A View of Strategic Hrm in a New Zealand Corporate

| Strategic HRM It’s More Than Just a Policy| A view of Strategic HRM in a New Zealand Corporate| | Glenn Duncan – 0705186| 11/8/2011| | *NB: Something, Something Else, Something Else 2, Outside, Thingy, Doublecheck and Hirethem are all pseudonyms. Executive Summary: In this paper I aim to highlight the importance of ensuring that all aspects of the Strategic HRM policy of an organisation are functioning. This will enable the organisation to gain the maximum benefit from its investment in HRM and the resulting motivated and engaged employees. Job satisfaction is related to goal efficacy, management support, performance appraisal review, rewards, organisatioanl facilitation and clarity of goals; (Lee C, 1991). To be effective in any Strategic HRM policy an organisation not only has to â€Å"Talk the Talk’ they have to ensure they â€Å"Walk the Walk† right down to the perceived lowest levels of the corporate ladder. The corporate I was employed at generally had a very good Strategic HRM system; unfortunately there were issues with its execution in some parts of the business. I will highlight three areas in my experience as a line manager where the division I was in was less than adequate at â€Å"Walking the Walk†, and the effect I felt this had on my team’s performance in the key areas of goal setting, performance management and personal development. Poor planning, ineffective goal setting, a dysfunctional reporting system and lack of cohesion in line management and HR and impersonal development are major roadblocks to the success in achieving the HRM goals of an organisation. My findings were that to ensure a HRM plan is effective an organisation has to ensure that it has sufficient suitably skilled and resourced HR experts and line managers, Specific, Measurable, Attainable, Realistic and timely (SMART) goals, supported by a reporting system that is both robust and accurate. Just having a Strategic HRM policy in place doesn’t give you the strategic advantage an organisation needs to compete in today’s markets, ensuring that it is effective from the boardroom down to the lowest rung on the corporate ladder does. Introduction: Something * is a fully owned subsidiary of the Something Else* under Something Else 2*, the consumer brands arm of the corporate, based in Melbourne Australia. Something* is a strong market leader and operates in the competitive Thingy* market in New Zealand. The department within Something* this paper will focus on is the Field Sales Team in the Outside *department. The Other* department markets nothing products to any retail or foodservice outlet that is not a supermarket. Other* channel contributes 20% of the volume, but over 50% of the gross margin. Something Else* as a corporate organisation operates what would be considered a world leading Strategic Human Resource Management policies and practices. This is evidenced by the inclusion of a board sub- committee whom assist the Board in fulfilling its corporate governance responsibilities in relation to the recruitment, retention, remuneration policies and to promote a safe and healthy working environment. Something Else* overall corporate strategy is developed by the Executive Committee, an eight member team from various disciplines lead by the CEO. The executive committee includes the Group Director Human Resources whose role includes responsibility for Something else*16,800 (Full Time Equivalent) staff worldwide with a focus on recruitment, reward strategy, capability management, organisational development, health and safety, training and employee relations. Fonterra seeks feedback from its employees through regular engagement surveys and forming various committees to ensure employee considerations are taken into account on numerous different levels. Something Else* factory workers in generally under collective agreements. Something Else’s* salaried staff are on individual employment contracts, and are performance managed using an HR framework known as Doublecheck*. This framework drives performance, development, succession, talent management and recruitment processes. It incorporates Something Else’s* performance objectives and values and links through to remuneration. The outcomes of Doublecheck*are designed to create opportunities for Something Else’s* people to develop both as individuals and in their careers. Something Else* outsources some of its HR functions including recruitment of salaried staff to organisations such as Hirethem*. The performance management quarterly reviews are focused on Key Performance Indicators (goals) and a range of competencies based on the organisations values: * Co-operative Spirit * Do What’s Right * Challenge Boundaries * Make it happen Something *employs the same HR format as its parent company. The GM of Human Resources is a valued member of the Senior Leadership Team which takes input from Something Else* corporate and various departments to decide the both the financial and strategic goals of the company. The HR team consists of a General Manger, HR Manager, and two HR Advisors. Payroll and Recruitment search are outsourced. Something*uses Something Elses’s* Doublecheck framework to performance manage and develop its salaried employees. Figure 1 – Reporting Structure – something* Ltd – Outside – Field Sales