1. Outline the problem
After reading the case study it is clear that there are several issues that have been noticed. Firstly there is a lack of factory managers to properly manage the 500 employees. Westfarmers would need about 35 managers instead the current 15, as research shows the average staffs to manger ratio is 7-10:1 (Anders, 2008). Secondly the CEO was aware of Johns accounting background and that he did not have all the required experience in HR management, but failed to provide him with adequate training. John was not given sufficient time to settle into the new position and solve existing staff problems, as he was given new tasks to do. Lastly there is an issue with the ...view middle of the document...
John’s employees are lacking management supervision as there are 15 managers for 500 staff members but also could be lacking motivation. The main focus of the company would shift to motivating the employees as they would be competitive advantage and it may help John to reach the 20% increase within the three years.
Barney's (1991) resource-based theory of, argues that continued competitive advantage occurs while four vital necessities are reached. The four necessities include adding value to the organisation’s production procedure with the importance of individual performance. Secondly firm’s skill set must be rare. Thirdly, the human capitol which are the organisation’s employees stands for cannot be easily duplicated. Even though one of the limitations is that the employees can change organisations, John has to make sure that he motivates and retains the employees. Lastly, the organisations human resources are not to be subjected to replacement by technology or other replacements if the man goal is to offer a supply of sustainable competitive advantage (Huselid, 1995).
The disadvantages of this theory are that it is really difficult to obtain a firms human capitol containing both the highest level of skills and demonstrate finest behaviour in the lack of an united people management system (Wright, 2001). Also all the resources are invested into the employees (human capitol) as they are the competitive advantage, while the human capitol can be easily transferred to another organisation (Barney, 2001). The organisation also misses out on the technological advances and the labour cost reductions. Economic structure of the company industry also impacts on the competitive advantages, because if it collapses the advantage is gone as well as the organisation cannot afford to have them.
Secondly the best fit theory could also assist John in his dilemma. The ‘best fit’ approach to strategic human resource management is to investigate the close liaison among strategic management and HRM. This can be done by taking into consideration the control and nature of vertical integration (Huselid, 1995). Vertical integration, where power is grown through the close relations of HR policies and practices to the organisational goals. The internal fit perspective proposes that the implementation of an internally consistent system of High Performance Work Practices will be reflected in better firm performance (Huselid, 1995). The benefits of HPWP are declining employee turnover, greater productivity, and also greater job satisfaction. It also operates through organisational social structure to increase flexibility and efficiency, all of these help improve building and growing people and improving business performance (Huselid, 1995).
Limitations to the best fit method include high job uncertainty as it is based on cost efficiency strategy that is why it failure to recognise the need to align staff interest with organisation with pre-validating social...