HRM FACTORS FOR SUSTAINABILITY ......................................................................................................... 3 The Application of Performance Management ..................................................................................... 3 Diversity Management ................................................................................................................................... 4 Managerial On-the-job Training ................................................................................................................. 7 Job Rotation ................................................................................................................................................... 7 Coaching/understudy method ............................................................................................................... 7 THE ACCREDITION: ISO 14001 AND OHSAS 18001 ............................................................................... 8 HARVARD FRAMEWORK ................................................................................................................................ 10 The Model ......................................................................................................................................................... 10 Situational factors .................................................................................................................................... 11 Stakeholders interests ............................................................................................................................ 11 Human resource management policy choices ............................................................................... 12 Human resource outcomes ................................................................................................................... 12 Long-term consequences ...................................................................................................................... 13 Feedback loop ............................................................................................................................................ 13 The Measurements ....................................................................................................................................... 14 RECOMMENDATIONS OF HRM PRACTICES ............................................................................................ 15 CONCLUSION ....................................................................................................................................................... 17 REFERENCES ....................................................................................................................................................... 18
EXECUTIVE SUMMARY This case study researches on the sustainability of Jia Hsin Co Ltd, a foreign Vietnam-based company which is the supplier for sandals manufacturing industry. The first part of this case study is discussing about human resource management (HRM) practices that help Jia Hsin Co Ltd in maintaining the sustainability in the market. Main practices are identified include of: (1) the application of performance management; (2) effective diversity management and (3) effective managerial on-the-job training. All three applications emphasize on the importance of management level regarding to the business performance of the company. Secondly, there will be analysis of HRM practices that contributed in the achievement of the company regarding to the accreditation of ISO 14001 and OHSAS 18001. The effective communication of management with employees, effective training program, high collaboration, and ethical incentives are the main factors that support the company in gaining such management certification. The Harvard HRM Framework is also applied in order to analyze the implementation of those practices. Last but not least, the recommendations toward the adjustment of some HRM policies are conducted to help the company in improving the performance and reducing the turnover rate. INTRODUCTION Jia Hsin Co Ltd is a sandal manufacturing company wholly owned by Jia Cherng Corp. incorporated in Republic of Mauritius (Jia Hsin Co Ltd, 2011). Jia Hsin means New and Pretty. The company has the expectation to maintain the sustainable abilities within the market. The case study is based on the Global Reporting Initiative (GRI) Sustainability Report 2011 of Jia Hsin Co Ltd to review the activities as well as the glance toward internal operation process that support the company in achieving ISO 14001 and OHSAS 18001 certifications. HRM FACTORS FOR SUSTAINABILITY THE APPLICATION OF PERFORMANCE MANAGEMENT Concerning to the performance rating process, it seems that Jia Hsin Co Ltd has applied the performance management instead of conventional methods in the aspect of performance appraisal. Performance Management and Performance Appraisal have similar characteristics; however, according to Dessler (2013), three points that can be used to distinguish them: 1. The organisations conduct the continuous interactions among senior management and subordinates in order to guarantee the continuous quality improvements. Jia Hsin Co Ltd stated that the firm has conducted weekly meeting for leaders and managers and re-formed the employees on the basis of issues being discussed within the meeting (Jia Hsin Co Ltd, 2011).
2. Performance management is based mainly on goals. The companys performance is based totally on business results while income of the senior management in each of department will be calculated with fixed wages plus a performance bonus (Jia Hsin Co Ltd, 2011). 3. Performance management means continuously re-evaluating and if needed, modifying how the employee and team get their work done. In the case of Jia Hsin Co Ltd, through the performance management process is conducted weekly, staffs will be implemented the career development plan in order to have an overview regarding to what they can do and do the best to be rotated in suitable departments or training programs (Jia Hsin Co Ltd, 2011). DIVERSITY MANAGEMENT Buckingham (2010) stated that many years ago, the top management and board of directors had the tendency to establish a homogenous organisations in order to share the similar organisational behaviours, culture, and so on. However, the homogenous environment can cause myopic opinion regarding to various types of problems (Morgan & Vardy, 2009) and especially internal group think phenomenon the staffs share the culture and mind-set; therefore, they will all agree with incorrect solutions (Marques, 2007). Labedz & Berry (2013) stated a reason fo efficient diversity management is the proactive attitude from organisation. In the case of Jia Hsin Co Ltd, the diversity management has been carried out efficiently. Top management has the tendency to recruit less female employees since they have high possibility of maternity leave and cannot compare with male in some heavy tasks (Pieterse, et al., 2013). However, Jia Hsin Co Ltd has the proportion of female employees in approximately 68% in comparison with 32% of male employees.
