The company Harley Davidson (HD) is a leading manufacturer of motorcycles in the USA. In this document will be investigated, based on the case study “Human Capital Development: The Harley-Davidson Way” (Sengupta 2007) how HR models and methods can be used to support to achieve a company target.
A whole restructuring process was necessary, on the one hand on managers side because the co – operational leadership style was asking for much more leadership competence and a total different focus in selecting and managing staff. And on the other hand also on employee side a rethinking process needed to take place, from the executing and obedient behaviour of the past to a more self responsible and collaborative approach in the future. This whole would imply that management and employees transform from a Theory X to a Theory Y approach within their relationship (McGregor 1960).
The new management style required the employees and managers to acquire additional skills on top their respective functional skills in order to function appropriately in the new environment. The company set up training and development programs to actively support their employees in building up these skills quickly. Next to the mentioned development activities the transformation was further supported by the recruitment of qualified employees and by rewarding them with an attractive salary/benefit package. Even if this looks like a minor change, the impact on the overall company was huge.
The workers started to feel responsible for “their” company, bikes and colleagues. This change in culture was a planned and strategic HRM campaign and the key to survive for the whole company. This achievement was only possible because of the tremendous managerial creativity and willingness to change. Additionally also the collaboration within the management team is an important factor to reach the targets. Even if the HR Manager is the specialist for HR objectives and responsible for developing HR strategies, there is also the need for good teamwork between him and the other managers to achieve the business goals.
This collaboration is the base for the harmonious working relationship between the departments (Mullins J. L. 2007). HD tried to transfer from the traditional PM style which was useful for earlier years and different work environments to a new more individually based HRM approach with more flexibility to face the new challenges of a fast changing environment. The idea behind this change was to use the spirit coming out of the “together we can make it” culture to boost the performance and quality.
From this higher performance employees will get positive feedback in their appraisals and will be able to develop themselves and get rewarded for the better performance. Guest’ model of HRM states that if HRM practices are applied in a coherent fashion and in line with the corporate strategy, it will result in improved individual performances which in turn will result in improved corporate performance and eventually result in higher profits.
Guest’s model can be used to describe how the HR activities HD applied as described above eventually led to the growth of the company. In the year 1992 another HRM strategy was rolled out in the company in that the traditional hierarchical organization was replaced with a modern so called circle organization which was supposed to support collaboration and teamwork. Three functional circles have been introduced with a coordinating instance in the overlapping area.
HD used the circle to involve the employees in all processes of the company. This should end up in a commitment of mutual goals and this would finally lead to the overall success of Harley Davidson. Next to the creation of these circles, Self – Directed – Work – Teams were set up. These teams took over responsibility for a work package, a work process or assignment related to the back office function. Special about this team structure is that they do not have a formal lead or management.
HD used the circle to involve the employees in all processes of the company. This should end up in a commitment of mutual goals and this would finally lead to the overall success of Harley Davidson. Collaboration with Accenture As third HR activity HD engaged Accenture, a worldwide acting, leading consultancy, to support them with the evaluation of human capital development activities. Accenture is using the Human Capital Development Framework (HCDF) to track the outcomes (like employee satisfaction, workforce proficiency, retention, etc. of the HRM activities used.
This enables them to measure the impact of human capital development activities on financial performance. Furthermore the right work environment is a key to higher performance by fostering values like employee diversity, using performance based advancements and encourages learning through out live (Meredith A. V and S Cantrell Accenture 2004) After the first HR project – the implementation of the “softer management style” – HR was primarily focused on recruiting people while the long term strategic approach was out of focus.
To support the perpetual growth of the company outside the US well trained and satisfied people were necessary. Management therefore decided to engineer a strategy, together with Accenture, to overcome the short and long term challenges which where growing in the same proportion as the size of staff to manage. The HCDF from Accenture is using different qualitative information from executives and employees, quantitative HR and financial data and comparable data from the company‘s peers.
Those information’s gathered has been used to create a balanced scorecard to benchmark each element in the framework. The outcome of this investigation showed potential for improvement in 6 out of 13 HC development processes and therefore supported the management approach of change in the HR strategy. The first activity based on this outcome led to a revision of the internal HR support functions. It was also identified, that systems and tools to support the analysis and the monitoring of the most important HR metrics were missing.