TeamFigure 2 – Something* Ltd – Strategic HRM System Whilst the intentions of the Something* HRM system are robust, the execution of some key elements of the HRM process are dysfunctional and fail to add value to the process. I will focus on three important factors of the HRM process: * Goal setting (KPI’s – Key Performance Indicators) * Performance Management (KPI progress at quarterly reviews) * Employee Personal Development I will present my argument using the HRM Performance casual chain, Source: Adapted from Purcell, J & Hutchinson S (2007). ‘Frontline managers as agents in the HRM Performance casual chain: theory, analysis and evidence† Human Resource Management Journal 17(1), p. 7. Which I feel shows the consequences of failing to execute HRM strategy logically. Figure 3 – HRM Performance Casual Chain: Source: Adapted from Purcell, J & Hutchinson S (2007). ‘Frontline managers as agents in the HRM Performance casual chain: theory, analysis and evidence† Human Resource Management Journal 17(1), p. 7. Goal Setting: Key Performance Indicators (KPI’s) At Something* Key Performance Indicators are set by senior managers using financial data and strategic initiatives from the annual business plan, passed down through the line managers for their respective department. These Key performance indicators will usually include core goals such sales volume / value, speed to market of new product launches, customer count. HR Practice Theory; Something* through the Doublecheck* framework was to set five to six SMART KPI’s and measure an employee’s participation in company activities against a set of competencies based on the Something Else* values. Progress against these were to be reviewed and feedback given / received at quarterly intervals. HR Practice Reality; Frequently the planning of the company was not complete in time for the start of the financial year, company goals were often to be achieved in a 10 month period rather than a 12 month period. This delay also had impact on other areas of planning which leads to a further delay in arrival of the tools the team required to achieve their goals. Goals were also derived from corporate strategy and had little relation to do with the Outside* market. Often in Fast Moving Consumer Goods (FMCG) companies the majority of the strategic focus goes on sales through the high volume supermarket (Key Account) or the Foodservice channel, there often was a lack of in depth understanding of any other channel. Whilst a good deal of this was outside of the overall HRM control, it greatly affected the results the team could achieve against their KPI’s and hence morale and the reputation of senior management. Employee Perception; Employees feel a disconnect from the setting of goals and become increasingly frustrated when poor management decisions and failing to meet timeframes impacts on their ability to meet KPI’s. At reviews employees often questioned the leadership team’s knowledge of the â€Å"out of Home† market the team operated in. â€Å"Knowing you are being judged on your performance but having to either chase unrealistic goals or mark time and wait can be sole destroying† Something*employee. Employee Motivation / Organisation Performance; Employees do their best to strive for goals however a sense of confusion over priorities and clarity results in a lack of motivation, end result is very rarely do KPI’s get achieved, performance reviews are filled with reasons why targets were not met (covering the backside). Performance Management: The Doublecheck* framework for a quarterly review consisted of an employee self-assessment of performance against KPI’s and competencies; this was sent to the line manager prior to the planned appointment. The line manager would compare the employees perceived performance figures against company top line figures. During the meeting the performance against KPI’s and competencies of the employee would be discussed and encouragement given or plans put in place to improve performance. HR Practice Theory; It is the intention of the company to provide accurate data around the employee’s performance relative to the actual market performance. This would lead to a positive conversation about achieving KPI’s and how to ensure this continues or alternatively a conversation about how to lift the employee’s performance to make up any short falls and obtain the goals set for the year. HR Practice Reality; Due to internal database issues quite often only top line data could be used, drilling down into data resulted in more questions than answers. The combination of inaccurate data and lack of clarity in the KPI’s resulted in a great deal of time spent at performance reviews comparing and or justifying data between what the company believed to be accurate and what the employee believed to be accurate. This caused unnecessary angst between both parties. . Employee Perception; Employees felt there was a double standard in the outputs of the company; employees were expected to strive for excellence in their output, as measured in the competencies, whereas the company was permitted to produce less than satisfactory reporting. Employees considered this to go against Fonterra’s value of â€Å"Make it Happen† which focuses on a climate for success, exceptional results, stepping up, take accountability, plan thoroughly, perseverance and