Human Resource Management Lesson 2 Exercise
For this exercise I would like to take as an example the company that I worked for before joining IBM. The name of this company is CHG-MERIDIAN Deutche Computers Leasing AG. This is a German company with the HQ at the south of Germany. It was founded in 1970s and remained a family owned company till the 90s.
Starting from 1990s the interest to the financial leasing of the IT equipment started to grow rapidly due to the dramatic increase in the usage of IT itself. During this time CHG-MERIDIAN became a multinational leasing company with the offices in 15 countries of Europe including office in Moscow, Russia.
Using the Trompenaars' (1993) management practices classification I can say that:
1. Universalism is mostly applied by the management. CHG has a strict bureaucratic structure with well defined roles and formal choice of the best person to fit this or that position.
2. Collectivism used in the performance assessment. There is no individual target for the employees. The assessment is performed on the business unit level only. Most often it is done on the country level.
3. Neutral emotions.
4. And achievement prevails in the performance assessment.
Main decisions are made by the board that consists of the founder of the company and his sons. There is also the advisory board that consists of the accounting, finance, legal and business professionals.
Talking about the HR function I would like to apply the Typology of HR functions described by Storey (Storey J. 1992).
The HR function in CHG is mostly cared re the labour legislation and other rules and procedures related to the subject. HR can influence on some managerial decisions if they are inconsistent with the regulations but only on the day-to-day task basis. There is no HR involvement in the strategic decision-making process.
I think that HR plays the Regulators' role in CHG-MERIDIAN due to the rapid growth of the company from the small family-owned business to the multinational corporation. While being a family business CHG-MERIDIAN was mostly focused on the sales activities and did not care a lot about the employees. The financial products that CHG offers are very standadized and the sales people does not need to be very qualified to offer the standard solution to the customer. The credit decisions had been made by the owner of the company and there were no need in the educated credit analysts.
When CHG became a multination corporation the owners did not recognize the importance of the HRM and kept the same level of HR department with the same level of its involvement into the corporate management.
I think that this role of HR has more weaknesses than strong sides. The only strong side that I see is that HR is really focused on the labour legislation and documentary side of HR work. So this brings the safe position of the employees if the country labour legislation protect them.
But from the company development perspective I see a number of dramatic weaknesses:
- HR is not involved into the strategic decision-making process and because of that can not influence on the development rout of the company, at the same time HR is the most important one for the services company.
- As CHG became a multinational owners had to delegate some tasks to the local managers and leaders. Credit decisions are delegated to the local credit departments. The HR has to develop the employees. To increase their qualifications to ensure the proper decisions.
- HR has to participate in the compensation design as old fashioned sales plans demotivate sales reps and lead to the decline of revenue.
From my point of view the movement of the HR from Regulators to Advisors quadrant had already started in CHG-MERIDIAN. This should be supported by the founder and owners of the company and will lead their still family-fashioned business to become a true multinational corporation.