Students are required to produce a consultancy report based on interviews with TWO HR managers of TWO different companies of the same line of industry. The companies (2) selected should be a Hong Kong-registered company (20+ staff) which has expanded their operation either locally or overseas. The student is asked to identify TWO major Human resource management challenges, what and how the chosen companies have been dealing with these challenges.

The student is required to select and use a theoretical framework to apply on one of these two human resource management challenges and criticize what and how the two companies can further do better on dealing with the two major human resource challenges.
The proposed company should be approved by the module lecturer. Students will need to submit an Ethics form for this module as primary research is a requirement.

The report should select 1-2 key human resource management challenges (below) identified in the interview.
– You must indicate in your report which issues you have selected
– Your report should draw upon the theories, principles, tools, and guidelines from the field of HRM

The human resource management challenges can be selected from the followings:
– Staff Recruitment
– Performance management – Performance appraisal
– Compensation and Benefits
– Diversity Management
– Training and Development
– Employee Relationship
– Others (suggest to prior approval by the lecturer)

The Consultancy Report should include at least the following:
1) Executive Summary
2) Table of content
3) Background of the companies
4) Human resource management challenges

5) Scope
6) Analysis of the human resource management challenges

7) Recommendation for solutions
8) Conclusions

Introduction and Company Profile

Walmart Inc. is one of the major American multinational corporations operating in different parts of the globe. Since its establishment in the year 1962, the company has focused on the management of hypermarkets, grocery and departmental stores and expanded its services to a reach a wide range of customers across the world (Walmart Inc. n.d). According to the Fortune Global 500 report, Walmart is categorized as the world’s largest company based on revenue and largest employer (Walmart Inc. 2018). Despite its high performance and expansion into the international market, Walmart is yet to venture in to Hong Kong market, to compete effectively with major players such as Tesco who are already in the market. The company needs to adopt an effective market entry strategy as well as manage its human resource management challenges effectively to enhance its competitiveness in the new market.

Focusing on human resource management challenges, this report presents a detailed discussion of the human resource strategy that should be adopted by Walmart in its expansion to Hong Kong and to address its human resource management challenges. The report gives a discussion on the economic environment of the new market and its possible effects of various strategies in addressing human resource management challenges. Also, the report provides a detailed discussion on the effectiveness of the HRM strategies in achieving maximum employee commitment, enhanced flexibility, and attainment of workforce quality. The report also presents a set of recommendations on the HRM strategies that should be adopted by the company in its management of the probable human resource management challenges.

Economic Factors Influencing Human resource management Challenges 

PESTLE Analysis of Hong kong 

Hong Kong is an affluent nation locates in the Arab Peninsula. The country is ranked as one of the most performing in the world based on its high Gross Domestic Products per capita value (Bush, 2016). The majority of the country’s wealth arises from its oil exports with other industries having a significant contribution to the same (Nataraja and Al-Aali, 2011). The political, economic, social, technological and legal environments are advanced herein.

Political Factors

Hong Kong comprises seven different governmental organizations that support a flexible system of governance. The leader of each of the emirates is members of the Supreme Council that makes the policies for the region and elects the president and the vice president (Bush, 2016). The fact that the making of policies and election of rulers are centralized ensures that favorable policies for every emirate are availed. The country also has developed strong trade relations with different countries across the globe, making it a suitable destination for any new venture (Nataraja and Al-Aali, 2011). Nevertheless, cases of conflicts are occasionally reported following the disagreements on oil reserve ownership or land by the neighboring nations.

Economic Factors

The economic factors that will influence the operations of any business in the region include the GDP per capita income of the country, unemployment rates and level of foreign direct investments. According to Bush (2016), UAE is categorized as one of the countries with the highest value of GDP per capita, 25. Also, the country has the highest amount of foreign direct investments in the region, presenting it as a suitable business hub for multinational corporations. The Unemployment rates in the region are very low, an issue that may be challenging to an organization that seeks to engage the services of the local employees. However, it is also reported that most of the employees are highly qualified thus enhances the chances of an organization to have access to the highly qualified staff as much as their number may be limited.

Social Factors

Hong Kong is characterized by some unique social factors. The majority of the people in Hong Kong live a lavish life due to their well-paying jobs. As such, the target employees in the region will accept nothing short-off a well-paying job that will ensure they maintain their comfortable lifestyles. Religion and culture form the major factors that influence the behavior of the consumers in the region (Nataraja and Al-Aali, 2011). Issues such as dressing, purchase intention, and consumption of various food products are determined based on the cultural beliefs and values of the customers.