Figure 1. Jia Hsin companys workforce by gender in 2011 (Jia Hsin Co Ltd, 2011) Marques (2008) made a statement that one of problems in diversity was that a lot of firms manage the diverse workforce mainly on the basis of profits instead of building a serious cultural and moral matters. Additionally, Daft (2010) stated that management has tend to promote people that share the same cultural background and this leads to the narrow solutions in problem-solving perspectives. Jia Hsin Co Ltd, in another hand, is serious in promoting both local and expat:
Figure 2. Companys senior management regarding to nationality in comparison between 2010 and 2011 (Jia Hsin Co Ltd, 2011)
Although the companys GM (General Manager) is a Taiwanese; however, Vietnamese senior management increased to 8 people (2011) with a rate of 35% and took some of important senior positions such as Operation Manager and Human Resource Manager. Menezes (2012) stated that efficient diversity management can help the organisation reduce the turnover rate. Jia Hsin Co Ltd actually had the turnover rate reduce 0.11% in 2011 and kept the yearly turnover rate be stable at 4% (Jia Hsin Co Ltd, 2011). MANAGERIAL ON-THE-JOB TRAINING According to Dessler (2013), the managerial on-the-job training include approaches of job rotation, coaching/understudy method and action learning. In the case of Jia Hsin Co Ltd, the company has applied the job rotation and coaching/understudy method. Job Rotation Job rotation is defined as conducting a cross-department training for managers or supervisors in order to enriching their knowledge and understanding in the aspect of tasks and business; moreover, it is also used to test their abilities (Noe, et al., 2011). Jia Hsin Co Ltd has rotated the supervisors among divisions in order to train them to become senior management in the future that can supervise several departments (Jia Hsin Co Ltd, 2011). Coaching/understudy method Dessler (2013) stated that the employees will be worked with different supervisors or managers for broadening coaching. Jia Hsin Co Ltd with the motto Right people will lead to more growth has been applying the policy for identifying potential staffs and put them in training program through complex functions for the stable development in the future (Jia Hsin Co Ltd, 2011). THE ACCREDITATION: ISO 14001 AND OHSAS 18001 Jia Hsin Co Ltd achieved the accreditation of ISO 14001 and OHSAS 18001 management system (Jia Hsin Co Ltd, 2011). Range of practices have contributed into the accreditation achievement include: Invest in training programs to improve employee skills (Gomez-Mejia, et al., 2012): For ISO 14001, the strong emphasis concentrates on training as well as communication in order to support realizing changes and continuous improvement (Kaur, 2011). Jia Hsin Co Ltd built and applied the CSR (Corporate Social Responsibility) software for data collection and performance measurement. Beside the establishment of Sustainability Team, the supervisors also took part in the rotation traning to enhance their knowledge in the aspect of system and software. So, they can adapt promptly in order to support operating the process system. Jia Hsin Co Ltd also invested for training programs US$ 12,957.42 in the year 2011 (Jia Hsin Co Ltd, 2011). Sharing information and effective communication (Tan & Nasurdin, 2011): Effective communication from management positions will support and ensure the clear understanding in the aspect of EMS/ISO 140001 and OHSAS 18001 for the staffs as well as the systems function, and employees role in identifying and controlling environmental issues (Kaur, 2011). Jia Hsin Co Ltd implemented 3 additional channels over 7 total channels for communication between top management and employees (Jia Hsin Co Ltd, 2011) a total implementation of 43%.
