Situated in Beijing, China, HuaMei is an international posting company. This company cooperates with UPS, TNT, DHL and China Post; their job is to find a best way to help customers mailing packages by sending all packages all together instead of sending separate packages. This way generates price advantages. Besides this, they have additional services like giving suggestions for packages, helping customers arrange packages and providing consult for best way to mail the packages. There are 50 staffs in this company. The CEO is Jinlong Zhou. The price advantage, which in accordance with the mission of the company is what, attracts customers. By analyzing its Human Resources Management situations, we can see how the company’s HRM works and also see if there are things can be improved for the company’s development in the competitive market.
2.1 Problem Statement
2.2 Research Question
How well does the human resource policy fit the low-price strategy of HuaMei Express Company?
How well does the HR policy fit the context in which the organization operates? To what extent do the various HR instruments together form a consistent whole?
Strengths and Weaknesses
Figure 1. Baron & Kreps Five-Factor Framework
The theoretical framework consists of Baron & Kreps Five-Factor Framework as a tool to map the core elements within and around an organization and the combined HR practices of an organization form its HR system. By analyzing the consistency we will make well-grounded recommendations for improvement. (Melody)
The book which is called Strategic Human Resources can be used to explain the basic theories for our research. We can use these basic theories combining with the practical operation of the company. Besides the book, we also search relevant articles and journals to help us accomplish the whole research. We also take several interviews with the CEO of HuaMei Express, human resource manager and the other 30 employees to get more of the inside information from the company. This could help us to use several theories into the practical operation of Human resource department.
4.1.1 External factors Environment: Social
Social factors determine the society trend will influence on individual behaviors. In China, it is common that people really care about building special relationships with each other, and the reason to do this is that people can gain benefits from each other, for example, most employees get their job in a trade company, is because of their parents of relatives are working for the customs department or government, it seems to be more convenient for trade companies to get government support with the help of their employees. In this way, HR systems in China really face a huge challenge to be fair, open and freedom.
China is one of the most important developing countries in the world. Its law is unique as it needs to fit its special national situations. Chinese law and legislation is changing every year. In fact, we can say that they are ‘improving’ every year. To maintain a good strategy for the company to survive, legal factors are crucial. From media we something heard that Chinese labor does not have a good reputation. For example: some private owned firms delay the payment to their employees when the wage date is due. Some firms make tight schedule for their employee so they do not have enough time for rest (Kate, 2006). These problems we need to consider as this should not happen because obeying law is of the core importance for the future of the company. Some law like labor law and contract law are well developed in China. People now are all aware of the use of law for their rights. In the meantime, the company is making good use of the laws too for the developing of their business. Therefore, HuaMei can apply this factor for making sure that it does not cause problem for either employees or being involved in unnecessary legal issues. In this way, it protects itself and develops in a good direct.
The high-speed economic development of China takes huge advantages for the labor market. More and more people in China are getting high-level education. Every year, nearly ten million students graduate from university, this is not only much pressure for the labor market, but also opportunities for employers hire talent people who can working for them. It is also an advantage for foreign companies to hire Chinese local employees because of the cheap labor cost.
4.1.2 Internal factors
HuaMei Express Company is run mainly by middle-aged employees who are very well educated. Socially, the workforce of HuaMei Express Company is heterogeneous. This is because the nature of the company’s business practices faces external economic pressure and is highly correlated with the business practices of delivery companies such as UPS, TNT, DHL and China post. However, the heterogeneous workforce of HuaMei Express allows the company to broaden its business perspectives so that they fit the company’s business strategy. At this point, the company is able to serve broader clientele and to operate in foreign markets through interaction with companies such as UPS, TNT and DHL. Furthermore, the heterogeneous workforce of the company also allows for various viewpoints that can widen the company’s set of opportunities which occasionally can lead to better decision making
The culture in HuaMei Express is hierarchical. As can be found in the background section, the CEO and owner of the company is Jinlong Zhou. Since the company is relatively small, there are only three managers who come from Operation, Finance and HR department with the other 50 employees. The price advantage of the company is also result from the culture of the company. This is because the culture in the company is one of cooperation and coordination between the co-workers and the CEO. Thus, all skills and talents are allocated to specific jobs accordingly, which allows for great efficiency. Furthermore, the work in the company is also viewed as a joy rather than drudgery.
