Huntington Ingalls Industries - Human Resources Activities and Organizational Strategies - Case Study Example

Huntington Ingalls Industries Huntington Ingalls Industries Introduction Huntington Ingalls Industries is a relatively new company that has expanded rapidly in the just under four years it has been in operation. This demonstrates a commitment to human resource management and a solidly built reputation centered on integrity that has garnered it quite a few major contracts as a shipbuilder. The company itself is already a member of the Fortune 500 group of international businesses, was founded on March 31,2011, and is a spin-off of the Northrop Grumman group. The latter is its former company, founded in 2008 as the Northrop Grumman Shipbuilding company. Type of Organization Huntington Ingalls Industries is a shipbuilding company that has it roots as the Nortrop Grumman Shipbuilding company based out of Virginia. The company itself was the result of a merger between to sections of the shipbuilding division of a larger company. Those divisions were Northrop Grumman Ship Systems and Northrop Grumman Newport News. The new company that was formed was named after the two founders, Collis Huntington of Newport News and Robert Ingalls of Pascagoula. The organization is built from the top down, with Mike Petters being the president and CEO of the company, having retained that titled in the transition from Northrop Grumman Shipbuilding. Scope of the Work Performed At the current time, Huntington Ingalls Industries is the only designer, builder, and company responsible for refueling all of the nuclear power aircraft carriers in operation as part of the United States defense force. In addition, it is estimated that nearly 70 percent of the current and active fleet of the United States navy has been built by one of the units of Huntington Ingalls Industries. Size, Revenue, and Number of Employees Huntington Ingalls Industries is currently the largest military shipbuilding company in the United States of America. Its various divisions are also providers of manufacturing, engineering, and management type services to non only commercial and noncommercial oil interests around the world, but also to the gas and energy markets. Through its more than a century of operation as Newport News, and more recently as Huntington Ingalls Industries based in Virginia and Mississippi, the organization has worked to build more ships in various types of ship classes than any other shipbuilder ever contracted by the United States Navy. While the headquarters of Huntington Ingalls Industries is based in Newport News, Virginia, the company employs roughly 38,000 people in its various divisions, operating both domestically and internationally. In its most recent financial report, detailing results from the third quarter of 2014, Huntington Ingalls Industries reported revenues of roughly $1.72 billion for the quarter. Its segmented operating margin for the quarter was reported at 8.8 percent, while its total operating margin was set at exactly 10 percent. This reflects a nearly 220 bps improvement when compared to the third quarter of 2013. The diluted earning per share were reported at $1.96 for the quarter, and cash and cash equivalents at the end of the quarter were set at $769 million. It was also reported in the recent financial report that the segmented operating income for the third quarter amounted to $151 million, which is rather favorable compared to a total of $142 million during the same period in 2013. The total operating income for the third quarter was also reported to be higher at $171 million in 2014, compared to $127 in 2013. The report indicates that the increase in operating income is perceived to be mostly the result of an improvement in overall performance across all divisions at Huntington Ingalls Industries, and the retirement of risk specifically at Ingalls Shipbuilding on the LPD-17 San Antonio. This is a nuclear class carrier and is seen to e a favorable FAS/CAS adjustment, which was partially offset by the net impact, a favorable one at that, that resulted in the prior year as financial recovery was made possible as hurricane insurance kicked in, and the Gulfport Composite Center of Excellence was closed. It is also reported that new contract awards for the third quarter amounted to roughly $0.4 billion, which brought the total backlog of orders by the end of the third quarter 2013 to $22.8 billion. Of that amount, approximately $13.1 billion, or 57.5 percent, was completely funded. The outlook looks bright. Mike Peters, the current president and chief executive officer of Huntington Ingalls Industries, remarked in the report that, “Our healthy backlog continues to support or businesses as we progress toward our goal of achieving 9 plus percent operating margin in 2015”. He went onto remark that, “Despite the challenging budgetary environment, we remain focused on continued program execution, risk retirement and cash generation.” Locations Where Business is Conducted Huntington Ingalls Industries currently has two major divisions, operating in two separate regions of the country. Newport News Shipbuilding is responsible for the building and maintenance of nuclear aircraft carriers, submarines, and their overhaul. This particular division is strategically located in Newport News, Virginia, which is not far from the Norfolk Naval station, which is home base to many of the aircraft carriers in the Navy’s arsenal. The second main division in Ingalls Shipbuilding, and they are responsible for the building and overhaul of surface combatants, amphibs, and the large cutters assigned to the United States Coast Guard. This particular division is located in Pascagoula, Mississippi. In addition to the aforementioned divisions, Huntington Ingalls Industries also consists of multiple subsidiaries, each located in various strategically located positions across America. AMSEC is a main subsidiary that is located in Virginia Beach, Virginia. This group is largely responsible for provide maintenance, modernization, logistics, engineering services, IT support, and training options marketed directly to