Hershey Company
1. Introduction:
The largest producer of chocolate in North America, Hershey
Company reported first quarter 2014 sales up at 6.5 percent to $3.5 billion and
profit of $83.6 million on March, 2014, the strong quarter in a row for
company. Advertising expenses for the
quarter increased by 46 percent as a company continued to promote iconic brands
such as Hershey’s Kiss and Reese’s products (www. Hershey.com).
Some of the Hershey’s premium products of have faltered
lately as customer switched lower price products. So, the company plans to
discontinue their Cacao Reserve brand as their Starbucks chocolate partnership.
But Hershey has its online gift business, which featured seasonal products and
gifts that could personalized by the consumers.
2. Identification and Analysis of the major forces shaping Hershey’s HR agenda
Hershey needs a clear aims and objectives that will
determine the nature of inputs, the series of activities to achieve outputs and
the realization of organizational goals. Feedback about the performance of the
system and the effects of its operation on the environment are measured in
terms of achieving the aims and objectives.
Basic principles of organization and management apply in any
series of activities in any of organization , Padilla, J (2010). For example:
·
Attention must be given to the design of the
suitable measure
·
The common elements of management-clarification
of objectives, planning, organizing, directing, and control-apply to a greater
or lesser extent in all cases.
·
Essential financial, legal, human resources and
administrative functions must be carried in the organization.
These common features make possible the application of
general principles of management and organizational behavior of those people
that comprises the organization. While general principles and prescription s
apply in Hershey, differences in the input-conversion-output process and in the
series of activities involved in this process. The nature of inputs, the
throughputs and the form of the output will emphasize characteristic features
of a particular organization. These features highlight alternative forms of structure,
management, methods of operation and behavior of people employed by or working
in different types of organization (Padilla, J, 2010).
Whatever the type of clarification of Hershey has, the
transformation or conversion activities may themselves be viewed as separate
organizational sub-systems with their own input-conversion-output process
interrelated to, and interacting with, the sub-systems.
The interrelationship and interdependence of the different
parts of the system raise the question of the identification of this
sub-system. What are the boundaries that distinguish one sub-system from other
sub-systems and from the system as a whole?
In Hershey, these sub-system are identified and the task
management to coordinate the sub-system and to ensure that the activities of
the organization as a whole. In practice the boundaries are drawn at the
discretion of the sub-system are identified, therefore, in a number of ways,
although there is a degree of similarity among the alternative models.
However, these sub-systems are identified; it is a task of
Hershey management to coordinate the sub-systems and to ensure that the
activities of the organization as a whole are directed towards the
accomplishment of its goals and objectives. Hershey therefore has five main
interrelated sub-systems as a basis for the analysis of work organization.
1.
Task- the goals and objectives of Hershey: the
nature of inputs and outputs, and the work activities to be carried out in the
transformation or conversion process;
2.
Technology- the manner in which the tasks of the
organization are carried out and the nature of work performance : the
materials, systems and procedures, and equipment used in the transformation or
conversion process;
3.
Structure- patterns of organization, lines of
authority, formal relationships and channels of communication among members;
the division of work and coordination of tasks by which series of activities is
carried out;
4.
People- the nature of the members undertaking
the series of activities: for example their attitudes, skills and attributes;
needs and expectations; interpersonal relations and patterns of behavior; group
functioning and behavior, informal organization and styles of leadership;
5.
Management – coordination of task, technology,
structure and people, and policies and procedures for the execution of work:
corporate strategy, direction of the activities of the organization as a whole
and its interactions with the external environment.
The study of Hershey as open systems serves to indicate both
the common features and the main distinguishing features between different
types of organizations. It provides a useful framework for the comparative
study of organization. The system view of organizations enables Hershey manager
to view their own organization in perspective and to compare it in meaningful
terms with other types of competitive organizations. Managers cannot afford to
take narrow, blinkered view; they need to adopt a broader view and recognize
interrelationships between various activities and the effects that their
actions and decisions have on other activities. The Hershey’s framework of five
main interrelated sub-systems is task, technology, structure. People, and
management-provides a useful basis for the analysis of organizational
performance, and effectiveness. Attention should be focused on the total work
organization and the interrelationships between the ranges of variables which
affect organizational performance (Padilla, J, 2010).
