Strategic Human Resource Management Organizational Essay

Question:

Discuss about the Strategic Human Resource Management Organizational.

Answer:

Introduction

In this report, KFC and Burger King are selected to compare overall contribution of people resource for organisation’s performance and success. KFC is an American fast food restaurant chain which is specialised in fried chicken. It is a subsidiary company of Yum! Brands (KFC, 2018). It was founded in 1930 by Harland Sanders. Burger King represents one of the largest food chains of world. The annual revenue of company is more than $2 billion. The company has over 12,000 restaurants which cover 50 states and 73 different countries. The people 21 managementphilosophies and strategies of both organisations have been discussed. Further the performances of organisations have been calculated and commented in terms of price earnings ratio, revenue per employee and profit per employee.

KFC

Until 1991, KFC was known as Kentucky Fried Chicken. As per KFC, 2018 there are over 20, 500 outlets in more than 125 countries around the world (KFC, 2018). Wang and Cai (2017) agrees that the largest unit of company is in China which comprises more than 1,600 restaurants. The internalisation of people resource management at KFC has improved scope of traditional HRM. It can be identified as the application of individuals to attain organisational objectives. One of the significant functions of HRM system is staffing. The organisation should have the appropriate number of employees with suitable expertise to do definite job at certain time. There are various important features such as planning, recruitment, selection and training. These features should be met to ensure companies are always productive. Every position should be analysed before posting it’s skills. KFC is productive only because the hired persons have a specific job description. The HRM is a part of firm’s internal environment. The internal environment is the factor which affects human resources and is inside boundaries of a firm (Sheehan, 2014). HR is very important when it comes to hiring. The company reviews human resource requirement to ensure number of employees required because failure may result in lack of employees required for proper skills (Wang & Cai, 2017).

People management philosophies

Understanding customer relationships:

The consumer philosophy of KFC focuses on the way customers relate to company. It includes transactional, relationship and mixed marketing philosophies. The transactional marketing includes the expensive purchases which are made by customers rarely. The relationship marketing concentrates on less expensive and regular purchased items. It considers merchandise cost, employee performance and terms between customers and company. KFC makes use of more relationship marketing (Jackson, Schuler & Jiang, 2014).

Motivating employees:

The motivational philosophies concentrate on the approaches to inspire employees to improve their performance. It does not concentrate on improving personal accountability for their work and work towards the whole success of their companies. This philosophy seeks to develop work environment which sponsors strong employee driven morals. According to the goal work philosophy of KFC employees are given high standards and knowledge to reach these goals (Jackson, Schuler & Jiang, 2014). The employees can improve their performance and can work to achieve goals.

The steps of HR planning process

Recruitment: The recruitment of KFC is made on the request of store manager. The manger report a request of needs and HR department plans for new recruitment such as internal recruitment, advertisement, newspapers and more.

Selection: After approval of recruitment plan by Head of Department, it goes through a selection process. All the CVs are selected on the basis of requirement. The skill, level of knowledge and background is matched with the requirement.

Competent employees: The competent employees pass first two steps. These are the employees who can do the job based on what they already experience.

Orientation: In this step employees are introduced to the company. It is a short course of internal understanding. It is where the company makes sure that new comers know who they are working with and what is the environment.

Training: In the training step the company offers three step training to employees. The training is based on different level and department of employees. It can be technical skill, interpersonal skill and problem solving.

Performance appraisal: The performance of each individual is evaluated after some period of working. It is to evaluate work performance of each individual in order to achieve objective personnel decisions. The performance methods are written essays, multi person comparisons, graphic rating scales and more.

Career development: Earlier organisations used to develop careers now days individuals develop careers.

Compensation and benefits: It is a system developed to change nature of work or workplace in order to make people interested and motivated. The compensation benefits include basic wages, wages or salary add-ons, incentive, benefits and service.

Strategies

Expatriate policy of KFC

KFC employs this policy in order to establish restaurants which can be suitable to the culture of any country. The familiarity of company with culture is an advantage which helps to penetrate country. Briscoe and Schuler (2004) believe that KFC employed first generation Chinese American to return to China to launch Chicken restaurants. The employees at KFC undertake several trainings at different stages before getting promotion. The general managers employed should have attained proper training and experience from the company. Vahid (2007) agrees that franchise is popular strategy used for the growth of business sector. The franchise companies have to undertake courses at Yum as per agreement. The migrants and colonists have the opportunity to unite with the culture of KFC and their own culture to suit the taste of clients (Vahid, 2007).

