M016LON Global HRM Strategies
The human resource is the backbone of an organization that plays a significant role in the success of the company. As concerning of this, the main aim of this report is to critically study the international human resource management.
For this, Zara is selected by the research that is a well known fashion brand in the industry. It will help Zara to develop and implement the joint venture strategy in Ghana with Totally Ethnik that is also top fashion brand in Ghana.
From this report, it is found that macro environment has an impact on the business activities and for this PESTLE analysis is conducted. By the help of PESTLE analysis, it is found that to start the business in Ghana can be complicated for Zara because political, economic, technology are supportive factors while social, legal and environmental are unsupportive factors.
At the same time, it is also identified that main objective of the human resource management strategy is to develop and apply effective and strict policies so the company can reduce the cost of the human resource. It is also found that in order to reduce the cost of human resource and improve operation efficiency,
Zara hires the skilled and profession member in the HR team. Likewise, it is also found that company will hire the human resource from the local and international market according to the skills of candidates. It will help Zara to get sufficient market share.
The main role of the human resource management is to manage all the activities of the human resource effectively. In the words of Jamali, et al. (2015) human resource management is a process of hiring and organizing the employees and providing responsibilities them according to their skills and experience.
In this report, the researcher draws a joint venture for Zara that is a Spanish fashion brand and going set up business in Ghana with local brand Totally Ethnik. For this, PESTLE analysis is developed to enhance the knowledge of macro environment of Ghana.
This report also discusses the requirement and section process of Zara during the operation in Ghana. Furthermore, it also depicts the strategies to conduct training and development program in the organization. This paper is also important to enhance the knowledge on the performance management and employee reward management system (Jia, et al. 2014).
Zara is a well known company in the fashion industry that is recognized due to its qualities and designed product. It was established by Amancio Ortega in 1975. Zara is a brand of Inditex that deals in the retail industry. Typically, the company’s products are liked by the young people over the world.
Along with this, the company’s products are famous among the females. It produces a wide range of the product for females. By the help its produce development strategy, Zara achieves the competitive advantage. Due to this, it has become a desirable brand in the fashion industry.
The product range of the company provides a good experience to customers (Porter and Heppelmann, 2014). Zara products generate approx 80% revenue for Inditex. Basically, Zara is a Spanish company but it operates the business in more than 80 countries.
Zara has approx 2200 stores overall world. The company provides employment more than 1000 people. In the financial year 2016, Zara revenue was computed USD$ 15.9 Billion. The firm is doing business with the clear vision and mission and the mission and vision of the company are supported by the managerial and operational policies.
The mission statement of the company depicts that the company wants to become a leading organization in the industry. For this company has an exclusive range as well as good quality for customers. The product range of Zara includes the clothing, shoes and accessories for men, women and children (ZARA., 2017). The global expansion strategy of the company was started in 1988.
Macro Environment Analysis (PESTEL)
Macro environment analysis is also known as the PESTLE analysis that is acronym form of the political, economic, social, technology, environmental and legal (Shaw, et al. 2013).
Ghana is located in Africa and it is one of the most peaceful countries in Africa. The below PESTLE analysis discusses the political, economic, social, technology, environmental and legal factors critically.
Political Factor
Political factor depicts the political situation of the country. In the context of Ghana, it is found that Ghana has a well developed political situation in the country that support the business activities in the country. It has stable political democracy system since 1992.
The government of Ghana focuses on the development of a regional modal for political and economic reform that brings the business opportunities for the companies. Along with this, Ghana’s government also has favourable policies that support the foreign direct investment (Rees & Smith, 2014).
But, in 2012, it has been seen that political situation was affected negatively due to opposite party claimed that election result was not valid and challenges then in the court. But, now there is not this type of political issue in the country.
Economic factor
Ghana economic condition is looking stable because the country major exporter of the cocoa, gold and oil that are the major source of the national GDP. Ghana exports these things more than 70 counties. In 2012, the total GDP of Ghana was recorded $40.71 billion with 7.1% growth rate (Zanoni, 2011).
In the country, the individual and corporate tax rate is 25% that can affect the business of Zara. However, since 2000, the annual GDP growth rate of Ghana is computed 6.5, which indicates that there is the fine business opportunity of Zara. The industrial sector of Zara contributes 30% to the national GDP.
