Executive Summary
The report highlights the market entry strategy for Maersk into the Kenyan logistics market. The report highlights six main strategies that the company should use in terms of human resource management.
The report is developed against the backdrop of the effect on a human resource strategy on the overall business strategy. To this end, the report ensures that a holistic discussion on the business relevance of the strategies outlined. Recruitment and selection coupled with training and development form the first tier of the human resource strategies.
The second tier involves reward management and employee performance which are outlined to illustrate the role of the employee an organisation. Performance management is also outlined. The same provides a link between the roles of the employees and the company objectives.
Introduction
Logistics in East and Central Africa
The growth of international trade gas resulted in a subsequent growth of the logistics industry. Kampfe (2007) argues that the industry’s performance in Africa, over the past five years has been splendid. To this end, multinational companies have been setting up shop in the continent with the sole intention of maximising on the growth of the sector.
Over the past five years, the logistics market in African has witnessed growth due to a number of economic variables. However with the growth of the market comes a need to invest in human resources. The report highlights how Maersk is penetrating the East and Central African market.
In the past five years, the East African logistics industry has grown. Investor confidence in the sector is on an increase. Kampfe (2007) argues that multi-national companies have increasingly been setting up shop in the region. Africa finds itself in a strategic position for investment due to the affordability of doing business. In Most European countries, the recession resulted in companies diversifying their business.
Going forward the logistics industry will continue to expand due to globalisation. Mandy, Noe and Gowan (2005) argue that globalisation enhances international trade. To this end, the future of the logistics industry market in Africa is great.
The logistics industry is also characterised by a number of challenges. Technological advancements, for example, have made companies reconsider certain decisions related to human resource management.
Prasad and Kanalanabhan (2010, p. 318) suggest that human resource strategies need to be informed by the changes in an industry. The report will outline a suitable human resource strategy for Maersk and its entry into the Kenyan Market.
Report Structure
The report has 7 different sections. The general discussion in the report will be how Maersk can rely on relevant human resource policies for a suitable strategy for their Kenyan subsidiary.
The first section is the introduction where an overview of the report is outlined, detailing the structure and key theoretical principles that will be applied. According to Kamoche (2002, p. 993) a suitable human resource strategy is informed by relevant theories in the field.
The second section outlines the recruitment and selection process. The same is informed by the fact that a multi-national company requires the necessary manpower to carry out their core business (Kamoche 2002, p, 993). The third section outlines the training and development.
Training and development is important in ensuring the employees of a company are up to par with the industry requirements. Thereafter the report outlines, reward management, performance management and employee involvement. The final section is a conclusion wherein recommendations are made regarding the industry.
International Business Environment in Kenya
Overview
The implementation of suitable human resource strategy is informed by a number of variables. Prasad and Kamalanabhan (2010) argue that human resource strategies rely on the business climate in a particular country. To this end, this section of the paper outlines Maersk’s company profile.
Prasad and Kamalanabhan (2010) argue that the analysis of a company’s profile is based on its aims, goals and international intentions. The same enables a suitable human resource management strategy to be adopted. Such a strategy is usually in line with the overall business strategy.
Company Profile for Maersk Group
The Maersk Group is an incorporated business entity made up of several business subsidiaries. According to Kampfe (2007), the company is a key player in the global logistical industry.
To this end, their entry into the Kenyan Market is informed by their core objectives. Kampfe (2007) carried out an analysis of several multinational companies which included Maersk. The analysis, among others examined the company’s profile which cites the company as a shipping agency.
The company’s mission is the understanding of their clients, business and market. Kampfe (2007) adds that the company guarantees their clients competitive transportation service. Kamoche (2002, p. 993) argues that Africa, and by extension Kenya, is projected to have increased trading activity. To this end, Maersk Group’s mission is compatible with the demands of the African market.
Kamoche (2002, p. 43) cites the increased cargo demands into the continent and a subsequent need to transport goods inland. Kenya is seen as strategic in terms of entry into the East and Central African market. It makes sense for an international company to set up shop in the region.
