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Strategic human resource management is often termed as SHRM or strategic HRM. SHRM is regarded as managing the human resources to provide a framework. The framework is to support the business on a long term basis to achieve business goals as well as outcomes. SHRM is designed in such a way so as to help the companies in order to meet the requirements of the employees of the organization. It also seeks to achieve the company goals while meeting the needs of the employees. Basically human resource management involves the benefits of the employees, hiring, training, firing and even administration (Armstrong, 2008). SHRM on the other hand is managing the people proactively. It needs the company to think ahead and to plan ways by which the company can meet the demand and needs of the employees. SHRM can be broadly divided into two types. The first one consists of the works that is concerned with the seeking and identification, so that the features of the organization can be understood. The second category of SHRM is less developed than the first. It is focused on ideas underpinning prevalent practices rather than the process involving staff management (Rothwell, Graber & McCormick, 2012).
The SHRM of the two companies that is Unilever and Pepsico is vividly summarized in this paper.
Unilever is a multinational FMCG company that was incorporated in September 1929 by a soap maker of Britain named Lever Brothers and margarine producer of Dutch origin called Margarine Unie. The company now operates in many countries of the world. The international competitors of the company are Procter & Gamble and Nestle. The company has a employee strength of 174,38K people (Macroaxis, 2015) and earns a revenue of about 49.8 billion euro yearly (Marketwatch.com, 2015).
The growth of the organization is their main ambition. The company has a culture and a structure that allows them to win in an environment which is fast changing. For this the company requires the HR team to locate and find the best talents and develop them to become the leaders in the world. It is believed that an organization in which the people are engaged turns out to be very effective. The employees of Unilever are considered to have the potential to be ardent advocates for their products and brands. The HR professionals have the key responsibility to attract fresh talent, create a culture for performance keeping in minds the values and diversity of Unilever (Unilever.com, 2015).
The Unilever Human resource department initiates the environment to change, renew, redefine, restructure and revisit the architecture of the company (Truss, Mankin & Kelliher, 2012).
The Unilever helps the new recruited members to prepare for managerial posts within two years of joining as conducted in UFLP (unilever’s future leader’s programme). Unilever at some countries provides the agile approach, which is about the work flexibility which states that an employee can work at anytime, anywhere (depending on the job profile)
Unilever considers the importance of constantly improving employee’s safety precautions, as work place accident rates are comparatively high.
Unilever considers the employee empowerment to make the employees act as the sustainability head because the living plans sustainability. Unilever challenges the choice that corporate world has to make to choose between business growth and sustainability. They want to make sustainability as a vital part of their employee’s job. Unilever has far reaching objectives to improve the health of not only the employees but also for the consumers. (Ehnert, 2009).
Unilever faces fresh competition with changing environment, and various developments in management policy. Thus the company goes by the holistic approach.
The recruitment and selection policy is sometimes outsourced by the Unilever recruitment administration. Their rationale is to hire employees who are focused on those aspects where they can add value. The recruitment process is done in Campus, in certain target cities for focused markets. They also prefer internal references (Unilevergraduates.com, 2015).
The selection process starts with motivational screening and CV, followed by aptitude test online. Sometimes the telephonic interviews are also done but that is for managerial job profile.
The objective of training and development for Unilever aims to enhance
1) General Skill: the general skills training in Unilever offers catalogue where a trainee can learn from classroom learning, virtual classroom learning and e learning.
2) Professional skills: each department has their respective learning, like the Unilever Marketing Academy develops academy for marketers at every level.
3) Leadership skills: Unilever provides their trainees leadership programmes of high potential.
Unilever mainly has three types of training- they are- local on-boarding, development program and mentoring. In order to evaluate Unilever has their own way of estimating the training results (Unilever.com, 2015).
Unilever has their personalized on line total reward system. The remuneration system is specifically designed to support the implementation of their strategy and their business vision. The fixed elements are the basic salary, fixed allowance and other benefits. Along with these the variable compensation also gets included. They are long term MCIP, long term GSIP and Annual bonus. The variable pay is made in order to improve the performance of the employees. Unilever also considers acknowledging success by considering the performance quality.
