Introduction
Most organizations in the world today have a human resource management function as a strategic business unit. This is a strategic component that aligns the firm’s plans and activities with the people in the organization. The human resource management function has evolved from the basic and traditional labor relations and employee relations activity and function that was meant to manage labor as a factor of production. However, in today’s world, human resource management is a tool for competitive advantage. Therefore, it is treated as a form of capital which must be leveraged and optimized in a company
The purpose of this paper is to conduct a review of human resource management in a practical context. This will include the review and analysis of the human resource function in Nike, a global sports manufacturing entity. This will be done in two main parts. In the first part, the function of human resource management to Nike will be reviewed in the context of a strategic business unit. Furthermore, there will be a review of human resource in Nike in relation to other functions of the company and this will include how it complements other functions of the company to achieve the best results for Nike.
Part 1: Human Resource Function of Nike
There are many definitions of the term “human resource management”. One definition states that “ it is that part of the management of organizations that is concerned with all aspects that relate to, and interplay with the work and people who do the work in an organization”. This implies that human resource management is about the people of the organization and how to make the best from them.
However, human resource management can be viewed in a broader context. It can be seen as a part of the process that helps the organization to achieve its objectives and desires. Therefore, from these two definitions, it can be asserted that there are two main facades within which human resource management can be reviewed. And this includes the routine management of workers (tactical) to the top-level strategic activities of the firm. However, in-between the tactical and strategic level of human resource management, there is the operational unit or component of HR management.
Strategic HRM in Nike
At the strategic level, Nike’s HR department has the obligation of managing the effort of over 30,000 skilled professionals including designers, markets and accountants as well as 800,000 lower level staff members who are mainly unskilled factory workers. Therefore, Nike’s overall HR strategy is one that requires the following:
The linkage of the inputs and effort of all the staff members with Nike’s overall corporate strategy;
Recruitment and selection
Motivation and development of the staff members;
Staff evaluation and promotion;
Employee activity management.
Therefore, the human resource management function of Nike is one that brings together the best practices and rules in order to recruit the best people in the industry, and get them to be prepared and trained to provide services to Nike at the highest performance levels. This will lead to a series of actions and processes that involve the training and retraining of staff members in important roles and duties in the company.
The Strategic HR system of Nike which is coordinated and carried out at the head office of Nike in Oregon is based on a series of policies and principles that are instituted in the company. The strategic HR policy of Nike is based on a Code of Practice that was brought to force in 1992 and renewed in 1998. These policies are modified and changed from time to time because of the need for changes in the business environment and the changes in the demands of stakeholders.
Nike’s HR strategy involves the use of tests and interviews that are conducted through an intensive process to ascertain prospective applicants’ suitability for a given role that has been advertised. The hired employees are required by the HR policy to interview around the company in the first month to find out if they are in the best job or not. This gets the employees to think and rethink about their decision to work with Nike. Through this, the employees find out better options and which activity will be most appropriate for them. When this is certified, the employee finds a niche and an appropriate area of work. And then proceeds to work in that area or unit. This is based on a free-agency model which is employed and instituted throughout the company.
In response to recent labor problems and exploitation accusations, Nike’s HR strategy is one that is steeped in risk management and risk review which is carried out through a proactive approach of checking issues with the work environment. These are integrated into the operational level of the
Operational HRM in Nike
The HR unit of Nike also performs some operational functions. This includes the carrying out of some activities including the management and supervision of different element across working teams like the management of remuneration and performance management. The essence of operational level HR management in an organization like Nike includes the merging up of different operational work units in order to ensure that they all work together to jointly achieve the overall goals and expectations of Nike. This helps to agglomerate and consolidate the efforts and activities of all the units and to achieve leverage by bringing the original HR idea from the top to the local level and the lower level of operations in an organization like Nike.
Nike therefore sets up important standards and metrics that are used by its different branches around the world and localized in the various countries and production units and components. This helps to transpose the strategy and HR standards to the local units of the company.
Some of the core standards and metrics that Nike uses for the setting up of operational standards and regulations in its different business units around the world include “productivity, human resources management assessments, turnover, absenteeism, and factory implementation of and results from worker engagement and well-being surveys.”.
The country currently runs a lean HR operational strategy which involves a desire to build less expensive labor costs and also attain the best results from its workers and employees. This involves the need to build strong teams and the training and retraining of staff to concentrate on quality but not quantity. There are also some metrics and standards that all factories in each region must adhere to in order to meet firm standards and objectives. There are other green metrics and expectations that each operational unit and component of Nike is required to work to meet as part of the lean operational strategy for Nike’s HR.
