Evaluating an International Human Resource Strategy at British Oxygen Company - Case Study Example

Evaluating HR Strategy at British Oxygen Company (BOC) AFFILIATION: Table of Contents Table of Contents 2 Introduction of British Oxygen Company (BOC) 4 PESTEL Analysis for BOC 6 Political 6 Economic 7 Social 7 Technological 7 Environmental 8 Legal 8 HRM and Environment 8 Recruitment and Selection 10 Training and Development 12 Performance Measurement 13 Conclusion and Recommendations 15 References 17 British Oxygen Company (BOC) is a leader in the oil and gas industry which has become a wholly owned subsidiary of the Linde Group. It is offering a range of specialised goods and services across the globe and aims to meet the industrial gas requirements efficiently. As the backbone of every organisation is its competent workforce, BOC makes sure that the HR department employs the competent resources for managing and retaining the employees. Being an international organisation is a challenge for the management team and HR professionals as they have to consider a range of cultural, social, political, economic, legal and environmental concerns of the host country. The company tries to follow the similar set of policies and procedures of recruitment and selection, training and development, employee involvement and performance management so that the diverse workforce is efficiently managed. On global level, it assures compliance with Equal Employment Opportunity law and there is no element of discrimination in the recruitment process. There is a specific list of Recruitment Agencies which are contacted for hiring the right employees. Moreover, every employee is given training and development opportunities in the global context so that the person can gain both national and international exposures. Every employee has to complete the Individual Development Plan so that a self-assessment about learning and development needs is effectively conducted. Thus, the success of BOC lies in its ability to effectively manage the employees across the globe and assure alignment between the HR and business strategies. Hence, it has undertaken a wide array of initiatives for motivating and developing the employees so that they feel valued and are willing to make valuable contribution in the firm. Introduction of British Oxygen Company (BOC) British Oxygen Company (BOC) is the leading name in the gas and oil industry of UK which has made a reputation of producing the superior quality atmospheric gases like nitrogen, argon and oxygen. It has been present in this sector for more than 120 year and its portfolio has augmented into a range of mixtures, gases, specialised equipment and related services (BOC, 2011d). On international level, BOC is the member of the Linde Group which has operations in about 100 countries globally (BOC, 2011c). Linde was inaugurated in 1879 in Germany. Meanwhile, Leon and Arthur Brin were the pioneers in taking out the foremost patent for a procedure utilised for separation of oxygen in 1880. Further on, an organisation by the name ‘Brin’s Oxygen Company’ was established in 1886 which was changed to British Oxygen Company in 1906. In 1969, the title was shortened to BOC to ease the international business venture (BOC, 2011c). During the period of 20th century, both enterprises attained the level of global providers of the industrial services and gases. In 2006, BOC became the wholly owned subsidiary of the Linde Group (BOC, 2011d). Currently, BOC is recognised globally for having a wide assortment of distribution and production centres across Ireland and UK. It offers its clients with a localised service so that it assures alignment with the top ranked international as well as national benefits. Some important facts about the organisation are as follows: 1. Provides employment to about 3,200 individuals 2. On daily basis, there are 5,000 deliveries in healthcare, industrial, pub and hospitality sectors 3. About 72 retail-based stores and local agents for cylinders are 340 4. Crucial units for Air separation are 7 5. Approximately 40,000 cylinders are filled everyday 6. More than 350,00 delivery points for cylinders 7. Filling sites for cylinders required by medical and industrial sectors are 12 (BOC, 2011d). Since BOC is a part of the Linde Group, it has to follow the policies, procedures and rules as developed by the management team. The parent company is known as the prominent organisation in the engineering and gases which employs around 50,500 people. As of 2011, the sales figure was €13.79 billion (BOC, 2011d). The strategy of the company assists it to be geared forward towards the sustainable, profitable growth with complete focus on tactical international expansion so that consistently high quality products and services are available. Even the Linde Group fulfils its responsibility towards the key stakeholders i.e. business partners, society, environment, shareholders and employees in all of the respective business areas, locations and regions worldwide (BOC, 2011d). The management team lives up to the commitment of introducing innovative solutions which are created from the latest technologies and compliment the objectives of attaining sustainable development and customer value. Linde Group has created a ‘Linde’s Competency Model’ that comprises of a standardised set of behavioural specifications which have to be embedded in every employee’s personality throughout the organisation. With the help of these competencies, the High Performing Organisation’s strategy and vision are linked to the entire