Worlds Largest Toy Company - Term Paper Example

HRM Case Study Based on the Mattel's workforce strategy Introduction "New models of competitiveness are needed to deal with the challenges ahead. These responses reveal a new competitive reality demanding organizational capabilities that will enable firms to better serve their customers and to differentiate themselves from their competitors." (Ulrich. D 1997) Being the world's largest toy company in 1999, Mattel operated in designing, manufacturing, marketing and distributing toys and games in more than 150 countries. The company owned manufacturing units in China, Thailand, Indonesia, Malaysia and Mexico along hundreds of independent contractors in many countries such as China, Thailand, Mexico, Far East and Australia. Wal-Mart stores, Target corporations and toys for us were the retailer out lets through which most of the revenue the company had in 2000. The company has gone through many ups and down for many reasons. The growth by acquisition strategy adopted by CEO Jill Barad had failed showing an 82.4 million loss in 1999. following the heavy loss Jill Barad was replaced by Robert Eckert, who decided against a cost cutting strategy to amplify the profit. He better focused on work force management, giving its managers sophisticated training which included the global leadership program and seminars on leadership. How did the strategy of training managers to become leaders ultimately turn out to be The workforce strategy was aiming at developing effective teams. Trying to foster teamwork and brake down the silo mentality with in the organization was a Herculean Task for the prevailing corporate set up of Mattel. What were the challenges they came across during the process The purpose of this paper is to go beyond the information given by Mridu Verma (2007) and to analyze and critically evaluate the strategy in the light of today's human resource management capabilities and limitations in the corporate circumstances. Company History - Mattel In order to understand the intensity of the developments and the fruitfulness of the out come close look at the company background is essential. Mattel's was founded by Elliot and Ruth handler in the year 1945. Gaining from the absence of quality and verity in the toy's market the company had recorded a $100,000 sale in the first year even with the least experience they had. The company made use of the popularity of television westerns when they have introduced toy replicas of the classic western guns and holsters in 1957. Later on they introduced Barbie Doll with its clothes and accessories, the company kept on conquering the market with its sale on the increase hitting the $100 million mark in 1965. By the end of the decade they were the world's number one toy makers. It was the time when the company established and developed itself with diverse operations into a world wide enterprise with a host of acquisitions. Some of those major acquisitions are Dee & Cee Toy in 1962, Standard plastic Products Hong Kong Industrial and Precision Moulds in 1966, Rosebud Dolls in 1967, monogram models and A&A Die casting in 1968, Ratti Vallenscasca, Mebetoys, Ebiex, H&Hpalstic Company and Met frame in 1969. However, in spite of the acquisitions by the year 1985 Mattel fell behind the Hasbro as the world's largest toy Maker. The 70s have seen many financial irregularities and finally a new management under former vice president Arthur S. Spear had take control of the organization in 1975, by when many of the business acquisitions the company had were running on loss. "John W. Amerman, who became the CEO in 1987 moved to quickly to cut Mattel's overhead by closing 40% of the company's manufacturing capacity, including plants in California, Taiwan and the Philippians. He laid of workers at Mattel's corporate headquarters in California saving at least 30 million annually. He turned the company around by focusing on brand names with staying power such as Barbie and hot wheels and by making selective investment in the making of new toys. Despite a lackluster economy and generally flat sale in the toy industry, Amerman's strategy paid off for Mattel. Between 1987 and 1992 Barbie's sale shot up from $430 million to nearly $1 billion, accounting for about half of the company's $1.85 billion sales. Mattel also concentrated on international expansion. In 1993 Mattel acquired Fishers Price, the world's leading maker of toys for infants and preschoolers, further cementing its unriveled position in the toy industry. Mattel continued with strategic acquisitions and in 1997 Amerman was replaced by Jill Barad as the CEO" (Verma M. 2007). Barad continued with the tradition of forceful spreading out. In July 1998 Mattel acquired Pleasant Company for $715 million, which bore out to be highly successful. Then as a part of further broadening its product line, in the year 1999 Mattel purchased the Learning company in a $3.5 billion deal. But, Even before the process was over the learning company began accounting losses, resulting in a net loss of $82.4 million in Mattel. It reflected in $345 million charge stemming from restructuring that involved in laying off in thousands and further losses in Learning Company. At the end Barad resigned hastily in 2000. Robert A. Eckert was named the CEO and Chairman in May 2000. HR Prowess of Robert A. Eckert Robert A. Eckert was steady and conservative in his approach he had a determination to bring the profitability back to the company rather than trying hectically to boost the revenue by chasing after new toy products. He kept the revenues relatively flat during his first two years, mean while collaborated in licensing agreement of computer games with Vivendi Universal and T-HQ Universal. The first initiative and timely decision from Eckert, which proved to be the most useful one was selling out the Learning company, Then, he also significantly paid attention towards international market with a new vigor, overhauling the supply chain and placing additional emphasis on international sales. In the beginning of the year 2003, Eckert has organized the company by bringing together the Boys/Entertainment and Girls division into a new unit called Mattel Brands. Secondly, the Pleasant Company was separated from the girls division and was made into a new brand known as American Girls Brand. The company's third unit called Fisher Price was intact. His short life with in the company has revealed that the employee groups were unmotivated and disjointed. "Mattel