Human Resource Management Strategy - Essay Example

? HUMAN RESOURCE MANAGEMENT STRATEGY Word counts: 2987 …………………………………….. College ……………………………. …………………………………………….. TABLE OFCONTENTS TABLE OF CONTENTS 2 Introduction 3 British Airways: Company Profile and Industry Analysis 4 Porter’s Five Forces Analysis 4 The HR Strategy of British Airways 6 High Performance Working as an HRM strategy 7 Salient Features of High Performance Work System 7 Basic Elements of High Performance Working 9 Major Elements of the High Performance Working in British Airways 9 Strategic ways for Meeting the challenge 13 Conclusion 14 References 15 Introduction Human Capital is perhaps the most powerful and high-valued asset of an organization since people within an organization not only depend on their own productivity and performance but also of all other resources like technology, materials, process etc. No process, system or organizational activity can work well unless there are right people for that and they are managed for the same. If people perform well, all other resources in the organization can be utilized up to a maximum extent. Therefore, managing the human resources effectively and with a view to make them high performers is extremely critical to the organizational success. In order to achieve sustainable competitive advantages, human resources management have recently designed, developed and concentrated on various managerial strategies. High Performance Working is one of such strategies. The High Performance Work strategy has recently gained serious consideration and attention from human resource managers, since the organization with high performance system has been found to be highly successful as they have brought positive changes from the very bottom and experienced increased productivity as well as long term profitability. Many large firms including British Airways have introduced high performance work system with a view to increase human resource p[productivity and achieve major marketing goals including sustainable competitive advantage. This piece of paper relates to the analysis of human resource strategy of British Airways in very recent years and explains how the company has successfully implemented high performance working in order to bring better results. Industry analysis with help of Porter’s five forces analysis will be given to help understand the business environment and competitive rivalry of the business. Based on literature review on high performance working and HR strategies that lead the organization to high performing, this paper illustrates the importance, relevance and overall benefits of implementing the high performance strategy. British Airways: Company Profile and Industry Analysis British Airways Plc is UK’s largest international airline. As a member of the royal family of European Airlines, British Airways carries passengers and cargoes to a large numbers of airports in more than 150 countries. The company provides airline services through around 240 aircraft (Hoovers, 2011). British Airways has emerged to be a highly successful competitor in the market and thus has been labeled the world’s first airline that took part in a scheme to reduce green house gas emission (Strategic Report, 2009). With customer focus and some other useful business strategies, the company has been able to achieve company’s specific goals. Out of its strategic perspectives, the company has perceived long haul premium customers as the key to profitability, delivered outstanding quality service for customers, grew its presence in most global cities, built a leading position in London and met customers needs (British Airways, 2009). Porter’s Five Forces Analysis Michael Porter’s Five Force analysis is a tool that can be used for comparing and contrasting the competitive environment and analyze the operational efficiencies. The five force analysis can also be used as a tool to evaluate how effective were the business strategies and how far these strategies have helped the company achieve competitive advantage. Porter’s Five force analysis gives a clear picture of the competitive rivalry that a particular business faces in the industry, based on other main market variables such as substitutes, buyers bargaining power, suppliers bargaining power and potential entrance to the market. From the porter’s five forces analysis, it can be noted that competitive rivalry and bargaining power of suppliers are high, where as bargaining power of buyers is medium in strength. Threats of new entrants and threats of substitutes are relatively low in strength. British Airways is strong in the market, though the competition is fierce and there are potential threats and difficulties it faces. There are only two suppliers, Air Bus and Boeing and therefore the bargaining power of the suppliers will be relatively higher. Thought there are substitutes like fast trains and video conferencing for businessmen, but still, customers use flights services for majority of their travelling purposes if the distance is quite long. The HR Strategy of British Airways Out of the core strategic directions, British Airways has concentrated on delivering outstanding quality services to the customers. The company has been successful in achieving the objective of providing superior quality service. No service can be delivered in the desired quality, unless the service providing employees are directed towards it. More specifically, the company has taken all the strategic steps and initiatives to motivate its people, encourage them towards high performing and thus to deliver outstanding quality services. The annual report of British Airways (2010, p. 30) has clearly indicated the basic HRM strategy of the company. As it noted, what the company did to improve the works and develop its people was merely with a view to become a high-performing organization. British Airways has declared that it has seen a new move as a learner origination with clear accountabilities linked to overall company goals. This has been underpinned by the strategic approach to performance management, which s certainly an essential and integrated part of high-performance working. As its annual report (2010, p. 32) highlighted, high performing organizations are becoming increasingly aware of the need and benefits of employee engagement and commitments to organizational goals and values. Employees mental aptitude towards accepting change is an important aspect to increase service