2.1 Introduction to human resource management Topic Practice

In 2010, ELE owned 4.5 % of the European Union (EU) car rental market. In 2019, ELE's car rental division had revenues of EUR 0.9 billion in a market worth EUR 16.8 billion. Initially, ELE only provided car rentals in its gasoline stations in Belgium. By 2014, ELE had expanded the service to its stations in France, Spain and the UK.

In 2016, Giselle also reorganized ELE's car rental offices so that each office operated as a profit centre. An entrepreneurial approach was adopted. Office teams received substantial bonuses if they exceeded profit targets, but only offices that met their targets qualified for these bonuses. These targets were set, without consultation, by Giselle. Over a five-year period, targets were met by 85 % of offices. Giselle's reorganization was not welcomed by employees.

In 2021, Monica recommended that ELE trial the business model she had proposed for the new In3T brand in two major cities in the EU for one year: if successful, the brand and its model could then be launched in all major cities in the EU. Monica said, "We must do it. I'm convinced that our rivals will adopt this business model within two years. If we don't act now, we will be left behind and our rivals will beat us to it."

Giselle, however, disagreed strongly. She had built the car rental division from its inception. She believed high levels of customer service and well-trained staff were two reasons why the car rental division remained successful. She was also unhappy with the EUR 100 million cost and payback of three years.

Explain two reasons why ELE's employees may have resisted the reorganization implemented by Giselle.

M M is reviewing its hotel and mining operations.
To understand customer opinions about its hotels, M M will distribute questionnaires at two of its hotels and use a convenience sampling method. M M is also considering introducing flexitime for hotel employees.
For its gold mining operations, M M wants to increase its market share worldwide to 1 % by 2030. In 2020, MM produced 17 tonnes of the global production of 3200 tonnes.
In another development, M M wants to enter the rapidly growing lithium market. M M has rejected the idea of buying an existing lithium producer and is considering two options: opening its own lithium mine in Australia or entering a joint venture with a lithium mining company.
Option 1: Open a lithium mine in Australia
M M has identified a site in Australia, and the Australian government, which is keen to develop its country's lithium mining industry, will approve a mining license for it. Development of the mine would take three years and cost $ 100 million. Table 2 shows the forecasted net returns for the first six years.

M M will sell the lithium to battery manufacturers in China, a market familiar to the Australian mining industry. Transport costs would be high. Environmental pressure groups oppose the mine because of the water and air pollution they think it would create.
Option 2: A joint venture with CanLith (CL)
C L, a lithium mining company, is seeking expansion with a new mine and needs finance. A joint venture with M M would bring M M 's expertise and corporate values to the expansion. M M and C L would have equal ownership of the new mine and jointly manage it. C L would appoint a board of directors. However, C L has attracted bad publicity because of its poor environmental record, and local people oppose the new mine. Information on the joint venture is shown in Table 3.

Define the term flexitime.

If RDM builds a new production facility in Europe, an immediate consequence will be an increase in capacity. At current levels of output this would lead to a reduction in capacity utilization. The current output of RDM's factory is 20000 units a year, with a productive capacity of 21000 units a year before the new facility is built. If the new production facility is built, the greater capacity for the whole business will, at current levels of output, result in the capacity utilization falling to 50 % until production at the new facility starts.

Xi, the marketing manager, suggests that this increased capacity provides the opportunity for market development to be achieved by entering the United States (US) market.

The US market has similarities with Europe, with an aging population and low birth rate. Demand for customized healthcare devices is high. However, the healthcare system in the US is very different, with a much greater role for private sector healthcare compared to Europe, where much of the healthcare is state funded. In the US, 18 % of gross domestic product (GDP) is spent on healthcare compared with an average of 11 % in Europe. Advertising spend in the US is very high for the typical healthcare equipment business, which uses TV and the internet to reach individuals, whereas in Europe healthcare equipment businesses typically negotiate with government organizations. Average incomes in the US are higher than in Europe. Competition in the US is very high, although some major healthcare equipment businesses dominate the market. Industrial/ employee relations in the US are generally more decentralized than in Europe, with a lower level of unionization.

To assess the best way to enter the US market, some senior managers may have to move to the US and Xi may need to recruit some new staff in the US with specialized knowledge of US laws and regulations, as well as some additional marketing employees. Xi is aware that industrial/ employee relations are different in the US.

Existing staff will have to get used to new ways of working and are concerned about having to work with new staff in the US.

Explain two possible reasons for RDM employees' resistance to change if RDM enters the US market.

MSS is in Central Tanzania. This area of the country is subject to severe droughts every few years, and in other years there can be very heavy rain, causing floods and significant damage to roads. Malaria has been a concern, but a government health scheme is reducing cases of this disease in children of school-going age. Jacob is considering having a school contingency plan for such natural disasters.

Jacob is concerned that the financial position of the school is not as good as it could be. He has prepared a variance analysis for the most recent six months.

