“Whether in a recession or during boom times, companies compete for talent” (Gomez-Mejia, L.R., Balkin, D.B. and Cardy, R.L. , 29)
HR employees are considered Staff employees rather than line employees because instead of being directly involved in producing the company’s goods or delivering the service, they are the ones who support the line function. Their job is to provide supporting services for line employees.
HR has to be constantly adapting to environmental challenges, those forces external to a company that affect the firm’s performance but are beeyond the control of management, for example moving the company to a new town. Dealing with moving employees or getting them used to this new place can be a big challenge for HR department.
Big changes put employees under stress, that’s why HR has to be constantly checking with employees to check their mental health and try to help them as much as they can/need.
Technology is changing the way companies hire, with automated proccesses that can deny your application if you have worked 4 years and 360 days instead of the minimum 5 years required.
Another present challenge is globalization, when a company becomes international, it no longer has one unique culture inside the organization but multiple of them. This differences make harder to cooperate and can have a strong impact on the bottom line. Or the moment to recruit employees in other countries with other necesities or ways of working.
Other challenges can be the shortages of skills in some specific markets or even natural disasters and terrorism, or even a PANDEMIC! This COVID -19 has lead into tens of milions of people being fired around the world.
In the other hand of environmental challenges we have Organizational Challenges, those that are internal problems to a firm, it’s the task of the managers to spot this isues and deal with them before they become major problems.
Competitive Position in HR
HR department represents the single most important cost in many organizations. It depens on how the company handles the HR issues, can have a dramatic effect on its ability to compete in a exponentially increasing competitive environment.
There are 3 ways a company can create competitive advantage with HR:
-Controlling Costs, using strategies to reduce labor costs.
-Improving quality, instead of reducing labor costs, making those costs more productive and profitable.
-Creating distinctive capabilities, using people with distinctive capabilities to create unsurpassed competence in a particular area.
Companies usually end up decentralizing, transfering responsibility from a central office to people and locations closer to the situation, this usually applies to international and globalized companies. And their oldest and most common way of improving their bottom line is downsizing, when company reduces workforce by firing employees. Another tool similiar to downsizing would be restructuring the company where employees and managers have to settle in new positions and new tasks.
HR also has to deal with individual challenges, those that address the decisions most pertinent to individual employees, for example if many employees leave the firm to join the competition, their competitive advantage is affected, that’s why there is “two-way” relationship between organizational.
To be able to keep this employees, HR has to measure, study and try to improve their productivity, their competence in performing their job, their motivation inside the company but mainly the quality of the work environment so employees can feel empowered and included inside the company’s mision and values.
Not performing this task can lead into brain drain, this happens when the highest talent inside the company moves to their competitors. Or employees start to feel insecure in their job, it can be safety issues or the inability to make future plans due to incertainty.
Benefits of Strategic HR Planning
When done correctly, HR department can provide direct and indirect benefits for the company such as:
-Encouragement of proactive rather than reactive behavior, making employees develope a vision of where the company wants to be and how it can work to get there instead of waiting for orders from superiors.
-Explicit communication of company goals. Same as the earlier benefit, if employees feel part of the company’s goals they will work better and focus on the important things.
Stimulation of critical thinking and ongoing examination of assumptions, identification of gaps between current situation and future vision, encouragement of line manager’s participation and creation of common bonds are other benefits of a good HR strategy.
Keeping all this benefits it’s a difficult task for HR, for example they have to keep their competitive advantage and reinforce their business strategy, cope with the environment and secure that managers are commited to the product.
HR has to be strictly and directly connected with managers, since all managers are personnel managers, they have to act as consultants assisting them to do their jobs better so the company grows and has a better performance.
Child refugees in Turkey making clothes for UK shops
An investigation found factories in Turkey that had children working on clothes for Marks and Spencer and the online retailer Asos. Also adults were found working illegally on Zara and Mango jeans.
