Human Resource Management in Manufacturing Industry

Running head: HUMAN RESOURCE MANAGEMENT IN MANUFACTURING INDUSTRY
Human resource management in manufacturing industry
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1HUMAN RESOURCE MANAGEMENT IN MANUFACTURING INDUSTRY
Any organization in the manufacturing sector would require human capital to grow and
prosper. At present in Australia, the manufacturing industry is one of the fastest growing service
industries. As such, the industry contributes to a major chunk of the national economy, roughly
12 % globally (Cania, 2014). Without valuable human resources, no company would be able to
make progress in this fast paced industry. In the manufacturing companies like Volkswagen
Australia, the department of human resources plays a crucial role in ensuring the overall success
of the organization and provides it with a competitive edge in the ever changing and dynamic
business environment Jackson, Schuler and Jiang, 2014). The process of organizational
development is one that emphasizes on optimized utilization of a company’s human resources.
Although manufacturing companies like Volkswagen are growing at an alarming rate, the
workforce is unfortunately shrinking. In Australia, the average age of a highly skilled laborer in
this industry is almost 55; this affects the productivity of the overall workforce. In the second
chapter of Robin Kramar’s book on human resource management, the authors Jamali and
Afiouni discuss that one of the major challenges that the human resource department in a
manufacturing company faces is attracting of potential employees and retention of existing
ones (Kramar, 2013). The following essay will focus on the key challenges of the human
resource department in manufacturing sector (using Volkswagen as an example) with special
emphasis on legal, ethical and safety concerns, performance management, diversity and work life
balance, employee turnover and retention and motivation and rewards as employee retention
strategies.
Cania (2014) states that the human resource department of a manufacturing company
would be responsible for the development of policies and strategies which would cover all the
myriad concerns and interests of the employees. These include recruitment and selection,

2HUMAN RESOURCE MANAGEMENT IN MANUFACTURING INDUSTRY
organizational development and design, change management, performance management, attitude
towards the organization, employee and industrial relations, personnel data management,
evaluation, training and development, compensation and rewards programs (Gamage, 2014).
Ekwoaba, Ikeije and Ufoma (2015) state that the workforce in a manufacturing company is
mainly divided into two segments – the management and the workers. The main function of the
human resource department in a manufacturing company would be to act as a mediator between
the two segments (Kramar & De Cieri, 2005). For instance, most manufacturing companies have
witnessed periods of unrest, strikes or strife on part of the workers. Even Volkswagen has
witnessed a number of such strikes in 2017 to protest against low wages. In such cases, it is the
human resource department that is expected to step in. In a manufacturing company, one of the
major responsibilities of the human resource department is employee retention and turnover.
Bansal (2014) claims that employee retention should be the primary focus of every
organization. As the name suggests, employee retention is a concept in human resource
management which deals with the ability of an organization to retain its existing employees.
Retention of employees is an organizational goal which ensures that a company is able to retain
its talented workforce, reduce turnover rates and foster a positive working environment which
boosts employee morale and promotes engagement. In other words, employees who feel
appreciated are twice as more likely stay back with a company. Cloutier et al. (2015) argues that
providing employees with privileges, compensation, incentives, recognition and competitive pay
are just some of the strategies that can help retain existing employees. In the highly competitive
business environment today, manufacturing workers have a plethora of options ahead of them. If
they happen to be dissatisfied with certain aspects of their current place of work, they need not
think twice before switching. For example, in order to retain their employees, Volkswagen offers

3HUMAN RESOURCE MANAGEMENT IN MANUFACTURING INDUSTRY
its employees a number of benefits like rewards and recognition, compensation in the case of
mishaps, paid parental leaves and so on. Hancock et al. (2013) argue that a certain percentage of
employee turnover is normal for any company. However, specific industries like manufacturing
would be more susceptible to the dangers of high employee turnover rates. This could be due to
the legal and safety concerns, wage issues and difficulty levels of work that is traditionally
associated with his time of work.
Stanley et al. (2013) claims that one of the major factors that affect the levels of
employee turnover would be the attitude of the workers towards their company or their line of
work. For instance, in manufacturing industries, it is estimated that the job satisfaction levels are
often low which could cause employees to leave. Hausknecht and Holwerda (2013) argue that
the more committed an employee feels to his job, the less likely he is to leave. For in the case of
Volkswagen, it was found that nearly 25% workers in the factories failed to report for work on
time on most days. Accordingly, the company reported a high rate of employee turnover
(Mowday, Porter & Steers, 2013). According to Terera and Ngirande (2014), there are a few
factors which contribute to low employee retention rates and consequent high employee
turnover. For instance, a lack of a clear and progressive career path could lower the morale of the
employees. Similarly, financial insecurities are another major contributing factor for employee
turnover. Aruna and Anitha (2015) argue that a large number of millennials working in the
manufacturing industries are troubled by financial insecurities. In fact, surveys showed that
nearly 52% workers in manufacturing companies were worried about their finances and were
dissatisfied with the quality of work they were compelled to do. Aguenza and Som (2018) claim
that ineffective communication in the workplace is another factor that contributes to high
employee turnover rates. In companies like Volkswagen, there is often a major gap in