Strategic Human Resource Management (SHRM)

Then comes the detailed discussion on the factors that determine a strategic performance relevant for the organizations that will undergo such a change in the workforce. The report has categorized the workforce as per their priorities and how the parties fare when it comes to each of the
company’s organizational design and goal orientation (Jackson 2015)

We have also tried to look at the macro economic factors that have led to such a change.

Source: Company Website

What is the strategic decision that Holden has made and why was it made?

The Australian automaker announced the redundancy of workforce for both its South Australian factory and Victorian product development office as well. This layoff resulted because of the decline in the consumer demand for their flagship model Holden Cruze. This model was gaining popularity since consumers preferred small cars and Sports Utility Vehicles. This low demand combined with escalating production costs in the region. The Australian dollar also plummeted making imported cars preferable for the consumer (Bradatan 2016). The Australian government also supported this company way back in 2012 by providing a grant of AUS 2 billion so that it can try to manage sustenance without lay-offs but the macro economic factors led to drop in sales and led to the company running is considerable losses. The company has gone through a lot of changes with respect to the current economic times. Hence Holden made the strategic decision to reduce the workforce and improve efficiency. This will alter their bottom line and make the company sustainable. They will lay-off more than 3000 employees by 2017.

Source: Porter 2016

They are also looking at involving a large number of employees to hold through after 2017 this count is 500 (Rayner 2016). The company will have to ensure that the best 500 employees who actually want to contribute stay back. This will be a major Human Resource challenge for the organization facing financial issues.

How will the activities of the HR team contribute to implementing the strategic decision of Holden and to satisfying employee needs?

There is a huge challenge for the HR workforce due to two reasons, firstly the company envisions to become the number one employer for workforce by the year 2020, secondly the company will need a strong force of 500+ employees in 2017 to sustain an optimum growth. The HR team has the most important role to play when it comes to such a transition at a very large scale. The HR team here at looking at providing ample support to the employee base. They are looking at providing ample support apart from that they are ensuring that employees are treated with respect. The company chief has already been forthright in conveying the painful news and they have been clear and honest to a large extent. The issue lies in the overall approach of this case.

Which approach to HRM is being applied, and is it a suitable approach?

The HR approach being used in this context is employee dismissal due to redundant positions. The advantage of this strategy is that there will be a reduction in the long term costs incurred by the company (Pha 2015). The downside is a lot of demoralization of the employee base. The other options are giving early retirement according to age. The strategy they are adopting will lead to employees feeling that they are no longer required by the industry. Retirement will give them some form of pride and also reduce costs for the company just like job cuts in first case. The other strategy is involuntary or voluntary attrition, this has two benefits for the employee it will lead to no stigma, since he left voluntarily. The stigma of ejection is totally removed. The other advantage is in the perspective of the company it will lead to better organizational performance. It will also have better effect on costs. The downside is a risk that maybe there is higher cost in the short term. Overall the best approach for the company is a mixture of voluntary retirement and compulsory age based retirement, since the cost burden will be better and the employees will be better handled (In & Kim 2015).

Conclusion

This case is about employee reaction management during lay-offs. Such scenarios are the typical challenge for HR personal and they must look at managing it effectively. Employees must be given proper information with clarity and honesty. There should be a clear cut plan of action to handle such a scenario. We have also tried to look at the macro economic factors that have led to such a change and this gives a better picture to understand why this change is important.

Human Resource management must also incorporate performance management in a better manner to incorporate this lay-off process.

References

Jackson, T. (2015). 15 Managing managers across cultures: different values, different ethics. Handbook of Research on Managing Managers, 283.

Pha, A. (2015). The forgotten children. Guardian (Sydney), (1673), 1.

Rayner, J. (2016). Generation Less: How Australia is Cheating the Young(Vol. 9). Black Inc.

Bradatan, C. (2016). Highly Skilled Migrants: Risks and Hedging Mechanisms. Population, Space and Place.

In, S. Y. & Kim, M. J. (2015). Public Sector Decision Framework for Airport Development: The Case of Incheon International Airport in South Korea. Available at SSRN 2687907.