the United States Navy. The Avondale group is available to provide highly modular and scalable support, at a moments notice, to function as a turn key process in the provision of the energy infrastructure market. They are currently located in New Orleans, Louisiana. Human Resources Activities and Organizational Strategies Huntington Ingalls Industries is involved in a line of work that is highly technical, and where errors cannot be tolerated. Being the sole shipbuilder for the United States Navy is a huge endeavor. It is also the lifeline of the business, and losing that contract would mean the likely demise of the company. As such, human resources plays a tremendous role in the organization of the company, the shaping of the personnel, and how many of the daily business operations are carried out. In order to account for the various cultures and businesses involved in supplying both labor and resources to Huntington Ingalls Industries, it is important to note that human resources involves the effective management of human capital within various economies and legal structures in order to provide stability in terms of organizational management (Naylor, 2012). When properly implement, human resources enables the business to properly utilize resources in an efficient and productive manner that results in solidly built and maintained nuclear class carriers. To illustrate this important point, consider a recent seven year study encompassing the human resources strategies of 100 foreign companies around the globe. It was revealed that solid human resources management practices accounted for the differences in overall productivity and eventual revenue generation. These factors were revealed to be more important than the areas of research and development and technology. For Huntington Ingalls Industries, this principle applies even more fully because each of their various divisions and subdivisions must be seamlessly integrated in order to provide the services and equipment that they have agree to supply the military with. In order to effectively accomplish this is a cross regional setting, however, many obstacles have had to be overcome in the companies short history. There have been issues of workforces values that had to be established amongst all employees, in addition to being able to adapt policies and procedures in a cross cultures and organizational setting. There has also been some turnover in management that had to be dealt with, as well as different management styles that had to be accounted for. All indications are, however, that the company has largely met each of these challenges successfully, partly owed to the retention of upper management from their previous company that they have spun off from. In terms of the activities related to human resources, it should be noted that human resources management largely entails a process of managing all individuals inherent within an organization in a systematic and organized manner (Mathis & Jackson, 2012). To do this effectively, a large organization such as Huntington Ingalls Industries must simultaneously deal effectively with issues related to proper staffing procedures, retention of key employees, and over performance management. Because of the technical nature involved in the building and maintaining of nuclear class aircraft carriers, highly technical and experience personnel must be enlisted. Not only must these individuals be properly compensated and taken care of, but they must receive training unique to this particular company (Cummings & Worly, 2008). To do so is an extreme investment of time and money, so it is of paramount importance that human resources do all that they can to organize their activities in such a manner that key staff feel valued and that they contribute long term to the success of the company. Human resources at Huntington Ingalls Industries is also largely concerned with managing all individuals involved at various levels with the organization from a mostly macro perspective. This involves managing key personnel via a combined link that has established between the workforce and upper management (Mathis & Jackson, 2012). This is made possible due to the strong relationship that Huntington Ingalls Industries has maintained with the management of the previous parent company established in 2008. This continuity of management has enabled the activities and operations of the company to continue under a common vision and direction. It has been documented that personnel management should be approached from the perspective of being centered on the employees within the organization, while still maintaining a balanced approach whereby available resources are allocated appropriately. In order to drive both revenue and productivity, this is a key point that the company certainly seems to have embrace in procuring and maintaining such a large defense contract that is, no doubt, coveted by numerous likeminded organizations worldwide (Cooke, 2010). The activities of the human resources division, in line with its organizational strategies, is focused on more than simply the hiring, rewarding, and disciplining of employees. Human resources at Huntington Ingalls industries, like many similarly positioned organizations, are concerned about creating an organizational structure that is well planned, and has a strong plan for implementing a management process into ensuring the best use possible of human capital is deployed in order to accomplish the key objectives and aims of the company. Within the realm, it is important to focus of several key component of human resources activities and operational strategies. These will be discussed now. Strategic Human Resources Management - This aspect of the process enables the organization to become and maintain its competitiveness through the implementation of effective strategies aimed at managing the human resources of the company. In the case of Huntington Ingalls Industries, this involves constant assessment across all division, in addition to an eye towards emerging technology in the area of nuclear power. In order to accomplish, it has become essential that upper management become deliberate in the planning stages of each activity within the organization, usually by setting forth and identifying several core competency that form the driving force of the organization (Armstrong & Baron, 2013). Equal Opportunity Employment - Particularly throughout its divisions in the United States, Huntington Ingalls Industries is actively involved in ensure that it complies with basis human rights standards related to providing equal opportunity employment for all prospective applicants. This is particular important to any government contractor, such as Hunting Ingalls Industries, as the standards are set even higher than for general private organizations (Barney, 2012). Hiring and Allocating Talent and Skills - This is critical for such an advanced and expertise driven industry such as shipbuilding, particularly in the area of building nuclear class carriers that are designed to run continuously for upwards of 50 years. To do this, the activities of human resources department must be focused on making certain that the proper number of qualified professionals are employed within the various divisions scattered throughout the company. They must also ensure that such employees have skills that are being properly utilized and that they are deployed to the areas of the organization that they are needed the most. The activities of the human resources department at Huntington Ingalls Industries, therefore, is concerned with being strategically aligned with the future needs and objective of the overall organization. It is also concerned with conducting regular assessments related to the current needs of the company related to the requirements that its most valuable assets, the employees, might present (Barney, 2012). Managing and Developing Talent - In the technological world of national defense system, Huntington Ingalls Industries must not only be confer in recruiting suitable talent, but they must be constantly focus on managing and developing that talent to take advantage of new innovations in the field of nuclear power and shipbuilding. One of the main activities associated in this area is that of planning for succession, particularly of key employees, that either retire or move on to other positions in other organizations. This involves constantly being mindful of the future and conducting career planning activities that provide clear organizational pathways for employees to know their role and to analyze their performance management. Huntington Ingalls Industry is constantly engaged in conducting performance assessments in order to ensure that not only are they getting the most out of their employees, but also to determine if their skills are being properly utilized (Becker & Matthews, 2011). Common Body of Knowledge Approaches to Accounting and Legal Issues It is important to note that Huntington Ingalls Industries does adhere to international common body of knowledge approaches to its accounting and legal practices. This is has enabled it to become the largest shipbuilder globally, and to procure the right to be the only company responsible for the Nuclear powered carriers of the United States Navy. It clearly posts its financial results each quarter via a webinar to interested parties, including all stockholders. It is noted that revenues in the third quarter of 2013 at Huntington Ingalls Industries did decrease by roughly 1 percent, or $6 million. This is largely attributed to its lower sales in the area of amphibious assault ships. This loss of business, however, was offset by higher sales in the National Security Cutter program that has recently expanded, in addition more sales of surface combatants and $28 million of a neat unfavorable impact during the previous year due to hurricanes that resulted in quite a bit of damage. All of this reported data is inline with commonly accepted accounting principles, and they reflect a business model that continues to expand by branching into new areas, even as shipbuilding operations are being reduced as a result of a shifting military defense strategy in the United States. In accounting for these commonly accepted principles, Hungtington Ingalls Industries notes that the decrease in revenues realized from amphibious assault ships was due, in part, due the lower volumes of revenue from the LHA-6 USS American and LPD-25 USS Somerset. This was, however, offset somewhat with higher than expected of volumes on the LPD-26 John P. Murth and the LHA-7 Tripoli. This illustrates a diversity in business operations that bodes well for a business predicated on shipbuilding and the maintenance thereof. In its most recent financial report, detailing results from the third quarter of 2014, Huntington Ingalls Industries reported revenues of roughly $1.72 billion for the quarter. Its segmented operating margin for the quarter was reported at 8.8 percent, while its total operating margin was set at exactly 10 percent. This reflects a nearly 220 bps improvement when compared to the third quarter of 2013. The diluted earning per share were reported at $1.96 for the quarter, and cash and cash equivalents at the end of the quarter were set at $769 million. It was also reported in the recent financial report that the segmented operating income for the third quarter amounted to $151 million, which is rather favorable compared to a total of $142 million during the same period in 2013. The total operating income for the third quarter was also reported to be higher at $171 million in 2014, compared to $127 in 2013. The report indicates that the increase in operating income is perceived to be mostly the result of an improvement in overall performance across all divisions at Huntington Ingalls Industries, and the retirement of risk specifically at Ingalls Shipbuilding on the LPD-17 San Antonio. This is a nuclear class carrier and is seen to e a favorable FAS/CAS adjustment, which was partially offset by the net impact, a favorable one at that, that resulted in the prior year as financial recovery was made possible as hurricane insurance kicked in, and the Gulfport Composite Center of Excellence was closed. It is also reported that new contract awards for the third quarter amounted to roughly $0.4 billion, which brought the total backlog of orders by the end of the third quarter 2013 to $22.8 billion. Of that amount, approximately $13.1 billion, or 57.5 percent, was completely funded. The outlook looks bright. Mike Peters, the current president and chief executive officer of Huntington Ingalls Industries, remarked in the report that, “Our healthy backlog continues to support or businesses as we progress toward our goal of achieving 9 plus percent operating margin in 2015”. He went onto remark that, “Despite the challenging budgetary environment, we remain focused on continued program execution, risk retirement and cash generation.” Huntington Ingalls Industries is involved in a line of work that is highly technical, and where errors cannot be tolerated. Being the sole shipbuilder for the United States Navy is a huge endeavor. It is also the lifeline of the business, and losing that contract would mean the likely demise of the company. As such, human resources plays a tremendous role in the organization of the company, the shaping of the personnel, and how many of the daily business operations are carried out. In order to account for the various cultures and businesses involved in supplying both labor and resources to Huntington Ingalls Industries, it is important to note that human resources involves the effective management of human capital within various economies and legal structures in order to provide stability in terms of organizational management (Naylor, 2012). When properly implement, human resources enables the business to properly utilize resources in an efficient and productive manner that results in solidly built and maintained nuclear class carriers. To illustrate this important point, consider a recent seven year study encompassing the human resources strategies of 100 foreign companies around the globe. It was revealed that solid human resources management practices accounted for the differences in overall productivity and eventual revenue generation. These factors were revealed to be more important than the areas of research and development and technology. For Huntington Ingalls Industries, this principle applies even more fully because each of their various divisions and subdivisions must be seamlessly integrated in order to provide the services and equipment that they have agree to supply the military with. In order to effectively accomplish this is a cross regional setting, however, many obstacles have had to be overcome in the companies short history. There have been issues of workforces values that had to be established amongst all employees, in addition to being able to adapt policies and procedures in a cross cultures and organizational setting. There has also been some turnover in management that had to be dealt with, as well as different management styles that had to be accounted for. All indications are, however, that the company has largely met each of these challenges successfully, partly owed to the retention of upper management from their previous company that they have spun off from. In terms of the activities related to human resources, it should be noted that human resources management largely entails a process of managing all individuals inherent within an organization in a systematic and organized manner (Mathis & Jackson, 2012). To do this effectively, a large organization such as Huntington Ingalls Industries must simultaneously deal effectively with issues related to proper staffing procedures, retention of key employees, and over performance management. Because of the technical nature involved in the building and maintaining of nuclear class aircraft carriers, highly technical and experience personnel must be enlisted. Not only must these individuals be properly compensated and taken care of, but they must receive training unique to this particular company (Cummings & Worly, 2008). To do so is an extreme investment of time and money, so it is of paramount importance that human resources do all that they can to organize their activities in such a manner that key staff feel valued and that they contribute long term to the success of the company. Conclusion In summary, it should be noted that, Huntington Ingalls Industries is a relatively new company that has expanded rapidly in the just under four years it has been in operation, it is based on a centuries old business platform that has gained tremendous respect around the globe and, in particular, amongst the military forces of the United States. This demonstrates a commitment to human resource management and a solidly built reputation centered on integrity that has garnered it quite a few major contracts as a shipbuilder. At the current time, Huntington Ingalls Industries is the only designer, builder, and company responsible for refueling all of the nuclear power aircraft carriers in operation as part of the United States defense force. In addition, it is estimated that nearly 70 percent of the current and active fleet of the United States navy has been built by one of the units of Huntington Ingalls Industries. The future is bright for the company and, as it has already expanded into other countries, it is likely poised to have a solid global presence for years to come. References Armstrong, M. and Baron, A. (2013). Managing performance: Performance management in action. London UK: Chartered Institution of Personnel and Development. Barney, J. B. (2012). Looking inside for competitive advantage. Academy of Management Executive, 9(4), 49-61. Becker, K and Matthews, J. (2011). The HRM practices of innovative knowledge intensive firms. International Journal of Technology Management, 56(2), 123-137. Cooke, F. (2010). Human resource strategy to improve organizational performance. Manchester School of Management, 9, 1-33. Cummings, G. and Worly, C. (2008). Organization Development and Change. Mason, OH: South-Western Cengage Learning. Mathis, R. and Jackson, J. (2012). Human resource management: Essential perspective. Mason, OH: South-Western. Naylor, J. (2010). A theory of behavior in organization. New York, NY: Academic Press. Read More