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Unit 21 Strategic Human Resource Management Assignment FMCG
Diploma in Business
Unit Number and Title
Unit 21 Strategic Human Resource Management FMCG
HRM is a tool and approach which is adopted by companies to manage their human resource in effective manner and focuses on achieving organisational goals and objectives by empowering workforce of the company. Strategic management is an approach to take most effective decisions for execution of activities in most effective manner. Strategic Human resource management can be defined as a tool of strategic management in organisation which is improving organisational performance by managing employees in most effective manner by taking scientific decisions after analysing different factors. Unilever UK based FMCG Company having its business in different countries around the world and managing a huge number of employees which is making it one of the successful organisations in the world. There are explained different aspects of internal and external environment of the company which is important to be analysed before taking any kind of decision and their impact on outcomes. Analyses and evaluation is done of the approaches, concepts and models using in Unilever to manage their workforce in the most effective manner.A detailed study of effectiveness of strategic HRM is done in this report and areas which are lacking are identified and recommendations are made to improve them and increase ratio of employee retention in the organisation and effective implementation of strategic management in organisation.
Organisational performance and growth depends on different factors in which organisational environment plays important role. Every organisation analyse potential changes by analysing internal and external environment of the organisation.A successful organisation effectively observes and analyse its internal and external environment which ensures efficiency in activities to achieve organisational goals and objectives. There are two types of organisational environment internal organisational environment and external organisational environment. Internal organisational environment-
Internal organisational environment can be defined as those factors which exist within organisation and these are the factors which influences organisational activities and can be controlled and managed effectively (Poonamallee, 2011).
Following are examples if internal environment-
- Structure and culture of organisation
- Management of employees
- Financial and budget changes
- Positive relationship and effective communication within workplace
- Innovative and creative attitude of employees
- Effective team work and collective approach
External organisational environment- External environment is defined as those factors which take place outside the organisation but influences organisational activities and decisions for running the company effectively.It is very difficult to estimate these factors and control them and make positive or negative impact on organisational growth (Poonamallee, 2011).
Following are examples of external environment.
- Economic changes
- Competitive threat
- Political and regulatory changes
- Social and technological changes
Unilever a UK based company in FMCG sector is analysed for its internal and external environment. Company is having its business in more than 120 countries and having more than 400 stores around the world. Organisational environment is effectively analysed and considered in the company’s activities and strategic management decisions. Internal and external environment of the company can be analysed as follows (Lingard, 2012).
Internal organisational environment- Organisational structure and culture defines factors and status of internal environment of organisation. Ways in which company execute its activities and factors which influence them are internal environment. Unilever’s organisational structure and culture is defined as internal environment which can be controlled and altered if required (Lingard, 2012).For analysing internal environment and its components we will do SWOT analysis of Unilever.
SWOT Analyses- SWOT analyses is a part of strategic audit of internal environment of organisation in which mechanism and elements which are important for the company and make their impact on organisation’s effective running are identified and evaluated.SWOT involves Strength, Weakness, Opportunities and Treats for any organisation. SWOT of Unilever is as follows.
- Strength- Strength can be defined as those powers of organisation which ensures its growth and helps in making effective running of activities. Strengths of Unilever is that company is one of the leader FMCG companies in global market and huge in size, company is dealing in more than 400 brands which are traded over 190 countries in the world. Unilever is spending more than 928 million euros for research and development of company and managing team of 1,67,000 human resource effectively and giving net profit of £4.4 billion with a growing sales 8.7 % each year. The company is positioned as an effective brand and recognised as most trustable FMCG Company in world market. Unilever is having two headquarters in two countries and also listed in both countries stock exchange which is helping in expanding company’s reach in market (Lingard, 2012). Unilever has a team of skilled, experienced and specialised employees which are effectively managing company’s activity by using strategic management and human resource management is also developed in company which is helping in retaining employees for long term.
- Weakness- Weakness of Unilever can be the brand extension and segmentation. Company is producing multinational brands and having different product categories, but there are ineffective approaches for management of this product segmentation and which leads to in effective promotion of products and creates confusion.As in Unilever is spending huge amount on its research and development and promotional activities which leads to increased prices of company’s product in comparison to other FMCG Companies in market.In this competitive market high prices can be treated as weakness of company.
- Opportunities- Unilever is spending high on advertisement activities and there is an opportunity to use social media to advertise and this will help in reducing cost and prices of products of company. Company is seeking opportunity from its extended research and development in different countries which results in expanding product width and length and launch new brands.
- Threat- Unilever is facing threat from its market competitors like P&G, Nestle which is dealing in the same product line and categories and these companies are offering their products with low prices. With the impact of economic conditions Unilever has sell off some of its brands to other companies and have purchased some other brands and this is a threat for the company as in these product brands are now in the hands of competitors (Sheehan, et.al 2014).
