Strategic Human Resource Management at Foxconn Technology Group - Example

Strategic HRM Table of Contents Introduction 3 2. Problem (Issue) ment 3 3. Data Analysis 4 3.2 Identification of the Stakeholders Affected by the Issues 5 3.3 Constraints and Opportunities Implicit to the Situation 6 3.4 Portrayal of the Numbers 6 4. Key Decision Criteria 6 5. Suggested Alternatives 7 6. Alternatives Analysis 8 7. Recommendations 9 8. Action and Implementation Plan 11 9. Conclusion 12 10. References 13 1. Introduction The notion of ‘Strategic Human Resource Management’ (SHRM) is fundamentally regarded as the planning procedure of an organization towards managing human resources in a suitable and beneficial manner. This particular concept is developed based on three main principles. The first principle states that human capital in an organization is a major foundation of gaining superior competitive position. The second principle signifies that it is the work force of an organization that actually frames and implements effective strategic planning in practical scenario or in crucial conditions. Finally, the third principle reflects that a systematic approach must be developed by an organization for defining its objectives and how these objectives can be attained (Smit &Trigeorgis 2004). With this concern, the report intends to analyze the case study provided, which is related to one renowned companies operating in the Electronics Manufacturing Services (EMS) industry i.e. Foxconn Technology Group. Various significant aspects like elaborating the problem (issue) statement, conducting data analysis, determining the key decision criteria, suggesting relevant alternatives, performing alterative analysis, providing recommendations and designing an effective action along with implementation plan with regard to the case study provided will be discussed in the report. 2. Problem (Issue) Statement In relation to the case study provided, it can be ascertained that Foxconn was established in the year 1974 and holds the vision to become a worldwide leader specifically in the EMS industry as compared to others operating in the similar field. However, as depicted in the provided case study, the company faced certain issues or problems that eventually hindered the company to accomplish the above stated objective. In this regard, one of such problems can be ascertained as the adverse labor practices prevailed in China. It can be apparently observed that the labor practices in China were poorly enforced as well as regulated, which eventually affected the performance of Foxconn’s Longhua plant. Apart from this, the other issue or problem faced by the company while performing its varied operational functions is the increasing number of suicides of the personnel in diverse plants of the company. In accordance with the provided case study, it can be apparently observed that numerous social issues were raised in opposition to the company due to the appointment of low-skilled migrant workers. This particular discrimination was conducted particularly against the migrant workers who eventually affected the performance of the company by a considerable extent (Eccles et al. 2013). 3. Data Analysis 3.1 Reasons for the Emergence of the Issues Based on the provided case study, it can be apparently observed that Foxconn operates its business with low pricing schemes. This low pricing approach of the company acts as its main differentiating factor and competitive advantage. The core issue identified from the case study circulates around the rising dissatisfaction of the employees working within the company. It can be identified from the case study that the labor conditions that prevailed in China were extremely poor. Apart from these, the working conditions in the factories of Foxconn were observed to be extremely adverse. In order to determine the reasons for which the issues have been augmented at large resulting in deteriorating the overall performance of the company, the aspects like treating employees in an unethical manner and work pressure to be tremendously high were crucial. Apart from these, extended working hours as compared to the average working hours, which was in excess of 14 hours daily and the absence of delivering basic necessities as well as facilities to the workers were also deemed to be quite noteworthy (Eccles et al. 2013). With regard to the case study provided, it has been quite evident that most of the labors belonging to Foxconn include the people who are migrators in China, especially in Shenzhen. Terry Gou, the founder of Foxconn is known for conducting his autocratic and overly strict leadership practices. In each of the factories located in varied regions of China, the leader established strict work measures focusing on giving more priority to the benefits of the company rather than considering the personal benefits of the workers. In this process, Gou established stringent work guidelines that were known to affect human physiological systems in long term. Thus, it can be affirmed that Foxconn faced the above stated issues due to the strict leadership practices performed by the business leader, which can be related to the theoretical framework of people. In terms of resources, it will be vital to mention that effective utilization of the same in the form of delivering low wages to the workers eventually caused the above identified problems for Foxconn (Eccles et al. 2013). 3.2 Identification of the Stakeholders Affected by the Issues From the above discussion, it has been quite evident that there exists certain potential reasons with respect to the factors like ‘resources’, ‘processes’ and ‘people’ for which Foxconn had faced several issues while performing its varied business and operational functions. In this particular scenario, it is quite obvious that the relevant stakeholders of the company including the potential investors, employees and most vitally the customers will be mainly affected (Eccles et al. 2013). 