Strategic Managment of Galactic Furniture Company - Term Paper Example

29-04-2007 STRATEGIC MANAGEMENT Strategic HRM is the explicit link HRM has with the strategic management process of the organization. In simple terms strategic HRM is all about systematically linking people with the organization. As a body of ideas, this field asserts a critical relationship between environment, overall business strategy and human resource strategies. It also emphasizes co-ordination or congruence among the various HRM practices like HR planning, recruitment, selection, training, development, compensation, retention, evaluation and promotion of personnel within organization to achieve strategic goals (Schuler & Jackson, 1987; Chew and Chang, 1999). Strategic HRM is viewed as 'strategic' as it involves the managerial personnel of the organization and regards. People are the single most important asset of the organization (Poole & Jenkins, 1990). It is proactive in its approach to people. It emphasizes on teamwork, flexibility, employee involvement and organizational commitment (Beaumont, 1993). Many organizations do not assess the short term or long-term implications of their HR policies and practices, which Ulrich (1997 a) emphasizes according to him, " In the 21st century, HR roles are that of strategic partner, administrative expert, employee champion, and change agent". One of the major responsibilities of HR is to prepare itself for change and to prepare for as many of these challenges as possible in order to exploit them for competitive advantage. The HR policies and practices should be flexible in nature in order to adapt itself to these situations. Further the key to sustained competitive advantage is building and sustaining core competencies within the organization and maintaining flexibility in order to react quickly to the changing global market place. In turn, the incredible advances in technology and the primary role of HRM should be able to felicitate this process. Now on we will discuss the organization Galactic furniture company (GFC) that is part of the group of companies named as Galactic Enterprises Group on the basic of our understanding of strategic HRM and especially based on the dimension of the SHRM. Management of Change & flexibility:- Schuler (1992) argues that HR activities can be the unifying force in helping an organization to master strategic change. Price (1997) started that effective change requires sure-footed, considerate people management who can take employees through the process with minimum anxiety and maximum enthusiasm. It requires the recognition that the people of the organization should not be Pawns of strategy but active participants in change. Companies should set performance standards for people to encourage flexibility and diversity and reward people for being innovative strategic HRM policies and all about flexible people management policies focused on multi skilling, new competencies, knowledge areas, new forms of contract and need for lower employment cost-performance systems. Now if we analyses DFC the first hand assessment of the organization is that it is the organization having problem of accommodating changes of the external environment as well as internal environment. The main problem of the GFC clearly indicates towards inability to change. The problem approach to change is the core for all other problems whether it is employee's attitude, motivation perception about management or managers inability to change with the requirement of the overall environment. In the case number of occasions conflicting views and situation arises where managers are actually not willing to change and therefore its immediate impact shows on the performance of employees and themselves also. The second most important thing is flexibility. Flexibility implies openness in thinking, adaptive ness to the environment and change action contingency, non-rigidity, variability of parameters and specifications, multiplicity of process setting freedom liberalization, informal attitude adjustment, compromise, autonomy of function, agility in action, resilience in systems, elasticity, looseness, customized or tailor made solutions and broadening of mind. If we analyze the GFC we cannot find that organization is flexible. The structure of the organization is not flexible at all. It is a hierarchical organization with the people managers having autocratic, mindset and attitude. Managers are not willing to change therefore have rigid mindset. They have very formal and bureaucratic setup. Autonomy to function is not available. Managers are interfering the process all the time. So on any parameter the organization is not flexible at all. In the area of adoption to new technology, managers are susceptible to failures and avoiding taking risks. This tendency pushes them back and their competitors coming up aggressively and the performance of GFC is declining further and further. Innovation and reward mechanisms are not proper at all in the organization. Cohesiveness is lacking in the organization at every level whether it is policies, members or departments Leadership:- Now it has been proved beyond doubt that leaders who adopt democratic or participative styles are more successful. Leadership effectiveness is dependent on the leaders diagnosis and understanding of the situational factors, followed by the adoption of the appropriate style to deal with each circumstance. As we understand that the basic reason for corporate failures is the lack of vision on the part of the CEO's to build and apply human resource trust based measures. The four basic leadership approaches are in existence i.e., people centered, change cent red, expertise centered and strategy centered. Leaders formulate strategy, create assets and make major decisions regarding the organizations. The culture building focuses primarily on creating values and norms that enables leaders to influence, motivate