Unilever believes that potential, performance and professionalism are significant considering have inference on their performance appraisal system. Thus for this reason the company introduced a system that explicitly involves considerable scope for salary increments for employees who shows sustainable quality performance. Earlier Unilever use to follow the last years report of appraisal system but soon they discovered the emergency of introducing some new concepts of performance evaluation and appraisal. There are some organizations that strictly follow development by training and performance setting targets. But in Unilever model of performance appraisal sets a leveled status (Kandula, 2006).
In 1890’s Pepsi-Cola was created by Caleb Bradham an N.C pharmacist. PepsiCo Inc was established through the amalgamation of Pepsi-Cola and Frito-Lay (2009 Trade Ideas, 2015). Pepsi is a fizzy soft drink like Coca Cola that was initially introduced in the name Brand’s Drink. Today PepsiCo is served around the world and its present net income is US$ 6.74 billion.
The strategic human resource management at PepsiCo implements strategies that contribute in innovation and expansion. The executives believe that employee’s dedication to the strategic principle leads to company’s success (Gitman & McDaniel, 2008). There are many factors that help in planning Strategic Human Resource management, they are discussed below.
Pepsi considers the power of steady improvement, and the goals change from added day to day operations, pursuing and adopting latest technologies and other advances and compromise with the changes in the external environment where the company governs. The HR professionals are responsible to create a mutual and encouraging work environment that encourages their employee for their increase in productivity. They motivate the employees by making them participate in business decision-making by building a team of expertise of their profession. The Reward systems are operated according to the business strategy of PepsiCo, and that helps employees to develop their performance.
The HR personnel’s are highly qualified (Alsever, 2014). Janine Waclawski, Vice president Human Resource at PepsiCo is a graduate from Columbia University This means that the decision making are authentic and there are very poor chances of having any flaw in HR operations.
PepsiCo provides sufficient amount of acquiring knowledge from sources both inside and outside. They help to improve and enhance the knowledge about the company and others. They also prefer new employees to increase their efficiency by motivation and encouragement.
Missplanning has been a vital failure for the HR, as the employees don’t get ample opportunity to participate equally in decision making. Certain ethical guidelines require to be maintained.
In PepsiCo by employee empowerment they mean the freedom to think and act the way the employees feel like. PepsiCo also embrace people of diverse culture and backgrounds that encourage cooperative outcomes, innovations and new perspective into the workplace. It also helps in identifying new market opportunities (Fernandez and Moldogaziev, 2013). PepsiCo depends on mutual respect; it requires employees who have the ability of working as a team or informal collaborating. PepsiCo also provides ESOP for their employees for retention.
PepsiCo applies both external and internal recruitment methods. The main priority is given generally to the internal only if the employees have the required capabilities of the working post. Any employee can refer any potential and competent person if the referred person satisfies the criteria of reference. The one referred receives a bonus. The recruitment policy starts with the application screening where it requires details of qualification and majorly real evidence of experience where possible. Then it is followed by online test of logical, reasoning and numerical tests in English. The interview is being taken in local and English verbally. The aim of the interview is to understand about the candidate and his or her career goals. And finally the last but not the least is Assessment centre, where the candidate has to go through three core activities will be there games, panel interviews and case studies (Suntory PepsiCo, 2015).
PepsiCo along with its subsidiaries are considered to have a great training is considered to have great training grounds for top people supervisors. Pepsi is popular for training sufficient human resource executives that it has been able to create its own brand identity in its field (Workforce.com, 2015).
The PepsiCo training and development policy differs from that of their competitors. It provides on-the-job training that gives the employees a scope of developing according to the job requirement. The employees are trained in two ways. The employees are also trained with the help of external sources. Training in the form of workshops; classroom training and seminars are conducted by hiring foreign facilitators. The facilitator evaluates the effectiveness of training and makes a follow-up.
PepsiCo’s compensation program included the basic salary, long term and short term incentive awards for executive officers. There are two types of benefit plans: nonqualified and qualified. The objective is to provide retirement benefits (Pepsicojobs.com, 2015). Awards are made on EIC plan which are majorly target oriented. Payments are not paid if minimum targets are not achieved.