3.3 Constraints and Opportunities Implicit to the Situation According to the provided case study, it can be affirmed from a broader understanding that ineffective utilization of the available resources and the prevailing labor conditions can be ascertained as the major constraints that are implicit to the situation. However, the need for managing the human resources and most vitally addressing the critical situations in the form of making effective decisions may provide maximum opportunities to the company in terms of developing its overall performance in the respective industry wherein it operates (Eccles et al. 2013). 3.4 Portrayal of the Numbers It has been mentioned above that the issue concerning the prevalence of exhaustive and unpleasant working conditions in diverse plants of Foxconn located in distinct regions of China had certainly made the workers to commit suicide at the plants of the company. In terms of numbers, the provided case study revealed that prior to the year 2010; two of the workers were identified to commit suicide at Foxconn’s plants in the year 2007 and 2009 respectively due to the persistence of brutal working conditions (Eccles et al. 2013). 4. Key Decision Criteria Based on the provided case study, it can be ascertained that the mistreatment of workers in the form of delivering them with stringent working conditions, which eventually led the personnel of the company to commit suicide, was the major issue faced by Foxconn while conducting different operational functions in China. In this particular situation, the alterative, which can be assumed as the best to resolve the above stated issue or problem, was the availability of proper working conditions to the workers. It is worth mentioning that the deliverance of proper working conditions can be duly measured in the form of providing fair wages to the personnel and designing the working conditions as per the market scenario among others. Based on this particular alternative selected, the key decision criteria for the company will be based on certain imperative factors. These factors will eventually comprise improving profitability in terms of raising product sales as well as market share, maintaining greater customer satisfaction level, remaining much consistent with the corporate mission along with mission and lessening adverse operational impacts on the environment. Apart from the alternative of availing suitable working conditions for the workers, the company can concentrate fixing its product price in accordance with customers’ requirements. It is anticipated that this particular initiative will not only address the issue of mistreating employees, but will also aid in raising customer satisfaction level at large (Eccles et al. 2013). 5. Suggested Alternatives In relation to suggest varied alternatives for resolving the problems faced by Foxconn, it is to be affirmed that human resources are undoubtedly regarded as the most critical and valuable asset for any organization to widen its overall performance. Thus, managing the human resources with adhering to their respective requirements will certainly aid Foxconn to mitigate the problem or the issue concerning labor practices and employees’ agitation along with their commitment towards suicide. In order to make this alternative result-oriented, Foxconn must pay utmost attention on embracing soft as well as hard strategic HRM policies. Conceptually, the notion of soft strategic HRM refers to the HRM practices that emphasize developing management and labor relations. This mainly includes the factors like communication development, physiological as well as physical advancement of the employees, job satisfaction and motivation of employees among others (Fish et al. 2003). On the other hand, hard strategic HRM policies emphasize deriving results that can be attained by managing human resources and aligning organizational targets with the interests of the employees (Kazmi & Ahmad 2001). Similar to every organization, Foxconn also operates with the aim of making substantial profit. As such, the main goals of the company lay in raising its profit margin and attaining superior competitive position as compared to others. In addition, Foxconn must also consider the human aspect of management, which is incorporated within the conception of soft strategic HRM policies. It is worth mentioning that investing in human aspect would certainly help the company to align the interests of the people with the organizational targets more effectively, resulting in accomplishing the desired results more easily. It can be apparently observed from the case study that Foxconn has focused extensively on strategic HRM concept, which was in line with the interests of its business. However, in this process, the company has left behind the requirements of human resources. This certainly resulted in the development of agitated and unsettled working conditions within the company at large. This can be solved by taking suitable steps to ensure that the interests and the benefits of the labors are duly considered by the management team of Foxconn with utmost significance (Eccles et al. 2013). 6. Alternatives Analysis Alternatives Pros Cons Implications Management of human resources Improve performance Emergence of complex situations Increased level of market share Better fixing of working conditions Satisfied employees Deteriorated operational performance Retaining existing and potential employees Availability of wide resources in workplace Improved profitability Increased level of operational costs Minimum environmental impact 7. Recommendations Based on the provided case study, it can be affirmed that Foxconn is in such a situation, wherein it needs to improve the satisfaction and the motivation level of the employees without raising the operational costs. This would be possible in case Foxconn is engaged in making deliberate efforts towards developing labor relations by managing the work environment efficiently (Bratton 2012). Creating value for the employees would make it possible for Foxconn to create a satisfied group of labors without