Business Strategy of Smith Radiators Inc - Case Study Example

Executive Summary The case of Smith Radiators, Inc. provided opportunities to identify its business strategy given that the Automobiles of America, Inc. (AAI) required them to comply with the following goals: (1) to be a fully certified AAI supplier within 20 months from the receipt of the letter; and (2) the application of Just-in-Time (JIT) delivery of radiators within three months, or by July 15, 1991. Smith Radiators is thereby applying the reactor business strategy where major changes are identified and required to comply with the identified goals. Failure to do so would endanger their market share and retaining their competitive edge. As noted, by being certified by AAI, the organization would tap the opportunity for continued growth. However, a review of their current HR policies revealed that these do not support the current business strategy of a reactor. After identifying the strengths and weaknesses, the organization should address these and eventually assume the business strategy of a defender. There are various weaknesses noted in the current HR policies that ultimately stem for the centralized decision making process and the lack of formal training and development programs. The recommended HR approach that the organization should take should focus on reviewing their policies on recruitment, selection, maintenance (particularly training and development programs), and other HR policies. Specifically, a closer look into decentralized decision-making to involve the management team and other crucial employees would be expounded; (2) a review of the contract and agreement with the Union in terms of benefits, compensation, and security concerns of employees should be delved into; (3) a review of current job descriptions are required; and (4) a closer coordination with other government agencies that affect work conditions such as the Department of Labor, the US EEOC, and the OSHA, must be forged to fit the defender strategy. Question 1: Identify and discuss key issues and problems related to the fit between the organization’s current (implied or stated) business strategy and its (implied or stated) HR strategic plan and practices. Identification of the Business Strategy Using Miles and Snow typology of organizational strategies, it is eminent that Smith Radiators, Inc. is applying the reactor business strategy in view of addressing the issues presented from the Automobiles of America, Inc. (AAI) letter. AAI proposed two relevant actions that need to be addressed to enable Smith Radiators to continue supplying radiators to them: (1) requirement for Smith Radiators to be a fully certified AAI supplier within 20 months from the receipt of the letter; and (2) the application of Just-in-Time (JIT) delivery of radiators within three months, or by July 15, 1991. As a reactor, the organization sees that a major change would be required but their ability to change is not quick enough due to the following reasons: (1) it would require an evaluation of the current policies and operating functions that would be affected from the proposed changes and the time frame needed within which they could comply; and (2) it would have to design appropriate strategies that should be adopted to achieve the defined goal. Identification of Whether or Not the Human Resources Department Supports that Strategy Currently, the Human Resources (HR) department implements policies that do not support the business strategy as a reactor. The following policies are currently enforced: Recruitment Policies: (1) use of internal sources through referrals of current employees in recruitment; (2) giving a $500 monetary incentive to employees for referring new recruits who would stay beyond two years. Selection Process: New employees are selected based on job tryouts and interviews made by the respective operating managers and the vice president of HR, Mr. Gary Jones. Training Process: Training of new employees is conducted by fellow employees under the supervision of the foreman. It was noted that Smith Radiators does not have a training manual or a formal training department. Other HR Policies and Practices: (1) conformity to a centralized decision making process where decisions are basically done solely by Mr. Smith, the president of the organization; (2) employee involvement and feedback are not encouraged; (3) enforcement of “no layoff, no strike” policy, as agreed with the union; and (4) banning of hiring and placement of women in soldering and painting departments. Strengths in the Current HR Policies To gauge whether the current HR policies are beneficial and advantageous to the organization, these policies must work towards the accomplishment of organizational goals. As a reactor, the short term goal of Smith Radiator over a three-month period is to ensure that the JIT approach is implemented. Smith Radiators is therefore obliged to comply with the JIT approach, as one of the pre-requisites stated by AAI. From among the current HR policies, only one strength was implied – that of protecting women by preventing their recruitment and placement in the soldering and painting departments which are noted to be an unsafe environment due to the presence of lead or lead-based products. However, this policy could still be contested as a violation of the Equal Employment Opportunity law specifically on sex-based discrimination[USEnd]. To address concerns on safety, the organization should seek suggestions and recommendations from the Occupational Safety and Health Administration (OSHA) regarding establishing a safe working environment with lead-based paints at hand[Occ12] regardless of gender, age, or other demographic factors. The policy of recruitment using internal resources could be an identified strength in terms of referring people who are known to the current employees; thereby, their credentials and qualifications could be verified immediately. Weaknesses of the Current HR Policies The JIT philosophy stipulates among its four tenets that there should be employee participation in the decision making process. This particular tenet runs counter to the current HR policy of Smith Radiators. Since decision making is highly centralized and employees’ feedbacks are not encouraged, the organization should therefore change this policy to fit the strategy of an effective reactor and to conform to the required JIT approach. However, there were