The strategy of the company is directly derived from its practice. The company is better able to provide better price of its services than its competitors. Thus, the company strives to achieve its advantage of low price. The basis on which the company is trying to achieve this advantage is integrated line of products and services, superior quality and low-cost production. Furthermore, the company tries to keep this advantage through financial and knowledge-based barriers to entry and reputation of aggressive behavior in response to challenges. The long-term objectives of the company are market share and niche penetration. The actions that are taken with regard to the objectives of the company are advertising the company, low-cost production and market positioning.
Since the nature of the business practices of the company requires a lot of coordination and monitoring, the work is mainly is done in single location with workers in close proximity one to another. This allows for great efficiency and also allows for peer pressure that can be more readily employed.
The skills required for the job are quick thinking, responsibility, being on time, being quick at calculations etc. Thus for highly automated practices such as the business practice of the company, these skills are acquired internally on the job. For example, the more employees learn on the job, the more experienced they get. However, this has its negative feedback. Learning on the job is good, but also can have negative consequences with regard to new employees. Since the company strives for its price advantage, hiring employees will reacquire significant time of learning because the coming new employees will have less expertise compared to the existing ones. As a consequence, these new employees will not be that efficient which can affect the price. Second negative consequence is that the company gets dependent to its existing employees. Since the strategy of the company is price advantage, the HuaMei Express will probably avoid firing its existing employees even if there are problems in the company because the existing employees are already experienced enough and replacing them with new employees can have negative feedback to the price advantage.
The input of the employees is not difficult to monitor since there are only 50 employees working at HuaMei Express. The performance monitoring system they use is the Total Quality Control (TQC). With this performance monitoring system the quality of the products is controlled in order to determine the employee input. The employees of HuaMei Express are very efficient and score high on TQC performance. The employees reach their day target easily and the quality of the products is good.
“The greater the level of task ambiguity. The harder it is to control performance by explicitit incentives, because it is harder to measure performance.”(Baron & Kreps, 1999) In case of HuaMei Express the production process is quite easy so it is easy to control performance. Due to the strict hierarchy culture of the Chinese economy it is not very naturally for employees to share their opinion or be creative within the company. The employees do their job and do not interfere with the production process or other factors within the company.
The workers are quite interdependent in their work because they have to be sure that they be as cheap as possible due to economies of scale. By being cooperative it is easier to prevent mistakes in the process.
Within HuaMei Express there are foot-soldier jobs, because one good performance is not very bad or very good for the company en a bad performance will not directly have negative influence on the company’s performance. 4.2 Findings of the HR Practices i. Assessment (Performance Evaluation) In all of the HR practices, assessment is the most important practice which determines whether the HR system is flawed or not. In a company, such as HuaMei Express, assessment is also named “Performance evaluation” in the HR department of the company. Base on Chapter 10 of “Baron& Kreps” textbook which mentioned 10 functions of performance evaluation (Baron & Kreps, 1999). Link to the situation of our client company, we found that in HuaMei’s HR system, they evaluated the employee in mainly three aspects, such as: “Information for self-improvement, Training and career development, and Pay (and promotion) for performance.”(Baron & Kreps, 1999) First of all, as an individual employee in HuaMei Express, his/ her performance will be evaluated by their HR system. Base on the result of the evaluation, employees need to improve where they were unsatisfied. Secondly, through the short-period training and career development, HR can also evaluate employees in order to enhance their job efficiency. Finally, related to employees’ benefit, HuaMei’s HR had already made a complete reward system to pay for the performance which includes salaries and bonuses. However, it is not a perfect assessment system which HuaMei used; they will improve this assessment in the future in order to complete their HR system. ii. Rewards
According to our interview with HuaMei, we found that the reward policy in HuaMei Express includes two parts: monetary reward and promotion.
As we known, monetary reward is a general way in the company which consist salaries and extra bonuses. Employees will receive the bonuses only due to they make extra achievement and contribution for the company. In general, salaries are fixed at the beginning when the contract in operation between company and employees. However, there is a rule which called “Wage for seniority” which means salary (wage) will increase with the seniority. (Wage for seniority, 2010).
In addition, HuaMei paid for their employees’ base on different knowledge and skills. As textbook mentioned, “a more skillful or better trained employee is more valuable to the organization.” (Baron & Kreps, 1999) In this case, it is also a motivation for employees who want to gain higher salary through their valuable knowledge and skills.
