The Cargill Way

Cargil Way

Date: June4, 2007 Student name: Pham Thi Thuy Ha (2A5026)

I have worked 2 years for Cargill Inc, an American company which was established in 1865. Cargill has 153,000 employees in 66 countries and engages in trading (grains, oil, gas), manufacturing foods, agriculture, animal nutrition and financial services. I list some Cargill’ HR practice equivalent to HP Way as below:

Equivalent to HP Way items	Formulation, rationale, factors, structure
MBO	- Division objectives or division Balance Scorecard (BS) are set by the management team of each ‘country division’ that belongs to a specific corporate business unit. These objectives are set based on market situation, growth potential, capacity and capability of this division in its local country. - These corporate objectives are transferred to department objectives or department BS. - Employees’ personal objectives (employees BS) must be SMART and are agreed between department heads and employees. The department heads are responsible for transferring department objectives to their subordinates. If an employee is unable to achieve an objective, the department head can negotiate with other employees inside the department. As employees are multi skilled, there has been no problem in transferring objectives to employees. - Once employees’ objectives are set, employees have to achieve these objectives without failure. Employees have freedom to ask for a full support for achieving their objectives such as budgets, training, time.　There are 2 ‘objective review sections’ per year to make sure that those employees are on the right direction. - MBO is strong motivation tool because the far employees achieve objectives, the better compensation they will receive. But MBO is a tool to kick employees out if they fail to meet their objectives
Compensation	- Based pay salary which is a bit higher than market base-pay - Medical, dental, life insurance for all employees - Stock options, tuition reimbursement, retirement plan, employee assistance plan, relocation services - Monthly incentives of 10% base salary for non-marketing staff if the division achieves BS. Marketing staff is compensated by commission - Overseas and/or continuous professional training and career development programs. Cargill offers intensive training for employees to help them acquire new skills and knowledge and prepare them for job relocation. This helps Cargill to prepare personnel for business expansion and allocate easily its HR among divisions and inside divisions. - Cargill accepts voluntary job relocations (i.e. family relocation, employees’ preference to work in different countries) as long as employees continue to contribute to the development of Cargill
Hiring policy Career maze	- Recruit excellent people who are entrepreneur, multi-skilled, trustworthy - College student program aims at recruiting top talented people who commit to grow within Cargill for certain positions in labs, mills, kitchens, trading floors. Internships are offered to see the fit with corporate culture and career paths. - Recruit senior level managers to bring in new strategic visions. This will assure that the corporate have good strategy for future growth. - MBA program to recruit MBA students and train them to become front managers after 2 years. This will allow Cargill to develop leaders for tomorrow’ business development.
Decentralized	- Cargill has a flat structure and it grants maximum autonomy to employees. All employees are encouraged to be independent in making decisions concerning their jobs. This practice is very suitable for Cargill’ trading practice which requires flexibility and fast decision making. - Autonomy enables employees to complete tasks faster and is a powerful motivation tool as employees feel to be treated as a part of the company. Cargill needs few managers to supervise employees. - There is no rigid daily check-in check-out time (i.e 8.00 am to 17.00pm). Employees are free to choose their best working time to complete their tasks in accordance with others’ tasks.
Evaluation	- Direct supervisors evaluate their subordinates. The purpose of evaluation is not to judge employees’ performance but to know their accomplishment of their objectives, resources, skills, training they need to achieve their objectives - Country division is evaluated by division BS.
Not layoff	- No guarantee for lifetime employment - Offer job security

Case: United Parcel Service

United Parcel Service

Human Resource Management

Prof. Sugiyama, Koichi

Group C

Akter, Md. Shahriar (2A6202)

Aunt Khine (2A6005)

Banares, Angelito Lambayan (2A6006)

Nishino, Kei (2A5024)

Pekaric, Benjamin (2A5025)

Pham, Thi Thuy Ha (2A5026)

May 21, 2007

Why to introduce IT function?

Business environment:

- Deregulations allowed new competitors coming in the industry

- Due to the development of IT, business environment has changed.

Competitors:

- Competitors are ahead in some technology innovations

- Competitors use technology to develop their competitiveness and create businesses that threat UPS’ business

- Competitors invest much more in developing in-house IT systems and applications

Inside UPS:

- UPS recognized that future competitiveness will be developed based on the development of IT systems and applications

- UPS should not outsource any part of its IT system because outsourcing has disadvantages:

Ø Outsourcing is costly

Ø UPS might lose managerial control

Ø Outside IT companies might not understand well UPS’ daily operations and therefore may not be able to create good solutions to meet UPS’ business requirement

Ø Outsourcers might not be able to provide satisfied services

Ø Outsourcing may create problems of communications between UPS and outsourcers

Ø There is a threat of losing confidentiality and secrecy of UPS business models to its competitors

Ø There is less flexibility in creating to changing business conditions

- In-house IT development is vital. It will address all these disadvantages and help UPS create competitiveness over its rivals.