Tactical HR System for Nike
Nike as a global manufacturer of apparels and footwear concentrates on utilizing the services of low skilled factory workers who do not carry out a complicated function or activity. This implies that the human resource management function starts from the most basic of workers who are mainly unskilled workers and the most basic human resource activity covers these workers who are managed by HR supervisors who ensure that most of the human resource management and productivity targets are met in Nike’s factories.
Figure 1: Routine Human Resource Management for Low-Level Staff Members
The model above shows how the most basic human resource activities and functions are construed within Nike as an organization. The structure shows that the main duty of the supervisors who represent the HR unit on the ground involves the transposition of the human resource philosophy and working culture to the staff members in the most basic form. This includes the identification of the Nike Culture and Values and ensuring that all staff members are able to understand it and internalize it in their affairs.
The integration of the HR function to basic and low-level staff members include the management of productivity and the formation of teams to carry out effective activities. The HR function of ensuring the health and safety of workers is carried out at this level of Nike’s activities and operations. Also, there is the provision of leadership and communication through the management of these low-level staff members. This leads to the empowerment and development of workers and their contribution forms the overall culture of Nike.
Part 2: HRM in Nike and Linkage to Other Strategic Business Units
A common body of knowledge is about the presentation of human resource management as a unique and distinct body of knowledge. Therefore, for instance, a word like “turnover” in the human resource management context means workers leaving their position and terminating their employment with a firm. On the other hand, the same word will mean revenue in a given year for a firm in the management accounting context.
The differences in the body of knowledge within human resource management and other business units are technical in outlook. However, in relation to the other departments of Nike, the human resource management unit is more of a strategic business unit that is used by the company to meet its competitive goals and objectives in the sports apparel industry.
Nike treats its human resources as a source of competitive strength. This is because Nike, like any other entity combines factors of product – land, labor, capital and entrepreneurship to take materials from the external environment and process it to sports products that are sold to consumers around the world. This is a service that is rendered by several other entities like Reebok, Adidas and others. Therefore, Nike will have to work extra hard to capture various elements of these factors of production in order to gain the best and the highest levels of returns from what they do. Nike will therefore need to get the best factors of production in order to work with it to achieve the best and most significant results in operations. This includes amongst other things, the recruitment, selection and motivation of the best workers on the market.
Human resource is a source of competitive advantage because if HR leads to higher levels of productivity, Nike can meet high levels of returns. This will include the maximization of returns from the materials they get. Hence, HR will be used as a major toll for the achievement of competitive strength in the industry.
The Corporate Strategy of Nike and Strategic HRM in Nike
Nike’s strategy is to provide the best and most appropriate sports products for its consumers through the innovation and development of better products. This is to be done through the conduct of research and development and the integration of these new methods and processes in order to improve production and enhance the activities that are carried out.
There are different elements of the company’s corporate activity and corporate strategy that are relevant to human resource management. Human resource management is the unit that will translate the highest and most significant elements of Nike’s current strategy which is based on innovation. The process will include the preparation of the workers of Nike to achieve the highest and the best levels of productivity after improving innovation systems. Therefore, the HRM unit of Nike will have to find a way of preparing the workers of Nike to achieve the highest and best standards and expectations.
The HR unit of Nike has the obligation to recruit the best workers who will be able to cope up with innovation and development. The procedure will include the identification of the best workers who can achieve the best results in the innovative systems. There is also the need for Nike’s HR to train the workers they recruit and re-train those who are working within the company to improve their productivity standards. This will help to ensure that there are workers who can meet the changes that are instituted by the board of directors and top level management.
In principle, the HR unit of Nike has the obligation to transpose the targets and standards of the corporate executives and the board of directors into human resource productivity standards and metrics. This will include amongst others, the setting of working and productivity standards and targets. They will guide Nike’s managers to manage the workers and employees at each level and ensure that the work inputs of employees are relevant to the targets and expectations defined by the top level management at any point in time. Therefore, HR is a responsive unit that is positioned to change and transpose the expectations and targets of the top level management to the workers of the company so the workers can also work to meet the targets and expectations of Nike.
Management Accounting
The management accounting unit of Nike is about putting together information about the cost and benefits analysis of Nike in a period manner (quarterly). This is done by identifying a build-up of costs in Nike and also the calculation or estimation of revenues. The information from management accounting in Nike is presented to the top level management of the company in order to help them to take decisions. This is often compiled and presented to the top managers through executive support IT systems and decision making software packages.
