Introduction
IBM is one of the publicly quoted firms in the technology industry. In addition, the firm deals in computer hardware and software as well as integrated technological applications and devices. The business is known for its value creation as well as ability to offer solutions to various businesses through integrated applications that leverage information technology and diverse knowledge of businesses processes. Essentially, the business is involved in creating value through reduction of clients’ operational costs as well as utilizing capabilities critical in the generation of revenues (IBM, 2013). The firm’s capabilities include its strategic human resources and sound financial management. Besides, the firm draws its business solutions from the leading industrial portfolios of consulting, delivery and implementation of services, enterprise software and systems.
The strategic human resources ensure increased probabilities to deliver the required services. Besides, strategic human resources support IBM’s business strategy of delivering high value solutions to enterprise clients. Given the volatility of the industry, the firm recognizes the need of having efficient, effective and competent human capital that would enable it to deliver valued products and services to clients. Essentially, in a rapidly changing competitive environment, efficient and competent human capital is one of the critical sources of competitive advantage. In fact, the firm’s human resources are aligned to the business strategies (Mellow, 2011).
Moreover, the firm’s human resources management system contributes to sustained competitive advantage through the development of competencies that are specific for the attainment of particular goals. Moreover, the firm’s human resources strategies are concerned with the creation of linkages existing between the general tactical aims of the business and the overall implementation process. The published reports of the firm indicate positive statistical relationship between increased adoption of good HR practices and improved business performance.
The Manner in Which IBM Has Utilized HRM to Support Business Strategy
The firm has developed a linkage between human resources management and business processes. Besides, the business processes are supported by human resources strategies that tend to acquire competent workforce, which would deliver valued products and services to clients. The fundamental relationship the firm has created between human resources management and increased business performance enabled its executives to come up with programs that ensure better operational results, which in turn increases the chances of attaining high performance (Armstrong & Baron, 2003).
In fact, the firm has realized the need to align the business strategies with appropriate skills and knowledge as well as delivery of value to the clients. The current business environment is determined by various factors that affect the business processes (McAfee, Nkomo & Fottler, 2011). Factors such as globalization, constant fluctuating demand as well as increased competition affect the business strategies particularly firms operating in a highly volatile industry such as IBM. In order to compete successfully, IBM needs to improve its performances continuously through cost reductions, product innovations, improved business processes, product quality and speedy introduction of products into the market (McAfee et al., 2011). As such, the firm needs to orient its strategies towards attaining the goals. IBM human resources management strategies are geared towards developing competent workforce, which in turn help in attaining increased competitive advantage (IBM, 2013).
The major objective of the firm is to improve its performances in order to remain competitive. The resource-based view of the firm argues that adopted human resources management strategies contribute hugely to sustained competitive advantage ((Nkomo & Fottler, 2012). The sustained competitive advantage can only be attained through human resource development programs that are aligned to business processes (Collins & Clark, 2003). IBM ensures that human resources development programs are based on general business objectives and goals. In fact, human resources are considered key element in attaining the set goals and objectives. Essentially, human resources department facilitates the development of competencies that are specific to the goals and objectives of the firm (Nkomo & Fottler, 2012).
The sustained superior performance of the firm has been attributed to unique capabilities of human capital to attain the required objectives. Besides, the responsibility of human resources management is to mobilize required competencies that support all business processes (IBM, 2013). Mobilizing and developing the required human capabilities that are directly linked to business strategies is significant in improving and sustaining the firm’s competitive advantage. Actually, the firm has acknowledged the importance of competent people in the implementation of business strategies (Armstrong & Baron, 2003).
Leveraging Human Capital to Improve Financial Performance
The firm’s report indicates positive linkage between human resources management and improved financial performance (IBM, 2013). The human resources policies of the firm are geared towards attaining the competencies required in the sound management of financial resources. In a business environment where financial results are measured, ensuring oversight through appropriate competency is critical for improved performance. The positive feedback from the financial measurements is significant in refining, developing and implementing ideas essential for the improvement of general firm’s performance (McAfee et al., 2011).
