Strategic HRM and Pixie Dust - Case Study Example

 Strategic HRM and Pixie Dust 1. Introduction The ability of businesses to establish a well-structured corporate strategy is critical for their success. In most cases, obstacles can appear leading to delays in the implementation of organizational plans. In firms where emphasis has been given on corporate values such risk is minimized. This fact has been made clear in the case of Walt Disney. Since its establishment, the organization was considered as highly opposed to employees’ right to participate, even at low level, in important organizational decisions. In the specific organization, other employees’ rights, such as the right for a fair compensation, in terms of the work offered, have been violated, especially in the pre-1984 period, where the firm’s management team was replaced. In this paper the firm’s strategic human resource plan is evaluated. Reference is made to the organization’s strategy and values, as concepts that have the power to influence the firm’s choices in regard to the management of its human resources. A particular strategic human resource strategy, the resource-based view has been employed for evaluating the firm’s ability to establish effective human resource management strategies. It is proved that the organization’s efforts in enhancing the value of its resources can be characterized as quite important; still, certain changes on the firm’s existing HRM framework would be necessary so that the organization is able to secure its market position in the long term. 2. Describe Disney’s Corporate Strategy and explain how its values fit with its corporate objectives? One of the most critical challenges that modern firms have to face is to set objectives that are aligned with their values. Indeed, under certain terms the promotion of organizational objectives can threaten organizational values, especially in organizations that have suffered severe losses and need to increase their profits in quite short time (Saee 2007). In order to understand the relationship between corporate strategy and values it would be necessary to refer to the elements of each of these frameworks. According to Saee (2007) each organization’s strategy incorporates two different concepts: ‘values and purposes’ (Saee 2007, 12). As a framework, corporate strategy is described as ‘a plan of action that it is not influenced by the organization’s location or management’ (Saee 2007, p.12). It is implied that the actions included in an organization’s strategy need to be aligned with the organizational values but without this term to be absolute. Since values and purposes, i.e. objectives, are both part of corporate strategy they have equal power in influencing the strategy of a particular organization. It can be assumed that each organization’s leader have the power to decide whether the strategy of his organization will be aligned more with organizational values than with organizational purposes. From another point of view, DuBrin (2008) notes that corporate strategy is set through strategic planning (DuBrin 2008, p.122) in the context of which each organization’s ‘mission and strategies’ (DuBrin 2008, p.122) are set. As for the relationship between corporate strategy and business values reference should be made to the following fact: values can highly affect the strategies of businesses (DuBrin 2008, p.122). However the level at which values and strategies interact is not standardized; it seems that a series of factors, such as organizational culture and market’s competitiveness, can influence the relationship between business values and strategies. Kew and Stredwick (2005) explain that values show the way in which ‘the organization should behave in regard to all its activities’ (Kew and Stredwick 2005, p.207). It would be noted though that ‘in well managed organizations corporate strategies need to be aligned with what people in power think as important’ (DuBrin 2008, p.122). In other words, the relationship between corporate strategy and values is based on the willingness of each organization’s top management team to promote strategies that are aligned with the personal perceptions and beliefs of the team’s members (Salaman, Storey and Billsberry 2005). Moreover, Amason (2010) states that in organizations that incorporated a high number of businesses, as sub-units, the following challenge can appear: when developing the organization’s strategy its strategic planner will take into consideration the organization’s values or the values of its sub-units (Amason 2010, p.176)? It is noted that the values of the organization would be rather preferred so that the integration of the organization is not threatened (Amason 2010, p.176). Different approaches have been developed for explaining the role of values, as an element of corporate strategy. According to Thompson (2001) in each organization values need to be aligned with ‘the needs of environment and the key success factors’ (Thompson 2001, p.53). Moreover, Hulsmann and Pfeffermann (2011) note that each organization’s values are mostly used in regard to the organization’s marketing and HR plans (Hulsmann and Pfeffermann 2011, p.272). Armstrong (2008) highlights the relationship between organizational objectives and values. According to the above researcher, in each organization objectives have to be aligned with the organizational ‘mission and values’ (Armstrong 2008, p.247). There is also the view that the values of each organization reflect ‘the code of ethics’ (Murray 1997, p.45) on which all organizational activities need to be based. Fernando (2009) notes that corporate values along with corporate objectives need to be defined in advance, i.e. before developing any business plan (Fernando 2009, p.254). As of their importance for each organization, corporate values are characterized as key elements of the corporate governance, being though at the same level with corporate objectives (Fernando 2009, p.254). Walt Disney has a quite clear corporate strategy. Emphasis has been given on continuous expansion. Employees have been regarded, at least up to 1984, just as a tool to support organizational growth and it is for this reason that employees’ rights in the particular organization have been often ignored. The prohibition to employees to be represented by unions, as this rule was set by the firm’s leaders, is an indication of the organization’s priorities up