Human Resources Management and Engagement Rate Issues Faced by Toyota and Volkswagen - Case Study Example

Introduction Significance of the Topic Multinational enterprises (MNEs) relating to different industries to adapt to the local cultures are required to effectively modify their existing HRM standards and policies. This would help the MNEs to cater to the needs of the local population and also the expatriate staffs. The MNEs are also found to counter potential challenges relating to the demands placed by the trade union bodies pertaining to the development of the wage and working conditions of the staffs. The paper would focus on the selection of two MNEs related to a specific sector where one has its business in Japan the other is based in Germany. It would aim to evaluate the HRM practices of the two companies and the needed modifications to be generated to help it enhance the business position in an international market like China. Based on the above theme, the paper focuses on the understanding of the HRM and Employee Relations issues faced by two automotive companies, Volkswagen and Toyota in the course of its subsidiary based operations in China. Firstly, the ERM and ER of each company will be introduced. Then, the comparison of the approaches adopted by both company will be illustrated. It includes identifying issues VW and Toyota faced, methods that they have dealt with and the effects on their business operations in the host country. Thesis Statement An analysis of the HRM and ER issues faced by Toyota and Volkswagen relating to its subsidiary based operations in China and the modifications needed thereof to help the companies adapt to the local Chinese culture. About the Companies Toyota Toyota operates as a Multinational Enterprise head quartered in Japan that operates in the automotive category. The company operates to generate a diverse range of vehicles incorporating needed innovation that helps in addressing the social and environmental needs in the global context (Toyota Motor Corporation, 2014). Volkswagen Volkswagen operates as a global company operating in the automotive category. The company based in Wolfsburg, Germany. Volkswagen is recognized as the largest automobile producer in the whole of Europe. Through increase in the vehicle production during 2013 the company gained the potential of generating around 12.8 percent market share in the global automobile market. The automobile company is observed to operate based along 12 major brands that help the company sustain its market in seven European nations (Volkswagen, 2013). Alignment with China’s ER and HRM Systems The analysis of the cultural dimensions based on the use of the Hofstede’s Cultural Dimensions model in the context of China reflects that the country has higher scores for the Collectivist and Power Distance dimensions. The scores signify that, Chinese population generates greater importance to cooperation and in valuing the relationship made with each other. High scores gained related to Power Distance denote that employees and subordinate staffs are not authorized to question and challenge their superiors in the organizations. The Chinese people are also observed to rely more on the development of informal communication and relationship networks in the organization. This culture is commonly known as “Guanxi”. High Power Distances also create a sense of value for the decisions made by senior members, while the performance appraisal and training mechanisms are generated for focusing on the development of the human factor (Fu and Kamenou, 2011). In the ambit of employee relations, the Chinese organizations are observed to generate greater significance to the development of Trade Union bodies which contribute in representing the rights and interests of the employees in the multinational organizations. With the passing of the Employment Contract Law during 208, the role of the trade union bodies in helping in the representation of employees in the MNEs operating in China gained a significant stand (Zhu, Warner, & Feng, 2011). Toyota The HRM practices in Toyota are observed to be effectively aligned with the cultural framework of China such that the management team of the organization effectively encourages the growth of teamwork and teambuilding exercises. Effective collaboration is planned between employees along the different levels to help in generating needed productivity (McBride, n.d.). Similarly, the management culture of Toyota also reflects the existence of a centralisation framework such that decisions are taken in a centralised fashion by the senior members in the organization. Working in a centralised fashion signifies that the final decisions related to business and production operations are taken by the people pertaining to the headquarters based in Japan (Promprasi&Jumreorn, 2009). Toyota is also observed to largely integrate the development of informal channels in the workplace. This encourages the employees and subordinate group members to generate innovative solutions through close cooperation with the senior members in the organization. The company encourages the growth of interactions between members along different levels and departments that contribute in generation of effective solutions to business problems in an innovative fashion (Liker &Hoseus, 2008). Relating to performance appraisal initiatives, Toyota focuses on incorporating the human factor through dividing the target based on individual and group competencies. Based on such targets, the performances of the employees either individually or in groups are evaluated or appraised. Feedbacks generated to the employees based on the inferences of the performance appraisals conducted contribute in enhancing their confidence and productivity in conducting stated tasks and in achieving targets (Marksberry, 2012). Training and employee development activities is pursued in Toyota in that the