Training and orientation of company

KFC focuses on training and learning of it’s staffs and managers in 30,000 restaurants worldwide. KFC has advanced extensive training programs for all the front line people. The management trainings provided by company deals with the issues such as sexual harassment, hiring practices and conflict resolution (Tracey, 2014).The company focuses on the notion that people need to delight with respect. The same training is provided to mangers and are required to attend meetings held at Louisville. Sikora and Ferris (2014) believe that front line mangers take responsibility to provide training to employees by using training manuals and product guides (Sikora & Ferris, 2014).

Benefits the company derived

The company has developed a support culture to train and motivate general managers with substantial reward programs to motivate them to lead team in different branches across nations. The company supports franchise manger from advertising to training of employees. It leads to success career with the company. The diversification of company has enhanced the scope of traditional HRM. The HR specialists not only manage people of home country but also manage people of other countries. It includes the staff and workforces within that country. The HRM might have problem when they have the best local staff but they do not sufficient awareness of foreign culture. The output is also affected when the human management is not compatible (Sutha & Chitra, 2016).

Burger King

Burger King is specialised in offering sandwich, chicken tenders, fries, salads, breakfast items and desserts. The first Burger King was established in 1954 in Miami. 90% of it’s restaurants are independent franchises. The philosophy of Burger King is to choose the food and it innovates. The goal of the company is to individualize customer’s order and provide the fastest service (Kramar, 2014).

People management philosophies

The people management philosophies forms business, goals and oversee all parts of company. The philosophies direct each feature of business.

Working towards maximum efficiency

This tactic of Burger King focuses on how it’s business should be organised, division of labour between management and employees. The organisational philosophy focuses on how work of business should be allocated to ensure maximum efficiency. It also specifies a clear chain of accountability. For instance, the bureaucratic management style divides responsibility between managers and employees who work as subordinates under mangers (Banfield, Kay & Royles, 2018).

Managing crisis

Burger King uses crisis management philosophy only when something goes wrong in the company. It focuses on identifying potential dangers and planning for dangers. It also focuses on responding dangers with a clear goal once it occurs. Cheung and Leung (2016) argues that the organisation cannot enclose any unfavorable information. A careful assessment is done by evaluating and suggesting methods for reducing impact of dangers in future (Cheung & Leung, 2016). The company also provides crisis reaction strategies to response immediate dangers once it is arisen. The crisis management allows a quick and effective response to major issues and challenges (Brewster, Mayrhofer & Morley, 2016)

Strategies

The strategies to assess and compare overall contribution in organisation’s performance and success are:

Generic and Intensive growth strategies

Burger King is one of the leading fast food restaurant chains. It applies generic strategy for competitive advantage to link effectiveness with world. The intensive growth strategies has major role in the global growth of firm. An appropriate arrangement and execution of generic and intensive strategies can lead to substantial competitive advantage and growth. The company’s generic strategy supports it’s competitive advantage which is based on cost, rating and product features. The main aim of intensive growth strategies is to increase market share (Sparrow & Otaye-Ebede, 2017).

Generic competitive strategy (Porter’s model)

The company uses two generic competitive advantages, cost leadership and broad differentiation. Burger King’s general competitive advantage is cost leadership. It includes reducing costs which leads to low prices. The company applies cost leadership through standardization of process. It minimizes cost based on the economy of scale (Koutroumanis, Alexakis & Dastoor, 2015). The financial objective is to reduce operating costs so that products of the company can be offered at low prices.

The company uses broad differentiation strategy as second general strategy for gaining competitive advantage. It is based on Porter’s model and entails creating unique characteristics to differentiate the business from competitive firms. The company make use of generic competitive advantage by grilling of burger patties (Purce, 2014). The previous slogan of company “Have it your way” and slogan at present “Be your way” represents company’s differentiation by offering flexible option to customers. The option of free drink refills is also accessible in many restaurants of Burger King. The strategic objective of the company is to make use of differentiation for attracting customers in new markets. The company especially makes use of it’s competitive strategy in the markets where major competitors are already well-known.

