TABLE OF CONTENTS
Brief Overview of Honda Motors ________________________ page 2
The Question answered (1b) ____________________________ page 3
A. Performance management of Honda ____________________ pages 4-7
B. Adopting a unique style of Management _________________ page 8
B.1 Management Organization ____________________________ pages 9-14
B.2 Preparing for the Future _____________________________ pages 15-20
Business organizations have been subject to enormous pressures over the past few years, with major underlying structural changes in industry sometimes concealed behind the short-term issues of recession. There will be no simple solutions and success will depend, as always, on the soundness of the strategic decisions taken by top management, and the ability of the organization to implement those strategies and would push the human resource aspects of the business to the fore, even without the added complication of continued change and the pressures that this brings. HRM needs to become even more strategic in the way it operates. In effect it needs to be driven by the business needs of the organization, but without losing sight of the critical value and importance of people in making strategies become reality.
Brief Overview of Honda Motors
Honda Motor Co., Ltd. operates under the basic principles of “Respect for the Individual” and “The Three Joys”, commonly expressed as The Joy of Buying, The Joy of Selling and The Joy of Creating. Respect for the Individual” reflects our desire to respect the unique character and ability of each individual person, trusting each other as equal partners in order to do their best in every situation. Honda Motor Ltd. has remained on the leading edge by creating new value by providing products of the highest quality at a reasonable price for worldwide customer satisfaction. The Company has grown to become the world’s largest motorcycle manufacturer and one of the leading automakers. Honda develops, manufactures and markets a wide variety of products ranging from small general purpose engines and scooters to specialty sports cars, to earn the Company an outstanding reputation from customers worldwide.
1b) Describe and critically assess the practices of your chosen organization in relation to two of the following:
a) reward & recognition
b) performance management
c) employee welfare
d) work design
e) management style
Honda has introduced an operating officer system, aimed at strengthening both the execution of business operations at the regional and local levels and the supervision by the Board of Directors. The term of office of each director is limited to one year, and the amount of remuneration payable to them is determined according to a standard that reflects their performance in the Company. Our goal in doing this is to maximize the flexibility with which our directors respond to changes in the operating environment. With respect to business execution, Honda has established a system for operating its organizational units that reflects its fundamental corporate philosophy. For example, separate headquarters have been set up for each region, business and function and a general manager from the Board of Directors or an operating officer has been assigned to each headquarters and main division. In addition, the Management Council deliberates important matters concerning management, and regional operating councils deliberate important matters concerning management of their respective regions. Honda’s basic policy emphasizes the appropriate disclosure of company information, such as by disclosing financial results on a quarterly basis and timely and accurately giving public notice of and disclosing its management strategies. Honda will continue raising its level of transparency in the future.
A. Performance management of Honda
Creating advanced new technologies and products
Through leading-edge research and development, Honda continuously creates original technology that opens up new possibilities in mobility. Honda is always tackling new challenges for the current and future benefit of individuals, society and the environment.
Research and Development for the future
Honda is constantly involved in the research and development of technology that will benefit people in the future. These technologies range from new materials and new sources of energy, including mass-produced solar panels, to new power trains that maximize joy while minimizing environmental impact. They also include advances in biotechnology, such as Honda’s work in decoding the rice genome for application in various fields. Honda is studying human anatomy and physiology, as well, in its efforts to produce innovative products that enhance safety in various ways.
ASIMO lends a hand
In 1986, Honda began conducting original research and development toward the creation of biped humanoid robots that will serve society in harmony with humans. The latest ASIMO, introduced in 2005, employs new posture control technology that allows it to run and move in concert with a human partner. Able to carry objects, it can also handle various reception and delivery tasks. ASIMO continues to evolve and will soon acquire the abilities to turn around and run 6km/h, making it an even better partner for humans.
Reaching for the skies
One of Honda’s earliest dreams was the development of jet planes. In pursuit of this dream, Honda recently established Honda Aero Inc. and developed a compact jet engine that has passed the experimental stages. The manufacture and procurement of components for this jet engine will be handled by a joint venture between Honda and General Electric.
