FREE ESSAY ON HUMAN RESOURCE MANAGEMENT-A CASE STUDY

HUMAN RESOURCE MANAGEMENT-A CASE STUDY

Management of Human Resources-Assignment 1
Introduction:
In order to critically assess and recommend alternatives, I would like firstly to give a
brief description of the business crisis the company was facing and the subsequent need
for change in the company's overall business strategy. I would then like to focus on the
key aspects of the firm's human resources strategy and the changes that were made in
order to supplement the overall changes in the business strategy.
Business Crisis:
International Computers Limited (ICL) was born in 1968 out of the merger between English
Electric Computers (EEC) and International Computers and Tabulators. With ?40 million of
government support it developed over a period of 6 years, an independent series of
computers that was incompatible with IBM computers. IBM had garnered a 50% share of the
UK computer market and the government felt the only way to stem this growth was through
the integration of British high tech firms. With the government as one of its major
customers and through several strategic acquisitions and product diversifications during
the 1970's, the company managed to achieve growth rates of around 20%. But this growth
did not continue for long as the recession struck in 1979 and growth rates spiralled. By
late 1980 the company was facing a ?100 million shortfall in orders, in spite of having
taken some major redundancy procedures. The firm was on the verge of bankruptcy when the
government agreed to act as a guarantor for a ?270 million bank overdraft. The government
subsequently exercised its power of guarantee by installing a new chairman and two new
directors, one of who was Robb Wilmott, the new MD. Wilmott was a perceptive man who
realised that the only way ICL was going to survive was by planning for the long-term and
this was to be achieved by formulating a new product strategy and a complete change in
the way it did business. 
Sparrow P 1995 International Computers Limited (ICL) In: Hiltrop J, Sparrow P (eds.)
European Casebook on Human Resource and Change Management Prentice Hall, pp 110-122
Downsizing:
The rapidly changing global environment with regard to competition and technological
advances in the industry and ICL's subsequent decision to shift from hardware to total
systems differentiation, led the MD to pursue a new strategy based on strategic
alliances. The main reasoning behind this was that it allowed the company to break into
new markets and gain access to new technologies quicker than would be possible if the
company were acting on it's own. This new focus, and the ongoing financial crisis led to
the need to restructure the financial side of the organisation. This was achieved mainly
through downsizing in a number of product areas and a series of redundancy procedures. As
the case does not explain in detail the actual redundancy procedures, it is difficult to
make critical assumptions of the firm. The availability of additional resources, coupled
with the need for a newer set of skills and scarce financial resources appears to be a
justification for the course of action taken by the company.
Cultural changes:
Armstrong (1999) cites the work of Furnham and Gunter (1993) defining culture as 'the
commonly held beliefs, attitudes and values that exist in an organisation. Put more
simply, culture is 'the way we do things around here'.
With shifts in the product strategy and the recent collaborations came the difficult task
of changing aspects of the cultural values of the organisation. The company traditionally
embraced what theorists would generally refer to as a role culture. This referred to
organisations operating in relatively stable environments with more of a focus on
procedure, hierarchy and bureaucracy rather than dynamism (Amstrong, 2000 citing the
works of Harrison, 1972; Handy, 1976; Schein, 1985 and Williams et al, 1989). For the
organisation to succeed in the more volatile and competitive environment it found itself,
its cultural values need to be revised to a certain extent. It started to become
necessary that the top management understood the major changes that the company was
undergoing and the need for refining of thinking processes and general management
values.
Though it is clear from the case that the new cultural values were widely communicated,
it is not very clear about the levers for change that had existed in the organisation and
the way they were used. The commonly identifiable levers could deal with the areas of
performance, commitment, quality, learning and values among others. From the initial
response by the organisation, it appears that the organisation did embrace the new
values, but only as a short-term response to the ensuing financial crisis and not really
through an understanding of the business' long term strategy.
Though the Core Management Programme (discussed later in the essay) managed to eventually
address the long-term strategic need for cultural change, a criticism may be levelled
that this approach should have been adopted initially.
Decentralization:
One of the biggest changes made to was to the organisational structure of the company.
ICL's structure had traditionally been based on the concept of functional grouping i.e.
dividing the organisation on the basis of the distinct functions they were aligned with,
for example Marketing, Production, Finance etc. Though this concept did foster good
communication and co-operation skills within the functional units, there was the
disadvantage of very little or no co-ordination across these functions.
In the case of ICL, it was highly apparent in the lack of communication between the
product development and marketing functions and the ensuing financial crisis brought
about by it. The developers were into designing advanced and very high technology
equipment for which marketing had failed to capture a market. With the company's focus
shifting towards product differentiation, decentralization of the organisation into
smaller self-managing business units based on the matrix structure seemed the order of
the day. A mechanised and bureaucratic system of centralization would no longer lend
itself to the dynamic environment the firm now found itself in. The idea was to bring
together the essential functions to work more closely together in achieving the company's
new strategic goals.
McKenna (2000) citing Ford & Randolph (1992) states the matrix system could be highly
effective in a complex and rapidly changing environment. Davis & Lawrence (1977) add that
the matrix style is applicable when there is a high need for information processing.