workforce’s goals. There are about twelve competencies which are divided into four categories (Business and Strategy, People and Collaboration, Leadership and Professional Capabilities) and each one of them has varying behavioural levels classified into Levels ‘D-A’ which depend on the role’s seniority. Every employee has to progress from Level D to A to embed proficiency gained on the preceding level. The primary role of these competencies is to give clarity about the direction which has to be pursued by the employees and they even state what the company expects from its workforce. Simultaneously, the values of the company are innovation for customers, giving empowerment to people, passion for excellence and diversity thriving. Likewise, there are certain Foundation principles such as respect, integrity, safety and sustainability which are the basis for daily decisions and course of actions (BOC, 2011g). PESTEL Analysis for BOC When a company considers the option of expanding in international markets, it has to take account of both internal and external environments. BOC has an exceptional working environment which is evident from its core business values but there are few areas of concern for the Human Resource Management (HRM) aspect of the company. First of all, PESTEL analysis will be conducted to give a snapshot of the crucial elements imperative for the host and parent countries (Marchington & Wilkinson, 2008). Each of the feature is explained below: Political For the businesses, the consumer taxation level and corporate tax are vital aspects to be considered as it impacts their after-tax profit/income amounts (Armstrong, 2009). Other factors which are evaluated before entering in other host countries are trade barriers, tariffs and quotas as they are source of issues for the corporations. Moreover, the political stability impacts the operations of a business. For instance, the corporate tax in US is 35%, in Japan it is 42% and in UK it is 30% so it means that US is better option for BOC as compared to Japan. However, the political situation of both countries is stable relative to Asian regions. Hence, BOC has to consider all the possible hurdles along with positive aspects of the host country’s political atmosphere (HM Government, 2013). Economic Since the global economic recession in 2008, the countries have become conscious about the performance of their economies as they have developed stringent rules and regulations for the corporations (Fapohunda, 2012). The four major factors which have to be assessed in any host country are employment percentage, inflation rate, market trends and growth of the economy (Armstrong, 2009). A rapidly developing economy like that of Europe, US and Japan is an indication of increasing employment rate and rising standard of living. Additionally, the consumers will have good spending income available which will allow new businesses to flourish in such markets. Likewise, the inflation rate has to be of lower level so that the markets are stabilised so that there is adequate availability of resources. A higher inflation rate means that the trade union will demand extraordinary wages which can distort the entire value chain. Even the cost of labour is an important determinant of the country’s decision of entering new market. Social In terms of social factors, the changes in demographic variables like age, shift in customer preferences, concern for environment, usage frequency and others can impact the sales of the company. For oil businesses, the companies have to determine the demand of their clients so that they can meet their requirements. Even the seasonal demand of the end consumers in textile, furniture, vehicles and other sectors have to be met by making sure that the clients have sufficient amount of oil and gas for operating the machines. Technological The technological advancements have eased the business operations as the companies can efficiently create communication mediums with their units located across the globe. Also, Multinational Corporations can make sure that everyone within the organisation has access to all vital information about the business and customers which is shared among all the business units. The oil and gas companies have created effective and integrated technological infrastructure so that they are closely linked with their suppliers and buyers. Moreover, such efficient technology has enhanced the functioning of companies due to cost effectiveness, control on inventory, smart labelling and proficient relationship with all stakeholders (HM Government, 2013). Environmental Every business has to make sure that it complies with the environmental concerns such as protection of environment, measures to control carbon emission, forestry, and development of community, sustainable development and ethical code of conduct. Equally important for the oil and gas industry is to implement those processes which will protect the environment and make sure that the products and services are in compliance with the ethical boundaries of the countries. Legal In every country, there is a range of laws regarding protection of employees, consumer rights, and business code of conduct, production requirements and others. It is vital for the companies to gain information about such crucial aspects of the host country so that they can follow the regulations of the respective market. Moreover, it is important that the oil and gas are manufactured and distributed in accordance to the legal necessities so that there is uniformity in the quality and clients are