Volkswagen India is one of the recent investments by Volkswagen to tap into the human resource and market available in India. The company employs more than 2500 employees. The main issue facing Volkswagen India is talent acquisition and retention. The worse hit category of human resource is engineers.
The number of engineers joining the automotive industry and remaining there is very small. Many of them go for MBA degrees or software engineering degrees after attaining their first degrees. In India, retaining engineers is becoming very difficult.
The company’s plant in Pune has the capacity to assemble 110,000 units per year. The company does not manufacture the cars in India. Rather, it imports the parts and assembles them in India to derive benefits associated with labor costs, and tax reliefs.
There is a lot of debate in different quarters regarding whether HR is a strategic function. Some of the debaters go as far as to claim that it is possible to do away with the HR function without consequence. These views raise serious questions in relation to the role of HR in the corporate environment.
The role of HR has changed in the last two decades based on advances in the behavioral sciences and in the understanding of human motivation.
During the same period, strategic management has become the basis for the management the organizations. This is the environment behind the proposal to view HR as a strategic function.
For the purposes of this report, the definition of strategic HR is the activities undertaken to secure the future of a company or to give it competitive advantage.
This report seeks to examine three aspects of HR in the modern corporate environment to determine whether HR can make a strategic contribution to Volkswagen India.
The first aspect that is of interest to this report is change. The management of change remains one of the most challenging aspects of corporate governance. Organizations develop cultures that are difficult to break. The formation of organizational culture is not always voluntary.
In many cases, culture emerges from the accepted norms and practices. The acquired habits become entrenched without deliberate direction from the management of the organization. On the question of change, the fundamental question that every HR manager needs to ponder is “do people dislike change?
The answer to this question provides the basis for planning for organization change at both strategic and operational levels. It is commonly accepted that people usually resist change. This is the basis of the numerous studies conducted in the field of change management.
Answering this question will make it possible to determine whether HR can play a strategic role in Volkswagen India, on the question of change management.
The second aspect that this report will deal with is organizational learning. Organizational learning is the ability of an organization to gain knowledge about its operations and to use that knowledge for a useful purpose.
Learning organizations that make the best use of the information generated in their ranks develop greater resilience to pressure.
At the same time, it consolidates its sources of competitive advantage. The main question that this report will deal with in this regard is whether HR can play a strategic role in organizational learning in Volkswagen India.
The third aspect of this report is employee engagement and commitment. Studies show that one of the key elements of talent management is whether high performing employees feel engaged and challenged by their work. Top performers tend to leave organizations that do not allow them to take on new responsibilities.
This is just one aspect of employee engagement and commitment. The main question that this aspect will answer is whether HR can play a strategic role in the engagement and commitment of employees in Volkswagen India.
Do People Dislike Change? Transition and Resistance
The causes of change in the corporate environment are varied. Change can result from the internal circumstances or from external environmental triggers affecting the operations of the organization. The internal causes of change include the adoption of a major plan or a new business strategy.
External triggers of change include changes in the regulatory environment, pressure from competitors or shifting consumer demands. Change can also result from a planned transition or from a forced process. When the change is planned such as the acquisition of a new facility, it is easier to prepare for it.
This is the nature if change that took place at Volkswagen when the company decided to build a facility in India. This was part of the efforts of Volkswagen to become the largest car manufacturer in the world.
One of the earliest models of change is Lewin’s three-step process that includes unfreezing, movement and freezing. Lewin went on to detail the events that take place during each of the three processes.
The second model of change is the Kulber-Ross model that is also useful in modeling how people deal with change. This model is used to describe how people deal with grief, especially after the loss of a loved one. The loss of a loved one represents one of the most significant changes that people go through.
Zell (2003) studied the process of change in the Physics Department of a major university and demonstrated that when change is not planned, then people handle it in the same manner as death. The department was at the risk of becoming irrelevant because of environmental changes affecting Physics as a discipline.
The Physics Department was receiving less funding for research, and was enrolling fewer students. Zell (2003) conducted a longitudinal study to map out the transition process from the time this trend became apparent to the time the faculty started taking proactive measures to adapt to the situation.
The study showed that the faculty members went through the five stages of grief as based on the Kulber-Ross Model.
The need for strategic planning usually stems from a recognition that change is inevitable. In fact, strategic planning is a facet of change management. When an organization realizes that change is inevitable, it sets out to influence the nature of change that it will undergo.
Volkswagen is working towards becoming the biggest carmaker in the world by 2018 through a strategic plan. The company needs a vibrant HR department to acquire and retain talent to achieve this goal. The point here is that there is a clear link between strategic planning and change management.
In the same respect, HR has a role to play in the way an organization adapts to change. For instance, succession planning is an application of change management to handle the transition of key employees.
HR is also responsible for talent management, which comes from the need to ensure that the organization does not lose top talent to competitors. Talent is one of the crucial success factors in organizations today. HR is also the best placed department in the organization to develop plans to deal with the unplanned loss of staff.
Another area that shows the importance of HR in any organization is organizational learning. Organizational learning refers to the ability of an organization to draw lessons from its operations as the basis for improvement.
Organizational learning requires the presence of a system that gathers data relating to the operations of the organization, processes the data, and produces useful information.
The information from the system then goes into programs and initiatives that help the organization to improve its operations. Organizational learning, just like change, may result from a disciplined process or from a crisis.
In a study of the nature of organizational learning in small firms in the high-tech industry, Therin (2002) uncovered several important issues relating to organizational learning.
