Human Resource Management Lesson 2 Exercise
1.- Reflecting on your own work experience, and with reference to the theoretical models discussed in Lesson 1, how would you characterise the role of the HR function in an organisation that you are familiar with?
I am familiar with one company where I was working for four years since 1996 to 2000. The company was Lucent Technologies Inc. (it was bought by Alcatel in 2006) and I worked in its IT department in Spain.
Figure.1. Lucent Technologies Logo from 1996 when it born after spun off from AT&T..
Lucent was a very large company originated by AT&T division, and after several years of very good results, in 1999 Lucent began its decay. Several events related with the labour situation of the employee happened in this period and in order to understand the HR function we are going to review the external and internal context of the company. In relation with the external context the main characteristics are the following:
· Political and Economic context: In 1996 the conservative party won the elections and did several important changes in the political and economic aspect of the country. The rates of unemployment, with almost 25%, decreased quickly and Spain joined in the UE due to the success results.
- Legal context: In this period the government faced to the reformation law to free up the labour market in order to facilitate the employment although against the right of the employees, in opinion of Unions.
- Labour Markets: Its was a period of a very high economic growth, with high inflation rates and where one of the better competitive advantage of the country, that was the low salaries, changed because the salaries started to be not as competitive as before in relation with other countries of East of Europe. During this period Spain lost its competitive advantage (cheap labour market) and started a transformation that until today is needed.
- Business Sector: The industry sector of telecommunications showed a very big explosion in 1996 to 2001 with the mass use of internet. But in the sector of the internet infrastructure, the crisis appeared some year before, and at the end of 1998 the sales decreased because all customers already had expended a lot of money in hardware to communications and came the time to develop business applications. Lucent started several changes to reduce cost through optimisation of its process and des-invest in some countries as Spain and other mature European countries.
- Location: Using the model of culture of Fons Trompenaars (1993) the dimensions that best fits with the Spanish culture can be Particularistic, Collectivistic, Emotional and Ascriptive. In case of Lucent is a world wide company but important to know these characteristic in order to understand the behaviour of the managers and no managers employees in Spain.
In relation with the internal context the main characteristics are the following:
- Management style: The style of management in Lucent is very different of the most of the Spanish companies, in Spain is known as typical American management style. Attending the Purcell's classification (1986) the management style can be classified as collectivistic and in the middle between consultative and constitutional depending of the department because almost the middle of the workers in Spain worked at the production plant. It’s important to remark that in the production department unions were very powerful in this sector.
Figure.2. Big picture of booking of school books process.
- Internal structure: The internal structure was different to the production workers and for the office workers. For the fist the structure was a vertically, but for the rest of them was a matrix structure. Although the general structure was multi-divisional or M-Form structure where each division or department had high degree of independence.
One of the main functions of the HR Manager was managing the Payroll Systems, and due to the new reorganization of the processes and the intention of use outsourcing of some departments several actions was taken in order to negotiate the different conditions with the employees and unions. To complete all the actions by the HR Manager were needed the support of CEO, and this happened because the HR Manager was changed by the CEO before undertaken the reorganization. Following the typology of the HR functions described by Storey (1992) this kind of HR model we can be classified as Change-Makers.
2.- Why do you think HR played this role in the organisation?
With the new external factors and mainly with the factor of economic situation in the Sector, the strategy of the company changed and Lucent started a hard change process. This process started making outsourcing of several departments as was the Quality department, IT and some production areas, even some functionality in the HR department changed and for make it was needed to have the commitment of the HR manager in order to implement difficult decisions and negotiations.
Figure.3. Typology of HR functions.
3.- What are the strengths and weaknesses of this role in the context of the organisation?
The main strengths of the role were to implement the decision of the CEO with ‘Iron hand’ in order to reduce its main production cost. The labour of HR Manager should address the constraints correctly, as are the Spanish law, union force, the directive company at world wide level without reduce the productivity of the departments not involved in the changes.
The main weaknesses in the management of the HR manager was the ability to maintain the employee morale and productivity during the negotiation process in order to maintain the same knowledge and people after outsourcing.
Marchington, M. and Wilkinson, A. (2008), 'Human Resource Management at Work' (4th edn), London: CIPD.
Helen Newell (2009), Human Resources Management Study Notes, Warwick Business School.
Purcell, J. (1986), "Employee Relations Autonomy Within a Corporate Culture", Personnel Management, February.