to the change of its management team in 1984. In this context, the alignment of the firm’s objectives with its values would be explained by referring in two different periods: a) to the pre-1984 years and b) the post-1984 period. In the pre-1984 period the firm’s strategy was based on a ‘paternalistic and domineering’ (case study, 1st page) style of management. The rapid and continuous growth was set as the key priority of the organization. The expansion within USA and in other countries has been used as the key tool for achieving this target. The particular plan was characterized by a rigid HR management practice: employees were treated just as units supporting the organizational goals and not as humans with particular needs. It is for this reason that the involvement of unions in the organizational activities was prohibited. This rigid HRM strategy led to the organization’s growth. Still, such approach would not be acceptable in new market conditions that are characterized by the promotion of employees’ rights and needs. The change of the firm’s management team in 1984 reflects the alignment of the organization with the new market rules. Indeed, in the post-1984 period, the organization’s corporate strategy has been significantly changed. The introduction of a new approach for the management of the firm’s human resources has been reflected in the film entitled ‘The Disney approach for people management’ (case study, p.1), a film that the firm produced in order to show its new approach in regard to HRM. The new approach has been based on a formula, entitled as ‘Pixie Dust’ (case study, p.1). This formula incorporated three elements: Training+Communication+Care=Pride (case study, p.1). In other words, from 1984 onwards the firm’s corporate strategy has been highly based on the increase of value of employees. In addition, terminology of the theatre has been used for reflecting the firm’s new HRM culture. Employees are characterized as ‘cast’ and customers as ‘guests’. From the first minute, i.e. since their initial interview for a position in the organization, employees are treated like actors. This practice has been developed for showing to the employees that they are highly valued for the organization and that their support is critical for the success of organizational plans. Particular reference should be made to the ways in which the firm’s objectives are aligned with its values. In the pre-1984 period the firm’s key objective has been the realization of the dreams of people; rapid expansion has been another objective. Both these objectives were aligned to the firm’s values at that time, meaning especially the ‘conservatism and anti-unionism’ (case study, p.1) that characterized the firm’s strategy since the entrance of the organization in the market. In the post-1984 period the firm’s key objective has been changed: the firm aims to ‘give to employees the sense of belonging to a family’ (case study, p.5). This objective is aligned with the firm’s new value: to focus on communication and cooperation especially in regard to its internal environment. 3. Using a SHRM theory of your choice, evaluate the contribution of HR to Disney’s success. In the context of SHRM a series of theories has been used for reflecting the increased interest for the employees’ needs, as members of modern organizations. SHRM has a critical difference compared to traditional HRM: it cannot be set under limitations or restrictions (Deb 2006, p.63); in a different case, i.e. if such limitations are accepted, then the value of SHRM is eliminated. Also, SHRM is based on the rule that people needs have to be taken into consideration along with the organization’s needs (Armstrong 2008, [2], p.49). In this context, for SHRM business strategies have ‘to be aligned with HRM strategies’ (Armstrong 2008, [2], p.49). It should be noted that in 1970s SHRM focused on the power of the firm’s external environment in influencing organizational plans (Wood 2009, p.64). In 1990s SHRM has been changed; the resource-based approach which was introduced in 1991 emphasized on the firm’s internal environment, as a factor that can influence organizational plans (Wood 2009, p.64). Other theories, such as the expectancy theory and the equity theory have been also incorporated in the SHRM since 1990s (Kovach 1996, p.2). The resource-based theory of SHRM will be used in this study in order to evaluate the contribution of HR to Disney’s success. The resource-based theory (Graph 1, Appendices) focuses on the value of a firm’s resources for the success of business strategies (Marchington and Wilkinson 2005, p.113). In the context of this theory, ‘training and recruitment are of strategic importance for the organization’ (Marchington and Wilkinson 2005, p.113). In practice, the resource-based view promotes the idea of the continuous improvement of a firm’s resources so that the objectives of the organization are achieved (Armstrong and Baron 2002, p.51). It should be noted that the resource-based first highlighted the importance of a series of HRM practices, such as ‘talent management and learning and development’ (Armstrong 2011, p.54). On the other hand, the resource – based view emphasizes on the uniqueness of the HRM policies developed in each organization (Paauwe 2004, p.93). This means that the measures that a firm takes for promoting its HRM cannot be appropriate for other firms (Paauwe 2004, p.93); the HRM practices introduced in each firm support only the objectives of the specific firm and not of other organizations, even those operating in the same industry (Paauwe 2004, p.93). In any case, for the resource-based view, the HR of each organization can help the organization to achieve a competitive advantage (Kandula 2004, p.73). As a result, human resources need to be taken into consideration ‘when the implementation of business strategy is attempted’ (Analoui and Karami 2003, p.206). In the case of Walt-Disney the resource-based approach has helped HR managers to understand that they should focus on the training and personal development of employees, so that their value is increased, a fact that would also enhance the firm’s profitability. Moreover, HR, and especially the resource-based view, has led to the transformation of organization’s culture: instead of focusing solely on the needs of customers, the company started to pay attention to the needs of its employees. Also, because of HR, the organization increased the investment made on employees’ personal development and rewarding. In this way, the communication between employees and top management has been significantly improved; this achievement can be considered as the result of the involvement of SHRM in the organization’s strategic planning process. In other words, HR helped towards the improvement of the terms of employment in Walt-Disney but also of the communication across the organization. For this reason, HR has benefited Walt-Disney not only to strengthening its current performance but also to secure a long term growth. 