Analyzing HR's Role in Competitive Advantage - Lancashire School

This essay critically examines the human resource (HR) function and its role in helping organizations achieve a competitive advantage. It draws from key principles of Human Resource Management (HRM) and assesses how the HR function can contribute to organizational effectiveness, using the Volkswagen Group as a case study. The essay discusses the nature and characteristics of HR management, including social, organizational, functional, and personal objectives. It explores the influence of internal and external business environments on HR functions, highlighting factors like political, legal, technological, cultural, and technological aspects. Models and theories of HRM, such as the Harvard Analytical Framework, Theory X and Theory Y, and hard vs. soft HRM practices, are examined in relation to people management strategies, procedures, and tools within the Volkswagen Group. The essay also touches upon HR accounting and the importance of a strong organizational culture in adapting to changing consumer behaviors.

Running head: HUMAN RESOURCE MANAGEMENT
Human Resource Management
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Introduction
The human resource management, often abbreviated as HRM, refers to the term used
to describe the formal systems that are being devised for people management within the
organization. The core responsibilities of the human resource manager can be categorized
into three major parts; that are staffing, designing or defining work and employee benefits or
compensation. The purpose of the human resource manager, essentially, is to maximize the
overall productivity of the organization though optimizing the employees’ effectiveness
(Ashleigh, Higgs and Dulewicz 2012). However, the duties and responsibilities of the human
resource manager often changes with the ever-increasing changes in today’s business world.
In this fast changing world, the large business organizations take several decisions of
enhancing their strategic growth in order to become competitive. The purpose of this report is
to evaluate the nature and characteristics of the human resource management and the line
managers, its structure as well as cultural patterns and people management tools, procedures
and strategies of Volkswagen Group. The Volkswagen is a part of Volkswagen Group of
America, which is the largest automobile manufacturer. The company designs, manufactures
and produces affordable cars for all consumer groups (Volkswagenag.com 2018). The report
will highlight the case study of strategic human resource management required for
coordinating and handling the issues related to the resources of Volkswagen Group.
Discussion
The objectives of the human resource manager of the Volkswagen Group can be
categorized into four segments; social objectives, organizational objectives, functional
objectives and personal objectives. The social objectives include the firm to be responsible
towards the societal needs and at the same time, it minimizes the wrong or negative impacts

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of such needs upon the company. The responsibilities of the line managers are also similar as
their job responsibilities include hiring and recruiting fresh talent to fill in the team positions.
The organizational objectives involve recognition of the role of human resource management
in understanding the effectiveness or efficiency of the Volkswagen Group (Austin and
Pinkleton 2015). Moreover, the functional objectives involve maintaining the overall
department’s contribution at the level that is appropriate for the organizational needs and
demands.
Last but not the least, the personal objectives help in assessing the employees personal
goals and thus, enhancing the overall contribution to the Volkswagen Group. In addition to
this, the environment of the business also plays an important role in the model of human
resource management. Hence, it is beneficial and desirable to gain an understanding of the
internal and external business environment and check how it influences the resource
functions of the Volkswagen Group. The external forces of the Volkswagen Group which
influences the nature and characteristics of the human resource management considerably
include the political, legal, technological, cultural and technological factors
(Volkswagenag.com 2018).
Apart than the external factors, there are internal factors as well, which hampers the
nature and characteristics of the Volkswagen Group’s human resource management. These
factors include employee unions, organizational conflicts and culture and lastly, the
professional bodies. Unlike the external factors, the human resource manager of the
Volkswagen can control the internal factors (Downs and Swailes 2013). The human resource
management can be considered as the process of intense forecasting that is related to the
Volkswagen Group’s future demands and supply for the right type of individuals at the right
time.

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Models and Theories of Human Resource Management
The application of different types of Models and theories is quite important in the
context of Human Resource Management Practices. The application of the different types of
models and theories helps in the establishment and practice of different types of Human
Resources accordingly. The Harvard Analytical Framework is one such theory that can be
applied in the following case. When tracing the actual origin of the HRM and its theory, it
becomes an elusive exercise to do so. The Harvard Business School formulated the following
theory based on the Harvard Analytical Framework. The following theory is also attributed as
the brainchild of the other present theories of HRM. Most of the later theories of HRM using
some of the elements of modern HRM are implemented in these different theories. The
Figure below will show the incorporation and the modern HRM framework formulated by the
mentioned business school.