Improved human capital over the years has contributed to superior financial performance of the firm. One of the key functions of human resources is to develop competent workforce in all business areas to improve the organizational performance. The firm’s human resources management has the responsibility of mobilizing competent workforce to ensure appropriate management of resources particularly finances. According to Armstrong and Baron (2003), the general performances of the firm depend largely on the management of financial resources. Competent workforce in financial resources management would automatically improve productivity in the department.
Even though the goals and objectives to be achieved by the firm are many, the strategic purpose is to attain higher financial performance and optimization of shareholders’ returns. Therefore, the human resources management strategies are geared towards attaining these strategic goals (Voorde, Paauwe & Van Veldhoven, 2010). Besides, improved operational performance of the firm is a function of the people, processes and technology. The firm’s effective interaction of the people with technology and the business processes requires competencies that are attained through acquired knowledge, skills and abilities.
The following table illustrates how IBM develops human capital to facilitate improved financial performance
Financial management personnel development and planning
The following Gantt chart illustrates the allocated resources in terms of time and costs
Competency is a critical factor in operational effectiveness of the firm particularly in terms of providing sound financial management within a specified time. The firm’s HR policies such as selection, training, improving work environment as well as performance appraisal are geared towards improving the required proficiencies for improved performance (Armstrong & Baron, 2003).
How Legal and Regulatory Environment influences Firm’s Human Capital Management
All actions and activities of the firm are accomplished within regulatory frameworks of various jurisdictions in which the firm operates. Human resources policies of the firm including selection, recruitment and improvement of work environment are accomplished according to established regulations and legal procedures. Besides, these regulations and legal procedures affect the manner in which the firm acquires its staff. Further, the recruitment and compensation procedures of the firm are also aligned to required legal measures and regulations (Nkomo & Fottler, 2012). Essentially, the legal requirements put certain conditions on the way the firm manages its human resources policies. In fact, the legal and regulatory procedures have positive and negative influences on the firm’s human resources management practices (Nkomo & Fottler, 2012).
For instance, the compensation procedures that are based on the regulatory framework have put increased financial constraints on the firm. However, the firm has managed to acquire competent staff through required recruitment procedures. Actually, legal compliance is a significant part of IBM’s human resources management practices. The case in point is the firm’s compensation system, which is in line with existing regulations as well as labor standards in various areas including equal pay, pensions, employees’ rights, insurance benefits, retirement benefits, occupational health and safety.
The Firm’s Hiring and Employees Retention Strategies
The human resources hiring procedures ensure that the firm acquires competent staff to improve performance. The firm hires its staff through elaborate procedures that safeguards final selection of a proficient staff (Nkomo & Fottler, 2012). Normally, the firm recruits employees through management trainee programs that target young graduates from various well-known institutions across the globe. While majority of management trainees normally go through intricate application and interviewing procedures, the firm also identifies talented individuals. The management trainees are then cultured on business processes and strategies. Essentially, new recruits are aligned to the operations of the firm in order to improve performance. However, positions of senior management are normally filled through succession process (Nkomo & Fottler, 2012).
Besides, IBM depends on the services of recruitment companies to hire senior management. While better rewards through compensation procedures have been applied to retain the workforce, empowerment and flexibilities in the work processes have played a critical role in sustaining the workforce (Nkomo & Fottler, 2012).
Training and Development Program for the Firm
One of the critical aspects of the firm is to develop and retain the required human capital that would enhance its performance. As such, the firm ensures appropriate management of the knowledge and intellectual capital gained over the years (Voorde et al., 2010). In fact, the firm’s training programs have been focusing on both organizational and individual learning as well as providing opportunities for personal development. Besides, the firm’s training programs provide opportunities for workers to share knowledge systematically. In addition, training programs ensure that important stocks of knowledge are retained within the organization. Moreover, training program maintain the flow of information and learning within the organization. Essentially, the training programs applied by IBM are focused on improving the performance of employees in various areas.
