HRM3704 EXAM PAPERS SOLUTIONS.

EXAM PAPERS MAY/JUNE 2013 SECTION A – CASE STUDY QUESTION 1 Read the following case study and then answer the questions that follow. Happy Sky Company: Aligning human resource functions with strategic objectives. Happy Sky Company is a company that produces anything from cutlery to toiletries for all South African Airlines. Although Happy Sky has been profitable over the decade of its existence, its productivity has recently declined. In the past several years, their employees have displayed diminished innovativeness, a higher turnover and absenteeism, and an overall sluggish performance. Based on these trends, Paul (the founder of the company) calls a meeting of all the managers to discuss potential courses of action to correct the problems. After a lengthy meeting, they agree to hire a full-time HR manager to assume sole responsibility for the employees. Previously, the line manager had assumed basic responsibility for managing their employees. After careful consideration, Paul decides to hire Kgomotso Molotsi, in line with the company’s new employment equity policy, to assume the primary responsibilities of developing a systematic HRM function for Happy Sky. When Kgomotso arrives at Happy Sky, she meets with Paul to discuss the strategic objectives of the company. Paul indicates that the two primary objectives of Happy Sky are, firstly, to continue its growth strategy to respond to growing demands for its services, and, secondly, to enhance the innovative nature of the workforce, in order to ensure that it remains competitive and up to date with market changes. Paul gives Kgomotso the task of developing and HRM function that will tackle the absenteeism and turnover problems while helping Happy Sky attain its two primary goals. As a first step, Kgomotso begins by reviewing the HR practices used at Happy Sky. It becomes clear that the company relies primarily upon two practices to meet its employee needs. Firstly, it recruits at the local university just 10 kilometers away. If graduating students are not interested or are unsuitable candidates for a certain job, Happy Sky places advertisements in regional newspapers to seek job candidates with the relevant skills who are willing to relocate. Although this hiring process is not comprehensive, Happy Sky has not experienced much difficulty in recruiting employees, thanks to the growth opportunities it offers. Secondly, Happy Sky has relied upon an established compensation system that applies to all employees throughout the company. Employees are paid salaries, the compensation level being based on the going market rate for similar positions. Annual salary increases are calculated according to inflation and individual performance. The average salary increase is between 3 and 7 percent of an employee’s basic salary. Kgomotso realises that, besides these recruitment and compensation practices, no other HR practices are consistently applied at Happy Sky. Instead, managers use different methods of managing the employees in their respective departments. For example, no uniform performance appraisal standards are applied throughout the organisation. Criteria used to evaluate employees range from counting days absent to measuring innovation and creativity. Similarly, each manager uses somewhat different tactics for training employees. Some units assign new employees to shadow more experienced employees, who serve as the new employees; mentors. Other managers do not offer any training and assume that the employees come to the job with all the knowledge they need to succeed. In the light of the organisation’s goals of growth and innovation, Kgomotso realises that significant changes need to be made at Happy Sky. The productivity of employees and the success of the company depend on effectively realigning the HR function. 1.1 Suggest specific HRM practices that could facilitate Happy Sky’s strategic objectives of growth and innovation. 1.2 Happy Sky employs 10 sales representatives to sell its software products. Name and describe various criteria which can be used to evaluate the performance of these sales representatives. QUESTION 2 Read through the following case study and then answer the questions that follow. Global HR at McDonald’s One of the best-known companies worldwide is the McDonald’s Corporation. This fast-food chain, with its symbol of golden arches, has spread from the United States (US) into 91 countries. With more than 18 000 restaurants worldwide, McDonald’s serves 33 million people each day. International sales represent an important part of McDonald’s business and more than 50% of the company’s operating income comes from sales outside the United States. Operating in so many different countries means that McDonald’s has had to adapt its products, service and HR practices to legal, political, economic and cultural factors in each of these countries. A few examples illustrate what kind of adaption had to be made in some countries, such as India, beef is not acceptable as a major part of the population, so McDonald’s uses lamb or mutton. To appeal to Japanese customers, McDonald’s has developed teriyaki burgers. Separate dining rooms for men and women have been constructed in McDonald’s restaurants in some Middle Eastern countries. HR practices must adapt to different cultures. Before beginning operations in a different country, HR professionals at McDonald’s do research on the country and determine how HR activities must be adjusted. One method of obtaining information is to contact HR professionals from other US firm operating in the country and ask them questions about legislation, political