Human Resource Policies - Case Study Example

Introduction Vodafone needs no introduction in the telecom sector. From a company of merely 300 employees, spanning over a period of ten years, today it has grown into a family of over 60,000 employees, adding on another ten years of its existence. Here, we shall be presenting an analysis of how well Vodafone's HR policies have supported it as an organisation through vertical integration. Before we begin to analyse, it's important to know what entails a vertical alignment dimension between people strategy and business goals. The Three-Dimensional Model of People Strategy (Gratton and Truss) Vertical Alignment: the alignment between the business goals and the people strategy. Horizontal Alignment: the internal alignment between the set of HR policies making up the people strategy. Action: the degree to which HR policies are enacted or put into practice, as judged by employee experience and management behavior and values. Figure: The three dimensional model of people strategy Vertical Alignment The reality is that an appropriate people strategy must vary according to organizational circumstances. The key circumstances are business goals and strategies. Our argument is that, in order to play a strategic role in the organization, the HR policies and practices that make up an organization's people strategy should reflect, reinforce, and support the organization's business aims and objectives. A strong linkage is needed between the overall vision of the organization that is held in the minds of the senior executives and the aims, objectives, and underlying philosophy of the organization's approach to managing people. This linkage will ensure that HR interventions can become a creator, and not an inhibitor, of sustained competitive advantage. This link between people strategy and business-unit strategy we term vertical alignment. Note, however that alignment suggests a much more fluid dynamic that allows for variation and flexibility. It is not a mechanistic "matching" exercise between business strategic objectives and people strategies; often, such matching is simply not feasible and, in any case, will act as a constraint. Instead, the process is evolving, based on an understanding of what the business's goals are, their people implications, and the translation of these into an overarching people strategy that can be used as a basis for detailed HR policies. Evaluation of Vodafone's HR Policies in vertical alignment Tactical Partnership (Crush) Characterised by: Some core policy-setting, majority of decision-making and service provision is at the divisional and local level. There is limited shared services or automation, resulting in duplication across the business. Strategic goals: Cost control; divisional growth; market penetration. What this means for HR: HR services are closely aligned to divisional/local requirements resulting in variation in service offering across divisions. Challenges for HR - Evolution is driven by a 'powerful few'; - HQ has grown by adding management layers; - Corporate centre's role is to check what is proposed by divisions; - Centre not seen to add value. HR impact in a nutshell: Requires strong local HR capabilities. HR's response: Matthew Brearley, HR director, Vodafone says: "This definition is partly correct, but I feel HR's ability to influence is a blend of the organizational model and environment and personalities of people. We have a global framework but freedom to work in our territories. Do I have the ability to influence and make change - absolutely." Recruitment and Orientation At the global level, Corporate Responsibility (CR) is integrated into induction training for all new employees, through workshops that talk about the company's CR policies. All employees also receive the booklet on 'Passion for the World Around Us' that identifies the company's values and its commitment to the goals of CR. Vodafone conducts an annual employee survey that includes questions about whether the company is generating trust and adequately managing its environmental impact. Vodafone does seek the approval of employees on what they are doing and the ratings are generally above 90%. Vodafone's internal website is also used for collecting information or ideas from employees on CR initiatives. Training Vodafone delivers a variety of global training through the use of e-tools, including an e-module on CR. Vodafone is developing a set of new indicators to identify the number of employees that have also received classroom CR training (e.g. ten global managers received training in social audit; 84% of Supply Chain Management managers and employees have received training on the Code of Ethical Purchasing). Other communication mechanisms are utilized to increase awareness of CR issues such as: topic emails (e.g. climate change); themed events (e.g. invited employees to attend showing of the documentary, monthly CR teleconferences; and the monthly newsletter from the CEO The CEO's newsletter often addresses Vodafone's way of dealing with an issue. Vodafone also includes CR in the training for its managers. A session on CR is included in the Global Management Development Program, which is a threeday course for the most senior managers. The participants debate a series of issues from the perspective