Human Resource Management (HRM) Harvard Case Solution & Analysis

1)  Assess the core issues and problems of the relationship between human resource management and business performance as they apply to Union Electronics.

Several issues can be identified as core ones leading to problems between the HRM function and business performance in Union Electronics. Several underlying reasons have contributed towards these core issues which are discussed in the following section.

Firstly, the start-company’s corporate governance can be identified as one of the prime reasons for keeping the HRM function disconnected with the business’ performance.  Handing over 60% of the company’s shareholding to external stakeholders decreased the control of the founding directors over the running of the organisation. While this was a move which seemed to bring in the much needed investment, the fact that the main focus of directors was on cost management at the expense of low human capital development suggests that the basic foundation of the HRM function was laid incorrectly. By ignoring human capital development’s role in cost effectiveness, the directors created the image that cost management could only be effective if the manufacturing function would focus on curbing wastage and costs.

The company undertakes transactional HR services such as payroll and HR administration. Other HR services are outsourced to specialized HR providers as required. These include recruitment, reward and senior management search and selection.

Outsourcing of the core HR functions can be identified as another major reason affecting business performance in the organisation. It should be noted that only HR administration and payroll have been kept as internal functions of the company’s HRM otherwise core functions such as reward and training have been outsourced. While recruitment of personnel may be outsourced to gain the benefits of outsourcing but it should be noted that disconnecting the HR function from strategic human capital management has triggered inefficiencies in the organisation.

When making outsourcing decision, an organisation needs to consider the likely impact of contracting out these activities on the organisation’s performance. It is important to distinguish between ‘core’ and ‘non-core’ activities. As per a basic distinction, the former includes top level strategy, HR policies and line management responsibilities like appraisal and discipline (Isik Cicik, 2011) while the latter includes specialists’ activities such as recruitment, routine personnel administration and professional HR advice related to legal regulations. It should be noted that by outsourcing training, rewards and managing HR administration in-house, Union Electronics is limiting its HR functions in terms of creating unique value for employees, customers and investors (Isik Cicik, 2011).

There is however a well-developed training function delivering highly bespoke technical and quality assurance services to the manufacturing division. There is no management development programme offered nor there is any formal talent management process in the organisation.

The fact that the management function at Union Electronics has not been included in personnel development, planning can be a major contributor to the issues that the HR function is currently facing at the organisation. It should be noted that the region has a low supply of key management personnel which suggests that personnel development needs to incorporate human capital development at the managerial level. The shift from technical to strategic development can be a difficult one and many new managers will flounder. When an organisation does not provide any formal development program for its new managers and no refresher training for existing ones, this will have an impact on the organisation’s performance. This is because an organisation’s managers are directly linked to employees and can have an impact on their performance and morale. Since, the business environment is dynamic and rapidly changing, ongoing personnel development is needed to enhance the interpersonal and leadership skills of managers (Grensing-Pophal, 1999).

It should also be noted that succession planning is an important part of management development and a key to ensure strong leadership. Since succession planning at Union Electronics has been implemented on the back of an external audit; it is quite obvious that the organisation is ignoring the gaps between its current management skills and the future needs of the organisation (Grensing-Pophal, 1999).

In addition to this, it should be noted that the HR director does not sit on the board and reports to the company’s legal council...............................

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