Strategic Management of Human Recourse and Innovation - WesFarmers - Case Study Example

Case Study 1 Student Name: Student ID: Table of Contents 1. The Practical Aspects of Relevant Theories 3 1.1 Assumptions 3 1.2 Advices to John 3 1.2.1 Resource Based View 3 1.2.2 Best Practice Model 4 1.2.3 Best Fit Model 4 1.2.4 Balanced Scorecard 5 1.3 Radical Innovation 5 1.4 Performance Appraisal 5 2. The Balance Scorecard Approach 6 3. One Page Advice Summary 7 References 8 1. The Practical Aspects of Relevant Theories 1.1 Assumptions There are four problems that are assumed and are required to rectify by the business manager, John Tomey. The first one is the unsatisfactory capabilities and skills of the staff and the managers as well. The second is the behavior of the staff, who either do not live the values or they do not consider numbers in measuring the performance. The third problem is the little experience of John Tomey in building the skills of the workforce. Lastly, the employee commitment is low in WesFarmers. It is also assumed that the competitive advantage of WesFarmer is the manufacturing and supply of ammonia. Moreover, there is an assumption, which states an aim to be achieved over the next three years and it is about growing the business by more than 20%. 1.2 Advices to John In order to build and grow the workforce and to improve the performance of the business of Wesfarmers Chemicals, Energy and Fertilizers, this section will provide some SHRM models that can be useful for John to ace in his aim. 1.2.1 Resource Based View In order to reach the level of capabilities, John is advised to use the Resource Based view. It is a model of strategic human resource management that can view the firm and provide a number of resources, in which human resources is the major one[Wer84]. These resources and their combination offer the firm to have an element of differentiation from other competing firms[Pet93]. Thus, it is an inside out approach that evaluates the internal resources [Mah92] and it will give the aspect of differentiation in the WesFarmer. Since, the internal environment lacks in motivation and the performance is needed to be increased, the advantage of this model is that it is more concerned for the internal environment as compared to the external one [Har95]. The resources and capabilities are the major internal environment factors that can affect the performance of WesFarmer. Hence, the strategic action must be made by John Tomey to focus on the internal factors. John can use RBV in three different analyses that will be discussed one by one in the following sections. 1.2.1.1 Core Competencies It is difficult for John Tomey to focus on each and every activity and their required capabilities. So, in this case John can solely pay attention to only those capabilities that are linked up with the sustained competitive advantage. The capabilities that are important in gaining the competitive advantage are known as the core competencies[Wri01]. Here, John is expected to devise such competence that is distinct, rare and exceptional. 1.2.1.2 Dynamic Capability WesFarmer can modify its operations and functions and cope with the world by using this analysis. Through the dynamic capabilities of the WesFarmer, it can integrate, establish and re-arrange the competencies that are internal and external at the time of changing environments[Hel03]. 1.2.1.3 Knowledge Based View This theory advocates the ability of a firm to learn the concepts and processes faster than the competing firms [Mor12]. In this way, the competitive advantage can be secured by John. Furthermore, it can also urge the WesFarmer to make its competitive advantage sustainable. It emphasizes on the explicit and tactic knowledge and the learning ability of the workforce. 1.2.2 Best Practice Model With the help of this theory, there is a way to active learning at WesFarmer, where people change through the motivational tools and learn from other firm’s mistakes. The priorities and directions are set to a standard and the WesFarmer can move from its current situation due to the Best Practice Model. This model is known as the ‘Universalist’ approach, which means that they can act well in any kind of situation. The organizational performance of WesFarmer is not satisfactory, so this model is advice to John to apply, because Best Practice Model can generate the organizational performance. It is assumed that the economic performance can be enhanced by the effective management[Bec96]. Such practices can generate profits in the WesFarmer through the workforce. It is advised to John to use this model, because it will develop the employees, team work, high productivity and high management system [Pfe95] in the WesFarmer. 1.2.3 Best Fit Model Another model that is advised to John is the Best Fit Model, in which he can align the HR strategies and organization, specifically on the culture, procedures, resources and process. The HR is completed restricted in implementing the strategies with duly effectiveness. It is a model that is based upon the cost reduction and quality focused strategies [Mil072]. There are three types of Best Fit Model that can be helpful for John and they are explained as below: 1.2.3.1. Life-Cycle Models John must notice the different developmental phases of WesFarmer and he must change HR strategies according to that phases. The alignment of the practices and policies of HR, which are appropriate for several business stages, i.e. birth, growth, maturity and decline, of WesFarmer can be design through this model. 