The Concept of Business Strategic Plans - Essay Example

?Strategic Human Resource Management Given that it is people who eventually implement business strategic plans, intellectual capital is one of the major sources of competitive advantage; top managers match corporate strategies with Human Resource Management strategies for optimum performance. Strategic human resource management, also known as Strategic HRM or simply SHRM, is an approach to the management of human resources; the approach provides every organization with a strategic framework to that guides strategic organizational goals and objectives. The SHRM approach focuses on long-term HR issues and macro-concerns such as organizational culture, values, commitment, and structure, among other things. In this view, Strategic HRM guides organizational decisions concerning personnel recruitment, training, development, performance management, and appraisal; personnel relations strategies, policies, and practices are also a key concern to SHRM. Unlike the traditional HRM, SHRM is an integrated approach in that its HRM strategies are integrated both with the business strategy and with one another. Strategic HRM plays a very crucial role in the tourism and hospitality industry because it leads to efficiency in service delivery and a multiplicity of competitive advantages for industry players (Baum, 2006). Some of the major challenges facing organizations and managers in the highly competitive tourism and hospitality sector are to do with recruiting, developing and maintaining a committed and competent workforce. To keep the workforce well managed, well-motivated, and focused on providing high-quality products and services to the increasingly demanding and discerning customers is another major concern for organizations and managers in the Tourism and Hospitality industry. In this regard, Strategic HRM approach provides industry players with a working framework through which they can achieve optimum growth and development; integrating business strategies and HRM strategies gives industry players competitive advantages in the highly competitive Tourism and Hospitality industry (Esra, 2010). Long-term HRM planning is a necessity rather than a luxury given that it addresses broad organizational issues concerning organizational effectiveness and performance. Other major issues of great concern to long term HRM planning include changes in organizational structure and culture, matching resources to future requirements, development competitive advantages, management of knowledge, and change management. Strategic HRM enables the organizations to meet human capital requirements and to develop process capabilities i.e. the ability achieve outcomes more effectively. The aim of long term HRM is to identify all issues relating to the workforce that affect or they are affected by the strategic direction of the organization (Nickson, 2012); this enables the organization to make remedial interventions beforehand. In this respect, critical concerns of HRM such as choice of top management and formation of healthy human resource relations are crucial to every organization. HRM underscores the need for planning, matching HRM activities, and policies to business strategies; it also underscores the need for organizations to consider utilization of their workforce as a strategic source competitive advantage. McDonalds Restaurants SHRM McDonalds is one of the many organizations operating in the tourism and hospitality industry in general and the food industry in particular; McDonalds began in the USA back in the year 1955 with a single restaurant. Since it opened to date, McDonalds has become the world’s largest and fastest growing Quick Service restaurant with over $30 billion worth of sales (Chirantan, 2013). Today, McDonalds operates about 21,000 stores in over 101 countries in the world with plans of expansion in the future by opening an additional 3200 stores (Business2000, n.d). The food industry is a highly competitive sector that requires all players to maintain high standards of service, customer satisfaction, and hygiene. To McDonalds, its workforce is the key resource to deliver unmatched services that have become its trademark, maintain its brand name and remaining profitable in the industry. McDonalds are highly concerned with the motivation, commitment, and satisfaction of its employees because they are a major source of their competitive advantage (HR Editorial, 2013). McDonalds’ main HR strategies aim at increasing employee motivation and commitment, promoting employee growth and development through provision of training programs, and employee satisfaction through various promotional programs. McDonalds engage in a host of HRM activities including, but not limited to recruitment and selection, performance management, organizational design and development; other HR activities include role specification, HR development interventions, reward systems, employee relations and welfare services. For McDonalds, it is close to impossible for any organization to achieve its goals and objectives without investing in its workforce, and this explains its commitment to SHRM (Business2000, n.d). McDonalds seeks to achieve its growth and development by working through people rather than with people as it is usually the norm in many organizations. Through various HR strategies, McDonalds has been able to develop a committed and competent workforce that delivers quality service and customer satisfaction. Strategic HRM strategies can be viewed as the main business strategy that has strategically positioned the restaurant in its current market position above its competitors in the food industry. McDonald’s employee training is a continuous program throughout the company and in the restaurants (Langen, 2011); the training program is made up of daily coaching and technology assisted learning programs. McDonalds has a Management Training Centre that offers two weeks advanced functions management course to future managers. For instance, the Crew Development Program is aimed at enhancing the progress of McDonald’s crew and to make them more efficient in the restaurant. Hierarchy level at McDonald is kept at the lowest to encourage open and free communication between crewmembers and the management i.e. crewmembers can feel free to discuss with the top management any issue relating to employment. McDonald even has an annual Founders Day, when