MU0012-SLM-Unit-02

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Employee Relations Management Unit 2

Sikkim Manipal University Page No.: 26

Unit 2 Strategic Employee Relations

Management

Structure:

2.1 Introduction

Objectives

2.2 Different Strategy Levels in an Organisation

Corporate Level Strategy

Business-unit Level Strategy

Functional Level Strategy

People Strategy

2.3 Strategy and Employment Policies

2.4 Future Challenges

2.5 Performance Management Services

2.6 Quality, Involvement and Commitment as Competitive Advantages

2.7 The Psychological Contract: Interest and Expectations

2.8 HR Infrastructure

2.9 Employee Surveys

2.10 Summary

2.11 Glossary

2.12 Terminal Questions

2.13 Answers

2.14 Case Study

2.1 Introduction

The previous unit explained the concepts of Employee Relations

Management (ERM). This unit familiarises you with the concepts of strategic

relations management. You will learn about the strategies and employment

policies adopted for effective employee relations. You will be introduced to

performance management, quality management, and employee

commitment, expectations and interests.

Johnson and Scholes define strategy as The direction and scope of anorganisation over the long-term; which achieves advantages for the

organisation through its configuration of resources within a changing

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environment, to meet the needs of markets and to fulfil stakeholders

expectations.

1

The main levels of strategy of an organisation are:

Corporate level strategy: It frames the overall business direction and

goals.

Business-unit level strategy: It specifies the methods the organisation

uses to compete in particular markets.

Functional level strategy: It outlines the strategy of individual

departments and divisions like finance, marketing, etc.

People strategy: It matches an organisations activities with its

resources.

Objectives:

This unit familiarises you with the concepts of strategic relations

management. After studying this unit, you will be able to:

list the different levels of strategy in an organisation.

explain why strategic people management is essential for the success of

an organisation.

explain how the strategy of an organisation influences its employee

policies.

recognise the role of quality, involvement and commitment as

competitive advantages. assess the role of HR infrastructure and employee surveys in strategic

relations.

2.2 Different Strategy Levels in an Organisation

Organisations have different levels of strategic decision making. Although

these levels are inter-related, each one of them has its own scope and

reach. The different levels of strategy in an organisation are at the corporate

level, business-unit level, functional level and people level. Let us now

examine each level of strategy that exists in an organisation in detail.

2.2.1 Corporate level strategy

Corporate level strategy is usually devised at the board level. It defines the

following for an organisation:

1http://www.oppapers.com/essays/Johnson-And-Scholes/269474

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The overall mission

The game plan The management of the business portfolio

The priorities of each business unit regarding resource allocation

The structuring of the business

The methods of financing the business

The alliances to be made

The acquisitions/mergers to be performed.

Figure 2.1 depicts the factors which influence corporate strategy.

Figure 2.1: Factors Influencing Corporate Strategy

From Figure 2.1 you can see that corporate strategy is influenced by the

external environment, the people and systems within the organisation, the

organisation structure, and resources within the organisation, the current

values of the organisation and the expectations and objectives of the

organisation.

Corporate strategy examines internal (within the company) and external

factors (competitors, clients, customers), frames a new vision for the

organisation and aligns policies, practices and resources to achieve that

vision. It provides an overall direction to the organisation. The corporatevisions of some organisations are listed below:

GE (General Electric): We bring good things to life.

Microsoft: To enable people and businesses throughout the world to

realise their full potential.

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The corporate vision influences the business mission. A good business

mission should be: Clear: It should be stated in a language that is easily understood by

most of the employees.

Achievable:The employees must feel that the organisation can achieve

the specified objectives.

Challenging:Each employee should exert as much effort as possible to

contribute to the overall success of the mission.

According to Johnson and Scholes, corporate strategy can be evaluated by

the following criteria:

Suitability: Is the strategy economically viable? Is it suitable to the

current corporate capabilities and environment?

Feasibility: Are the resources (finance, people, time, knowledge, etc.)

available to implement the strategy?

Acceptability: Will the stakeholders (shareholders, employees,

customers) react favourably to the strategy?

