justify
Why it is working
Why company use it
Critic it changes management within company – Kotter
HR management supporting sustainable business and growth.
Sustainable growth is the realistic attainable growth that company can maintain without any problems. Business that grows too slow or not at all may stop. Company that grows too quickly can find some difficulties about funding the growth. The optimum growth rate is an important objective to achieve. Sustainable Growth Rate (SGR) is the maximum growth rate sustained by company without increasing the financial leverage. Finding of SGR, answers the questions such as: how much can this company grow it must borrow the money?
How does HRM support business performance and growth?
It is significant to achieve sustainable growth. Workforce and HR play an important role in influencing the growth and retention. The key function of the HR is to hire right people for the company, potential leaders.
Whether your top values are innovation etc., the people you are hiring should fit to those values as good potential future leaders and to increase the position of the company. People must be dynamic like company. Company grows, so will an employee. It is important to invest in professional development of your new talents. Investing in employees and preparing them to become potential leaders is worthwhile. If the value matching is in the company from the beginning, people you hired will become the best candidates for future leaders of the company.
When the leadership positions are available within organisation, company must to decide: do we promote from within or bring someone in from outside? According to Jim Collins, in their company over 40 years, 11 of the CEOs achieved greatness, and 10 of the 11 CEOs came from their company. If the company is hiring the right people and investing in their professional development, the next CEOs will be down the structure of the company.
In addition to hiring and promoting from within, creating a long term leadership solution is also essential to support sustainable growth in the organisation. A long- term leadership program should bring young professional into the organisation, checking their future potential. Prepare them with an intensive business orientation. Then, offer them a long-term career path and to ensure that company will have leaders for future growth. The best place to start a recruitment is university. Offer the mentoring for candidates and set the position of company as an Industry leader. HR can support the sustainable growth by hiring people with values, worthy to investing in their professional development.
Rewards
The best fit perspective
Monitoring the success of HR strategy.
Benchmarking is a measurement of the quality of an organisation’s products, programs, policies and strategy, and comparison with standard measurements or similar measurements of its peers. The benchmarking has to define what improvements are called for, to analyse how the company achieved their high level of performance. Also it is useful to improve the performance of the company.
Key Performance Indicators
10-c checklist of HRM
– Comprehensiveness –
– Coherence
– Control
– Communication
– Credibility
– Commitment
– Change
– Competence
– Creativity
– Cost-effectiveness
Model of capability for skills evaluation
Performance management systems
Adding value
Recruitment and retention
Performance
Change
Administration
Quantity measures Staff turnover
Quality measures
Personal development review; training
Strategy changes
Add potential
Benefits and risks
Conclusion.
Recommendation.
References.
P. Boxall (1996) “Human Resource Management Journal: The Strategic HRM Debate and the Resource-Based View of the Firm” University of Auckland, Auckland, New Zealand.
J. Purcell (1999) “Human Resource Management: Best Practice and Best Fit: Chimera or Cul-de-sac” University of Bath, Bath, Somerset, United Kingdom.
Daimler AG (2017) “CSR inventions” Available online: https://www.mercedes-benz.co.in/passengercars/the-brand/corporate-social-responsibility/sports.module.html
KPMG (2014) “The UK Automotive Industry and the EU” Available online: https://www.smmt.co.uk/wp-content/uploads/sites/2/SMMT-KPMG-EU-Report.pdf
S. Gibbs (2016) “Mercedes-Benz swaps robots for people on its assembly lines” The Guardian. Available online: https://www.theguardian.com/technology/2016/feb/26/mercedes-benz-robots-people-assembly-lines
Daimler AG (2017) “Key Figures Human Resource” Available online: https://www.daimler.com/sustainability/key-figures-human-resource.html
"Best Global Brands – 2014 Rankings". Available online: https://web.archive.org/web/20150315012352/http://bestglobalbrands.com/2014/ranking/ Archived from the original on 15 March 2015.
Auer, Georg. "A genius whose three-wheeler is seen as the first car". Available online: http://www.autonews.com/files/euroauto/inductees/benz.htm European Automotive Hall of Fame.
A. Price (2007) “Human Resource management in a Business Context” 3rd Edition, Cengage Learning, Boston, United States of America.