all office employees work in a restaurant for the day in uniform to remind them McDonald’s nature of business. Job rotation is a common phenomenon at McDonalds as employees periodically alternate functions to gain experience in all areas of the business. McDonald attracts and retains a diversified workforce in its restaurants around the world, and practices selective hiring of employees i.e. all the recruitment for McDonald’s staff is through internet application form and advertising on the store, thus offering equal employment opportunities to all. This process is not only time efficient, but also very cost effective thus helping the restaurant to save both time and money; upon completion and submission of application forms, only selective candidates are invited for interview. However, McDonald pays minimum wages to their employees; it has been noted by that the low level of employees (crew members) are unhappy with their wages and reward systems McDonalds has both position and pay promotions (appraisals) to honour exemplary employee performance; the restaurant has a pre-determined standard upon which the workforce is rewarded basing on knowledge, skills, and experience of work. On an overall, 40% of senior managers at McDonalds have been drawn from the crew and promoted internally to managerial positions as opposed to direct hiring from outside. Most of the top managers started their career by working at the lowest level of the hierarchy i.e. as crewmembers in the kitchen of the restaurant, but through training and employee development programs, they have risen to managerial positions. Other HR strategies include McDonald’s employee welfare initiatives that seek to ensure employee satisfaction. For instance, McDonald’s scholarship programmes, service recognition awards, life assurance plan, and private medical care ensure that the employees are satisfied and committed to the success of the organization (Erica, n.d). McDonalds also provides an investment opportunity to its employees by allowing them to invest in shares of the company, among other things. All these HR strategies are aimed at promoting the restaurants workforce growth and development, to ensure it is well motivated and committed to offering quality service and customer satisfaction at all times. Most importantly, strategic HRM strategies have been directed at enhancing the restaurant’s competitive advantage in the highly competitive food industry. Once again, an examination of McDonald’s HR Strategies reveals that McDonald’s Strategic HRM and its HR management strategies have been integrated to promote the restaurant’s efficacy at value creation, and profitability. Since the McDonald’s workforce is the restaurant’s most prized asset and source of competitive advantage, McDonald’s Strategic HRM is an integral part of McDonald’s HR management strategy (HR Editorial, 2013). The restaurant is willing to go to all extremes to promote HR development, satisfaction and commitment because it recognizes that it can only achieve its goals through people it employs. Through Strategic HRM, McDonalds has been able to develop a myriad of competitive advantages against its competitors in the foods industry, and to remain profitable by achieving its business goals and objectives through people. Influence of Globalisation, high Competition, Instability and Technology in SHRM Policies Strategic organizational management is affected by a number of factors that characterize the business macro environments in which organizations operate; the PESTLE model provides a framework for scanning and analysing environmental factors that exist in the macro environments in which businesses operate. The first four letters PEST stand for Political, Economic Socio-cultural and Technological factors, and the remaining two that can be alternated stand for Legal and Environmental factors (Oxlearn, n.d). Using the PESTLE model, this paper will identify and discuss with examples the impact of globalization, high competition, changing technology and business instability on devising strategic HRM policies; the impact of Equal Opportunity legislation and ethical considerations in employment of labour in the US will also be highlighted. Organizations have no control over the macro environmental i.e. an organization on its own cannot change these factors; nevertheless, these factors may not directly affect the organization’s profitability; however, a keen eye on these factors enables the organization to take advantage by maximizing opportunities and minimizing threats that may challenge its profitability. A PESTLE analysis audits organizational environmental influences as a guide to strategic decision-making, especially because changes in any of the factors in the macro environment could be either an opportunity or a threat to the organization. An organization that understands its macro environment is able to determine its strategic position in the environment, its opportunities or threats and its strategic direction; in addition to that, the organization is better placed than its competitors to respond to changes in the macro environment. Political factors may refer to the stability of the political environment and/or the attitudes of political parties or political movements and organizations in the individual nation states where organizations operate. These may manifest through government influences on tax policies, and/or government involvement in business contracts in those environments where organizations operate. Organizations must consider how governments approach corporate policy, corporate social responsibility, environmental issues, and customer protection legislation; in addition to that, the organization must also consider the potential impacts of the government’s stand on business, and if that is likely to change with time. Political factors are closely tied with Legal factors only that whereas Political refers to attitudes and approaches, Legal factors are those that have already been passed into law and regulation. For instance, legal factors include national employment laws, international trade regulations, and restrictions; other crucial legal factors include monopolies and rules that govern mergers, and consumer protection policies. Unlike political factors, which represent influences, restrictions, or opportunities but are not mandatory, legal factors are mandatory and organizations must comply to with