factors and cultural issues. In addition, the firm conducts a detailed analysis to ensure that all relevant information will be gathered. Data gathered might include what employment restrictions there are 1 on the age of employees and hours of work, what benefits must be offered to full-time and part-time employees (if parttime work is allowed) and information on other operational requirements. For instance, in some of the former communist countries in Eastern Europe, employees provide locker rooms and showers for their employees. These facilities are necessary because shower facilities and even consistent water supplies are unavailable at many homes, particularly in more rural areas around major cities. It is also important to check public transport to ensure that employees have adequate means to travel to work. Once a decision has been made to begin operations in a new country, the employment process must begin. Often, McDonald’s is seen as a desirable employer, particularly when its first restaurant is being opened in a country. For instance, in Russia, 27 000 people initially applied to work at the first McDonald’s in Moscow. Because customer service is so important to McDonald’s, recruitment and selection activities focus on obtaining employees with customer service skills. For positions such as those of counter representative and cashier, the focus is on identifying who will be friendly, customer serviceorientated employees. A “trial” process whereby some applicants work for a few days on a probational basis may be used to ensure that these individuals will represent McDonald’s appropriately and work well with other employees. For store managers, the company uses a selection profile emphasising leadership skills, high work expectations and management abilities appropriate to a fast-paced restaurant environment. Once applicant screening and interviews have been completed, individuals are asked to work for up to a week in a restaurant. During that time, the applicants and the company representatives evaluate one another to see if the job “fit” is appropriate. After the first group of store managers and assistant managers have been selected, future managers and assistant managers are chosen using internal promotions based on performance. Once the restaurant has been staffed, training becomes crucial to acquaint new employees with their jobs and the McDonald’s philosophy of customer service and quality. McDonald’s has taken its hamburger university curriculum from the United States and translated into 22 different languages to use in training centres throughout the world. After trainers and managers have completed their training, they conduct training for all employees to work at McDonald’s locations in foreign countries. 2.1 Identify and discuss cultural factors that might be important in a training programme for food handlers at McDonald’s in Saudi Arabia. 2.2 Rather than focusing on differences, indicate the similarities that you expect will exist between McDonald’s customers and employees in the United States and those abroad. 2.3 Any business (whether it is a fast food franchise such as McDonald’s or a big corporate company such as Deloitte and Touche), has a management team. However, differences exist between a leader and a manager. Briefly define the concept of leadership and explain the difference between leadership and management. MANAGEMENT LEADERSHIP - Means creative problem solving - Works within the paradigm - Works within a system - Sets people and “things” in motion by means of methods and techniques - Uses people as means - Means an attitude of doing - Means alertness to opportunities - Imagination and vision to capitalise on them - Creates a new paradigm - Works on the system - Is a natural unforced ability to inspire people - Requires respect and a genuine interest in people - Means attitude of serving SECTION B – ESSAY QUESTIONS QUESTION 3 3.1 Briefly discuss the four questions which determine a resource’s value. The question of value – The first question to ask is: do a company’s resources add value by enabling it to exploit the opportunities and/or neutralise the threats in the company’s environment? By answering this question, managers link the analysis of internal resources with the analysis of environmental opportunities and threats. This is important as the resources of a company cannot be valuable in a vacuum; the company must be able to exploit opportunities and/or neutralise threats. The question of rarity – The second question to ask is: How many other companies already possesses the valuable resources? The valuable resources must be rare among the competing companies in order to be a source of competitive advantage. However, this does not mean that a common but valuable resource is not important, it might be essential for a company’s survival. The question of reproducibility – The third question to ask is do companies without a resource face a prohibitive cost disadvantage in obtaining the resources other companies already possess? Having a valuable and rare resource can at least provide a company with a temporary competitive advantage. However, if a competing company does not find it too expensive to imitate this resource, the competitive edge will soon disappear. If imitation is too expensive, the fist company will retain its competitive advantage. According to Barney, imitation can occur in at least two ways: by duplication or by substitution. Duplication occurs when an imitating company builds the same kind of resources it knows the competitor possesses, with substitution an imitating company may find a similar resource that provides the