CASE 9

An Ethical Dilemma

How can an organization’s HR department cope with the challenges of a changing, globalized world? How can a business remain ethical while reaping the obvious benefits that come from globalization? Although I doubt we’ll be able to solve these issues completely, these will be the issues we will be exploring this week.

Our first case involves the exploitation of Syrian refugees by the fashion industry in Turkey. The BBC’s investigative unit “Panorama” went undercover into a garment factory in Istanbul to expose manufactures of famous brands employing Syrian refugees and children as young as ten, all of whom do not possess a work permit and are paid as little as £1 per hour, far below the Turkish minimum wage. Included among the brands involved with the violating factory was iconic British brand Marks & Spencer, who maintain that they’re inspections have found no exploitation present in their current factories and claim the exposed producer to be an illegitimate manufacturer. They have also offered those that have been affected and are of working age permanent legal work.


The Panorama report from the BBC

 As the West moves further and further away from a production economy, this will continue to be an issue faced by all but the most dedicated and diligent. Nike, Walmart, Apple, Victoria’s Secret and Nestle have all been implicated in poor, exploitative labor practices, just to name a few. Companies must extend their HR policies beyond their own boundaries. Not only should companies insist that their suppliers to fall in line with their practices, but it is also the duty of an HR department to promote ethical policies and support a culture of ethics throughout the organization. These policies should be proactive and are informed by the nature of the business activities performed. Although all companies should strive to be ethical on all fronts, the form of these policies will differ greatly depending on the mission, vision, structure, key activities and general business strategy. Let's take a moment and talk about some of the different business strategies and their accompanying HR strategies.

In 1978 Miles and Snow published “Organizational Strategy, Structure & Process”, wherein two distinct strategic segments were introduced. These identified strategic categories are defenders and prospectors. Defenders are the tried and true brands of old, unlikely to attempt to extend beyond their already comfortable market segment. This focus on stability equals an HR strategy that seeks to maintain control with a formalized management structure and equally formalized hierarchy and promotion structure. On the other hand, “prospector” organizations seek new and innovative offerings and the segments that come with them. With a focus on innovation, flexibility and an unconventional structure are the name of the game.

Michael Porter offers a slightly different perspective, identifying 3 businesses categories: overall cost leadership strategy, differentiation strategy, and focus strategy. The allure of exploitative labor practices affiliated with outsourcing may be more alluring to a business practicing a cost leadership strategy, as the goal is to keep pricing as low as possible. HR strategy must reflect the challenges faced by this positioning, while also being cost efficient. These lean HR practices should take the form of strict adherence to practical policy that maintains a rigid structure to avoid errors that create expensive setbacks. When dealing with companies that practice differentiation strategy, the role of HR leans toward a more flexible, creative strategy to entice skilled, creative employees, not to mention these companies (if successful) have the capital to experiment more in their HR strategy. A focus strategy may take the best of both worlds and usually seeks a narrower audience and as expected, HR strategy will usually end up as a blend of the two previous models listed above.

Another option to best implement an effective HR strategy is to find outside help. While many businesses are choosing to outsource their HR services with mixed results, it may be more effective to hire an HR consulting firm to help streamline your policies and bring them in line with your business’s strategy. Advisory HQ has assembled list of the top consulting firms operating in the HR realm. Aon Hewitt, Deloitte Consulting, Hay Group, Mercer, and Oliver Wyman all made the cut. Each excelling at a different aspect of the HR realm. For example, Aon brings structure in a more tailored, localized fashion with its “Globalized Business Units” strategy, effectively promoting a consistent culture across geographically diverse locations while offering strategies that are individual to the local branch.

I feel like I end all of these posts by saying that your strategy is individual to your specific business, and today is no different. Business is rapidly changing, and businesses competing in the same fields may implement vastly different strategies, the only constant is the need for ethical and humane policy. The rest is up to you.
         

Sources

AdvisoryHQ. (2016). Top 5 Best HR Consulting Firms | 2017 Ranking | Best HR Consultants & HR Consultancy Services. [online] Available at: http://www.advisoryhq.com/articles/hr-consulting-firms/ [Accessed 27 Apr. 2017].

BBC. (2016). Undercover: The Refugees Who Make Our Clothes (Panorama) - BBC News. [online] Available at: https://www.youtube.com/watch?v=3tf6qc51Kbw [Accessed 27 Apr. 2017].

BBC News. (2016). Child refugees in Turkey making clothes for UK shops - BBC News. [online] Available at: http://www.bbc.com/news/business-37716463 [Accessed 27 Apr. 2017].

Gomez-Mejia, L., Balkin, D. and Cardy, R. (2016). Managing Human Resources. 8th ed. Essex: Pearson Education Limited, pp.21-79.

