Formulating and executing HR policies and practices

Today, most companies have easy access to the same technologies, so technology itself is rarely enough to set a firm apart. For example, Toyota doesn’t have manufacturing equipment that’s available to Ford. Why then Toyota so much more efficient, and its cars of such high quality? Watching Toyota’s (or Saturn’s) small self-managing assembly teams would reveal that at once. In most firms today, it’s the employees’ skills commitment, and the management system that produced the skills and commitment, that make the difference. A production expert from Harvard University studied manufacturing forms that installed special computer integrated manufacturing systems to boost efficiency and flexibility. Here’s what he found.

All the data point to one conclusion: Operational flexibility is determined primarily by a plant’s operators and the extent to which mangers cultivate, measure, and communicate with them. Equipment and computer integration are secondary.

So, it wouldn’t take a visitor to Toyota’s Lexington, Kentucky Camry plant long to discover the secret of the Camry’s quality and success. Small teams of carefully selected and highly trained assembly workers inspecting and assessing their own work, selecting their own team members, interacting with engineers and suppliers to improve components meeting with the plant’s top managers, and spending several weeks each year being trained. Costs are low and quality is high because the self managing teams have the capacity and commitment to always do their best. Toyota’s human resource strategies–a full week of employee screening and testing, three weeks per year of training, and team based rewards that incentivize the assembly teams to self manage their own performance for instance ensure they do. The preceding new workforce features presents another example.

Strategic HRM:

Formulating and executing HR systems—HR policies and activities that produce the employee competencies and behaviors the company needs to achieve its strategic aims.

Managers use the term human resource strategies to refer to the specific human resource management courses of action the company pursues to achieve its strategic aims. For example, one of FedEx strategic aims is to achieve superior levels of customer service and high profitability through a highly committed workforce, preferably in a nonunion environment. FedEx’s human resources strategies stem from this aim. They include: using various tools to build two way communications: screening out potential managers whose values are not people oriented; guaranteeing to the greatest extent possible fair treatment and employee security for all employees; and utilizing various promotions from within activities to give employees very opportunity to fully realize their potential. There is interplay between human resource strategy and the company’s strategic plans and results. Strategic human resource management means formulating and executing human resource policies and practices that produce the employee competencies and behaviors the company needs o achieve its strategic aims.

South west Airlines:

Most of the passengers boarding Southwest Airlines flight 172 from Orlando to Louisville probably aren’t thinking about how Southwest keeps its prices low. Those who may assume it’s Southwest’s young fleet of planes or fuel buying policies – but those aren’t the main reasons. If they were, United and USAir could just copy Southwest.

Southwest’s real secret is its human resource management strategy. Strategic human resource management means formulating and executing human resource management policies and practices that produces the employee competencies and behaviors the company needs to achieve its strategic aims. What are Southwest’s aims? Its basic aim is to deliver low cost, convenient service on short haul routes. How does it do this? One big way is by getting fast, 15 minute turnarounds at the gate, thus keeping planes flying longer hours then rivals. What employee competencies and skills do Southwest need for these fast turnarounds? Ground crews, gate employees, and pilots who all pitch in ad do whatever it takes to get planes turned around. And what human resource management policies and practices would produce such employee competencies and behaviors? A HR strategy built on high compensation, flexible job assignments, cross training, and employee stock ownership. We can outline this as follows: High compensation, flexible work assignments and so forth lead to motivated flexible ground crews and employees, who do whatever it takes to turn the planes around in 15 minutes, so that Southwest achieves its strategic aims of delivering low cost, convenient service.

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