Caterpillar’s and Graphic Controls’ Human Resource Strategies

Introduction

Strategy refers to a decision that an organization or individual makes with respect the objectives that the concerned party wishes to achieve. A strategy denotes the technique that can assist in actualizing the objectives. Thus, strategies are long-term objectives that are initiated with a predetermined plan on how to achieve them. Business strategy is founded on having adequate information of the market trends, the fortes, and challenges of an organization, as well as socio-economic and political issues that may alter the strategy execution process. The internal resources should kowtow with the external factors. Human Resource (HR) professionals are important participants in the creation and implementation of business strategies. As organizations launch human resource strategy, it is vital that they consider the labor market, employee position, and the workers’ training opportunities. With the aforementioned hints in mind, the discussion in this paper will focus on the role of HR professionals in the introduction and realization of human resource strategies. To accelerate comprehension of the topic, it will also illustrate the aforementioned issues using two US companies, namely Caterpillar and Graphic Controls.

HR Professionals and Formulation of Human Resource Strategy: Their Role

Scholars such as Dessler, Chhinzer, and Cole claim that it takes over a decade for a new strategy and labor skills to become part of an organization (1). Workers have to align their skills with the realization of the goals set up by the company. Whenever new goals are set, there needs to be close supervision before the human resource department can adjust to the new system. Caterpillar and Graphic Controls provide good examples of the role of HR professionals in the subsequent ten years after the companies altered their human resource strategies. The companies had to couple with various adjustments concerning employee needs together with how the company prepared to meet them. The case of Caterpillar portrays an instance when an organization introduces a fresh strategy and strives to align its internal changes with external factors such as competition and political developments. On the other hand, Graphic Controls Company illustrates the effect of its strategies. It adjusted them to match with the shifting commercial and institutional dynamics (1).

The subsequent stage is the growing phase whereby the HR department should engage in hiring the appropriate number of workers who have proficient skills to comply with the required talent as set out in the commencement phase. During this stage, the firm needs to work in accomplishing the demands of the external market and remunerate their workers in accordance with the existing market. Moreover, the firm should initiate training programs to improve the employee prowess. When the organization gets to the maturity stage, it should strive to balance and/or regulate labor cost whilst enhancing productivity. The maturity phase is followed by the decline stage where the HR professionals should engage in reeducating and counseling employees to raise the deteriorating morale. When formulating strategies, HR professionals should strive to ensure that their plans can transform challenges into opportunities that an organization can use to succeed in the highly competitive contemporary market.

Benefits of having a Well-thought out HR Plan

Human resource strategies are purposed to monitor employees so that they help in realizing institutional goals. Hence, a well-thought out plan centers on matters that the organization aspires to accomplish in relation to its workers procedures and culture. Thus, the manner in which the human resource department is handled has a direct influence on the business strategy implementation. Through human resource strategy, HR professionals have an opportunity to improve the status of an organization. HR strategies are developed to realign the recruitment process, employee allocation, and interaction with the goals and vision of the firm. If this goal is achieved, then the firm is well placed to accomplish its objectives through its employees. HR strategies have an execution role. They assist in creating a course, homogeny, and steadiness in workers’ efforts. While striving to align the business policies with HR strategies, an organization must also consider external factors that are irrepressible to determine how they affect the realization of its strategies. HR professionals can counter the impact of external environmental factors by offering leadership, direction, and training opportunities for employees to familiarize them with the external factors (1). Companies need to prioritize HR strategies because rival organizations cannot institute similar strategies. Firms have a disparate setup. Thus, their strategies cannot be homogenous. Using HR strategies that enhance loyalty and zeal leads to improved customer services, which result in an increase in returns. The implication is that the company will face its competitors with an effectual human resource. Nonetheless, HR strategies should be consistent with business goals for the organization to develop. For example, a firm that deals with the provision of service should adopt a strategy that encourages its workers to serve clients better.

Steps to Follow to Execute the HR Plan

Determining Goals

Since companies have a different setup, their strategies should be different. Indeed, their strategies should also be different. However, particular steps and elements need to be similar. To begin with, the HR professional must determine the business goals. If the strategies are not in line with the business strategy, they will not benefit the organization. Business strategies are often created in line with the current market trends so that the organization can have a competitive advantage over its rivals. Business strategies provide the course that a company needs to follow during a specified period in line with the external factors. Managers must explain what they aspire to accomplish in the period that they are meant to serve. Thus, HR strategies must be inconsistent with the business strategy. Moreover, when determining goals, HR professionals need to have impressive comprehension of the emerging trends and legislative transformations that might affect the creation of certain goals (1).