- In-house recruitment does not help UPS to develop IT system quickly because in-house recruited employees do not have knowledge, skills and expertise in IT and they need education at schools.

- Outside hires with skills and expertise can work immediately on IT system development after joining UPS

- UPS can better compete on cost, time, reliability

- To facilitate internal and external communication, customer relation

How to introduce IT function?

Phase 1: Get consensus to the particular of IT function

- Top management should agree on introducing IT function and hiring outsiders for IT function

- Design hiring process, job description, salary, evaluation and compensation systems for outsides hires

- Top management communicates the introduction of IT function, hiring process, job description, salary, evaluation and compensation systems for outsides hires for IT function to all employees

Phase 2: Hiring IT employees and providing internal training

Hiring IT employees

Providing internal training about

- Hire IT experts as full-time employees

- Changes in business environment - The potential change in UPS’ business model - The needs to have outside hires to implement corporate assignments on IT development - The important roles of IT services in developing the company’ business and gaining competitive advantages over competitors - Roles and functions of IT service in the entire organization, its relationships with all currents business operations such as tracking - How IT services help each employees perform better their jobs - Prepare them to train outside newly recruited employees

Phase 3: Training new comers

- Develop a one-month orientation program for all new comers: 2 weeks as driver, 2 weeks on-job training at IC

- Regular 2-day monthly training to understand UPS’ business practices and operations until the 6^th month

- Give new comers 1 year to adapt to UPS’s culture

Phase 4: Monitoring, controlling and evaluation

Case: United Parcel Service

United Parcel Service

Human Resource Management

Prof. Sugiyama, Koichi

Group C

Akter, Md. Shahriar (2A6202)

Aunt Khine (2A6005)

Banares, Angelito Lambayan (2A6006)

Nishino, Kei (2A5024)

Pekaric, Benjamin (2A5025)

Pham, Thi Thuy Ha (2A5026)

May 21, 2007

Why to introduce IT function?

Business environment:

- Deregulations allowed new competitors coming in the industry

- Due to the development of IT, business environment has changed.

Competitors:

- Competitors are ahead in some technology innovations

- Competitors use technology to develop their competitiveness and create businesses that threat UPS’ business

- Competitors invest much more in developing in-house IT systems and applications

Inside UPS:

- UPS recognized that future competitiveness will be developed based on the development of IT systems and applications

- UPS should not outsource any part of its IT system because outsourcing has disadvantages:

Ø Outsourcing is costly

Ø UPS might lose managerial control

Ø Outside IT companies might not understand well UPS’ daily operations and therefore may not be able to create good solutions to meet UPS’ business requirement

Ø Outsourcers might not be able to provide satisfied services

Ø Outsourcing may create problems of communications between UPS and outsourcers

Ø There is a threat of losing confidentiality and secrecy of UPS business models to its competitors

Ø There is less flexibility in creating to changing business conditions

- In-house IT development is vital. It will address all these disadvantages and help UPS create competitiveness over its rivals.

- In-house recruitment does not help UPS to develop IT system quickly because in-house recruited employees do not have knowledge, skills and expertise in IT and they need education at schools.

- Outside hires with skills and expertise can work immediately on IT system development after joining UPS

- UPS can better compete on cost, time, reliability

- To facilitate internal and external communication, customer relation

How to introduce IT function?

Phase 1: Get consensus to the particular of IT function

- Top management should agree on introducing IT function and hiring outsiders for IT function

- Design hiring process, job description, salary, evaluation and compensation systems for outsides hires

- Top management communicates the introduction of IT function, hiring process, job description, salary, evaluation and compensation systems for outsides hires for IT function to all employees

Phase 2: Hiring IT employees and providing internal training

Hiring IT employees

Providing internal training about

- Hire IT experts as full-time employees

- Changes in business environment - The potential change in UPS’ business model - The needs to have outside hires to implement corporate assignments on IT development - The important roles of IT services in developing the company’ business and gaining competitive advantages over competitors - Roles and functions of IT service in the entire organization, its relationships with all currents business operations such as tracking - How IT services help each employees perform better their jobs - Prepare them to train outside newly recruited employees

Phase 3: Training new comers

- Develop a one-month orientation program for all new comers: 2 weeks as driver, 2 weeks on-job training at IC

- Regular 2-day monthly training to understand UPS’ business practices and operations until the 6^th month

- Give new comers 1 year to adapt to UPS’s culture

Phase 4: Monitoring, controlling and evaluation

Case: The HP Way

Individual Case write-up: HP Way

Date: May 28, 2007 Student name: Pham Thi Thuy Ha (2A5026)

HP Way is the culture of work freedom, open communication and goal-orientation effectively supported by excellent HRM system.