A majority of consumers in Hong Kong are predominantly Muslims, as such, their action, and social life are driven by Islamic laws. However, the advent of globalization has resulted in many people moving into the major towns of Hong Kong. Specifically, the number of immigrants in Abu Dhabi is high presenting a population that is characterized by mixed cultural values and beliefs (Bush, 2016).  Despite these mixed cultures, the Hong Kong nationals are tolerant of other religions and offer maximum freedom to the expatriates and other immigrants that may consider working in the country.

Technological Factors

In the current business market, technology is a major requirement in the operation of any business. As such, companies will evaluate the technology advancement levels in a region as well as determine the technical abilities of the staff before engaging in the business. Hong Kong’s population consists mostly of young individuals that are techno-savvy making it easy for any company to leverage technology in its operations (Bush, 2016). The wealth exhibited by the nation has also enabled it to purchase adequate technological infrastructure improving its technological development.

Legal factors

Activities within Hong Kong are mostly governed by Islamic laws. Depending on the case to be handled, only a single judge or a bench of three judges hears cases. Court proceedings in the region are complex since all evidence must be provided in Arabic are overly time-consuming (Cave, 2004). Any multi-national corporation faced with a legal challenge in the region must seek the help of lawyers and legal minds from within the country to win any case. This presents the need for multi-national corporations to engage the local employees in their operations.

Environmental

Hong Kong is a sandy desert with a coastal area, as such; the nation has a hot and dry climate that can result in a significant reduction in the productivity of the employees. Farming is not easy in the region, thus companies relying on fresh produce needs to devise ways of accessing the same (Nataraja and Al-Aali, 2011). Trade has been made easier in the region, due to the presence of coastline, as such; importation or exportation of various raw materials or products is not a challenge.

HRM Theories

Two major theories that have dominated the discourse of HRM as opposing theoretical foundations are the contingency and universalistic theories. According to the universal approach to human resource management, there is a significant relationship between the management of human resource management challenges and an enhanced level of organizational performance (Syed and Jamal, 2012). Proponents of the theory argue that there are best HRM practices that when implemented would have significant positive implications on the performance of the organization, as well as in controlling its human resource management challenges (Knies et al., 2017). The universalistic approach to HRM holds that the best practices positively impact on the motivation and efficiency of the workforce and consequently enhance the overall performance of the company.

On the contrary, the contingency theory argues that increased organizational performance can only be attained when human resource management challenges are properly managed. Proponents of the theory argue that effective integration of the HRM practices and the strategy of the company results in enhanced performance of the company. According to Úbeda-García et al (2013, p. 35), there are certain human resource management challenges that may not be consistent with the strategy of the organization, as such, should not be included in the management process. The inclusion of such inconsistent practices will not only cause ambiguity but will also result in a significant reduction in the productivity of the employees. The contingency allows the HRM management to encourage and support employee behaviors that are consisted with the overall strategy of the business. Working in harmony with the company strategy is essential in ensuring that the HRM practices employed are properly implemented to promote the attainment of an enhanced level of performance.

The implementation of the contingency HRM approach in the management of the HRM activities will promise a significant positive return to the company. According to Knies et al., (2017) the contingency theory supports the integration of the HRM practices with the company strategy. In essence, the theory advocates for the matching of the role of the human resources with the organization’s strategy, in this sense, only the inclusion of appropriate behavior that matches the specific organizational strategy will result in the attainment of a high level of success.

Looking at the economic, political and social environments that Walmart will operate in Hong Kong, the company will have to adopt the contingency theory in informing its HRM practices. The organization is likely to employ a new business strategy in the region based on the difference in the cultural beliefs and behavior of the local employees that the company will engage in. This is because the employees of Hong Kong origin are likely to uphold a different culture from those of the parent company. Walmart will be required to adopt a specific organizational strategy for its outlet in the region. As such, the HRM practices designed to manage the activities and behavior of the employees should be integrated.

The Effectiveness of HRM Strategies

Human resource management is mainly described as a concept that can be implemented in two forms, hard or soft HRM. According to Cook, MacKenzie and Forde (2016, p. 560) the soft HRM strategies are based on the theoretical foundation of normative theories of human resource management. The soft version of HRM is linked with the human relations movement and puts emphasis on the utilization of individual talents to achieve the goals of an organization. The soft aspect of HRM works in line with McGregor’s Theory Y that emphasizes “developmental-humanism”, a focus on humans.

