XL has realized that people are not just a vital resource but are the key factor for successful performance, so it is the time to lead HRM to a strategic position. Sanz-Valle (1998) concludes that strategic HRM as a reactive management field where human resource management is a tool with which to implement strategy, to a more proactive function in which HR activities can actually create and shape the corporate strategy.
This means that the function of HRM is not only a tool to implement but also to create corporate strategy.Recently, XL has become a NO.5 bedding products company in Xiaoshan.
According to corporate strategy, XL wants to be a NO. 1 or NO. 2 in five years. Because there are so many companies in Xiaoshan, for attaining this goal, XL needs to make internal system best as well as much more understand external environment, especially competitors. Moreover, XL wants to develop Japan & European market, and it has established new manufacture. So, XL’s HRM strategy emphases on:1. Learn from competitors first and defeat them later.
2. Japan and European culture teaching, make different market requirement clear top-down. 3. Similar HRM methods to new manufacture, similar reward to company.
HR Activities: Recruitment and selection: XL likes “happy staff” that suits its values, especially for managers. So HR manager will make an interview for them and consider their resume carefully. For ordinary staff, XL will test them first. Normally, it involves half-year probation period for new staffs. And any workers who are from other provinces who want to join in XL must get a certification from local police station, which will avoid child labor and other issues. This method protected staff as well as company.Training: Learning from better company is a HR strategy of XL, so every year, XL organizes a part of good staffs to visit other companies to learn advanced experience.
Internally, XL has established automatic training system. High-skilled workers has been arranged beside relatively lower workers, so latter will learn from former as fast as they can. In addition, some special jobs like manipulating washing and separating machines, workers must be trained as least two months.Reward: The salaries consist of wage, bonus and endowment insurance. Part time workers can get RMB 600 only.
For piece rate workers, if whole year wage is more than RMB 20000 or 15000 (before insurance), they can get 20% or 10% bonus. For managers, except fixed wage, CEO will decide how many bonuses been paid based on their performance and last year bonuses. Promotion: XL believes “Ability First”, every staff has the chance to promote. The best case was that a technical worker had become a vice director in bedding products manufacture in 2003. The promotion process includes interview, ask workers around him, evaluate past record and current performance and potential.Employee relations: Besides local managers, staff come from four different provinces. XL has established an internal staff union, four switching leaders from different places convey labor voice, which lead to a healthy relationship between company to staff, and staff to staff.
Meeting: At the beginning and end of the year, CEO has a meeting for all managers, a year plan and annual conclusion will make the managers clear that “what will we do this year, what have we done this year.” Also, during the year, there are many meetings when urgent problem or good opportunity appears. So meeting helps company solve strategic problems as well as tactical problems.Comparison with Best Practice and Best Fit Best Practice Marchington ; Wilkinson (2002) defines “Best Practice” might be considered as “the idea that a particular bundle of HR practices has the potential to contribute to improved attitudes and behaviors, lower levels of absenteeism and labor turnover, and high levels of productivity, quality and customer service, ultimately generating higher organizational performance and profitability.
Depending on external (PESTEL) and internal environment (corporate strategy and internal resources), XL has made a bundle of HRM policies (selective recruitment, effective training system, flexible reward system, promotion, meetings), which has appeared to be high HR outcomes (low absenteeism, low labor turnover, high commitment, high morale and competitive), from this on, XL has got higher performance and profits. In 2003, the annual sales volume was RMB around 200 million and the annual net profit was RMB 15 million, the net profitability is 7.5%, its quiet high in this industry.It seems that many organizations have a desire to learn from this ‘proven’ best practice and to use the generic ideas, concepts and techniques ‘world-wide’.
However, it is becoming apparent from a range of fragmented evidence that best practices developed and successful in one context are not necessarily directly transferable to a comparable alternative. More detailed examination suggests that national culture has a significant role to play in determining the precise nature of a best practice. (Hope&Muhlemann, 1999)In other words, best practice is not a universal method, which cannot imitate from one company to another. XL’s practices may be difficult to say its best practice or not. Although, it has been proven by its high performance and profitability, still need to be tested by time.
Best Fit Baird and Meshoulam (1988) argue that HR activities, like structure and systems, must fit the organization’s stage of development-‘external fit’, and ‘internal fit’ is for the need to ensure that individual HR policies are designed to fit with and support each other. Considering external and internal fit, XL has following three fits, which compared with Best Fit models.