Five Porter’s Forces
When an organisation is keen on market entry an evaluation of the same is suitable based on a number of parameters. The Maersk Group’s entry into the Kenyan market requires an analysis based on such concepts as the Porter’s forces.
According to Kampfe (2007, p. 50), the Five Porter’s Forces allow a company to come up with a suitable business strategy. Consequently, a suitable human resource management strategy is realised through such a perspective about a given market.
The first aspect regarding Porters forces is the threat to new entrants. Kamoche (2002, p. 995) argues that the Kenyan market has been liberalised. Investors are attracted by the increase in terms of exports over the previous years. Figure 1 is an illustration of how exports in the Kenyan market have performed in the past.
Figure 1:
Source: Kamoche (2002, p. 995)
According to figure 1, Kenya witnessed an upsurge in imports from various destinations. The implications, of the increase are that, the threat to new entrants is relatively low. Kamoche (2002, p. 995) argues that the government has put in place relevant measures to attract investors. The same is coupled by the fact that there is evidently a large market that requires attention.
With respect to the bargaining power of buyers, Kenya has a nascent economy. Kamoche (2002, p. 994) emphasises on the fact that the economy is still growing and the household incomes are still insufficient for competitive business action.
However the country’s infrastructural activities are contributing to an upsurge of imports in form of raw materials. Consequently, the same has brought increased investor activity, with a majority of raw material being imported. The same calls for services like container freight services, which Maersk is bringing to the country.
Recruitment and Selection
Once a company has entered a given market, it is imperative that it rolls out a plan to acquire new staff. Kramar (2014, p. 1069) defines recruitment as the identification of the need to engage a given number of employees in a company.
Kramar (2014, p. 1069) goes on to define selection as the process through which an organisation carries out vetting on applicants to a given position. The selection is concluded once a suitable candidate is settled upon. Maersk, in its intention to enter the Kenyan market must be alive to the fact that they will need to engage the services of a certain number of employees.
The recruitment and selection of staff is informed by the need for sufficient training. To this end, companies like Maersk, employ the Frase Rodger Framework. According to Kramar (2010, p. 1070), the Frase Rodger framework is employed by companies due to the need to develop the skill levels of the entire workforce.
Consequently, the aspect of training is encouraged in all organisations to ensure that the staff members have the relevant knowledge pertaining to the specific field. Logistics has a number of fields that require specialisation. To this end, Maersk is going to invest a lot on training since there is a scarcity of skilled labour in the market.
The recruitment of personnel can be conducted in-house or external advertisements made. A company like Etihad Airlines is a respected strategist on the human resource front. Their entry into Africa broke glass ceilings on several fronts. For instance, Kampfe (2007, p. 55) indicates that the company up their management positions to external applicants.
In most cases companies prefer to retain management positions whenever they go to a new country. Such a strategy used to work in places where there is absolute scarcity of skilled labour.
However, a country like Kenya is known to have sufficient personnel capable of handling a freight company (Kamoche 2002, p. pp4). Consequently, Maersk should consider coming up with a strategy that blends between the two avenues of recruitment
As already mentioned, a company can opt for an internal or external recruitment process. In both cases, Gilmore and Williams (2009, p. 67) suggest that experience and proven capabilities must inform the recruitment process. Nonetheless, each of the recruitment platforms has its own merits and demerits. In point form, the following are the merits of internal recruitment:
- A company saves on the resources that would be used to train new employees
- New stuff might disrupt the blue print of a company. However, an internally sourced employee shares in the vision of a company.
- The idea that a new job will pop up, internally, acts an incentive to hard work within any organisation
- The risk factor of hiring an insider is lower than hiring an external employee.
Notwithstanding the benefits of internal recruitment, there are demerits which ought to inform persons of its suitability. The following are the disadvantages to internal selection;
- It results in burden to replace the employee who has taken up the new job position.
