HRM in Automotive Industry - Capita selecta

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HRM in Automotive Industry - Capita selecta

  1. 1. 30/05/13 HRM models and theories 1INDUSTRY DYNAMICS >HUMAN RESOURCE MANAGEMENT >EMPLOYEE CONTRACTING“Linking production models with employment patterns, in the automotive industry.Another angle on how employment adaptation strategies are drawn.”Course: Managing Human Resource Flows (194120090)Document: Capita Selecta – Individual ProjectAuthor: Dimitrios Kordas (MSc)Enschede, 30-5-2013
  2. 2. 2Abstract• Does really production models in USA & Japan affectemployment strategies of car manufacturers?• Is an institutional analysis (micro, meso, macro – level)sufficient to explain the evolution of Japanese long-termemployment and the American private social welfare?• What are the gaps that a production-driven approach canaddress look on HRM policies and employee contracting?• Why, the Japanese organizational mode seems to bemore productive, more flexible and more profitablecomparing to the American one?
  3. 3. 33Research goal“To examine whether and how the production model followedby the automotive firms operating in Japan and in USA affectstheir employment strategies.”Notions used: Product Architecture: Modularization vs. Integration Employee Contracting: HR-architectures
  4. 4. 4IntroductionOld technology New technologyDevelopingCapabilitiesTransforming corecompetences intocoreproducts On which products exactly do automotive firms compete? Why do firms differ so much in terms of profitability?
  5. 5. 5Literature review  JAPAN USALabor mobility Low HighUnemployment rate Increased DeclinedWage differentials among workers Smaller BiggerTable 1. Mobility – Employment – Wage differentials (Hattori & Maeda, 2000)Organizational mode Japanese AmericanHRM PoliciesSourcesAbbeglen (1958)Dirks et al. (2000)Hamaak, Hori, Maeda, & Murata (2011)Hirano (2013)Jacoby (2005)Kato (2000b)Moriguchi & Ono (2004)Nitta & Hisamoto (2008)Okada (2012)Recruiting at any levelPay for specialized skillsIndividual bonusesUse of hierarchy commands/standardsfor information processingMarket-oriented decentralized personnelmanagement (DP)Job-based ranking policyStandard evaluation and development ofspecialized skills,DP: as a business partner trying tosucceed to the four roles defined byUlrich (1997)Competencies-Triad (Boudreau &Ramstad, 2007):- Business knowledge- Delivery of HR practices- Technology expertiseRecruiting at the bottomPay for roles potential abilities,Work group bonusesInter-department communications &strong union participationCompany optimization-orientedcentralized personnel management(CP)Ability-based ranking policyIntense in-house trainingCP: as a complement to an internallabor market, Mass-hiring of graduatesCompetences:Knowledge of the various divisionswithin the firm and development of abroad network of connections
  6. 6. 66Institutional analysisLevel of analysis TOYOTA-style GM/FORD-styleMacro: Government Competition transparencyPersonal rights protectionOpen to women employmentStrict labor market regulations, union lawsand social welfare policies (Moriguchi &Ono, 2004)The Nikkerein Initiative (1995) Close towomen employmentMeso: Organization Manufacturing operationsConcentrated productionHigh inventoriesUse of local workers’ knowledgeProduct improvementsCorporate StrategyCompetition leaderReinvestment in external activitiesShort-term buyer/supplier relationsManufacturing operationsHigher spread productivity growthTransplant investmentsLow inventoriesLean operationsCorporate StrategyGrowth and market share orientedReinvestment in personnelLong term buyer/supplier relationsMicro: Society Personal (vertical) promotions,opportunism, high-class education andprestigious institutions lead to prestigiouscompaniesLoyalty, trust, commitmentSocial exchange relations (horizontalpromotions)Low impact of institution’s reputation onemployment
  7. 7. 7Product Architecture: Source of technologicalinnovationTechnology trajectory Product platforms• Performance improvement• Diffusion• Change of interestInnovation: Types - Patterns - Technology cycles