So the result of the collaboration with Accenture is for HD Management a measurable outcome which shows that human capital processes were most likely to result in improved business results and critical capabilities like employee engagement (Scott H. et al. 2006) The Harvard model applied to this approach: The different stakeholders (Accenture, Management, Employees, etc. ) were involved by the assessment, also situational factors (rapid growing, retirement of employees) where taken into consideration to develop a new HR Strategy.
Via interviews where employees, HR executives and higher management up to CEO surveyed to create a scorecard which should show the areas of improvement in this framework. The outcomes of this investigation showed that some processes were not as good emphasized as they should be and those processes where strongly related to HD’s financial performance and employees motivation. To improve on those areas and reach more employee satisfaction and more cost efficient strategies were set up.
As the initial step the HRIS strategy was set up to consolidate the number of HR systems and make sure everybody would be able to get needed and consistent information. This should lead to a better standardization and process integration between HR and the overall business. Secondly the usage of workforce metrics should help to collect the employee feedback to investigate the efficiency of the programs which where set up to emend the human capital programs. And this information would go back to the stakeholders (Management and Employees) and the cycle would start again.
Because of the change from a top down to a bottom up working style it was inevitable for the working culture to change together with the mutation in organizational structure. Especially by building the workforce teams every member had to find his new role in this changed environment. Even if they worked for the company for years, due to the changed environment the employees would needed to adapt to it.
The question which would needed to be asked referring to Edgar Schein’s model of culture (2004) would be:
- Identity and Role: Who am I and what will be my role?
- Power and Influence: will my needs for influence and control be met?
- Needs and Goals: can I support the overall goals and are they in correlation with my own goals?
- Acceptance and Intimacy: Will other members in this group like me, respect me and accept me the way I am.
The answers to these questions are critical to ensure the function of the group and to keep people motivated and engaged. Reflecting the structural development of the company the structuration theory of Giddens would support the chosen HR strategies. This is based on the fact that circle structure would foster routine processes within the workforce teams and the defined interface to the other circles.
E. g. the workers in the “Produce Products Team” have a common understanding of steps taken within their circle because they coach each other and all of them will have a general common understanding of processes used within their circle and a their common goals. Additionally there is a leadership council to contact if there are overarching actions to be taken. So the organisational structure is based on an interactive relationship between structure and behaviour as shown in the following figure:
Related to the idea that whatever humans do will create a social structure and that this structure also creates constraints (not only used in the sense of a restriction but also in the sense of giving direction) what human are able to do. From that perspective the social structures that exist within an organisation both depend upon and create adaptations in the actual organisation structure and vice versa. (Martin, 2005)
Conclusions
The key to get good results out of HRM strategies’ is to consider those strategies in the overall planning and business strategy development. When goals are set up for business planning and future development an integrated HRM approach will deliver even better results. This is also the outcome Accenture found in their research on pharmaceutical industry (Meredith A. V and S. Cantrell 2004).
During investigation this case study it became quite obvious, that different components like policies, strategies, hierarchies, organisational structures, environments and of course the people have a huge impact on each other. Definitely the company’s culture and the motivation of the employees are key factors to achieve business goals.
It will not be possible to offer an ultimate definition of the concepts of motivation or performance, how they relate to each other, or how they should be used in practice. Every manager needs to answer the question of how to motivate people to perform the best way related to the circumstance they are working in and related to the goals which needed to be achieved (Martin 2005). The chosen HR Strategies worked very well for Harley Davidson because of the American attitudes, and might not work well in countries with other paradigms and other values. In a research done by Hofstede (2001) the USA were classified as strongly individual.
So they would not need a tight management or even would be taken aback by that. In contrast to that e. g. Japanese employees would not feel attracted by the individual approach because they seek clearly defined top down structures to avoid any uncertainties. This means that national cultures needed to be considered when decisions for cooperate structures and strategies are made. Especially international companies with subsidiaries in different countries need to be aware of this attitude. Furthermore there needs to be a congruency between the chosen HR and business strategies and the employees and organisational requirements.
HRM strategies are not an end in themselves but are set up to support the overall business strategies of the organisation (Schuler, R. S. and S. E. Jackson 1987). Recommendations HD has managed to change from a company near the bankruptcy to a competitive international player on the market. But there are still some rooms of improvement which are not covered yet out of the HFCD and additionally, the worldwide collaboration with partners or even own subsidiaries can also deliver more ideas and challenges regarding collaboration, company culture and motivation of employees.