- Reforms might not be forthcoming if an insider is appointed to a new position
- Employee rivalry may result in the event one is promoted to a new role. The same reduces performance
Basing on the advantages and disadvantages of the internal recruitment process, a company can make an informed decision on how such a recruitment policy would affect its performance. According to Kapfe (2007, p. 55), suitable human resource strategy for a new company is based on loyalty. An organisation works best when the members of staff are reliable and can be trusted.
Holtbrugge, Friedman and Puck (2010 p. 439) recommend a partial internal recruitment process for organisations entering a new market. Such a process would require that the initial management team be composed of both internal and externally sourced employees. Such a move allows for diversity within a company.
Training and Development
Human resource management requires, among other things the improvement of skills for the work. As already defined, training entails skill improvement of the employees in an organisation. Grieves (2003, p. 77) relates training to the development of an individual’s performance in a given job description.
Under such circumstances, the employees are provided with the necessary skills to undertake the various jobs in that organisation. Essentially, training entails the improvement of the knowledge associated with a particular job.
There are a number of reasons why companies focus on training and development for their human resource. Kramar (2014, p. 1070) argues that the same is particularly true for companies that are entering into a new market altogether.
For instance, the intentions by Maersk to set up shop in the Kenyan market, comes with the understanding that skill improvement is necessary. Kamoche (2002, p. 994) argues that many multi-national companies that invest in Africa, factor in training and development in their planning due to scarcity in skills that meet international standards.
Training and development is not a generalised concept. Companies tend to come up with a training and development framework that specialises on different roles in an organisation (Grieves 2003, p. 77). It is important to clarify that Maersk is not entering the Kenyan market, per se, for the first time.
However, through one of its subsidiaries, Maersk intends to provide other logistical services including storage and handling of cargo. To this end, a number of job openings will be available. However, the same will be subject to rigorous training and development to ensure that the company attains international standards in its performance.
As already mentioned, training and development involves the impacting of knowledge to the employees in an organisation. The knowledge will trickle down to the actual improvement of skills in the said organisation. Grieves (2003, p. 45) argues that knowledge keeps on changing.
It is not possible to be content with knowledge. Such an assurance implies that training and development needs to be sequential. Kamoche (2002, p. 994) argues that companies entering a new market need t come up with a period. Figure 2 is an illustration of a periodic training and development schedule.
Figure 2
Source: Kramar (2014, p. 76)
Figure 2 illustrates how Kurray Group has developed a training scheme for their employees. The company was venturing into the Pakistan market. According to Kramar (2014, p. 76), the clustering of the employees into the respective roles is an efficient means of attaining the goals of training and development.
Figure 2 indicates that each job class has a specific training regimen. The same can be carried out depending on the set goals of an organisation. The market entry of Maersk into the Kenyan market requires a similar attention to training and development.
Companies are required to ensure that the training covers all the employees in an organisation. According to Prasad and Kamalanabhan (2010, p. 316) there are companies who perceive training as a requisite for the new members of staff. Unforttunately, that may not be the case.
When a new concept emerges in an industry all the employees in that field will require training. Kampfe (2007, p. 47) argues that a shipping business has new trends emerging every so often. To this end, training should encompass all the employees in an organisation, regardless of their stay
Training and development, in an organisation is meant to prepare the workforce for any future demands in the job group in reference. To this end, there are a number of training models that an organisation can employ. The result will be an overall improvement in the performance of such organisations within the market in reference.
According to Grieves (2003, p. 104) training can be carried out, in an organisation, based on the need assessment. The same is derived from the systems model of training. A company identifies its immediate needs and responds to them accordingly. The training will carried out to ensure the workforce meets the said needs.
Organisational analysis is another aspect of the systems model of training. Mondy et al. (2005, p. 88) argue that depending on a company’s organisational performance, the needs for training arises.