Encourage team work so that employees are more willing to collaborate with each other (Gomez-Mejia, et al., 2012): the training development can lead to better team members and cohesive teamwork. Nee (2011) claimed that teamwork can have positive and significant relationship with the implementation of ISO 14001 EMS. The company has the corner stone of Respect, Share and Care and establishes every necessary method for make connection between the management and employees, include of: (1) weekly meeting; (2) policies, notices posted on notice board; (3) suggestion box and (4) face to face meeting between management and employees no bureaucratic system was applied (Jia Hsin Co Ltd, 2011). High compensation contingent on organizational performance (Tiwari, 2012): Paille et al. (2014) said that another core component for the effective implementation of environmental management system is motivating employees and implying appraisal and reward related to environmental performance. In this aspect, Jia Hsin Co Ltd stated that the investment company appraises Top Management performance not only by reviewing company business results but also based on achievement in social and environmental aspects (Jia Hsin Co Ltd, 2011). Building ethical incentives culture (Dessler, 2013): although the reward and appraisal system is needed for implying those management system; however, financial performance-oriented incentives without ethical standards may cause unethical behaviour and even culture (Dessler, 2013). For illustration, in the aspect of environmental protection, Jia Hsin Co Ltd outsourced a third party company for waste disposal in order to remove adverse impact to employees health (Jia Hsin Co Ltd, 2011). HARVARD FRAMEWORK THE MODEL
Figure 3. Harvard human resource management model (Torrington, et al., 2005) Harvard human resource management model is an analytical framework developed by Beer et al. (1984) and include of six components (Bratton & Gold, 2012):
Situational factors Regarding to Bratton & Gold (2012), these factors will influence managements choice of human resource strategy. Concerning to the workforce characteristics of Jia Hsin Co Ltd, the average annual turnover rate was 4%, 856 new employees joined in 2011 and the number of leave was 901 (Jia Hsin Co Ltd, 2011). In another hand, 74.53% of new employees were under-30 years old. It meant that the companys workers ages were quite young and they can change job anytime they want (Jia Hsin Co Ltd, 2011). Therefore, the number of new employees was large enough to consider. Training supports employees in mastering understanding, knowledge, abilities, skills that can make contribution not only to management practices in daily routine operation but also in term of innovated products and production process (Tan & Nasurdin, 2011). Based on Paille et al. (2014), training and development environmental knowledge is the first core component for motivating the endorsement of environmental management system (EMS) such as ISO 14001. Stakeholders interests The stakeholder interests help to identify the importance of trade-offs between the owners interests and those of employees and their organizations, the unions (Bratton & Gold, 2012). The company has considered enhancing the understanding among the partners is an important factor for the business success and development. Therefore, Jia Hsin Co Ltd had to implement the communication effectively by sharing with the employees in the aspect of strategies of company, business policies, targets and objectives, the expectations from the customers, suppliers, and board. The company also notifies its requirements toward employees cooperation and contribution (Jia Hsin Co Ltd, 2011). Human resource management policy choices The human resource management policy choices concentrates on the aspect that management's decisions and actions in human resource management can be completely appreciated on the basis that it is resulted from an interaction between constraints and choices (Bratton & Gold, 2012). Based on the employees survey result, 33.3% of employees wish the company would have more policies in supporting living conditions (Jia Hsin Co Ltd, 2011). Therefore, a high contingent reward system based on the organisational performance can help to create an environment in which employees were motivated to do their best and had chance to improve the living condition through working progress. Human resource outcomes The human resource outcomes are high employees commitment to organisational and high individual performance which lead to the cost-effective products or services (Bratton & Gold, 2012). The managerial on-the-job training helps to discover employees competencies in various aspects. This also creates the opportunity for their career development and enhances their commitment toward the organisation. Moreover, since they made the commitment with the organisation; the performance management process will help to make the congruence between the employees goals with the firms strategic goals. Last but not least, together with the commitment of employees, the ethical incentive culture lead to the successful implementation of OHSAS 18001 which can bring tremendous benefits for company including of decreasing less work-related accidents which can lead to absenteeism and turnover, downtime and associated cost, adapting with the legal requirements as well as public insurance costs (To, et al., 2012). Long-term consequences The long-term consequences are