Hertz Global Holdings Internal Management and Performance Appraisal System - Assignment Example

Hertz Corporation Hertz Global Holdings, Inc. is a renowned US company, which has also established its subsidiary d Hertz Corporation. Today, thedecisions of top management, the effective implementation of strategies by middle managers and the hard work of first-line staff has made Hertz world’s most famous brand. In addition, Hertz Corporation has already received the status of the largest car rental services provider worldwide. Quite unequivocally, the main reason behind this phenomenal success is the premium quality rental services offered to potential passengers across the globe. The use of information technology resources enables Hertz to facilitate its consumers through an efficient and sound online booking and reservation system. The business operations are expanded in more than 145 nations and there were nearly 9500 locations during 2009 - 2010. Nevertheless, USA, Australian and developed European economies are considered as its core markets unlike Asia and Africa. (Internet: Hertz.com) Hertz Car Rental focuses heavily on brand recognition, awareness, brand equity, customer satisfaction and loyalty. The company is in a transformation process as it has been paying special attention to update internal structure and to meet contemporary business requirements and challenges. New company logo, employee uniforms and induction of technologically advanced fuel-efficient vehicles in fleets are all the steps towards differentiation and positioning to obtain clear and distinctive image in the minds of customers (Hein, 2009). As far as other businesses of company are concerned, it has Equipment, Truck and Van rental and Car Sales units because of its business development strategy. The rental businesses deal directly with end-users; however, the Car Sales division is responsible to resale all used vehicles from company’s existing fleet of automobiles so that the old ones could be replaced by new ones. Safety, quality and reliability are the core principles of Hertz and the strategic planners never compromise upon these values for short-term monetary gains. Some of the major departments in the corporation are Finance, Sales, Process Improvement and Project Management, Marketing, HRM, Information Technology and Vehicle Maintenance. The top management is determined to facilitate internal communication and collaboration among employees, because information sharing is viewed as the actual asset in today’s workplace. The organization could not be called as absolutely complex in nature; however, complexity is observed at Hertz Corporation because workers at remote locations may not freely interact amid absence of informal communication channels (The Official Board, 2009). The company has instructed executives at the middle and top managerial levels to empower their subordinates through delegation. The major aim behind this delegation of business tasks is to increase employee confidence, promote experimentation, and enhance decision–making and problem-solving skills. In other words, this empowerment may increase workers’ morale and job commitment, which subsequently increase efficiency and effectiveness. The company has various divisions such as European, American, Australian, Asian, Middle East etc., in which a certain number of countries are divided because of geographical location (Hertz Corporation, 2010). Core Competences: Fleet: The first core competence is induction of new fuel-efficient vehicles that reduces fuel expenses, maintenance and repair costs of the company. For instance, these purchases of comfortable, sumptuous, better designed and secure vehicles have been frequently made to continue top quality services. In fact, the idea is to sell an experience rather just providing rental services. Next, the long-run estimated benefits in terms of smooth customer relationships are much higher than estimated short-run financial costs (Salmon, 2009). Internal Management and Performance Appraisal System: Hertz’ internal management system enable the employees (at a specified location) to actively communicate and coordinate with co-workers. Moreover, this information sharing increases participation in business affairs, which increase the probability that goals would be achieved. Next, Hertz values its employees and consider as its major asset because a company could not thrive without efforts of human resources. The workers are given extrinsic rewards remunerations, accommodation, promotion, pay- increase and bonuses if they meet all performance standards, criteria and code of conduct. In other words, Hertz strongly convict in the statement of a wise person who said that happy and well - satisfied employees put extra efforts to meet or exceed business targets by making their customers happy and satisfied (Annual Report, 2006) ; (Hein, 2009). Acquisition of Dollar Thrifty Group: Hertz has a broad target market which includes both leisure and business traveler segments. The company’s acquisition of Dollar Thrifty Automotive Group enabled to entice budget conscious segment actually targeted by