International HRM: Case study on Apple Inc.
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Contents INTRODUCTION ....................................................................................................................................... 3 AN EVALUATION ON INTERNATIONAL HUMAN RESOURCE STRATEGY OF APPLE Inc. ........................... 3 THE LEVEL OF FIT BETWEEN APPLE’S IHRM STRATEGY AND ITS GLOBAL CONTEXT OF OPERATION ..... 5 SUMMARY ............................................................................................................................................... 8 REFERENCES ............................................................................................................................................ 9
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INTRODUCTION The recent developments in international human resource management (IHRM) has been underlined by the advent of globalization and the increase in multinational business ventures resulting thereof (Armstrong and Taylor, 2014). In this challenging business environment leading multinational companies have developed effective IHRM strategies and practices to develop, manage and retain truly global workforces. Leading tech companies such as Apple, Google, Amazon, Samsung and Facebook have been great advocates of IHRM practices and strategies. The present report intends to critically evaluate the IHRM practices of Apple by analysing the internal consistency between different components of IHRM of Apple. The report further evaluates the fit between IHRM strategy of Apple and the global context in which the company operates. AN EVALUATION ON INTERNATIONAL HUMAN RESOURCE STRATEGY OF APPLE Inc. The underlying aim of human resource management is to attract, develop and retain highly talented and effective workforce for achieving the organizational objectives of the organization. The idea behind international human resource management is to develop and adapt HRM practices that used to be limited in scope to specific country to a global stage (Armstrong and Taylor, 2014). In the modern era of globalization, IHRM has an important but underrated role in success of multinational businesses, notes Bratton and Gold (2012). Human resource management is a critical element of international organization as effectively managed human resource can directly translate to superior competitive advantage in the market. An organization that has been heralded for its international human resource management strategy is Apple Inc (Phillips and Gully, 2013). As one of the leading technology companies in the world Apple strives to attract and retain the best talents in the world. The company’s IHRM strategy is crucial in enabling this. The main component of IHRM strategy of Apple is the ‘Work Hard, Play Hard’ culture of the company. This culture on one hand promotes excellence and innovativeness while on the other adopts informal and playful work environment in the company (Lev-Ram, 2014). For example, employees are free to wear informal clothing to work and even work from home in Apple. The company is also known for its meticulous training and development programs
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that help employees gain knowledge in the latest developments in their respective fields (Phillips and Gully, 2013). Recruitment and selection: An important aspect of recruitment and selection of Apple is that there is no universal hiring programme in Apple. Instead, the company tasks middle level managers in identifying and recruiting talents with the help of HR department. This means that prospective employees are hired by their immediate manager in consultation with the project team that they will be working in (Gully, Phillips and Kim, 2014). The importance of this is to ensure fit between new employees and team members. Apple uses a completely online process for recruitment and selection. Apple website lists the openings available in the company. But the main source of selection and recruitment in Apple is LinkedIn. The company identifies and pursues talented and experienced individuals through LinkedIn. Schuler and Jackson (2014) notes that Apple always takes the initiative when the company identifies a potential talent on LinkedIn. A detailed selection process involving multiple interviews and tests is used for testing the knowledge and competence of candidates. But the final decision is completely reliant of the fit between the candidate and the company rather than the skill set of the candidate. Training and development: Unlike, competitors Apple do not outsource training and development programs. The training and development program of Apple is named as Apple University and is a completely in-house program (Chen, 2014). The reason for this is that the company gives high importance to training and development and considers it an integral factor contributing to the competitive advantage of Apple. The aim of Apple University is not just to train and educate employees but inculcate a sense of belonging among them. For achieving this Apple provides a comprehensive induction programme for inducting new employees into the company. This programme provides employees insight into the rich history and business culture of the company (Chen, 2014). This means that the company takes significant effort to fit employees into the ‘work hard, play hard’ work culture of Apple. Another highlight of the training program is that the programmes are not mandatory but the company recommends certain courses. Employees are free to learn anything they like (Chen, 2014). This is also in line with free and innovation oriented work environment of Apple.