Next-generation power trains
Honda’s Automobile Research and Development Center in Japan includes research facilities dedicated to the development of next-generation power trains. Here, Honda engineers are developing new means of propulsion that may one day contribute to human mobility.
Consistent quality worldwide
Honda is a global company with manufacturing operations and sales networks all over the world. Furthermore, our products are enjoyed by people in numerous countries. This global success is built upon the renowned quality of Honda’s products and made possible by the passion and dedication of Honda associates everywhere. Wherever you are, you can always count on the quality of Honda products.
Localizing production to meet local needs
Honda began manufacturing motorcycles in Belgium in 1963. In 1982, Honda became the first Japanese automaker to produce passenger cars in the U.S. Since then, Honda has established independent local operations around the world for research, development, marketing and production. Through the introduction of Honda’s flexible manufacturing system, Honda continues reducing the time and resources necessary to launch new models into production and improving the efficiency of manufacturing operations that meet regional needs. Moreover, the grouping of production processes into cohesive units has improved the working environment, raised product quality, and further accelerated production. In the future, Honda plans to further localize the production of engines and key components for automobiles, motorcycles, and power products, while simultaneously raising quality and efficiency and accelerating our response to the dramatically changing world.
Inspiring their customers
By creating products and services that highlight the core values that make Honda unique, we would like to provide our customers with joy and excitement beyond their expectations. Honda will continue to create such inspiring experiences for our customers by offering mobility that is always ahead of the times. In this way, Honda products will be loved and enjoyed by customers of all generations.
Expanding New Values for customers worldwide
The ultimate goal of Honda’s sales activities worldwide is to satisfy our customers so that they will continue to come back for more Honda quality products. That’s why they put heartfelt effort into our services, responding to changing values and increasingly sophisticated needs. They’re always working to improve the quality of our customer relations providing friendly and attentive sales, responsive service support, thorough maintenance and repairs so customer satisfaction constantly grows. Honda also continues to develop sales and service systems best suited to community needs. In that way, “life with a Honda” brings new joy to people and places worldwide. Starting in Japan in 2006, Honda will unify our multiple car-dealership channels into a single Honda sales channel seeking to strengthen the Honda brand, enhance customer satisfaction and help ensure lifetime customer loyalty.
B. Adopting a unique style of Management
The romantic image of the founder-millionaire wearing overalls. tinkering visibly with some mechanical marvel in workshop or lab, is often reality. So it was with Soichiro Honda, in many ways the least typical of the post-war Japanese economic victors: but simultaneously the most visible archetype of the success of Japanese business culture, though an eccentric one. ‘Mr Honda’, said one baffled journalist, ‘ is a management executive who always wears red shirts and tells naughty stories when drinking.’ The drinking was important to Honda. In his early sixties, the great man admitted that he didn’t understand computers. The fact that he couldn’t keep up with the technology was only one factor in his decision to take relatively early retirement. Five years later, Honda came of technological age with the Japanese market in recession, Honda invested in German, Swiss and American machine tools, reckoning that they were the best in the world. He then ‘reverse-engineered’ the European bikes he was copying – taking them apart to see how they were made: and discovering that their best was simply not good enough. European manufacturers believed it was impossible to run motorcycle engines with even faster bursts. Honda not only proved that you could, but also started to win Grand Prix races all over the world. Super-design went with super-efficiency in production engineering. At Honda’s motorcycle plants not a single storeroom existed for parts, raw materials, or finished machines; deliveries went in at one end, and finished bikes, up to one every seven seconds, moved straight on to double-decker trucks at the other.
B.1 Management Organization of the Company’s Corporate Governance for Decision-Making, Execution, Supervision and Others
Putting the emphasis on easy access to colleagues signals that involvement figures high in the corporate values. Then, placing top executives in an open office signifies the intention to have an open style, in which rank and status have no practical importance. The round tables indicate that decisions are only to be taken after full discussion among colleagues who are always on tap. The proximity of the desks establishes that lines of communication are to be short and easily opened. The classic Western office layout, based on the ‘behind closed doors’ principle, is the antithesis of visibility and delivers an utterly contrasting message. The corporate vision statement is like the founder himself, enormously practical:
Ø Quality in all jobs – learn, think, analyse, evaluate and improve
Ø Reliable products – on time, with excellence and consistency
Ø Better communication – listen, ask and speak up
Developing a philosophy built on the experience of a practical engineer, the founding father had created a corporate culture that would go on working towards his objective nothing less than becoming and remaining the world’s best motor manufacturer long after his own active day. His influence, like the man himself, is still highly visible. And the visibility is inseparable from the success.