Apart from the monetary reward policy, HuaMei used promotion policy towards their employees as well. Employer-provided benefits in HuaMei also affect employees’ action directly. For instance, if employee contributed more than employer expected at the end of a period, employer will use the promotion policy such as a gift or position promotion base on the achievement. On the other hand, if employee had lower efficiency during a period, employer will “provide incentives not to quit and avoid being fired. ” (Baron & Kreps, 1999)
iii. Job Design After the interview with the CEO Jinlong Zhou of HuaMei Express, we found that they did well job designing before they recruit new employees in company. Specifically, they did job design in following elements: Variability over time in task assignment and extent of rotations, the specific mix of tasks given to the individual or group to do, and the level of autonomy. (Baron & Kreps, 1999) Variability In HuaMei Express, employees’ tasks rotation is frequent instead of stay with the same tasks which brings more flexibility for the company. At the beginning, employer will provide basic training for the new employees which last one month. After a working period, HuaMei will provide advanced cross-training for different position, in order to get flexible employment. Specific mix of tasks given to the Individual or team Prior to the distribution of tasks, HR department should first determine the nature of tasks assigned to individuals or teams. Usually, there are diverse specific mixed tasks given to both individual employee and team. At this time, both individuals and teams should plan accordingly for the mission and assigned tasks to relevant employees. Level of autonomy Aside from the CEO Jinlong Zhou has autonomy, the manager of each department has their own autonomy. For instance, in HR department, manager may decide about the promotion and reduction of employees; and in Operation department, manager may decide their future operation plan. However, all of the final decisions should be made by the CEO of HuaMei after each manager made their own decision of department. iv. Recruitment & Selection Recruitment is costly and correcting selection mistakes is often costly still, (Baron & Kreps, 1999). In order to avoid the waste of human resource, HuaMei signed several contract with those professional online-recruitment website, to make sure that the employee they hired can be the right people who fit the right position. As a company which only has 50 employees, HuaMei needs the company always keep high level cohesiveness, which means that besides of the normal basic knowledge of express, the employees also have high emotion quotient. Unlike normal complicated staff-selection process, recruitment in HuaMei is quite efficiency. Candidates have to face three rounds. In the first round, the HR manager of HuaMei has to check the CV from each candidate’s, the manager has to make sure that those candidates can achieve the basic requirement of the company, like education level requirement and age requirement. In the second round, HR manager normally focus on the EQ test for each candidate, as a express company, the most profit are come from their loyalty customers, in order to build good relationship with customers, HuaMei asks their employees have to understand the needs of customers, the most important task for each employee is to retain the current customer and find out the potential customers. That’s why the employee who has higher EQ can build good relationship with his/her customers. In the third round, candidates have to face probationary periods, normally it takes three months for the company to see whether the candidates fit the position, according to the Chinese labor law, candidates have to sign contract with HuaMei, then HuaMei can offer the same treatment to the candidates like the other employees. After three months performance show time, and permit of HR department, candidates can be the real employee with sign the working contract. v. Training
Employees who enter into HuaMei in the first month have to get operation training in order to get general knowledge of express and realize the company structure. The operation training is quite important for those new employees because they have to give right answers to customers with any time, such as the shipping date, the price and the volume of air cargo, if they make one mistake, the customer may think the unprofessional of the company. The main task for operation training is to improve the productivity of employee. (Baron & Kreps, 1999) The period of new employee training is one month, in order to learn knew knowledge of express and catch up the new dynamic of industry, HuaMei also training all the employees in the end of each month. And this period is short only for two days.