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Chen (2014) notes, that Apple meticulously plans training and development programs and all available technologies are incorporated into training sessions to make them more engaging and effective. The training courses are led by leading academicians and scientists from prestigious institutions such as Yale, Harvard, the University of California, Stanford and M.I.T. An internal website is used by employees of Apple to sign up for courses and to attend them. Gully, Phillips and Kim (2014) observes that Apple considers training and development programs to be a critical product of the company just like iPhone or iPad. So a similar level of design and sophistication goes into developing individual training sessions and programmes. One of the main focuses of these training programs is to teach employees about the unique design style and sensibilities of Apple rather than teaching them any specific technology (Chen, 2014). Pay and rewards: As one of the largest tech companies in the world, Apple provides higher wages than most other companies. For example, the average salary of a computer engineer in Apple is in the range of $51,210 - $91,024. This is significantly higher than the average salary in IT industry (Andrew, Sirkin and Butman, 2013). The company has low classification between different position in terms of pay and rewards and hence employees are rewarded for their performance and not just for their position. The strategy used by Apple in rewarding high performing employees is also very unique. The company uses ‘Pay for Performance’ system for rewarding employees. In this system the rewards and bonuses received by employees are directly linked to the sales performance of the company (Millman, 2015). This means that employees are rewarded not just for excelling in their tasks but for adding value to the company and thereby to its shareholders. In 2015, Apple’s top executives $281 Million in performance bonuses (Melby, 20150). From the above discussion of different elements of IHRM of Apple, it is clear that the company culture of ‘Work hard, Play hard’ underscores these different elements. For example, the training and development program, recruitment and selection proves and performance and rewards system are all unique and developed specifically for managing the workforce of Apple. It is also clear that the company values its employees and takes meticulous effort to develop and retain employees. This clearly shows the consistency in various elements of IHRM strategy of Apple. THE LEVEL OF FIT BETWEEN APPLE’S IHRM STRATEGY AND ITS GLOBAL CONTEXT OF OPERATION 5
As per Cable (2013), the global context of human resource management is shifting from formal and rigid corporate culture to informal work culture mainly due to the enormous success of tech companies such as Google and Apple which have adopted informal work culture. Apple has been at the forefront of this revolutionary change in outlook towards HRM in multinational companies. This does not mean that Google and Apple have similar outlook towards IHRM. Wellington (2011) observes that human resource plans of Google and Apple are starkly different from each other despite adopting informal work culture. The main difference is in the recruitment and selection process of Google. Unlike, Apple Google uses a universal hiring process which hires large number of candidates and then trains them and after training assigns them to different project (Sparrow, 2010). This is very different from Apple’s strategy of hiring employees who fit with specific project needs. The reason for the difference in recruitment and selection process of Apple and Google can be traced back to the visions of these companies. Apple’s vision is targeted at offering the best products to consumers. In this sense, Apple is a product oriented company and hence human resource management practices of the company add value to the products of the company through development of highly talented and effective project teams. On the other hand, Google is primarily a service company which has diversified its business in a range of new industries in recent years. Hence, the company’s focus is on providing high quality service to customers. Due to these inherent differences in the core business models, Apple and Google have different IHRM plans and practices (Sparrow, 2010). The difference in approach towards IHRM in Apple and Google is also evident in the differences between the training and development programs of the company. As mentioned earlier, Apple’s training and development program is a completely in-house program meticulously designed and developed and headed leading academicians from prestigious universities (Chen, 2014). On the other hand, in Google the training program is partially outsources while the in-house segment focuses on employee-to-employee learning. In this program experienced employees from diverse departments are recruited into provide training classes and coaching to cross-functional teams comprising of relatively new and inexperienced employees (Kessler, 2013). This is a very cost effective method and has helped Google in developing an effective organizational learning and knowledge management processes within the company that helps in developing and sharing knowledge in the company.
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The reward system used by Google is also very different from that of Apple. Unlike Apple’s reward system which is directly to sales growth of the company, the reward system in Google relies simply on exceptional and noteworthy performance of individual employees. The company has established two separate systems for achieving this. Peer to Peer reward and Spot reward (Cook, 2012). In peer to peer reward, employees recommend rewards to their coworkers for their exceptional performance in any work related aspect. This system draws inspiration from 360 degree feedback system and links this feedback directly to reward system. In spot reward system, the top level management of Google provide special rewards to exceptional performance of employees (Cook, 2012). Both these reward systems are designed for developing exceptional work habits among employees through positive reinforcement. In comparison Apple lacks such as effective reward system that reinforces positive work behaviour as the existing system is very rigid especially in relation to the way in which the rewards are directly linked to sales growth which can sometimes vary due to external factors that are not in the direct control of employees. Other leading tech companies such as Amazon and Samsung also utilise very different IHRM plans when compared to that if Apple. For example, Amazon uses universal hiring practice like Google. Employees are given effective training program and rewards. The main difference is in the work culture. Amazon has developed a high performance work culture that pushes employees to perform at their absolute best through exceptional rewards and benefits (Armstrong and Taylor, 2014). Amazon is a customer focussed company and hence customer value and user-friendliness are given utmost importance in the company even at the expense of employee satisfaction. The case of Samsung is also very different from that of Apple. Samsung is a very complex organization that is part of a very diverse conglomerate. Samsung has very diverse operations across the globe. This complexity in the organizational structure of the company is reflected in IHRM plan of the company. For example, the separate departments and regional operations of Samsung are responsible for hiring and training employees. Due to this there is no organization wide process for managing these activities but rather the company provides a set of guidelines based on which the different department conduct HRM practices (Schuler and Jackson, 2014). From the discussion of the fit of IHRM of Apple in the global business context, it is clear that Apple has developed unique HRM practices that help the company in achieving competitive 7
advantage in the global market. However, these practices are very different from the strategies adopted by leading competitors of Apple such as Google, Amazon and Samsung. One of the main things to emerge from the above discussion is the stark contrast in IHRM practices of Google and Apple despite both companies promoting ‘Work hard Play hard’ culture in the company. SUMMARY In the present report, the IHRM practices of Apple were critically reviewed by analysing the consistency in different elements of IHRM such as selection and recruitment, training and development and pay and rewards. It was understood that selection and recruitment, training and development and pay and rewards practices of Apple were unique practices designed specifically to improve the workforce of the company and thereby develop the competence of the company in the market. The focussed business vision and objectives of Apple also influenced its IHRM plan. The report also evaluated the fit between Apple’s IHRM strategy and its global business context. This assessment revealed that Apple’s IHRM strategy was radically different from that of its competitors and helped the company in succeeding in global market.
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