As the HRM for Honda business industry is considered an integration function supporting all the improvements of resource management and business functions. Sound HRM systems and strategies clearly contribute to productivity improvement. However, Honda cognitive differences of HRM will produce diverse HRM strategies, and the achievements of HRM reflect distinct business performance. This study proposes an approach to investigate the correlation of firms’ productivity and various patterns of HRM so as to improve a firm’s performance. The two critical factors, human resource compensation and maintenance, receive more attention and achievements from the organization but, human resource acquisition and development are the two factors with significant correlation to high productivity as this helps firms monitor the major factors of HRM and appropriately adjust their efforts to activate HRM subjects for improving industrial human productivity of Honda. Strong forces are shaping the environment in which Honda operates and old concepts of management have to be re-examined against the challenge of the world the organization live in today and the world Honda believe they will live in tomorrow. While there will always be many new issues in the external business environment which will affect the organization from time to time, and which will impact both the corporate strategy and HRM, Honda can also see some long-running trends which have been with us for some years, and which will continue into the future. Perhaps of more significance than the individual forces described here is the cumulative result: organizations face a period of almost continuous change. There is no escape from this, so the only solution is to learn to live with it, and this makes the people aspects of management even more significant than they have been in the past. Competition has increased, and for most industries it is no longer possible to define competition within the boundaries of a particular country.
There are few places where an organization can shelter from competitors, and many industries have been shaken up because their competitors have taken a global view of their markets. The demise of the motor cycle industry was in a large part due to the inability of the firms to imagine that anyone could gain great production advantages by thinking of manufacture for a global market, instead of the traditional approach of producing for the local market and the exporting of any surplus where there was a protective customs tariff. More organizations are compelled to think of Honda’s business in global terms and most others are subject to ever increasing intensities of competition. Aside, technology advances bring opportunities as well as threats. One example close to the hearts of HRM managers is the new opportunities offered by advances in computer technology, making e-learning a real option, and providing opportunities for other forms of e-HRM.
Common actions taken by Honda have included:
Ø seeking a reduction of costs, with more attention being given to competitive positioning
Ø attention to time as a strategic issue, and attempts to reduce cycle times throughout the organization
Ø giving more attention to customer relationships
Ø new forms of relationship with suppliers, for quality, costs and strategic reasons
Ø attempts to change the culture of organizations to enable them to react faster and more effectively to market requirements
Honda business ways is now looking at human resources as a unique asset that can provide sustained competitive advantage. The changes in the business environment with increasing globalization, changing demographics of the workforce, increased focus on profitability through growth, technological changes, intellectual capital and the never-ending changes that organizations are undergoing have led to increased importance of managing human resources Thus, there were noticeable financial returns for the organizations whose human resource management (HRM) systems have achieved operational excellence and are aligned with business strategic goals to have better perceptual performance. Honda’s achievement levels and importance levels of HRM subjects contained in each factor are noted. The correlation between the achievement of each factor is determined. These critical HRM factors are then used to determine the HRM patterns of the sample firms vs. their associated productivity indices. HR managers usually endeavor to find efficient methods to perform their HR activities in supporting the organization’s HRM strategic initiatives as effective management of critical HR factors is the key for business sustaining competitiveness. The management ways and style of Honda is evident that will likely continue to increase if the economic downturn continues in Honda’s major markets worldwide, leading to further increase pressure within Honda’s competitiveness, which will over time affect its results. The global culture in which Honda’s management operates still lacks transparency because of global political and economic uncertainty, fluctuations in oil and raw material prices and currency movements. Furthermore, Honda will continue striving to earn even more trust and understanding from society through companywide activities. Along with efforts to develop effective safety and environmental technologies, Honda will have to enhance the creativity in its advanced technology and products and will have create and swiftly introduce new value-added products that meet specific needs in various markets around the world and must continue their efforts in the research of future technologies like the advancement of advanced humanoid robots and compact business jets and their engines. Importantly, to identify the changing nature of the employment relationship was addressed to differing degrees and with differing support provided for the points and have explained the changing context of employment and employee relations that requires a new framework for analyzing the employment relationship compared to old models of industrial relations. The increasing requirement for flexibility and fragmentation of the workforce. The diffusion of non-standard employment contracts, the rise of idiosyncratic agreements.