For example, Dell Computers is a leading PC supplier. The corporate

strategy adopted by it is to deliver innovative and cost-effective solutions,

which address customer needs. Dell Computers tries to deliver this through

its in-house research and development (R&D) division and by forming

strategic partnerships with top industry suppliers and original developmentmanufacturers.

We have so far discussed corporate strategy. Let us now discuss the

business-unit level strategy of an organisation.

2.2.2 Business-unit level strategy

Business-unit level strategy is mainly concerned with how the organisation

gains advantage over its competitors. It deals with the following:

The methods the organisation uses to compete in particular markets

The new opportunities that the organisation identifies or creates

The products or services to develop

The customers that the organisation targets.

For example, the business-unit strategy of a furniture manufacturer is

decided by the following factors:

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The type of furniture the furniture manufacturer wants to market (home

furniture, office furniture, etc.) The competitors who market similar furniture

The quality of furniture the furniture manufacturer wants to market (solid

wood, plywood)

The customers the furniture manufacturer targets (individual customer,

corporate, educational institutions).

According to Porter (1985), the three basic factors that influence the

decision-making process are:

Cost leadership: It aims to offer lower costs than the competitors without

lowering quality.

Product differentiation: It tries to achieve industry-wide recognition that

the different products and services of the company are superior in

quality when compared to that of the competitors.

Specialisation by focus: It tries to establish a niche market.

Having understood the business-unit level strategy, let us now discuss the

functional level strategy of an organisation.

2.2.3 Functional level strategy

Functional level strategy is concerned with how different units of the

business (marketing, finance, manufacturing, personnel) transform

corporate and business level strategies into operational goals. According toJohnson and Scholes, functional strategy describes how the component

parts of an organisation in terms of resources, processes, people and their

skills are pulled together to form a strategic architecture, which will

effectively define the avenue. 2

Functional units help in framing the business and corporate strategies by

providing input on resources and capabilities. Once the higher level

strategies are framed, action plans are framed for each department, in order

to accomplish the higher level strategies.

For example, when the corporate strategy of a business is to become the

lead player in a specific market, the functional strategies of each division

would be as follows:

2People and Organisations - Employee Relations, Third edition by John Gennard and Graham Judge

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Manufacturing division: To produce good quality goods.

Human resource division: To train staff in order to have a highly skilledworkforce.

Marketing division: To increase sales by increasing advertising.

The different kinds of functional strategies are

Marketing strategy: It deals with pricing, selling and distributing a

product.

Production strategy: It deals with what products to produce (issues like

new products for existing markets or products for new markets), the

production chain, etc.

Finance strategy: It aims to align the financial management of an

organisation with its mission and goals. The decisions to be made are

regarding budgets, liquidity issues, credits, cash flows, loans, capital

investments, etc.

Human Resource Management (HRM) strategy: It deals with managing

an important asset of the organisationits work force.

R & D strategy: It deals with issues like innovation and development of

new products, and the addition of new features in existing products.

It is essential that various functional units organise themselves with care in

order to achieve their aims and synergise with the rest of the business. Let

us now analyse the concepts of people strategy.2.2.4 People strategy

People strategy aims to match the activities of an organisation with its

human resources. An effective strategy for people management is vital to

the success of an organisation. Research carried out by the Institute of

Work Psychology and the Centre for Economic Performance shows a clear

link between the adoption of good human resource business practices and

improved performance. The research proves that focussing on key people

management issues will improve productivity and profitability. People

strategy aims to:

Ensure that the employees are satisfied with their jobs, workingenvironment, rewards and career prospects.

Develop employee commitment by motivating them to move beyond

contractual obligations to emotional commitment. This develops a strong

sense of loyalty to the organisation and its customers.

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Manage organisation culture by concentrating on the important cultural

aspects of the organisation.The culture of an organisation is defined by:

The artefacts and symbols of the organisation

The stories and myths within the organisation about its various

successes or failures

The rites and rituals that define employee behaviour

The rules and procedures that set parameters for employee behaviour

and action

The role models within the organisation

The beliefs, values and attitude reflected in the daily activities

The ethical standards which set the boundaries of acceptable behaviour.

The five main features of people management are:

Developing a strategic view of managing employees

Involving employees in the business

Investing in communication

Managing employee performance

Viewing employees as individuals.

