The report offers an analysis of the human resource management strategies implemented at PlusNet and Virgin Media, the two leading organizations in the broadband industry. The HRM strategies of these organizations have been explored using the Harvard framework, identifying the actions that have been taken to create linkages between stakeholders’ expectations, external influences and HR policies. Moreover, the outcomes of the implementation of these policies have been evaluated using the case of PlusNet and Virgin Media. It has been found that the management at PlusNet has used HRM strategy to create a sense of commitment and innovation among their personnel, while Virgin Media has focused on employee engagement apart from innovation and commitment. It has also been reported that the management at PlusNet and Virgin Media has recognized the connection between strategic HRM and organizational performance as depicted through the use of HR systems and policies to manage the output of the workforce, thus indicating focus on contemporary means of HR management. Recommendations have been provided for the management to bring improvement in the domain of HRM strategies and employee performance.
1. Introduction
The function of Human Resource Management (HRM) in an organization provides the company with the context for recruitment, selection, and overall management of the performance of the personnel. With the passage of time, developments have been made in different industries, creating a change in the industry dynamics. One of the key outcomes of these changes is the evolution of human resource management strategies which have expanded beyond the traditional means of handling the workforce in an organization (Bratton & Gold, 2012). According to Rees and Smith (2014), the earlier conceptions related to HRM viewed this function in terms of personnel management, overlooking the importance of creating linkages with the organizational strategy. However, the contemporary strategies of HRM have increasingly recognized the necessity to link HRM with business objectives to gain favourable outcomes.
This report intends to examine the human resource strategies adopted by Plusnet and Virgin Media that are included in among the leading Broadband Providers in the market. The analysis of the HRM strategies will be carried out on the basis of ability of the management to incorporate the strategies that depicts adaptation with the emerging trends in HRM. Furthermore, the discussion will entail critical analysis of the HRM strategy of Plusnet and Virgin Media, and the implications in carries for the organizational performance and growth. On the basis of the analysis, recommendation will be provided to management, highlighting the changes that need to be made in order to enhance the effectiveness and fit of HRM strategies with the contemporary business context.
2. Overview of Human Resource Management Strategies
The traditional framework of human resource management had significant focus on the implementation of organizational policies, with minimal emphasis on using HRM as a means of implementation of business strategy and objectives. However, the recent HRM frameworks have addressed this limitation, highlighting the role HRM can play as a source of strengthening the effectiveness of business strategy (Armstrong, 2011). The human resource management when integrated within the strategic perspective provides an organization with the means of gaining competitive advantage which can support the company in the long run.
HRM strategies arises out of an amalgamation of the suitable tools for managing the workforce, development of favourable organizational culture and structure and creation of HR systems that enable an organization to connect HRM with the business objectives. This process creates a strategic framework for human resource management, which focuses on gaining an edge over the rival firms through strengthening the internal systems and human capital (Wood & Kispál-Vitai, 2014). The management of workforce entails the use of benefits, incentives and other business activities that aim to increase the involvement of the personnel and retains the talent. The HR system involves processes such as managing the compensation and benefits, analysis of the performance of the employees for review etc. The component of organizational culture represent the underlying values and norms that are corroborated by the HR officials, supporting the creation of a unified set of beliefs that drive the workforce and align their output with the organizational mission and objectives (Zhang & Iles, 2014).
One of the central themes that is a part of the development and implementation of human resource strategy is the notion of “fit” which outlines the linkages between the internal and external environment of an organization, leading to the development of specific HRM policies (Wang & Shyu, 2008). The following section elaborates the HRM strategies implemented in PlusNet and Virgin Media:
2.1 HRM Strategies at PlusNet
The HRM strategies at PlusNet can be viewed in terms of HR system, employee management and organizational culture.
2.1.1 HR system and employee management at PlusNet
The management at PlusNet offers it employees various benefits such as free broadband, phone and T.V. Along with that the company has made the employment at the organization a more favorable option for the employees by offering them free lunch. In terms of financial benefits, the employees at PlusNet are offered increments, life insurance and the opportunity to become shareholders of the company, while the pension plan is also integrated as a part of the HR system (PlusNet, 2016a).
As far as the recruitment and selection processes are concerned, the company uses its selection tools to identify the candidates who have potential and are suitable to be a part of PlusNet. The skills of the employees at the organization are enhanced through offering them training and development opportunities (PlusNet, 2016a). Moreover, the Graduate and Apprenticeship schemes are offered to the people who demonstrate the skills to be a valuable part of the company (PlusNet, 2016b). The HRM function at PlusNet has recognized the importance of job satisfaction in gaining a long term advantage. This goal has been achieved through providing the employees with growth opportunities while employed at PlusNet. According to the CEO, there have been more than 50% of the employees who have received an opportunity to be promoted at a higher designation within the organization. However, there are some employees who consider that the company is offering them low career growth opportunities. The absence of strategies used for staff retention has also been indicated as an area of weakness in the company (Glassdoor, 2016).
