Human Resource Practices of Fortune 500 Companies - Example

Human Resource Practices of Fortune 500 Companies Human Resource Practices of Fortune 500 Companies Introduction Human Resource Management (HRM) is a practice that involves hiring, firing, paying, motivating, training, and managing relations between employees and employers. It is impossible to find an organization that does not have a human resource function because this role is fundamental in achieving high performance (Tyson, 2012). Fortune 500 companies have the best human resource management practices that help them in fulfilling the requirements of being ranked in the list. These are companies whose performance is said to be the best in every financial year in terms of revenues, profits, customer loyalty and retention, and efficiency (Mondy R., & Mondy, M., 2014). The HRM practices of these organizations involve recruitment, hiring, training, employee relations, performance management, and compensation. It is essential to analyze the strategies that Fortune 500 Companies use in HRM to help in providing recommendations to a developing organization that is aiming at increasing the efficiency of this function. Recruitment Fortune 500 companies like Deloitte, KPMG, and Price Water Coopers (PWC) conduct recruitments in colleges and universities (Luefschuetz, 2010). These organizations use this strategy because they believe that it enables them to hire the best employees in the countries where they operate. These organizations also use this technique because they believe that the best employees are those whose performance is outstanding in school. These companies also find employees who are fresh from college because they are the best to nurture in the job market. This is because these workers do not have prior experience of the job market (Lussier, & Hendon, 2013). Numerous of the Fortune 500 companies also use multiple interviews as a strategy of helping them to recruit the best employees in the world. Organizations that use this technique include Apple, Google, Ford Motor, General Electric, and PWC (Louler, Boudreau, & University of Southern California, 2012). Multiple interviews enable the organizations to test the knowledge of prospective employees in all fields of life. The questions aim at testing the skills of the workers and their level of critical thinking at work and away from work. The organizations choose the candidates who perform extra ordinarily in all the interviews that they undergo; because this indicates that they interviewees are smart in all activities that they undertake. Some of the above companies such as Google and General Electric outsource the recruitment process to external recruitment agencies. This means that external recruiters perform advertising, interviewing, and hiring on behalf of these organizations (Zweigenhaft, & Domhoff, 2011). Benefits of the Recruitment Strategies The three strategies above enable companies that use them to get the finest employees in the job market (Luefschuetz, 2010). For example, recruitment of students from colleges and universities enable the organizations to choose candidates who get first class grades in schools. The undertaking of multiple interviews on prospective workers also enables the companies to hire workers who are knowledgeable in all aspects of life. These practices also help the organizations to save on future cost of hiring workers (Tyson, 2012). This is because the companies hire the best employees with the finest skills and qualifications that are available in the market. The outsourcing of recruitment activities to external recruitment agencies enables companies to save time. This helps these firms to concentrate on product development, advertising, marketing, and customer care. These activities help in increasing direct sales and profits in the companies (Tyson, 2012). Disadvantages of the Recruitment Techniques The major disadvantage of the above recruitment strategies is that they are expensive (Luefschuetz, 2010). For example, companies have to pay high cost of outsourcing to external recruitment agencies. Multiple interviews, on the other hand, mean the organizations have to acquire tools such as tests, interviewers, and locations from where to conduct interviews. The organization should acquire the above recruitment practices because they have numerous long term benefits despite their high cost, which is short term. Training and Development Fortune 500 companies such as Apple, Wal-Mart, and Starbucks offer workers with on the job training. This involves teaching employees how to undertake their jobs in the most efficient manner every day when they are at work. The organizations do this by giving workers assignments, rotating them on different roles so that they may learn to undertake all functions at the workplace, and promoting them to higher job ranks (Mondy, R., & Mondy, B., 2014). These companies also organize workers into groups and give them tasks that enable them to learn how to work in teams. First class companies such as Deloitte, PWC, and Coca-Cola also use off-the-job training programs such as seminars, workshops, and conferences to coach employees. These techniques are conducted outside the workplace meaning that workers have to take a day off to attend the programs. Off-the-job training programs enable Fortune Companies to use technologies such as power point, case studies, and demonstrations to train employees (Zweigenhaft, & Domhoff, 2011). These technologies are efficient because they enable employees to understand their functions better than they used to do before being coached. The best ranked companies such as Toyota, Apple, and IBM conduct training needs assessments on workers before planning training programs (Lee, 2011). This technique enables these firms to equip workers with the skills that they lack during training to avoid wasting time and resources by coaching workers to acquire skills that they already have. After trainings, the organizations measure the performance of employees after training and compare it with previous performances (Lee, 2011). This helps