of different stakeholder groups and devise a response. Vodafone is also working at standardizing processes related to training among its local operating companies. Performance Appraisal and Compensation In 2006, specific CR performance targets were defined and embedded into the performance quarterly review process. Local operating CEOs and Group operating business unit CEOs now have their bonuses also tied to personal performance against CR targets. CEOs cascade the performance targets throughout their organizations so the local CR team members, the energy efficiency manager, etc. would also have a CR-related target. Development boards operate at all levels within the Vodafone group. In order to make assessments as objective as possible, the potential of employees is considered in the context of a series of relevant criteria (Table 5.1) complemented by information (from performance review forms) in relation to the employee's own short to medium-term career plans. In reviewing staff, the development boards adopt quite a sophisticated approach, noting where staff have a high degree of potential and are ready for promotion, or where broader experience is needed, perhaps through a lateral move or increased responsibility. Reputational Effectiveness HR department in Vodafone secures the resources it needs by meeting the business-goal expectations of their line management colleagues (vertical alignment).By doing so,they create reputational effectiveness. Business-Focused HR team The HR staff is assigned to the business units to work alongside line managers as they make and implement strategic decisions. Only by sitting alongside line executives can HR practitioners take part in day-to-day decision-making about the running of business units. As a consequence, HR managers are able to alter their mindset and view people strategies from a line perspective. An additional benefit of working alongside line managers is that HR policy implementation can also be enhanced. HR looks up and out HR groups are willing to extend their horizons, to look up-at what is happening at the top of the organization-and out-to see what is happening in their industry, their profession, their neighborhood, and the world. They contribute enthusiastically to the discussions and co-production of knowledge. They are willing to invest considerable time in engaging in an open and frank dialog with their peers from other organizations and with the research team, and to learning without a particular end-game in mind. Conclusion According to Wei, Primarily, the nature of the strategy a company chooses and value and culture system of a company are proposed to be two major determinants that influence the extent of vertical fit that a company can ultimately realise. HR practices should be designed and arranged to reinforce functional implications of the various generic strategies defined by Porter (1985). In case of Vodafone, having adopted a cost leadership strategy, it has rightly formulated uniform, objective criteria on performance evaluation. The clear goal of cost leadership strategy (minimising production costs) adds to the explanation. Similarly, training has higher positive effects for firms adopting a cost leadership strategy than with differentiation strategy. The way Vodafone manages CR reflects the management structure of the business .It monitors its performance across the Group through robust internal reporting systems, and report the progress to stakeholders through a Group CR Report and local operating company reports. Vodafone also responds directly to stakeholders throughout the year via other channels and completing questionnaires from analysts, investors, suppliers, customers and CR organisations. Vodafone engages with the stakeholders at Group and local operating company level to ensure it is aware of global and local issues. Therefore, the top level managers, who are representatives of the values and unique culture of Vodafone provide enough support to HR and its activities, leading to immediate adjustment toward designing and adopting an optimal HR practice arrangement and an organisational atmosphere advocating a higher extent of fit between strategy and HR practices. To conclude, "Vertical fit is influenced by the nature of strategy a firm adopts; specifically, the less uncertain and clearer of the strategic goals, the vertical fit will be better achieved. Vertical fit is influenced by the value and culture system of an organisation. Specifically, vertical fit will be better achieved with values and culture system promoting the design of a strategy compatible HR practices and a timely adjustment of HR practices following the strategic change." (Wei). In case of Vodafone, this holds true to a large extent and wherever there is scope to achieve more, Vodafone would have to work on these lines to be a true representation of vertical integration in Human Resources. Works cited Does HR's influence depend on the company it operates in' Peter Crush, 01 October 2009 Strategic Human Resource Management: Determinants of Fit : Li-Qun Wei ,Research and Practice in Human Resource Management, 14(2), 49-60. The three-dimensional people strategy: Putting human resources policies into action: Lynda Gratton and Catherine Truss Academy of Management Executive, 2003, Vol. 17, No. 3 Read More