Developing a strategic view of managing people

An organisation must ensure that its people are at the centre of any

strategic business planning. The key issues that an organisation mustaddress while planning its business strategy are:

Are the right knowledge, skills and competencies available within the

organisation?

Should people be recruited from outside?

Can the knowledge, skills and competencies of the people be developed

to explore new business opportunities?

Involving people in the business

Emphasis on team work will involve employees in the business. Teams

need:

More autonomy and freedom for self-management.

Clear objectives and targets.

The freedom to plan and undertake work, acquire resources and

improve the processes, products and services.

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Investing in communication

To be successful, an organisation must invest heavily in communications.Businesses that show a high growth have implemented the following in

enhancing communication within the organisation:

Communicate their business strategy to all employees

Give feedback on performance to all employees regularly

Use a wide range of communication methods.

Managing employee performance

Employees perform well if they:

Know what they have to do

Get feedback on their performance

Know the areas in which they have to improve

Know how they can improve themselves.

If employee expectations are not well defined, it can lead to low morale,

dissatisfaction, absenteeism and high turnover.

Viewing employees as individuals

High performing organisations view people as individuals and use

techniques of involvement which encourage satisfaction and commitment.

This section explained the various levels of strategy in an organisation. We

will next discuss how organisational strategy influences employee policies.

Self Assessment Questions

1. The main levels of strategy of an organisation are __________,

__________, __________, and _________.

2. __________ strategy is usually devised at the board level.

3. __________ strategy is concerned with the methods the organisation

uses to compete in specific markets.

4. According to Porter, the three basic factors that influence the business-

unit level strategies are ________________, ______________, and

_____________.

5. People strategy is concerned with matching the activities of anorganisation with its _____________.

6. Improvement in productivity and profitability can be achieved by

focussing on key _______________ issues.

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7. Employees can be involved in the business by emphasising on

_______________.8. To be successful, an organisation must invest heavily in

_______________.

Activity 1:

An organisation wants to introduce a new product, for example a new

shampoo. Note the factors that determine the business strategy of the

organisation. List the people strategy which will help in realising this goal.

2.3 Strategy and Employment Policies

Figure 2.2 shows how employee relations are formulated.

Figure 2.2: Strategy and Employee Relations

The business strategy defines the Human Resource Management (HRM)

strategy, which in turn defines the employee relations strategy. The

employee relations strategy defines the employment policies and practices.

Having understood how to differentiate between the different levels of

strategy in an organisation, let us now see how the strategy of the

organisation links with the different aspects of employee relationshipnamely, employee resourcing, employee development and employee

reward.

It is very important that the strategy of an organisation maximises its

competitive advantage. An organisation must constantly evaluate and

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re-evaluate itself and make necessary improvements. Organisations should

design and manage employment policies, which will improve their business.The process of change and its impact on the formulation of strategy poses

many challenges. For example, if there are trade unions in an organisation

and there is a trend towards individualism, then the organisation must

decide whether the trade unions have to be encouraged or marginalised.

The workforce of Southwest Airlines (a U.S. airline company) is organised

into nine unions for pilots, technicians, transportation workers, customer

service personnel, mechanics, cleaners, reservation agents and flight

attendants. The company has welcomed these unions and maintains cordial

relations with them. The company has also ensured that these unions have

the same objectives as the company.

The strategies and policies on employee relations must be in synergy with

the business strategy and also be innovative, clear and action oriented. The

employee relations strategy must respond to the needs of the organisation.

It must assist the employee in understanding their goals and the methods

used to achieve their goals. The employee relations specialist formulates

the employee relations strategy based on the philosophy of the organisation.

The needs of an organisation in terms of its employee relations policy are

defined by the following areas:

The change management procedure: It deals with issues ranging from

increasing productivity, improving employee involvement, or introducing

team work.

Attitude towards trade unions: It decides whether to encourage trade

unions or not.

Practical employee relations strategies include:

Regulation of workplace agreements

Protection of employee issues

Human Resource (HR) infrastructure support

Growth performance management.

Now you know how employee policies are influenced by organisational

strategies. Let us next analyse the future challenges of an organisation.

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9. The strategies and policies on employee relations must be in synergywith the __________ strategy.

