Brief Answer Paper: Strategic Human Resource Management

STRATEGIC HUMAN RESOURCE MANAGEMENTByInstructorCourseInstitutionDate
Abstract
High Tech Company is a UK based multinational situated in York, and dealing with the production of high tech equipments. The company has a long time vision of expanding into South East Asia where it seeks to plans a subsidiary in China. The company’s board requires a succession plan that will assist the company’s CEO and the Human Resource manager in implementing a successful plan in the region. This report is a succession plan developed to offer strategic human resource information in the technical requirements of setting up the company in China. In this report, the roles and responsibilities of the Human resource manager such as employee management, talent development and recruitment of workers is in detail. The company shall face several external and internal environmental forces that shall affect its operation. The case study uses Porter’s five forces to evaluate the market place and the competition the company shall face. The report uses Handy’s topology to describe the management culture that the business can use. The report gives suggestion of the management of the subsidiary in relation to the parent company as ethnocentric, polycentric or geocentric. According to Ghoshal & Bartlett (1990), geocentric approach is the best method of choosing the management of the subsidiary. The company shall require defining itself as the employer of choice through creating good reward package, developing talents, having good ethical policy, company branding and creating good working conditions for all workers.
Introduction
Establishment of a subsidiary for a multinational is a difficult and challenging process due to the many legal, environmental, political and economical factors that come to play. Operating in a foreign market offers newer challenge that does not exist in the local market. This is due to new laws, complex market structure, different operating costs and cultures that may affect the company’s operations in several ways. Multinationals also carry a global outlook and the other country may perceive it in a new dimension as compared to the local firms. These and other challenges contribute to the establishment of a subsidiary of High Tech, a UK based company in South East Asia.
High Tech Company is a multinational organization in the high-tech market and is located in York in the United Kingdom. The firm’s main activities include importing, exporting, and manufacturing for communication, laser equipment, optical apparatus and related parts and machinery. The corporation is undergoing rapid expansion in South East Asia, which needs the creation of a Strategic Human Resource Management. The company faces several challenges in implementing its vision of creating the subsidiary in South East Asia. There is need for a clear definition of the role the Human Resource manager shall play in the new country. These shall include management of workers, planning recruitment processes, developing talent, motivating workers, and assigning duties to workers according to their potentials to increase productivity. Being a different country, it is clear the company needs to understand the challenges that the hr shall face in managing foreign workers.
Additionally, the company requires identifying and understanding the organizational environments that shall affect its operations. These are internal and external environments. The internal environments include culture, technology, employee management, and financial issues. The external environments include legal policies, political, economic, and environmental policies. The company shall also face competition from its rivals and threat from suppliers and buyers. The company seeks to become and employer of choice but lacks strategy of attracting, developing and maintaining the pool of talented employees it expects to get.
This report consists of detailed description of the strategic Human Resource management plans the company should adopt in the new country. It is imperative for the management to consider the working culture and minimum wages employees in China get. The company should also consider adjusting to the requirement of legal, environmental, political, and economic policies in China. This analysis uses Porter’s Five Forces to describe the competitive environment the company may face in China.
The study also uses Handy’s topology to describe the business culture that the company should adopt. The detailed analysis of the approach that the company should take in becomi8ng an employer of choice includes creation of a reward system, development of talent, creating a strong business culture and structure, having an ethical policy, company branding, having an outstanding criteria for selecting job applicants and creating a safe working condition foe employees. The study also discusses the management topologies such as ethnocentric, polycentric, and geocentric, and recommends the appropriate one for the subsidiary. The paper focuses on analyzing the organizational environment, identifying policies and procedures that the CEO should adopt to become an employer of choice and to attract and retain talented employees and recommendations on how the development of the business and HRM strategic plans will increase the performance of the firm.
Role of Human Resource Department
The Human Resource department is one of the most important in any organization. This is because employees of the organization consist of important assets that require proper management to achieve organizational objectives (Barney & Wright 1998). In order for the company to achieve its goals of creating a competitive advantage in the new market, the HR department shall be important in managing the skills of each worker and utilizing them to their full potential (Need 2006). The HR shall be important in recruitment of new workers in the new subsidiary, with the need for both skilled and unskilled workers required for their various positions.