Diversity Strategy and Increased Competitive Advantage in IBM
Diversity within IBM’s workforce is a critical aspect that enables the firm to gain competitive edge over other firms in the market (IBM, 2013). In fact, IBM respects and accommodates the workforce’s varying opinions. The capacity to acknowledge diversity in opinion enables workers to realize their full capabilities along with making significant contributions to the success of the firm. The increased capabilities of the workforce are critical in improving the firm’s competitive advantage. In this regard, the output retention as well as gratification of the IBM’s employees is augmented through the creation of an optimistic environment where personnel’s differences are not cold-shouldered. However, the workers are offered with opportunities to improve their innovative, problem solving and decision-making capabilities essential for improved performance, which in turn is additional competitive advantage (IBM, 2013).
In reality, IBM’s HRM managers understand the effects of these dimensions on work performance, success as well as motivations. Most importantly, the firm’s executives comprehend how the dimensions that brings about diversity in the workplace influences the competitive advantage. Further, organization’s human resource managers have put in place structures that take into consideration all dimensions of diversity among the workforce. In fact, dimensions of diversity among the workforce are linked to improved performance, which result in improved competitive advantage. Essentially, embracing diversity within workforce has increased benefits (IBM, 2013).
One of the benefits is that diversified workforce enables the corporation to acquire increased performance in core areas that result in improved competitive advantage. In other words, in IBM, personnel with diverse cultural, language, skills, educational and leadership background characterize variations found in the workforce. In this regard, the heterogeneous workforce created by diversified backgrounds brings into the organization the skills and competence mix that contributes to the increased performance and competitive edge over rivals in the industry.
Diversity experienced within IBM’s workforce is responsible for the firm’s increased productivity. Actually, variations in the workplace motivate workers and enable employees to be more efficient and effective leading to increased productivity. Besides, diversity is responsible for the transfer of skills and technological knowhow that enable the firm to achieve its goals in an efficient and effective way. Moreover, diversity leads to increased creativity among the employees (Nkomo & Fottler, 2012). For instance, IBM’s employees with broadened horizons are capable of interacting with various skills that lead to innovations and creativity, which bring about solutions to various problems faced by the firm. Efficient and effective delivery of services leads to improved competitive advantage.
In addition, through diversified workforce, the firm has gained positive reputation. Actually, IBM is perceived to be non-discriminative in its recruitment processes. As a result, highly qualified and professional staffs are attracted to the organization. Essentially, the qualified staff brings into the firm the necessary skills and competencies that aid IBM in attaining its objectives in an efficient and effective way (Schuler & Jackson, 2007). Besides, IBM has the capability of sustaining the existing talent and competency, which in effect add to the firm’s reputation. Consequently, enhanced reputation increases the firm’s competitive advantage.
Besides, IBM’s management often exposes its executives and personnel to frequent training and development on values pertaining to diverse cultures and differences. As such, the firm’s workforces are equipped with precise comprehension and appreciation of dissimilarities in a workplace setting. Similarly, through prepared leadership and diversity training programs, IBM’s personnel are capable of exploring the codes of belief pertaining to race as well as ethnicity. As such, the enterprise is capable of acting responsibly in all its operations (Schuler & Jackson, 2007). As indicated, appreciation of diversified opinions among the workforce leads to improved performance, which is significant in increasing the competitive advantage of the firm.
IBM also has refined programs aimed at attracting, fetching and developing as well as retaining varied aptitudes. In principle, the competitive advantage gained by IBM from its diversified strategy in workforce is anchored on pursuing varied abilities and nurturing associations with prospective human resources. Actually, IBM does not only ensure diversity in workforce through recruitment process but also via inclusion of diverging assessments and viewpoints regarding the development of the business strategies (IBM, 2013). Besides, IBM embraces Employee Resource Groups (ERGs), which are vital in providing backup and expansion of personnel groups spotting conjoint connections ranging from race to sexual characteristics. Through such groups, workers with diverse characteristics are brought together and work towards a corporate objective of augmenting the output of organization thereby swelling the firm’s efficiency.
Another significant diversity strategy within IBM’s workforce involves the recognition as well as the appreciation of workers views concerning the best solutions to business operations irrespective of status quo, race, gender and ethnicity as well as sexual orientation. As such, IBM is capable of building collaboration and communications in its diverse workforce through novel attitudes and procedures beneficial to the organization (Collins & Clark, 2003). Besides, IBM is able to augment its competitive advantage through effective relationships with clients from diverse backgrounds.