  8. 8. 88Organization strategic direction Core Competences (CC): the point on which manufacturers, try tobuild, borrow, buy, bounce, or bind capabilities, as fast as possible tosuper-pass their competitors (Prahalad & Hamel, 1990). Companies, even from the same national context, differ on what theydo compete!“Prius”: Aggressivecollaboration,Partially Borrow &Partially Buycapabilities“Prius”: Aggressivecollaboration,Partially Borrow &Partially Buycapabilities“Insight”:Transferring &Training to buildcapabilities,Redeploymentemploymentstartegy“Insight”:Transferring &Training to buildcapabilities,Redeploymentemploymentstartegy
  9. 9. Source: (Lepak & Snell, 1999) 9HR-Architectures
  10. 10. Source: (Prahalad & Hamel, 1990)10Business portfolio vs. Competences portfolio“Capabilities portfolio”CHRYSLER (after ’60s)/FORD(after ’80s) Hand-in-Hand training Learning through specific-components partnerships Competition ontransaction-specific skills(Jones & Hill, 1988)“Competences portfolio”TOYOTA Collaborative training Accumulative learningshared with partnersLong-term competitiveness“Job portfolio”GM (2008) No in-house training R&D direct adoption Competition on price“Business portfolio”HONDA In-house training Accumulative learningstays inside Short-termcompetitivenessPrice/Cost (efficiency)Performance(Responsiveness)
  11. 11. 1111Supply Chain learning: Transaction Costs approach Factor prices Resource availabilities towards Resource Based View Market situation“The World of Contract (Williamson, 1985)”ContractualinterfacesContinuityAdaptabilityReal economic valueoffer
  12. 12. 1212TOYOTA Supply Chain: A “best practice” example Strategic supplier segmentation Partner-model 3-level concentric supplier management (Fig. 1) employeeportfolio (Fig. 2) Common destiny: high relational mutuality & high HR-superiorityFig. 1: Strategic supplier management (Dyer et al,1998)Fig. 2: Nikkerein employee portfolio proposal(Nikkerein, 1995)
  13. 13. 13TOYOTA personnel segmentation
  14. 14. 14Why supplier segmentation? Increase numerical (cost) flexibility Establish individual and performance-based initiative HYBRID (Japanese) organizational mode (Hirano, 2013)Ranking policies: Ability-based + Job-based Transplant case National and Societal factorsJAPAN USA- Homogeneity - Diversity- Social welfare corporatism - Unrestrained market- Familism - Individualism- Paternalism
  15. 15. 15Corporate StrategyModularizationIntegrationJob-designSet the bottom line of JAPANESE-strategy Highly modularized mass-market Develop as fast as possible VRIO capabilities Lean production system: Triple segmentation Reciprocical commitment (Cole, 1979) Horizontal promotions, irrespective the seniority level AMERICAN-strategy “Inner” & “Outer” workforce segmentation Centralized ownership Not full acquisition (not squeezing the lemon) Lateral promotions for highly-skilled engineers
  16. 16. 16Summary: “A purchasing approach andHypotheses to be tested”Internal labor market Long-term/HybridExternal labor market Short-term/Task relatedEfficiency (productivity)Responsiveness (variety)CustomizationMass-productionProduction model Operating perspective Developing CCs Employment pattern
  17. 17. 17Hypotheses to be tested I H1: “If mobility will increase – in transplant case – andunemployment will decrease, then profitability will increase.” H2: “Given that job tenure in Japan is decreasing, then thenumber of flexible workers will increase to the extent thecontacting costs of core and specialized employees will bereduced, respectively.” H3: “The rate of employee development is positively relatedto the bottom turnover for each position.” H4: “The customization costs are positively related to theannual firm profitability.”
  18. 18. 18Hypotheses to be tested II H5: “The transfer frequency of an employee is related to his/hercommitment negatively in USA and positively in Japan.” H6: “The wage differentials – for university graduates – for bothorganizational modes are linearly expanding with the seniority level.”
  19. 19. 1919Limitations Complementarity and Duality principles are not analyzed Labor data: not used (qualitative approach) Productivity measures: not taken into consideration Trade/Labor unions: not considered as crucially employmentshaping factors New employment models (e.g. pay-for-jobs, pay-for-accountabilities): out of article’s scope.
  20. 20. 2020Further discussion IModel 1. Testing the relationship between Physical & Human Capital investments withthe Production Organization Index
  21. 21. 21Further discussion IIModel 2. Efficient contract organization (Control vs. Commitment HR-systems)
  22. 22. 22Thank You !

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