At the same time, it is also found that gold and oil major way of national income but they do not provide much employment. Due to this, paying ability of people is low in Ghana (Madadipouya, 2015).
Social factor
In Ghana, many cultural and religious groups can be found but the majority in the population is of Black African that is 98% of the total population. Along with this, English is most spoken language in Ghana that is spoken by 90% people in Ghana. It supports the multinational companies to find the employee according to need and requirement.
But, at the same time, the business firm can face issue to expand the business because there is a lack of expendable resources (Munier, 2011). The big part of the Ghana population is suffering from the HIV virus that is a cause of hazard disease. There is also some ethnic violence in the country but they do not affect the business environment.
Technology Factor
In the context of technology, science and natural resources, Ghana is well developed in Africa. Since independence, Ghana has developed and adopted advance technologies that support the business activities in the country. The government of Ghana supports the research and development activities in the country by providing sufficient fund.
In the last two decades, internet and communication technology improved to the great extent that is help for organizations to communicate be updated rapidly (Rizea, 2015). At the same time, the country has developed and established some special technology that supports the business operation by minimizing their cost.
Legal factor
Ghana is known as the one of the strictest country in Africa in the reference of legal rules and regulations. It has a strong military and police force that is best tin all of Africa. Even though, the many laws and regulation are similar to the European countries that rule about the labour laws and paying policy. If Zara will start a business in Ghana then it has to meet the some kind of value added tax.
The country also has stamp duty, customs and excise duties, transfer duty, capital gains tax and skills development levy (Siemann, 2011). Hence, it can be said that business expansion is difficult in Ghana due to its legal factors.
Environmental factor
The issue of the environment protection has become a concerning aspect for the overall world. as focusing of this, the government and environment protection agencies are active in Ghana to keep safe to the environment. Due to this, there are lots of policies implemented to protect the atmosphere. It affects the operation of the companies to prevent then to produce more them limitation.
On the basis of the PESTLE analysis, it can be said that to operate the business in Ghana favourable by the political and economic situation of the country. Moreover, technology and social factors also support the business activities.
But, at the same time, by the study of the legal and environmental factor, it can be assumed that to run business in Ghana is not an easy task because legal and environment factors can affect operation and profitability of companies.
Recruitment is the effective process of identifying the best suitable candidate for the organization for which application form for the post are invited. In other words, recruitment is an initial stage in which organizational needs for the candidate is identified for a required post.
For recruitment process, there are two different ways through which candidates are recruited i.e., internal recruitment or external recruitment (Boella and Goss-Turner, 2013).
While doing recruitment, there is a process through which HR department has to consider such as job vacancy, identifying a job requirement, requirement of skill and competency, advertisement for candidate requirement and developing proper policies or framework.
Recruitment is major step of selection process and there are three types of recruitment needs that involve the planned, unexpected and anticipated needs. These all needs gets affected from the factors which influences indirectly or directly to the recruitment process i.e., external and internal forces.
The external forces of recruitment include supply and demand, competitors, labor market and unemployment condition whereas internal recruitment factors includes recruitment policy and planning, recruitment cost, growth and expansion and so on.
The corporate culture of Zara helped in enabling the one of the leading fashion company and assist in earning the high profitability. Zara is locating its new store in new market Ghana for which Zara required specialized and skillful employees which help company to attain its organization goals effectively.
Every organization wants to recruit the employee which is having right personality and skill to understand the job requirement (Bilgihan, et al., 2011). There are some company who likes to recruit and select those candidates who wants to take decision for betterment of organization and society.
To pull the right candidate for job for that information is collected from the different career sites and fashion lovers who want to work in the fashion industry. In selection process of candidate, there are some steps like preliminary interview, medical checkup, interviews, and so on.
Zara Company also follows effective recruitment and selection process that help organization to recruit the best employee for an organization for a particular job. But as Zara is deciding to expand its business to Ghana country for which organization required a new employee.
The human resource management team of the Zara always focuses on Zara needs in which HR manager emphasis more on financial capabilities, wages, skill and competency required in candidate.
While recruiting the candidate for the new store, Zara look forward some qualities which candidate must possess like candidate with creative, initiative, enthusiastic, passionate and committed towards the work in fashion industry.
In addition, candidate must be flexible enough to except the changes and adapt to them easily as well as candidate must have good communication skill, teamwork, leadership quality and most important be customer oriented (Stone, 2013). These above stated are some qualities which Zara look in every candidate while recruitment and selection.