This culture is quite suitable for a technology-driven company like HP. Goal-orientation drives employees to achieve their objectives which are in line with HP’s corporate objectives. Work freedom enables employees to find their best ways to complete tasks fast and accurately and work together as teams. Open communication allows all employees to be aware of what is going on, have a feeling of fairness and to be part of management. All these three elements enable employees to be creative in their work and as a result, HP has always achieved robust success in growing its business.

HRM was an important enabler to keep this culture over time. HP’s hiring practice was to find people who can fit its culture and who has long term sets of skills and knowledge. HRM had designed an excellent ‘story telling’ strategy to train employees continuously about the company’s spirit. HR function had conducted series of continuous training, executive seminars etc to bring employees at all level together and prepare them for new challenges. HP’ rehire strategy enables the company to get back excellent employees.

This culture could motivate well employees and drive them to excellent even exceptional results. Especially, MBO made employees feel part of the company and therefore increase employees’ satisfaction and commitment. Continuous training and MBO produced good managers and brilliant employees who are able to work in such demanding environment and achieve goals.

However, this culture had some drawbacks. First, maintaining this culture was expensive because of costs associated with continuous training and employee turnover. Second, this culture required a very strong HRM system and excellent employees. As excellent employees were chased by good corporations, HP might face a risk of being unable to find good people who can fit this culture. Another risk is high turnover rate. This is because excellent employees HP has trained are usually smart and they tend to leave HP to set up their own business or to be lured by other corporations.

Why has the HP way been working well?

- HP had grown slowly.

- HP did not expand quickly its operation to the global market. So HP still could maintain its Way in some international locations where HP Way was suitable for local cultures.

- Jobs were not well available in labor markets so employees stayed with HP long time.

- Venture capital was not widely available to start up new companies so excellent HP employees could stay longer with HP.

- Employees at that time were not so motivated to quite HP to set up their own business or to seek better position. This was because the pace of globalization was not high and therefore, international labor movement and international business opportunities were rare.

- The rate of retirement from HP was not high so HP did not have any lack of management position.

- HP’ product lines were somehow similar and HP did not diversify business to any completely new business. Therefore, it was easy to mold new employees in HP Way.

Comments:

HP Way is a perfect fit with HP’s business model. However, as the company expands internationally, it will be a real challenge to hire overseas employees who can fit perfectly with this culture. Keeping this culture is vital for HP to exist and grow so the company might think of new HR practices to maintain this culture in foreign countries.

Case: Nordstrom

Individual Case write-up: Nordstrom

Date: May 21, 2007 Student name: Pham Thi Thuy Ha (2A5026)

The case does not provide information about the evaluation and compensation for some positions such as assistant buyers, department managers and store managers. Therefore, I only focus on changes at some position and address only some critical points because there are a lot of evaluation criteria applicable for buyers and sellers.

Changes in evaluation criteria

Position	Current	Suggested changes	Reason
Office assistants	- sales increase - gross margin improvement - inventory turns	- Delete sales increase - Add vendor relationship management	- Sales increase should be used to evaluate people in the front line - Maintain good relationship with vendors is critical to business
Buyers	- sales increase - gross margin improvement - inventory turns - leading buyers	- Delete sales increase - Add vendor relationship management - Add vendor evaluation and selection	- Sales increase should be used to evaluate people in the front line. - Maintain good relationship with vendors is critical to business - Vendor evaluation & selection is important in buying process

Changes in compensation system

Position	Current	Suggested changes	Reason
Salespeople	1. Pay by commission or hourly wage	1. Based pay salary	Guarantee basic earnings
	2. Additional incentives based on sales results for top performers	No change
	3. Company-wide recognition for top performers	No change
	4. Promotion route: sales person to department manager, larger department manager, assistant buyers, buyers, store manager or divisional merchandize manager or regional merchandize managers	4. Promotion route: sales person to department manager, larger department manager, store manager, regional managers	- Sales & merchandizing require are different skills and knowledge. - Limited promotion opportunity if this person is not suitable for a buying position.
		5. Commission based on sales results	Motivate salespeople to increase sales
Assistant buyers	Promotion route: assistant buyers, buyers, store manager or divisional merchandize manager or regional merchandize managers	Promotion route: assistant buyers, buyers, divisional merchandize manager or regional merchandize managers	Buyers should be transferred to front line under job relocation but not under promotion
Office assistants	1. Salary	No change
	2. Bonus based on: - sales increase - gross margin improvement - inventory turns	2. Bonus based on: - gross margin improvement - inventory turns	Sales increase should be used to evaluate salesperson, department managers, store managers and regional manager
Buyers	1. Salary	No change
	2. Bonus based on: - sales increase - gross margin improvement - inventory turns	2. Bonus based on: - gross margin improvement - inventory turns	Sales increase should be used to evaluate salesperson, department managers, store managers and regional manager
	3. Promotion route: buyers, store manager or divisional merchandize manager or regional merchandize managers	3. Promotion route: buyers, divisional merchandize manager or regional merchandize managers	Buyers need knowledge and skills to work on front line
	4. Quarterly cash reward for leading buyers	No change