The soft HRM strategies stress the significance of integrating human resource management policies and strategies with the goals and objectives of the organization. According to Michael (2017, p. 120), the model emphasizes the treatment of employees as important and valuable assets of the organization. These employees should also be seen as a major source of competitive advantage for the company. Ensuring that they are highly committed, increasing their level of adaptability and availing a flexible work environment for them does not only improve the quality of their skills but will also impact positively on the performance of the organization.

Under the soft model of HRM, employees are considered as proactive members of the organization that plays a major role in accomplishing its set goals. These employees are capable of taking part in developmental activities and collaborating with others to further enhance their performance. The soft model of HRM treats human resources as highly resourceful and thus focuses on enhancing their commitment, involvement and participation in the execution of various business activities (Michael (2017, p. 121). It is believed that achieving a highly committed workforce will not only enhance their quality but will also result in enhanced organizational performance.

On the contrary, hard HRM is a quantitative approach to the management of human resources. According to Michael (2017, p. 120) hard HRM strategies focus on the adoption of a calculative approach to communicate tough business language to the employees in an organization. Hard HRM strategies have been termed as human asset accounting since it emphasizes quantitative and calculative management of the people. The hard HRM strategy reduces people to passive objects that can be managed scientifically. As such, the people are not cherished as humans but are rather evaluated on whether their skills and expertise are needed by the company.

Hard HRM strategies stress the importance of resource maximization in an organizational contest. Through the integration of the human resources with the organizational policies and strategies, it is anticipated that the scientific management of people will result in higher performance. From the perspective of the hard HRM strategies, humans are considered vital factors of production and objects of just doing business, and not proactive individuals that are capable of handling issues independently to convert various factors of production into wealth.

The table below gives a summary of the features of the Hard and Soft HRM strategies

HRM Strategies and Employee Commitment

The adoption of soft or hard HRM strategies has different effects on the commitment of the employees. Soft HRM strategies are characterized by a human approach to the management of human resources as such, more likely to achieve a highly committed workforce. According to Michael (2017, p. 120), soft HRM strategies focus on enhancing the skills and abilities of the employees. As a result, a committed workforce with strong emotional ties to the company is achieved. On the contrary, such a high level of employee commitment cannot be attained with the use of hard HRM strategies (Verheul, 2018, p. 79). Since the hard strategies treat employees as just instruments of the company, the development of their skills is rarely observed. Rather, companies employing the hard HRM strategies look for the desirable skills and only hire those that qualify. The implications are a workforce that is less committed and has no serious psychological ties with the company.

Human resource management challenges: Workforce Flexibility

Workplace Flexibility refers to the ability of the employees to respond to probable changes in the business environment with much control from the management. The majority of the employees value flexibility since it gives them the freedom to tackle different tasks within and without their job description (Michael, 2017, p. 121). Also, flexibility within the workplace means that the managers will provide greater latitude for task completion, offer guidance and recognize the efforts of the employees to optimize their performance. Such kind of flexibility can only be attained through the adoption of soft HRM strategies. According to Verheul (2018, p. 78), the Soft HRM strategies focus on generating highly engaged and committed employees by involving them in different tasks. The soft HRM strategies offer maximum flexibility to the workers through empowerment, decentralization of tasks and promotion of teamwork. On the other hand, the hard HRM strategies are marred with strict control of the employees’ activities denying them the chance to freely undertake various tasks. As such, the adoption of a soft approach in the management of human resources is

Human resource management challenges: Workplace Quality

Soft HRM strategies have been associated with enhanced workplace quality and performance. The soft strategies allow the management to consult regularly with the employees and ensure they execute the tasks assigned correctly (Verheul, 2018, p. 78). Also, the soft HRM strategies emphasize the training and development of the employees to enhance their knowledge and expertise in their respective areas of specialization (Michael, 2017, p. 122). The motivation and empowerment supported by the soft strategies to human resource management also contribute towards a significant improvement in the overall productivity of the employees. An organization that manages its workforce based on the soft HRM strategies is likely to have a highly qualified workforce capable of offering quality services.

Contrarily, the hard HRM strategies have been associated with a lack of consultative discussions between the employees and the managers. The form of communication evidence when such hard approaches to human resource management are adopted is a direct downward form of communication that creates a bad relationship between the management and the workers. According to Verheul (2018, p. 73), the strict control of the employees’ activities promoted when hard HRM strategies are employed does not only kill the morale of the workforce but also affects their productivity. Hard HRM strategies are also characterized by minimal pay to the employees that is not commensurate to their work, leading to their inability to go the extra mile in their endeavors. The lack of motivation of the employees and excessive control of their movements results in the provision of poor quality services that affects the overall quality of the workforce