B.2 Preparing for the Future
As for the global economy, the U.S. and Asian economies are expected to grow steadily, and Japan and Europe are also expected to maintain their moderate economic recovery. However, the global environment in which Honda’s management operates still lacks transparency because of global political and economic uncertainty, fluctuations in oil and raw material prices, and currency movements. It is under these circumstances that Honda will strengthen its corporate structure quickly and flexibly to meet the requirements of our customers and society and the changes in its business environment. Also, in order to improve the competitiveness of its products, Honda will endeavor to enhance its R&D, production and sales ability. Furthermore, Honda will continue striving to earn even more trust and understanding from society through Companywide activities. Along with efforts to develop even more effective safety and environmental technologies, Honda will enhance the creativity in its advanced technology and products, and will create and swiftly introduce new value-added products that meet specific needs in various markets around the world. Honda will also continue efforts in the research of future technologies, including the advancement of advanced humanoid robots and compact business jets and their engines. Honda will establish efficient and flexible production systems and expand production capacity at its global production bases, with the aim of increasing its capability of supplying high-quality products. Honda will continue to make efforts to expand product lines through the innovative use of IT and to upgrade sales and service structure, in order to further satisfy its customers. Responding to increasing consumer demand, Honda will upgrade its quality control through enhancing the functions of and coordination among the development, purchasing, production, sales and service departments.
Honda will develop safety technologies for accident prediction and prevention, technologies to reduce injuries to passengers and pedestrians from car accidents, and technologies for reducing aggressively, as well as expand its line-up of products incorporating such technologies. Honda intends to enhance its contribution to traffic safety in motorized societies, including Asian countries. Honda also intends to remain active in a variety of traffic safety programs, including advanced driving and motorcycling training schemes provided by local dealerships. Honda will step up its efforts to create better, clean, fuel-efficient engine technologies and to improve further the recyclables throughout its product lines. In addition to continuing to provide products incorporating Honda’s advanced safety and environmental technologies, Honda will continue striving to earn even more trust and understanding from society by, among other things, undertaking activities for corporate governance, compliance, and risk management and contributing to society. Honda: a name that conjures images of high quality as the benchmark incorporates as the truth that Honda is really best-selling car in America being the highest resale value in its class as made with regularity concerning the Honda Accord – a vehicle that is always on the short list of the most popular cars in this country. (2001) Honda, as of now sitting comfortably at the top of the U.S. passenger car market, was not always in this successful position. As of the present, Honda is a model of such car companies such as General Motors as the car company try to emulate in order to increase their own sales. The themes have contributed to Honda’s success in the United States: the company has seized on opportunities in the U.S. market and it has also tailored its practices to fit American culture as Honda is a benchmark by which other automakers are now measured to run its American operations.
Honda is a global company with manufacturing operations and sales networks as Honda products are enjoyed by people in numerous countries. This global success is built upon the renowned quality of Honda’s products and made possible by the passion and dedication of Honda associates everywhere. Honda’s business processes were not limited to its advances in the motorcycle market. Honda built its first automobiles and looked to enter the U.S. automobile market and faced several obstacles to its entrance: a strong reputation as a motorcycle manufacturer would not help Honda’s venture (). Instead, the company had to start its U.S. auto marketing strategy from scratch and aware of the fact that it would not be able to rely on its motorcycle reputation to sell its cars in the U.S., Honda required that its cars and motorcycles be sold separately like cars and motorcycles could not be sold at the same dealership as Honda carry enough weight as a legitimate carmaker to insist that dealers carry its cars exclusively (). Looking to build on its success with the Accord and Civic in America, Honda embarked on a bold and unprecedented plan to build cars in the United States as no other Japanese automaker had ever done (I) and a small company like Honda seemed ill-equipped to battle the car giants in their home territory (). The motivation behind the decision was Honda’s desire to expand, compounded with Toyota’s and Nissan’s dominance of the Japanese market ().