CASE 8

Separation Anxiety

After a weeklong break, we’re back in business. This week we’ll be looking at the past trials and tribulations of the once great Nokia. Studying in Finland, I knew we would get here eventually. Many of my younger classmates probably see Nokia as a scrappy underdog, nipping at Apple and Google’s heels, knowing only a sense of tarnished patriotic pride associated with the brand. While I (as a relative old-fart) was once a proud owner of a gloriously garish, indestructible, gold brick of a phone known as the 3310. I remember Nokia as a colossus, unrivaled in its market. As an American living in Finland, I do not seek to belabor the point that Nokia’s fall came hard and fast, as I can see older faces sour when the name is mentioned and understand that Nokia was much more than a company here, but symbolized an entire thriving economy. Compounding the cultural significance of their descent was a world wide economic crisis to add real injury to insult.

For more information about the history of Nokia check out the video series below.

All credit to the videos original creators. Check out their channel here

In 2008, with little notice Nokia pulled up stakes in its German factory, laying off 2,300 manufacturing jobs in the process. In an effort to reduce costs, the phone manufacturer planned to relocate to the far cheaper, newly inducted EU member state of Romania, much to the chagrin of German officials. Threatening to brand them as a “subsidy locust”, officials insinuated that Nokia was abusing German subsidies to then turn around and move to a country which receives financial assistance from the EU. Little did Nokia know that a looming financial crisis was about to break and their Romanian factory would shutter 3 years later, slashing another 3500 jobs. German officials in 2008 demanded an update to the EU directive on the European Works Councils (EWCs) to prevent companies from these kind of abrupt layoffs. A revised directive was passed in June of 2009, addressing many of these concerns.

While Nokia managed to avoid EU sanction, they certainly walked away with a tarnished reputation in these markets and in the minds of the thousands of people laid off. Let’s take a look at what could have been and some methods that could have been utilized.

Downsizing vs Rightsizing

Downsizing is the the effort to diminish the scale of an organization for a leaner, more effective operation. Whereas rightsizing is a restructuring of an organization for the sake of efficiency. Rightsizing will more than likely produce redundancies or shed light on inefficiencies that will result in employee separations. In Nokia’s case it could be argued that moving the factory to a more financially agreeable country can be seen as reorganizing for efficiency and thus be considered “rightsizing”. It may have been in Nokia’s best interest to attempt purely to downsize its operation in Germany, while opening a more modest operation in Romania. It may not a have averted disaster, but it may have saved some of its reputation.

Layoffs

Living in the new economy, this is a concept in which we are all at least tangentially familiar. This is an involuntary employee separation brought on by an organization's financial situation or strategic positioning rather than due to employee misconduct and should be view as a last resort. Layoffs can be a powerful signal to investors and can sometimes be misconstrued as poor financial performance when it was a strategic maneuver instead. Although generous severance packages may soften the inevitable PR blowback, mass layoffs are never trumpeted as a measure of success.

Laying off the layoffs

There are quite a few alternatives to layoffs that organizations can implement instead. First is early retirement programs. To best manage an early retirement program, a the scope should be limited to a select number of carefully selected employees and managed with a soft touch to avoid the perception of forced or coerced retirement. Other options include: hiring freezes, part-time hires rather than full-time, reduction in pay or hours, job sharing, or handing out profit sharing incentives rather than traditional raises. Training programs can be utilized to encourage more efficiency from existing workers or to replace departing/retiring employees. There are more options than those implemented in the Nokia case.

And life goes on…

If layoffs are inevitable, it is wise to strategize a measured and thoughtful outplacement procedure. Outplacement is the process that seeks to minimize the turmoil felt by departing employees. These programs may be handled in-house by HR or by a third party consulting firm and serve to avoid negative press, avoid union issues, and allow employees to leave with a sense of security and dignity. These outplacement services often manifest as counseling services or employment search assistance or a measure of the two. By allowing employees the tools to make it through a difficult time an organization can avoid the ill will and possible toxic PR situation that can arise from layoffs, all while doing the right thing by those that have served them loyally. A company need not always pit what’s right against what’s best.

Nokia suffered greatly during the the mid to late aughts. Although many of their employees were well compensated after their respective departures, a more conscientious approach may have allowed the once mighty colossus to show the public a more strategic, graceful shift in strategy, while doing right by those that helped them ascend to their once vaunted position.     

Sources:

Cold Fusion (2017). Nokia | The Rise And Fall [Parts 1, 2, 3]. [online] Available at: https://www.youtube.com/watch?v=yyRb_4-cquc [Accessed 20 Apr. 2017].