Scanning the Environment

The next vital step in formulating the HR plan is scanning the environment. Various external factors influence the success of organizational goals. Hence, HR leaders are required to familiarize themselves with these factors such that the strategies they create can counter any challenge that is anticipated to arise. Politics and economic dynamism may derail or accelerate the implementation of particular plans. If HR leaders remain oblivious to such facts, they may be compelled to succumb to challenges.

Upon considering the case of Caterpillar and Graphic Controls (GC), drafting a plan for the human resource management in the subsequent ten years involved a detailed comprehension of the adjustment in the industry, as well as the economy. After the Second World War, the US experienced a rapid advancement in the service provision sector to an extent that it had a larger labor and returns than the goods-producing industry. The monetary turmoil in the 1970s also had detrimental impacts on the manufacturing industry. Caterpillar and GC were part of this sector. Manufacturing companies were anticipated to couple with the issue of renewal. Although the companies had enjoyed impressive returns in the previous years, foreign competition abated their performance. Thus, managers in the manufacturing sector believed that to have a competitive advantage in the market, they had to improve product quality and be time conscious on delivery. Hence, it was anticipated that firms would promote modernism in inventory management, statistical regulation, and increased use of computers when drafting designs. Thus, when preparing their strategies, Caterpillar and Graphic Controls had to consider the economic trends (1).

Commercial issues that affected the Caterpillar Company were conventional to issues that were witnessed in the heavy manufacturing industry. For over century, the company had dominated its industry because of adequate investment in innovation and technology. Its strategy was to promote continuous manufacture of quality products that could operate in any terrain and climate. It also improved its service delivery by creating a widespread service network. However, when foreign competition struck, it suffered a reduction of sales. Moreover, profits declined because of the increased energy cost and reduced currency value. Thus, some of the matters that Caterpillar had to address in strategy formulation were to work on the labor and overhead costs. Graphic Controls encountered similar challenges. It had to improve innovation by generating new items that were in tandem with the market demand in the competitive medical industry. The HR strategy in the subsequent ten years had to be in accordance with the challenges.

Thus, HR professionals in Caterpillar and GC initiated HR strategies that were purposed to rationalize, incorporate new technology, and improve worker supervision. Strategic plans were also consistent with the firm’s life cycle. Their HR strategies were also created by considering the culture of the companies with the intention that it would unite the employees towards a similar goal (1).

Internal scan involves determining internal matters that might interfere with the HR department efforts to execute certain objectives. Thus, other organizational departments are required to participate in enlisting some of the internal issues that may hinder or accelerate the achievement of the HR plan. Once these issues are determined, HR leaders can then proceed to utilize the internal opportunities and attempt to reduce the impact of the imminent internal threats. Some of the issues that should be considered when conducting this scan should include the impact of adjusting leadership policies on the organization’s HR strategies, the budget cost, and/or how changes in the sector may affect the implementation process. Moreover, the HR department should consider if the management practices and leadership are effective in executing HR plan or whether they need to be adjusted for the required strategy to be formulated and/or implemented (1).

Workforce Analysis

Workers play the central role in the implementation of organizational strategies. A company that understands its workforce is better placed to achieve its objectives than a firm that does not. Therefore, HR professionals should have knowledge concerning the labor force pattern. The patterns of the labor force are determined by the degree of proficiency, workers’ mindset towards their duties, and their relationship with their fellow employees and employers. Gender and age distribution is also a matter to consider when human resource management is reviewing the plans.

Consider the workforce patterns with respect to the time that GC and Caterpillar were preparing HR strategies. In the late 1990s, a huge chunk of the human resource was made with about 35-53 workers. This category was perceived to have an expressive personality. The workers sought individual accomplishment at work whilst demanding time to spend with their families. They were also ready to participate in training programs to expand their understanding in various sectors. However, as they advanced in age, it was anticipated that their aspirations would change. Demands for wage increment were also expected to change.

Caterpillar and GC had employees who were expected to be above the age of 55 in the following decade. Workers above the age of 55 are loyal and more committed to their work. Nevertheless, with the advancing technology, they will be less informed than young workers and thus, less valuable to the organization. A huge number of employees above the age of 55 were also expected to retire. Hence, the companies had to prepare a retirement benefit program. Therefore, HR strategy had to incorporate the recruitment of new employees to cater for those who were to leave in the near future.