to inform the companies whether the training achieved its goals and the improvements that need to be done on the coaching programs. Benefits of Training and Development Techniques Off-the-job training equips workers with theoretical knowledge of skills that enable them to be efficient at the workplace. On-the-job training, on the other hand, enables workers to use the skills that they acquired during seminars and workshops at the workplace (Lussier, & Hendon, 2013). Training programs also enable the organizations to nurture workers and motivate them so that they may increase efficiency in production. This reduces the cost of production and it increases profit. The needs assessment and performance measurement after training enable organizations to save time, resources, and cost (Lee, 2011). Limitations of Training and Development Training and development programs are expensive to plan and execute because they require the use of technology, efficient trainers, and they consume time that would be used for production (Lussier, & Hendon, 2013). I would recommend the above training and development programs to the organization because they help in increasing efficiency organizations. Training and development also helps workers to broaden their thinking and become creative at performing their jobs. This increases profits and it reduces cost in the long-run despite of the high cost of planning and implementing the programs. Labor Relations Fortune 500 companies such as Wal-Mart use contracts as a technique of managing their workers (Lee, 2011). The organization employs workers on a contract basis at agreed hourly rates for a period such as one to two years. The organization then honors the terms of the contract by fulfilling all the promises made to workers, for example, paying them a certain minimum wage. The company also signs employments contracts with workers who are hired on a permanent basis. Organizations that are in the Fortune 500 list hire arbitrators to help them solve conflicts with workers. Arbitrators are private lawyers who solve conflicts away from court rooms. The arbitrators help the organizations to unite with their employees on common goals and it reduces the high cost of solving conflicts in courts (Lawler, Boudreau, & University of Southern California, 2012). Examples of companies that use arbitration services include Wal-Mart, Tesco, Johnson and Johnson, and Costco. Other first class corporations such as Google, Apple, Starbucks, and Procter and Gamble involve employees in the decision making process. These organizations ask workers to suggest techniques that they believe may help them in carrying out their functions more efficiently than before. Workers are also allowed to comment on the leadership styles of their superiors; this enables the companies in implementing management and leadership techniques such as participative leadership that motivate employees (Tyson, 2012). Employees also help the firms in developing efficient problem-solving techniques. Organizations also provide workers with safe working tools and environments that ensure effective execution of duties. Examples of these organizations include Apple that offers spacious workspaces, General Motors and PWC that provide working tools such as production machines, helmets, and computers, and McDonalds that provides workplace uniform (Mondy, R., & Mondy, B., 2014). Benefits of Labor Relations The involvement of employees in decision making helps to develop efficient techniques of production and solving problems. This also reduces conflicts between employees and the management, which in turn saves time (Lee, 2011). The provision of working tools and save environments enables these organizations to gain loyalty of workers and reduce employee turnover. Limitations of the Techniques The major limitations of these techniques include slow decision making, high cost of arbitration services and safe working environments. I would recommend the organization to adopt techniques such as signing contracts with workers and involving them in the decision making process. These strategies may help the company in becoming creative and ensuring that workers agree to the terms of service before accepting to be employed. Performance Management Fortune 500 companies use various techniques of performance management that include performance objectives, development plans, reviews, evaluations, and appraisals. Lee (2011) argues that 90% of Fortune 500 companies use 360 Degrees performance evaluation technique; some companies that use this strategy include Toyota, IBM, Nordstrom, and FedEx. In this technique, organizations involve managers, peers, and customers to evaluate every employee in turn. Employees who are evaluated then use the results of the evaluation to formulate personal development plans that help them to become efficient at their jobs. The plans enable the workers to align their goals with those of the organization that they work for to avoid conflicts in objectives (Tyson, 2012). All the Fortune 500 companies also use a strategy of developing performance objectives at the beginning of every financial year. The companies set targets of sales, profits, and budgets that help them in achieving the targeted sales and profits (Zweigenhaft, & Domhoff, 2011). All the organizations then appraise their performance at the end of every financial year to determine if they have achieved their objectives (Luefschuetz, 2010). This involves measuring profits, sales, and expenses and comparing them with the set targets. The companies then conduct meetings where they discuss the comparisons and determine ways of improving and maintaining high standards. During review meetings, the companies also discuss techniques that may help workers in achieving targets for the following year. Advantages of Performance Management Tools Tools such as objectives enable organizations to work towards achieving set targets during the whole year. This helps to prevent wastage of time and over expenditure that may arise when an organization does not have goals. Personal development plans and 360 Degrees