Human Resource Management
During the last a few decades of twentieth century, the world economy has changed greatly. It is becoming internationalized and this process is speeding up. With the interacted global business climate, market has becoming more complex than ever and, business environment represent much more turbulent competition. In order to survive in this stage where is full of challenges and ventures accompanied with opportunities, organizations have to try hard to seek a new approach.
Finally an innovation on human itself starts. Organizations are gradual aware that people are the core of all human activity. A famous General from West Point once addressed a very suitable words which mean that war is entering at a new stage, in the future, modern war will mainly consist of high technology war and information technology war, but the result of a war still be made by people. Business arena has been compared to the battlefield without bleeding. Therefore to adapt the new business era, it would be contributed to how the people’s role is oriented in the business life cycle. HRM has been gestated in this circumstance.
There is one of the accepted definition for HRM by John Bratton & Jeffrey Gold (2003: 7): “HRM is a
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Furthermore, HRM is broadened to consider with both ‘hard’ and ‘soft’ approaches (Gerry Johnson & Kevan Scholes 2002:479). In the modern economy, organizations pay extra attention on ‘soft’ side, because it is a competence margin for personnel and a value margin for organization, but not as traditional personnel management. With this conception and understanding of HRM, this article attempts to clarify the HRM theory and practice in an organization, China Ninxia Qinyi Industrial Group (QIG), to ultimately carry out how HRM impact its performance.
Background of QIG and Environment of Its Surviving QIG is complete owned by a family. From its first smeltery established in 1987, QIG became attached to industrial field. By the 2002, it has three smelteries and seven subsidiary companies, the business involve in metallurgy, crude oil, railway transportation and entertainment service. 15 years ago it was only a niche with 30 employees, but now it has become the biggest private corporation in Ningxia province.
The corporation has 1500 employees and the asset up to 0.67 billion RMB (Fiscal report of QIG: 2002). Its annual sales revenue reached to 14.84 million in 2003 (Newspaper: Legal Daily 15.12.2002) and the business has spread more than 10 countries. In 2001, QIG ranked at 226 in the Top 500 private enterprises in China (The report of China Top 500 private corporations: 2001).
QIG, a family corporation, has got shining achievement. It is contribute to two aspects. In the one hand, it is a family corporation, because its ownership character, the strategic management target would concentrate on the cost minimized, but pursue profit maximized. This strategy spirit would be throughout its management layer, this would be a reason of that the most managerial positions and important posts are charged by its family members. On the other hand, it has faced an excellent opportunity accompanied with China reform and opening up policy process. It is of course not only contributed to above reasons, but also certainly related to its corporation strategies on both internal and external environment.
Surfing in The Economic Wave — PESTLE & 7S Analysis QIG mainly involves in metal smelting industry, it has three smelteries, aluminum ingot plant, magnesium metal plant and ferro silicon plant. First it should be stated, QIG sits in Ningxia province, the north and west China, where the economy is undeveloped compare with the south and east China. The abundance electric resource1*, low labour cost and low cost praedial resource are the fundamental advantage for its entering industrial field.
In external environment, QIG develops its business accompanied with China reform and opening up process. It essential benefit from reform and opening up policy, such as the first 3 years tax break policy which would greatly attract to any investors, particularly high fixed cost investment sector. In 1997, QIG invested 0.23 billion RMB launched its first aluminum ingot line (QIG ERP Database 1997). In 2000, QIG added its second aluminum ingot line by injected 0.14 billion RMB. In 2001, by its mature experience of investment in industry, QIG targeted to invest in an annual capacity 6000 tone magnesium metal plant. A huge investment was carried out by QIG in a short time, there is another reason based on government policy which is deflection west economy policy.
Depending on opening up and reform policy worked out by Chinese government and his own suitable policy, QIG insists on high developing speed to challenge himself, which help him finished the primitive capital accumulation. There are common words stated as “any theory can’t stand without practice and any practice would be conducted by theory”. QIG is able to succeed in its investment and to achieve operational strategies; HR and people with their knowledge would be an important infrastructure. One of the state owned aluminum plant, Qingtongxia Aluminum Plant which is the shareholder of the world second biggest aluminum corporation, Canada aluminum corporation, locate at 60 Kilometers away from QIG.
It is meant that QIG had already got technical support advantage. QIG hunted many managers and technicians from Qingtongxia Aluminum Corporation, it is not only ensure QIG to achieve its operational strategies, but also recruit qualified and high skilled staffs. At another point, Ningxia province is an undeveloped region. It has abundance labour, special majority of workers come from rural area, which dramatically reduce the HR cost. Consequentially, it is a great advantage for QIG with a physical intensive HR structure.
Where QIG gets money form? It would be a question. However, China has the fastest economic growth speed in the world and has been looked as the world workshop. Because there is a big ‘cake’, according to World Bank reported China absorbed 68 billions FDI by 2003 (World Bank 2003). QIG made advances cooperated with Glencore which is a famous Switzerland resource company. From this action, it is possible to observe that QIG has a tendency to drive a family corporation extending to external market. Furthermore, due to government issued the deflection west economy policy, QIG has acquired very big fund support from Chinese banks. It just like a Chinese Proverb described: “time advantage, geographical advantage and support of people are as the three success factors”. QIG has all packed.
Qinyi Industrial Group Corporate Strategy According to Gerry and Kevan, “Corporate-level strategy is concerned with the overall purpose and scope of an organization and how value will be added to the different parts (business units) of the organization.”(Gerry Johnson & Kevan Scholes 2002:11). In order to understand QIG’s corporate strategy, an effective approach should be considered with its corporation spirit, which described as “Adopting new technologies, improving administration, speeding up capital velocity and enhancing group’s image”(QIG www).
Therefore, QIG as an industrial manufacturer, its core target is to produce satisfied products through gradually prefect management and improved technology to generate low cost and high profitable competitive advantage. On the other hand, QIG pursues high developing and distending speed. As a industrial corporation, the size is key factor for its surviving. Because industry is a high fixed cost unit, distending the scale of a corporation can result in adding the unit profit and decreasing the average unit cost. At operational strategy level, QIG paid some attentions on “the dam effect and barrel effect” which focus on corresponding with every steps of its corporation strategy approach.
As China emerges with great potential, it is impossible for QIG to ignore such a big opportunity. QIG adapts its corporation strategies to benefit from the great opportunity. As another Chinese Proverb described: ” be careful what you wish for, you just might get it.” In 2002, it has made a next five-year plan. The most important target is to extend its aluminum ingot line up to 280,000-tone, entering the top 10 aluminum plants queue in China. The total annual sale will reach 3 billion RMB, and the average annual revenue will reach 0.52 billion RMB. Whilst a 4*15Mkw accessorial electric power station has been designed in its ERP database (The ERP Database of QIG: 2002). By implementing of the next strategic approach, QIG could enhance its competitive advantage in a more dynamic economic environment.