The jobs under PepsiCo are evaluated yearly and with 360 degree method. The skilled and potential employees are rewarded by promotions, annual holidays, bonus and increments. Surveys and questionnaires are also made through which the behavior of the employees and the personality of the employees are analyzed. After evaluation, the unsatisfied employees are taken care of. If the attitude still continues then they are fired or demoted (Catapano, 2005).
In this era of competitive nature in Global Business, the main reason of competition is about focusing in innovation and creation of value. SHRM not only helps to achieve the targets but of a company but also helps in increasing the level of productivity of employees. Through this case Study one thing can be stated that no matter how different the SHRM for PepsiCo International and Unilever is the basic objective remains same. The employee retention, setting a proper environment and motivation acts as the key elements to an effective SHRM (Greene, 2015). Hence, it can be concluded that the HR department has a huge responsibility for aligning the strategies of human resource in context with the Organization.
Developing human resources is all about helping the employees in fulfilling their work. Development is not just about fulfilling the work instead it is all encouraging the employees in various ways to develop their career and also different aspects of their working conditions. Siemens is committed towards its employees. The key success pillar strategy of Siemens is to motivate, develop and manage all its employees through corporate responsibility, excellence operational services and performance. This section provides a brief understanding of SHRM (Strategic Human Resource Management) process of Siemens and analyzes the various practices, procedures and process utilized.
The following table explains the organizational structure of Siemens
Figure: 1 the segments of SIEMENS
Figure 2: the organizational Structure of Siemens
Apart from these Designing better jobs, staffing talented candidates, developing skills of employees, better quality customer service and building teams have helped Siemens to improve their performance. Siemens have further understood the need of human behavior, knowledge of various systems that helped the organization to attain the strategic objectives. This shows that the main purpose of SHRM in Siemens is to develop strategic capability by making sure that the organization has well motivated, engaged and skilled employees for attaining competitive advantage to sustain. This shows that the SHRM mainly integrates the strategic needs of the firm with the human resources and the HR practices are aligned according to the capabilities and demand of the employees and line managers in Siemens.
In Unilever the HR strategy works for the same purpose. For every organization the labor productivity is the ultimate say. Unilever also follows the method of evaluation, appraisal system and compensation system as per their MCIP and GSIP system.
Based on the information provided in the case study, the SHRM have contributed effectively towards Siemens by helping them to make better organizational outcomes and also improving their workforce behavior and competencies. This SHRM has supported Siemens to develop value based products through good quality service and innovation. In the year 2011, Siemens had developed 10 value based products that are easy to use, timely to market, affordable, reliable and maintenance-friendly. These products have been targeted to various sectors like industrial applications, power distribution, aviations, healthcare etc (Siemens.co.in, 2011). The SHRM process has further helped Siemens to maintain high standard employee management through competitive employee recruitment and selection, training them to develop their career, motivating them and also their unfair HR policies. Then, the teamwork management has also supported them to utilize the potentialities of human resource of the firm. This has encouraged them to improve the interaction process within the organization and successfully understand the overall process of the firm. Additional, Siemens have created a strong unifying corporate identity through diversified workforce. Therefore, the SHRM process have contributed towards developing value based products, team work management, diversified workforce, and learning environment through training and development.
In organizations like Unilever the strategic human resource management helps is team building to a great extent. Unilever firmly believes in team work and they give credits for the progress of the company to group work. The Strategic Human Resource policies also help in monitoring the progress. As the strategic vision of Unilever to reach its goals, of attaining profit along with social responsibility, Strategic Human Resource Management helps to evaluate on a regular basis to monitor their progress. The Human Resource functions and the executives are repetitively monitoring to identify the problems the employees and the organization is facing. The Strategic Human Resource Management also has to look after the legal matters of Unilever, because it helps in reduce legal and worker issues.
Siemens is considered to be a amiable and released workplace where the employees can expect a continuous work support from the superiors, colleagues and subordinates. They support new ideas an d open thoughts. The competitive base salaries help the employees for a competitive environment. Siemens also considers life-integration gravely. They encourage flexible plans for timings and they support good quality of work life.
