Strategy Human Resource Management - Nestle Malaysia - Case Study Example

Applied SRHM Report- Nestlé Malaysia Student’s Name: Grade Course: Tutor’s Name: Date: The unyielding forces brought by competitive markets and globalisation have caused many organisations to introduce strategic roles in their human resource management. Accordingly, HRM is now positioned to integrate human resource practices that are in line with the relevant business or corporate strategies. According to Wright and McMahan (1992), HR practices such as: recruitment and selection; and training and development have been integrated and aligned to the organisations’ strategic imperatives. In the past, Storey (1995, p. 4) observes that organisations recruited just for the sake of filling existing human resource gaps. However, modern organisations have now realised the need to recruit people who have the skills and expertise that are in line with the company’s objectives. As Othman (2009, p.1) argues, “organisations should be able to attract and retain qualified employees who are motivated to perform and hence will contribute to organisational effectiveness.” This report is based on the recruitment and selection processes in Nestlé Malaysia. Specifically, the report looks at the strategic contribution made by the recruitment and selection processes to the overall goals and objectives of the company. The case of Nestlé Malaysia Nestlé Malaysia is among the contemporary companies that have taken the strategic human resource management (SRHM) concept to heart. In survey conducted by Othman (2009), the company is indicated among prominent Malaysian organisations that have adopted a multi-pronged approach to talent management. Specifically, Nestlé Malaysia has adopted a recruitment program that seeks to hire only people who have the right talent for jobs in the company. According to Othman (2009, p. 13), any applicant for a position in the organisation has to go through different selection levels, which are contained the ‘New Talent Development Program’. To start with, applicants who have “+/-3 years’ working experience, a university degree and [is] active in extracurricular activities” stands a better chance of securing employment with the company (Othman, 2009, p. 13). All applicants wishing to work for the company must go through a preliminary test and interview where they take an aptitude test, a personality assessment and an interest assessment. The second stage involves an interview with the human resource manager and the line manager. Finally, the directors of the company interview the job applicant. Asked why Nestlé Malaysia had adopted such a recruitment and selection strategy, one of its members (cited by Othman, 2009, p.13), stated that the company is intent on finding the right people, who have the needed skills, knowledge, and attitudes. Notably, Nestlé Malaysia emphasises “teamwork, participatory decision making and devolution of functions and cross-functional activities” (Othman, 2009, p. 13). As such, its strategic HRM recruitment function seeks to recruit and select candidates who are not only versatile, but also those with the ‘right’ personalities and temperaments to work as part of the Nestlé team. Additionally, the Nestlé HR manager quoted by Othman (2009, p. 13) alludes to the fact that the recruitment team looks for people who can establish commitment, loyalty and valuable working relationship with not only their managers or supervisors, but also their fellow employees. Ostensibly, Nestlé realises that for it to compete well in the dynamic marketing environment, it will need to have a loyal, committed and valuable staff members, who share in its values, aims and are willing to meet the company objectives collectively. The strategic contribution of the company’s recruitment and selection policy can therefore be seen in the processes ability to recruit loyal, committed staff members, who are versatile and willing to work in the Nestlé Malaysia work teams. A critique According to Bratton (2001, p. 38), SHRM refers to a managerial process that requires organisations to link their human resource policies and practices with their strategic objectives. Notably however, different human resource practitioners and researchers still contest the real meaning of the SHRM concept. As Bratton (2001, p. 38) notes for example, there lacks conceptual clarity about whether SHRM relates to organisational outcome or processes. Ulrich (1997, p. 190) for example, defines SHRM as a process stating, “[it is] the process of linking HR practices to business strategy.” Wright and Snell (1991, p. 203) on the other hand defines SHRM as an outcome stating “[they are] organisational systems designed to achieve competitive advantage through people.” Regardless of this theoretical dispute, HR practitioners and researchers agree that SHRM refers to the strategic alignment of HR policies and practices with the organisational goals. To understand whether Nestlé Malaysia has indeed conformed to SHRM theories in its recruitment and selection policies and practices, one would first need to understand why strategic management is important to contemporary organisations. According to Bratton (2001, p. 39, citing Wheelen & Hunger, 1995, p. 3), strategic management is the “set of managerial decisions and actions that determines the long-run performance of a corporation.” Merging strategic management practices and human resource policies and practices would thus position a firm in a better performance positions. According to Chang and Huang (2005, p. 435), though there are some unanswered questions regarding just how HRM practices affect the competitive advantage in organisations, empirical evidence by researchers and scholars suggest that HRM practices affect the firm’s short-term and long-term performance. In