management function organizing meet goals businesses today. Write a paper considers strategic role human resource management driving organizational performance.
General Motors: Case assignment
Over the course of the recent economic downturn, General Motors has had to fundamentally alter its way of doing business and its managerial structure. In the past, despite occasional efforts to reconfigure its outdated organizational operations, "the inability or unwillingness of management to recognize and respond to the core drivers of systemic change" doomed the company, and the federal government was forced to 'bail GM out' to insure its future solvency (MacDonald 2009). During its early years, the company's initial success lulled the management of GM into a sense of entitlement. "For most of the 20th century General Motors was the most dominant industrial company in the United States, if not the world. At one point, no other single company contributed more to America's GDP than did GM., hence the saying, 'what's good for General Motors is good for the country'" (MacDonald 2009).
Over the course of the 20th century, GM became crippled with the demands of financing the healthcare and pension costs of its workforce. And even without these drains, many argue, GM would have still encountered difficulties. Although the 2008 recession caused car sales to decline, the total market share of General Motors was decreasing even when the number of cars sold in America was increasing. This was "due to the arrogance of entitlement GM was making cars it wanted to sell, not offering cars people wanted to buy" many industry analysts said (MacDonald 2009). GM's cars were inferior in quality to the vehicles of their major competitors as well as less technologically innovative and fuel-efficient. Other than specializing in lower-cost new cars, GM seemed to have little to offer.
GM's traditional organizational management
GM's earlier management style was designed to manage a large, sprawling bureaucracy. "Management became an exercise in ensuring stability. GM's market power made it less sensitive to cost increases, especially labor costs," which were often priced as much as 34% higher than the average in other manufacturing industries (Samuelson 2005). GM "offered one of the country's most lavish health and benefit plans… [Early in hits history] GM agreed to a groundbreaking union clause where they paid workers idled by shutdowns" (Hartung 2009:3). When oil prices skyrocketed in the 1970s, and demand for its large, gas-guzzling vehicles plummeted, its organization did not respond effectively and due to "slowing growth, GM was forced to close plants…shutdown labor provisions meant that GM was still paying most workers, again pushing up the prices of cars even more" (Hartung 2009: 5).
GM's labor agreement also created an incentive to keep outdated brands alive, "to keep those plants running, to generate cash…to feed a sprawling web of aging auto brands…The bedrock principle upon which GM was built -- offering a car to feed every market segment…degraded into a series of contrived brands, most with little identity, and bland, overlapping product lines" (Welch & Beucke 2005:1). What was once GM's strength -- its determination to offer a diverse range of products to every market segment and to attract the best employees -- became its weakness. Other companies such as Toyota became profitable through an opposite model, using a loyal, yet non-unionized workforce to promote a small range of high-quality brands deploying a relatively similar design (Welch & Beucke 2005:1).
As the 1970s and 1980s wore on, GM produced large numbers of inferior vehicles, with deep discounts in an increasingly competitive market dominated by the Japanese (Samuelson 2010). Consumers would only buy GM cars with the enticements of discounts and 0% financing. In the years since the famous saying "what's good for General Motors is good for the country" was first proclaimed, GM management saw its share of the U.S. market decline from 53% to 20% overall. Instead of responding to international and national calls to 'go green,' through research and development, GM relied upon its political connections in the U.S. Congress. It lobbied against "stricter standards for fuel efficiency and safety" against "better-gas-mileage requirements," catalytic converters, and even seat belts and air bags (George 2008). It did not explore innovative designs like Toyota's deployment of electronic hybrid technology. Instead of trying to become more competitive when Japanese imports grew more popular, "when GM started losing share, its management lobbied Washington for limiting imports of foreign autos through increased tariffs, only to waste its opportunities by increasing prices and profits instead of investing in competitive products" with an eye upon the future (George 2008).
However, the picture of GM's recent past is not entirely bleak. One of its strengths has been its fostering of diversity at the company. Early on in its history, GM tried to adopt a nondiscriminatory attitude, long before it was fashionable. "General Motors became the first automotive OEM to establish a formal supplier diversity program in 1968" (GM Diversity, 2010, GM Website). "Today, GM has over 400 certified minority and woman-owned companies" (GM Diversity, 2010, GM Website). Today, "as much as a fifth of the [auto] industry's workforce is African-American" (Mahler 2009:2). The success of GM in Detroit has long been linked to the swift rise of the black middle class in the area. "Slowly, haltingly, over the course of the 1950s and early '60s, the plants became fully integrated and black workers spread across Detroit block by block, moving the city's de facto color line as they went. It wasn't that long ago that Detroit was the home of the nation's most affluent African-American population with the largest percentage of black homeowners and the highest comparative wages," (Mahler 2009:2).
Today, at GM, "minority and women executives have increased 52% just since 1996, and now account for over 3,000 of the top positions" at the company (Muley 2010). The new GM is a globally-focused company, and responding to the needs of an increasingly multicultural and demographically diverse environment is essential. Its foreign sales, particularly in China, are amongst the company's greatest recent success stories. To become more competitive, GM has continued to try to introduce more diverse ideas and also to promote diversity as a value within the company.
Benefits of diversity
Stressing diversity is not merely 'PC,' according to GM, is essential aspect of winning the hearts and minds of consumers who make up a vital part of the new car-buying public. "African-Americans and Hispanics control almost a trillion dollars in purchasing power….Asian-Americans…increased more than 75% from 1990 to 2000" (Muley 2010). Additionally, almost every household today has two cars, one of which is likely to be owned by a woman earning a salary. "In the automotive industry, 43% of new car purchases are made by women and 80% are influenced by women" (Muley2010). Having female and minority executives and employees 'weigh in' on what women want in a vehicles is another part of GM's marketing strategy: "General Motors created the Center of Expertise and Diversity Growth Markets in direct response to the population and economic growth of diverse consumer groups, including women, youth and persons of African, Asian and Hispanic descent…. through the Center of Expertise, we've tapped the richest resource we have -- our employees. Through our employee affinity groups, we gain the insights into these markets that can be translated into product development, community involvement and marketing programs" (Muley 2010). Also, having minority-owned dealerships presents a friendly, diverse company 'face' of GM to car-shoppers.
Challenges do managers face in creating a diverse workplace and using employee networks
General Motors, while it strives to promote diversity, must also create a new approach overall in the company, which can be difficult given tradition-bound managerial structure. It is essential that GM ensure that diversity is not merely a series of mission 'statements' but is measured in terms of real, achievable benchmarks. That is why GM has "established aggressive goals and measurements for increasing our market share among diverse groups. Everyone in the organization is aware of these goals -- from the executive boardroom to the individual brand teams" (Muley2010).
To reach these benchmarks, GM has tried to encourage employee networks and employee-based programs like the Center of Expertise and Diversity Growth Markets to foster a culture of diversity and cooperation. Despite the criticism and bad press generated by the bailout, GM has a long-standing, proven commitment to honoring diversity, more so than any of its Japanese competitors. GM even launched an 'affinity groups program' in 1999.
[T]he program was intended to make diverse employee constituencies feel more welcomed and valued at GM, to remove barriers to employee productivity, and to increase market share and customer support in diverse market segments. Under the company's affinity groups guidelines, a group had to register and to offer voluntary membership to all current full-time employees who shared the group's goals…Recognized groups included those for persons of African ancestry, Hispanics, Asians, Indians, persons of Chinese ancestry, persons with disabilities, women, gays and lesbians, and veterans (McGlothen 2006).