Compensation Strategy
IBM is constantly advancing the management of human resources to attain and sustain competitive advantage as well as increase returns. Studies indicate that adopting good human resources practices lead to sustainable competitive advantage and increased returns to the organization. Actually, compensation systems have been identified as one of the human resources management practices critical in long-term sustainability of profits and competitive advantage to the firm (Schuler & Jackson, 2007).
Over the years, personnel compensation has continued to form the foundation of IBM’s significant venture. In reality, the compensation strategy of IBM is anchored in profit as well as revenue levels of the firm (McAfee et al., 2011). The pay programs shows IBM’s obligation towards competitively remunerating employees with top performance. As such, IBM has market-based adjustments that ensures increased salary base for employees in qualified career roles as well as states exhibiting market reimbursement gaps. Further, IBM has a novel worldwide growth driven profit-sharing program. The compensation system of IBM is established to accomplish several objectives particularly on the management of its employees (McAfee et al., 2011).
On this note, compensation system of IBM is set up to attract, retain and motivate employees. In order to attain these major goals, the compensation system complies with the regulations that govern the industry remunerations. Moreover, the compensation system of the firm simplifies the administration of employees as well as ensures cost-effectiveness.
Compensation systems of IBM are closely linked to performance in order to attain competitiveness and success. Besides, IBM offers increased work flexibilities in terms of non-financial benefits such as education support, work hours as well as shifts (Nkomo & Fottler, 2012). Additionally, market competitiveness is a critical factor that IBM’s compensation strategy is based. Actually, IBM’s reward system is within the market rate. As such, the firm is able to attain high performance resulting from motivation.
In addition, legal compliance is a significant part of IBM’s compensation strategy. The firm’s compensation system is in line with existing regulations as well as labor standards in various areas including equal pay, pensions, employees’ rights, insurance benefits, retirement benefits, occupational health and safety. In fact, ensuring that the compensation practices adhere to the labor regulations is significant in guaranteeing and maintaining IBM’s good relations with employees (IBM, 2013).
Recommendations for the Human Capital Strategy
The firm should ensure increased motivation, commitment and role engagement within the workforce. The firm’s human resources management should encourage workforce to be identified with the core values as well as act upon those values freely in order to enhance the attainment of the organization’s goals. Moreover, the human resource management should develop an atmosphere of trust and corporation as well as clarifying the psychological trust.
Further, the firm should develop performance cultures that encourage high performance particularly in areas that include improved productivity and quality. The performance culture should also focus on the customer services delivery, development and growth, revenues as well as improvement and delivery of the stakeholders’ value. Additionally, the firm should focus on empowering employees to display flexible behaviors that are linked to increased performances. The discretionary behaviors should focus on areas that include risk taking, innovation as well as knowledge sharing.
Finally, the firm should enhance its reward management systems. In fact, the firm’s reward system should be motivating, enhance commitment and ensure job engagement. Essentially, the firm should portray discretionary behaviors towards valuing and rewarding the workforce based on their performances. In fact, the firm should adopt the performance-based compensation system that is closely linked to the workers motivation.
References
Armstrong, M. & Baron, A. (2003). Strategic HRM: the key to improved business performance. London : CIPD. Web.
Collins, C. J., & Clark, K. D., (2003). Strategic human resource practices, top management team social networks, and firm performance: The role of human resource practices in creating organizational competitive advantage. Academy of Management Journal, 46(6), 740–751. Web.
IBM 2013. IMB annual report. Web.
McAfee, R., Nkomo, S., & Fottler, M. (2011). Human resources management applications: cases, exercises, incidents and skill builders. Mason, OH: Cengage Learning. Web.
Mellow, J. (2011). Strategic human resource management. Mason, OH: Cengage Learning. Web.
Nkomo, S., & Fottler, M. (2012). Human resources management capstone. Mason, OH: Cengage Learning. Web.
Schuler, R. S. & Jackson, S. E. (2007). Strategic human resource management. USA: Blackwell Publishing. Web.
Voorde, V., Paauwe, K. J., & Van Veldhoven, M. (2010). Predicting business unit performance using employee surveys: monitoring HRM-related changes. Human Resource Management Journal, 20(1), 44–63. Web.