The purpose of this report is to analyse the strategic human resource management at Huawei. Firstly, this report explains the context of Huawei where it is analysed who are its stakeholders are how political system is influencing this company. Secondly, it analyses how this company is following the soft approach of managing its employees. Thirdly, it analyses few components of HR bundle at Huawei, the strategic configuration and HR department functioning at Huawei. Fourthly, it sheds light on the role of HR-Line conflict. At the end, it studies the barriers for its HR implementation.
Its stakeholders involve two groups i.e. market stakeholders and non-market stakeholders. Market stakeholders of Huawei are employees, suppliers, distributors and customers of Huawei while non-market stakeholders those who do not directly influence or influenced by Huawei like pressure groups and community members.As this company is initiated by a Chinese military officer, therefore, his networks has allowed this company to develop a strong guanxi network which cannot be copied by its competitors (Harwit, 2005). Due to this fact, it is in position to get a big number of contracts. However, this also negatively influence this company as various foreign distributers are sceptical to be in contract with Huawei due to their orientation that its founder was a military officer. This political factors has cautious implications of Huawei. As per current restrictions in Chinese envorirnmentl, international firms can only enter through joint venture strategy with local companies and this has provided an advantage to Huawei (Wu and Zhao, 2007).
It is following the soft approach for managing its human resource. Currently, its employees are highly engaged owing to dynamic management which does not only focuses on employee work activity but it continuously introduces such practices which keeps employees engaged. It avoids work discrimination and all kind of supports are provided to employees which help in fulfilling the psychological contract with employees. For avoiding monotonousness in work, they celebrate occasions like New Year Day, Christmas Day, Women’s Day etc. It also arranges various activities like competitions, lunch, picnics, concerts to keep employees motivated(Saunders and Tiwari, 2014). At Huawei, as per recommendation of Silson and Storey (2009), employees at Huawei are treated as the most important resource and the competences and capabilities of its employees are used for gaining sustainable competitive advantage. It heavily stresses on employee participation hence it promotes the participative leadership style in all of its managers. It values its employees and continuously tries to improve the motivation of its employees (Zhang and Duysters, 2010).
Human resource management practices are important for the performance of the organizations. The theoretical argument about HR bundles is that when influence of HR becomes more stronger when HR practices are implemented in a bundle, instead of separate or unrelated practices. The human resource management provides stronger synergetic effects when they are applied in a bundle. Similar is analyzed for the case of Huawei. The following practices are applied in the form of bundle and they have synergetic effects.
As told by Sheldon et al., (2011), Huawei believes that internal labour market is most beneficial for its success. Therefore, before hiring people form external market, it looks for the talent which is available in organisation. It transfers people from one unit to another while transferring it is ensued that people are considered valuable and their strengths and capabilities are fully exploited. It develops the customised solutions for aligning the personal goals of employees with business objective. For employee security, It heavily emphasises on employee career development and capability development.
As per recommendation of Marchington and Wilkinson (2012), the process of hiring employees is quite rigorous. It is based on selective hiring where it used a sophisticate process of selection. The selection process includes three rounds namely written exam, technical interview an HR interview. It has specified the eligibility criteria for all of its employees where it makes sure that only best people in the market apply for the jobs. Once an employee is selected, Huawei tried to retain it and develop internal labour market and provides them security.
Employees are considered valuable therefore their capabilities are continuously enhanced through its extensive training, learning and development opportunities. Huawei provides general learning and development programs along with various cross-functional professional capability programs which are meant for increasing the expertise and knowledge of employees. In 2013, the total training person-time was reported as 1,162,848 which means that every employee is being provided training of 37.29 hours (Huawei, n.d. (a)). The below figure provides the training statistics.
Table: Training Statistics at Huawei
Source: Huawei, n.d (a)
It could be analysed that this HR practice is aligned with the internal labour market as Huawei has already invested significantly on training so it intends to retain employees for longer term. This helps it to have ‘synergetic effects’.
In HR bundle, team work and self managed teams have become important.Huawei promotes teamwork extensively and it is also one of its core values, as depicted in below figure.
Figure: Core Values of Huawei
Source: Huawei n.d. (b)
It is believed that success of Huawei is based on teamwork where every employee has to work with each other in both good and bad times. Through its team work, it is managing cross-cultural collaboration and stream line inter-department cooperation which is helping it to achieve its strategy (Huawei, n.d. (b)). It becomes able to have successful team work by reducing status differences and fostering harmonisation, which again provides the indication of ‘synergetic’ affect highlighted in theory of HR bundle.
Though, it comply with minimum wage requirements as dictated by the local law, it ensures to offer the relatively high compensation to its employees. Its pay package involves a various benefits which involves mandatory insurance, involving life insurance, critical illness insurance, accident insurance, media insurance, media rescue plans and business travel insurance. It also tries to provide similar benefits to its local hires (Huawei, n.d(a)). The employees who perform well are rewarded while the poor performers are dismissed (Schuler and Jackson, 2014). From this, it could be analysed that only criteria is performance for pay increases, it is not the status or background which is aligned with another HR activity in the bundle.