10. The ________________ formulates the employee relations strategy

based on the organisations philosophy.

11. The _____________ procedure deals with issues as diverse as

increasing productivity, improving employee involvement, or introducing

team work.

2.4 Future Challenges

Future challenges in the area of employee resourcing are developing

appropriate recruitment and selection policies.

Regarding employee rewards, the HR personnel face constant challenges

in:

Stimulating employee commitment

Motivating employees

Enhancing performance

Balancing monetary and non-monetary rewards.

As far as employee development is concerned, the challenges facing the

HR personnel are in deciding whether:

New staff has to be recruited or if in-house staff has to be trained People with special skills or general skills have to be recruited

Staff have to be trained only to execute their current project or for

enhancing their knowledge or skills.

The directors of the organisation have to consider challenges the

organisation might face in the future and their impact on the employees. The

external political, economical (rate of inflation, interest rates, etc) and

societal influences (demographic trends) also have to be considered before

strategies of the organisations are decided. Changes in technology also

impact the strategy of the organisation.

You now know the future challenges which an organisation has to consider

while planning employee relations. Let us next analyse performance

management in an organisation.

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2.5 Performance Management Services

Armstrong and Baron (1998) define performance management as, astrategic and integrated approach to increase the effectiveness of an

organisation by improving the performance of the people who work in them

and by developing the capabilities of teams and individual contributors.3

The features of a good performance management programme are:

Key performance indicators: These are critical measures that identify

that the employee is doing what needs to be done and at the level that it

should be done. These then provide the basis for reward and

recognition.

Organisational competencies: These identify the organisational traits

that are very important for its success, the framework for employee

recruitment, employee duties and employee contributions.

Performance reviews: These provide feedback to the employees on how

they are performing. They can be paper based or web based.

Training programmes and explanatory materials: These include

handbooks that are provided to both appraisers and appraisees. The

appraisal process is explained along with examples of completed

appraisal forms.

Having understood the performance management of an organisation, let us

next discuss how an organisation can achieve excellence by adopting theconcepts of quality, involvement and commitment.

Activity 2:

Imagine you are the HR manager of an organisation. How will you assess

the performances of new employees who have completed their training

and have not been assigned to a project?


12. Future challenges in the area of employee resourcing are developing

appropriate ___________and ______ policies.

13. _________________ can provide feedback to the employees on how

they are performing.

14. A good employment contract clearly states the basic ______ and

___________ of both the employer and the employee.

3http://en.wikipedia.org/wiki/Performance_management

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2.6 Quality, Involvement and Commitment as Competitive

AdvantagesThe three critical factors that help achieve organisational excellence are:

Commitment to quality customer service

Commitment to high quality work life

Employee involvement.

Employee involvement implies that employees at all levels are involved in

the successful operation of the business. Employee involvement is present

only when employees have the following facilities:

Authority to make decisions

Good understanding of business operations

Training and personal development opportunities

Good and open channels for communication

Good performance management programmes

A good reward programme.

Quality customer service should be the core priority of any business. The

top management should be totally committed to quality and this commitment

should be communicated to employees at all levels. Customer feedback

should be constantly used to improve business practices.

Organisations display a commitment to a high-quality work life if they follow

the practices listed:

Help employees balance their personal and work life.

Give its employees challenging jobs without overworking them.

Do not discriminate amongst employees.

Equip its employees with the correct tools, materials and equipment.

Ensure job security.

Organisations can gain competitive advantage if they incorporate employee

involvement, quality assurance and a high commitment to good quality work

life in their culture. Employees, too, become committed to the organisation.

The morale of the employees improves and productivity increases.

The next section explains the concept of the psychological contract.

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2.7 The Psychological Contract: Interest and Expectations

Psychological contracts are the foundation of employer-employeerelationships. According to Rousseau (1989), psychological contracts are

defined as the beliefs individuals hold regarding the terms and conditions of

the exchange agreement between themselves and their organisations.

The written contract of the employees cannot include every aspect of the

employment relationship. Psychological contract bridges the gap by defining

the mutual beliefs, views and duties of the employer and the employee. It

reduces employee insecurity and helps shape employee behaviour.