satisfied with the supplies. HRM and Environment The Linde Group emphasises the attraction and retention of competent pool of employees as it is the basic strength of the international company. BOC also implements the stated procedures of HR department so that there is alignment between the business strategy and HRM strategy. In order to enhance the employee’s job satisfaction, the experts provide a range of opportunities required for the workforce growth and development. Therefore, the HR department is 100% committed towards the complete development of each employee (BOC, 2011h). Since the business environment is changing at a fast velocity, there is constant need of organisation’s people flexibility, drive for innovation and adaptability. Likewise, change management is embraced during critical phases so that new knowledge is acquired, latest skills are developed and behaviours are adapted in accordance to the market dynamics. It is assured that every individual is provided access to both professional and personal developmental chances needed by them so that they possess the capabilities mandated for meeting the challenges of the environment (BOC, 2011h). Simultaneously, everyone within the firm is encouraged to undertake initiatives for their self-learning and even carry out their self-assessment to determine training requirements. At the beginning of the year, every employee has to complete the IDP (Individual Development Plan) with the line manager. This exercise allows the individual to identify their developmental needs along with the possible future requirements of the job (BOC, 2011i). Since the way in which work is performed is of utmost importance, the company has developed a tool known as ‘ACTS Cultural Pillars’ which assesses the employees’ behaviours and values. These principles are linked to the Linde’s 10 ABCs (ACTS Behavioural Competencies) (BOC, 2011i). BOC has developed a HR department in such a way that all of its international operations are effectively managed. Since there is diversity element present in the workforce as people from varying backgrounds and cultures are employed, the professionals have to make sure that everyone is provided equal opportunity for employment. Furthermore, the division is designed to provide maximum guidance to the corporation and make valuable contribution to its objectives. There are five primary constituents of the department which work together for offering excellent and streamlined service. The teams are classified into Employee Service, Reward, HR generalist, Learning and Development and Payroll (BOC, 2011h). Recruitment and Selection As a loyal and proficient workforce is the vital requirement of the organisations in today’s business environment, it is mandatory that an effective recruitment and selection process is in place (Kramar, 2014). BOC utilises both internal and external recruitment sources for developing a capable pool of employees. For the senior level positions, it approaches the Recruitment Agencies who are present in their PSL (Preferred Supplier List) as it allows them to hire the most competent professional for the executive positions. Additionally, on its website, there is a separate page for those agencies who want to get registered with the company and develop a strong association with HR department (BOC, 2011k). With the advent of time, the entire recruitment and selection process has been refined so that only credible people become part of the organisation. Even employees are encouraged to recommend individuals whom they know so that the business operations are effectively managed. Whenever there is a vacancy in the firm, the details of the job are posted on its website after doing internal analysis. It implies that the departmental heads first try to get the positions filled by evaluating the job description and competency requirements of the individual required for the particular position. If the designation can be filled by an existing employee from any of the business unit, then the person is given promotion or transferred to the new location. However, if there is lack of an internal recruitment, then the PSL is reviewed. After all CVs are collected for a particular position, the Employee Services head develops a short-list of the potential candidates. Each of the candidate’s interviews is arranged within the company’s premises and interviewee board comprises of HR head and concerned departmental head. Later on, another short-list is prepared and second interview takes place. During the second phase, the HR head, departmental head, Learning & Development officer and CEO conduct the interview. Within this period, an instrument known as ‘Rodger’s Seven Point Plan’ is used for assessing the candidate’s level of competency. Once a final decision is made, the employee is hired, given a manual about the company’s policies, contract is signed and training is given by the Employee Services officer. The first six months are considered to be the part of a probation period in which the individual has to give evidence about his/her credibility and worthiness. If a person does not accomplish the targets, then the individual is terminated from the job. Simultaneously, the company has realised that it needs to induce fresh blood within the businesses so that it can foster innovative work environment (BOC, 2011l). Some of the programs which are undertaken are BOC Graduate Engineering Scheme, BOC Apprenticeship and Internships (BOC, 2011a; BOC, 2011b). All of these initiatives provide an opportunity for making sure that all of its worldwide