Huge Financial Loss Of General Motors Commerce Essay

This study is to look into the cause of immense fiscal loss of General Motors and the impact towards their Human Resource Management. Currently GM has retrench 1000s of workers and close down several chief production workss to retrieve from their job. This issue was assisted by several external environment, such as the economic, rivals and universe fuel monetary value. The usage of Strategic Human Resource theory such as the Balance Score Card and High Performance Work System ( HPWS ) is measures GM can take to work out their issue based on their changing external environment. Balance Score Card can be used as a short and long term for their fiscal and non fiscal public presentation measuring. The HPWS will give a long term solution so that General Motors will be able to vie in the old ages to come. Recommendations on Human Resource Activities are given that are relevant to General Motors current place at the terminal of this study.

Background to General Motors

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General Motors Corporation ( GMC ) is a auto maker set up in 1908 in Flint, Michigan. Harmonizing to New York Times ( 2008 ) , based on planetary gross revenues, General Motors is the largest car manufacturer in the universe and an tremendous 284,000 employees universe broad They manufacture both auto and truck under many trade name names. Those autos and trucks are “ Buick, Cadillac, Chevrolet, GM Daewoo, GMC, Holden, Hummer, Opel, Pontiac, Saab, Saturn and Vauxhall which are sold in 35 different states ” ( GM Website, 2008 ) . General Motors have been the leader in the car manufacturer industry until late 2006. As they enter 2007, their fiscal has face convulsion. Early 2008, “ the company reported a loss of $ 38.7 billion, or $ 68.45 per diluted portion in 2007, compared to a reported loss of $ 2 billion, or $ 3.50 per diluted portion in 2006 ” ( Autospies, 2008 ) ( refer appendix 1 ) . This in consequence has led to close down several fabrication workss and caused 1000s of employees to lose their occupation. “ GM announced it was shuting workss by 2010 in Janesville, Wisconsin ; Moraine, Ohio ; Oshawa, Ontario and Toluca, Mexico, extinguishing more than 8,000 occupations ” ( Walsh D. 2008 ) .

2.0 Objective

This study seeks to look into what are the factors that caused such a immense sum of losingss and the impact towards their human resource direction.

3.0 External Environment

There are three factors which had made General Motors in this state of affairs. First, the United States economic system is non come oning be their U.S. gross revenues projections for 2008 have been excessively rose-colored. “ GM had been anticipating more than 16 million vehicles, including trucks and coachs, to be sold this twelvemonth ” ( Taylor III 2008 ) . Second, intense competition from their planetary rivals such as Honda, Nissan, and Hyundai which had produce better fuel efficient engines, stylish at a much lower monetary value compared to any GM trade names. Third, the universe ‘s fuel monetary value had increased to USD 120 per barrel in the market had made consumers non to buy vehicle and utilizing public conveyance or smaller vehicle. In the United States, “ consumers want to abandon their less-fuel-efficient vehicles for smaller autos, and that ‘s illustrated by all kinds of tendencies, said David Tompkins, executive manager of industry solutions for, parent of Auto Observer ” ( Buss 2008 ) ( refer appendix 2 ) .

4.0 Strategic Human Resource Management Theory

4.1 Balance Score Card

Balance Score Card is a public presentation measuring index that can be used to mensurate the fiscal and non fiscal state of affairs in General Motors. There are four parts ; fiscal position, internal concern position, client ‘s position, larning and growing position. Balance Score Card is like your autos dash board where there is index on as you drive, you can look at the splashboard to obtain real-time information such as how fuel, velocity and the distance you ‘ve traveled or even any faulty system etc. “ It ‘s known to assist companies and implement the alterations required to run into their concern ends ” ( Pangakar & A ; Kirkwood, 2007 ) . The balance mark card enables the companies to develop a more comprehensive position of their operations and to better fit all operating and investing activities to long- and short-run strategic aims ( Punniyamoorthy & A ; Murali, 2008 ) .

The loss of USD38.7 billion is a immense fiscal loss which in fact will impact the internal concern procedure, the client, and growing of GM. The immense loss was mostly contributed from deferred revenue enhancement charges and bead in gross revenues. Presently, the organisation fiscal position appears to the portion holder is in a diminution where “ GM portions fell about 5 per centum, or USD1.67, to USD34.48 ” ( Bunkley N. 2008 ) . Therefore to pull off this losingss, 1000s of workers are laid off from responsibility. This will impact their internal concern procedure and may take to disgruntled clients. For illustration, normally General Motors takes 1 hebdomad to present a auto to a client. When they decided to retrench workers they will lose their competitory advantage where now it takes 2 hebdomads to present a auto. This will do dissatisfaction to consumers because they have to wait an excess hebdomad to obtain their vehicle. In the terminal, the acquisition and growing perspective buzzword ‘ be achieved because the deficiency of resources will disenable them to vie in the turbulent environment consequence to worsen in gross revenues.