company focuses on generating large scale investment to help in enhancing the expertise and productivity of the personnel in the organization. Contents of the training and development activities are tailor made to suit the needs of the participants such that it enables them to continually develop on their existing skill base and productivity (Liker and Meier, 2005). The employee relations practices of Toyota is also observed to reflect gradual changes through the adaptation of the trade union practices where the later contributes in generation of effective bargaining to help in enhancing the compensation and bonus schemes. Incorporation of trade unions in the designing of compensation and bonus schemes rightly helps in motivating the people to generate greater productivity (Aoki, Delbridge, & Endo, 2011). Volkswagen Volkswagen reflects the adaptability to a teamwork culture relating to its operation based on its Chinese subsidiary. Teamwork is generated in the company in a manner such that the service team in the organization effectively integrates with the administrative team of the company to contribute in the fulfilment of the organizational and production objectives (Chorley, Miller, and Jacob, 2008). This reflects the growth of collectivist principles in the organization. Volkswagen also focuses on encouraging the inclusion and growth of expatriate staffs in the organization through the generation of promotional opportunities that would help the people gain an increase in the compensation scales to suit their needs in the foreign country. This reflects that the human resource system encourages the adaptability of the expatriate population in the foreign country where it has set up its branches (Suri and Chhabra, 2009). Existence of centralised decision making activities is also observed related to the operations of Volkswagen. Operating on a centralised decision making environment requires the people operating in the different subsidiary units like Volkswagen China to abide by the decisions taken by the centralised management (Cremer, 2014). The human resources management activities in Volkswagen aim in enhancing the performance competencies of the individual employees through designing of adequate training programs. Further, the performance potentials of the people are evaluated and appraised based on the use of effective performance appraisal activities based on set standards. Rewards and promotional programs are linked with the performance appraisal activities such that the same contributes in motivating the employees to generate greater productivity (Volkswagen , 2014). Employee Relations (ER) is managed in Volkswagen through the involvement of trade union bodies that help in generating effective bargaining with the management in terms of generating effective compensation schemes and also in issues relating to job hours. Involvement of trade unions in deciding on the betterment of the employees is being gradually adapted in the Chinese subsidiary of Volkswagen. Company management of Volkswagen aims to incorporate the activities of the Works Council and also the views of Trade Unions to gain a sustained business in the region (Craig, n.d. ). The Volkswagen units around the globe operate based on the involvement of works councils opted by the employees which reduces the dependency on trade unions (Finkin and Kochan, 2014). ER and HRM issues faced by Companies Toyota Faulty human resources practices conducted by the management of Toyota are observed to generate significant impacts on the organizational performance of the automobile company. The company management is criticized for its increased emphasis on the scheme relating to generation of rewards that in turn shielded the errors that were conducted by the employee (Feng, n.d. ). Similarly, the recruitment process of Toyota also comes under criticism such that it failed to hire competent staffs that would contribute in accomplishing stated tasks in a productive fashion. The performance appraisal program of Toyota also suffers from potential criticism in that the program failed to identify the errors related to the performances of the employees based on set standards. Employee retention programs carried out at Toyota is observed to effectively retain the right quality of staffs that would act as whistleblowers to help in generating needed awareness in the emergence of potential issues. Further, the growth of employee turnovers and a mismanaged corporate culture were also identified to be significant HRM issues that affected the company (Sullivan, 2010). In the course of its operation through its Chinese subsidiaries, Toyota is observed to gain potential challenges relating to the demand placed by the trade unions for development in the health and safety practices in the workplace (Cole, 2011). Development of the safety and health conditions at the workplace is taken to help in the enhancement of employer-employee relations in its Chinese subsidiary. Volkswagen Volkswagen operating through its subsidiary unit located in China accounts for countering major challenges relating to the finding of adequate skilled labour to meet the production and operational objectives. Lack of effective manpower requires the automobile companies to invest in large amounts to help in training the staffs to meet the technical and administrative needs of the organization (Kronos Inc. , 2011). The increase in human resources cost also relate to the demand of the expatriates and the local population for higher salary and also the need to enhance the health and safety standards in the workplaces (Bimmer, 2014). Moreover, the expatriate population operating in the Volkswagen Group factories and organizational establishments also reflect an increased demand for better living, schooling and medical standards. This requires Volkswagen to invest in large amounts to meet the rising needs of the staffs operating in