New HRM Strategy for Mid Lancashire Automotive Ltd - Coursework Example

REPORT ON THE FORMULATION OF A NEW HUMAN RESOURCE MANAGEMENT STRATEGY FOR MID LANCASHIRE AUTOMOTIVE LTD: A CRITICAL EVALAUTION OF MERGER OF HR SYSTEMS AND CORPRORATE CULTURES OF SUBSIDARY FIRMS Contents Introduction 3 Case Analysis 3 HaleCars 4 Mid Lancs 5 Mid Lancashire Ltd 6 Theoretical Analysis 6 HR Leadership in Mergers & Acquisitions 6 HR Strategy & Corporate Strategy 7 Organisational Culture 8 Change Management in HR 9 Recruitment & Selection 10 Remuneration 11 Motivation 11 Training and Development 12 Recommendations 13 References 15 Introduction This report is provides a critical review of the facts relating to the practices and history of HaleCars Ltd and Mid Lanc Ltd which are two automobile firms operating in the UK that have merged into the Mid Lancashire Automotive. The two car manufacturing entities have been unified under the same ownership structure and board of directors. However, they had different human resource management systems and organisational cultures. Authorities in the field of Human Resource Management identify there are two kinds of issues that occur when there is a merger of different firms. The first is that there is the need to bring together two potentially conflicting cultures and practices under one single corporate structure(Armstrong, 2012). The second issue includes adjusting the individual HR practices and systems in each of the organisations in order to eliminate errors and inefficiencies of the past(Armstrong & Taylor, 2014). The purpose of this paper is to critique the circumstances relating to the systems and practices of the two companies. This will be done on the context of historical practices and processes. From there, the paper will recommend a way forward in improving the HR system, organisational culture and other practices for the achievement of the corporate strategy of the newly formed car manufacturer – Mid Lancashire Automotive. Case Analysis The facts of the case brings to the fore, important pointers and issues that can be used to diagnose HR and Organisational Behaviour concerns. These issues can be used to streamline the structures of the new company, Mid Lancashire Automotive and give the blueprints for the creation of a new and a better entity that will achieve better results. The ultimate end is to develop a good HRM strategy that will operate within an appropriate Corporate Strategy to ensure efficiency and effectiveness that will lead to competitive advantage and ensure the survival of the new company in turbulent times. There are three main classes of issues that are of relevance to this analysis. First of all, there is a case of the issues inherent in HaleCars. Secondly, there are issues with Mid Lancs which come with unique implications for a new human resource management strategy. Finally, there are the conflicts that will arise as a result of trying to link up the two entities into one entity. HaleCars The organisational culture of HaleCars is one that is built around the specialisation and focus of the firm because they only do a few cars at a given point in time and this kind of bespoke and extreme specialisation. This means focus and specialisation are the main ends sought by the company. Another view that can be deduced is that there is a very profit-oriented culture in which workers are made to work to meet targets. This is evidenced by the fact that there are signs of a concern for production rather than a concern for people in the management practices. This is further established by the fact that there are no health and safety standards and workers are replaced hastily. Also, they seem to demand to people who do not really want to have a long-term vision for them. The profitability culture explains why there seem to be no conscious HR strategy and HR system. This is evidenced by high labour turnover and the exploitation of workers from the most vulnerable section of the British workforce. There is also no recruitment and selection plan. This suggests that the employment relations is based on some form of exploitation aimed at getting the best results from a cheap labour force that is paid the absolute minimum in wages in order to achieve high profits. This raises several technical issues that must be handled in the new corporate structure and this includes: 1. A new HR Strategy and Structure; 2. Integration of HaleCars staff members into the new culture; 3. New Recruitment and selection strategy; 4. Motivation & Employee retention; 5. Employee retention plan 6. Absence of a Training & Development Plan Mid Lancs On the other hand, Mid-Lancs has a stronger culture and the culture is very well crafted in order to provide important forms of multi-tasking that enables them to gel and work together to achieve synergistic results. This implies that they will have to meet some kinds of cuts that must be made in order to ensure that some of the things which might be seen to be a luxury in the current dispensation will have to be eliminated. The unionised workforce also poses a major threat to the changes that may be proposed because the workers will have a strong say. Hence, there might be some kind of situation whereby the demands of the firm in its strong cultural setting would have to be curtailed and controlled. The HR Controller is also a major person or individual who might either play a positive or a negative role in the company’s future. This is because the company’s HR controller could either undermine the new HR system that will be put in place or work to solidify it. High costs of running the HR system with elaborate profit-sharing packages and paid holidays will have to be re-evaluated in many ways and manners. This will give way to the creation of a new and a meaningful culture. Mid Lancashire Ltd Mid Lancashire Ltd will need two main things to meet its strategy of attaining the best and the most important