and empower subordinates to realize the shared goals of the organization. Leaders are altruistic self that expressed genuine concern for the welfare subordinates and organizational growth. Now if we analyze the leadership of GFC we find that the main attribute of leadership i.e., trust is missing. Employees do not trust their leadership. Through CEO of the organization have vision and mission but do not have followers to implement his vision into reality. The leadership poses itself as people centric by declaring that people are the main asset but by their act they had shown that they do not trust subordinates and try to command them by force and this type of leadership is not long lasting. Here leadership does not command respect from subordinates rather they never trusted hem. They are able to influence motivate or willing to empower the subordinates and nor shared vision and goals with them. Managers never genuinely concerned for their subordinates. The instance of secret incentives or board decisions not to tell to subordinates or not believing in subordinates abilities and dedication such as apprehensions that employees will play game on personal computer are some examples which shows the mental make up of leadership in GFC. Top leadership had proposed the new mission but it has not been taken well by the subordinates exemplified in the conservation between two managers that they cannot be able to remember main points of CEO speech. Organizational Culture: Kabanoff (1993) have categorized organizational culture into four categories: elite culture, meritocratic culture collegial cultures and leader focused culture. All HRM functions from job design through recruitment, selection, training, career and performance management and salary administration processes help to reinforce or develop organizational culture. Cultural changes, therefore results from innovative HRM approaches to all these functions in an integrated and strategic program. High performance cultures are customer oriented, provide environment to use knowledge skills and focus on freedom and flexibility with minimum bureaucratic burden and insists on equality. Now after analyzing KFC it has been evident that it is not pursuing and having high performance culture. The whole organizational structure is rigid with maximum bureaucratic control and not insisting on equality whether it is gender equality or in general equality between employees or management. Some has been treated referentially. Culture of innovation, knowledge and skill is missing all together. The managers are not willing to even listen the suggestions by the subordinates about work improvement. So in this type of organizational culture performance of the employees as well as managers has to be affected and this results in the loss of business, lack of services and its quality and ultimately profitability of the organization. Organizational commitment: One of the defining characteristics of HRM is its emphasis on the importance of enhancing organizational commitment. It is one of the 4 C's in Harvard Model and the price model. Beer et al. (1984) gave an approach to achieve commitment by developing career ladders. They emphasize on trainability and commitment as highly valued characteristics of employees at all levels in the organizations. They highlighted a need for a high level of functional flexibility with less rigid job descriptions, reduction of hierarchies, ending of status, differentials and heavy reliance on team structure for disseminated information, structuring work and problem solving. The concept of high commitment is aimed at electing behaviors that is primarily self-regulated, that is, rather controlling the individuals by sanctions or external pressures, there should instead be a high level of trust (Walton 1985 b). Wood and Albanese (1995) refer to career ladders, training, flexibility, reduced hierarchies, team, jobs with upgraded skills, job security, new forms of assessment and payment systems and a focus on quality as elements high commitment. Analyzing GFC we clearly see that employees as well as managers lack sense of commitment towards organization. Rigid hierarchies, job description strict status differential (preferential few), and almost no team spirit and cohesiveness it self shows the sense of commitment of employees and manager a like. Behavior of employees has been strictly regulated through sanction and pressures negatively affect the commitment towards organization. Organizational Learning: competitive advantage will be achieved by organizations that develop HR policies promoting continuous learning, teamwork, participation and flexibility (Dertouzos et al. 1989). An organization learns through environmental assessment, leading changes linking strategic and operational change, seeing HR as assets and liabilities and achieving coherence. The presence of organizational learning can assist organizations to manage changes. Learning enterprises are characterized by enduring values; integrative cultures shared visions, lofty and challenging goals and a continuous quest for innovations, excellence and achievement. As in the GFC organizational learning i.e., Training and development have the least importance. It has been very clear from the example that in the last 18 months or so on change management training programme has been organized and Sr. Manager & directors have not attended it. The budgetary allocations are sinking and organizations do not have learning culture at all. People ate not learning therefore the change process got delayed and people are resisting change due to their lack of knowledge. Nobody likes to listen training and development manager through he has some good ideas to manage the employees as well as improve leadership and productivity. So GFC is the organization, which is not facilitating the organizational learning process results delay in the change process. People not aware and do