Jacob recognizes the need for change, but his experience tells him that change needs careful management and that if something works well it is best left alone. He is planning to create an internet connection for the school to help teachers and students to access more educational resources. However, this is likely to be expensive and a technical challenge due to the school's remote location and underdeveloped infrastructure. He also has plans to improve classroom facilities, but the school does not, at the moment, have sufficient finance.

Mrs K is discussing with Jacob ways in which the school could become more efficient and improve examination results. She wants to increase teacher contact time with students. This would mean a better use of resources and should help students to learn more. She also wants teachers to observe each other's lessons with the aim of making suggestions for improvements of teaching and learning methods. There could be additional duties for teachers, such as supervising students' spare time and study time. Supervision is particularly important at weekends, when some teachers currently go home to their families.

Discuss human resource strategies that could reduce the impact on employees of the changes suggested by Mrs K.
Section C
Answer the following question.

3. Healthy Nation (HN)
Healthy Nation (HN) is a pharmaceutical organization that used to operate in the public sector, selling its medicines (drugs) to hospitals at very low prices.
With increasing government funding over several years, H N increased the number of employees in its Research and Development Department, which was staffed by scientists, and in the Manufacturing Department. However, both departments were inflexible and inefficient. Resources were significantly under-utilized, and innovation limited.
HN's structure used to be hierarchical, with a very long chain of command and channels of communication. Senior management made the decisions and set the production levels. Consequently, the scientists in the Research and Development Department never developed decision-making skills, and development of new medicines was slow. In 2021, after many years of losses, the government sold H N to a profit-maximizing global pharmaceutical manufacturer, Global Pharma (GP).
To improve productivity, efficiency and flexibility, the management of GP reorganized HN as a shamrock organization by:
- outsourcing the production function to a well-known manufacturer
- retaining the Research and Development Department, along with its scientists and support staff, and employing additional staff when required.
In addition, two major changes were announced:
- Establishing performance-related pay for the scientists based on a new appraisal system to increase productivity levels.
- Using an expensive external company to provide cognitive training to the scientists to develop innovative decision-making and improve teamwork.
These changes have proved to be very unpopular, and the scientists in particular are resisting the changes and the short time frame in which they will be implemented.

Discuss two human resource strategies that GP could use to reduce the scientists' resistance to the changes.

3. KA
K A is a public limited company that designs, manufactures and sells air conditioners. K A 's unionized employees are motivated and efficient despite not being involved in any decision making. However, they are resistant to change.
The market and competition for air conditioners are growing rapidly. K A operates at full capacity but stock turnover has slowed.
Primary market research revealed that:
- consumers do not differentiate KA air conditioners from those of its competitors. All products are perceived as medium price and medium quality
- KA's customer service is rated as poor
- customers demand energy-efficient products using ecologically sustainable production methods.
To exploit opportunities and overcome weaknesses and threats, KA's management has decided to redesign its products so that they are energy efficient. K A is considering two options:
- Option1: Implement lean production methods, which includes investing in ecologically sustainable machines that will increase capacity by 10 %. Total quality management (TQM) will also be implemented. However, the financial manager is worried about K A 's ability to meet high initial costs. The forecasted payback period is three years and average rate of return (ARR) is 4 %.
- Option 2: Outsource the production to QS, a company known for its reliability and high capacity to produce excellent quality air conditioners using cradle to cradle manufacturing principles. However, QS refuses to sign an exclusive long-term contract with KA, insisting instead on renegotiating the contract every two years. KA will have to close its production facility and will use the cost savings to improve customer service and to reposition and differentiate its air conditioners.
Employees have heard rumours of both options and fear for their jobs. Strike action is being considered.

Explain two possible human resource strategies that K A management could use to reduce employees' resistance to change.

3. Mercy Ships (MS)
Mercy Ships (MS) is a non-profit organization that operates the largest non-governmental hospital ship in the world: the Africa Mercy. With the Africa Mercy, Mercy Ships provides free healthcare and other medical services.
Each year, Mercy Ships undertakes thousands of surgical and dental procedures and community health projects. Before the Africa Mercy arrives at a port, Mercy Ships uses brochures aimed at local people to promote its services. Mercy Ships also

treats patients at dental clinics away from the port itself.

Everyone on the Africa Mercy is a volunteer. To keep the ship in operation, it requires a staff of 400 volunteers, including doctors and nurses as well as chefs, engineers, hair stylists, and many other people from different professions. People volunteer for varying lengths of time and must apply for available positions. Mercy Ships volunteers agree to follow a strict code of conduct and also pay a fee to participate. Volunteers include young people before they begin their professional life, middle-aged people who want a career break, and older people who want to remain active and make a difference. All volunteers believe in Mercy Ships' vision statement to "become the face of love in action, bringing hope and healing to the poor".

To what extent does MS face challenges in its workforce planning?