was essentially a prowling tree with multiple branches. Each entity had its own distinct culture, language and way of doing business. Instead of close-knit communities and strong group dynamics, there were 'disconnected' subcultures brewing discord and inefficiencies. Eckert was wary of the company's work culture as he had the stereotypical perception of Los Angel's relaxed work culture. The board of directors pointed out that being the CEO he could make the culture anything he wanted it to be"(Verma M. 2007). As Bedell and Kritz (2006) Puts it 'Human Resource Management should be derived from the vision, mission statement and strategy and flow from the business plan of the organization. In absence of such integration and flow there is bound to be a tension between the achievement of business objectives and optimal utilization of human resources. The maintenance and development of human capital is necessary to sustain an organization's competitive position. Quite simply, the organization needs to have a human capital mix (e.g., knowledge, skills, & abilities) that will facilitate goal achievement year after year. Organizations that fail to take a proactive approach to developing and maintaining human capital will be less competitive'. As Pfeffer (1998) notes, "Companies that manage people right will outperform companies that don't by 30% to 40%". Where as here in Mattel did not have a formal written strategy for the company. Employees with in the company had absolutely no idea of what the company as a whole heading to accomplish. The productivity of promising talents were undermined because as the then president of human resources recalled 'how well you did would depend on how poorly somebody else did'. Eckert found that Human resources practices such as performance tracking succession planning and leadership development were entirely lacking in Mattel. So, with his vision the company developed systematic methods for succession planning, employees training and performance assessment. The planning and implementation took extra effort from Eckert himself because Hirsh W. (2000) reminds us that 'succession planning should be a process by which one or more successors are identified for key posts (or groups of similar key posts), and career moves and/or development activities are planned for these successors." Succession planning is, therefore, not necessarily about plucking individuals out of the general talent pool and circumventing existing processes to 'fast track' or place them into more senior positions. It is one part of range of resourcing and development processes which Hirsch (2000) refers to as 'succession management', sometimes also referred to as talent management. These cover resourcing strategy, HR planning, processes for filing vacancies, management and other professional development and should involve talking to and well as about employees and their aspirations. It's a dynamic process and should be repeated annually or biannually'. Understanding this Eckert personally involved with the employers in there daily chores. He personally talked to them answered them and eat with them he was all set out to make a tangible difference and development among the work force. He hunted for the hidden talents and personally took care to shine it. Rousseau (2001) states that HR practices are enacted through social interactions, making leadership style a further significant signaling factor in organizations. In 2002 Eckert called for a global internal survey he was looking for the employees' concept on the positive and negative factors of Mattel's progress and operation. He personally studied many of the responses from the employees world wide. He realized to keep the work force consistency towards better performance needed impeccable leadership qualities from the managers. He wanted them to be trained leaders than task masters. The leadership in HRM, in fact, keeps the whole of organization as one single unit with in the dimension of transactional and relational aspect. 'While transactional leadership focuses on rewards and punishment for good and poor performance respectively, the relational aspects of leadership behaviors focus on employees and their needs' says Waldman (2004). Mattel managers were, therefore, given sophisticated training initiatives which included even a global leadership program. Global leadership program was a week long initiative held twice a year. The training and techniques in HR management have strengthened the departments by attracting the talent from the core departments. Mattel's workforce strategy was a success in turning around the ailing company. The training and formation had enabled the workforce to make better involvement and predictions about important movements such as product line development, market expansion or partnership. On the way to this successful end the senior management team including Eckert had to come across and deal with number of challenges. The beginning of clear thinking in Eckert's decision making started with trying to be a bit of conservative in the beginning against all the odds. When the whole system believed in increasing the revenue by finding new horizons, Eckert refocused company back to its core competency. Conclusion To have right person at the place on right time is crucial in any organization's success. The HR functions have been changed to a great extent that they embrace the business they are in. The Prudence and the decision making prowess of the managing body is the driving force behind the success of an organization, while the leadership qualities of the managing body is the core factor in the very existence and entity of the organization. Reference Bedell M. & Kritz H. (2006) Changing HRM Education to fit the Field; The Coastel Business Journal' Spring 2006. Pfeffer, J. (1998). The Human Equation: Building Profits by Putting People First. Cambridge, MA: Harvard Business School Press. HIRSH, W. (2000) Succession planning demystified. Brighton: Institute for Employment Studies. Rousseau, D. (2001) Schema, promises and mutuality: the building blocks of the psychological contract. Journal of Occupational and Organisational Psychology, 74: 511-542. Ulrich, D. (1997). Human Resource Champions: The Next Agenda for Adding Value and Delivering Results. Cambridge, MA: Harvard Business School Press. 25-27, 53-81. Waldman D. 2004. Charismatic leadership at the strategic level: A new application of upper echelons theory. The Leadership Quarterly, 15: 355-380. Read More