already several negative feedbacks that face the organization if the JIT approach would be enforced. First, the workforce is predominantly composed of high school dropouts and have been noted to exceed the efficient workload by 20%, therefore, significant changes are definitely required. Further, as noted by the supervisors, employees are perceived to be not amenable to participating in the decision-making process or to manifest involvement due to failure to be directly accountable and responsible for their work. They were deemed uncooperative and possess difficulties in communicating. The lack of formal training and the absence of the training manual were also noted and could be contributory to the current workforce’s inability to participate, communicate, cooperate and show involvement in the organization’s processes. The lack of confidence and perceived insecurity to keep current positions could be justified through lack of appropriate training and development programs. This policy is therefore not fitted to the objective of the company to implement the JIT approach and by not addressing it, their business strategy as a reactor would be ineffective. The current overload of 20% in production workforce does not fit the JIT approach in terms of violating the tenet of elimination of waste. The company is paying more people and incurring higher labor costs as compared to what it really needs. Identification of the Strategy that the Organization Should Adopt After having identified the business strategy of Smith Radiators, Inc. as a reactor, the approach that the company should take in the future is that of a defender. Case facts revealed that aside from Samurai Denoki that supplies 19% of radiators to AAI in first place and seconded by Fujuki, Inc. that carries 18% share, Smith Radiator assumes the same market share of 15% with Radiators USA. AAI clearly stated that it would only certify three among their ten radiator suppliers by the end of 1992. Therefore, assuming that Smith Radiators would be able to change their current HR policies to fit the JIT approach, the long term goal is to manifest conformity to the JIT delivery through the identified criteria. In this regard, the new business strategy would be as a defender to defend their market share and focus on the frequently ordered products to adhere to high quality standards, reliability in delivery and ensure that the quantities delivered are accurate and priced competitively. Recommendation of HR Approach the Organization Should Take As a defender, Smith Radiators, Inc., the areas and functions of HR that must be focused on and improved are the following: Recruitment Policies: (1) evaluation of the internal sources through referrals as the only source of new recruits; (2) a review of the monetary incentive provided. This proposed recommendation is deemed necessary to improve the quality and competencies of the current work force. As revealed, the company is located in Detroit, an area where skilled workforce is readily available. Management should therefore explore the possibility of tapping external resources to upgrade the skills and composition of their workforce. Selection Policies: A closer review of the authorized officers who are more qualified to determine the qualifications and competence of new recruits that match job responsibilities with other credentials. The current policy of leaving the interviews solely to the operations manager and the VP of HR could be too restrictive and limits selection criteria to those known by these approving officers. Maintenance Policies: Prospective development of training manual and training programs to be conducted by qualified personnel on regular and graduated levels. One could assume that the lack of training manual and qualified personnel to conduct training programs on a more regular basis is highly contributory to the lack of confidence and morale of the workforce. This is also identified to be one reason for its employees to lack motivation and for the high employee turnover. The current practice of having new recruits trained by colleagues is susceptible to providing insufficient training and substandard compliance to responsibilities since those who are assigned to train might not be fully competent to do the training. The knowledge, abilities and skills required for the position would not be harnesses as required. Other HR Policies: (1) A closer look into decentralized decision-making to involve the management team and other crucial employees, as deemed necessary; (2) a review of the contract and agreement with the Union in terms of benefits and security concerns of employees; (3) a review of current job descriptions; and (4) close coordination with other government agencies that affect work conditions such as the Department of Labor, the US EEOC, and the OSHA. With increased employees, it would be very tedious and ineffective for Mr. Smith to do all the decision-making himself. Although the vice presidents assist in recommending courses of action, still a change in the centralized decision-making approach should be reviewed in the light of conformity to the tenets of the JIT approach. Likewise, since the contract with the union is about to expire by December 31, 1991, it would be at their best interest to review the ‘no layoff no strike’ policy in terms of the need to streamline the workforce and improve compensation, security and benefits of the future pool of personnel. In addition, case facts revealed that the “current job descriptions allow little flexibility for management to assign these workers to different tasks” (Case Facts, n.d., p. 244). It therefore signifies the need the review current job descriptions to identify the applicability to current setting and to fit the requirements of the JIT approach in terms of workers being able to multitask and enable them to respond immediately, appropriately, and effectively to production schedule changes. Finally, by forging close coordination with government agencies such as the Department of Labor, the US EEOC, and the OSHA, the organization would be apprised of legal requirements and regulations that govern their workforce in terms of benefits and compensation; as well as conformity to safety and security. References Miles and Snow Typology of Organizational Strategies. USEnd: , (U.S. Equal Employment Opportunity Commission, n.d.), Occ12: , (Occupational Safety and Health Administration), Read More