This paper examines the human resource performance management system at British American Tobacco (BAT), one of the world's largest multinational tobacco companies. It explores BAT's HR philosophy, the alignment of personnel policies with overall corporate objectives, and how the company uses workforce strategy to pursue competitive advantage across 52 factories in 44 countries. The paper evaluates the effectiveness of BAT's system using metrics such as the Lost Workday Case Incident Rate, employee satisfaction surveys, and the company's four strategic pillars. It also identifies ethical tensions around working in the tobacco industry, discusses cost-effectiveness, commitment, and congruence among stakeholders, and proposes concrete improvements — including personalized incentive packages, employee stock purchase programs, and a more proactive, employee-driven management approach.
British American Tobacco (BAT) is committed to personal growth and development, and the international corporation implements a comprehensive human resource performance management system. The first priorities on the HR performance management agenda involve creating a safe and pleasant environment in which BAT employees can work effectively. Personnel performance is measured using the Lost Workday Case Incident Rate (LWCIR), which has been declining in recent years, falling from 4.9 to 4.2. BAT aspires to a rate between 0.1 and 0.2 — the range achieved by the strongest and most competitive companies (BAT 2006 Annual Report).
The policies implemented eliminate discrimination based on any criteria and promote a friendly environment in which employees are appreciated, encouraged to develop, become involved, and are promoted, motivated, and remunerated accordingly. The wage strategy involves analyses of other large firms and the offering of competitive salaries. All human resource strategies, policies, and philosophies are consistent across all 52 cigarette factories spread across 44 countries (BAT Website, 2007).
British American Tobacco aims to increase its competitive advantages in national and international markets, with the ultimate objective of growing the company's profits. Throughout the processes implemented to reach this overall organizational objective, BAT regards its personnel as the vital force behind the completion of its mission.
The core belief is that the human resource is the primary force supporting BAT's activity and that, in order to increase efficiency, the company must keep its employees satisfied at all times. Employees who are highly satisfied with their employer and working conditions feel safe and valued; as a result, they tend toward increased performance and productivity. These improvements lead to greater quantities of manufactured goods and superior quality, an expanded customer base, higher sales, increased market share, greater sales revenues, and consequently higher profits.
In all, the human resource policies are fully integrated within the organization's overall goals and management philosophy. Personnel are offered a safe and friendly working environment along with motivating compensation, and they are valued and respected as members of the BAT family. Integration of employees and achievement of the final HR policy objectives will be realized once the organization succeeds in unifying employees' individual goals with the company's overall goals.
British American Tobacco aims to become the global leader in the tobacco industry, and in pursuing this goal it implements four major strategies: "Our vision is to achieve leadership in the global tobacco industry, through strategies for creating shareholder value based on Growth, Productivity, Responsibility and a Winning Organization" (BAT 2006 Annual Report).
The human resource is present in all of these strategies and at every organizational level, remaining the force that makes objectives achievable. As the 2006 Annual Report states: "The extent to which our employees, at every level of the business, feel engaged and committed to delivering superior results is key to delivering our leadership vision." BAT's human resource system is triangular in structure, with employees at the core — influencing all organizational layers and policies, including the working system, personnel flow, and the remuneration and rewards system.
Beyond a committed workforce, British American Tobacco holds competitive advantages derived from international expansion and brand recognition, as well as a large number of strategically positioned factories — 52 facilities across 44 countries. Human resource management at this scale requires consistent, well-aligned policies to sustain performance globally.
The effectiveness of BAT's human resource performance management system is evidenced by increased productivity over recent years and a considerable reduction in the Lost Workday Case Incident Rate. In addition, the company conducts internal surveys to identify employees' views regarding company policies and practices and to gauge the level of personnel satisfaction. The responses are analyzed and new strategies are developed and implemented based on the findings.
To ensure that responses are objective and reliable, British American Tobacco benchmarks them against results obtained from other corporations. In 2006, BAT received higher ratings than many major competitors, recorded improvements across numerous organizational levels, and achieved a higher survey response rate than in previous years (BAT 2006 Annual Report).
"4 Cs analysis and tobacco industry ethical tensions"
"Recommended changes to HR policies and incentives"
"Employee-driven strategy and proactive HR management"
"Summary findings and final HR recommendations"
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