The HR department shall also find the task of matching these employees to their roles according to their qualifications (Need 2006). This shall be essentially important in maintaining and keeping the talented employees from leaving and joining the competitors. Barney and Wright (1998), show that there is a strong relationship between customer satisfaction and employee perceptions. The kind of services offered depend of the relationship between employees and the HR. Therefore, the HR manager shall need to encourage, challenge the employees, and create good relationships in order to improve their performance.
Organizational Environment
Organizational environment refers to factors surrounding the existence and operation of the organization whose changes cause significant effects to the organization (Adeola 2016). It is imperative for the company to understand the environment it shall operate in South East Asia in order to prepare for the outcomes. These environmental factors may be internal or external.
Internal Environment
Culture
It is important for the management of the company to understand the culture of the people who shall be working in the company. As High Tech is an international company, many of the employees will come from different nationalities or races. According to Sheng, D’Netto and Tang (2010), the Chinese society comes different to the English society, and the typical working days in UK may not correspond to those in China. The company will have to adjust to accommodate for holidays and public functions that are of utmost importance to Chinese people. Therefore, the management will require creating a management plan that is flexible with the Chinese culture.
Management and Organizational Culture
The management of the company will require a model that will present easy and efficient way of monitoring the activities of the subsidiary. Wong (2014) posits that some Chinese managers emphasize the concept of collectivism as opposed to individualism, providing a challenge to international companies seeking to utilize local professions. By using Handy’s model of organizational culture, the management of the Chinese workers can be through:
Power culture – this form of business culture grants power to few individuals within the organization who bear the greatest influence on decision-making within the institution as Handy (1996) reiterates the danger of this method; the employees further from the centre of decision-making become less attached to the running of the organization. This form of management majors on employee achievement and not the method used to reach to a decision (Kane 2006). This may create opportunity for quick decision making without the thought of its consequences.
Task culture – involves team members coming together to solve a specific problem such as analysis of a project. The team members collectively contribute through knowledge and ideas that may bring innovative solutions to the task (Handy 1996). There is no centralization of power in this setup but shifts with each formation of groups. This method can be especially effective and productive with good leadership, teamwork, personality, skills, and team dynamic.
Person culture – refers to an organizational system where individuals feel more important than the organization. This model comprise of employees who report to work and perform their duties just for money (Handy 1996). The consequence is the organization takes a back seat and fails gradually. The employees in this setup are rarely motivated and loosely attached to the organization. This model shall not be efficient for High Tech Company.
Role culture – in this model, employees receive responsibilities commensurate to their expertise, education, skill and interests in order to utilize their productivity (Kane 2006). This forms of management places accountability on every employee according to their assignments, and demands completion of the tasks as professionally as possible. The organizational culture determines the job satisfaction of the employees. A management structure that reduces on redundancy and emphasizes on using skill and interest aids in encouraging creativity and innovation from employees (Collins 2004).
Employment
High Tech Company will require highly skilled individuals to make up its work force. The individuals have the task of with implementing the company’s goals in the new subsidiary, with the aim of offsetting the competitors challenge and providing products suitable for the local and international market. According to Kopp (1994), international companies face the challenge of finding and absorbing highly skilled employees than local companies, due to lack of recognition or popular name. This shall pose a challenge to High Tech, especially with the conglomeration of already many similar companies in China. According to Bruton (2000), the Chinese government is constantly urging private firms to absorb more workers, many whom are unskilled, into their workforce. This provides a HR challenge as highly skilled employees of the calibre High Tech needs may have to come from other companies.
The company will also have to factor in the long duration of time between finding the right employees and the beginning of proper operation, as training and familiarization with the new environment responsibilities will supersede the quest of the company to make profits. Proper employee management will be important at this stage. Bruton (2000) suggests that multinational companies seeking to have their base in China should be ready to face stiff competition for skilled employees and pay highly for their services due to worker protection and availability of opportunities.
Technology
According to Voiculet et al. (2010), every company must keep up with the pressures of technological change. With the changing technological industry, the company will require keeping up with the current trends in order not to lag behind the consumer prerequisites. The changes in methods of production, trends in consumption and emergence of new technologies and innovations present challenges especially in a land with high technological consumption (Tushman 1996). Therefore, the company must always stay abreast of the competition and innovation race in order not to incur losses and inability to pay employees because of slow moving products.