For instance, if a department in a given organisation is not performing as expected, there is a need to introduce a new work regiment. Consequently training becomes important. Other components of the systems model of training include the following:
- Job analysis
- Person analysis
- Development of a training scheme
- The design of a suitable environment for training
Reward Management
It is a norm to award excellent performance in any organisation. Suitable reward strategy ensures that an organisation is able to have a well motivated workforce.
According to Dickman and Muller-Camen (2006, p. 581) reward management is born out of the need to ensure that a workforce is well compensated for their efforts in an organisation. Essentially, a reward management regimen ensures that there is a proper framework for the appreciation of the work carried out by the employees in an organisation.
A reward management program is responsible for the control and analysis of several aspects of the employees. Dickmann and Muller-Camen (2006, p. 581) argue that all the benefits of employees must be included in a reward management program. To this end, all forms of remuneration and compensations are made with respect to the performance of an individual in a given organisation.
The objective of such a reward management plan is to ensure that all the aspects of a reward structure are adhered to in the implementation of a company’s reward structure. Organisations that are venturing into a new market must ensure that the reward management guarantees employees satisfaction in the organisation.
A suitable reward structure is one that entails the following:
- A comprehensive pay policy and related practices
- An efficient administration of the payroll system
- Incorporation of the minimum wage policy aid out
- Payment of the bonuses and other related benefits
The objective of reward management is to ensure that the contribution made by the employees in an organisation, does not go unnoticed. Under reward management system, the employees in an organisation get a fair and commensurate award for all their hard work. According to Grote (2002, p. 76), a reward system is meant to motivate the employees.
The same also attracts employees to the organisation. Grote (2002, p. 76) argues that an organisation that is getting into a given market is required to have an attractive reward management policy. Such a policy must ensure that competing firms do not have an upper hand.
The reward management policy is quite ideal in theory. However, its implementation in reality is a thorny subject in many organisations. According to Grote (2002, p. 98) many organisations come up with a specific reward system that is aimed at appreciating a given parameter in an organisation.
However, in most cases, the item marked for award is not often rewarded. Grote (2002, p. 98) insists that diversion of an intended reward from one objective to another, reduces the credibility of the reward system altogether.
There are a number of reward systems in an organisation. Grote (2002, p. 76) argues that depending on the reward, the objective is as diverse. To this end, implementation of the various reward systems guarantees a satisfied workforce in the said organisation. In most cases people associate rewards with slight increases in salaries.
However, Dickmann and Muller-Camen (2006, p. 584) argue that that is just one out of the several rewards that exist. Grote (2002, p. 76) refers to such an award as being extrinsic. Many employees prefer increments in their salaries owing to the inability to attract other forms of reward n an organisation.
Extrinsic rewards are the kind that employees get after a certain duration of service to an organisation. According to Grievers (2003, p. 77) extrinsic rewards include such rewards as bonuses, promotions, gifts and salary increments.
The other type of reward is referred to as the intrinsic rewards, which are geared at giving an individual personal satisfaction. Some of the characteristics of intrinsic rewards include positive feedback and trusting an employee with more responsibility. Grote (2002, p. 56) also suggests that intrinsic rewards incorporates such issues as employee recognition.
The entry of a new company in a given market requires a careful analysis of the people’s reward preferences. Grote (2002, p. 55) argues that in some societies employee satisfaction appeals more that the financial gain. A worker needs to be valued in an organisation.
To this end, multinational companies like Maersk are required to develop a reward system that ensures the employees feel appreciated for the work they put in an organisation. A satisfied employee is motivated to work even harder in an organisation.
Performance Management
Performance management is a concept in human resource management that ensures the workforce confirms to an organisations objective. According to Dessler (2000, p. 170), performance management is crucial in companies venturing into a new market.
Grote (2002, p. 70) argues employees are better placed in understanding how an organisation is expected to operate due to the link between their respective work efforts and an organisation’s core objectives.