things. First of all, they will need a functioning and an articulate Human Resource Management Strategy that will meet the corporate vision and the corporate goal. Secondly, there will be the need for the utilisation of measures to ensure that the new company meets its objectives and goals and balance between the different competing needs and demands to ensure strategy. Fundamentally, there will be the need for the creation of a new HR leadership and the formulation of a new HR strategy that will be streamlined and connected with the corporate strategy. There must be the merger of the different cultures and the creation of various strategies and structures that will be necessary to ensure that the company works to achieve its goals and vision Theoretical Analysis In this section, the facts of the case will be critiqued in the framework of important theories and concepts that relate to human resource management. To this end, the issues and problems defined above, will be examined and reviewed in the light of authoritative sources in human resource management. HR Leadership in Mergers & Acquisitions During mergers and acquisitions, two organisations with different backgrounds and histories come together to achieve unified goals and strategic objectives, hence, there is a natural tendency towards potential conflicts and disagreements (Marks & Mirvis, 2011). HR leadership will have to be developed to ensure pluralism, integration, assimilation and transformation in the new entity (Marks & Mirvis, 2011). Transformational leadership is seen as the best approach and the best way through which the management and the structures of the organisation can be modified and consolidated to create a better profile in HR and other functional units (Lakshman, 2011). The implication of this is that there should be the creation and maintenance of a form of leadership in which the desires and goals of members of the organisation can be tied to the growth and development of the resulting organisation from the M&A. Therefore, in this case, there is the need for an HR leadership system to be put in place that will override the structures of the old entities, particularly HaleCars. This is because the leadership system of HaleCars is highly transactional. The workers are seen as a mere factor of production – labour. There is no structure or evidence that the management of HaleCars wanted to pursue the interest of the workers. Hence, this old system should be abolished and a new transformational leadership structure that aids the best interest of Mid Lancaster Ltd must be put in place. HR Strategy & Corporate Strategy There is the need to set up a completely new and different human resource management strategy that will be based on the corresponding corporate strategy of the new company, Mid Lancaster Ltd. As identified in the case, the main corporate strategic goals are: 1. Reducing cost of running the company whilst identifying better and more efficient methods of doing things throughout the company; 2. Identifying efficient and effective methods and processes of doing things in the company over a long-time horizon; 3. Target the mass markets of consumer cars and shift from the bespoke and specialised operations; 4. Ensure competitive advantage is achieved and operations are optimised in the current economic climate of the car industry. Therefore, based on these four pointers, there is the need for the HR strategy to be coined in order to fit into the broader corporate strategy and its related framework. The main pointers of importance include: 1. The recruitment and selection of the best workers to complement the strategic vision and strategic goals of the company; 2. The training and development of the existing workforce in order to streamline their competencies and experiences to achieve the strategic goals of the organisation; 3. Introduction of measures for promoting motivation, discipline and commitment necessary for the achievement of operational targets in the new company; 4. Maintenance of optimal HR costs including the provision of optimal remuneration, and working towards the achievement of higher returns from HR; 5. Creation of an early-detection system to deduce cultural synthesis risks and respond to them promptly. Organisational Culture An organisational culture refers to the generally accepted way of doing things in an organisation in both the formal and informal sense (Ashkanasay, et al., 2013; Campodonico, 2011; Schneider & Barbera, 2014). This is important because it forms the very crux and basis for the operation of an organisation and it defines the way in which things are done to meet corporate targets. In this situation, it is apparent that Mid Lancaster is going to inherit most of the cultures from the previous entities that make up the core of the company. Therefore, there is the need for the company to make a conscious effort to define the main culture within which things are going to be done. There are strong organisational cultures and there are weak organisational cultures. Strong organisational cultures occur in companies where organisational cultures are clearly defined and there are few divergences from the practices that are based on them within the organisation (De Witte & Van Muijen, 2014). There are also weaker cultures which often refer to cultures that are not clearly defined and a system where actions are fundamentally informal in outlook (Dwivedi, 2013). Hence, the organisation carries out its activities with little or no sensitivity to the culture because there is no clearly defined way and manner of doing things in the organisation. In the case of Mid Lancaster, there are huge risks that are associated with any attempt to rush into the creation and maintenance of a culture that is strong and very definite (Campodonico, 2011; Marks & Mirvis, 2011). Rather, it might be best to maintain a weak organisational culture, but within a very strong philosophical