2.1.2 Organizational culture at PlusNet
The management understand that the nature of work environment at PlusNet emphasizes the ability to deliver work performance with efficiency. In an effort to balance the effects of this fast-paced work environment the organizational culture at PlusNet upholds the notion of providing the employees with an enjoyable work experience, which is established through the informal organizational culture (PlusNet, 2016a). The acquisition of PlusNet by BT Group is viewed as a negative influence on the organizational culture as the latter endorses bureaucratic structure, while PlusNet has been focusing on creativity, team work and employee autonomy.
The HR system and employee management practices are aligned with the recent trend of focus on human capital, nonetheless, there are some areas of improvement that can hinder the effective implementation of HR strategies at PlusNet. Likewise, the organizational culture needs to be further aligned with the contemporary trends in HR which support the notion of investing in the employees to gain competitive edge.
2.2 HRM Strategies at Virgin Media:
The following section outlines HRM strategies at Virgin Media.
2.1.2 HR System and Employee Management at Virgin Media
The HR system at Virgin media seems to reflect a more effective approach for handling the employees and using their skills as a means of gaining a competitive edge in the broadband market as compared to PlusNet. The company has created insight team with the intention to gain an understanding about the factors that resulted in high absence rates among the employees, specifically in the call centre department. The integration of HR analytics as a part of the HR processes has enabled the company to identify the causes of high absence and take necessary steps to decrease this ratio (Milne, 2015). It was reported that the policy framework in place for managing the absence of the workforce was supporting high absenteeism, thus changes in the policy were introduced.
The company has been investing in the development of its personnel, through offering them training and development opportunities, while focusing on their specific skills and areas of competence that can become a source of long term advantage for the company (Woods, 2009). Another case which depicts the effective employee management practices at the company is inclusion of people working at senior positions as a part of the training sessions focusing on enhancing well-being (Roper, 2015).
The incentives offered to the personnel at the company positions the organization in a favourable perspective, as the employees not only gain job growth prospects, but also receive variety of benefits that are a part of the industry practice such as life insurance, medical plan and pension fund. Some of the incentives employees receive differentiate the HR practices of PlusNet, as Virgin Media allows it employees to take a day off on their birthday, as well as support the employees in areas such as childcare and medical insurance for the significant others of the employees (Virgin Media, n.d). However, the employees that are working at the company as contractual workers do not receive the similar range of benefits, indicating an area of weakness in the employee management plan at the organization.
2.1.2 Organizational Culture at Virgin Media
Virgin Media emphasises the use of creativity by the employees, supporting them to be innovative while working in a fun environment (Virgin Media, 2015). The company culture upholds the values of use of creativity and flexibility. Moreover, the informal culture creates a work environment that is supportive for innovation and uses employee engagement tactics to gain commitment from the employees. As mentioned by Kyle (2015), the organizational culture at Virgin Media reflects the positive attitude the management has towards it employees and the supportive stance it has towards encouraging the employees to make them feel an integral part of the organization. Moreover, the culture endorses recruitment and selection of people from diverse backgrounds as representatives of the different segments of the population in UK.
It is evident from the analysis presented above that Virgin Media has developed effective HR systems and people management policies that facilitate the company in reaching its objectives. Moreover, the fun and creative workplace culture determines the positive output of the employees, which in turn enables the company to establish a leading position in the market.
3. Analysis of fit of HRM Strategies
The HRM strategies can become a source of significant benefit for an organization when they are incorporated as a part of the larger business strategic framework. The key idea related to strategic fit of HRM is that it should be able to function as a part of the organizational strategy by supporting the management to use the output of the employees for implementation of business strategy (Rees & Smith, 2014).
3.1 Soft Model of Strategic Fit
Soft model which is also termed as Harvard framework takes into consideration the influential position of the internal and external stakeholders of the organization, identifying the stakeholders as the driving source of the HR strategy (Beer, Spector, Lawrence, Quinn & Walton, 1984). The model further depicts that the HRM policies are an illustration of these external influences. The model further asserts that the HR policies are connected with the outcomes that are deemed as favourable by the organization. The Harvard model is illustrated as follows:
Figure 1: Harvard model for strategic fit
Source: Rees and Smith (2014, p. 11)
3.2 Implementation of Soft Model at PlusNet and Virgin Media
The HR officials at PlusNet takes into consideration the perspectives of the management, government and other external forces such as workforce characteristics to formulate a suitable HR strategy. The use of incentives such as life insurance is driven by the standards set in the market due to government’s intervention. These factors also shape the HRM policy in terms of the rewards offered to the employees for their performance and the career growth opportunities they are provided by the management. The rewards and career growth policies are being used as a means of obtaining commitment from the employees. In case of long-term goals, the company intends to encourage the employees to use innovation and creativity to become a source of effectiveness for the company (PlusNet, 2016a).