Communicating Labour Rights. (2008). Nokia closes plant in Germany and relocates in Romania. [online] Available at: https://communicatinglabourrights.wordpress.com/2008/01/17/nokia-closes-plant-in-germany-and-relocates-in-romania/ [Accessed 20 Apr. 2017].

Gomez-Mejia, L., Balkin, D. and Cardy, R. (2016). Managing Human Resources. 8th ed. Essex: Pearson Education Limited, pp.209-230.

Yle (2011). Nokia cuts 3500 jobs "to ensure profitability". [online] Yle Uutiset. Available at: http://yle.fi/uutiset/osasto/news/nokia_cuts_3500_jobs_to_ensure_profitability/5431070 [Accessed 20 Apr. 2017].

Yle (2012). Hundreds of Nokia's outsourced Symbian developers leaving Accenture. [online] Yle Uutiset. Available at: http://yle.fi/uutiset/osasto/news/hundreds_of_nokias_outsourced_symbian_developers_leaving_accenture/5252177 [Accessed 20 Apr. 2017].

CASE 7

In this week's blog post will be looking at employee engagement. Defining employee engagement can be difficult due to the needs of the individual and the multifaceted nature of the concept itself.  Issues related to engagement can include, but are not limited to: motivation, success, loyalty, recognition, flexibility, culture, individuality, professional growth and so on. Employee engagement may be the decisive factor in employee retention, differentiation, and company wide success. Therefore, managing and fostering engagement is one of the most important tasks in a manager’s or HR professional’s career.

Employee data consultants, the Hay Group, have identified six mega-trends influencing the future of employee engagement. Found here, the white paper defines these trends as: globalization 2.0, environment crisis, demographic change, individualism, digitization, and technological convergence. We will not explore every trend listed, as I believe many are interdependent, but instead we’ll try to explore a few of the issues involved.

The economic centers of the world are shifting. No longer can a company rely solely on the needs and wants of a purely western workforce, nor can they graft the same engagement template onto different cultures or regions. Customs and socio-economic factors shape all of our desires. We strive to achieve the goals that our culture deems worthy, or buck the trend and derive satisfaction from defying our culture’s goals. Every generation has a little bit of iconoclast in them, so understanding the generational composition of your workforce along with their culture is critical as well. This rise of a global society also makes for a more diverse and vibrant workforce that may not all share the same sensibilities. Therefore a multifaceted approach is necessary in the development of an effective employee engagement plan. The core of any successful engagement plan is the employee survey. By surveying your employees, not only do you gain insight on your employee’s needs, but give the employee a sense of agency and the feeling of being heard; a powerful tool indeed.

We touched earlier on the concept of age in the previous paragraph, but let’s talk a little about how the demographics of the workforce is changing. With the baby boomer reaching retirement age, a younger workforce is taking over the reigns of the workforce. During this transition we are looking at the most age-diverse workforce that the world has ever seen. To make matters worse, after the global financial crisis, many retirement age workers have found it impossible to retire. These coming years are uncharted waters and must be navigated carefully. The methods of engaging a 66 year old who saw his 401K disintegrate and is now just burning the clock are vastly different than a 25 year old, eager to begin his new career and professional development. A younger workforce may be frustrated by the lack of modern technology in the workplace, while the older generation may feel threatened or frustrated by the encroachment new unfamiliar tech. These two issues need not be tackled individually, by allowing the younger employees assist the older workers in adapting to the new environment, while fostering a relationship that allows the older workers to help mentor the the newer employees. By understanding the the needs of your individual employees, you may find that one group's issues may be solved by another’s, and vice versa.

Engagement may not only be affected by the organization interacting with the employee alone, but may also be affected by the organization’s interactions with the society at large. Along with the rise of social media and a more connected world employees have more and more opportunities to see of a company’s successes and also its misdeeds. An organization must be honest and enthusiastic in its sustainability efforts. They will find out, and an organization will be taken to task, not just by the general public but by its own employees. If a company is enthusiastic about its environmental initiatives not only will you have more satisfied employees, but they will be your greatest evangelists. Social media can be fraught with peril for any company that doesn’t manage their image well or pushes employee engagement were the will doesn’t exist. At the same time it can be a powerful tool to collect and gage solicited employee feedback and foster stronger positive relationships with one another. Internal social media sites, intranets or message boards can be a source of collaboration and can encourage engagement, when not presented as just another task or a chore with no reward.

Employee engagement impacts all elements of an organization’s performance and should be at the forefront of an business’s HR strategy. By tailoring you strategy to your business’s culture and specifically to the individual, you can create a workplace that encourages hard work and loyalty rather than a workforce that works for a check and 5 o’clock.


To find out how different people find engagement in their work, check out the Best Part of My Job podcast below.