Psychological contracts are based on promises made by both the employers

and the employees. Every employee expects a fair deal and clear

communication. Every employer expects employees to perform well and

protect confidential information. The general promises made by the

employers are of the following types:

Career development: A good career growth and timely promotions.

Job nature: A challenging and interesting job.

Social environment: A pleasant working environment.

Financial compensation: A fair compensation.

Work-life balance: A good understanding of the personal situation of the

employee.

The promises made by the employees are of the following types: Good performance: Willingness to work hard and do the job well.

Loyalty: Willingness to work in the best interests of the company.

Flexibility: Willingness to work flexible hours (like overtime) in order to

complete the work allotted.

Ethical conduct: Assurance of good ethical behaviour like protecting

confidential information and dealing honestly with the resources of the

organisation.

Employees form their expectations on the basis of their interactions with the

people in the organisation and the culture of the organisation. Newcomers

have great expectations from the organisation. When newcomers gain

experience, their expectations weaken. The psychological contracts of

newcomers develop as their socialisation within the organisation increases.

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Violations of the psychological contract occur when either the employer or

the employee fails to fulfil one or more obligations of the contract.Employees respond to the breaches of the psychological contract by:

Quitting the organisation.

Asking their superiors for better work conditions

Having less loyalty to the organisation

Neglecting their work

Being absent or late more often.

This section discussed the importance of the psychological contract. Let us

next analyse the HR Infrastructure needed for organisational success.

Self Assessment Questions15. _______________ implies that employees at all levels are involved in

the successful operation of the business.

16. ____________ are the foundation of employer-employee relationships.

17. ______________ of the psychological contract occur when either the

employer or the employee fails to fulfil one or more obligations of the

contract.

2.8 HR Infrastructure

Figure 2.3 illustrates how managers and employees interact in a good HR

infrastructure. A good HR infrastructure should: Support the mission, vision and values of the company

Be simple, flexible and reliable

Support and enable the flow of work

Connect the employees to the overall system.

The five strategies to strengthen the HR infrastructure of an organisation

are:

Attaining HR expertise

Implementing performance management

Implementing HR policies and procedures

Understanding and complying with labour laws

Developing training programmes.

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Figure 2.3: HR Infrastructure

The essential HR building blocks that build a productive workplace are:

Employment contracts: A good employment contract clearly states the

basic rights and obligations of both the employer and the employee.

Staff handbooks: These provide information about what is expected of

the employees and what the employees can expect from the

organisation.

Policies and procedures: These specify the working of the organisation.

Good job descriptions: These describe the manner in which each job fits

into the overall organisation.

Proper performance evaluation systems: These improve employee

productivity.

Compensation system: It rewards and reinforces right behaviour.

Now that you know the HR Infrastructure essential for a productive

organisation, let us next discuss the importance of employee surveys.

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2.9 Employee Surveys

Employee satisfaction is very essential for the success of an organisation.Employee surveys help in finding out the opinions of the employee

regarding the organisation and the co-workers. These surveys also indicate

to the employees that their opinion is very important. The feedback from the

employee helps the organisation in understanding what it is doing well, and

in what areas it should improve. Employee survey results provide guidelines

for the business. Employee surveys also act as an effective communication

tool. Employee surveys can be conducted online or on paper.

The different kinds of employee surveys are:

Employee satisfaction survey: Sometimes employees find it difficult to

communicate their feelings and expectations. These surveys help tobridge the gap between the employer and the employee. They give an

opportunity for employees to voice their opinions.

Culture survey: This enables in identifying the current corporate culture.

We can determine if the culture of the organisation is in sync with the

corporate vision. Certain negative cultural elements like disrespectful

treatment of employees, poor planning and lack of team work will affect

the success of the organisation. These have to be identified and

corrected.

Ethics survey: Corporate ethics are essential for an organisation. Ethics

survey enables the employee to understand the ethics and values of the

company. The company can also determine the feelings of the

employee regarding the ethical standards of the company.

Productivity surveys: Employee productivity is in direct proportion to

employee satisfaction. Productivity can be improved if the organisation

understands employee expectations and attitude. As organisations

grow, they have to reassess and correct their policies and procedures.

They have to use better employee recognition programmes.