Nestlé Malaysia’s case, the underlying assumption driving the recruitment and selection processes, are found in the belief that human capital is a source of competitive advantage as suggested by Snell et al. (1996, p. 65). For this reason, one gets the impression that the organisation is bent on attracting and recruiting human capital with the right level and type of skills. Considering Becker and Gerhart’s (1996, p. 782) argument that it is difficult for an organisation to grasp the exact mechanism that generates value in human resource, it seems that Nestlé Malaysia may have challenges aligning its human resources to its strategic objectives. Some form of hope is however given by Boxall (1996, p. 67), who argues that organisations recruit people who are “latent with productive possibilities”. While there is no guarantee that such new recruits will be valuable to the organisation in the long-run, the recruiters anticipate that securing the best, brightest or exceptional talent in accordance to laid out recruitment policies would enhance the chances of HRM satisfying the organisation’s strategic objectives. Nestlé Malaysia’s insistence on versatility, right temperament, right personality, loyalty, commitment, and team working characteristics in all its new employees conform to the intellectual capital concept as suggested by Wright et al. (2001, p. 716). According to Wright (2001), it is not enough for an organisation to accumulate exceptionally talented workers; rather, the workers must be willing to invest their skills and knowledge in the organisation. As such, new employees (and older ones) must engage or commit fully to the organisation if any human capital benefits are to be realised. However, for human resources to have an impact on firm performance, employees must interact well in the social and organisational environment in the workplace. This means that the skills, knowledge and behaviours of the employees must conform to the culture, structures and practices in an organisation. Consequently, such interaction would create the atmosphere for the development of valuable working relationships and teams. Seeing that Nestlé Malaysia carry out a careful selection of personnel as indicated earlier, this report assumes that the organisation has equally ensured that its organisation and social environments are viable for the enhancement of human capital performance. Additionally, careful selection of personnel should be followed up with training if the company needs to enhance employee performance. According to Steffy and Maurer (1988, p. 277) carefully selected employees need to be trained well if the employer is to realise the link between good human capital selection and good organisation performance. Aligning this to the organisation’s objectives, would enable the recruitment team to note the level of training that each new employee needs. However, considering that recruitment and selection is just one HR practice in Nestlé Malaysia, which [may] contribute to the firm’s performance, predicting its effect on the firm would most likely reveal nothing. As Barney (1995, p. 56) aptly states, a single HR practice has “a limited ability to generate competitive advantage in isolation...in combination... they can enable a firm to realise its full competitive advantage.” If this assertion by Barney were to hold true, one can argue that the recruitment and selection policy at Nestlé Malaysia conforms to HRM theory as suggested by Ulrich (1997). Ulrich has divided HRM roles into four distinct categories (change agent; strategic business partner; the administrative expert; the employee champion). Arguably, the recruitment and selection practices in Nestlé Malaysia can fit into the former. As Ulrich (1997, p. 29) states, “HR professionals should be active in developing [human] capital.” As such, HR professionals do not just recruit new employees just for the sake of filling existing human resource gaps; rather, they base the recruitment procedures of HR processes, which aim at staffing the organisation with the right employees. Notably, a firm like Nestlé Malaysia seeks a competitive edge in the market using different strategies. As Chang and Huang (2005) suggest however, the firm can generate a unique competitive advantage from its human resources. Specifically, Chang and Huang (2005, p.435) argue, “HR is an invisible asset that creates value when it is embedded in the operational system in a manner that enhances firm ability to deal with turbulent environment.” HR managers as strategic partners in Nestlé Malaysia Though there is no specific literature from Nestlé Malaysia to support the notion that HR managers in the firm are strategic partners in the organisation, this report argues that the managers are indeed business partners in the organisation albeit indirectly. To support this argument, this report borrows some insight from Ulrich (1997, p. 26) who argues that HR professionals have a strategic role of aligning human resource practices with the business strategies in an organisations. By accomplishing such a role, Ulrich (1997, p. 26) assert “HR professionals increase the capacity of a business to execute its strategies” thus becoming strategic partners to the organisation. In order to accomplish their roles successfully, professionals in HR must understand the strategic direction that an organisation intends to follow. Based on such understanding HR professionals are then able to develop skills ad competencies necessary for the effective implementation of the organisation’s strategy. In Nestlé Malaysia’s case for example, the recruiting team must understand the strategic objectives of the firm in order to recruit employees who are able to implement them effectively. As Kirkbride (2003, p. 176) states, HR roles in the competitive business environment