The study was trying to find the correlation between organizational learning and innovation, and the relationship between organizational learning processes and financial performance, among other issues. Therin (2002) interviewed over one hundred CEOs of various small firms with less than 500 employees.
The results from the study showed a strong correlation between organizational learning and profitability.
The factors that determined the degree of benefits that an organization derived from specific organizational learning practices included the age of the organization, the strategic posture of the organization, and the environmental threats facing the organization.
Organizations with well-established systems for organizational learning tended to derive greater benefits from the processes. The strategic posture of the organization referred to the strategic position of the organization in relation to its wider industry.
Organizations with strong strategic postures benefitted more from organizational learning compared to the ones that did not have a strong strategic posture.
The role of HR in organizational learning is that HR is the custodian of talent development in the organization. Development of talent in an organization requires the consistent exposure of employees to information and knowledge that can help them to improve their work.
Many automakers in India retrain their newly recruited Engineers to enable them to fit in their corporate climate. In this sense, HR has the responsibility of ensuring that there are systems that enable all employees to learn about their work and how it affects the overall performance of the organization.
HR is also in charge of measuring the growth of the potential of each employee. Practices such as performance appraisals are critical points in the collection of data that can help organizations to learn about their progress.
Organizational learning is a strategic function in an organization. Organizations that learn find several opportunities to increase their effectiveness, and to strengthen their strategic position. Volkswagen India can improve its competitive advantage by making use of the lessons derived from organizational learning.
In this sense, HR plays a very important role in developing the learning mechanisms and translating the lessons into competitive advantage for the company.
Employee Engagement and Commitment
The third role that HR plays in the life of an organization is the development of structures for improving employee engagement and motivation.
Employee engagement refers to the ability of the organization to harness the potential of the employees to enable them to make a meaningful contribution to the operations of the organization. In addition to this, engagement refers to the ability of an organization to keep the employees interested in their work.
This may call for the application of employee motivation techniques. On the other hand, employee commitment refers to the ability of employees to dedicate themselves to the company. In recent times, employee turnover has become a big problem for many companies.
The problem is more pronounced in the high-tech industries because of the huge demand for very creative individuals. In some sectors, the rate of attrition is lower.
However, all the sectors of the economy in most parts of the world are dealing with a higher rate of employee turnover compared to the rates of turnover experienced before the nineties. This demonstrates the need to work towards achieving higher commitment rates from company employees.
Lewis, Donaldson-Feilder and Tharani (2012) conducted research into employee commitment by collecting data from employees and managers in different organizations, and made the following findings.
First, they found that employee commitment was high whenever an organization ensured that there was openness, fairness, and consistency in its HR policies and other business practices. Employee commitment was also high when the organization prioritized knowledge, clarity, and guidance when it came to job design.
This helped employees to feel better placed to handle their duties. Thirdly, employees showed greater commitment to organizations that supported their personal development.
The HR department in Volkswagen India already plays a critical role in the development of job descriptions and proposing changes to the critical functions of the firm. These basic elements constitute the factors influencing employee engagement and employee commitment.
The structure of a job can influence whether an employee remains in it for some time or whether the employee exits from it. For instance, an employee who reports to too many superiors soon becomes overwhelmed and is likely to plan to leave an organization.
In the same breath, the attainment of employee commitment will come from the ability of Volkswagen India to demonstrate the same commitment to the employee. This calls for the organization to ensure that the employees have the space and the time to pursue their own interests.
Google is well known for its policy of allowing engineers to spend up to thirty percent of their time on pet projects. Such engineers feel free to explore areas where they have a passion.
The role of HR in attaining employee high employee commitment is very clear. It is impossible to attain any meaningful development in an organization where there is a high rate of employee turnover. This means that reducing turnover is a strategic issue for every organization.
One of the main duties of HR is talent retention. This means then that HR has a primary interest in ensuring that the employees in the organization have high commitment to the organization.
On the issue of employee commitment, HR also has a role to play. HR is the only department that asks questions relating to the performance of an employee.
The other departments usually worry about performance when there is a problem. On the other hand, HR focuses on performance proactively giving it the unique position to generate employee commitment.
The main recommendations that follow from the literature review are as follows. In the issues of change, Volkswagen India needs to develop strong systems that will anticipate and direct change rather than deal with change in a reactive manner.
The proactive management of change can result in competitive advantage for the business.
Secondly, the organization can use the HR department to plan for how to handle the human side of change. While it is easy to prepare for change from a strategic level, it is more difficult to handle the people who undergo change because of the natural tendency to resist change.
On the issue of organizational learning, the two main recommendations are as follows.
First, Volkswagen India stands to benefit more from a strong culture of learning than from a weak one. In addition, deliberate learning is better that crisis driven learning. In this sense, the organization will benefit if it empowers HR to coordinate learning.
It should do this by allowing HR to provide leadership in the acquisition of new knowledge and in the collection of learning opportunities internally. Secondly, it is recommended that learning be infused in all the departments within the organization to improve the overall benefits of the process.
On the issue of employee commitment and engagement, it is clear that HR is the only department with the presence of mind to deal with organizational commitment to the employees. This makes HR the best department to handle employee engagement and commitment.
Volkswagen India should empower the HR department to make it possible for the department to develop programs and reward systems that will improve employee engagement. Similarly, the company should support the efforts of the HR department to create a working environment the employees find stimulating and challenging.
In conclusion, HR plays a very important role in the life of any organization. Its role in talent management is a strategic role. If the HR department in Volkswagen India is empowered, it will be able to make a strategic contribution to the organization.
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