However, there are certain criticisms that could be levelled against the matrix system.
McKenna (2000) again cites Daft (1998) and Davis & Lawrence (1997), among others in
pointing out some of the key problems associated with Matrix organizations. The most
appropriate in this situation appears to be with regards to role conflict of
subordinates. The firm has very much shifted its focus from technology to market-driven
and there appears to be a danger of the marketing function dominating authority, thereby
leading to operational problems.
Skills Restructuring:
Along with the shift towards decentralized units and product differentiation came the
need to restructure the essential skills of its engineering workforce. The major increase
in the development of small and distributed systems was achieved through a combination of
upskilling of existing, and creation of a new entry-level grade of service oriented
representatives.
Managing Change:
The majority of the new business initiatives had been implemented to reasonable success.
Through the various tactical changes made including downsizing, re-structuring and the
new product strategy, the company's financial situation had stabilized and things were
back to normal in the short term. However, the most difficult issue had still remained
unresolved. During the period of the financial crisis, it appeared that there was a
complete buy-in to the new strategy. But this appeared to be a misconception as once the
company had started to stabilise, the realisation that the cultural issues still very
much remained, began to dawn. In order to achieve the long term strategic goals of the
company, the MD knew that he had to address these issues by educating the organisation of
the need for a significant cultural change. The initiation of the Core Management
Programme turned out to be brilliant idea. It was a brave gamble (the costs of
implementation amounted to 25% of the firm's profits) that eventually paid off. The
programme built on identifying the existing levers for change in the organisation and
making use of these in communicating the new strategy at all levels. After initial
resistance, people gradually started to understand the concepts of the new strategy and
the importance of human resources in gaining competitive advantage. It is assumed that
one of the biggest issues in the firm's HRM strategy had been addressed eventually
Shift from Personnel and HR Planning:
In response to the significant changes that had been made to the overall strategy of the
firm came the need to expand the Human Resource side of the organisation in comparison to
the personnel aspect. The was a significant shift away from traditional personnel values
such as industrial relations and employee relations towards a much broader, strategic and
critical viewpoint of the company's human resources with an emphasis on competitive
advantage. With reference to the writings of by John Storey (1989), it appears that the
focus had shifted from the 'soft' to the 'hard' side of HRM.
In order to achieve its new strategic goals and to ensure long term stability, the
personnel function needed to actively forecast the firm's future HR needs based widely on
manpower planning and skills retention through a series of new processes including
appraisals, pay flexibility, assessment and career planning. As this process known
generally as Human Resource Planning, is to be discussed in detail in the next
assignment, I shall not go into much more depth on this particular subject.
Recommendations and Conclusion:
In view of the facts that have been presented in the original case and the assumptions
made by myself, it appears that the Human Resource Strategy adopted by the new MD was in
fact very efficient. It managed to address most of the major HR issues associated with
the implementation of a new business strategy and also added a new dimension to the
personnel function of the organisation. The major criticisms that I could level against
the new strategy would be the initial efforts made to change the corporate culture and
the structural changes made to the organisation.
I am of the belief that corporate culture is one of the most difficult aspects of an
organisation to change. A change in culture entails a change in individual beliefs,
values and attitudes, and this could be no mean task. The members of the organisation
require very good reasons to be willing to make changes to what is basically a set of
personal assumptions. The problem with HR as opposed to Personnel is that the focus
appears to shift from the individual to the organisation and the accent seems to be on
keywords such as competitive advantage. In order to integrate an efficient HR strategy
with the business strategy, it is vital to stress the goals of the organisation and also
to place an emphasis on the needs and wants of the individual.
The other area in which the strategy could be made more efficient is in the
re-structuring of the firm. Taking into consideration the environmental factors affecting
the company, the matrix structure appears to be ideal. However, as has already been noted
there are a number of disadvantages associated with this type of structure. McKenna
(2000, citing the work of Daft, 1998; Davis & Lawrence, 1977; Larson & Gobeli, 1987 and
Lorenz. 1994a) discusses the main problems associated with the implementation of this
structure, including the possibility of role conflict, power struggles with regard to
establishment of authority, inappropriate decision making techniques and difficulty in
establishing accountability. Though it may be argued that every form of organisational
structure has both strong and weak points, maybe a structure that is applicable to the
environmental context, as well as having fewer disadvantages attached to could be
applied. My personal view would be implementation of a structure based on product
grouping, which in essence is similar to the matrix, but appears to posses fewer
disadvantages.
Reference:
? Sparrow P 1995 International Computers Limited (ICL) In: Hiltrop J, Sparrow P (eds.)
European Casebook on Human Resource and Change Management Prentice Hall, pp 110-122
Bibliography:
1. Armstrong M 1999 A Handbook of Human Resource Management Practice 7th edn. Kogan Page,
London
2. McKenna E 2000 Business Psychology And Organisational Behaviour 3rd edn. Psychology
Press
3. Handy C 1995 Gods Of Management 4th edn. Arrow Books Ltd