increasing the labor wages directly. The Storey’s typology model of HRM can be implemented in this case (Boselie 2010). Fig.1: Storeys HR role model Source: (Boselie 2010) According to the above stated model, the HR managers can assume four major roles that entail advisors, handmaidens, regulators and change-makers. The company i.e. Foxconn currently had the managers who are found to be of regulators type. They usually focus on formulation and observance of employee rules. In the present situation, the HR managers have to assume the role of change-makers who would enhance employee-management relationship according to the changing needs of the business and advisors who would perform the role of consultants in the internal organizational environment. The role of handmaidens, which focuses on developing customer relationships, is not applicable in this scenario (Boselie 2010) High performance management can be duly considered as a best-fit solution for addressing the issues faced by Foxconn as per the case study provided (Hartog & Verburg 2004). In this respect, the company implementing high performance management would be facilitated in building a highly motivated, satisfied and participative workforce. In this approach, work satisfaction based on non-monetary schemes will be focused. This may include the introduction of suitable training and development processes, performance appraisal systems along with functional grievance redressed procedures and proper compensation along with promotional approach (Peng 2006). Foxconn can start with redesigning the job requirements and roles. The current operational system of the company requires every labor to work with high responsible, work pressure and intensive workload. Moreover, the company must focus on reducing the workload on each employee, so that the employees do not face psychological and physical challenged due to extensive work pressures (Warner 2004). Most vitally, the company should focus on improving the communication system of the labors specifically with the line managers and supervisors. It has been reported that almost 6 of the 14 suicide incidents of the labors at plants of Foxconn were caused because of extreme work pressure and stress. Therefore, Foxconn should take measures to reduce the workload of the labors. This can be done by employing more number of labors and redesigning the operational processes as well as the job roles. Foxconn has to find the best fitting human resource strategies that would be in alignment with its business and corporate strategies, which would certainly help the company to maintain its competitive advantage in the respective diverse markets. In the background of suicidal incidents and the reactions of public along with media towards the company, Foxconn should immediately take suitable measures to offset its negative publicity (Wang 2005). Foxconn has already been forced to increase the labor wages due to the pressure from the external environment including pressure from the media, public as well as its client company i.e. Apple Inc. Thus, the company should also try to find out other strategic ways to ensure that the human resource practices are improved to build motivation and satisfaction amid the employees. Specially mentioning, if the company is able to create better working conditions and guidelines for the workers in its factories, this would enable it to establish a satisfied labor base without the need of increasing wages further. Therefore, the company needs to focus on alternative strategic HRM concepts like improvement of labor relations, development of supportive leadership and creation of positive patterns in worker relationships to control its raising operational costs (Armstrong 2006). 8. Action and Implementation Plan 9. Conclusion From the above analysis, it can be concluded that an immediate improvement in the work conditions of the factories of Foxconn is extremely necessary. The stock prices of Foxconn have fallen after high degree of negative publicity caused by the suicidal incidents of the workers. In addition, Foxconn has been severely criticized for conducting sweatshop practices that were duly considered completely unethical in the modern business domain. To create an ethical image and to re-establish its image in the industry, Foxconn has to focus on improving multiple aspects of its HRM field. Therefore, it is advisable for Foxconn to ensure maintaining a low operational cost. The maintenance of controlled operation expenses would not only help the company to keep low prices of its products, but would also help in building a better ethical image for the company as well as create greater value to its customers along with employees. 10. References Armstrong, M. 2006. Strategic human resource management: a guide to action, Kogan Page, London. Boselie, P. 2010. Strategic human resource management: a balanced approach, McGraw Hill, New Jersey. Bratton, J. 2012. Human resource management: theory and practice, Palgrave Macmillan, London. Eccles, R. G., Serafeim, G. & Cheng, B. 2013. ‘Foxconn Technology Group (A)’, Harvard Business School, pp. 1-21. Fish, C., Schoenfeldt, L. & Shaw, J. 2003. Human Resource Management, 5th edn, Houghton Mifflin, Boston. Hartog, D. N. D. & Verburg, R. M. 2004. ‘High performance work systems, organizational culture and firm effectiveness’, Human Resource Management, vol. 14, no. 1, pp. 55-78. Kazmi, A. & Ahmad, F. 2001. ‘Differing approaches to strategic human resource management’, Journal of Management Research, vol. 1, no. 3, pp.133-140. Peng, M. W. 2006. Business strategies in transition economies, Sage, Newbury. Smit, H. T. J. & Trigeorgis, L. 2004. Strategic investment: real options and games, Princeton University Press, New Jersey. Wang, J. Q. 2005. ‘Six major trends in human resource management in China’, Enterprises Research Journal, vol. 20, no. 1, pp. 22–23. Warner, M. 2004. ‘Human resource management in China revisited: Introduction’, International Journal of Human Resource Management, vol. 15, pp. 617–634. Read More