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Australian Cladding Company
The objective of this study is to answer the question asking what are the immediate and underlying problems facing ACC? As well, this work will answer as to what sort of HR activities need to be put in place reasonably quickly and what HR approaches need to be taken in the longer term to ensure ongoing strategic competitive advantage? These theories will be addressed using the Evolution of HRM, SHRM, HRM Planning/Retention/Turnover, Job analysis and design, recruitment and selection.
The Australian Cladding Company (ACC) was started by Jim Hackett in 1998. Hackett has a background in engineering and created is the creator of a house cladding product that is lightweight and low cost. This product is reported to have found "a ready market in Australia." Hackett's company grew rapidly and the headquarters while being in Sydney supplied the cladding in various states and attracted customers internationally as well. The construction industry remained vibrant due to government initiatives. ACC was involved in the supply and installation of the product to various construction projects that were large in Western Australia. Hackett staffed the venture with a small group that included Hackett as managing director, Ben Harper, Engineering and design, Reg Grundy, Marketing and Sales, Arthur Seymour, Financial Controller, Clark, production manager and Jill Hackett, to head personnel including wages and salary and personnel administration. The company employed 20 individuals in the beginning and grew to a production staff totaling 150 and 25 additional staff working in the area of logistics, engineering, personnel, sales and accounting and finance. The company's profitability fell during 2007 and in the beginning of 2008 due to an increase in the cost of materials and labor costs. In addition, there were noted to be efficiency problems with production staff including too much down time and other times due to stress of constant work. The company was additionally having problems with retention of staff and especially skilled staff such as engineering and IT staff. Accidents in the workplace had risen and it was noted that workers were not following safety procedures around the machine areas. Additionally, there was a problem with alleged sexual harassment according to some of the female workers.
I. Consultant Makes Recommendations
Hackett hired a consultant in the middle of 2008 due to declining performance and staff problems. The consultant believed that the majority of the problems were linked to the company's very rapid growth and the fact that the company's approach to Human Resources had failed to keep pace with the company's expansion. The company had failed to plan its workforce around peak demand periods and the workforce was different than the workforce of five years earlier, which had been comprised primarily of men tradesmen. The skilled workforce had related that they were not receiving enough professional development and in addition, all the senior positions were filled by the existing management group and the result is that other employees were unable to see a clear career path for themselves with the company. Clearly, the company needed to address strategic management of its workforce.
II. Strategic HRM
The work of Akhtar, Ding, and Ge (2008) reports that it has been argued by researchers that human resources can be viewed "a sustained competitive advantage for organizations. The underlying assumption is that human resources are unique to the extent that competitors cannot imitate them. This research has led to the identification of a number of human resource management practices that contribute to company performance across different organizations." (p.15) Akhtar, Ding, and Ge (2008) relate that it has been reported that seven practices have been identified s being consistent with strategic HRM principles. HRM strategic practices are those, which are "theoretically or empirically related to overall organizational performance. The seven identified practices are reported to include those stated as follows:
(1) Internal career opportunities;
(2) Formal training systems;
(3) results-oriented appraisals;
(4) Employment security;
(6) Job descriptions; and (7) Profit sharing. (Akhtar, Ding, and Ge, 2008, p.16)
Thite and Kavanagh (nd ) reports that firms realize that "innovative and creative employees who hold the key to organizational knowledge provide a sustainable competitive advantage because unlike other resources, intellectual capital is difficult to imitate by competitors." (p.10) People management is a function that has become important to organizational strategy. Because of this the HR scorecard has been developed. (Becker, Huselid & Ulrich, 2001; Huselid, Becker & Beatty, 2005) In addition there is an emphasis on the return on investment of the HR function and HR programs. (Cascio, 2000; Fitz-Enz, 2000, 2002 in Thite and Kavanagh, nd) Typical HR programs are reported to include such as "…record keeping, recruiting, selection, training, employee relations, and compensation. However, all these programs involve multiple activities, and these HR activities can be classified into three broad categories: transactional, traditional, and transformational. (Wright, McMahan, Snell, & Gerhart, 1998 cited in Thite and Kavanagh, p. 11) It is reported that costs and cycle times can be reduced through IT-driven automation and work process redesign and that this also serve to improve quality. Management information systems assist in decision-making and strategic decision implementation. Information technology is a tool and is often mistaken as the message rather than as the messenger. (Thite, 2004) The critical success factors in information systems project implementation is stated to be "nontechnical and due more to social and managerial issues." (Martinsons & Chong, 1999) Roehling et al. (2005) reports that as information technologies are used increasingly in HR planning and delivery "…the way people in organizations look at the nature and role of HR itself may change." (Thite and Kavanagh, nd)
III. Best Practices
The approach just described is such that is reported to have become known as the "best practices or universalistic approach." (Akhtar, Ding, and Ge, 2008, p.16) Akhtar, Ding, and Ge report that within the best practices approach to strategic HRM "the first practice, internal career opportunities, refers to the organizational preference for hiring primarily from within." (Akhtar, Ding, and Ge, 2008, p.16) Training systems refers to "whether organizations provide extensive training opportunities for their employees or whether they depend on selection and socialization processes to obtain required skills." (Akhtar, Ding, and Ge, 2008, p.16) Akhtar, Ding, and Ge report that appraisals are "conceptualized in terms of outcome-based performance ratings and the extent to which subordinate views are taken into account in these ratings." (2008, p.16) Employment security is reported to be such that is reflective of the "degree to which employees feel secure about continued employment in their jobs. Although formalized employment security is generally on the decline, organizations may have either an implicit or an explicit policy." (Akhtar, Ding, and Ge, 2008, p.16) Employee participation is reported to be "in terms of taking part in decision making and having opportunities to communicate suggestions for improvement has "emerged as a strategic HRM practice." (Akhtar, Ding, and Ge, 2008, p.16) Job description is reported to refer to "the extent jobs are tightly and clearly defined so that employees know what is expected of them." (Akhtar, Ding, and Ge, 2008, p.16) Profit sharing is reported to be reflective of the "concern for overall organizational performance on a sustainable basis." (Akhtar, Ding, and Ge, 2008, p.16)
IV. Research on HRM
Research on HRM includes "contingency and configurational approaches. The contingency approach implies that organizational strategy (moderates the relationships between strategic HRM practices and company performance. In other words, a particular HRM practice may influence company performance positively in combination with one strategy and negatively in combination with another strategy." (Akhtar, Ding, and Ge, 2008, p.16) Akhtar, Ding, and Ge report that the configurational approach is such that "…builds on the two previous approaches and synthesizes them into a high order system in which researchers are interested in identifying the unique patterns of strategic HRM practices that are optimally effective." (Akhtar, Ding, and Ge, 2008, p.17) The work of Appleby and Mavin (2000) states that human resources are "the efforts, skills, and capabilities that people contribute to an employing organization, which enable it to continue in existence. Although difficult to define, SHRM is generally perceived as a distinctive approach to managing people which seeks to achieve competitive advantage through the strategic development of a highly committed and capable workforce." (p.555) SHRM is reported to be concerned with the management of human capital of an organization in such a way as to achieve some type of competitive edge. Having not only a committed workforce, but also having a workforce that is highly trained for the job that must be performed achieves the competitive edge. Moving in this direction is where human resources becomes SHRM." (Defining SHRM, 2006, p.3) This idea is built upon by Van Donk (2001) who explains where the human resource management role must fit in the planning process of a company in order for the planning to be strategic in nature. Van Donk states as follows:
"From the 80s onward there have been pleas for integrating human resource management and corporate strategy. A number of…[continue]
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