Consistent with local laws and regulations, its establishes and enforces non-discrimination policies where employees are nor discriminated on the basis of ethnicity, sexual orientation, race, age, color, religion, political affiliation, marital status or any other similar factor during the process of training, recruiting, compensating and promoting employees (Huawei, n.d (a)). The only criteria for differences is the ‘performance’, which shows this practice is consistent with performance related pay, highlighting synergetic affect of HR bundle.It has recently introduced the idea of employee stock ownership plan which also aims to prevent the wealth gaps which exist among top management and employees. It has adopted this plan to promote harmonisation and equity where the philosophy is ‘harder you work, the more you can earn’. It is private company where larger share is now owned by its employees. The total take-home income of employees is 2.8 times of the company’s net profits and it is further planning to increase it to 3:1 and purpose is to decrease gap between top management and employees (Cremer and Tao, 2015).
As per the typology provided by Miles and Snow, an organisation can follow four strategies. The details of these typologies are provided in the below figure.
Figure: Strategic Configuration Theory – Miles and Snow Topology
Source: Miles and Snow (2001)
Huawei follows the prospector strategy where it actively expands into new markets and it strives for stimulating new opportunities. Consistent with the explanation of this strategy by Purcell and Boxall(2011),it seeks fast growth and emphasise the risk taking and innovation. It is having 72% sales from its overseas markets. In Japan, America and Europe, it sales has increased by 150%. According to Yijiang (n.d) as this company wants to be ahead of others on the basis of its innovation, hence, it has employed a large number of people in its research and development department, which is the characteristic of prospectors. It started with 500 employees in R&D and 200 production staff, but now it is having 24,000 employees from which 48% are in R&D. This provides the indication that it is focusing on aggressive growth through following prospector strategy.
The role of HR department at Huawei is considered as important as other core departments. There is a ‘Human Resources Committee’ which functions at the corporate level and its purpose is to manage and optimise the core elements like culture, talent and incentives. It work directly with board of directors for implementing the key polices and transformation initiatives which are related with HR. This committee continuously aligns HR policies with management philosophy and core concepts. Now, this department is working at the strategic level where HR presence exists at the board level (Huawei, n.d. (c). As per the theory of Ulrich (1998) regarding the HR roles, this tells strategic role is played by HR of Huawei.From mere administrative and operational focus of HR, it has become strategic which highlights that HR department is considered as important like other core departments.
Though, above sections has demonstrated that HR has taken the strategic view at Huawei, but there are few problem areas which need to be solved. As few of HR functions has to be performed by the line managers, therefore, there is a conflict which takes place between line managers and HR managers. According to Marchington and Wilkinson (2012), now HR department should shift most of its operational and administrative duties on line managers while HR managers should start working on strategic aspect. Considering this, Huawei is also shifting its HR functions at the shoulders of line managers. Performance management is one of such areas where line managers has to play a vital role for completing this HR function. Like other organisations, managers of Huawei do not like to waste their time on this activity.As also told by Op de Beeck, Wynen and Hondeghem (2015), when line managers of Huawei are asked to spend time on some activity which is not directly related to their core duty and performance objectives, it only frustrates them.
HRM implementation becomes difficult owing to the competing priorities of workload (Silson and Storey, 2009). As explained above, line managers have to share HR related tasks with HR managers. This often is considered bad and there is lack of motivation for doing this. Line managers believe that they already have competing priorities and this is just an addition in their workload which they do not like to perform (Evans, 2016).
Literature has identified that most of the time line managers do not accept that HR is as important as other departments (Wright et al., 2001).Indeed, the role of HRM at Huawei is quite critical but like other organisations it is also facing the problems in the perception of line managers who believe that HR department is a support function which exists to facilitate other departments and it has no value addition in the profits of the company. Many of line managers also believe that they can do the work easily which is performed by HR managers and they even do not require any training for this. This often creates issues related to implementation of HR practices (Daniel, 2013).
According to Chang and Chi (2007), HR policies must be implemented equally for all employees, and there should not be any inconsistency in policies. The strategic HRM must have to focus on the consistency and alignment of HR practices. Due to certain legal constraints, Huawei is unable to offer similar benefits and profit sharing plans to non-Chinese employees. For example, it recently introduced employee stock ownership plan where it is not providing the same benefit to its non-Chinese employees, given that they express the desire to get this benefit (Cremer and Tao, 2015). This shows that it has to face the problem of inconsistencies in application of its HR policies.
It is concluded that Huawei which is a Chinese organisation has become successful on the basis of its human resource management. It has adopted soft approach for managing employees where employees are considered valuable asset. It is analysed that it is successfully implementing few of its HR bundle strategies which is helping it to become more competitive. It is following the prospector strategy and its HR department functions as the strategic department. However, it is facing few problems due to the line and HR managers conflict which needs to be solved.
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