The main function for EQ training is to reinforcing culture, (Baron & Kreps, 1999). Employees are trained to know how to build relationship with customers. To be good relationship with customers need employees have smart skills, they have to know how to using the low-price advantages and how to adding values to their customers. All the employees have to learn how to being a good person before they get contact with their customers. HuaMei also realized that learning is important than training for their employees. People usually learn a lot after they made mistakes, in the working period, employees are encouraged to make mistakes, but do not make the same mistakes for twice. ( Marianne Van Woerkom, 2007) vi. Promotion Promotion can be useful, it can be used to send appropriate signals to the workforce, and it can give the firm levers for training, screening, and appropriately placing its employees. (Baron & Kreps, 1999)Because HuaMei is a small company, it is obvious that promotion pyramid is existing in HuaMei. In HuaMei, there are strict rules for employees to get promoted. Since there are only three departments in the company, which means there are not too much positions for low-level employees to get promote, the only opportunities to get promoted are waiting managers retire or get quite well performance in one’s position. Nevertheless to say, this is quite a weakness for HuaMei, with several interviews with CEO Jinlong Zhou, he also realized that he should expand the company in to more cities so that more employees can have more positions to get promoted. For the current operation period, employees are asked to do their basic job well and be promoted with cash or gift reward. Chapter5 Discussion 5.1 Consistency of HR Practices (Georgiev)
HR system that bear on individual employees – recruitment, compensation, performance appraisal, promotion, training and so on- should be consistent or (perhaps a better word) complementary (Baron & Kreps 1999). However, the case with HuaMei express tells a different story. When we look closer into the company we can notice that the HR practices that focus on a single employee are not consistent. This is because of several reasons. First, the company is situated in very competitive industry. This makes it difficult for the company to maximize its operating profits and make high profit margins because of competitors. As a result, policies that focus on recruitment, compensation, performance appraisal, promotion and training are not consistent with one another. For example, in times where the company cannot meet its profit targets because of competition, HuaMei cannot invest in training because the company does not have extra cash. Second, as already stated the structure of the company is hierarchical one. Thus there is not too much space for employees to get promoted. This is also because the size of the company is relatively small. To say it simply, HR practices that focus on individual employee promotion does not happen every month or even year. Furthermore, recruitment, compensation and performance appraisal HR policies also seem not to be consistent. Even more, recruitment does not take place very often because of the size of the company and because it may turns out to be very costly. Compensation and performance appraisal depends on how the company performs. Since it is very hard nowadays for the company to survive, these policies of the HR system that bear on individual employees are also not consistent. Among – employees consistency The treatment of different workers should, at least over some span, be consistent (Baron & Kreps 1999). Again HR policies that focus on among – employees consistency are not consistent. It has been stated several times that the structure of the company is hierarchical one. It means that worker a (novice worker) is not treated that same way as worker B (the manager of the Finance department). Even more, any compensation, performance appraisal or promotion is quite difficult for a novice employee compared to more experience one. However, we should say that before entering the company every potential worker knows that she or he will not be given the same privileges and bonuses, and she or he will not be accepted the same as the rest. This is largely because of the culture of the country the company is situated. However, this does not mean that the novice employees are discriminated. Each employee that enters the company is given equal chance to show his or her skills and expertise. Even more, in times where the company does well the bonuses that are paid are evenly distributed among the novice employees. Furthermore, each employee of the company is also protected from the national labor union against any discrimination or actions of the company that aim to suppress the rights of its employees. Temporal consistency The appropriate extent of temporal consistency will depend, of course, on a number of factors, not the least of which is the rate of change in the organization’s environment. But in general how employee A is treated today should not differ radically from how she was treated yesterday (Baron & Kreps 1999). HuaMei express is progressing slowly. There are times where the company accelerates but that is not usual. Here again the HR practices that focus on temporal consistency are not consistent. For example, if the company finds itself losing money it may decides to fire a worker. Furthermore, when the company is pressured for time due to large volumes of orders, the company may decides to put all this pressure to odd number of employees and not to even number of employees because of the expertise of some employees compared to other and because of fear of mistakes which can lead to unsatisfied customers and losses. Thus, the temporal consistency depends largely on the industry in which the company is situated. 5.2 Strengths and Weaknesses We evaluate HuaMei’s strengths and weaknesses in this chapter are to analyze how well the Human Resources in fact is applied in the company and why Human resources policy influence HuaMei’s development. Previous chapters give some valuable conclusions and information about HuaMei’s human resource policy and management. It becomes clear that HuaMei’s strengths and weaknesses can be derived from the conclusions. In addition, to have a general evaluation, more points are also derived. We summarize the strengths and weaknesses as follows: Strengths Small company gives flexible management Good reward system Transparent assessment for employee’s promotion or penalty Refer to law leaves it no conflict when problems occur Weaknesses Relatively small amount of training for staff Not enough methods to contribute to a good company atmosphere No sufficiently cash flow for maintaining a good employee-employer or employee-employee relationships. Financing is relatively weak Many competitors make it hard to survive in the market The strengths are lying mostly on the size of the company. Therefore, it is more flexible in managing human resources. HuaMei pays attention to the staff and stick to laws. The only problem that makes HuaMei weak is that it cannot generate enough cash to enhance the relationship among employees and employer. What’s more, its low price strategy makes it cut all costs and cannot earn extra profits. Chapter 6 Conclusion & Recommendations 6.1 Conclusion (Melody) 6.2 Recommendations
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