Intensive growth strategies

Market penetration: The prime intensive growth of company is market penetration. The aim of the strategy is to increase revenue from current customers where the company is already operating. For instance, Burger King executes intensive growth strategy by establishing new restaurants in current markets to increase it’s market share. According to Sparrow, Brewster & Chung, 2016 Intensive growth strategies makes shift in global sourcing. The objective behind this strategy is to expand franchise network of company (Reiche, Stahl, Mendenhall & Oddou, 2016). The generic strategy of company also supports intensive strategy by highlighting unique product features for making entry in market and expanding business.

Market development: It is secondary intensive growth strategy. To support growth of business market development strategy involves making entry in new markets or aiming new market sectors. For instance, Burger King uses this strategy by initiating new stores in foreign countries where the company is not operating before (Lee, Hallak & Sardeshmukh, 2016). This strategy has minor role because the company is already operating in markets around the world. The objective of company is to grow by attracting new customers in new markets by availing cheap prices. Thus the objective of this strategy stresses on low prices in the marketing strategy of company. It can be supported through the cost leadership generic strategy (Fey, Nayak, Wu & Zhou, 2016).

Product development: It is the least important intensive growth strategy of Burger King. This strategy assists company to grow by launching new products. The company makes least use of this strategy. For instance, Burger King launches products at low prices. Most of the products of company remain on the menu for years. Edmondson and Harvey( 2017) believes that strategic objective behind this strategy is to grow business of company through product innovation (Edmondson & Harvey, 2017). This strategy supports generic strategy of broad differentiation by emphasising new products which are unique in comparison to competitive firms.

Organisation’s performance

The performance of both organisations KFC and Burgers King can be evaluated by using price earnings ratio, revenue per employee and profit per employee.

(Data Source: Yahoo finance, 2017)

P: E Ratios

Price earnings ratio is used for the evaluation measure of stock. It can be calculated by dividing last sale price by average EPS (Earnings per Share). It can be viewed as number of years taken by the company to get back the price paid for stock. It shows current investor demand for shares of company. The P: E ratio is calculated by net income. It is complex to non- repetitive earnings and capital structure. Investors may use price earnings ratio to estimate profits. The P: E ratio is an indicator of market judgement about relationship between company’s obligatory rate of return and it’s actual rate of return. A high price earnings ratio shows increased demand because the analysts expect earnings growth in the future. The price earnings ratio of KFC in 2017 is 22.15 times which indicates how many times earnings investors are willing to pay for the share. As per Finance management, 2018 the P/E ratio shows positive future performance of company and investors’ willing is to pay more for such shares (Finance management, 2018). The price earnings ratio of Burger King is 22.74 times which is more than price earnings ratio of KFC. It reflects better financial condition of Burger King. It leads to rise in market price of company. It also defines the performance and growth of company (Cania, 2014). This ratio is useful in comparing companies of same industry. Burger King’s P/E ratio is higher and investment of company is also considered more risky than KFC.

Revenue per employee

Revenue per employee is also called Sales per employee. It evaluates the average revenue created by each and every employee of company. It can be calculated by dividing revenue of a firm by total number of it’s workers or employees (Shields, et. al. 2015). Usually the number of employees keep on changing so average number of employees is used during the period. It is a measure which reflects how competently a company is utilising it’s employees. It shows positive sign when revenue per employee is high and find ways to embrace more revenue out of each worker. A company compare it’s result with other company of same industry to evaluate revenue per employee. The revenue per employee is affected by employee turnover rate of company. Revenue per employee is an indicator of productivity of employees of company. The revenue per employee of KFC in 2017 is $97.97 whereas revenue per employee of Burger King is $738.08 which is actually very high. It shows better result of Burger King. The higher revenue of Burger King shows it better.