celebrate success. The team expressed that they felt let down by the company in the pursuit of their personal and company’s goals. Employee Motivation / Organisation Performance; For the majority performance reviews become conversations over missed opportunities, time delays and excuses. Quite often segments are cut and paste from previous reviews. The process fails to motivate even the high performers. Employee Personal Development: Central to Something Else* HRM strategy is a desire is to attract, retain and develop people of the highest caliber, by believing that learning is an integral part of each employee’s role, learning and development especially when done on the job, dealing with real issues and challenges. It is stated that identification and accelerated development of key talent is critical to Something Elses*success. HR Policy Theory; The Doublecheck*system has a segment where an employee discusses their career aspirations with the line manager with input from HR and agree a realistic career goal. Line managers then work with the employee and the HR team to map out a pathway of development allowing the employee to reach these goals over time. This pathway was to include training, coaching and mentoring. HR practice Reality; Something*under direction from Something Esle2* purchased a generic set of sales courses intended over time to develop a high performance sales team. Unfortunately this generic course was very â€Å"key Account â€Å"focused and again had little relation to the Outside* market. This action took out of play the HR department’s allocated budget intended for personal development towards career goals for each team member. Employee Perception; Members of the team generally felt that they were being disadvantaged by being sent of generic courses they felt did not improve their skill base, knowledge or chance of advancement in Fonterra as a whole. They felt they were being treated as a herd instead of individuals. Training was catering for the lowest common denominator and did not challenge the high performers. Employee Motivation / Organisation Performance; If employees, especially the high performers (who can be high maintenance due to their driven nature), perceive they are not being rewarded by development / progression they ask why should my performance be better than another employee if there is nothing in it for me. Overall result is a decline in motivation across the board. The Role of the Line Managers: Line Managers are tasked with the role of executing a great deal of the HRM policies for Something*, yet generally speaking, the amount of training given to line managers on the intricacies of HRM is minimal. Employees are greatly influenced by the HRM practices they experience of line managers, these can be both positive and negative, a good manager can make poor HR policies work whereas good HR practices can be negated by poor line manager people management or leadership skills. (Hutchinson, 2007) The relationship between employees and Line Management is important in in? encing the employees’ views of the support received or available from the organisation as a whole, both at the functional transactional level and in the corporate climate, this often determines the attitude towards organisational commitment and outlook towards the job. (Hutchinson, 2007) Conclusion: It is considered that SomethingElses* overall HR strategy is very robust and the corporate intention is to run a world class Strategic HRM system. At Something* I believe that the overall strategy is not achieving its goals. This was generally caused by a lack of cohesion between various departments which in turn lead to delays in the planning processes. The delays in the planning process ultimately affected the ability of all employees to meet their KPI’s causing stress and friction between competing employees. At times, it appeared that some senior managers were primarily focused on obtaining their own KPI’s, often to the detriment of the overall company goals. At Something* the HR personnel ratio to employees of approximately 100/1 (excluding the GM HR who was generally focused on strategy) caused issues. HR team members were not able to spend sufficient time with the line managers in discussions / planning around employees. When time was spent with the HR team it was generally pressured and not of great quality. There was also a lack of a cohesive approach by HR and line managers to the review and performance management process, each Line Manager generally went about the process the best way they knew how, hoping they were following the correct procedure and delivering the same message. It is argued that perhaps line managers should not be heavily involved in the HRM process as studies have shown in the undertaking of performance appraisals, management implementation was usually irregular within organisations and that the actual practice was also subject to significant variations of quality (McGovern P) and to further evidence to this argument were the findings: also to be taken into account is the short-term nature of managerial activity which leads to a tendency to put a greater priority on the achievement of the budget numbers, rather than the achievement of objectives through the team. McGovern P). My argument is who better than to review an employee’s performance than the