According to Dessler, Cole, and Chhinzer, when developing any HR strategy, HR professionals should strive to meet the needs of the various groups of workers in the organization (1). They should prioritize gender equality and ensure that it caters for diversified needs. Young workers have different needs just as it is evidenced in the case of the aged employees. These groups need to feel that they are equally getting attention from the administration. Failing to consider their needs will lower their morale, which will eventually have an impact on production quality and returns.

Gap Analysis

Gap analysis involves comparing the current performance of the organization and its actual potential. An organization may fail to achieve its potential if it does not utilize its resources and capital. During the formulation process, it is crucial for the HR professionals to examine and establish the fortes and weakness of the organization. This process should incorporate stakeholders and other departmental leaders so that all hitches in the firm are identified. The results of the gap analysis should be shared among leaders in the organization so that they can assist in preparing the HR strategy. The analysis will help HR leaders to determine areas where they should emphasize to accelerate the realization of the business strategy (1).

The developed strategy must be effective in closing the gaps. Although it may appear that the company has sufficient internal resources, it may be necessary for it to seek external assistance. For instance, the company may fail to reach its potential because some of the employees are non-performing. To close this gap, the organization may opt to hire new employees. This move may seem right. However, upon consultation from experts, the HR department may realize that it is more effective to train employees to sharpen their skills. Gap analysis ensures that HR officials do not deviate from the actual problems that affect the performance of an organization when drafting HR strategies (1).

Setting HR Priorities to Help in Achieving Departmental Goals

After assessing gaps in the organization and in particular the HR department, leaders should embark on processing strategies that are required to eliminate the challenges. HR strategies should address various matters such as creating a talent pool so that the company can always maintain proficient skills. It should enhance the working environment so that it improves employee morale. Furthermore, it should seek to promote employee relationship with other workers and their employers. In the case of Caterpillar, for instance, one of the issues that were expressed in the HR strategy was the link between the executives and junior employees. Moreover, the strategy should address the issue of recruitment and retention. As years progress, an organization is expected to hire new employees as others retire. HR leaders must be conversant with the statistics of workers and the expected staffing pattern (1).

HR professionals can also seek the opinion of the workforce in the manner they want some issues to be handled. Incorporating workers’ opinions demonstrates appreciation and recognition. It can itself stir morale among employees. Caterpillar inquired about personnel opinion concerning their various expectations in the firm. Employees ended up collecting over 1000 proposals, which if they had followed to the latter, would have benefitted the company. GC also consulted its employees who suggested that the HR department should ensure a fair pay and be included in the company’s decision-making process (1).

Monitoring, Evaluating, and Reporting on Progress

Observing the process of execution and reporting on the current achievement is a key requirement for determining progress in the organization since the commencement of the implementation stage. It also helps an organization to identify areas that still need improvement. When evaluating the implementation process, one should consider various issues. The HR professional should examine if some indicators are in place to determine the rate of success of the strategies. He or she should also consider whether the implementation is consistent with the ongoing accountability programs. The information that is collected during the evaluation of HR performance can be used to prepare reports for the subsequent meetings so that the company can improve in its weak areas (1).

Caterpillar failed in the implementation of HR strategy because leaders wanted an autonomous control of the company without incorporating employee opinions. Sincerity while implementing the HR strategies is significant for the company to realize its goals. GC promoted teamwork from top leadership to the subordinate staff. Strategies can be formulated properly. However, if some leaders are insincere when steering their implementation, realizing them (strategies) can be unattainable.

Conclusion

Improving organizational status depends on the presence of well-defined strategies that the organization needs to focus on for a given period. Business strategy defines the course that a company should follow to have a competitive advantage over its rivals. Implementation of business strategies requires the existence of proper HR strategies that can guide employees who are having a central role in the execution of the business strategies. HR officials have important roles in formulating, monitoring, and execution of HR strategies with the aim of improving a firm’s status. As mentioned in former paragraphs, certain steps need to be followed in the formulation and execution of HR strategies for the process to be successful. The process requires HR officials to familiarize themselves with the external and internal matters that affect the performance of HR plans. Once the formulation and execution of the plan commence, HR leaders must observe and evaluate whether the processes are in accordance with the firm’s general objectives, goals, and mission. Where weaknesses are witnessed, they should be noted so that more methods of eliminating them are designed in the subsequent stages.

Reference

Dessler G, Cole N, Chhinzer N. Human Resources Management in Canada. Canada: Pearson Education Canada; 2013.