Honda was able to produce high-quality automobiles successfully by adapting to the needs of its workers and not by forcing Japanese managerial policies to be practiced. Honda’s success in manufacturing in the United States can be attributed to its management philosophy, unique to both the Japanese and American auto industries (). The company operates with an openness that is rare in the world of business, where consensus and conformity are the rule. To boost communication, Honda has done away with executive lunch rooms and private offices, egalitarianism prevails: all Honda employees, right up to wear white coveralls with their names stitched in red lettering above the right breast pocket. () In making its associates true team members, Honda increases productivity by seeking input from all levels of the company and not just management. Honda adapted to the business environment in which it operated, allowing it to be successful as result of three key plans of action. First, Honda exploited a market opportunity. Instead of trying to battle Toyota and Nissan in a saturated Japanese auto market, Honda started production in the United States, knowing that it could produce higher-quality products than its other counterparts. Second, Honda used unique marketing strategies to position itself as a motorcycle manufacturer and later a car company that would be appealing to a wide variety of Americans. Furthermore, Honda introduced a managerial strategy for its United States production facilities that was unique not only to Honda’s Japanese plants but also to American auto plants in general. In respect to business execution, Honda has established a system for operating its organizational units that reflects its fundamental corporate philosophy. Honda’s basic policy emphasizes the appropriate disclosure of company information, such as by disclosing financial results on a quarterly basis and timely and accurately giving public notice of and disclosing its management strategies.
Honda will continue raising its level of transparency in the future. Honda promotes an environment where customer’s opportunities are analyzed and maximized by implementing business practices that increase loyalty, satisfaction and retain customer’s business over their lifetimes. Customers drive their business strategies to achieving success and excellence in everything Honda do and will continue to be its key focus for developing products and services that accelerate their capability to prosper in the car business. Identifying and meeting customer needs is key to Honda’s continued business success listening to customers is what determines its business strategies and drives Honda’s culture in creating and managing the customer relationship that can be a company-wide task. The company as a whole defines and clearly communicates to every employee what it wants to be the basis of the customer relationship like acquiring and updating knowledge about customer needs, motivation and behavior drive Honda’s approach toward customer excellence. Honda adheres in fostering an environment where highly motivated, action-oriented employees work together to continuously create and deliver high-quality, innovative products and services. Honda believes that a high quality players will help us maintain our leadership position and ensure that we remain one of the best places to work and innovative in the context of an ever-changing market environment. The management relies on teamwork by providing a collaborative environment that thrives on working across geographical and organizational boundaries, sharing information and finding new and better ways to support each other and its valued customers in continuing business success. Good communications both internally and with our customers and partners directly affects customer success. No matter how good Honda is – the one thing that can bring the company down is getting too far away from loyal customers as it gives emphasis on the success factors in fully realizing the company’s potential to influence the entire industry.
Therefore, customer satisfaction is essential to basically improve the effectiveness of its processes and to establish quality objectives and created customer satisfaction metrics to monitor customer success and level up employee compensation to achieving those metrics and used to determine the goals and strategies that make Honda successful in reaching such goals and enhance better services and support respectively. Honda Motors will then achieve a competitive advantage by managing the value chain better than other institutions in their industry. Managing the value chain implies increasing the quality of products and services, while reducing the institution’s costs and increasing revenue, thus increasing competitive advantage. Examining its value chain and comparing it to those of key rivals indicates areas of cost advantage or disadvantage within the decision to undertake certain activities that is directly linked to achieving competitive advantage such as wishing to outperform its competitors by differentiating itself through higher quality will have to perform its value chain activities better than the competition. By contrast, a strategy based on seeking cost leadership will require a reduction in the costs of Honda associated with the value chain activities or a reduction in the total amount of resources used in order to follow a focus strategy by targeting a specific market segment or a specific offering. Costs for an activity can be reduced only if the reduction does not adversely affect strategic advantage (2000).
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