Profit per employee

Profit per employee is also known as net income per employee. It is calculated by dividing net income of company by number of it’s employees. This number shows efficiency of company with it’s employees (Albrecht, Bakker, Gruman, Macey & Saks, 2015). Higher net income per employee shows better performance of company. The profit per employee is net income of company. Other than increasing productivity of employees, it can also be increased by number of other factors such as using advance technology (Stone, Deadrick, Lukaszewski & Johnson, 2015). The high turnover ratio of company can also decrease profit per employee of company. It helps in increasing profits in accordance with the number of employees. It also focuses on creation of value for talented people. Profit per employee of KFC in 2017 is $22.33 whereas profit per employee of Burgers King is $106.65. The number of employees at KFC is more that is 60,000 and employees of Burgers King are 6,200 which lead to more profit per employee of Burgers King. The profit per employee of KFC is calculated by dividing net profit of company that is 13, 40,000 by number of employees which is 60, 000. It brings out $22.33 profits per employee. The profit per employee of Burgers King results in $106.65 which shows better results than KFC.

Conclusion

In the above report people management philosophies and strategies of both organisations KFC and Burger King have been compared to assess overall contribution of the people resource. These are the most admired companies listed in Google. The performance of organisations has been compared by metrics such as P: E ratios, revenue per employee and profit per employee. By making comparison of performances it has been evaluated that Burger King is performing better than KFC. The price earnings ratio of Burger King is 22.74 times which is .59 times more than the P: E ratio of KFC. The revenue per employee of Burger King is also high which is $738.08. The profit per employee of KFC is significantly less that is $22.33 whereas profit per employee of Burger King is $106.65. Thus it can be concluded that the performance of Burger King is far better than KFC in terms of not only HRM but in terms of P:E ratio, revenue per employee and profit per employee also.

References

Albrecht, S.L., Bakker, A.B., Gruman, J.A., Macey, W.H. and Saks, A.M., 2015. Employee engagement, human resource management practices and competitive advantage: An integrated approach. Journal of Organizational Effectiveness: People and Performance, 2(1), pp.7-35.

Banfield, P., Kay, R. and Royles, D., 2018. Introduction to human resource management. Oxford University Press.

Cania, L., 2014. The impact of strategic human resource management on organizational performance. Economia. Seria Management, 17(2), pp.373-383.

Cheung, F.S.L. and Leung, W.F., 2016. Transparency for Crisis Communication in the Digital Age–Cases from Food Safety Disasters. Eurasian Journal of Business and Management, 4(1), pp.51-61.

Edmondson, A.C. and Harvey, J.F., 2017. Cross-boundary teaming for innovation: Integrating research on teams and knowledge in organizations. Human Resource Management Review.

Fey, C.F., Nayak, A.K., Wu, C. and Zhou, A.J., 2016. Internationalization strategies of emerging market multinationals: A five M framework. Journal of Leadership & Organizational Studies, 23(2), pp.128-143.

Finance management, 2018 available from

Jackson, S.E., Schuler, R.S. and Jiang, K., 2014. An aspirational framework for strategic human resource management. The Academy of Management Annals, 8(1), pp.1-56.

KFC, 2018 available from

KFC, 2018 available from

Koutroumanis, D.A., Alexakis, G. and Dastoor, B.R., 2015. The influence organizational culture has on commitment in the restaurant industry. Small Business Institute Journal, 11(2), p.27.

Koys, D.J. and DeCotiis, T.A., 2015. Does a good workforce influence restaurant performance or does good restaurant performance influence the workforce?. Journal of Human Resources in Hospitality & Tourism, 14(4), pp.339-356.

Lee, C., Hallak, R. and Sardeshmukh, S.R., 2016. Innovation, entrepreneurship, and restaurant performance: A higher-order structural model. Tourism Management, 53, pp.215-228.

Purce, J., 2014. The impact of corporate strategy on human resource management. New Perspectives on Human Resource Management (Routledge Revivals), 67.

Reiche, B.S., Stahl, G.K., Mendenhall, M.E. and Oddou, G.R. eds., 2016. Readings and cases in international human resource management. Taylor & Francis.

Sheehan, M., 2014. Human resource management and performance: Evidence from small and medium-sized firms. International Small Business Journal, 32(5), pp.545-570.

Shields, J., Brown, M., Kaine, S., Dolle-Samuel, C., North-Samardzic, A., McLean, P., Johns, R., O'Leary, P., Robinson, J. and Plimmer, G., 2015. Managing Employee Performance & Reward: Concepts, Practices, Strategies. Cambridge University Press.

Sikora, D.M. and Ferris, G.R., 2014. Strategic human resource practice implementation: The critical role of line management. Human Resource Management Review, 24(3), pp.271-281.