them. Economic factors vary in different contexts and they represent the wider economic considerations such as economic growth rates and levels of employment or unemployment, among other things (Tribe, 2011). Other economic factors include costs of inputs such as energy, interest rates, monetary policies, exchange rates, and inflation rates in the individual countries where organizations operate. Socio-cultural factors include the culture of the local communities where organizations operate and other things such as demographics, age distribution and population growth rates. The level of education, distribution of national resources, social classes, in addition to, living conditions and lifestyles are also important socio-cultural factors to consider in organizational strategic planning. Technological factors refer to the level of technology, innovation rates, and technological development, including changes in information infrastructure; other factors to consider are changes in the internet, the emergence of e-commerce/ mobile commerce, and government research in technological advancements. Technological factors go beyond developments on digital and internet-related areas to include equipment development and new methods of manufacturing, distribution, and logistical factors. Globalization, high competition, changing technology, and business instability in today’s global business environment have a direct impact on organizational strategic HRM policies. Globalization can be regarded as the increase in cross-cultural and cross boarder interaction between countries, companies, and individuals; globalization has emerged largely because of the disintegration of global frontiers and the opening of domestic markets to foreign firms (Chen, 2009). Globalization has led to increased integration of organizational operations, strategies and processes in diverse cultures, products and services, and ideas that it is increasingly determining organizational HR strategies (Anthony, n.d). For instance, the rise of globalization has led to an inevitable diversification of organizational customers and stakeholders, from diverse languages, and socio-cultural backgrounds (Bradley, 2013). In response to this diversification, many organizations HR strategy is to recruit employees from diverse socio-cultural backgrounds to take advantage of the socio-cultural factor in their macro environments. Diversity recruitment enables the organizations to develop a workforce that their customers can relate to, and to utilize their diversity as a source of competitive advantages. High competition in global markets can be attributed to the entry of new industry players and the ever-increasing standards of quality for the global clientele. The need to maintain a competitive niche above industry players through the development of organizational specific capabilities or competitive advantage leads to fierce cutthroat competition. Organizations are turning to effective Human Resource management as their source of competitive advantage to survive competition in the highly competitive global markets (Esra, 2010). An organization’s workforce has the incredible capacity of developing certain capabilities that are unique to an organization and cannot be duplicated by rival organizations. The fast changing technology can be attributed to the high rates of invention and technological advancements because of extensive research and knowledge explosion that renders traditional systems obsolete. Changing technologies are increasingly affecting organizational HR strategies especially in areas such as recruitment, training, and development and performance management (Morison, n.d). For instance, the advancements in technology have completely altered the way organizations hire their workforce; nowadays, e-recruitment has replaced the traditional ways of recruitment in many organizations. It is common practice for organizations to post vacancies online alongside application forms, which are completed by prospective job seekers and upon completion; successful applicants are invited for interviews. The change in technology has transformed other HR management functions such as performance management especially through payroll and attendance records (Amit, 2013), which form a valuable basis for employee appraisals. Organizations operate in complex and dynamic business environments, and this leads to high business instability that calls for a multifaceted approach towards business sustainability. The worrisome instability in global business environment can be attributable to a myriad of factors but key among them include international conflicts, and the emergence of protectionism and nationalism. For instance, Political tensions that lead to instability in the macro environments where organizations operate are contingencies that can result to organizational challenges, thus, their influence on organizations’ HR practices and policies. HR managers are keen on political attitudes and organizations and the possibility of changes that may call for the organization’s response. Governments may have direct influence to HR management through labour policies, and organizations must hire and manage their workforce in accordance with those stipulations. The U.S. has an Equal Employment legislation that is enforced partly through the Equal Employment Opportunity Commission and is provided for through the Civil Rights Act of 1964. The Act protects the prospective employees from workplace discrimination and employment discrimination based on race, colour, nationality, among other factors. The Act also prohibits employers from acting against any employees who carries out their rights as provided for under the US constitution. The Equal Employment legislation has a direct impact on employment of labour in the US; organizations are required to offer equal employment opportunities in recruitment of their workforce in accordance with the legislation. In this regard, organizations operating in the US are obliged to recruit their workforce regardless of race, skin colour, nationality, sex, religion or any other basis of discrimination. The US labour employment is also governed by some ethical considerations such as child labour and human rights issues especially for foreign workers. In this regard, the US has child labour laws that clearly stipulate the minimum age for labour employment and organizations are obliged to recruit their workforce