External organisational environment- Every organisation is influenced by different factors which exist in the external environment of the company and which should be considered. Unilever’s external environment will be analysed by doing its PESTEL analysis which is as follows.
PESTEL analysis- External environment of Unilever can be analysed by evaluating its political, economic, social, technological, environmental and legal factors.
- Political factors- Unilever is having its headquarter in two countries United Kingdom and United States and is listed on the stock exchange of both countries. Both the countries are having different government regulations and policies affecting the style of doing business. Both the countries are members of European Union and UK is willing and making referendum to leaving EU, this will going to make impact on the company’s effective running and market position in its shareholders mind (Sheehan, et.al 2014).
- Economic factors- Unilever is still suffering with the effects of recession and household consumption are still improving. Increased rate of unemployment and reduced flow of money in the market leads to decreased demand of company’s product, but this situation is changing now.
- Social factors- Unilever is focusing on the life expectancy rate of public and doing its R&D on that basis. Company is making its efforts to fulfil demand of customers from different society. Corporate social responsibility is also considered by Unilever and it is giving its share of profit in empowerment of society (Dirisu, et. al 2013).
- Technological factors- Social media, websites, online trading are new technological changes which are adopted by Unilever increasing its reach and provide ease to purchase to customers and collecting feedbacks of customers and resolving them.
- Environmental factors- Environmental factors should be considered by companies like Unilever manufacturing on huge level for effective utilisation of resources to manage the waste. European Union Emissions Trading System (EUETS) was established to reduce carbon emissions under Kyoto Protocol.
- Legal factors- Unilever is a multinational countries dealing within different countries by considering legal and regulatory requirements of those countries. Company is considering different acts and laws related to employee and labour empowerment, fulfilling all the due diligence of doing business and protection of customers (Dirisu, et. al 2013).
Strategy word is driven from Greek noun “strategus” which means commander in chief.Strategic management defined as taking scientific decisions by analysing different factors which ensures long run performance of organisation and growth.Strategic human resource management can be defined as the integration of HRM with the strategic management and objectives of organisation which lead to improved performance of employees and organisation. Companies having their business on global level adopt strategic management on each level to increase effectiveness and certainty in business. In the process of creating policies and regulations for managing human resource of company it is important that strategic decision making should be adopted to ensure their success and empowerment of employees.Strategic HRM is a tool to achieve organisational goals with the help of people in organisation (FitzRoy, et. al 2012). There are using different models and concepts of strategic HRM in companies which are as follows.
Models of SHRM
- Matching model- This model of strategic HRM focuses on effective matching of organisational structure and strategies with HR policies and management. This model tries to get fit between the external strategies of business and internal HR policies and strategies to achieve best results in the organisation.According to this model human resource policies should be inspired from the organisational strategies and should be developed strategically by taking scientific decisions.
- Control based model- This model is based on the human resource strategies in which the employee management and control strategies and methods are in the direction to achieve organisational performance and profitability (FitzRoy, et. al 2012). Employee behaviour and activities are observed in this model to ensure effectiveness of organisational strategies and goals. Potential capabilities and capacity of employees should be utilised according to this model.
- Resource based model- This model defines efficiency of organisation based on the effectiveness of resources and capabilities of workplace. There are divided organisational resources within different categories like financial, technological, and human resources. The model focuses on achieving organisational goals and application of strategies by improving skills and capabilities of human resource in the organisation. This leads to achieve competitive advantage in the competitors of organisation.
- Integrative model- This model is focused on two approaches in which one is the reward motivation impact and other is strategy and management relationship. This is an integrated process of control on management and effective resource based model. This model focuses on improving employees performance by providing them training and development programs by maintain the locus of control by managing human resource (Woodburn, et. al 2014).
Approaches to Strategic HRM
There are three categories of SHRM which is helping in effectively manage human resource in organisation and achieve organisational growth which is universalistic, contingency, and configurational.
- Universalistic or best practice approach- This approach defines that there are various practices and policies of HRM which can lead to positive results in organisation within different circumstances. There are a huge range HR activities like recruitment and selection, training and development, leadership and motivation in which there should be adopted best practices to effective execute the activities (Woodburn, et. al 2014).
- Contingency or best fit approach- Best fit or contingency approach denies the universal or best practice approach. According to this approach HR policies should be considering organisational policies and strategies.These practices can be selected by taking effective decision by scientific decision making process.
- Configurational approach- Configurational approach is integration of both the above approaches as in it includes the best practices for HR management and also accepts adjustment of various organisational policies and strategies. This makes him collaborative approach to SHRM.
Human resource policies and procedures
In organisations there are various policies and procedure which are applied to achieve organisational goals and objectives and help in empowering human resource in the company. These policies and procedures set a framework and standards which guides activities management of workforce to achieve positive results in organisational growth. Following are some example of effective HR policies and procedures applied in organisations (Ehnert, et. al 2014).