Financial issues
The company’s immediate financial challenge shall emanate from lack of consistent roles and familiarize with the methods of production before realizing consistency in production (Cassar 2004). The need to comply with legal requirements, registering the company, travelling expenses, and payment of employees means that the company will undergo some financial constraints before stabilizing. This shall require economical use of resources to reduce costs during the first stages.
External Environment
Legal policies
Every country has set rules and procedures for doing business that every company has to comply with them. Kopp (1994) adds that several countries have rules in place to prevent exploitation of their workers by multinationals. Additionally, they have strong worker unions that may dictate their wages and advocate for safer conditions of work. Several laws also exist to protect employees from unfair contract termination and time-off laws, requiring sobriety when dealing with employees (Beesley 2013).Therefore, High Tech management must understand these policies and their implications on the workforce. Following such legal requirements is not only good for the smooth operation of the company, but will highly affect the outlook that employees will have on their employer.
Environmental policies
In the year 2014, the Chinese government passed a stringent environmental law that required companies to conduct environmental impact assessment and to cut down on pollution (Kaima 2015). The law provided tough penalties for perpetrators including a 15-day detention for company managers who failed to implement such directives. The country has placed such tough laws due to increasing smog and pollution of underground water sources containing dangerous materials such as arsenic and benzene. The company must therefore consider these policies since they directly affect the legal requirement in the country. Implementation of environmental policy should consider creating policies specific to the subsidiary’s country rather than a global environmental policy (Christmann 2004).
Political policies
Governments all over the world especially in developing economies are working hard to attract multinationals. They provide them incentives, tax leaves, tax breaks and subsidies in order to reap the benefits of creation of employment, increased revenue and technological transfer (Clare 1996). However, these governments are reluctant to allow these companies to continue operations in their countries if they bring no economic benefits to them. Issues such as exploitation of cheap labour provided by the citizens of the host countries provide problems with multinationals. Therefore, High Tech must seek to help the countries in South East Asia meet their economic goals as it carries out its expansion.
Clare (1996) also posits that governments enact policies that ensure all industry players adhere to standards that protects employees, consumers, suppliers and the community from exploitation by the multinationals. The company must also be ready to pay various forms of taxes as required by the government.
Economic policies
The increase in multinational companies in China due to availability of cheap labour forced the Chinese government to introduce minimum wage policies in the early 2000s (Xiao-ian 2007). This was to combat monopoly in the labour market by private firms, who would discriminate the low skilled workers due to low payments. Fang and Lin (2015) show that, since the enactment of the new minimum wages laws in China in 2004, the amount of minimum wages rose by over 200% between 2003 and 2012, from 301 RMB to 944 RMB. This means the company will have to pay higher costs in terms of labour. Additionally, the highly skilled calibre of employees sought by High Tech will demand higher pay, which will require the company to incur high costs in the starting years.
Additionally, in order to reduce on expenses on labour the company will have to begin with fewer workers then increase them as demand dictates. However, the minimum wage policy shall still be important since tasks such as warehouse management and office errands will require lowly skilled workers. The HR can contribute to this by creating competition among workers in a bid to lower wages, in both skilled and unskilled workers (Longhi & Brynin 2007). This also allows the creation of value as workers will find the importance of sticking to their jobs and becoming productive ion a yearly basis (Lepak, Smith & Taylor 2007).
Competitive Environment: Porter’s Five Forces
The type of environment the business operates in creates competition in terms of the future expansion plans of the company. Rodriguez-Clare (2010) posits that a company competing in a new market must prepare a new strategy and adaptation plan in combating the competitive threat posed by the industry, suppliers, consumers, new entrants, and replacement services. These factors promote competition:
Buyer power
Factors such as consumer awareness, level of product standardization, customer concentration and position of the buyer dictate the bargaining power of the consumer (Rodriguez-Clare 2010). The Chinese consumers have a wide range of technological products to choose from and may opt for products from other companies if the prices offered by High Tech do not suit them. The state of the economy also dictates the buyer power, where a grown economy where people earn high wages would mean that there is enough money on the hands of people to spend. High Tech can also create competition among consumers by creating high quality and rare products found nowhere else in order to limit consumer choices. However, competitors may offers products at a cheaper price to counter the competition.
Supplier power