Performance management is realised once the employees are geared towards certain expectations. Grote (2002, p. 37) explains that the employees in an organisation must develop certain targets. Such targets ensure that all the actions and behaviours of the personnel result in the projected targets.
Grote (2002, p. 67) argues that performance management relies on the incorporation of performance parameters like standards and performance dimensions. Such parameters ensure that employees stick to their duties for the benefit of the company.
Market entry is often characterised by a number of challenges that have a direct impact on the long-term performance of a given company. However, through performance management, can organisation realise their respective missions with ease. According to Kampfe (2007, p. 57) Etihad Airlines penetrated the European market courtesy of its excellent record on performance management.
The company ensured all the employees bought in to the company’s vision. Consequently, it became easy to set targets that the company expected to attain. The targets were realised owing to the collective effort played by the members of staff. Maersk would do well to adopt a similar policy.
Employee Involvement
When people are engaged in employment in a given organisation, it is important that they feel like the organisation is their second family. Under such circumstances, Kamoche (2002, p. 994) argues that employee involvement ensures that people are comfortable to work in an environment where they have a say in matters that touch on their jobs. It is important to observe employee involvement as a philosophy rather than as a tool.
An organisation is required to incorporate all its staff members on its overall operations. Employee involvement will therefore require the participation of the workforce in the decision making process. According to Kampfe (2007), multi-national organisations are perceived as foreigners whenever thy venture into a new market territory.
To this end, the company’s future will depend on how the locals perceive their role in the decision making processes. Consequently, a company that allows for the opinions of the participation of the members of staff will find it easier to operate in just about any market.
Employee involvement, as a human resource principle, can be applied as a strategy based on a given model. A suitable employee involvement is one that ensures the decision making process are largely influenced by the employees rather than the management (Kramar 2014, p. 1087). Figure 3 is a suitable model of employee involvement in a company.
Figure 3: Employee involvement in decision making
Figure 3 illustrates how a decision can be arrived at in an organisation. Assuming that a decision needs to be made, the manager can tell the members of staff what that decision is all about. In this case, the manager has absolute control over the decision making process.
However, the in-charge, in an organisation, can opt to sell the ideas behind the decision to the members of staff. According to Grieves (2003, p. 71) such a move is an attempt by management to gain support f the decisions from the members.
Decision making process can also be consultative. In figure 3, consultation is highlighted wherein the manner arrives at a decision with the involvement of the involvement of the employees. The consultative mechanism allows for the input of the employees although the ultimate decision is made by the manager.
Employee involvement can go a notch high when the manager asks the members of staff to join them in implementing a decision. However, through delegation, the employees relish in the responsibilities bestowed upon them. Consequently, the decisions made end up affecting them positively.
Employee involvement is a key asset in ensuring market penetration by a given organisation. Maersk stands to benefit from the same if they allow employee participation in the decision making process. According to Dessler (2000, p. 88) new companies in the market can use this strategy as a human resource retention strategy.
The same would help reduce loss of staff to rival companies since they will feel like they belong to the company acknowledges their role in the overall performance.
Conclusion
In conclusion, the entry of a company like Maersk to an African country signals increased competition into the market. To this end a suitable human resource strategy is required. According to Hoch and Dulebohn (2013, p. 114) such a strategy should consider a number of variables like recruitment and training.
Fortunately, the report has highlighted the respective aspects of human resource management that can be used to formulate a strategy for Maersk once they enter the Kenyan market. To this end, the report recommends an all inclusive recruitment exercise that allows for internal and external applicants. The same will bring about diversity in the company.
The report also outlines the importance of training and development. To this end, recommendations are made that the training and development be periodic and focus on specific skills. According to Kamoche (2002, p. 997) employees require appreciation for the service they do in a company.
To this end, Maersk needs to develop an extrinsic and intrinsic reward system. Also, the company should develop a concrete performance management to ensure that they meet their objectives. Finally, Maersk would do well in incorporating their employees in the decision making process. Such a human resource strategy helps in ensuring that the entire company operates as one unit.
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