evaluation technique enables workers to determine their strengths and weaknesses (Luefschuetz, 2010). This also helps employees to improve on their weaknesses by developing ways of improvement and setting personal targets. Appraisals and review meeting help organizations to remain on track and develop more efficient technique of achieving goals. Limitations of Performance Management Some organizations may set targets that are beyond their ability when setting targets (Tyson, 2012). This leads to the overworking of employees who may then quit their jobs when they are unable to help the companies achieve the over ambitious targets. I would recommend all the above performance management techniques to the organization. The company should first learn how to formulate achievable targets that may not exert excess pressure on the resources of the organization. The targets may be both qualitative and quantitative and they should consider all aspects of a firm. The company should also appraise its performance based on achievements and goals; this will help in motivating workers, saving time and resources, and increasing creativity at the workplace. Compensation and Benefits Incentives The compensation strategies that these organizations use include paying high salaries, bonuses, commissions, equity-based pay and benefits such as pension schemes and insurance (Bonner, 2010). Companies such as Apple, Toyota, General Motors, and KPMG pay their workers high salaries. The companies also pay executives higher salaries than their junior workers to encourage them to lead and manage others effectively. Apple, Wal-Mart, and McDonalds pay their workers salaries when they achieve pre-determined targets such as sales and profit. The companies calculate bonuses to pay workers as a percentage of the achieved results (Lee, 2011). Bonuses motivate the employees to work harder in the following financial year so that they may receive the extra pay. Some organizations such as Apple and Singapore Airlines offer their executives the benefit of being paying by acquiring shares in the organization (Lussier, & Hendon, 2013). Managers, therefore, do not receive cash payments, but rather an increase in ownership of the assets of the company. Equity based payment enables companies to avoid diluting their ownership by selling shares to new shareholders in the capital market. Toyota Motor, Boeing, and Microsoft offer their executives and employees with benefits that include insurance and pension payments. The organizations help their workers in paying insurance such as health to ensure that the employees are always healthy so that they may work hard. Pension payments, on the other hand, offer workers with job security and it achieves employee loyalty in the company (Lussier, & Hendon, 2013). advantages of Compensation and Benefits High salaries, commissions, and bonuses motivate employees and executives to work hard and achieve the overall goals of the companies. These tools also increase the loyalty of workers and they reduce employee turnover (Bonner, 2010). Health insurance and pension scheme benefits offer workers with job security. These benefits also attract highly skilled workers to work for these companies. Limitations of Compensation and Benefits The benefits and compensations offered by Fortune 500 Companies are costly because they increase expenses and reduce profits of the organizations (Bonner, 2010). I would advise the organization to acquire the compensation and benefit plans that match with other aspects of the organization; for example, the company should pay workers salaries that match with their levels of production. The organization should also evaluate benefits such as pension and insurance before offering them to workers. if the benefits of these plans exceed their costs, the organization should adopt them. However, if the benefits of the plans are lower than their costs, the company should avoid them. This will prevent unnecessary expenditures that reduce profits. Conclusion Fortune 500 Companies employ Human Resource Management practices such as recruiting employees from universities and colleges, and conducting multiple interviews on candidates. These strategies help the organizations in hiring the most qualified workers who are in the market. The organizations also train employees on-the-job and off-the-job to equip them with both theoretical and practical knowledge. Other techniques of human resource that the companies use include involving workers in making decisions, signing contracts, setting goals, evaluating achievements by comparing them with goals, and paying high bonuses and salaries. An organization that is aiming to develop its human resource function may use these strategies that are used by Fortune 500 Companies. However, the company should evaluate the benefits and costs of every practice before employing it to avoid using costly techniques that do not produce higher benefits than costs. The board of trustees of the organization should also consider the availability of resources and the size of the company before choosing the strategies to adopt. References Bonner, P. A. (2010). Benefits and compensation glossary. Brookfield: International Foundation of Employee Benefit Plans. Lawler, E. E., Boudreau, J. W., & University of Southern California. (2012). Effective human resource management: A global analysis. Stanford: Stanford Business Books, an imprint of Stanford University Press. Lee, G. (2011). Labor relations. New York: Avalon Books Luefschuetz, G. S. (2010). Selling professional services to the Fortune 500. New York: McGraw-Hill. Lussier, R. N., & Hendon, J. R. (2013). Human resource management: Functions, applications, skill development. Thousand Oaks: SAGE Publications. Mondy, R. W., & Mondy, B. J. (2014). Human resource management. Boston: Pearson. Tyson, S. (2012). Essentials of Human Resource Management. Hoboken: Taylor and Francis. Zweigenhaft, R. L., & Domhoff, G. W. (2011). The new CEOs: Women, African American, Latino and Asian American leaders of Fortune 500 companies. Lanham: Rowman & Littlefield Publishers. Read More