The Human Resources planning in an organization is mainly influenced by various external factors. As an organization functions in an environment that is mainly bounded through various factors, it is mainly bound to comply with those factors. The factors include (Saiyadain, 2009, p- 64-66):
Based on the above four factors; government, technological, economic and social, Siemens need to focus on their human resource requirements. This human resource planning would help to fully utilize the potential and existing workforce of the organization. Therefore, Siemens need to (Martin, 2009):
The HR planning of Siemens starts with the Job specification and description at Siemens. Taking an example of Field Telecoms Engineer & Technical Support Engineer at Siemens, the job description and job specification is as shown below:
Siemens need to use the workforce planning methodology to find out the outflow or influx rate of employees in the organization. This process would help to check the existing skills of the present employees and also decide on the need of training to develop the employees. This process would help to identify the skill gap among employee skills and job.
The recruitment and selection process of Siemens can follow the following activities:
In Siemens the line managers and their subordinates agree to various objectives before starting their job and then the subordinates performance is monitored formally and informally from the beginning itself. This makes the managers of Siemens to focus on the different requirements of the employees and address their issues. Then, the performance results are discussed with the employees annually and the feedback provided helps them to develop objectives. People with versatile experience are more acquainted to the appraisal system. There are specific systems for appraising and these processes are sometimes done poorly that they concludes in failing in design, for a negative experience faced by both the employees and the managers. Some organization does this to makes sure that their employees are working properly whereas, some organizations does that on an obligatory basis.
The remuneration at Siemens is tailored based on the business strategy. The continuous remuneration makes sure that the strategic targets of the organization are achieved. Thus, Siemens focuses on both fixed and variable pay package. Then Siemens mainly maintains the pension plans and also provides fringe benefits like promotion.
The above HR plan makes the organization to succeed in this competitive world. The HR practitioners who would plan the program would help the Organization to oversee its staff deliberately. The plan supports to direct the activities of HR division. The plan not only aid the organization just, however it will likewise encourage the profession arranging of the representatives and help them to attain to the destinations also. This expands inspiration and Siemens would turn into a decent work environment. HR Planning structures an essential part of information system of management. It changes to the workforce compositions that compel chiefs to pay consideration on HR arranging. The progressions in creation of workforce impact the arrangement of staff, as well as likewise the procedures for choice, preparing, pay and inspiration.
The standard protocol of HR is to construct different procedures and policies for an organization, as it is solely responsible for keeping the employment matters according to the philosophy of the organization. Therefore, the main purpose of HR policies in Siemens is to define the rules, roles and also different consequences and behavior and also give the employees various tools to do their work effectively. HR procedures and policies give work environment structure. Absence of certain policies, for example, disciplinary activity, working hours, performance rules and reviews concerning safety of the workers, the workplace could be turbulent. HR divisions give a feeling of structure also. For instance, policies of HR department concerning plan regularly are matters tended to by HR initiative, for example, supports for extra allocations and estimation for rate of profitability in HR activities (Gill and Meyer, 2011). HR procedures and policies help with equal job opportunity in giving fair treatment to candidates and workers all through the employing methodology and the work experience. For instance, for an association that doesn't distribute its EEO policies, for example, worker rights under Title VII of the Civil Rights Act of 1964, the rules for its enlistment and choice procedure would be dim, best case scenario. HR policies and procedures can help in the examination of HR practices and general business practices.HR procedures and policies are the useful components of an association's key arrangement, significance the strategies are the steps important to accomplish vital objectives. However, HR procedures and policies serve the essential role of reclassifying HR strategic advancement and the heading of the association. Through a survey of the organization's HR procedures and policies, administration groups that create key maps for the organization realize what lives up to expectations and what doesn't work concerning HR procedures and the workplace (Guest, Paauwe and Wright, 2012).
The HR requirement policies like employment responsibilities and rights, data protection, contractual terms, discrimination, equality are mainly regulated by strategic human resource management. The regulatory work of SHRM in various sections of business strategy of Siemens is shown below (Walsh, 2007):
This regulatory framework makes sure that equal payment is paid to women and man equally and also proper promotion, recruitment is followed with no gender or cultural discrimination.
A company’s growth makes an impact on an organizational structure. The structure sets the climate, the system of an organization. This helps the people to work in a habitual basis.