4. Identify the HR practices that have made a significant contribution to Disney’s Human Resource Management of the company and show how these can improve the company’s performance in the future. The key HR practice that has most contributed to Disney’s HRM is the use of practices used in theatres for managing the various aspects of HR. More specifically, the firm’s HR managers have promoted the use of terminology and of processes used in theatre so that the communication with employees is improved. In this context, employees have been named as ‘cast’ while customers have been described using the term ‘guests’. The delegation of tasks to employees is developed through a process called ‘casting’. In this way, employees understand that they are highly valued for the organization and contribute with their ideas in the improvement of the quality of services delivered to the customers (case study, p.2). In addition, a reward system has been introduced for ensuring that employees are fairly compensated. In this way, the firm’s HR managers expect that they can help towards the increase of employee motivation. Another importance HR practice introduced by the firm’s new management team is the following one: employees have been given the right to be represented by unions. The union chosen in regard to the firm’s employees has been the Service Trade Council Union. About 27,000 workers of the firm, i.e. a percentage of 30% of all the firm’s employees, are represented by this union (case study, p.3). With the support of the firm’s new management team employees in Walt-Disney are encouraged to participate in training programs and to communicate, so that conditions in the workplace are friendlier for employees and so that employees’ needs are made known to HR managers. Employees are also encouraged to care for customers, a practice that if combined with those mentioned above, i.e. communication and training leads to the firm’s formula in regard to HR; this formula is known as Pixie Dust (case study, p.1) and is considered as a key element of the firm’s HR strategy. Among the above practices, particular emphasis should be given to training and communication. These practices, which are incorporated in the resource-based view of SHRM, can help the firm’s performance to be standardized at high levels (Brewster and Harris 2012). In general, all the HR practices that the new management team has promoted, as these practices are described above, could help towards the increase of employee performance, a fact that would benefit the current organizational performance; also, these practices would help towards the increase of employee motivation and the improvement of the relationship between the employees and the organization, as these facts would secure the firm’s long term growth. 5. Conclusion The development of effective HRM strategies can help organizations to achieve a competitive advantage towards their rivals. However, in many cases the willingness of organizations to promote such strategies is limited mostly because organizational interests do not allow such initiatives. For example, since its establishment Walt-Disney has been market-focused trying to respond to the needs of its customers. The needs of employees were not taken into consideration, a phenomenon that has threatened the organization’s position in the international market. For facing the risks involved, the organization’s leaders decided to change the top management team and support important changes in the practices used for managing the organization’s human resources. The HRM practices promoted by the new management team have significantly helped towards the increase of the firm’s efficiency; this has been achieved in two ways: a) organization has made clear to employees that their value for the achievement of organizational objectives is critical and b) organization has encouraged employees to participate in the development of critical organizational decisions, such as those decisions related to the restructuring of daily business operations. In the case of Wal-Mart the potentials of SHRM to benefit organizations have been made clear. Moreover, the SHRM has helped organization to set the basis for a long term-growth, as this growth has been related to employee participation and commitment. References Amason, A., 2010. Strategic Management: From Theory to Practice. Oxon: Taylor & Francis. Analoui, F. and Karami, A., 2003. Strategic Management: In Small and Medium Enterprises. Belmont: Cengage Learning EMEA. Armstrong, M., 2011. Armstrong's Handbook of Strategic Human Resource Management. 5th ed. London: Kogan Page Publishers. Armstrong, M., 2008. How to Be an Even Better Manager: A Complete A-Z of Proven Techniques & Essential Skills. 7th ed. London: Kogan Page Publishers. [1] Armstrong, M., 2008. Strategic Human Resource Management: A Guide to Action. 4th ed. London: Kogan Page Publishers. [2] Armstrong, M. and Baron, A., 2002. Strategic HRM: The Key to Improved Business Performance. London: CIPD Publishing. Brewster, C. and Harris, H., 2012. International HRM. London: Routledge. Deb, T., 2006. 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Paauwe, J., 2004. HRM and Performance: Achieving Long-Term Viability. Oxford: Oxford University Press. Saee, J., 2007. Contemporary Corporate Strategy: Global Perspectives. London: Routledge. Salaman, G., Storey, J. and Billsberry, J., 2005. Strategic Human Resource Management: Theory and Practice. 2nd ed. London: SAGE. Thompson, J., 2001. Understand Corporate Strategy. Belmont: Cengage Learning EMEA. Wood, G., 2009. Human Resource Management: A Critical Approach. Oxon: Taylor & Francis. Appendices Graph 1- The Resource-based View, phases of development (Source: http://www.fsc.yorku.ca/york/istheory/wiki/index.php/Resource-based_view_of_the_firm) Read More