A similar case is apparent in Virgin Media, where the HR policies are outlined in accordance to the stakeholder’s interest and external factors. For instance, offering incentives plans to the employees is an indication of the focus of the company on motivating the personnel to work towards common objectives (Annual Report, 2013). The changes in the leave policy to tackle the issue of high absenteeism is an example of stakeholder’s interest triggering a response from the HR function (Milne, 2015). The company has used its HR policies to establish loyalty among the employees, upholding the notion that when an organization invests in its employees, the employees in turn invest in the organizational development. Moreover, incentives and rewards, along with a supportive workplace culture result in high level of employee engagement which is evident in the case of Virgin Media (Thomas, 2014). Virgin Media not only focuses on organizational effectiveness but also emphasizes individual well-being, through the creation of a fun environment in which employees are allowed to use their creativity.
4. Relationship between HRM, Organisational Strategy and Performance
The relationship between the components of HRM, organizational strategy and performance has been examined by different scholars (Sun, Aryee & Law, 2007; Wood, 1999). Huselid (1995) has concluded that the use of suitable human resource management tools enables the organization to achieve growth as well as financial gains through the output of the employees. Likewise, Guest (2002) has asserted that positive HRM practices create high degree of satisfaction among the personnel, which in turn provides the foundation for organizational growth and enhanced financial performance. The connection of organizational strategy and use of human resources for attaining high performance goals has also been explored and it has been inferred that the effective management of human resources is mandatory to implement the business strategy and achieve the performance related goals (Deb, 2006).
PlusNet and Virgin Media have deployed different human resource management strategies to gain a strong position in the broadband industry. Since both of these organizations require employee’s creativity, the HR function has strived to create a workplace environment that is marked by the emphasis on informal culture, while the employees are encouraged to use their innovative ideas to help the company in growth and success. The business strategy at PlusNet is driven by the need to provide the customers with the low cost broadband option (The Star, 2015). On the other hand, Virgin Media is pursuing quality as a key component of its business strategy (Virgin Media, 2013).
Across the various functions or departments, the management at PlusNet emphasizes linking the employee performance with the business strategy. For instance, the finance department focuses on managing the employee compensation system, while at the same time ensures that the revenues generated by the company are a reflection of the successful implementation of the organizational strategy (PlusNet, 2016c). Similarly, Virgin Media has used its human resources strategies to establish trust and loyalty among its personnel (Thomas, 2014) which has supported the company to gain a 5.2% increase in the revenues in 2012 (Virgin Media, 2013). PlusNet has also been able to gain growth in the business as evident from the profit of £37.2m in 2015, which is significantly higher than the profit of £25.2m in 2014 (The Star, 2015).
5. Implementation Plan
There are some areas of improvement that can help PlusNet and Virgin Media to utilize the human capital in a more effective manner. The following recommendations outline the remedial actions that can be taken in this regard. One of the main areas that should be considered by PlusNet is development of a framework for career growth for the employees. The HR department and finance department needs to work in collaboration to develop the growth plan for employees and identify the cost that company will have to incur in case of promotion of the employees and the financial benefit they are likely to receive from the enhanced commitment and performance of the employees. Another area that needs to be focused on by the management at PlusNet is adherence with culture that supports creativity rather than bureaucratic culture that focuses on standardization of processes and implementation of regulations. Establishment of organizational culture will involve input from the top management, HR officials and team leaders. The team leaders should be supported in developing an understanding about the dynamics of organizational culture that can assist the employees in using their innovative skills.
Virgin Media needs to focus on development of incentives and reward structure for the contractual employees. Currently the HR practices at the organization are offering wide range of incentives for the full time workers, but the employees at contract are not able to gain access to the similar range of benefits and incentives. The HR officials, top management and personnel from the financial department need to develop incentive and benefit plan for the contractual workers and monitor the outcomes of this plan of action.
6 .Conclusion
Human resource management strategies are at the core of success or failure of an organization. Companies that are able to establish linkages between the human resource strategies and business strategy are able to strengthen their position in the market and implement the business strategy in an effective manner. Employees are the driving force behind the growth and success of an organization and HR strategies can be a key source of accomplishment of company objectives. The case of PlusNet and Virgin Media has demonstrated how the adoption of suitable HR system and strategy has supported these organizations. It can be concluded that HR model and HRM strategy at PlusNet has resulted in commitment among the employees. Likewise, Virgin Media has used HR system and strategies to establish a work culture that emphasizes worker engagement and enables the company to use them as a source of creating differentiation in their services.
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