Human Resource Practises of Audi - Essay Example

AUDI: HUMAN RESOURCE PRACTISES al Affiliation) Contents Contents 2 Introduction 3 2.Audi’s Organizational Culture 3 2.1.Daniel Denison’s Organizational culture model 4 2.1.1.Mission 4 2.1.2.Adaptability 5 2.1.3.Involvement 5 2.1.4.Consistency 6 3.Audi’s Reward System 6 3.1.The Total Reward Concept 7 3.1.1.Financial Rewards 7 3.1.2.Non-Financial Rewards 7 4.Recommendations and Conclusion 8 References 10 1. Introduction Audi is an automobile manufacturer that deals with luxury automobiles. It is concerned with designing, producing, marketing and distributing automobiles. It has been in operation since 1885 and its success comes from good management practices and its emphasis on producing quality products for its consumers (Audi History, 2001). This report is based on Audi’s Human Resource practices. It looks at two practices: Organizational Culture and Audi’s reward systems. The two points shall be based on two models: Denison’s model of organizational culture and the theory of Total Reward. 2. Audi’s Organizational Culture There are numerous definitions by scholars on what organizational culture is. Two of these definitions are as follows: Ravasi and Schultz (2006) wrote ‘organizational culture is a set of shared assumptions that guide what happens in organizations by defining appropriate behavior for various situations’. Needle (2004), ‘Organizational culture signifies the beliefs, collective values, and principles of members in an organization’. Culture includes the organizations values, norms, systems, vision, language, symbols, beliefs, assumptions, and habits. The culture of organizations makes it unique and different from other organizations. It explains why there are many companies that deal with automobiles, producing the same products and make of cars but which are completely different due to their operations, values and their executions. 2.1. Daniel Denison’s Organizational culture model Denison’s model (1990) states that ‘organizational culture is described by 4 general dimensions: Adaptability, Consistency, Involvement, and Mission’. The model shall be used to explain Audi’s culture. 2.1.1. Mission An organization’s mission refers to its reason of existence. The reason as to why it was founded and the objectives it aims to achieve. Denison further divided the mission into three: Vision, Strategic Direction and Intent, and Goals and Objectives. Audi’s Vision is ‘To develop Audi into the world’s leading brand in the premium automobile segment’ (Audi Corporate strategy, 2015). The vision defines Audi’s culture because it portrays the direction which it wants the company to go. As a result the personnel work towards making this vision a reality. They manufacture cars that are of good quality and that meet their consumers’ demand, which shall make it become the best brand of all the other automobile manufacturers in the world. The strategic direction and intent of Audi is to delight customers worldwide. They aim at achieving this by being innovative, creating experiences for their employees and their customers, living responsibly and shaping Audi. Its goals and objectives are financial growth, continuous growth, sustainability of processes and products, to be leaders in innovation, to be the most attractive employer worldwide and, to have a top image position and customer mix (Audi Corporate strategy, 2015). The mission has shaped Audi into becoming a renowned automobile company. As a result, it manufacturers cars that not only meet the customers’ needs thereby creating satisfaction but also makes it a fun environment for the employees which has contributed to its success. 2.1.2. Adaptability Denison subdivided adaptability into creating change, organizational Learning, and customer focus (Denison, 1990). Audi’s organizational culture is adaptable as it builds its employees intellectually by encouraging and providing lifelong training and supporting its employees by giving them part-time shifts that create time for its employees to go back to school and develop themselves intellectually. Audi is creating change in the world through its products. Its products have changed tremendously from the time it was founded. The newer models are more environmental and user friendly. Audi focuses on its customers demands and needs so that it can manufacturer more products that meet their needs. It has adopted a marketing concept where it produces the goods that consumers wants and sells it to them. Their efforts to focus on the customer and satisfy their needs has increased their sales tremendously over the years. 2.1.3. Involvement The Audi management team encourages its staff by involving them in decision making procedures, empowering them in their fields by encouraging them to make decisions that will better their performance, supporting team effort and improving their capacity through training. As a result, Audi’s productivity is improving consistently. Personnel are very crucial in organizations and should be respected for a company to do well (Anderson, 2007). Audi’s culture supports its employees through part time shifts which provides employees with time to deal with family issues, and enables them to go for vacations and business trips. It also employs their employees permanently thereby providing job security which motivates them and makes them more involved in the company processes. 2.1.4. Consistency Audi’s Core Values ensure that it provides services that are consistent throughout the whole organization. Consistency has enabled them to produce automobiles that are of the same model and structure (Orme, 2007). It has also encouraged its employees to always do their best in operations thereby maintaining high productivity levels. Consumers therefore receive similar service and treatment and there are no complaints of employees treating some people better than others or that a particular automobile has better parts than another of the same make and model. Audi’s organizational culture therefore meets customer needs and provides impeccable service in addition to treating its employees right by supporting them and empowering them in their daily activities. The company declares that ‘People is the most important factor, because people produce products’. Audi therefore regards its employees as an important part of the organization and ensures that they are treated properly. Consumers are also important because they make the company and encourage its existence. Were it not for them, Audi would not be producing automobiles since there would be no market. 