- Statement of responsibility- Responsibility of employees should be effectively distributed within them which make them clear about their role in achieving organisational goals and objectives. Strategic HRM is integration between HR policies and organisational strategies. Responsibilities should be effectively allotted considering strategies of organisation and structure and culture of organisation. Employees who are members of employee union should consider their contract for guidance for any policy and procedure.
- Recruitment and selection policies- Every organisation should make policies for recruitment and selection which have impact of organisational strategies and most effective selection should be made by which organisational goals and objectives can be achieved effectively.Tools and methods should be used to best selection and proper training and development program should be conducted and new selection should be introduced with organisational strategies and goals.
Unilever is one of the biggest FMCG Companies in the world. It is a UK based company having its business in more than 190 countries and having more than 400 products in its product line and employing more than 1,67,000 employees all around the globe. Every organisation like Unilever is having its organisational strategies and goals and objectives which should be achieved by human resource of company and for that strategic HRM is adopted by company which is integrated approach of HR policies and organisational strategies and results as positive for organisational growth. Unilever is effectively managing its workforce in different countries and employing skilled and specialised people in organisation but there can be some suggestions which can be proved beneficial for attracting new talent and retain employees in organisation for long and increase the employee loyalty and trust in the company (Ehnert, et. al 2014).
Following are the new approaches to strategic HRM for Unilever branding in its workforce.
- Employee engagement- In strategic HRM the new approach is emerged to increase involvement of employees in organisation. By engaging employees in organisation employee’s enthusiasm can be increased and this leads to enhanced performance of employees. Effective communication and awareness for goals and objectives helps in leading employee’s efforts in direction of organisational growth. This approach helps in increased sales and customer satisfaction and increased profits in the organisation. This approach also helps in attracting new talents. Unilever can manage its employees by increasing their involvement and ensuring their role in organisation. There are some barriers for this new approach like threat of misuse of leniency and ineffective management in the organisation and lack of confidentiality in organisation.
- Workforce diversity- Unilever is having its business in different countries which is having different required employability skills and talents to effectively manage and execute activities and help in achieving organisational goals and objectives. According to this approach company should make portfolio of its employees in which employees with different skills and specialisations are included this will help in creating competitive advantage to company in market and also helps in increasing innovative and creative atmosphere in company which leads to success. Barrier to this approach is there emerges huge cost of recruitment and selection of employees and making portfolio and training them effectively. Clashes and conflicts also emerge between employees in this approach (Fong, et. al 2011).
- Strategic International HRM- Multinational companies like Unilever are using international HRM to manage its human resource all around the globe. Strategic management of international HRM is new approach which should be adopted by Unilever to effectively manage its employees internationally with integrating organisational strategies and goals and objectives. This also helps in positioning of employer branding in international market to attract new employees in organisation.This helps in providing unanimous approach towards management of employees in multinational companies like Unilever and also provides growth to organisational performance.
Barriers to this approach are that there comes diversity in cultures, regulations of countries which lead to difficulties in managing human resource of multinational company on uniform basis. There are diversity in the beliefs, values, perspectives, needs and working patterns of employees of different countries and they requires management in which these factors are considered and suitable for them as in positive working environment. Unilever can adopt this approach by considering these barriers and planning to remove them and get positive results (Fong, et. al 2011).
The report is a study of strategic management of human resource by using different tolls and models. Effective analysis is done of internal and external environment of UK based multinational company in FMCG sector Unilever. Different tools and methods are used like SWOT for internal analyses and PESTEL for external environment is done and found that there are different factors which are influencing internal and external environment of company. Further we have studiedabout strategic HRM and analysed facts about that. Different models and concepts are identifiedand approaches like best practice, best fit are analysed in the study. HR practices which arehaving impact of strategic management of organisation are described which includes effective HR policies and procedures in organisation helping in achieving organisational growth (Reilly, et. al 2016).Now we can conclude that Unilever is having different strengths and weakness, opportunities and threats which are defining internal environment and external environment.
Unilever is having effective strategic HRM which is helping in improving performance and growth of the company and creating competitive advantage in market. Workforce is effectively managing with the consideration of different models and approaches of strategic HRM. As in in present business environment change is a must and organisation which are adopting new and unique are successful in making core competencies in competitors. There are some new approaches for strategically managing human resource in organisation which are increasing employee engagement and diversifying portfolio of employees in organisation and adopting strategic international HRM in the company(Weisbord, 2011). Unilever can adopt these approaches to enhance its quality of employee management and improve their performance by empowering them and effectively achieveits goals and objectives. But there are some barriers to these approaches which should be identified and managed to decrease any kind of risk and increase certainty in the company.
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