divided into three levels: individual, organizational and societal (Agyepong, et al., 2010). In the aspect of individual, the job rotation is a part of job enrichment attempt developed by Herzberg (1957) in a book by Torrington et al. (2005). This adapts well with one of the motivation strategies of Armstrong (2009) beside the financial motivation, in which employees can be motivated with the opportunity to grow by developing abilities and careers. In the organisational area, keeping the stable pool of talent management would help the company be sustainable and maintain the competitive advantage in comparison with other competitors. Last but not least, taking account to the stable human resource pool means the organisation also has to take care the community or society around the employees. For instance, beside conducting a new waste disposal system, Jia Hsin Co Ltd also carried out the training and education classes concerning to various types of diseases for both employees and their families (Jia Hsin Co Ltd, 2011). Feedback loop The situational factors influence HRM policy and choices but long-term consequences can have impact toward the situational factors, stakeholders interests and HRM policies (Bratton & Gold, 2012). This means that long-term output can help to improve the situation of the organisation, through the evaluation and lead to continuous improvements. For illustration, although the company can keep the stable and has a slight decrease in turnover rate, Jia Hsin still decided to implement Human Resource Management System (HRMS) and organisation reformation to improve the company structure in order to help improving the turnover rate, and absenteeism (Jia Hsin Co Ltd, 2011). THE MEASUREMENTS The company has applied some of these approaches in order to measure the outcome of human resources practices: Human Resource and Business Result: regarding to Huselid (1995), the investment in HR practices can have impact toward business results, both in financial and market value. In the period 2010 2011, Jia Hsin Co Ltd appointed more local staffs in senior management level and implementation of OHSAS 18001 and Human Resource Management System (HRMS), the retained earnings increased 99.38% while the sales volume increase 31.42%. Human Resource Audit: in order to ensure the sustainable compliance, Jia Hsin Co Ltd built up the labour management system and do the periodically internal audits (Jia Hsin Co Ltd, 2011). Through the HR audit, the company can identify the roots in quality improvement and conduct two important approaches: Adding human power for CSR system implementation. Conducting rotation training for employees to maintain multi-function HR pool. Employee Survey: the employee survey is also conducted in order to identify the requirement as well as expectation of employee regarding to the companys operation.
RECOMMENDATIONS OF HRM PRACTICES Providing recognition to staffs with both financial-oriented and non-financial rewards (Gomez-Mejia, et al., 2012): the annual turn-over rate kept constantly at 4%. In which, 77.25% of under-30 age employees left because as Jia Hsin Co Ltd stated, for opportunities that can helped them gain more earning. Therefore, the company should develop policy that can give prompt and appropriate recognition toward employees in order to keep the turnover rate down beside the remuneration or salary.
Figure 4. Number and age of leave employees (Jia Hsin Co Ltd, 2011) Making the staffs become part-owners of the organisation with stock (Tiwari, 2012): the remuneration and salary that Jia Hsin Co Ltd offers for basic employees was VND3,158,881. Indeed, if the company does not want to break the salary floor, it can offer the potential employees with stock. By this way, it can motivate the staffs to work better because now their performance and bonus can stick with the business performance of the company.
Figure 5. Basic salary and remuneration by category and function (Jia Hsin Co Ltd, 2011) Develop a screening trainee selection program to recruit best potential staffs (Armstrong, 2009): although the company has the career development program for potential staff to practice complex functions; however, with the turnover rate of 4%, there is high chance that these staffs would leave the company during the training period. Therefore, the company can make implementation by screening the potential applicants right during the recruitment and selection progress and put them in managerial on-the-job training right in the first time.
CONCLUSION In conclusion, Jia Hsin Co Ltd successfully implemented the human resource practices of performance management, diversity management and managerial on-the-job training. Especially in the aspect of training and development, with the promotion of the local senior management together with the job enrichment policy for supervisors, the company can ensure the cohesive teamwork for better performance. Moreover, the enhanced communication among stakeholders together with an open and multi-channels environment, it augments the company in the information flows from management to employees as well as the collaboration spirit. However, the company would needs to make the implementation in the aspect of motivating employees with recognition and make them become a part of the organisation in order to reduce the turnover rate. A talent screening and development program would be useful for head-hunting potential employees.
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