operations are effectively managed. The HR department is assured that it has the latest HR IT system known as SAP HR so that data about the employees along with internees and Management Trainees is appropriately stored and protected (BOC, 2011d). Training and Development As the developments in the business world are taking place at a fast pace and a range of avenues are opening up for the existing employees, it is important for the firms to provide them growth opportunities (Rees & Edwards, 2010). Due to increase in social networking avenues, people have access to various online tools for locating attractive jobs (Shah et al., 2012). Since BOC is well-aware of such challenges, it makes sure that every employee is provided equal opportunities for learning by recognising the personal needs of each individual (BOC, 2011f). The HR department has created Learning and Development division so that the specialists can address the requirements of diverse workforce. It is the responsibility of the professionals to offer a distinct array of progressive prospects which can be either specialist or generalised. From simple safety rules to the time management, from job specific skills to the leadership advancement and from production to customer and sales service proficiencies, everyone is provided equitable learning sources. Even the employees are offered accessibility to a range of training resources such as in-house, coaching, mentoring or even formal session based training (BOC, 2011f). Some other techniques which are encouraged at BOC comprise of workshops, distance learning programs and Self-Development scheme for support (assistance in terms of finance and also provisions for study consign are provided) (BOC, 2011j). In order to enhance the learning effectiveness, both development and performance are monitored at regular intervals and formal review takes place at year end. Additionally, 360 degree feedback is undertaken to assess all aspects of an employee’s performance. This tool is specifically utilised for the individual’s annual performance appraisal which is precisely linked to the organisation’s ‘ACTS Behavioural Competencies’. Since it is a global company, its people are provided opportunities for going abroad in the form of global team so that they can gain international exposure. Such initiatives offer avenues for learning and exchanging information from the team members. Moreover, the company’s exchange and graduate programs provide platforms for fostering knowledge management and its transference on the international level. One of the crucial elements of the development set is change management. Hence, BOC makes sure that there is sufficient management involvement which will build committed workforce and overcome the resistance. Likewise, the employees are trained in such a way that they are ready and willing to undertake change measures within the businesses. Performance Measurement Since employee’s performance assessment is a vital aspect of the jobs, it is important for the organisations to develop and implement Performance Management System (PMS) which will determine the worth of an individual (Beardwell & Claydon, 2010). Moreover, it is the tool employed by the firms for rewarding the employees. At BOC, there is a Performance Appraisal questionnaire which is filled by each employee at the start of the year and the goals are set in a meeting with the line manager. At year end, performance is reviewed by the managers and then discussed with the person. With the help of this framework, BOC identifies those individuals who recommend innovative ideas and projects for enhancing the organisation’s reputation. It even appreciates the employee’s success so that they feel motivated and are looking forward to try out unique concepts for the firm’s enhanced performance. BOC comprehends the importance of PMS and considers it to be the critical business leadership responsibility as it postulates the basic approach for execution of the corporate strategy and aligning everyone’s efforts and objectives towards the attainment of corporate goals. Hence, the principal aims of the Performance Management are as follows: 1. Postulate a strategic and well-defined orientation for the employees 2. Make connection between the employee’s level of motivation, behaviours and influence on the goals which the organisation is striving to attain 3. Provide challenges to the employees for upholding the principles and values of the company 4. Create a high performance working culture so that the individuals are provided opportunities for continuous enhancement of the corporate processes and even development of their abilities and competencies For targets appraisal, there are certain percentages which determine whether employee has been able to complete the set target. This evaluation is done by the line manager only. The following scale is used: 1. 0% - fails to achieve target 2. 50% - partially achieves target 3. 100% - fully achieves target 4. 150% - exceeds target 5. 