quality. All-employee confidential Speak Up survey conducted at among British Airways employees is thus a system approach to track employee feedback and a way to increase employee performance. In short, it can be observed from the annual reports of the company that its basic HRM strategy in recent years has been ‘High-Performance Working’. High Performance Working as an HRM strategy Noe, Hollenbeck and Gerhert (2003, p. 36) described that high performance working is a system in which an organization has best possible fit between their social system, mainly people, and its technical system, mainly technology and processes. Implementing high performance work system requires major up-front investments such as training, more selective training, higher wages etc (Pfeffer, 2001). High performance working promises an increase in the productivity of staff through motivation and increasing staff commitments. Some of the basic components of high performance working are selective hiring, extensive training, pay based on performance, workplace empowerment, knowledge sharing etc (Yalabik and Chen, 2008, p. 146). The major outcomes of effective high performance system are higher productivity, increased profitability, lower costs, increased revenues, better responsiveness to customers etc. Focusing on high performance working is certainly a more effective strategy to HRM because it cannot be simply copied or duplicated from another company and this requires better partnering among executives, line managers, HR professionals and union representatives (Bohlander and Snell, 2009). Salient Features of High Performance Work System Though there are no specific rules or instructions on what specifically structure out the High performance working, most organizations perceive some of the basic key elements to achieve high performance working. They are Selective hiring and employment security, Extensive training and knowledge sharing or organizational learning, Transformational leadership and reduced status distinction between managers Self-managed team and team works (Dessler and Varkkey, 2009). When it comes to the case of British Airways, the company has for last few years implemented high performance system as one of its core HRM strategies. As noted in the annual reports of British Airways in 2008, the company has embarked on a culture change program that can transform the company in to an organization in which innovation, growth and clear customer focus will be defining the qualities. The program consisted of five dimensions of strategic initiative, in which its people will be encouraged to make the company a high performing workplace (British Airways, 2008, p. 40). The total reward system, organizational learning, employee responses and feedback through survey and team work are some of the effective strategies that British Airways implemented to motivate its people towards high performance working. As depicted above, the strategic program of British Airways comprising of five components has been designed with a view to make the company a Global Premium Airline, and for this target, employees are those who play most important and critical roles. Macky and Boxall (2007, p. 539) described that employees play mediating role in the high performance work system. For its success, employees are to be placed as the central of the program so that organization can experience the results of high performance workplace. Employee capability will be set upper limit of the performance, motivation will be directly impacting the degree to which this capacity can be converted to an action and then opportunities will be given so that employee can seize best out of them (Macky and Boxall, 2007, p. 540). Basic Elements of High Performance Working High performance working can be implemented through a number of different organizational practices. Various elements included in the high performance system are organizational structure, design, selective recruiting and hiring of the people, reward system and organizational learning etc. As illustrated in the figure below, an organization’s goal can be achieved through high performance with an integrated approach various systems like reward, recognition, selective training and hiring etc. In recent years, there have been greater pressures for performance due to the dynamic and competitive environment, and therefore HR managers seem to gravitate towards improving the efficiency of the organization by implementing strategies (Ashkenas and Ulrich, 2002). Noe, Hollenbeck and Gerhert (2003,p. 515) identified the following elements of High Performance Working. Major Elements of the High Performance Working in British Airways The elements that an organization can use to achieve high performance work environment may vary from firm to firm. For instance, an organization may use team work while the other targets high performance through high level of motivation and performance based pay scale. British Airways has been focusing on quite different strategies in order to ensure high performance of its employees and thus to ensure outstanding airline services to its employees. The main components that the company used to increase the performance are detailed below: 1- Reward System British Airways operated two fundamental pension schemes in the UK, the Airways Pension Scheme and the New Airways Pension Scheme. From 2003 onwards, new employees were entitles to join British Airways Retirement Plan. Smart pension arrangement and Employee Reward plan are the other two basic reward schemes and these also have brought positive changes in the way its people perform in their workplace (British Airways, 2009). Reward is most powerful tool out of all the available human resource strategies, and this not only motivates the people in the organization, but also ensures increased productivity more employee cooperation as well (Jackson and Hitt, 2003). Reward and recognition is an important component of high performance working, because it directs attention of employees to the most important organizational requirements and goals and also motivates them to put their efforts towards attaining the goal. Armstrong (2000, p. 239) stated that the total reward system hat British Airways has implemented with a view to achieve integration in order to engage people to satisfy business needs. At British Airways, reward system has been a part of the intrinsic motivation. Armstrong (2010, p. 68) highlighted that the reward