An increasing number of companies are making efforts to enter global market due to the globalization worldwide and the huge profit attraction. In order to earn a share in the international competition, a company should not only focus on improving its output but also have a keen insight of the internal management, such as human resource management. Based on this circumstance, Huawei Investment and Holdings Co. , Ltd, a Chinese technology organization, which is fighting for a share in the European market, is analyzed and certain HR configurations would be recommended to this company.
Lepak and Snell (1999) studied the relationships among employment modes, employment relationships, human resource configurations and criteria for competitive advantages, and come up with the idea that it is not appropriate to give one simple identification to the characteristics of all the human capital investments and there should exit a human resource architecture (HR architecture) that is suitable to manage all the employees. The HR architecture is a system that consists of HR policies and practices.
The organization creates the framework of employees according to the differentiation between them and carries out specific activities to enhance the flow of work. There are many departments inside Huawei, such as operations, sales and marketing, research and development (R&D), etc.. The employees in Huawei could be categorized into different employee groups as follows: Manufacturing, R&D, IT, Legal, Sales and Marketing, HR, Customer Service, Finance, Logistics, Distribution.
These groups are ranked according to their uniqueness and strategic value and a matrix is used here to show the result. After completing the employee portfolio, the groups will be related to the 4 quadrants defined by Lepak and Gowan (2016). [pic 1] As can be seen, under the external employment system, Legal and HR group are considered as alliance or partners of the company and IT, Finance and Manufacturing are seen as contract workers. In the internal employment section, Marketing and Distribution share the high level of strategic value and are called job-based employees.
The last three groups belong to the group of core employees. In order to maintain a competitive advantage, companies tend to make the talented employees with high strategic value become the internal human capital, which is not easy to be obtained and imitated in the labor market. However, the competition in high-tech industry is fierce compared with that in traditional enterprises, the uncertainty of the external environment will affect the strategic choice and the HR architecture of enterprises.
High-tech firms are obliged to change the traditional employment mode, since the long-term employment mode, which is driven by internal labor market, has been unable to meet the organization needs. Moreover, the pace of economic globalization and technological change renders most of Chinese high-tech enterprises such as Huawei focus on the strategy of innovative products because of the relatively low risk and investment (Huarng et al. , 2015). What’s more, in order to increase the employment flexibility, Huawei also chooses the employment mode that is driven by external market to outsource jobs.
Although this new trend of employment mode brings benefit to Huawei, it also leads to many problems. Because the new employment relationship led by the external market has outweighed the traditional internal employment, according to Psychological Contract Theory (Rousseau et al. ), the employees would change their psychological expectations and behaviors. Thus, their behaviors would show more transaction characteristics. The company builds a relational relationship with the employees who have a high uniqueness capital, and keep transactional relationship with those who have low uniqueness.
For example, the IT department is one of the core departments in Huawei due to the reason that it is the source of innovation. If the organizational commitment consistently fails to carry out, the IT staff turnover rate would significantly increase and enterprise’s core technology training and retention would become more difficult. A recent study indicates that the employment relationship mode will affect the attitude, behavior and work performance of employees (Felisa et al. , 2016), which may have adverse effects on the company, especially high-tech enterprises.
Given the theory and reality mentioned above, four HR configurations will be recommended to Huawei. Firstly, for core employees, Huawei is supposed to choose Arthur’s (1994) commitment-based HR system to develop a long-term and loyal relationship between employers and employees. That is to say, the groups of core employees, such as sales, customer service and R&D departments, should be invested and sponsored significantly to master unique knowledge and skills (Lepak and Snell, 1999).
Specifically, Huawei should keep a high level of continuance commitment by raising the career switching cost of employees and developing employees’ firm-specific competencies, among core employees, especially customer service and R&D, which are the focused sectors in the high-tech market. Under this circumstance, the turnover rate of employees could be decreased and employees may be motivated to bring more value to the company. Secondly, according to Lepak and Snell (1999), Koch and McGrath’s (1996) market-based HR system may be the better choice of job-based employees.
Since job-based employees like marketing employees are not unique to a certain firm, it is most likely for them to be evaluated based on the performance rather than development. Therefore, Huawei is suggested to put efforts in selecting people who can make immediate contributions in jobs. Thirdly, as for contract workers, such as IT and manufacturing workers, compliance-based HR system is recommended (ibid). Compared with commitment-based HR system, compliance-based HR system focuses on obeying preset rules, regulations or conditions of contracts rather than securing organizational commitment.
In the light of this situation, in a high-tech market, IT and manufacturing departments of Huawei can put an emphasis on improving rules, systems and policies in order to keep confidentiality and efficiency. The final advice is the collaborative-based HR system for alliance. Generally, employees of legal and HR departments act as the partners of a company. For instance, if Huawei wants to protect the company’s rights and profits by laws, it can seek help from the legal counsel.
In other words, this HR system encourages cooperation and collaboration and provides value for all involved parties. Thus, it is beneficial for Huawei to employ such HR system in order to invest in a good relationship. In the final analysis, given the theory of employment modes and relationships, the essay argues that four HR configurations should be recommended to Huawei and Huawei should manage its HR architecture for competitive advantage to emerge as one of the most outstanding in global market.