often include identifying HR policies, procedures or practices that are necessary is meeting the strategic objectives in a firm. Specifically, the HR function focuses on attaining deliverables or outcomes, which not only add value to organisational performance, but also aid in the strategic implementation. Most of the SHRM literature reviewed in the course of writing this report (Bratton, 2001; Chang & Huang, 2005; Ulrich, 1997) refers to the fact that strategic HRM has a different set of priorities compared to traditional human resource management. While the latter focused more on functions such as hiring, training, performance appraisal and employee compensation, the former is oriented towards the strategic and business objectives of the firm. According to Chang and Huang (2005, p. 436, citing Hustled et al., 1997) SHRM focuses on diagnosing the strategic needs in an organisation, and recruiting employees who can implement identified competitive strategies as well as achieving specific operational goals. Nestlé Malaysia’s recruitment and selection policies in relation to HRM studies reviewed Othman (2009) states that strategic integration is of imperative importance to any organisation that seeks to provide congruence between its human resource and business strategy. According to Othman, only through strategic integration can HR support the organisation to attain its goals and objectives. To this end, Nestlé Malaysia to be in conformance with HRM studies since its recruitment and selection policies seek to recruit the right employees, who can be managed effectively in order to enhance organisational performance. As Othman (2009, p. 2) observes, firms that manage employees effectively register high business performances. The fact that Nestlé Malaysia subjects its potential employees to three levels of interviews (two which requires the managers and directors in the organisation to interview the candidate) is testament that the organisation realises the importance of recruitment and selection in providing the firm with the right people. As Schuler (1992, p. 18) observes, SHRM is mainly about how well the HR department integrates and adapts to the organisational strategy. Specifically, Schuler (1992, p. 18) states that SHRM in any company should ensure that “HR management is fully integrated with the strategy and the strategic needs of the firm”. Nestlé Malaysia appears to have met this requirement by recognising that its human capital is ‘good enough’ to execute its business strategy, which is (ostensibly) based on teamwork, versatility, commitment and loyalty. According to Othman (2009, p. 3) contemporary organisations cannot ignore the important role that people play. As such, HR departments and managers in such organisations pay greater attention to recruitment and selection as a means supporting the realisation of a corporate strategy. According to Othman (2009, p. 3), the Nestlé Malaysia’s recruitment and selection process can be compared to the same practices in Japanese companies. The latter, according to Othman, adopt an “undeniably strategic involvement” in their organisational structure. Consequently, the interaction between departments is more prevalent in the organisations, which in turn supports teamwork. Notably however, Nestlé Malaysia’s insistence on prior working experience is unlike what the Japanese companies do. However, a Nestlé Malaysia manager quoted by Othman (2009, p. 13) states that the organisation’s HR department works closely with the manufacturing department in order to recruit employees who serve the firm’s work force requirements. Specifically, the HR manager quoted by Othman (2009, p. 13) said ‘we wouldn’t know exactly what kind of people do they [manufacturing department] need and also the exact numbers they need. Hence, we have to work together in determining our manpower requirements”. According to Bratton (2001, p. 42), human resources and manufacturing are in the functional-level strategy, together with other functions such as research and development, marketing and finance. Together, the identified functions support the firm’s business strategy by maximising productivity. Most notably, HRM policies have a unique role at the functional-level strategy since they support the business strategy objectives (Othman, 2009, p. 44). Conclusion There is little doubt that Nestlé Malaysia considers the HR department as part of the firm’s overall business strategy. The involvement of line managers and company directors in the recruitment process is testament that the company realises the unique role that employees play in the company. Evidently, HR has a significant role to play ion Nestlé Malaysia’s strategic planning since new employees (as well as existing ones) are made to understand the short- and long-term objectives of the company. Consequently, the firm is able to manage the employees effectively, making them a source of competitive advantage in the Malaysian market. The recruitment and selection policies in Nestlé Malaysia no doubt have some strategic contributions to the organisational goals. Although this report cannot independently verify such contributions (ideally, strategic success can only be quantified in financial terms), it is worth noting that the HR manager quoted by Othman (2009, p. 13) seemed satisfied with the result that the HR practices had on the organisation. It is therefore apparent that the organisation’s efforts to match the recruitment and selection policies with strategy has successfully enabled the firm to employ people who have the right attitudes, skills and behaviours needed to implement its business objectives. References Barney, J (1995), ‘Looking inside for competitive advantage, Academy of Management Executive,’ vol.9, no. 4, pp. 49-61. 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