the rival firm. The acquisition would increase the share in domestic airport business to a considerable 38%, while the number of locations would also increase from 8,000 to a colossal amount of nearly 10,000 locations across the USA and globe. Hertz will obviously benefit financially from increase in customer reach (greater target market), greatest amount of stores and better profitability in extremely challenging business environment. For instance, the competition in the sector would decrease that enable Hertz to maximize its financial gains. Hertz is among the top three companies that lead US $20 – 23 billion rental industry and it enjoys extensive financial resources, which enables the company to survive even in most challenging business years of 2009 – 2010 in which it incurred losses, yet was able to acquire small rivals (Stoller, 2010). Challenges: Recession: The global economic recession have, somewhat, adversely impacted business growth of Hertz Company across USA and globe. In fact, the major reason behind the decline in business activities was poor purchasing power that reduced the industry wide demand of car rental services. The global economy has not completely defeated recession; therefore, the demand side will remain under pressure, which may affect market prices and revenue streams (Hertz Corporation, 2010). Fuel Costs: Hertz has inducted new fuel-efficient automobiles in its fleet; however, the international fuel prices have increased from average $60 in 2009 to $80 during 2010. The impact of this constant increase in oil prices will be the reduction in profit margins. Hertz, thus, has to increase rentals to meet this escalation in company expenditures (Hertz Corporation, 2010). As far as internal managerial structure is concerned, the top management has adopted vertical functional design; however, they also opt to improve workers’ participation, six sigma, benchmarking and implementation of other Total Quality Management (TQM) principles to increase productive efficiency. Hertz has various departments and functional units in all subsidiaries established in different nations. The top management wants to make sure there is organizational harmony and unity among workers as it leads to relationship building and goal accomplishment (Hein, 2009). The company has a decentralized structure as revealed from company’s organizational chart. The Chairman or President is at the top of hierarchy to whom CEO, directors and all divisional heads (European, Asia, American and Australian) are answerable for all business related decisions, policy formulation and implementation. Each divisional head controls its departmental heads, while all middle managers and executives work under supervision and authority of department heads. The structure is decentralized because employees at bottom of hierarchy may actively take part in decision-making and consult middle managers, who then forward the progress report to top management. In other words, information flows from top – to - bottom in hierarchy and vice versa. There has been greater focus on formalization because instructions are provided in written through intranet or communication networks to divisional heads and other employees. Communication through both informal and formal channels is promoted because it enables the employees to understand their colleagues from diverse backgrounds and life experiences. Also, this benefits Hertz because relationship building helps reducing probability of conflicts. (Annual Report, 2006) It could be concluded that Hertz Car Rental Company conforms more to the organic model of organizational structure instead of using mechanistic model. This is because of Joint Specialization, teamwork, workers’ collaboration, mutual consent, decentralization, socialization and mutual adjustment. (Reigle, n.d). References: No author (2006) “Annual Sec 10 - K report 2006” Hertz.com [Online] Available at https://images.hertz.com/pdfs/HTZ_2006_annual_report.pdf No author (2009) “Hertz Global” The Official Board [Online] Available at http://www.theofficialboard.com/org-chart/hertz-global-holdings Hein, Kenneth (2009) “Hertz Tries Harder” Brand Week [Online] Available at http://www.brandweek.com/bw/content_display/news-and-features/automotive-travel/e3iea9ebb170ad87d3099ae84505262a789 Hertz Corporation (2010) “Hertz Increases Full Year 2010 Profitability Guidance and Expects to Report Strong Third Quarter Operating Results” Advfn.com [Online] Available at http://www.advfn.com/news_Hertz-Increases-Full-Year-2010-Profitability-Guidance-and-Expects-to-Report-Stro_44860092.html Reigle, R. (n.d) “Measuring Organic and Mechanistic Cultures” All Business [Online] Available at http://www.allbusiness.com/human-resources/1064730-1.html Salmon, Felix (2009) “Corporate bully of the day: Hertz” Reuters Blog, October 9, 2009 [Online] Available at http://blogs.reuters.com/felix-salmon/2009/10/09/corporate-bully-of-the-day-hertz/ Stoller, Gary (2010) “Hertz to acquire rental car rival Dollar Thrifty in $1.2B deal” USA Today 2010 [Online] Available at http://www.usatoday.com/money/industries/travel/2010-04-26-hertz-dollar_N.htm Read More