Operation of Power and Control - Case Study Example

Engineering Products Limited Operation of Power and Control: Issues of Human Resources Management 0 Introduction: The growing trends of globalization has mounted the pressure on the management of human resources, in that every possible effort has to be taken by the managers to centralize the industrial practices throughout all the units dispersed across the world. The pressure is added because of the limitations that they face due to the issues in the interpersonal relationships caused by the multiplicity of socio-economic factors prevailing in the multi-country locations and the personal characters of the employees thereof. In this complex scene, the role of the Human Resources (HR) department acquires an importance in the success or failure of the company’s international operations (Quintanilla and Ferner, 2003). The HR department adopts numerous ways in which they could attempt homogenization of the various practices that are being adopted in the Headquarter of the company so that the uniformity in the products with respect to the quality can be achieved, as it is the order of the day that the customers insist on the consistency in the product design and quality. Such consistency can be achieved only by integrating the practices throughout the organization. While the HR Management takes the efforts for integration, they are usually confronted with various issues of power and control which are outlined in this paper while analyzing the case of Engineering Products Limited. The paper also discusses the implications on the managers and non-managers of the organization as a result of such integration efforts. 2.0 Engineering Products Limited – A Background: Engineering Products Limited with more than 33,000 workers undertook a restructuring and expansion plan out of which the company expanded globally with more than half of the employees work in their overseas locations. Having three distinct business areas in automotive components, defence and industrial services, the company’s automotive components division being the largest have its employees scattered in the European countries Germany, France and Spain. A smaller percentage of them are placed in UK as well as North America. With the major customers of the company insisting on the same specification of the components produced in all the company’s location, the HR Department of the company is in an attempt to transfer the ‘best practices’ of the company to all its locations. For that purpose they adopt the following methods: 3.0 Structures of Management: One of the key areas of attention of the Management at the Head Quarter of the company is to adopt various management structures that can possibly help the exchange of information among the managers in the different locations. The management structures take the form of: Manufacturing Councils: Under this system the senior manufacturing directors from the various plant locations are periodically brought together to have first-hand knowledge of the processes which are being adopted in the different plants. This practice gives them an insight into the various practices that are adopted in the different plans so that the best of them could be adopted by the managers in their respective plants. International College of Engineering: Another practice that is being adopted by the company is the ‘International college of Engineering at which the development of new manufacturing methods are studied and developed by the managers which later on are transferred to the different units for adoption. Internal Consultants: Under this structure an international cadre of managers is being created with the specific responsibility of pioneering a new practice. It is for these managers to later on take a mission of touring to the different plants to explain the new method of manufacturing for the information of the unit level managers. The Structural approach has also been specifically used in the transfer of HR policies (Edwards and Ferner, 2004; Florkowsky, 1996; Schuler et al., 1993; Taylor et al., 1996). Regarding the transfer of HR practices, Edwards et al., (1999) claims that the spread of practices is more probable when there is a high degree of production integration through the countries. In the matter of structural approach the following points are worth noting: The adaptability of the best practices from the Head Quarter will be more when the different units are relatively new and younger. Depending on the size of the plant locations, the degree of adaptability of the practices will vary. When the local inputs are less the units will depend more on the best practices of the Headquarter. “Researchers additionally suggest that the greater the cultural distance between the home and the host country, the harder it will be for the multinational to transfer home country philosophies and practices” (Ferner 1997) 4.0 Internal competition for Orders: Since the creation of international management structures alone will not be sufficient to achieve the required degree of integration, the company Engineering Products Limited adopts a policy of creating a competition among the various units. All the orders would be received in a centralized way at the Headquarter which then will be distributed to the different plants on the basis of the performance of the individual plants. The company adopts the policy of moving the production from one country to another not only for controlling the volume but also to ensure that the world’s best practices are adopted uniformly throughout the organization. 5.0 Performance – Related Pay: In addition to the above measures for efficient transfer of the best practices the company also adopted a policy of performance related pay. Usually the norms relating to the performance levels and the related pay scales are fixed on the basis of discussions with the local managers and workers’ representatives. Any differences arising either in the performance level or the associated pay scales would be resolved by discussions. However at times the sanction from headquarter of the company may also be required to push the decisions of the management at Head quarter to the divisions. Such sanction may also go to the extent of even sacking the Chief Executive in case of serious objections to adopt the policies initiated by the Headquarter. This practice had really helped the mangers at the plant level to adopt the best practices in respect of the manufacturing processes as well as the management of the labour. However such measures had serious implications on the attitude and performance of the managers and non-mangers of the company. 