The analysis of organizational effectiveness requires an
understanding of relationships within the organization’s structure, the
interrelated sub-systems and the nature of its external environment.
Irrespective of the identification of sub-systems, the nature and scale of the
series of activities involved in converting inputs to outputs will differ from
one organization to another in terms of interrelationship between technology,
structure, methods of operation and the nature of environmental influences.
Contingency models of organization highlight Hershey’s interrelationship and
provide a further possible means of differentiation between alternative forms
of organization and management (Mann, S, 2003).
3. Ethics and Responsibility
Hershey commitment to social responsibility extends beyond
their school to both their products and supplier relationships. The company is
actively involved in the International Initiative Foundation, designed to
eliminate child labor or forced labor such as World Cocoa Foundation, which
supports environmental projects that include nonchemical pest management
practices and which encourage sustainable farming practices to support
ecosystems in the region. Hershey also
closely monitors its supply relationships and purchases palm oil from suppliers
with membership in the Roundtable on Sustainable Oil (www. hershey.marketonline.com).
Hershey role as an environmental steward is also evident
that its plants use recycled water that is later purified for various landscaping
projects. Changes in product packaging have resulted in lighter materials and
less waste during the manufacturing process and Hershey extensively recycles
materials from their different factories in the world. Hershey monitors
greenhouse gas emission from operations and has installed energy efficient
lighting in all of their plants.
With revenue in excess of $8 billion, Hershey continues to
produce chocolates and confectionary products. Hershey has recently expanded
its global presence via joint ventures in China and India.
4. Review of Hershey’s Business and HR
Strategies:
SWOT Analysis
In order to evaluate the nature of the business environment
and its strategic capability; Hershey may undertake SWOT analysis which focuses
on Strengths, Weaknesses, Opportunities and Threats facing the organization.
The SWOT analysis provides convenient headings under which to study Hershey in
its environment setting and provide a basis for decision making and problem
solving.
Strength
|
-
Hershey iconic brands such as Hershey, Bar,
Kisses and Reese are easily recognized within the domestic market.
-
Hershey concentrates advertising revenues on
these brands while also promotes the health benefits of flovanols in its dark
chocolates products
-
Hershey products are sold to more than 2
million retail outlets, including wholesale distributors, chain grocery
stores and convenience stores. Hershey direct research on consumer
preferences supported via the Hershey Center of Health and Nutrition
developed in 2008. Many of the ingredients which are used for Hershey
products are grown in West Africa, South America, and the Far East.
-
Hershey has five operating segments by
geographic regions: 1) United States 2) Canada 3) Mexico 4) Brazil 5) and
other International locations (India, Korea, Philippines. Japan and China.
-
Hershey sales increased by 5.2% in 2013
-
Hershey employs about 13, 450 full time and 2,
000 part time employees and approximately 47% of the workforce is covered
collective bargaining agreements.
-
Hershey announced a joint venture with Lotte
Confectionary Company, a leading confectionary company in Korea, to produce
products for China. The manufacturing facility, that is located in Jinshan,
China is designed to produce Hershey and Lotte products that are tailored to
the needs of Chinese and Asian market.
|
Weaknesses
|
-
Some of the Hershey’s premium products has faltered lately as customers switched to
lower price products.
-
Due to lower commodity prices total charges to
Hershey Supply Transformation Program have been forecasted downward from $665
million to $640 million
-
The company close their online gift business,
which featured seasonal products and gifts that could personalized by the
consumer
|
Opportunities
|
-
The establishment of Hershey Center of Health
and Nutrition that involved in scientific research and also collaborates with
external organization that develops products to support both weight
management and heart health.
-
Due to increased consumer preferences for
healthy and organic products, the company portfolio of healthy snacks has
expanded to include Payday pro energy bars and sugar free such as Twizzlers
(www.marketonline.com).
|
Threats-
|
-
Key Industry competitors like Nestle, Cadbury
and Mars has an aggressive marketing and research and development structures
-
Nestle acquisition of medical nutritional
business of Novartis, Gerber baby foods and Jenny Craig, a company with an
established brand of nutritional weight management products.