Organisations have to ensure the career development of the employees.

Favouritism and bias have to be removed.

Health and safety surveys: These surveys help to identify health and

safety lapses. They provide statistics on time lost from work due to

accidents. They also determine if the safety policies are being adhered

to.

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Exhibit 2.1: A s ample survey

A large insurance company in the UK uses administration of surveys todetermine the specifics of the work climate. This is done to ascertain the

positives and the negatives regarding the work climate. Areas that need

work are identified. Suitable measures to be taken are suggested by the

respective managers or HR personnel. Sometimes external consultants are

appointed for finding solutions to very tricky problems. Work-life balance and

amount of stress that the employees undergo is judged by using these

surveys. A sample is provided below:

Survey No. 22

Target: All the personnel in executive/supervisor levels in Zonal Office,

Reading. (125 members)

Note: Read the following questions carefully and answer only Yes or No.

Yes No

1. The environment in this organisation supports abalance between work and personal life.

2. My manager/supervisor understands the importanceof maintaining a balance between work and personallife.

3. I am able to satisfy both my job and family

responsibilities.

4. I am not forced to choose between job and familyobligations.

5. The pace of the work in this organisation enables meto do a good job.

6. The amount of work I am asked to do is reasonable.

7. The organisation has reasonable expectations of itsemployees.

8. My job does not cause unreasonable amounts ofstress in my life.

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Organisations should strengthen their HR infrastructure to be successful.

Employee surveys provide guidelines for the business and influence thedirection the business takes.

Organisations have to identify future challenges and frame appropriate

strategies for them.

2.11 Glossary

Term Description

Acquisitions Taking control of a firm by purchasing more than half of its votingshares.

Appraisals Impartial analysis and evaluation done according to certain set

criteria to determine merit or acceptability

Artefacts A hand-made object such as a tool or a work of art; an objectreflecting contemporary society or popular culture.

Autonomy Independence or freedom as of the will or ones action; self-governing.

Competencies Sufficiency of qualification; cluster of knowledge, abilities andskills that enable a person (or an organisation) to act effectivelyin a job or a situation.

Configuration Layout and interconnections of different units; arrangement ofdifferent units

Demography The number and characteristics of the people who live in an

area, in relation to their age, sex, marital status, ethnic group,etc.

Differentiation To make a product or a brand stand out as a provider of uniquevalue to its customers in comparison with its competitors.

Ethics A system of moral principles; the rules of conduct with respect toa particular group.

Innovative Using new and creative methods or ideas

Individualism The concept that freedom of thought and action for each personis the most important quality of a society, rather than sharedeffort and responsibility

Liquidity Measure of the extent to which a person or a firm has the ability

to acquire cash to meet immediate and short-term obligations.

Myths Ancient story; false idea

Niche market A focused targetable part of a market; a small area of tradewithin the economy, often involving specialised or unusualproducts

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Portfolios Specialised collection of company shares and other investmentsthat are owned by a particular person or organisation

Stakeholders Person,group, or organisation that has direct or indirectstake (ashare or financial involvement) in an organisation. They canaffect or be affected by theorganisation'sactions,objectives,andpolicies.Key stakeholders in abusiness organisationinclude creditors, customers, directors, employees, government(and itsagencies), owners (shareholders), suppliers, unions, andthe community from which the business draws itsresources.

Synergy A state in which two or more agents, systems or processes worktogether in a fruitful way that produces an effect greater than thesum of their individual effects.

Viable Practical; an alternative that is beneficial at a reasonable cost

2.12 Terminal Questions

1. Explain briefly the different levels of strategy in an organisation.

2. How are employment policies influenced by the strategies of the

organisation?