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Figure 1: Harvard Analytical Framework for Human Resource Management
Source: (Bratton and Gold 2017)
The top managers of Volkswagen Group have the ultimate responsibility to develop
different kind of policies and the practices of Human Resource Management in their
workplaces. According to, Bratton and Gold (2017) the company must have a vision and
philosophy must be considered in the organization and the human component available with
the management of the organization should also be considered as a strategic resource of the
Company. The line managers of the organization have to accept extra responsibility for
ensuring the alignment of the competitive strategy and adhere by the guidelines of the
different policies that are formulated by the Human Resource Management. The management
or in specific words the human resource management must take care of the mission and try to
complete the objectives of the mission in a coherent and compact way.
On the other hand (Marchington 2015) have described that the theories are applied in
this aspect typically involve the soft human resource management and the hard human
resource management. The hard human resource management treats the employees as a
resource of the overall business. It helps in building a strong corporate link on what the
resources the organization needs and how much those will cost. It is important for the human
resource manager to focus on the needs of the workforce as per the business guidelines and
recruit or manage in accordance with that. The theory of soft human resource management
typically states that the employees are the most important resource of the business and the
source of competitive advantage (Downs and Swailes 2013). It is important for the Human
Resource Management of the organization to have all the needs of the employees fulfilled as
because such a task will surely ensure the improvement of the organizational performance
and there will be also a personal organizational change in the business.

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In addition to this, the theory X and theory Y in the human resource management
have been coined by Douglas McGregor, who was a social psychologist of America. Both the
theories are being used extensively in the motivation or management of the employees.
However, theory X assumes management in the autocratic from and theory Y assumes
democratic management within the organizations. On studying the case of Volkswagen
Group, it can be said that the organizational leaders of the company prefers supervising their
subordinates in order to increase their production level (Brewster, Chung and Sparrow 2016).
They believe that the workers need to be motivated and encouraged in order to give their
level best.
People Management Strategies, Procedures and Tools of the Organization
In modern day’s fast changing world, it is highly essential for the human resource
managers of the Volkswagen Group to undertake people management strategies, procedures
and tools for succeeding in times recession and turbulence. The human resource managers of
the organization need to choose the correct style of managing the people of the Volkswagen
Group. Over the decades, the company has adopted various strategic management operations,
which have been prepared by the Volkswagen Group (Lamba and Choudhary 2013). The
strategic decisions have played an important role in the long time welfare of the Volkswagen
Company.
The long term and overall direction of the organization is being decided by its overall
strategic planning. Moreover, the long term direction has also determined the culture and
structure of the Volkswagen Group. If these factors of people management strategies are not
taken into consideration, the company may not meet the designated goals as well as
objectives. The CEO of the company has to understand the changing preferences as well as
buying patterns of the individuals, in order to maximize the Volkswagen’s sales in its

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respective country’s markets (Schuler 2015). Therefore, for this particular reason, the human
resource managers of the company require to plan for people management strategies. It is
important for the management to have a clear idea about the soft and hard HRM practices in
the following regards. According to, Marchington (2015) the hard HRM practices
experiences the management treating the employees as simply the resources of business like
the other assets. The following approach experiences a strong link with the corporate business
planning of the company and identifies workforce needs of the business along with the
recruitment and the management of the people accordingly. However Stone (2013)n has
suggested that practicing such an approach can be harmful in the long run as because the
management are more prone to change the number of employees in a short term and
minimum communication is present from the upper to the lower ranks of the organization. On
the other hand the soft HRM approach for the organization considers the employees to be the
most important resource in the company and also a source of competitive advantage. Each
and every individual are treated individually and the needs of each of them are answered
accordingly. The Human Resource Department in the particular kind of approach ensures the
presence of rewards; roles and motivation to the employees to enable them perform in a much
better way. The management of Volkswagen must practice the Soft approach as because
having a proper planning, treating the employees as the largest assets of the company,
ensuring the empowerment of the employees is important for the success of the business. The
more the company takes care of the employees, the more will the employees be inclined
towards the organization and work productively.
Human Resource Accounting refers to the measurement of cost and value of the
people working in Volkswagen. The management of the organization has to measure the cost
that is required by the organization to recruit the employees, hire them and train them to meet
the different requirements of the organization. The management will always have the aim to