not have knowledge more prone to resist change due to the basis reason why GFC is not adopting change properly and moving backwards. Organizational structure and coherence: Organizational structuring and restructuring are fundamental to strategic HRM. The classical approach to strategic HRM involves ensuring appropriate organizational structures. Mintzberg (1979) specifies 5 distinct types of ideal structural forms: Machine bureaucracy, professional bureaucracy, divisional structure, simple structure and adhocism. Non-bureaucratic structure felicitated organizational performance and organizational adaptability. The greatest challenges in organizational life are to create cues and processes that are mutually aligned and coherent with the goals of the business. Organization should never consider any innovation in isolation. Now in GFC we have seen that in last 5 years, organizational structure has changed twice. The organizational goals are not coherent with the structure GFC need an organizational structure that have minimum levels so that the mission and goals could be reach at the lowest levels. GFC have highly bureaucratic structure, which hinders organizational performances and adaptability to the current environment. The company tries to implement TOM but failed to achieve the objectives due to manager's resentment and employees never trusted their leaders. Organizational Capability: The basic task of management is to create an organization capable of infusing products with irresistible functionality or creating products that customer need but have not yet imagined. So innovation is the core area for organizational capability. Human capital and organizational capacity have a great deal to do with organizations core competencies. Organizational capability represents the business ability to manage organizational systems and people in order to match customer and strategic needs. It is the most important source of sustainable competitive advantage. The organization i.e., GFC have the market share of around 30 % in UK office furniture segment but low cost segment mainly. In the total turnover only 5% shares comes from higher cost segment. It shows that being in business for more than 70 years company has not developed its capabilities to the market needs. In the last 5 years where the highest market segment is growing in manifolds, GFC only planning to achieve 15% of its total earnings from high cost end products. Dipping profits and larger infrastructure and non- adaptability of newer practices and technology as well as not willing for change according to market conditions, all affected adversely to GFC capabilities Participative Management And Empowerment: Employees participation in the management process could be categorized at different levels i.e., participation at work decisions, consultative participation, short-term participation, informal participation, employee ownership and representative participation. If the employees have better and more complete knowledge and information about work task and work process then they are placed in a better position than managers to identify and correct problems. This would help than to optimize performance. Empowerment can enable managers to effectively deal with challenges marked by varied influence channels increased reliance on horizontal structures, peer-peer networks, a blurred distinction system. Through company had declared effective communication and feedback structure but result was complete failure. In effective communication process has already been presented in the survey where most of the employees (27%) do not know the objectives. Due to lack of effective communication process the most important factor that suffers is the trust. The trust between manager and employees, top management and frontline managers diminishes and adversely affect the productivity, motivation & commitment. Employees do not able to express their opinion and therefore management lack feedback on almost all policies. This lack of feedback and modification accordingly results in failure of policies and resentment among employees, which ultimately affects productivity and profits. Apart from above shortcoming GFC have strong market presence having around 30% market share in lower office furniture category though it has been facing the decreasing trends of profit but have strong financial backing of the group. Employees are the main assets of the organization. In general GFC is facing the problem to manage change. External change pressures from technology, competitors and market condition force GFC to change accordingly but resistance change is very high. GFC have the new mission and objectives which are coherent to its market situation but do not have motivated, focused team to implement at into action. Willingness and attitude to change is lacking everywhere. Lack of trust, effective communication, no officially published policy on HR, non-transparent system and withholding of information and preferential treatments to some are the key factors, which results in decreasing profitability. Communication: Storey (1992) suggests that organizations make extensive use of communication with employees as a mechanism to maximize commitment. Effective communication felicitates coherence. Good communication is essential to smooth running of the people management system. It must be a two-way process. This can involve a cascading flow of information from the top and also feedback from lower levels through surveys, performance measures and open meetings. An open culture should be encouraged and employees feel confident that they can express their opinions and concerns without fear of retribution. Interpersonal communication and the flow of communication are important elements to create a flexible organizational culture where employees are empowered to perform the best and a sense of belongingness is felt among the employees. Developing good communication