For recruiting talented candidate, Zara focuses on targeting the talented candidate from all around the world. For recruiting the right candidates for the store,
Zara approaches the external recruiter for recruitment and selection process in which external recruiters involves some activities like placement, fashion shows, job sites, job fairs, workshops, and social media and through head hunters. Therefore, Zara is using the best essential function for recruitment and selection process of right candidate to right position and at a right time.
Training and development plays a significant role in Human resource strategy as training help in developing and encouraging the staff or employees to use their capabilities and ability or develop their skill & knowledge through practical learning.
According to Karami (2012), training and development is an essential managerial function which helps in teaching the new or existing employees about the basic skill and knowledge required to perform particular work at their job.
In the research study of Kearns (2010), it is clearly stated about the importance of training for development of employees in which training help in increasing the employee’s motivation and reduction in absenteeism. In addition, training also help in optimal utilization of resources and grievance handlings that help in increasing the efficiency of employees.
Griffin (2013) defined development is referred as a concern for maintaining or developing the efficiency and willingness to develop as a professionals. The development of people or staff is highly dependent of training needs. The training to staff is provided on a regular basis i.e., staff to staff training requirement.
The research study of Davidson, et al., (2011) explained that training to employee is given on the basis of their willingness and development of their skill and knowledge which encourages the employees to retain in the organization for the longer period of time.
The human resource management mainly focuses on providing timely training to the employees so that employee learns the new skills and knowledge about the developed new technology. In context to it, Kearns (2010) stated that traditional and modern approach are two effective training and development approaches which are used by organization in past and present business scenario.
For providing the training, there is need to identify the requirement of training for which proper training process is done. The training process involves the four steps which are identifying training need, instructional design, validation step, implementation and evaluation step is last.
On the other side, organization is required to use proper training method in order to conduct successful training session. There are two training methods i.e., on-the-job training and off-the-job training method. In on-the-job training, employee are provided training at a job i.e., by actually doing that job whereas in off-the-job training method, training is provided by other hired experts which provide training to employees in classroom, through case study or in conferences, seminars.
With the help of training and development, Zara wants to promote the internal promotion, performance evaluation, constant basis adaption and many more. The training system of Zara is divided into two i.e., in-store training and classroom training which help the company to train its employees during or after the job.
In store training, Zara involves entry plans, ongoing training about store management and separate courses for the prevention of workplace risks (Rees and Smith, 2014). At the same time, in classroom training, languages and computing training is provided by the organization.
Before starting the training program, Human resource management team is required to develop a training plan which includes those factors that are important for achieving the successful training program. The Human resource management plans the training program in which they include:
- languages
- information system
- names of training new employees
- Management team and so on.
However, Zara also focuses on providing training for general purpose or motive related to corporate social responsibility, environment, and online courses and also for workplace accidents.
The main purpose of conducting a training session by Zara is to reduce the absenteeism in stores by employees, eliminating temporary employment and also reduces the rate of rotation. Thus, this training and development supports the human resource management of the company to develop the efficiency of employee and achieve organization goals effectively.
Mathis and Jackson (2010) stated that Reward management is essential element of human resource strategy as this management system is developed with an aim to reward the employee or staff member on the basis of its performance consistency, fairness that is observed during the job performance.
At the same time, Van den Brink, et al., (2013) explained the importance of reward management for the organization as reward are given to employees in order to motivate and encourage them to retain and work efficiently for betterment of the organization i.e., for achieving an organizational goals.
In organization, reward management is an important aspect of HR strategy as reward and recognition to employees encourages them.
In similar manner, Lashley (2012) demonstrated that reward management of Zara is effective as it concern more about its employee’s retention and empowerment. Reward management will help the organization to provide its employees with reward which increases employee’s morale and boost their energy to a large level.
This reward management practice of organization is supported by theories called motivational theory and Herzberg theory which help manager in understanding the use of reward and help in analyzing the employee’s performance efficiently and effectively.
While studying about Zara strategy about reward management, it is found that Zara have attractive human resource management system that helps in retention of talented staff through its reward and recognition management system. Zara reduces its recruitment cost with the help of reward management system which is adopted by company to retain its employees and reduce employee turnover.