on this ethical ground. For instance, organizations cannot recruit children under the age of sixteen to work especially in hazardous work environments that may endanger their health. The US’s "Fair Labour Standards Act of 1938" outlawed all forms of oppressive child labour i.e. employing a person under the age of 16 or employing a person between the ages of 16 and 18 in an occupation deemed to be hazardous by the Secretary of Labour. For instance, working with explosives, roofing, and coal mining have been classified as oppressive occupations, and organizations are obliged to put these ethical concerns into consideration when hiring labour in the US. Effective HR managers Characteristics Effective HR managers have a number of specific characteristics and competencies that promote their execution of HR management roles with utmost success of their organizations. Overall, basic HR managers’ characteristics include but are not limited to expertise, communication, cultural sensitive, flexibility, adaptability, integrity and leadership. Effective HR managers must possess a wide knowledge of HR functions such as employee relations, recruitment and selection, and training and development (Mayhew, 2013); sufficient knowledge of HR management and HR processes is essential for effective management of HR specialists. HR managers require strong communication skills in order to interact effectively with a wide range of people including staff, company executives and supplies. Listening is a key aspect of the communication process, and HR managers must pay equal attention to staff’s comments as to executive’s strategic plans. HR managers must be sensitive to cultural differences and be aware of their existence in the workforce (Heaps, 2012), and make use of them by turning them into competitive advantages for the organization. HR managers must also be flexible and adaptable because different business environments present different challenges that require varying the HQs HR strategies. HR managers must also be of high integrity to execute their HR functions with utmost integrity; for instance, HR managers require integrity to uphold basic business principles such as equal employment opportunities, fairness, and equity at the workplace. In addition to that, HR managers have access to confidential company information and data regarding things such as organizational strategy, employment data and company proprietary information. In this regard, integrity is of utmost importance to HR managers Managers apply different management styles or a multifaceted approach at management that combines a number of different management styles in different situations in the running of organizations. The most common management styles used in organizations around the world today include democratic management, autocratic management and laissez faire management styles. Each style of management has its own advantages and disadvantages and managers must know the correct style of management relevant to every situation at the workplace. A democratic management style entails making major decisions basing on what has been agreed upon by the majority (Types of Management, 2013); the democratic manager involves the staff in decision making through group discussions, votes and staff meetings. The advantages of this management style are that it enables the management to harness ideas from the rich organizational diversity, and to build a strong, highly committed, and well-motivated workforce. The advantages include long decision making processes due to lengthy deliberations and consultations, and the decisions arrived at may not necessarily be the best and/or in the organizations interest due to conflicting interest. The autocratic style of management is a dictatorial style, where the top management has total authority and absolute control over organizational decision-making (Queensland, 2013). Autocratic managers control the workforce, and monitor the performance of tasks to ensure they are completed on time according to the plan. The only advantage of this style is that the management gets things to be done especially where strict deadlines are to be met; the disadvantages are that it can frustrate employees who do not like supervision, and it can stifle creative and innovative thinking. In addition to that, employees lack motivation to work and this leads to poor task performance in the organization thus low organizational output in the end. Laissez-faire management is a 'hands off' approach to management that has neither clear leadership nor rules; everyone is free to do whatever they want in the organization. The advantage of this style of management is that it gives employees a sense of empowerment and fulfilment because rules or management does not control them. This style of management is also advantageous because it can foster creativity and innovation in the organization because free thinking is not stifled by the management. The disadvantage of this management style is that it assumes staff will be responsible and committed to their work and life changing problems that can potentially be damaging may go unnoticed for long. Impact of Job Design and Skill Development on Performance Job design and team members’ skills development impacts on individual and group performance in the workplace; job design may refer to the process through which the top management decides individual tasks and authority in the organization. Major aspects of job design include job organization (deals with things such as division of labour, job delegation, and job rotation), job structure (entails job enrichment, autonomy, and process management) and job scheduling/ location (deals with the site of work and time requirements for the work). Job design must go beyond the simple definition of simply finding the most effective ways of performing tasks, to allow the growth and development of the workforce. Some job designs are unnecessarily rigid and static that they stifle employee development in the organization, and performance of individual and group tasks accordingly. Organizational structure and operational framework should ensure that job designs are flexible to unleash employee potential rather than stifling it, and this promotes performance of tasks. For instance, management can apply the Quality of Work Life management philosophy in the designing of tasks to be performed by individuals at the organization. The