its Chinese subsidiary (International HR Adviser, n.d.). Volkswagen’s subsidiary based in China is observed to counter potential challenges relating to the demand placed by the Trade Unions operating for the automobile manufacturing sector. The demand placed by the trade unions regarding improvement in the salary and working conditions required Volkswagen to increase its manpower cost in meeting the demands placed relating to salary, health, safety, living and health conditions of the employees (International HR Adviser, n.d.). Volkswagen to sustain its market in China is observed to focus on generating CSR objectives and thereby working in meeting them through enhancement of working, social and environmental conditions (Bertelsmann Stiftung, 2012). Countering the ER and HRM issues Toyota The emergence of issues related to the HRM policies requires Toyota to effectively redesign its human resource practices to help in meeting the operational and customer servicing objectives. The organization is required to develop effective recruitment and hiring strategies that would contribute in the planning of the number and the competencies of the personnel to be allocated related to the different posts (Liker and Hoseus 2008). Planning and generation of rewards are required to be made by linking the same with the performances generated. This would help in justifying the amount generated in the form of rewards. Similarly, the retention strategies of the organization is required to be undertaken based on the activities of recognition of performances of individuals and thereby, focusing on the generation of rewards and promotions. Effectiveness of the training and development activities is gained through linking the same with the job or task roles related to the different segments and departments. Finally, the feedback of the performance appraisal programs is needed to be generated with due transparency by the higher level management to the employees assessed. This would contribute in growth of trust of the staffs on the management. The Corporate Culture of Toyota focuses on generating equal growth and development opportunity for the employees such that it aims to generate greater productivity through generation of employee satisfaction. Related to HRM practices the company in addition to working in generating health and safety measures also aims in incorporating and developing a diverse workforce to help in generating greater productivity (Toyota Motor Corporation, 2014). Relating to Employee Relations, the management of Toyota is required to effectively incorporate the influence of the labour unions in creating cohesion with the employees. The above issue would contribute in protecting the interests of the staffs working in the different levels and departments and thus, helps in enhancing the loyalty dimension of the employees. Clarification of the roles of labour and management would contribute in further enhancing the relationship between the two units. Volkswagen Relating to HRM, Volkswagen’s subsidiary is required to focus on recruiting and selecting employees with the right type of skill sets to satisfy the organizational objectives. Apart from skills, the selection process also needs the evaluation of the employee based on aptitudes and experiences in performing the task. The subsidiary unit of Volkswagen to help generate employee satisfaction is required to focus on the incorporation of training and job rotation activities in the organization. This would also help in enhancing the confidence of the people to perform in a productive fashion. Volkswagen’s subsidiary is also required to focus on staff motivation through the generation of both financial and non-financial incentives in the form of bonus, incentives and job recognition and promotional activities respectively. Conducting of performance appraisal activities need to be made and feedbacks generated focusing on the needs of the Chinese population (Jackson, 2002). The corporate culture of Volkswagen aims in enhancing the competency and expertise levels of the staffs through development of training and development activities. It also aims in encouraging the staffs to generate greater productivity in a committed fashion through generation of activities related to employee participation and staff involvement (Volkswagen , 2014). The Human Resources activities relating to Volkswagen China reflect that the company increasingly focuses on provision of training to the Chinese employees to help them enhance their skills and expertise in generating greater productivity. Further through training activities the management at Volkswagen China helps the local Chinese staffs to rightly adapt to the company’s culture and ethos thereby generating greater commitment and loyalty (Volkswagen, 2009). Effects of ER and HRM issues on Business Operations The lack of focus of the automobile companies like Volkswagen and Toyota in recruiting and selecting an effective skill base of workers and also failure to meet the health, safety and compensation standards as demanded by the workers and the trade unions is observed to significantly affect its business operations. Failure to meet the demands of the workers is observed to generate an event of potential disruption like strikes and lockouts in the workplace. These events fuelled by the activities of the trade unions thus, significantly affected the manufacturing and business operations of the companies in the region. Conclusion The analysis of the different HRM and Employee Relation issues faced by Toyota and Volkswagen in terms of its operation based in China and the needed changes to be brought in to help adapt to the local culture generates some salient inferences. The automobile companies to effectively conduct its business in China are required to pay heed to the needs of the Chinese population on issues concerning health and safety and also the development of their