1.2.3.2 Competitive Advantage Models The competitive advantage of WesFarmer is the production and supply of ammonia. John is advised to make a perfect use of this competitive advantage by aligning and integrating the policies and practices of HR as per the strategies of generic competitive advantage. 1.2.3.3 Vertical Integration Since John want to increase and expand the business by 20%, the vertical integration is advised to him. By using this model, the company can expand through owing the supply chain. By taking the hold on the suppliers, John can get success in his aim. 1.2.4 Balanced Scorecard It includes a number of measures that can evaluate the health of an organization. According to Kaplan & Norton (1995), four different types of perspectives can become the part of a Balance Scorecard to discuss the position of an organization. They are financial, customer, learning and growth and internal business process[Mar99]. It will satisfy the WesFarmer’s stakeholders and the perspectives are analyzed by referring them to the WesFarmer’s stakeholders. It will allows John to make the strategies by thinking of the stakeholders. It also presents the balanced view of the activities that are responsible for the overall performance of WesFarmer. It measures the effectiveness and efficiency and clarify the vision, so that the strategies can be designed to get the desired output. 1.3 Radical Innovation Here, it is assumed that the Wesfarmers have not produced a new product from a couple of years. The point of sale, which the Wesfarmers is currently having is the store and physical dealer shops, is also assumed. To innovate the business model, Wesfarmers must start selling its product on the internet, i.e. online sales. There are three levels of innovation that can be used by the organization to perform better and obtain the competitive advantage [Tid01]. To cure the existing problem and acquire the goal to grow, John is advised to bring the innovation at the radical level in the products and the business model of WesFarmers. John Tomey can grow the business by introducing new chemical products and may find new locations at the point of sale. 1.4 Performance Appraisal To motivate the workforce and to increase the employee commitment, John is advised to use the Performance Appraisal. It will enhance the performance of WesFarmer and grow the business. It is the evaluation of the employee’s work. The organization is rewarded if an employee achieves a good performance appraisal. The performance of the workforce at WesFarmer can be evaluated with the help of several analyses, such as rating scales, 360 degrees, MBO, graphical rating and critical incident method. The effectiveness, efficiency and the sustainability of an organization can be produced if there is a growth in the Performance Management [Mil07]. While evaluating the performance, John is advised to have focus on the team work ability, competency. Ethics and initiative skills of the workers. 2. The Balance Scorecard Approach It aims to satisfy the stakeholder and the perspectives are analyzed by referring them to the stakeholders [Lip00]. It allows the managers to make the strategies by thinking of the stakeholders[Mil072]. This section will design a Balance Scorecard for the Wesfarmers Chemicals, Energy and Fertilizers to grow the business and enhance the skills and values of its employees. Objectives Measures Targets FY01 FY02 FY03 Initiatives Financial To increase the profits. To increase the market share. To decrease the operating cost. To increase the sales. ROCE In percentage In percentage In Dollars. 5% 5% 2% 5% 12% 12% 5% 13% 20% 20% 8% 20% The profits, market share and sales can be increase by the new product. The operating cost can be minimized through the radical change in the business model. Customer To increase the customer satisfaction. In percentage. 10% 17% 22% It can be increased by the percent of sales and market share each year. Internal Processes To increase the operational excellence. Build the online stores. In percentage. In numbers of stores. 5% 5% 17% 10% 23% 15% Change in the business model can increase the operational excellence and establish the online stores. Learning & Growth To enhance the worker’s capabilities and skills. To improve the overall performance of the firm. In percentage. In percentage. 7% 5% 14% 12% 21% 20% The application of SHRM theories and performance appraisal can enhance the skills and produce the better overall performance. Table 1: Balance Scorecard for Wesfarmers Chemical, Energy and Fertilizers There are several assumptions that are made in preparing the above Balance Scorecard. They are listed as below: Currently, the company has low profits, sales and market share and high operational cost. The level of customer satisfaction is low at the moment. At present, the operational excellence is below the standard. Right now, the company is only dealing at the physical sales point. John can use the above Balance Scorecard to improve the present state of WesFarmer. Four types of objectives with the target are mentioned in the Balance Scorecard, so that he can attain the ultimate goal in three years. With the purpose of increase in the profits, market share and sales, WesFarmer should launch a new product. The operating cost can be minimized through the radical change in the WesFarmer business model. Customer satisfaction can be increased by the percent of sales and market share each year. Change in the WesFarmer business model can increase the operational excellence and establish the online stores. The application of SHRM theories and performance appraisal can enhance the skills of the workforce and generate better overall performance. 