framework including a vision, mission and strategy. As the organisation grows and develops, a new organisational culture can be defined and this can be changed and streamlined in the context of the practices and activities of the firm. Change Management in HR The most appropriate model that can be used to ensure that an appropriate culture is adopted and instituted is through the application of strong change management techniques and systems. This includes the approach towards unfreezing cultural and HR practices, changing cultural practices and refreezing the cultural practice (Marks & Mirvis, 2011; Schneider & Barbera, 2014). This will imply that there will be the evaluation of existing cultural practices and the HR systems. And from there, there will be a merger of the two processes. In this process, there will be the identification of the negative and positive HR practices of HaleCars and Mid Lancs and this will be balanced for a new culture to be put in place for both entities. Fundamentally, the HR system of HaleCars is based on the traditional personnel management system that is steeped in the exploitation of workers without any concern for their future. This has major long-term challenges and aside profitability, that approach destroys various important personal and stakeholder-based benefits that an organisation can get (McCourt, 2012). On the other hand, it is apparent that the HR system of Mid Lancs is elaborate and it is thorough. However, it can be said that such an HR system is expensive to maintain and this makes it problematic to institute it. Thus, there must be cuts in such a process in order to achieve optimal results. Recruitment & Selection It is not apparent that there will be the need for immediate workers or hiring. Therefore, it will be assumed that there will be no immediate plan to recruit. Hence, there will be the need to create a strategy for future recruitments that will occur later in future. Looking at the issues in HaleCars, it is apparent that there was no scientific approach that had been utilised to hire employees. There is the need for a scientific and modern recruitment and selection system to be introduced. Therefore, it is apparent that there is the need for a total evaluation and appraisal of the manpower needs of Mid Lancaster in the short-run (next 12 months) and the long-run (5 – 10 years). This will lead to the division of job specifications which will give rise to a group of possible employees that might be needed to meet the growth and survival requirements (Lewis & Spicer, 2013). After job specifications are done, there must be person specification that will state the Education, Experience and Ethical standards expected of an ideal person (Armstrong, 2012). Based on this, an appropriate advertising method should be identified to attract the highest and best pool of potential workers in the labour market (Bradley, 2014). When vacancies are advertised, there is the need for a scientific and objective method to evaluate all potential applications and choose the best applicant (Dias, 2013). This way, an appropriately good skilled workforce can be maintained by the company to meet its competitive advantage targets and standards (Hernandez, 2009). Remuneration From the scenario, it is apparent that Mid Lancs’ staff members are getting too much in terms of remuneration. In the case of HaleCars it can be said that the staff members are not getting any significant remuneration for their efforts. Therefore, it is necessary for a remuneration system to be formulated. Due to the nature of employee relations in Mid Lancs, it is going to be somewhat easy to fix new salaries. This might not be the case for workers from HaleCars. Therefore, there is the need for the HR unit to interact with the corporate leaders of Mid Lancaster to define the standards and levels of spending that the management can make (Randhawa, 2013). Based on that, the HR unit can define the implications and different options for payment in order to maintain and meet corporate targets. The HR department will therefore be able to spearhead negotiations and discussions relating to the amount of remuneration that can be possible made or received (Boella & Goss-Turner, 2013). Therefore, there is the need for all the employees to form unions and also come up with an appropriately strong bargaining power and process. Through this, discussions between management and the staff members can be conducted and appropriate salaries and benefit packages can be defined. Motivation The remuneration package to be defined for Mid Lancaster should be one that will encourage appropriately high performance and also attract and retain sufficiently skilled persons for a given job criteria (Condrey, 2010). The remuneration package must also be skewed towards encouraging and motivating people of the same class of employees in every job opening or job position (Wilton, 2012). Therefore, it is important and vital for the staff members to evaluate and analyse the needs of employees based on their economic, social and communal levels and then define the best way of meeting that. This will culminate in the identification and maintenance of the best level of motivation. Other forms of motivations like profit-sharing can be retained to boost the transformational leadership approach that is to be maintained by the new company (Strayer, 2013). Additionally, employee involvement in decision making should be encouraged and enhanced in order to let the workers feel part of the long-term interest of Mid Lancaster. Training and Development This is one of the pointers apparently missing from the activities of HaleCars. This is a major problem and issue that ought to be addressed. Although it exists in the culture of Mid Lancs, there is evidence that it is carried out with little emphasis on the results of operations. Hence, it is advisable that a training and development plan must be defined and