living and compensation standards. Further, the need for the inclusion of training and performance appraisal activities need to be conducted by the automobile companies through providing greater significance on the human factor. The automobile companies are also required to encourage the people to work in a team based and cooperative work culture while potentially following the decisions generated by the head quarters of the company. Implementation of the above issues is taken to help the automobile companies to rightly adapt to the Chinese culture which in turn would help them to work in a productive fashion. Reference List Aoki, K., Delbridge, R. & Endo, T. (2011). Continuity and Change in Japan’s Automotive Industry. Retrieved from http://iveybusinessjournal.com/topics/global-business/continuity-and-change-in-japans-automotive-industry#.VCVtFVc0_w4 Bertelsmann Stiftung. (2012). China. Retrieved from http://www.csr-weltweit.de/en/laenderprofile/profil/china/drucken.nc.html Bimmer, F. (2014). VW braces for market challenges as post 2013 record sales. Retrieved from http://www.reuters.com/article/2014/01/11/us-vw-sales-idUSBREA0A07820140111 Chorley, S., Miller, K. G., & Jacob, L. (2008). FCS New Venture Creation Level 3. South Africa: Pearson South Africa. Cole, R. E. (2011). What Really Happened to Toyota? Retrieved from http://sloanreview.mit.edu/article/what-really-happened-to-toyota/ Craig, B. (n.d.). Anti-union politics unites Chinese communists and Tennessee Republicans. Retrieved from http://www.ky.aflcio.org/wkvaflcio/index.cfm?action=article&articleID=a0788b8b-148d-482d-8ceb-0e497c6c3042 Cremer, A. (2014). New manufacturing platform headaches add to VW cost worries. Retrieved from http://www.reuters.com/article/2014/07/29/vw-costs-idUSL6N0Q04NG20140729 Feng, Y. (n.d. ). Toyota Crisis: Management Ignorance? Retrieved from http://www.diva-portal.org/smash/get/diva2:349746/FULLTEXT02 Fu, Y. & Kamenou, N. (2011). The impact of Chinese cultural values on human resource policies and practices within transnational corporations in China. The International Journal of Human Resource Management, 22 (16), 327-3289. Fu, Y. & Kamenou, N. (2011). The impact of Chinese cultural values on human resource policies and practices within transnational corporations in China. The International Journal of Human Resource Management, 22(16), 3270-3289 International HR Adviser. (n.d.). China Challenges for HR - Investing In 3rd And Even 4th Tier Cities. Retrieved from http://www.internationalhradviser.co.uk/storage/downloads/Investing%20in%20China.pdf Jackson, T. (2002). International HRM: A Cross-Cultural Approach. United Kingdom: SAGE. K., S. R. & Chhabra, T. N. (2009). Managing Human Resource: Techniques and Practices. United States: Pentagon Press. Kronos Inc. (2011). FAW-Volkswagen Controls Labor Costs and Increases Productivity by 15% Using Kronos for Manufacturing Solution. Kronos Inc : United States . Lander, E. & Liker, J. K. (2007). The Toyota Production System and art: making highly customized and creative products the Toyota way. International Journal of Production Research, 45(16), 3681-3698. Liker, J. & Hoseus, M. (2008). Toyota culture: The heart and soul of the Toyota way. New York: McGraw Hill Professional Liker, J. K. & Meier, D. (2005). The Toyota Way Fieldbook. New York: Tata McGraw-Hill Education. Liker, J. K., & Hoseus, M. (2008). Toyota Culture. New York: Tata McGraw-Hill Education. Marksberry, P. (2012). Investigating The Way” for Toyota suppliers: A quantitative outlook on Toyotas replicating efforts for supplier development. Benchmarking: An International Journal, 19(2), 277-298. Marksberry, P. (2012). The Modern Theory of the Toyota Production System: A Systems Inquiry of the World’s Most Emulated and Profitable Management System. United States : CRC Press. McBride, D. (n.d.). The Toyota culture of continuous improvement. Retrieved from http://www.reliableplant.com/Read/10817/toyota-continuous-improvement Monden, Y. (2011). Toyota production system: an integrated approach to just-in-time. New York: CRC Press Promprasi, S. & Jumreorn, N. (2009). Business coordination across borders within Toyota: A case study focusing the coordination between Japan and Thailand. Retrieved from http://mdh.diva-portal.org/smash/get/diva2:224180/FULLTEXT01.pdf Sullivan, J. (2010). A Think Piece: How HR Caused Toyota to Crash. Retrieved from http://www.ere.net/2010/02/15/a-think-piece-how-hr-caused-toyota-to-crash/ Toyota Motor Corporation. (2014). Company. Retrieved from http://www.toyota-global.com/company/ Toyota Motor Corporation. (2014). Relations with Employees. Retrieved from http://www.toyota-global.com/sustainability/csr_initiatives/stakeholders/employees/ Toyota Motor Corporation. (2014). Relations with Employees. Retrieved from http://www.toyota-global.com/sustainability/csr_initiatives/stakeholders/employees/ Toyota Motor Corporation. (2014a). Company Profile. Retrieved from http://www.toyota-global.com/company/profile/index.html Toyota Motor Corporation. (2014b). Environment. Retrieved from http://www.toyota.com/usa/environment/index.html Volkswagen . (2013). The Group. Retrieved from http://www.volkswagenag.com/content/vwcorp/content/en/the_group.html Volkswagen . (2014). Top-quality work with a top-class team. Retrieved from http://www.volkswagen-karriere.de/en/what_we_stand_for/personnel_policy/personnel_development.html Volkswagen. (2009). Human resources management. Retrieved from http://www.vgc.com.cn/cds/?menu_uid=565 Volkswagen. (2014a). The Group. Retrieved from http://www.volkswagenag.com/content/vwcorp/content/en/the_group.html Volkswagen. (2014b). Human Resources. Retrieved from http://www.volkswagenag.com/content/vwcorp/content/en/human_resources.html Zhu, Y., Warner, M. & Feng, T. (2011). Employment relations with Chinese characteristics: The role of trade unions in China. International Labour Review, 150(1/2), 127-143. Read More