Sparrow, P. and Otaye-Ebede, L., 2017. 10 HRM and productivity. A Research Agenda for Human Resource Management, p.163.

Stone, D.L., Deadrick, D.L., Lukaszewski, K.M. and Johnson, R., 2015. The influence of technology on the future of human resource management. Human Resource Management Review, 25(2), pp.216-231.

Sutha, A.I. and Chitra, S., 2016. Human Resource Management in Service Organisations. Engineering and Science, 1(3), pp.130-134.

The wall Street Journal, 2018 available from

Tracey, J.B., 2014. A review of human resources management research: The past 10 years and implications for moving forward. International Journal of Contemporary Hospitality Management, 26(5), pp.679-705.

Wang, J. and Cai, G., 2017. An Analysis Of International Human Resource Strategy Of KFC In China. American Journal of Multidisciplinary Research, 5(2).

Albrecht, S.L., Bakker, A.B., Gruman, J.A., Macey, W.H. and Saks, A.M., 2015. Employee engagement, human resource management practices and competitive advantage: An integrated approach. Journal of Organizational Effectiveness: People and Performance, 2(1), pp.7-35.

Armstrong, M. and Taylor, S., 2014. Armstrong's handbook of human resource management practice. Kogan Page Publishers.

Banfield, P., Kay, R. and Royles, D., 2018. Introduction to human resource management. Oxford University Press.

Brewster, C., Mayrhofer, W. and Morley, M. eds., 2016. New challenges for European resource management. Springer.

Kramar, R., 2014. Beyond strategic human resource management: is sustainable human resource management the next approach?. The International Journal of Human Resource Management, 25(8), pp.1069-1089.

Cania, L., 2014. The impact of strategic human resource management on organizational performance. Economia. Seria Management, 17(2), pp.373-383.

Cheung, F.S.L. and Leung, W.F., 2016. Transparency for Crisis Communication in the Digital Age–Cases from Food Safety Disasters. Eurasian Journal of Business and Management, 4(1), pp.51-61.

Edmondson, A.C. and Harvey, J.F., 2017. Cross-boundary teaming for innovation: Integrating research on teams and knowledge in organizations. Human Resource Management Review.

Fey, C.F., Nayak, A.K., Wu, C. and Zhou, A.J., 2016. Internationalization strategies of emerging market multinationals: A five M framework. Journal of Leadership & Organizational Studies, 23(2), pp.128-143.

Finance management, 2018 available from

Jackson, S.E., Schuler, R.S. and Jiang, K., 2014. An aspirational framework for strategic human resource management. The Academy of Management Annals, 8(1), pp.1-56.

KFC, 2018 available from

KFC, 2018 available from

Sheehan, M., 2014. Human resource management and performance: Evidence from small and medium-sized firms. International Small Business Journal, 32(5), pp.545-570.

Shields, J., Brown, M., Kaine, S., Dolle-Samuel, C., North-Samardzic, A., McLean, P., Johns, R., O'Leary, P., Robinson, J. and Plimmer, G., 2015. Managing Employee Performance & Reward: Concepts, Practices, Strategies. Cambridge University Press.

Sikora, D.M. and Ferris, G.R., 2014. Strategic human resource practice implementation: The critical role of line management. Human Resource Management Review, 24(3), pp.271-281.

Sparrow, P. and Otaye-Ebede, L., 2017. 10 HRM and productivity. A Research Agenda for Human Resource Management, p.163.

Sparrow, P., Brewster, C. and Chung, C., 2016. Globalizing human resource management. Routledge.

Stone, D.L., Deadrick, D.L., Lukaszewski, K.M. and Johnson, R., 2015. The influence of technology on the future of human resource management. Human Resource Management Review, 25(2), pp.216-231.

Storey, J., 2014. New Perspectives on Human Resource Management (Routledge Revivals). Routledge.

Sutha, A.I. and Chitra, S., 2016. Human Resource Management in Service Organisations. Engineering and Science, 1(3), pp.130-134.

The wall Street Journal, 2018 available from

Wang, J. and Cai, G., 2017. An Analysis Of International Human Resource Strategy Of KFC In China. American Journal of Multidisciplinary Research, 5(2).

How to cite this essay: