Strategic HRM - Maersk - Case Study Example

Strategic HRM- Case study of Maersk Table of Contents Introduction 3 2. Literature Review 3 2 Concept of SHRM 4 3. Analysis of Market in Which Maersk Operates 4 4. Maresk’s Approach to Its Internal Shareholders 5 5. Managerial and Business Environment of Maersk 6 5.1. Organizational Structure of Maersk 7 6. Maersk’s HR Strategies Aligning Environmental Factors 8 6.1. Recommended Actions to be taken by HR Team 10 7. Conclusion and Recommendation 10 Reference List 12 1. Introduction Maersk drilling company supports international gas and oil production by offering highly efficient drilling services to the global oil companies (Lin and Shih, 2008). The mission of the company is to become an important contributor to the Maersk group generating a profit of USD 1 billion by the end of year 2018 (Paauwe and Boselie, 2003). The overall objective of Maersk drilling is to position itself as a significant and stable provider to APMM group profits through developing and diversifying its business within the ultra deepwater and ultra harsh water segments (Jabbour and Santos, 2008). Achieving this mission requires an efficient implementation of strategic human resource management in the organization, as the company believes that their people are the most valuable asset. In the era of globalization, it is realized by most of the organizations that the human resource of a company can be a source to gain a competitive advantage, provided that there is a proper integration between an organizations goals and practices for managing human resources and there comes the need of Strategic Human Resource Management (SHRM) (Alharthey and Rasli, 2011. The objective of the study is to analyze the relevance and implementation of strategic human resource management in context of Maersk and recommend appropriate HR strategies to the company (McCallum and OConnell, 2009). 2. Literature Review According to many researchers, shipping is believed to be an asset driven business and global by its nature (Moon, 2010). These business organizations are observed to have customers worldwide. Because of human resources and capabilities that are required to have a global coverage, shipping lines have been forming competitive strategies according to their global environment (Hon and Brunner, 2000). SHRM have derived more attention of the industry scholars in order to analyze their principal environment in which they operate and accordingly develop HR strategies. Through this study, a more detailed view will be gathered on various aspects of SHRM discussed in the literature review (McCuiston, Ross Wooldridge and Pierce, 2004). The objective of the report is to elaborate the concepts of the literature review and gain an understanding of SHRM in context of Maersk. Researchers believe SHRM contributes a lot to an organization to realize the managerial and the business environment of an organization in which it operates (Richard, 2000). Additionally, it also provides an accurate view of how organizational HR strategies can be shaped and formulated in response to an organization’s internal and external factors (Martín Alcázar, Miguel Romero Fernández and Sánchez Gardey, 2013). 2.1 Concept of SHRM Figure 1: Strategies of SHRM (Source: Jain, 2005) The field of strategic human resource management is still on an evolving stage and there lies a slight agreement among scholars regarding a suitable definition (Daley and Vasu, 2005). SHRM methodically links people with the organization and to be specific, it is an approach to integrate HRM strategies into corporate strategies. HR strategies can be understood as plans that address the strategic human resource management issues in an organization. Authors summarize a number of topics that focus on the SHRM over the past few decades (Werbel and DeMarie, 2005). This evaluates the strategies of managing human resources in global industries and the components of SHRM. It is perceived that integration between HRM and organizational strategies is the key to improve business performance and gain a competitive advantage by attaining success (Jain, 2005). 3. Analysis of Market in Which Maersk Operates In the globalised world, it is observed a tremendous growth in the oil and gas industry as a result of mounting demand for energy worldwide. Most of the oil and drilling companies are focused on expanding their business and they are entering into a competition to attract skilled employees all over the world (Compact, 2013). In the global market, the search for talent is fierce and the global companies like Maersk agree that the skilled human resources are the one who makes the difference. As the company plans to expand further, a culturally diverse workforce enhances their scope for securing their share of global talent in offshore and onshore segments and they are bringing in strategic ways of employee training and development that have a scope to deliver better business results (Flin and O’Connor, 2000). Maersk operates its business in a diversified market and their employees are of different nationalities, cultures and represent local legislative requirements. As they aim to further diversify their operations, a culturally diverse and growing workplace can create trans-cultural challenges like defining shared interest and common values across cultural and national boundaries (Menkhoff and Evers, 2013). A detailed analysis of the oil and gas market depicts that there is a possibility of a huge growth in the forging years from the offshore deepwater market (Aaronson and Higham, 2013). With their new drill ships they ensure the market and their customers that they want to portray themselves as a major player in ultra-deep water market. They are strategically approaching towards managing and training their human resources to utilize these upcoming opportunities and attain their objectives (Tompkins, 2002). 4. Maresk’s Approach to Its Internal Shareholders Internal shareholders or the employees of Maersk are considered to be the most valuable asset by the company (Wells, 2013). Due to this reason, the company realizes their corporate social responsibility towards their people who are the key to their success (Minbaeva and Collings, 2013). The various approaches initiated by the company to sustain a healthy human resource management among their culturally diverse workforce are pointed as under: Supporting and respecting globally proclaimed human rights Responsible business behaviour A healthy environment to work Protecting and maintaining health and safety Encouraging high security standards Engaging with the society The company offers a healthy and motivated workplace to its employees and support globally recognized labour standards (Flin, OConnor and Mearns, 2002). As the offshore jobs comes with many challenges for the employees who do not want to compromise on their health and safety, Maersk approaches towards employing the most suitable people that will enable its business to compete and thrive. The employees are completely made aware of the company values and code of conduct at the time of recruitment process (Kaiser and Snyder, 2013). Maersk provides development and training support to their employees on a regular basis to keep their employees up-to-date with the business standards (Lin and Shih, 2008). Maerks encourages and enables every employee to give out their best performance through their skills along with highly professional teams who acts within the framework of the company’s values (Garcia, Lessard and Singh, 2014). Their aim is always on a long term sustainable performance and this is the reason that all their decisions are guided by shared ethical values. To cope up with the harsh competitive environment, Maersk approaches are focussed on building trust and sense of commitment among its employees through efficient leadership. It also ensures that all their decisions are ethically sound so that it strengthens the corporate culture and equally provides career growth opportunities to its employees (Mearns, Flin and OConnor, 2001). 5. Managerial and Business Environment of Maersk The HR professionals of Maersk work under harsh and competitive managerial and business environment which requires strategic thinking and planning. Managerial environment of the company is considered to be quite efficient because of strong focus on corporate values and efficient leadership (Rose and Kumar, 2006). The company possesses a culture of continuous development by providing regular training courses and by gradually expanding responsibilities of the employees. Maersk promotes employee commitment, involvement and provides continuous supervision on their work. Maersk drilling company has a strong consideration for efficient governance and management (Cahoon and Haugstetter, 2008). In spite of that, the company faces various challenges that are beyond the current objectives of running a profitable business (Fei, 2011). The analysis of the business environment depicts that it becomes difficult to conduct business responsibly in the countries vulnerable to corruption and poor business standards (Asyali and Zorba, 2010). The company possesses good culture but still it becomes important to perceive and deepen their ways to bring in special dynamic and face new market challenges regarding training and attracting new talent. (Cahoon, Haugstetter and Bhaskar, 2010). External work environments of Maersk are complex and potentially involve high risk. The company’s main risk is losing control over the drilling operations which can lead to numerous safety issues. The company operates its business in high risk environments and therefore provides secured and healthy workplace to its employees and business partners. They aim to minimize their impacts on environment by operating responsible business (Boudreau and Ramstad, 2005). 5.1. Organizational Structure of Maersk The organizational structure of Maersk is kept simple with fewer layers to promote free flow of internal communication and efficient management of all the job positions in the company. The management section handles all the practicalities of the workplace (Lopez-Cabrales, Perez-Luño and Cabrera, 2009). This includes organizing transport to and from the rig, ensuring preparedness for emergency situations and also providing treatment to the employees’ when experiencing safety or health issues. Maersk group developed two-tier management system, where the board of directors has the supervisory role and the executive board has the responsibility for directing the overall operations and business growth (Gong, Y. and Chang, 2008). Figure 2: Organizational Structure of Maersk (Source: Luthans and Sommer, 2005) 6. Maersk’s HR Strategies Aligning Environmental Factors Evaluating the internal and the external environment of the company, Maersk has build up efficient strategies. Few of those strategies are mentioned as under: Maersk has implemented the sustainability strategy in which they initiated the continuous learning process with the goal of improving their environmental, social and economic impact on the society (Guthrie, Spell and Nyamori, 2002). Additionally, the main focus is on managing the emission of hazardous materials, social engagement for their local communities, communication and stakeholder engagement, risk management and efficient decision making. Growth strategy is another winning strategy implemented by Maersk (Brewster, Wood, Brookes and Ommeren, 2006). The company tries to create value for its customers through its unique service delivery concept where they adapt safe and proficient drilling services. The company’s strategy is to abide by their general framework working model to improve their HR management among their culturally diverse workforce (Luthans and Sommer, 2005). Figure 3: HR Analytics Working Model at Maersk (Source: Jackson and Seo, 2010) Maersk has adopted efficient talent management strategy, in which the major focus was on “attraction”. Through attraction, they invited right people to join the group. The company recruited dedicated and best-fit people for the job positions. Under the newly restructured HR department, this strategy was completely under the responsibility of the business-unit HR department (Jackson and Seo, 2010). 6.1. Recommended Actions to be taken by HR Team The HR team of Maersk is recommended to develop certain actions or strategies aligning to its market in which it operates and to its employees. The recommendations are underlined as under: Implementation of total reward strategy can prove to be beneficial for the company, which involves development of well-designed and well-executed rewards system (Progoulaki and Theotokas, 2010). Instead of awarding workforce with pay increases and other incentives, the concept of “new-pay” can be implemented for the achievement of strategic objectives. Innovative rewards such as skill-based pay and goal sharing can be a blend of monetary and non-monetary rewards offered to the employees for motivating them to take up risky jobs (Sheehan, 2005). Considering strategic fit, Maersk can easily make efficient decisions and direct the workforce towards achieving company’s objectives. Fit is the blueprint of planned human resource deployment and activities that are anticipated to enable the company to attain its strategic goals (Kaufman, 2002). Employing wellness strategies thinks beyond simply providing incentives. The focus of this strategy is on the ways to better engage employees in health-promotion efforts and this is beyond just paying them to participate in the organizational tasks (Wright, Snell and Dyer, 2005). Talent management and diversity recruiting strategy is crucial to the company’s success, which can be formulated depending on the company’s drivers for diversity (Martin, Gollan and Grigg, 2011). Such drivers can be like what the company is trying to achieve in a particular market where employing diverse workforce can help the company to connect with the diverse clients (Arthur and Boyles, 2007). This strategy can help the company to enhance the global mindset of hiring and developing talent management and gain competitive benefits of efficiently operating in the global market. 7. Conclusion and Recommendation The report critically evaluated the relevance of strategic human resource management in global companies such as Maersk and how it can contribute to the success of the organization. The company’s strategic human resource approaches served as a key to its success of its diversified business. Moreover, as per the analysis, it can also be observed that the company plans to extend its diversification program due to high market prospects which will require the human resource team or the organizational leaders to manage the culturally diverse workforce by strictly adhering to international labour policies and efficient management of talent pool. As per the detailed analysis of the case study of Maersk and the positive effects of SHRM towards company’s success, the following recommendations are made to the company: Build a strong leadership culture as efficient leaders are the key to gain competitive advantage. 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