3. One Page Advice Summary Since, John is working in an organization that is a large Australian conglomerate, he is advised to follow the latest strategies to cope and stream with the world. While applying the HR strategies, John Tomey must measure the performance of workers and WesFarmers side by side. There are a number of ways to measure the performance of the workforce, such as by comparing the profit, growth and productivity from the actual to the expected figures [Mil07]. He is suggested to use the qualitative measures, such as efficiency, effectiveness, quality of work, job satisfaction, turnover and absenteeism, for measuring the worker’s performance. Another advice to monitor the performance contrary to the strategic goals is the Balance Scorecard [Ban04]. John is advised to work strategically in pursuing the goal of enhancing worker’s skills and growing the business by 20%. He is recommended to relate the performance with the reward to motivate and encourage the employees. By designing the job in such a way that it includes the responsibilities, feedback and rotation, John Tomey can obtain the best outcomes. If he incorporates the financial and non-financial rewards and pay for the performance schemes, then he can develop a progressive culture and secure the desired performance. Another advice to John Tomey is to incorporate the best chosen strategy with HR through the management systems, which are incorporated with the ability to develop the intellectual capital, dynamic capability and ability to establish the knowledge based organization[Str]. Innovation does not comes automatically and it is dig up by polishing the capabilities and skills of the employees[Che01]. If John is able to change the behavior of the people, then he can induce innovation and creativity. The element of creativity can be easily yielded in an organization, because every person can be creative and together an organization can be creative [Kas06]. The quality of innovation and creativity can be enriched by boosting the skills of the workers with the help of the HR strategies, such as staffing, training, reward and appraisal. The recruitment and rewards are the important functions of Human Resource Management [Dav061]. The individual performance is valuable for the overall organizational performance, hence it can aid in achieving the goals of the organization [Hod03]. To implement the radical innovation in the business, John must consider the needs of existing and future customers, cost and speed in the seven phases of innovation, which are derivation of an idea, technical solution, needs of market, funds, development, launch and post-launch development [Chr00]. To enhance innovation at WesFarmers, learning can act as a powerful tool. There are learning systems for innovation that can refine the business model, build the competitive advantage and prepare the HR strategies [Dav062]. John must emphasize on the innovation and creativity to reach his goal and to satisfy the stakeholders as well. Innovation affects each and every aspect of the organization, specifically the HR functions, such as recruitment, staffing and training. Another advice to John is the application of the innovation and creativity in the organizational culture and structure. To have the competent workers in an organization, John is suggested to change the staffing process and to develop the potential capabilities. The worker’s performance is ultimately the organization’s performance [Mil07]. To find and recruit the right employee, the process of strategic recruitment and selection must be applied by John. This process will bring long-term positive changes [Mil071]. To conclude, the business manager, John Tomey is advised to follow the SHRM theories, performance appraisal and the learning systems for innovation to grow the business and to bring the employees to live the values. References Wer84: , (Wernerfelt, 1984), Pet93: , (Peteraf, 1993), Mah92: , (Mahoney & Pandian, 1992), Har95: , (Hart, 1995), Wri01: , (Wright, et al., 2001), Hel03: , (Helfat & Peteraf, 2003), Mor12: , (Moreno, et al., 2012), Bec96: , (Becker & Gerhart, 1996), Pfe95: , (Pfeffer, 1995), Mil072: , (Millmore, 2007), Mar99: , (Martinsons, et al., 1999), Tid01: , (Tidd, et al., 2001), Mil07: , (Millmore, 2007), Lip00: , (Lipe & Salterio, 2000), Mil072: , (Millmore, 2007), Ban04: , (Banker, et al., 2004), Str: , (Millmore, et al., 2007), Che01: , (Chell, 2001), Kas06: , (Kassulke, 2006), Dav061: , (Davila, et al., 2006), Hod03: , (Hodge, et al., 2003), Chr00: , (Christiansen, 2000), Dav062: , (Davila, et al., 2006), Mil071: , (Millmore, 2007), Read More