6.0 Implications on Managers and Non-managers: The adoption of different measures like management structures, international consultants, internal competition and other measures, though represented strategic moves of the company also had various implications on the moves of the managers and non-managerial employees. These implications have made the function of the HR more complex in the sense that the HR had to find ways of balancing the standardization moves of the company. Variations in the nature of law, institutions and local cultural aspects attributed to the differences in the practices where it remained as a challenge for the HR to attempt standardizing the best practices either through the consultative process or by compulsion through sanctions. Some of the areas where the differences occurred are the performance related pay and the employee representation. In the case of employee representation while in the American plants there were no recognized unions to represent the workers nor it was obligatory for the company to recognize any unions, the state of affairs in the Continental Europe was different. In the European plants the company was compelled to deal with more powerful unions. This has put the pressure on the HR department for arriving at a balanced approach for ensuring that the best practices are followed effectively by the plants at all international locations. The managers were faced with the problem of mobility to various international locations, as the decision of the management to fill up the senior managerial positions purely on merit. Thus since the managerial hierarchy is no more confined to the plant locations only, the managers were constrained not only to perform better but also had to develop the willingness to spend time on overseas assignments. This did not go well with some of the senior managers for various reasons. Another implication of such transfer of practices is the effect on the job security of the non-managerial employees in different plant locations. The increase in competition among the plants had increased the pressure on the plants to perform better and the plants are always subject to comparisons. “These comparisons, and the ability of the HQ to move production from one site to another, reduce the bargaining power of employees in each individual plant, having the effect of eroding potential resistance from employees and trade unions to change.” (Newell, H & Scarbrough H 2002) Another implication for the workers is that they had to deviate from the working practices typical to the country of location of the plant to get adapted to the transferred best industrial practices from elsewhere. An example in this respect is the transfer of ‘cellular assembly’ model from Spain. This practice requires multi-skilled operators and also the number of operators is required is less for the same output. Since the management is convinced of the superiority of the practice in the Spanish plant it gave the option for the managers of Spanish location to move around other plant locations for educating the people at those locations about the ‘cellular assembly’. Reich (1990) opines that in the increasingly interdependent global economy, corporations carry out their activities all around the world and their country of origin is less and less relevant.  7.0 Conclusion: The transfer of best practices has to be looked into from the angles of designing, decision-making on the policies of transfer, negotiation of the terms of transfer, actual process of implementation and homogenization of the practices. Such transfer of the best practices from the Headquarter to the different plant locations are often influenced by the characteristics of the country of origin of the firm. In the late 1980s and early 1990s, the debate shifted from a simple, binary, home-versus-host, national-versus-corporate model, to developing the idea that both cultures have different degrees of influence on different corporations (Mueller 1994). However in such transfers the influence of the local conditions of the country in general and the attitude of the employees in particular needs to be taken into account, as these are bound to have their own implications on both managers and non-mangers. References: 1. Edwards, T., Rees, C., and Coller, X. (1999) Structure, Politics and the Diffusion of Employment Practices in Multinationals, European Journal of IndustrialRelations, 5, 3, 286-307. 2. Edwards, T and Ferner, A. (2004) Multinationals, Reverse Diffusion and National Business Systems. Management International Review, Special issue(1/2004): 49-79. 3. Florkowski, G. (1996) Managing Diversity within Multinational Firms for Competitive Advantage, in E. Kossek y S. Lobel (eds.) Managing Diversity, Oxford: Blackwell, pp. 337-364. 4. Mueller, F. (1994) Societal effect, organisational effect and globalisation, Organisation Studies, 15(3): 407-28. 5. Newell, H & Scarbrough H (2002) HRM in Context: A Case Study Approach Houndmills: Palgrave 6. Quintanilla, J. and Ferner, A. (2003) Multinationals and Human Resource Management: between Global Convergence and National Identity International Journal of Human Resource Management, 14, 3, 363-368. 7. Reich, R. (1990) Who is us?, Harvard Business Review, Jan-Feb, pp. 53-64. 8. Schuler, R., Dowling, P., and De Cieri, H. (1993) An Integrative Framework ofStrategic International Human Resource Management, InternationalJournal of Human Resource Management, 4, 4, 717-762. 9. Taylor, S., Beechler, S., and Napier, N. (1996) Toward an Integrative Model of Strategic International Human Resource Management, Academy ofManagement Review, 21, 4, 959-85. Read More