Usually companies say they have a strict control over this practices but in reality, their outsourced manufacturers use this unethical and illegal practices to reduce costs. This is unacceptable since they are poorly treated at the factories.
Criticcs say the retailers ar enot doing enough to stop the problems highlighted by Panorama, the investigators. Companies have to better control their manufacturers because at the moment they act like they don’t know what’s happening inside those factories.
After this acusations, Asos said they will help children with financial support and adults will be paid full wage until they find a legal work.
Incuding the bad conditions, they were working 12-hour days, without a contract and being illegal inmigrants.
2019 Ranking & Reviews best HR consulting firms.
When HR is done poorly it results in internal issues inside the company, outsourcing HR is a must in bigger companies, this HR consulting firms offer services such as employee training and advancemenet, healthcare and other employee benefit programs, incentive and rewards programs, efficiend and effective onboarding, recrutiment and interviewing, merger and acquisition of staff transitions, employee communication, reviews, and rule enforcement.
Between the top 7 firms we can find Aon plc, Cambria Consulting, Deloitte Consulting, Korn Ferry, Mercer, Oliver Wyman and WIllis Towers Watson.
What are the challenges to the employer image that can arise when company outsources production?
When a company decides to outsource production they hire a party outside the company to perform the proccess of manufacturing the product for them, usually as a cost-cutting measure.
For example Inditex, the biggest clothes retailer in the world, had first their production in Spain, but then the biggest hub of their manufacturing proccess was moved to Turkey. in 2018 China was their biggest supplier with 449 partners. This group has twelve clusters in Spain, Portugal, Morocco, Turkey, India, Bangladesh, Cambodia, China, Pakistan, Vietnam, Argentina and Brazil, which concentrate 92% of its production. They also have 145 suppliers in Africa and 22 in AMerica.
Inditex and it’s Owner, the spaniard Amancio Ortega has been famous inside Spain since Inditex started to grow exponentially. Media companies have always claimed Amancio Ortega to be “an example” for Spaniards and a thing they should be proud of. But in reality, Inditex uses tax dumping, paying almost all taxes that should be paid for Spain and Europe sales in Netherlands where the taxation for companies is lower than Spain.
The company has had a big amount of factories in Spain that have been gradually closed in order to traspas production to cheaper countries like Bangladesh, firing thousand of people. This has affected the company’s image inside it’s own country, eventho spaniards have a few options left to buy their clothes than Inditex’s brands, they don’t agree at all with their policies.
Their marketing/HR strategies to clean their image only make it worse, with this COVID pandemic, Inditex made a donation in health products valued in 25 million€ but this represents nothing compared to the taxes that INditex should have paid in Spain instead of Netherlands.
Outsourcing manufacturing proccesses also generates problems with quality, despite all the benefits of outsourcing, that’s why the companies need to discuss the expected quality upfront. If not, customers will see a downgrade in the quality of the products and will stop buying from the company.
As said before, one of the things that affect the most to the company’s image is the job loss in the home country. The fact that workers in other countries may be getting job opportunities they hadn’t had before is little comfort to members of the home country that have been hit by factory closures.
Also the proccesses become shadier for customers, they don’t know who exactly is producing the goods. As said before, this outsourced companies use unethical practices to reduce costs.
References
BBC, Child Refugees in Turkey Making clothes for UK Shops, 2016 URL: https://www.bbc.com/news/business-37716463 Accessed: 7 May 2020
AdvisoryHQ, Best HR Consulting Firms 2019 URL: https://www.advisoryhq.com/articles/hr-consulting-firms/ Accessed: 7 May 2020
Josephson A. The Pros and Cons of Outsourcing, 2018 URL: https://smartasset.com/career/the-pros-and-cons-of-outsourcing Accessed: 7 May 2020
MDS. Inditex sourcing: where does Zara owner make its clothes? 2018 URL: https://www.themds.com/companies/inditex-sourcing-where-does-zara-owner-make-its-clothes.html Accessed: 7 May 2020
Guillem's Basics of Human Resource Management 