Quality of Work Life approach promotes the dignity of all workers, introduction of cultural change in the organizations and improvement of the physical and emotional well-being of employees. In order to enhance individual and group task performance, job design should focus on identifying both individual and organizational needs; job design should then develop jobs that promote both individual needs and organizational needs to enhance individual, group and organizational effectiveness. An effective job design specifies the contents, methods, and relationships of jobs; this not only fulfils the technological and organizational requirements, but also the social and personal requirements of the employees. Therefore, managers can enhance both individuals’ and groups’ performance of tasks through effective job design strategies that promote development of competitive advantages for the organization. Skills development for team members is another critical concern for management today because it directly determines both individual and group members’ performance of tasks in the organization. Every work force needs to develop a particular set of skills that promote the advancement of organizational goals and objectives with utmost efficiency. Organizations that invest in skills development achieve heights of organizational growth and success due to increased efficiency. Regular organizational training and development programs are quite effective in skills development as employees continuously become better at performing tasks leading to increased efficiency. Diversity at the work place today is a very valuable asset to organizations as it brings together a team of employees with mixed skills, abilities, and aptitudes that are essential for task performance. Managers should encourage this diversity by considering and incorporating the varied ideas of their workforce in major organizational decisions that are made in the organization. This way, the workforce is encouraged to develop unique skills and capacities that are organizational specific and cannot be duplicated by rival organizations. Both individual and group performance of tasks depends on the level of skills of individuals and the groups performing the specific tasks. Organizations should therefore consider the level of skills of its workforce when assigning tasks to promote task performance; this ensures that tasks are matched to the level of competence of employees. Job rotations in the organization also ensure that the workforce develops an array of skills by familiarizing themselves with the basic functions and processes of the organization (Nigel, Campbell and Stonhouse, 2003). The need for organizations to promote skills development for its employees cannot be ignored, as the human resource is every organization’s source of competitive advantages. The organizations need to develop the skills of their workforce to enhance efficiency in task performance and to develop capabilities that are unique to the organization (Esra, 2010). Working to achieve organizational goals through people is the most effective way of dealing with global competition and remaining profitable in the highly complex and dynamic global business environment. Employee skills are an organization’s only resource that is not accessible by rival organizations operating in the same industry. In this regard, HR management strategies focus on training and development of the human resource to increase its effectiveness and quality of service. Q6. Strategic HRM is very instrumental in developing organizational culture of organizations; for instance, McDonald’s organizational culture is arrived at through Strategic HRM approaches. McDonald’s has integrated its HR management function with Strategic HRM because it recognizes the crucial role played by the human resource in the achievement of the restaurant’s business goals. McDonald’s has identified its workforce as a major global corporate strategy for success in the food industry where it operates, which is highly competitive that it calls for highly motivated and committed workforce that provides quality service. The restaurant achieves its extensive business goals through its workforce. In this regard, McDonald’s HR strategies focus on the human side of the organization; by motivating the workforce, developing commitment, collaboration and communication, skills development and appraisals, the organization develops its competitive advantage over industry players. Eventually, McDonald’s strategic HRM practices have played a major role in determining the restaurant’s organizational culture over the years; having been integrated into the organizational HRM functions, strategic HRM guides its business strategy. McDonald’s strategic HRM frameworks and policies largely are governed by the Best Practice model, the idea that a particular set of HR practices has the potential to promote organizational efficiency. According to McDonald’s, strategic HRM practices contribute to improved attitudes and behaviours among its workforce thus leading to high motivation and commitment; therefore, Strategic HRM strategies leads to low absenteeism and labour turnover, while promoting level of productivity and quality of customer service. The result of all these approaches is higher organizational performance and profitability due to the increased competitive advantage that is unmatched in the food industry. The Best Practice model incorporates a number of components such as selective recruitment, internal promotion and employee job security; other components of the Best Practice approach are training and development of employees, reward over the organizational performance and employee consultation. All the components discussed above provide the framework for McDonald’s HRM strategies in the restaurant’s pursuit of competitive advantages in value creation. For instance, McDonald’s offer great job security to its workforce and are committed at reducing employee turnover in the restaurant. McDonald’s employees’ job status automatically moves from temporary to permanent after successful completion of a three months’ probation period. Overall, the policies and frameworks that govern McDonald’s strategic HRM have been successful at increasing the restaurants’ competitive advantages in the highly competitive tourism industry in general and food industry in particular. 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