Line Manager who on a daily basis has to work closely with the employee, a HR person jumping in from time to time unaware of the daily challenges would not gain the same insight as a Line Manager does. When discussing the issues around requiring accurate data for reporting on KPIâ€℠¢s and the angst this would cause with HR, a Line Manager would get the distinct impression that the HR advisor did not completely understand the numbers or jargon being used. (Brown, 2001) writes: Ann Boswall, vice-president of human resources and one of six members of top management team at Imperial Tobacco in Montreal, adds, â€Å"It is absolutely essential for HR to do a better job of learning about the business outside of their own department†. With regards to personal development, sending experienced sales teams on generic courses is a tick box exercise; according to the verbal feedback I received, if a post course survey was carried out the over whelming response would have been that no real learning experience has taken place. (T Short, 2010) writes: The failure to evaluate learning events and show positive business results was clearly linked to an undervaluing of training and development investment among senior managers. Recommendations: Ensure the corporate planning process has sufficient time allowed to achieve its goal of presenting a business plan that is able to be executed for the full twelve months of the financial year. This would take a great deal of pressure off the business as a whole. Setting SMART goals that give clarity of direction to the wider team and are specific to each departments channel not generic companywide goals. Even in a company with a goal-setting procedure that had been in use for over ten years, content-related problems with goals (such as lacking goal clarity or conflicting goals) were key predictors of goal commitment and job satisfaction. (Bipp, 2011) The HR department has to be resourced such to permit the Strategic HRM plan to be implemented from the top down. Not having the resources to penetrate and spend time where it counts most left the HR team performing mainly transactional duties such as recruitment and disciplinary activities. Green, 2002) writes: For over a decade, HR leaders have been striving to become business partners. They want to have a strategic impact on their organizations; however, many are struggling to make this transition. The primary reason for lack of progress in this endeavor is that HR analysts, the staff who carry out this mission, are still trained and reinforced in the traditional, transactional mindset. In order for the entire HR department to be consi dered strategic in nature, the HR analyst must learn critical consultative skills. p. 111) To counter this a 2004 Cranet survey indicated that people responsible for HRM activities have a growing proportion of members educated in business related studies, 43% in New Zealand from a business studies background. (E Rasmussen, 2010). Training of both the HR team to understand requirements of each department they deal with and equally training Line Managers in people management skills would help with alignment of HR Personnel and line managers in their duties within the HRM framework. This activity would go a long way to improving the overall performance of the HRM framework and the job satisfaction of employees within Something*. (Hutchinson, 2007) writes: It is often observed that there is a gap between what is formally required in HR policy and what is actually delivered by FLMs. The way FLMs undertake their HR duties of selecting, appraising, developing, communicating, involving, etc. , is inextricably linked to a wider set of what are increasingly called leadership behaviours, which aim to in? ence employee attitudes and behaviour and give direction. These two aspects of FLMs’ roles can be brought together in the term ‘people management. Implementing the above as a bare minimum would greatly improve the overall performance and moral of the Outside* sales team at Something*. Literature Sources: 1) http://www. SomethingElse*. com 2) http://www. something*. co. nz 3) http://scholar. google. co. nz. ezproxy. aut. ac. nz/ 4) http://search. proquest. c om. ezproxy. aut. ac. nz 5) http://web. ebscohost. om. ezproxy. aut. ac. nz References: Bipp, T. (2011). Goal-Setting in practice. Personell review, 40(3), 318. Brown, D. (2001). HR's role in business strategy: still a lot of work to be done. Canadian HR Reporter, 14 (9), 20. E Rasmussen, T. A. , N Hawort. (2010). Has the Strategic Role and Professional Status of Human Resource Management peaked in New Zealand. Journal of industrial relations, 52, 103 -118. Green, M. E. (2002). Internal human resources consulting: Why doesn't your staff get it? Public Personnel Management, 31(1), 111-119. Hutchinson, P. a. ( 2007). Front-line managers as agents in the HRM performance causal chain: . Human Resource Management Journa, 17(1), 3-20. Lee C, B. P. , Earley C, Lock E A. (1991). An Empirical Analysis of a Goal Setting Questionnaire. Journal of Organizational Behavior, Vol. 12( No. 6), pp. 467-482. McGovern P, H. -H. V. , Stiles P. Human resources management on the line? Human Resource Management Journal, 7(4). T Short, R. H. (2010). Challenges in aligning workplace learning with business goal. Australian Journal of Adult Learning, 50(2), 381.