200% - far exceeds target After the rating is given on the target sheet, then the detail of each rating for each target is given on the specific target sheets to justify the ratings given which is known as the targets specification of achievement levels. For each responsibility identified on the sheet, the line manager rates the employees on the following scale: 1 - fails to fulfil responsibilities 2 - partially fulfils responsibilities 3 - fully fulfils responsibilities 4 - exceeds fulfilment of responsibilities in many instances 5 - far exceeds fulfilment of responsibilities in all instances Similarly, for each competency, the line manager rates the employees on the following scale: 1 - fails to meet the standard for this competency 2 - partially meets the standard for this competency 3 - fully meets the standard for this competency 4 - exceeds the standard for this competency in many instances 5 - far exceeds the standard for this competency in all instances Succession planning is also done giving all supervisors the authority to nominate one of their immediate subordinate, who might be given appropriate grooming for their position, providing their subordinates with necessary coaching and training on an ongoing basis. Module based techniques are also used for coaching employees. Besides this, BOC has a concept of “Organisation Capability and Talent Management (OCTM)” in their organisation. According to this program, high performing individuals are identified who are the potential successors for managerial positions and departmental heads. After identifying them, adequate opportunities are provided to them so that they can polish their skills and develop themselves to match the criteria of the respective positions. They are required to complete certain courses that are offered by the virtual university of The Linde Group, it provides a whole framework for their training and development. Conclusion and Recommendations The international organisations have to give utmost importantance to the alignment of HR and business strategies so that they have an appropriate pool of talent for meeting their goals. Similarly, BOC being a global company has undertaken every vital measure for assuring uniformity in all of its business operations. Realising the growing diversity and cultural issues, the HR department has implemented strategic tools for managing the company’s operations. However, there are certain areas which need to be considered by the management team: 1. The HR department has to consider the option of following an internationalisation strategy in global functions so that each division works in accordance to the respective market. It implies that the HR section of every international firm has to be given authority of developing 40% policies in alignment with the host country’s legal requirements. 2. Although there is 360 degree feedback and line manager reviews the employee’s performance, it is recommended that the filled form is discussed with the individual so that there is clarity about the specific measures undertaken. Moreover, it creates a friendly atmosphere and any criticism is accepted in a positive manner. 3. There is a need of developing cordial relations with leading Recruitment Agencies in all of BOC’s locations so that they can be contacted instantly. Additionally, there is requirement of enhancing the recruitment process so that the urgent positions can be filled strategically and quickly. 4. In addition to the appraisals, the company should consider the option of awarding the employees with special rewards such as ‘Employee of the month’, paid vacations for exceeding the targets, ‘Excellence Award’, ‘Best Safety Employee’ and others. Such forms of appreciation boost the morale of the employee and motivates them to enhance their efforts and performance. References Armstrong, M.A., 2009. A handbook of Human Resource Management. 11th ed. London: Kogan Page. Beardwell, J. and Claydon, T., 2010. Human Resource Management: A contemporary approach. 6th ed. London: Prentice Hall. BOC, 2011a. About the Graduate Engineering Scheme. [Online] Available at: [Accessed 13 March 2014] BOC, 2011b. BOC Apprenticeships. [Online] Available at: [Accessed 13 March 2014] BOC, 2011c. BOC History. [Online] Available at: [Accessed 13 March 2014] BOC, 2011d. BOC in the UK and Ireland. [Online] Available at: [Accessed 13 March 2014] BOC, 2011e. Careers at BOC. [Online] Available at: [Accessed 13 March 2014] BOC, 2011f. In-house training. [Online] Available at: [Accessed 13 March 2014] BOC, 2011g. Introduction to our Competency Model. [Online] Available at: [Accessed 13 March 2014] BOC, 2011h. Our Business Areas. [Online] Available at: [Accessed 13 March 2014] BOC, 2011i. People Development – Introduction. [Online] Available at: [Accessed 13 March 2014] BOC, 2011j. Personal Development. [Online] Available at: [Accessed 13 March 2014] BOC, 2011k. Speculative Agencies. [Online] Available at: [Accessed 13 March 2014] BOC, 2011l. What benefits do we offer? [Online] Available at: [Accessed 13 March 2014] Fapohunda, T.M., 2012. The global economic recession: Impact and strategies for Human Resource Management in Nigeria. International Journal of Economics and Management Sciences, 1(6), pp. 7-12. HM Government, 2013. UK Oil and Gas – Business and government action. [Online] Available at: [Accessed 13 March 2014] Kramar, R., 2014. Beyond strategic human resource management: is sustainable human resource management the next approach? The International Journal of Human Resource Management, 25(8), pp. 1069-1089. Marchington, M. and Wilkinson, A., 2008. Human Resource Management at work: People Management and Development. 4th ed. Harlow: Pearson Education. Rees, C. and Edwards, T., 2010. International Human Resource Management: Globalization, National systems and Multinational companies. 2nd ed. London: Prentice Hall. Shah, F.A., Yusaff, D.R.M., Hussain, A. and Hussain, J., 2012. A critical review of Multinational Companies, their structures and strategies and their link with international Human Resource Management. IOSR Journal of Business and Management, 3(5), pp. 28-37. Read More