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ensure the best productivity for the company and thus they assign a great value to the
employees of the organization.
The management of Volkswagen can take appropriate example from the case of Ryan
Air where the management of the airlines company failed to manage the staff problems which
led to a massive damage to the HR system with an overall financial loss of around $30
million. Apart from this the organization also saw a dip of 3% in all of the shares it holds in
the market. Thus it is necessary for the management of Volkswagen to ensure the presence of
a strong and compact Human Resources.
According to Stone (2013), the human resource managers of the company has a major
role in motivating and attracting the most talented employees, along with the necessary
culture for coping up with the environment. It is important for the managers to hire skilled
and knowledgeable employees, who have a clear understanding of the customers’ preferences
and choices. None of the people managing strategies can be efficiently or effectively
implement without the right employee. Therefore, it is highly important for the human
resource managers of the Volkswagen Group to have all levels or functions to influence the
employees’ interest.
Current Pattern and Trends
The culture of the Volkswagen Group needs to be strong depending on the degree of
the people management strategies, individual behavior and the changing behavior or attitude
of the consumers. As per Van den Brink, Fruytier and Thunnissen (2013) opinion, it can be
stated that the organizational structure can have a steep or flat hierarchy, where the major role
of the human resource managers is to set the goals or objectives of the Volkswagen Group.
The strategic decisions of the people management tools and procedures, should comprehend
the major organizational values and objectives.

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The latest patterns and models of the human resource management is involved in the
management of the organization and keep a strong focus on the policies and procedures of the
organization. The human resource managers of the organization have a clear idea of the
different types of the latest models followed in the market by other companies. The
management implements these policies in a packaged format including some new ones
formulated by them which lead to the progress as well as growth of the company. Each and
every organization or company needs to design some strategies and follow latest trends in
order to meet the strategic objectives as well as maximize the employees’ performance
(Boella and Goss-Turner 2013).
The human resource management trends and patterns are considered to be the one
which is concerned with the organizational policies as well as systems. It is highly essential
for the human resource management of the organization to operate appropriately and that too,
in accordance with the latest technologies and trends in order to be able to deal with the
challenges of the business environment (Brewster, Chung and Sparrow 2016). The current
trends and patterns adopted by the human resource managers of the Volkswagen Group
involve the procedure of selection and recruitment of the employees.
Moreover, it deals with providing induction and trainings to the new employees.
Orientation and induction plays a major role in the overall training procedure for the
organizational growth and progress. In addition to this, the company hires certified trainers
and professional experts for conducting the orientation and induction programs. It enables the
newly hired employees to gain an overview of the company’s mission and vision, goals as
well as objectives. Furthermore, it also falls under the responsibility of the human resource
manager to design the employee benefits as well as compensation programs, for motivating
and encouraging the employees to perform better every day (Storey 2014).

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Majority of the organizations have issues with their human resource management but
manages to come up with some probable solutions. Berman et al. (2016) stated that low
morale as well as poor engagement of the employees may often prove to be the signs of
dissatisfaction in jobs. According to recent survey and analysis of the available data, it can be
said that the employees are happy working with the Volkswagen Group; however, there are
some issues in relation with the human resource management of the organization. The
employees revealed that the compensation and benefits are not adequate enough as per their
organizational working culture.
Relevant Survey Data
In this context, the employee satisfaction surveys are very much helpful in identifying
the working conditions, which causes the employees to be less enthusiastic regarding their
jobs. In order to be truly efficient as well as effective, the human resource staffs of the
Volkswagen Group need to discuss about the results of the survey and analyze those. Along
with the organizational leadership as well as management, it is important for the human
resource manager of the Volkswagen Group to develop some action plans for the managers
and the supervisors (Mitchell 2013). In addition to this, the action plans need to provide a
road map in order to resolve those employment issues as well as follow up strategies and
sustain improvements.
As per Fine’s (2012) opinion, it is immensely necessary for the human resource
managers to incorporate attractive compensation and benefit packages. Moreover, flexible
working schedules are not the only factors, which create a desirable and well defined
workplace. The job seekers of any organization want to have an idea regarding the
company’s direct and indirect benefits. Therefore, it is required to give them an
understanding of the organizational direct and indirect benefits.

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The human resource managers of the Volkswagen Group need to comply with the
federal as well as state employment and labor laws. Flamholtz (2012) mentioned that this is
immensely necessary for the employer to survive in any organization. Therefore, along with
direct and indirect benefits, the human resource managers of the Volkswagen Group should
give full attention to the critical nature of the compliance. The human resource managers are
ultimately responsible for ensuring the obligations of the company regarding equal payments,
safety at workplace, working hours, employee wages and employee compensation as well as
benefits. Continuing professional development and education for the human resource staffs is
a way, which can ensure that they have updated knowledge regarding the compliance issues
of the organization.
Conclusion
To conclude, several companies need to operate with the strategies of the human
resource technology, which needs to be revised every year. Moreover, the enterprise resource
planning systems must be implemented in an effective, yet efficient manner. The boom in the
human resource management application as well as the growth of technologies has changed
the views of the organizations, in order to redefine the roles of human resource.

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