adhered to. Efficiency and effectiveness in meeting targets should form the basis of the training. Therefore, it is important for the company to train the workers on the most innovative and the most significant measures of building 4x4 cars and how mass production lines can be maintained effectively and efficiently. This will help to provide a framework for the development of the workers and this will build upon the existing skills and competencies of the workers and the employees. An immediate training programme must be formulated and implemented in the next 3 months before operations of the new plant begin. Then there must be various kinds of training activities over the next 12 months. Afterwards, training must be done as and when the need arises. Recommendations In light of the circumstances discussed, there is the need for immense changes to be put in place to ensure that Mid Lancaster meets its ends and fundamental objectives. The following are most desirable: 1. HR Strategy Formulation: There is the need for an HR Strategy to be formulated in the new Mid Lancaster Ltd. This should be a reflection of the current strategy and it must include promoting efficient and effective labour delivery, high quality labour standards and low cost of running this labour in-house. The strategy must be monitored and implemented in order to complement the overall corporate strategy. 2. Employment of HR Manager & Formation of HR Team: An HR manager should be employed immediately. This could be the current HR manager of Mid Lancs who has proven to be a very good one. The HR manager must oversee the new HR strategy and work to build a strong and independent human resource management team. 3. Definition of Basic Cultural Framework: The firm needs a philosophy. It needs an idea that it stands for and this should devolve from the Articles of Association and Memorandum of Association. This will provide the guidelines for the HR department to define the cultural context within which the company will carry out its activities. This will form the scope of activities that will be conducted in the company. 4. Utilization of Change Management Techniques for Cultural Development: As the new systems are put in place, there should be the utilisation of change management techniques to unfreeze, change and refreeze the practices and cultures. This should culminate in the institution of obvious cultural practices in the affairs of the company. 5. Formulation of Recruitment Selection: A recruitment and selection plan must be put in place to define job requirements and job specification. Through this, an appropriate advertising method should be put in place to recruit from a pool of the best qualified persons. Once this is done, a scientific and objective means should be used to select the best candidates. 6. New Remuneration and Motivation System: Remuneration must be modified to attract and sustain the best people on the job market. This should be complemented with specific cash and non-cash remuneration packages that are aimed at meeting individuals` economic and social needs. 7. Training & Development Plan: There should be a conscious plan on the training and development of workers. This should include an immediate training plan meant to get workers to move from their views of the old companies and understand new things on the new strategy. This should be complemented by continuous training and retraining activities over the short run and the long run. 8. Implementation & Monitoring: The plans and propositions must be implemented but monitored for shortfalls in order to make changes and modifications where necessary. References Armstrong, M., 2012. Armstrongs Handbook of Strategic Human Resource Management. London: Kogan Page-. Armstrong, M., 2012. Competitive Human Resource Management. 2nd ed. London: Kogan Page. Armstrong, M. & Taylor, S., 2014. Armstrongs Handbook of Human Resource Management Practice. London: Kogan Page. Ashkanasay, N., Wilderom, C. P. M. & Peterson, M. F., 2013. The Handbook of Organizational Culture and Climate. 3rd ed. London: SAGE. Boella, M. & Goss-Turner, S., 2013. Human Resource Management in the Hospitality Industry. New York: Routledge. Bradley, J. C., 2014. Challenges Faced by Human Resource Managers Because of Technical Changes. [Online] Available at: http://smallbusiness.chron.com/challenges-faced-human-resource-managers-because-technical-changes-61058.html Campodonico, S. P., 2011. Culturology: Using Organizational Culture for Strategic Growth. New York: Livario Nobel. Condrey, S. E., 2010. Handbook of Human Resource Management in Government. Hoboken, NJ: John Wiley and Sons. De Witte, K. & Van Muijen, J., 2014. Organizational Culture. New York: Psychology Press. Dias, L. P., 2013. Human Resource Management. London: Flatworld Knowledge. Dwivedi, R. K., 2013. Organizational Culture and Performance. Delhi: MD Publishing. Hernandez, S. R., 2009. Strategic Human Resource Management in Health Services Organization. Mason, OH: Cengage. Lakshman, C., 2011. Postacquisition Cultural integration in Mergers & Acquisitions: A Knowledge-Based Approach. Human Resource Management, 50(5), pp. 605-623. Lewis, E. M. & Spicer, J. G., 2013. Human Resource Management Handbook: Contemporary Strategies. Aspen, NJ: Aspen Publishers. Marks, M. L. & Mirvis, P. H., 2011. A Framework for Human Resources Role in Managing Culture in Mergers and ACquisitions. Human Resource Management, 50(6), pp. 859-877. McCourt, W., 2012. Global Human Resource Management: Managing People in Developing. Surrey: Edward Elgar Publishing. Randhawa, G., 2013. Human Resource Management. Delhi: Atlantic Publishers. Schneider, B. & Barbera, K. M., 2014. The Oxford Handbook of Organizational Climate and Culture. New York: Oxford University Press. Strayer, S., 2013. Vault Guide to Human Resources Careers. London: Vault Publishing. Wilton, N., 2012. An Introduction to Human Resource Management. London: SAGE. Read More