The HR department of Nike will have to assist by providing the totality of labor costs. This will include the presentation of information about how much labor is costing Nike and can be used to build up the totality of the costs of the company. Therefore, HR provides information. Also, when there are decisions on how to improve Nike’s activities and progression, the information is to be presented to the management.
Marketing
Human Resource Management in Nike helps with the presentation of an image for Nike. Workers are an important representation and projection of the firm to the outside world. Therefore, HR will have to prepare its sales and marketing unit and also position its work practice and culture to a positive light that will help Nike to make the company gain a more positive image.
Legal & Compliance
Employment of workers and the supervision is under the auspices of the laws of the country and the rights of workers. Therefore, there is the need for the HR to work with the legal department by applying the company’s legal policy in supervising and delivering what workers need. This includes the presentation of compensation, leave, working conditions and others. These are all the obligation of the HR unit which as to ensure that these activities are conducted in the right and appropriate manner.
International Business
Nike is a global business. It expanded into Asia and other countries to take advantage of the low cost of factory workers’ labor. However, these extensions have also come up with major reputational risks and issues in the past. For instance, a company like Primark in the UK had a major reputational issue when the factories that they were producing their clothes from collapsed. There are many legal problems and issues that come with the poor management of labor in these poorer countries and the disregard of human rights in these areas. Therefore, the institution of a good and positive HR system to promote and guide Nike’s global operations is important and vital because it will help the country to maintain its reputation and also protect the minimum rights of the workers in countries that are of a higher risk.
Applied Decision Making
Strategic decision making is carried out by conducting a gathering and compilation of information through an IT system. The HR unit of a company will have to contribute to this by providing the cost build ups and implementation and feedback system. This can allow the executives and top level management of the company to get information of the things that are going on and make adjustments where necessary.
Conclusion
The human resource management of Nike is a strategic level activity that is carried out by the top-level management of the company. It is concerned with a technical and a strategic function. The technical function is about recruitment, selection, training of new workers, motivation of workers and the development of workers. This requires the use of a common body of knowledge and it is meant to attract and retain workers of an appropriately high standard and the monitoring of these workers to achieve productivity standard. Strategically, the HR unit of Nike will have to be proactive and it must transpose the strategic requirements and expectations of Nike to the HR context and ensure that the HR unit’s activity is in line with the company’s corporate standards. Nike’s HR unit also cooperates and works with other units of the company like marketing, IT, research and development and international business to achieve its main objectives and goals.
Bibliography
Briscoe, D. R., & Schuler, R. S. (2012). International Human Resource Management: Policy and Practice for the Global Business. New York: Psychology Press.
Business Wire. (2010, January 22). Nike Outlines Global Strategy for Creating a More Sustainable Business. Retrieved from Business Wire: http://www.businesswire.com/news/home/20100122005661/en/Nike-Outlines-Global-Strategy-Creating-Sustainable-Business#.VYoO1xtViko
Dutton, D. (2010, March 22). Why dDon't Most Companies Just do HR the Way Nike Does? Retrieved from Career Management: http://careerrocketeer.com/2010/03/why-dont-more-companies-just-do-hr-the-way-nike-does-they-should.html
Erasmus, B., & Schenk, H. (2012). South African Human Resource Management: Theory & Practice. New York: Juta and Co Ltd.
Kaila, H. L. (2014). Human resource Management. Mason, OH: Cengage.
Mello, J. (2012). Strategic Human Resource Management. Mason, OH: Cengage.
Nike Biz. (2014, December 6). Strategy. Retrieved from Nike Biz: http://www.nikebiz.com/crreport/content/strategy/2-1-1-corporate-responsibility-strategy-overview.php?cat=cr-strategy
Nike Inc. (2015, May 14). Our Work Force. Retrieved from Nike Biz: http://www.nikebiz.com/crreport/content/people-and-culture/6-1-0-our-workforce.php?cat=our-workforce
Nike Inc. (2015, May 4). Workers and Factories. Retrieved from Nike Biz: http://www.nikebiz.com/crreport/content/workers-and-factories/3-9-1-our-approach.php?cat=hr
Nike Responsibility. (2015). Our Sustainability Strategy. Retrieved from Nike Corporate Social Responsibility: http://www.nikeresponsibility.com/report/content/chapter/our-sustainability-strategy#sthash.meIDKfT1.dpuf
Purpel, D. E., & McLaurin, W. M. (2013). Reflections on The Moral & Spiritual Crisis in Education. New York: Peter Lang.
