September 23, 2014

Strategic Human Resource Management (SHRM) is best understood as the principle of harmonizing all key ideas and major plans within an organization so that employees are led towards business aims and targets. Mello states that SHRM “involves aligning initiatives involving how people are managed with organizational mission and objectives” (Mello, 2011, p. 105). If an organization, an individual or any entity lacks a plan, it can be argued that they lack an eye towards achieving business goals. Successful businesses have coordinated plans and mission statements so that all individuals under the same umbrella march to the beat of the same drum. If no business strategy exists then the organization fails to reach its targets and eventual undertaking.

Steve Jobs founded Apple Computer with his friend Steve Wozniak on April Fool’s Day, 1976. Although neither had finished college, both had a vision to bring to market a computer that anyone could use at their leisure and in their private setting. During the time of their inception, computer mainframes were found principally at select universities, and the notion of having a miniature computer at an individual’s personal disposal was unimaginable. Jobs and Wozniak did the unimaginable. “Jobs made it Apple’s missions to bring an easy-to-use computer to market. In April 1978, the company launched the Apple II, a relatively simple machine that people could use straight out of the box” (Yoffie & Slind, 2008, p. 2).

Jobs & Wozniak lacked a harmony of their plans for their once termed Apple Computer company, however. This would prove to be their near demise. By the time they changed the company’s name to Apple, Inc., it’s revenues ceased to depend from the manufacture of the very personal computers that Jobs & Wozniak had introduced in 1976. Apple was wildly successful because it pursued business opportunities in varied directions. They were driven by ingenuity, vision and creativity. While their revenues soared, their market share plummeted. They were the inventors of personal computers, and since they were first to market, in 1980 they enjoyed a Worldwide PC Share of 16%. By the year 2007, they had a mere 3% of the worldwide PC share, having fallen to 5% in 1997 and never climbing upwards again (Yoffie & Slind, 2008, p. 19).

Jobs led the company at its creation but as IBM introduced their own machine, with the help of Microsoft DOS, and then Windows 3 Operating Systems, Apple lost its footing. Strategic Human Resource Management includes having a relationship between human resources and strategy, be they employed via the Industrial Organizational (I/O) Model or the Resource-Based View (RBV) Model. (Mello, 2011, p. 105). Jobs had no mission other than bringing the personal computer to the everyday individual. Once IBM comparable computers intruded into the domain of Apple, Jobs failed to appreciate the competitive environment. This was costly for Apple and the Board would realize it eventually. Other manufacturers reduced their prices while Apple clung to producing an elegant, sleek, high-priced machine. Apple tumbled and the Board took action: they replaced Jobs with John Sculley, a protégé of Jobs. Sculley remarked years later that he had recognized the problem Apple was facing but failed to respond in concert with SHRM principles. “We were increasingly viewed as the ‘BMW’ of the computer industry. Our portfolio of Macintoshes were almost exclusively high-end, premium-priced computers. . . . Without lower prices, we would be stuck selling to our installed base.” (p. 3). As dan Eilers, Vice President of Strategic Planning at Apple said, “The company was on a glide path to history.” (p. 3). It did.

As history documents the Apple story, Sculley was not mindful of SHRM models of strategy. According to the text, a business operates within a milieu of threats & opportunities, all nipping at their heels of profits and revenues (Mello, 2011, p. 109). Sculley could have controlled the costs of parts for which his business built Apple computers. Instead, Sculley ignored these. Likewise he failed to reflect on the business truism of offering goods and services at lowers costs than competitors (Mello, 2011, p. 109). Sculley missed this very basic yet salient principle.

It would appear that Apple could have mitigated its losses had it adopted SHRM policies. For example, the Apple Board yet again replaced their CEO in 1993 with another business leader: Michael Spindler. Yet Spindler did nothing to offer services at lower costs than their competitors, which would have stopped Apple’s hemorrhaging of market share. Instead, Spindler failed to consult with HR experts, and consequently eliminated employees in an effort to reduce expenditures. Yet, reducing costs was not the problem. The problem at Apple was not adhering to simple SHRM rubrics. “Spindler also moved to slash costs, cutting 16% of Apple’s workforce and reducing R&D spending. Yet despite Spindler’s efforts, Apple lost momentum” (Yoffie & Slind, 2008, p. 3).

The Apple Board once again sought to curtail its financial losses by replacing Spindler with Mr. Gilbert Amelio. However, Amelio failed to recognize the problems to which Spindler had also turned a blind eye. “Meanwhile, Amelio led the company through three reorganizations and several deep payroll cuts. Despite these austerity moves, Apple lost $1.6 billion on his watch, and its worldwide market share dropped from 6% to 3%. The Apple board forced Amelio out, and in September 1997 Steve Jobs became the company’s interim CEO.” (Yoffie & Slind, 2008, p. 3).

The Apple Board would have done better to have chosen a CEO who would have viewed the business environment with the guidelines of SHRM. That is to say, that if any of the CEOs that the Board had hand picked, reflected upon the critical components of Apple’s external environment (i.e. competition, industry structures, market trends and economic trends), Apple may have had a different economic outcome (Mello, 2011, p 106). In the end, however, Apple was able to resuscitate itself because they looked beyond Macintosh computers for revenues and brought to market varied and new digital products that were truly breathtaking and exceeded anyone’s expectations: e.g. iPod, iTunes, iPhone, and others (Yoffie & Slind, 2008, p. 14).

 

References:

Mello, J.A. (2011).  Strategic human resource management.  Stamford, CT: Cengage Learning.

Yoffie, David B., and Michael Slind. “Apple Inc., 2008.” Harvard Business School Case 708- 480, February 2008. (Revised September 2008.)