3. What are the future challenges that an organisation may face?

4. Describe Performance Management Services.

5. How can organisations gain a competitive advantage?

6. Explain psychological contracts.

7. How are employee surveys helpful to an organisation?

2.13 Answers

Answers to Self Assessment Questions

1. Corporate level, business unit level, functional level, people level

2. Corporate level

3. Business-unit level

4. Cost leadership, product differentiation, specialisation by focus

5. Human resources

6. People management

7. Team-work8. Communications

9. Business

10. Employee relations specialist

11. Change management
http://www.businessdictionary.com/definition/person.htmlhttp://www.investorwords.com/4681/stake.htmlhttp://www.businessdictionary.com/definition/organization.htmlhttp://www.businessdictionary.com/definition/action.htmlhttp://www.businessdictionary.com/definition/objective.htmlhttp://www.businessdictionary.com/definition/policy.htmlhttp://www.businessdictionary.com/definition/business.htmlhttp://www.businessdictionary.com/definition/agency.htmlhttp://www.businessdictionary.com/definition/resource.htmlhttp://www.businessdictionary.com/definition/resource.htmlhttp://www.businessdictionary.com/definition/agency.htmlhttp://www.businessdictionary.com/definition/business.htmlhttp://www.businessdictionary.com/definition/policy.htmlhttp://www.businessdictionary.com/definition/objective.htmlhttp://www.businessdictionary.com/definition/action.htmlhttp://www.businessdictionary.com/definition/organization.htmlhttp://www.investorwords.com/4681/stake.htmlhttp://www.businessdictionary.com/definition/person.html

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12. Recruitment, selection

13. Performance appraisals14. Rights, obligations

15. Employee involvement

16. Psychological contract

17. Violations

18. Employment contract

19. Employee surveys

20. Employee productivity

Answers to Terminal Questions

1. Refer section 2.2

2. Refer section 2.33. Refer section 2.4





2.14 Case Study

RWE Power is one of the main energy companies in the UK. It has both

private and business customers. Its corporate strategy is to deliver

cleaner, affordable and secure energy while improving profitability.RWE Power has a culture of trust in its employees and it delegates

decision making to all levels in the organisation. Employees are

encouraged to use their talents and capabilities to deliver the desired

performance with focus on the customer. An example of this is found in

their Strategic Spare Parts project. This project was set up with the

strategy of minimising the risk of supply failure. The main objective of the

project was to improve the availability of important spare parts and

reduce plant availability costs.

The directors made the corporate decision to undertake the Strategic

Spare Parts project in order to realise the companys objective of reliable

power supply. The leaders of this project then formulated a strategy to

manage spares by categorising them to critical parts and non critical

parts. The actual implementation was delegated to a junior engineer,

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who gathered data from different levels of employees (managers,

operators, etc) using different channels of communication (groupdiscussions, one to one meetings).

The junior engineer had to

Look at the range of spare parts kept in stock

Assess the costs of maintaining and re-ordering the stock

Compare these costs to the costs of breakdown in supply.

The junior engineer found that

For 75% of the spare parts, time could be permitted for normal

ordering, purchase and installation. These items could be sourced as

and when needed.

25% of the spare parts were vital for efficient energy supply.

The findings of the junior engineer were communicated to the directors

who had to make the final decision on whether the project investment

was worth the cost.

Thus we see that due to the culture of trust in RWE Power, functional

decisions like changes in the method the job is done are proposed by the

staff. But there is a constraint that these functional decisions must be in

line with the companys aims and objectives.

Questions:

1. What are the differences in the strategic decisions and other

decisions taken in RWE Power?

2. What are the advantages and disadvantages of delegating decision

making to all levels in the organisation?

References:

Gennard J. and Judge, G. People and Organisations Employee

Relations, (3rded)

E- references:

http://www.oppapers.com/essays/Johnson-And-Scholes/269474

http://en.wikipedia.org/wiki/Performance_management (retrieved on7/06/12)

http://www.engaging.com.au (retrieved on 7/06/12)

http://www.erstrategies.com.au/services (retrieved on 7/06/12)

http://www.employeesurveys.com/default.htm (retrieved on 7/06/12)
http://www.oppapers.com/essays/Johnson-And-Scholes/269474http://en.wikipedia.org/wiki/Performance_managementhttp://www.engaging.com.au/http://www.erstrategies.com.au/serviceshttp://www.employeesurveys.com/default.htmhttp://www.employeesurveys.com/default.htmhttp://www.erstrategies.com.au/serviceshttp://www.engaging.com.au/http://en.wikipedia.org/wiki/Performance_managementhttp://www.oppapers.com/essays/Johnson-And-Scholes/269474

MU0012-SLM-Unit-02

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