Question

Describe all of the major HR systems (the HR architecture) of both organizations. For Lincoln Electric and SAS

Answer 1

The following is an insight into Lincoln Electric's HR architecture

Selection-
Regarding the hiring of its U.S. employees, Lincoln Electronic pursues a selective employment approach aimed at attracting skilled personnel that can connect to the companies high performance values and live up to high quality standards. New recruits have to pass a three-month probation period and show their dedication in trainee programme. For the established U.S. operations promoting experienced employees from within can be considered as aligning HR goals with corporate quality strategy. It is synonymous with Lincoln's strategy of binding the good employees and rewarding them for their achievements with responsibility thus maintaining its intellectual capital and ensuring a competitive advantage in fields of performance, knowledge and quality. In the international operations, Lincoln made the error of relying too much on inexperienced U.S. managers and only after it's international subsidiaries started to move from its unitary strategy towards a more responsive best fit approach to external environmental by recruiting more experienced external managers in China and Europe which fits the company's international expansion plan. For example, In its Chinese recruitment it adapts to the local labor market by personally promoting and introducing prospective employees through senior management to identify people who can live up to performance, education and quality requirements.

Training-

Lincoln applies a best fit strategy which aims at enhancing employees' abilities and knowledge through an investment in globally recognized best practice training methods. For example, a sophisticated trainee program for sales and engineering trainees, vocational trainings for experienced workers and work certification programs . These aim at supporting and maintaining the superior efficiency goals creating core competences compared to its rivals and a competitive advantage.

Reward-

In the USA, Lincoln uses a highly compensated piece-work system which is linked to individual employee performance based on different work-related factors. This system is able to motivate employees for achieving commitment through a remuneration which is industry best. Payment system is seen as the key to achieving employee commitment leading to cost advantages, productivity and quality. Group collaboration within the company is promoted through specific bonus pools which are allotted to work group performance. The bonuses are distributed to the members of that group according to their performance on the semi-annual merit rating based on factors like idea generation, quality, reliability, dependability and output. Employees are closely attached to the company through a stock purchase plan as part of their remuneration package. Lincoln invented the individual performance-system which is the major component towards making its employees its core strength. The performance payment system has proven to be successful becoming an internal best practice. For its global operations, Lincoln is forced to follow national restrictions in the legal environment and traditional working habits in the socio-cultural environment to align its reward system to local standards. For example, in Europe, it is forced to conduct a best fit approach abiding by the local regulations and adjust to differing standards of motivation where employees prefer benefits like vacation over annual bonuses.

Employee participation-

The best fit approach is also used for employee participation. The company has an open door policy where employees can contact management directly. Flat hierarchies with minimal supervisory management leads to very low barrier to communication and more opportunities for taking responsibility. As participation is one of the criteria for evaluating employee remuneration, Lincoln has a high workforce participation rate concerning continuous improvement suggestions. This encourages idea generation and directly involves employees in major decisions. Although employees are not unionized, participation with the management board takes place through the Employee Advisory Board. This approach supports the core competence and sustainable competitive advantage of productivity and innovative quality as major strategic objectives.

The following is an insight into SAS's HR architecture

HR functions and people policies play an important role in the success of SAS. HR is responsible for developing and guiding the company's vision and articulating it's strategy to help acquire, develop, reward and retain the best talent. HR department has a team of close to 100 employees who partner with the business units to maximize the potential ofthe employees, by delivery of programs that drive innovation and creativity. It plays a role of aligning HR with business objectives to drive results.

Selection-

The main role of HR is to recruit and select those candidates who are not only talented and innovative, but fit the company culture as well. SAS is a strong-culture organization, as it has a culture of cooperation, teamwork, and mutual respect; and it is the HR's responsibility to select those candidates who can fit into this culture.

Training-

The company brings in new talent and trains it as per requirement. Training and human resource development is one of the main functions of HR. It's responsibility in training and HRD further increases when the company gets all training programs done internally. The company provides four types of training-

Technical Training: SAS has extensive technical training for its employees and all of it is done internally.

Sales training- New joinees in sales Department get two weeks of training. They also have a five to six week extensive training program spread over a six month period.

Management Program: This is in three parts and takes eighteen weeks to complete and there is a one-half day of instruction per week for six weeks.

Compensation and benefits-

Basic salaries of employees are competitive and are adjusted regularly with merit increases awarded once a year. Although the company doesn't pay commissions and does not have stock option, it has linked the rewards with performance through bonuses. At the end of each quarter, the managers gives performance reports which are combined to calculate the overall bonus for the employee at the end of year. The philosophy behind this is to deemphasize financial incentives as motivation. Few of such benefits are medical facility, gyms, Cafes, scholarship etc. Performance assessment and management system of SAS has also some very distinctive features. Instead of formal appraisals and performance planning, managers spend time talking to the employees and provide them feedback at least thrice a year. HR has implemented Management by Objective (MBO) where short term and long term goals are set and then people are assessed based on the successful completion of those goals.