is, therefore essential in order to generate trust, cooperation commitment and a feeling of belonging. Now in GFC the basics of effective communication is missing organization does not have two-way communication. If the company has to survive and remain profitable in the business it has to adopt certain policies and implement it in true sense. Between managers and workers and decreased attachment of the employees to organization. GFC management style comes under non-participative and almost no empowerment to its employees. When employees do not participate in management or do not know the exact views of management it becomes suspicious and lost trust in the management even if management want to change for betterment of employees or organization. Participation of Williams Short the personnel manager is allowed in all board meeting who represents all HR policies and plan. No other participants either from HR dept. or from employees are allowed and this creates discrepancies in passing on the actual mission and policies to lowest level. Employees in GFC are not empowered at all. All the instructions by the top management have been mechanically followed and this create demotivation, detachment and non-commitment of employees' results in poor productivity and decreasing profits. Recommendations: 1. The first thing organization has to do, is to appoint an external change agent/consultant who with the CEO device a plan to motivate employees as well as managers to accept change willingly not forcefully. This change agent must develop internal change agents who continuously work for change in attitude of employees and managers. These internal change agents should be from within the employees and manager so that they can trust him/her. 2. Company has to device two-way effective communication policy so that employees and managers feedback could be received. The two-way effective communication policy builds trust between employee and management. Employees have to be encouraged to give their suggestion openly. In the present situation where employees are not willing to say anything must be motivated and encouraged enough to participate actively in the company and feel as integral part of company. 3. To overcome the barriers of change employees must be counseled properly and their apprehensions about uncertainly related to future must be cleared off. Training and development should be making compulsory to every employee and manager through it may cost heavily initially but in later stages it pays for the company. 4. Organization culture of openness, transparently, knowledge, and merit should be encouraged. It enhances trust and productivity of employees. 5. Company has to device its HR policy and should be known to all. HR practices should be such that seek optimal utilization of HR through job rotation, value addition, upgrading employee skills preparing them change and so on. 6. Company has to emphasizes and device the policy of transparency, communication, redeployment, retraining and right sizing. 7. HR functions should be improved through emphasizing on areas like cross-functional teams, its processes, structure performance and reward management to build competency. 8. Company has to adopt better communication policy with employees and they must emphasize on people rather than any other thing. 9. Management of change and the role of HR manager in managing change have come to the forefront in strategic planning. So HR dept. should be strengthened and equipped to manage change effectively. 10. Employees unions and representation should be included into board so that they could be made strategic partners in business strategy. This step enhances trust of employees and shows sincere efforts to manage change on part of top management. 11. Decentralization of power and faith on employ7ees and greater involvement of line managers and employees create a cohesive team, which ultimately proves important factor for organizational success. 12. HR functions like recruitment, rewards, training and development and performances appraised should be uniform and transparent so that the trust faith could increase and motivate employees to work for organization. References: 1. Beaumont, P. (1993) Human resource management: key concepts and skills. London: Sage Publications. 2. Beer, M., Spector, B., Lawrence, R. (1984) Managing human assets, New York Free Press. 3. Chew, I. and Chang, P. (1999) Effects of strategic Human resource management on strategic vision, International journal of Human resource management, 10(6): 1031-45. 4. Dertouzos, M. R., Lester, R., Solow, R. (1989) Made in America: Regaining competitive edge, Cambridge: MIT Press. 5. Kabanoff, B. (1993) An exploration of espoused culture in Australian organizations, Asia pacific journal of Human resource, 31(3): 1-29. 6. Mintzberg, H. (1979) The Structuring Of Organization, New Jersey: Prentice-hall. 7. Poole, M. & Jenkins, G. (1990) The impact of economic democracy: Profit sharing and employee shareholding schemes, London, Route ledge. 8. Price, A. (1997) Human resource management in business context, London, International Thomson business press. 9. Schuler, R. (1992) strategic Human resource management: Linking People With The Strategic Needs Of The Business, Organizational Dynamics, 21(1): 18-32. 10. Schuler, R. & Jackson, S. (1987) Linking competitive strategies and Human resource management, Academy of management executive, 1(3): 207-19. 11. Storey, J. (1992) Developments in the management of Human resources, Oxford: Blackwell. 12. Ulrich, D. (1997 a) Human resource Champions: The next agenda for adding value and delivering results, Boston, Harvard business schools press. 13. Walton, R. (1985 b) From control to commitment in the work place, Harvard business review, 63(2): 77-84. 14. Wood, S. and Albanese, M. (1995) Can we speak of high commitment management on the shop floor Journal of management studies 32(2): 215-47. Read More