For Zara, it is very difficult to retain talented employees as in high competitive environment there is high demand of talented staff. As Zara is deciding to target the new market Ghana for which it required highly talented staffs who work with a main motive to attract large number of customers and increase sales.
Performance Management is a systematic process where managers and employees work together in order to plan, review and monitor the employee’s performance and their contribution towards the organization.
The main aim of performance management is to analysis the skill, performance and competencies of the employee in accordance to the organizational objectives.
In every organization, there is a need of performance management system in order to get ensure that all employees are carrying out their job roles and responsibilities efficiently.
In context to it, Cvelbar and Dwyer (2013) elaborated that performance management system help Human Resource department to analysis the performance of every employee of the organization as well as assist the manager to align the resources, systems and employees on the basis of organization objectives and goals.
The performance management is highly influenced with the corporate objectives and employee performance nd their perspective in order to get the better outcomes from organizational objectives.
In contrast to it, Porter and Heppelmann (2014) depicted that performance management system affects the overall performance of the employees because reward to employee is given on the basis of its performance at work. This reward management creates negative influence on other employee performance and their work responsibility.
In simple term, manager and employee and organization growth is highly dependent or inter-related with each other. In Zara, the store manager practices involve the daily review about the business with their subordinates and this review practices becomes one of the part of performance management.
To analysis the performance of new employee, then Zara required to have separate performance management system which helps in identifying the factors which are affecting the performance of the employees as well as to assess the performance of employees according to organizational objective.
The performance management system of Zara considers the following factors on the basis of which employee performance are evaluates such as speed, dependability, quality, capability, capacity and many more.
On the other hand, performance management of Zara is based on the environment, employee’s performance, dashboard and human resource strategy which are developed to manage the resources and human resource activities.
Zara adopts proper performance management system under which employee performance depends on the context where actually the store is situated. However, in HR processes of Zara, it is determined that staffing process is done on the basis of sales volume and selling area.
The performance of employee is measured on the basis of merit rating under which employee’s performance is analyzed and on that basis employees are supported by providing training and development to them (Mello, 2014). Zara provide its store manager with the responsibility to manage the store and store employee performance by analyzing the store activities efficiently in order to achieve the organization success.
In the current competitive business environment, the role of employee involvement is important to increase the sale of the company. In the joint venture of Zara, the human resource management has an expectation to sufficient employees’ engagement. It will the company to achieve the business goal and objective effectively (Stone, 2013).
For this, the company can take the help of employee engagement model that will help to manage the HR practices effectually. At the same time, Zara will conduct a survey to look for an area where improvement is required. It will provide training to employees to retain motivated and positive in at workplace (Ulrich, 2013).
Conclusions and Recommendations
From the above discussion, it can be concluded that ZARA is one of the leading firm and has its different outlets across the globe. At the same time, it can also be concluded that there are different issues related to the Human resource management that creates the hurdle for the firm to successful mange the business and to have a good customer base.
In addition, in order to motivate the employees firm also uses the employee reward management system. It is because it is one of the best ways that assist the firm to easily motivate the employees and to increase their productivity.
Additionally, it can also be summarized that there are different approaches that are used by ZARA in order to manage the business in the Ghana. It is because there are lots of difference in the culture of the Ghana and the ZARA. So, in order to manage these issues and to successful manage the business in outside countries, different new approaches and the techniques are used by the firm.
In addition to this, it can also be stated that there are different training programs related to development of the skill of the employees that are used by the firm in the successful managing the business in the Ghana. It is because it increases the motivation level of the employees and provides the competitive advantage for the firm.
On the other hand, it is also recommended that there are also different ways that can also be used by the firm to manage the business in Ghana. In this, conduct the ooff-the-job program and provide the ooff-the-job training for the employees can be the better ways for the firm in Ghana; it is because it will help the firm to overcome the extra cost and to improve the business performance of the firm as well.
Along with this, it is also recommended that firm should also make some liberal rules and the regulation for the employees in Ghana; it is because in order to operate the business in other countries, firm faces the different issues and work on already made rules of the firm creates the issue for the employees.
Because of this, the new development of rules and the regulation will make easy the firm to successful manage the HRM practices in the business and to develop a good customer base. In like manner, it is also recommended that firm should also have the transparency in the HRM practices that will help the firm to effectively manage the customer base and the business in the other countries.
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