3. Audi’s Reward System Employees receive various benefits and compensations for the work they do for organizations. The total reward concept shall be used to explain the reward system adopted by Audi. 3.1. The Total Reward Concept Total Rewards are the tools that the employers use to appeal to, motivate and keep employees. They may be in various forms: Benefits, work-life, compensation, developmental and career opportunities and performance & recognition (Rogers & Marcotte, 2010). The Total reward concept categorizes rewards into financial or non-financial rewards. Longo (2012) states that ‘Total rewards is a more effective and compelling way capable of rewarding employees that produces long-lasting results’. 3.1.1. Financial Rewards Financial rewards can be direct in the form of salaries, bonuses and incentives or indirect in the form of holidays, medical and health care, employee assistance, child care, and insurance (Armstrong, 2000). In 1997, Audi introduced a permanent profit-sharing system for all employees which was effected in 1998 (Profit-sharing and personnel policy at Audi, 1998). The profit share is paid annually. The system was to reward the employees and to foster identification and motivation. Audi employees therefore receive their salaries, bonuses and profit shares. They also have medical cover which caters for their hospital bills. 3.1.2. Non-Financial Rewards According to Armstrong (2000), non-financial rewards are divided in terms of the job one is doing and the environment. Non-financial rewards that result from the job are: Interesting work, Challenges, Responsibility, Recognition and Advancement. Those that stem from the environment are: Competent supervision, congenial co-workers, Good policies and practices, Fair treatment, and finally, Safe and healthy work environment. Audi provides its employees with non-financial rewards by establishing a no redundancy clause in 1996, maintaining the number of vocational trainees; recruiting of all vocational trainees who successfully finish their apprenticeship into the organization; providing qualifications in order to keep jobs and improving the working time systems. Audi also trains their employees and encourages them to develop themselves by obtaining education. In addition, some policies have been implemented over the years that have improved personnel conditions. According to Profit-sharing and personnel policy at Audi (1998), the policies include the following: The introduction of working time accounts in 1988, introducing generous provisions for parental leave (1990), abolishing the white-collar and blue-collar distinctions during payments and introducing a unitary payment system (1994), introducing group work (1994), Increasing the flexibility in working time (1996) and finally the introduction of profit-sharing (1998). The above motivate workers to perform their best. 4. Recommendations and Conclusion Audi has flourished as a result of its human resource practises. Its organizational culture and reward systems act as a form of motivation for its employees to do their best in their daily activities. However, although the working time account policy of 1988 encourages employees to put in more effort since they are paid according to the time they work, it can also be discouraging. Especially during times when the productivity levels are low - during low sales season - thereby reducing the number of hours worked by employees. Instead of only paying employees for the hours worked, there should also be a fixed retainer fee for all employees that ensures that employees get their salary irrespective of the economic condition of the organization and of the country. As a result, the employees will be motivated throughout. In addition, the company should come up with more ways to empower their employees. For instance, it can offer education sponsorship programs for the most promising and most productive employees. As a result, the best performing employees shall be more education which shall enable them to climb into higher managerial posts of the company. The sponsorship program shall also act as a motivator since the employees shall work harder so that they can receive that sponsorship program. In summary, Audi has excelled in the automobile industry due to its management practises, its employees, the quality of goods and service they provide, meeting the consumers’ needs and the reward system that it has adopted. Its mission, vision statements, goals and objectives all aim to create an organizational structure that continuously builds the company and also creates products that are consumer and environmental friendly while it empowers and continues to involve the employees in the procedures of the company. Profit sharing in addition to the various salaries, bonuses, benefits and incentives that it provides to its personnel encourages them to increase their productivity as they will also benefit from the profits. The non-financial rewards like training, recognition, fair treatment, employee empowerment and good policies motivate the employees to do their best and encourages them to own their jobs and to love what they do. References Armstrong, M. 2000. Employee reward 2nd ed. London: Institute of Personnel and Development. Anderson, B. 2007, March 1. Employee empowerment leads to better solutions. Audi Corporate strategy. 2015, January 1. Retrieved March 23, 2015, from http://www.audi.com/corporate/en/company/corporate-strategy.html Audi History. 2001, October 24. Retrieved March 23, 2015, from http://www.audiusa.com/us/brand/en/about /main/history.html Denison, D. 1990. Corporate culture and organizational effectiveness. New York: Wiley. Longo, R., 2012. Total Reward as a HRM model, HR Professionals, Milan [online]. Needle, D. 2004. Business in Context: An Introduction to Business and Its Environment. ISBN 978-1861529923. Orme, S. 2007, November 23. Motors: AUDIS FIRST CLASS PACKAGE; FIRST DRIVE Audi A3 1.8 Sport. Coventry Evening Telegraph. Retrieved March 23, 2015 Profit-sharing and personnel policy at Audi. 1998, January 27. EurWORK European Observatory of Working Life. Ravasi, D.; Schultz, M. 2006. "Responding to organizational identity threats: Exploring the role of organizational culture". Academy of Management Journal 49 3: 433–458. Rogers, S., & Marcotte, S. 2010. Communicating Total Rewards How-To Series for the HR Professional. Scottsdale: WorldatWork Press. Read More