strategy implemented by British Airways was aligned to the business strategy and that has helped that company make people engaged in the achievement of business goals. It has been aligned to company performance with a support to performance culture. At British Airways, the reward system helped the employees understand how their efforts contributed to company success and how this was cost effective. When the company designed a new system of high performance working as part of effectively managing the human resources, company continued its reward system and made it as a tool to encourage employees become high performers. Bach (2005, p. 326) found that the reward vision of British Airways included the use of rewards as aligned to both individual and company performance. Basically, all the intrinsic motivation including reward, recognition etc normally increases the individual performance of employees as well as organizational performance. Total reward strategy helps the organization create a work expedience that would be able to meet the needs of employees and encourage them to contribute extra efforts. According to the view of Pfeffer, reward system aims at creating a fun, challenging and empowered work environment. As Tsui and Lai (2009, p. 100) observed, the reward system that British Airways implemented has been a good example for how effectively it can contribute to performance. Reward was a powerful communicator of business value and direction, as it has been in British Airways. People can, therefore benefit their personality and deliver greater values to the company from the business oriented reward strategy. 2- Extensive Training British Airway’s annual report of 2009 revealed that the company delivered 235,000 days of training during the year, including 30,000 training days to employees at Heathrow to support the move to terminal 5 (British Airways, 2008, p. 40). As American Society for Training and Development (2000) observed, performance is most critical issue in training and development. Most companies are aspiring to become high performance organizations and the performance is measured by the results of training or employee development programs. At British Airways, the company has developed customer service training portfolio and have developed program for making its cabin crew deliver superior quality services. The basic underlying concept behind this extensive training program is that every customer travelling by British Airways is an asset to the firm, and their opinions as well as word of mouth can be turned to be long term assets of the firm if employees deliver superior quality services. It means, if employees are high performers, the service quality will improve and the company will gain the long term benefits. Training is therefore a more useful investment and its results will be far better than many other spending. 3- Colleague Involvement At British Airways, colleague involvement is very similar to collaboration and collective employee feedback. Employees are given opportunities to speak up their experiences, opinions, suggestions through the survey. The results of the survey will be communicated in detail to concerned departments and necessary actions will be taken, in order to ensure that employees within the workplace of British Airways are happy with management and business actions. The survey and Speak Up program has been designed and implemented with a view to motivate employees become satisfied with work environments and thus to get them to high performing. 4- Leadership Development During the year 2008- 2009, British Airways has given significant priority to leadership among employees (British Airways, 2008, p. 40). Company has arranged leadership program called ‘leading the business’ focusing on business change, change management and engaging employees to support business strategy. Leadership development is basically part of empowering the skills and capabilities of people and this will in turn promote high performing as well. 5- Diversity and Inclusion During the financial year of 2008- 2009, the company formed a new program for the diversity and inclusion. The main aims of the program were 1) to ensure every employee understand why and how diversity is important to the organization and 2) to ensure that diversity is integrated in to every part of the business (British Airways, 2008, p. 40). Employees are highly motivated to work well in an environment where people are socially respected, their personal, religious and all other concerns are values and dignified. Employees are dissatisfied in a workplace where there remains harassment, individual discrimination and cultural or religious disparities. Maintaining diversity is therefore a strategic step to promote performance of workers within the workplace. Strategic ways for Meeting the challenge Despite the severe hits of financial downturn in 2008, British Airways continued to grow. Though there can be several factors, the company believes that its economic sense of meeting customer needs has helped it remain far positive to the crisis. The company has, even amidst the crisis, launched new services to various international regions. The company gives extreme importance to maintaining corporate social responsibility and it considers it to be one of its core strategies. The company has brought all of its activities under the banner of ‘one destination’ and this has been implemented with a vision to reduce carbon emissions and other pollutions. It invested largely on community programs and many other social responsibility activities. Spending money in charities, social functions and community activities are never considered to be expenses, but rather, they are investments and that can add up to the revenues, brand names and long term profitability too. Conclusion This piece of research paper has examined the HRM strategy, namely High Performance Working, of British Airways. Based on relevant literatures about High Performance Working and its theoretical underpinning, this paper has explained that high performance working can be used as an effective strategy to boost up the business results. This strategy has surely played a pivotal role in the success of British Airways. Various strategic elements such as reward, training, colleague involvement, leadership and diversity that British Airways implemented for achieving high performance working are also detailed. 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