-
The consumer increasingly awareness of
nutritional value of various product ingredients with purchase decisions
reflecting a preference for organic non-adulterated products.
-
|
5.
Measurement
of HR effectiveness
The ultimate measures of HRM
function of Hershey is the contribution it makes in meeting the objectives of
the business and to improved organizational performance. But achievement in the
area of HRM is difficult to measure and it is not easy to establish
satisfactory methods of assessment. There is also a more general problem of
assessing managerial work where the end-product results from the efforts of
other people, Patton (2005). Cost is obviously a consideration but should not
be viewed in isolation. Not every activity in Hershey can be identified clearly
as making a contribution to profitability. Hershey believed that a balance
should be maintained between the more easily identified financial costs of HRM
function and the less readily apparent but very important long term benefits
such as morale and job satisfaction of staff as well as their attitudes,
behavior and performance. Over a period of time however, some quantified
measure may serve to provide management with an indication of effectiveness.
Hershey includes staffing costs, turnover, and stability indexes; internal
promotions and staff development; errors in work; levels of absenteeism and
sickness; timekeeping; accidents at work; the number of grievance hearing,
dismissals, labor disputes, employment tribunal cases; complaints from
suppliers or customers.
Hershey’s one way to review the
performance and potential of staff is through a formal performance review
system. An effective system offers a number of potential benefits to both
individual and the organization but there are number of important questions to
be addressed. Consideration must be given to the design and implementation of
the system, methods of appraisal, and the problem areas. Hershey emphasized
that it is particularly important that a formal system does not detract from
manager’s responsibility for reviewing performance on a day to day basis and
that it should be seen as part of Performance measures strategy.
According to Slater, 2009,
“Recognition that employees from the lifeblood of a company has highlighted the
strategic role that the human resources department should now play.” Hershey
believed that HR professionals have the opportunity to add value to business.
Greater attention is placed on issues such as how well a company executes its
business plan, employee well being, corporate culture and organizational
structure. Although, the customer is still king, Hershey realize that it is
their employees who deliver the performance of value to customers.
Hershey’s sound HRM policies help
foster good employment relations. It is necessary to take account of the
institutions and parties involves, and their ideologies and motives. There are
two major and contrasting perspectives of work organizations, and the
explanation and outcomes of conflict-the unitary and the pluralistic
perspectives. These contrasting views influence the nature of employee
relationships and the management of human resources. Good management strategies
are important for effective employment
relations that are founded on a combination of legal and behavioral dimension.
6.
Conclusion
and Recommendation:
Hershey success is based on the
essential process of management is that proper attention be given to the
efficient use of resources, in particular human resource? In recent years there
has been increasing attention to a strategic approach to “human resource
management” and also to the idea of human capital. However, it is important to
remember that it is people who are the most important asset of any
organization. Effective HRM requires strategic integration of people management
policies and successful implementation if it is to impact on organizational
performance.
Hershey success in the field of
Human relationship stems from good HRM policies and practices which should be
based on underlying philosophies of managerial behavior and employee relations.
The range and scope of HRM activities are wide, and a shared responsibility
among top management, line managers, and supervisors and the HR manager. As an
element function, HRM is part of the generality of management and part of the
responsibility of all managers and supervisor. HRM has top operate at a strategic
level and in partnership with line managers.
References:
Mann, S “Doing Things
Differently”. Professional Manager, vol. 12, no.3, May 2003, pp32-5
Patton, F, 2008 “ “An Integrated Model of Management and
Managerial Development, Journal of Management Development, vol. 7 no.3 , 2010,
pp 29-39
Padilla, J, 2010 Strategic Management, 2nd edition.
Pp 23-26
Slater, The Quality of Working
Life, 2008,: Managers’ Health, Motivation and Productivity, pp354-355
Great stuff....enjoyed reading it also helped in an assignment
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