Various literatures show that the organization structure is based on the objectives and goals of the organization. The chosen structure of organization actually sometimes facilitates or hampers the pursuit of an organization. According to Clemmer (2003), organization structure shapes organization’s performance. However, Johari and Yahya (2009) additionally adds that the organization structure not only shapes the performance but also shapes the processes and competency of the organization.
Siemens mainly follows the matrix organization structure (oecd.org, 2013). This matrix structure thus helps the Siemens to be more efficient and flexible compared to other structures. Due to this matrix structure, the organization quickly determines about its necessary capital (Kuprenas, 2003). This organization structure is helping Siemens to work like an information web that is data is channeled both horizontally and vertically as people can exchange financial information, marketing information and technical knowledge. The matrix organization structure develops adept management in Siemens which makes the top management to make effective decision and more involved towards everyday activities of the organization (Galbraith, 2009).
Organizational culture is the schemes and shared knowledge developed by particular people for responding, expressing, perceiving, interpreting to the social realities (Silverthorne, 2004). Siemens’s organizational culture is to offer favorable condition to all the employees in the organization, encouraging collaboration for effective team work, following diverse culture in the organization, learning based environment and satisfying the clients with better service and products. The key success of the organization is to follow a strategic direction that helps to achieve the identified plans and goals properly and communicate properly with all the members to build a bridge among the managers and the subordinates (Siemens.com, 2015).
This organizational culture is creating a living phenomenon that helps employees to collaboratively develop the organization in a better way. The working environment of Siemens is surrounded with beautiful culture that shapes the processes and job relationship in the organization. Therefore, it is helping the organization to solve the issues due to external factors and also internal integration by developing a shared pattern (Aydin and Ceylan, 2009).
In order to monitor the effectiveness of HRM process, Siemens need to focus on two different levels. At micro level Siemens need to carry out career planning for all the employees and also succession planning for organization’s positions and at macro level the organization should focus on workforce planning. Further, to assess the HR functions, Siemens can use the various metrics throughout the control process (ocl.ac, 2010). This would help to exercise control over the costs and quality. Siemens can also use the quantitative tools like benefit-to-cost ratio to measure the training activities and monitor the job-impact. Further, the levels of attrition rate can be assessed by measuring the retention rate and turnover rate of the employees periodically by comparing the past data with the industry average. In this way Siemens can reflect on the effective designs, long-term planning, weakness and strengths and also empowerment of human capital (Noe and Noe, 2012).
The following recommendations would help Siemens to do better in future:
As the study suggests Siemens is a learning company. The advanced technological nature of Siemens’s business refers that human resources must be able to be trained on an ongoing basis. Siemens applies its system of collective classroom and stress on apprenticeship training worldwide, to assist in facilitating this .It also presents employees wide enduring management and educational development. The Global teamwork is the input to mounting and with the help of all the latent of the firm’s human resources. Because it is very significant for employees of Siemens to feel liberate to work together and act together, employees have to comprehend the entire process, not just parts and pieces. To support this .Siemens provides extensive training and development. It also ensures that all employees feel that they’re a division of a strong amalgamating corporate uniqueness .For example, HR uses cross cultural, cross border knowledge as requirements for career progress. A climate of shared respect is the foundation of all relationships-within the Siemens and with society .Siemens argues that the nationalities wealth, outlooks, languages and culture symbolized by its people is among its most precious assets .Therefore Siemens engages their employees in numerous ways .thus HR policies are aimed at structuring openness towards the company.
Hence Strategic Human Resource Management is important for an organization for its smooth running. The progress of a business depends on the strategies that an effective Human Resource Department implements. Human beings are the driving force behind the operations of an organization. Due to this fact, strategic human resource management cannot over emphasize in an organization. A well-planned and well-thought strategic human resource must implement ideas that will benefit not only the organization but also the society. A good strategic Human resource management delivers a good relationship between the workers and its organizations. It is responsible to see whether the employees are performing their necessary duties efficiently. The department is also responsible to carry out required steps for recruiting ideal people for respective vacancy. Strategic Human Resource Management also participates in the decision of setting the short-term and the long-term goals.
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