Ford Motor Company's human resources strategy and labor relations

¶ … Ford Motor Company and its human resources management practice. The company's human resources strategy is very closely tied to its strategy. As with other automakers, Ford's labor costs can be quite high, but there are also related costs of labor, such as benefits and pensions that can result in the total labor cost today being very high, even when much of the company's production is automated. Ford also must work closely with its main unions in order to negotiate the terms of each contract, something that also influences the company. Ford seeks to compete largely as a cost leader in its industry, but needs to have relatively low labor costs in order to pursue this policy profitably.

The HR position at Ford constitutes a number of different tasks. Labor relations is listed as the foremost specialty within the HR department, and with good reason given how critical it is to maintain a high quality labor force but to also remain cost competitive. Other specialties are typical of a manufacturing concern -- business operations, compensation, benefits, workforce planning and recruiting, organizational development, personnel relations (for non-union staff), HR strategy and learning & development. HR strategy is an important specialization within Ford's human resources division, because it highlights how critical HR strategy is to the company. The other people within the department work at least in part in accordance with the links between HR activities and overall strategy. With this large number of different specialties within HR, it can be expected that an HR professional at Ford will be exposed to a number of these different tasks.

Alignment

Human resource strategy should be aligned with overall strategy. Boxall (2003) points out that having the right people in the right jobs puts the organization in a better position to meet its objectives. At Ford, this can be challenging. Aside from the cost of labor issue, everything else is also controlled through negotiations with the union. Arguably, it will be easier for an HR professional to focus on the non-union employees more than the union ones. With that, there remains some flexibility for managing marketing and administrative staff, and production managers, using HR strategy techniques. Walker and MacDonald (2001) note that human resources initiatives can be evaluated along the lines of strategy by adapting the balanced scorecard model where HR contributes to a variety of different strategic outcomes. Such a technique can be used to achieve a higher degree of alignment between HR strategy and the company's overall strategy.

As such, HRM can contribute significantly to competitive advantage. This is particularly important in the creative and information-based fields. For example, Ford can gain significant competitive advantage if it has the best engineers and designers in the industry. The role that HR plays is to find ways to attract, retain and train that talent, so that it is able to contribute to the competitive advantage.

Diversity

There are a number of different approaches to fostering diversity within an organization. The first involves working with the unions on a diversity program, for example the promotion of hiring within specific target ethnic communities. Richard (2000) also notes that diversity does add value to the organization, especially for a company like Ford that has a diverse customer base. The company can promote diversity at the highest levels -- without executive buy-in no diversity program will succeed.

Another way that Ford can use to increase its diversity is to locate in diverse areas for the factory jobs, as those facilities are major employers whose demographics tend to reflect those of the immediate area. For positions that are a draw, such as engineering positions, it can be beneficial to encourage interviewing from specific groups. While hiring from specific groups is usually not allowed, the company can and should take steps to increase the diversity of its interview base, something that will eventually lead to greater diversity in the workforce. For Ford, this also means taking steps to boost diversity at the senior management levels. One way the company can do this is to promote programs at its foreign subsidiaries by which managers at those subsidiaries can apprentice in the U.S. before returning to their countries to build executive careers. Over time, this will improve the diversity of senior management candidates within the company.

Works Cited:

Boxall, P. (2003). HR strategy and competitive advantage in the service sector. Human Resource Management Journal. Vol. 13 (3) 5-20.

Walker, G. & MacDonald, R. (2001). Designing and implementing an HR scorecard. Human Resource Management. Vol. 40 (4) 365-377.

Richard, O. (2000). Racial diversity, business strategy and firm performance: A resource-based view. Academy of Management Journal. Vol. 43 (2) 164-177.