To guarantee that General Motors can efficaciously accomplish its balance mark card in the hereafter, they must manage their external environment issue briefly. They have to better thru their internal procedure and acquisition and growing to get the better of their competition issue. General Motors have to come out with new design and engineering to increase the merchandise line. Research and Development outgo have to be spent so that they could make better vehicle so their rivals. How to make better vehicle than the rivals? This can be accomplished by buying the engineering from their rivals or similar industry. For illustration Proton had get Lotus in the twelvemonth 1996 had made them competitory at that point of clip. When this happen, employees will hold to be train therefore it can increase the cognition of the workers. In certain instances, workers will be sent oversea for such preparation to get engineering. Workers will be more effectual and accordingly increase productiveness in General Motors.

Like a well oiled machine, every portion in the organisation performs best when all of them work towards a common end. All of the four positions in the balances score card plants manus in manus thru their significant aims, steps and enterprises. As mentioned above, to do certain that General Motors can do net income to cover the immense sum of losingss they must increase productiveness, more outgo on research and development etc. In General Motor ‘s instance, fiscal position is the cardinal scheme for the other three positions. For General Motors, the larning position can work together with the gross revenues section to develop and train the gross revenues staff or even developing new efficient production, developing equipment. To better on the client scorecard they could make research by studies from their bing clients on how to better client relationships. Customer keeping is of import factor ignite purchasers to increase gross revenues. It ensures repeat purchase, increase positive word of oral cavity and cut down cost to happen new clients.

Balance Score Card will “ guarantee human capital development, bettering employee satisfaction and increasing employee motive ” ( Kaplan & A ; Norton, 1992 ) in General Motors.

Link of each position in the Balance Score Card ( BCS )

4.2 High Performance Work System

High public presentation work system ( HPWS ) is besides another method to explicate the state of affairs in General Motors. Autonomous work squads, unfastened systems and performance-based wage are known jointly as high-performance work systems ( Rouse, 2000 ) . HPWS have besides “ come to be known as high engagement work systems, flexible work systems and high committedness work systems ” ( Aghazadeh & A ; Seyedian, 2004 ) In other words, they are merely work pattern that can be intentionally introduced in order to improved organisational public presentation The chief focal point of HPWS is forming work so that the employees participate in determinations that affect the mundane operations of an organisation. There are three possible factors that can impact high public presentation work system in General Motors ; retrenchment of workers, engineering used and layout design.

A worker is the cardinal success to any organisation. Retrenchment will do General Motors to lose gifted workers later lose competitory border. To last in the changing environment, a company must trust on their workers creativeness, inventiveness job work outing ability and strong squad work. Workers are able to do their ain determination on the best manner to carry through their work. The cognition and accomplishment shared will make a high public presentation work system. For illustration, an applied scientist in General Motors is developing a fuel efficient engine. Engineer A may necessitate helpers from Engineer B, nevertheless when GM decided to retrench workers, Engineer A will confront trouble in developing the engine. Performance of employee can be boost thru squad plants. A survey by Thompson, Baughan and Motwani indicates that company such as General Electricity, Proctor & A ; Gamble, Xerox Corporation had immense addition productiveness every bit high as 250 per centum and dual their net income ( 1998 ) .

The usage of engineering is another characteristic in High Performance Work System. All directors in every section of General Motors must be able to place the engineering they use in their organisation. The application of Human Resource Information System that can hive away information on workers that can help directors in make up one’s minding which employee is executing and which is non. The usage of engineering without human runing it is besides nonmeaningful. Directors in General Motor must place whether the qualified workers are able to run the tools or non.

Layout of General Motors production workss and office be required to properly design in order for them to increase workers public presentation and productiveness. This involves careful occupation planing by HR directors. Harmonizing to Aghazadeh and Seyedian, layout plays a function to guarantee success by utilizing infinite, people and equipment efficaciously, increasing the flow of information and stuffs, hike employee ‘s morale and utterly encourage flexibleness ( 2004 ) . Directors in General Motors may hold to come out with proposals to alter the bing layout to a improved, sustainable working layout.

If all of the three factors are taken into history, General Motors can retrieve from their immense fiscal losingss merely and can avoid retrenchment of employees. Although to implement HPWS is dearly-won, unsure success and clip devouring but in the long tally this can profit General Motors.

5.0 Recommendation for Human Resource Activities

Training and development plans should be given to employees to guarantee addition in productiveness. Offshore preparation in Japan auto makers to larn assorted methods to do better autos.

Mangers are required to do research and human resource planning on the best methods to make a peculiar undertaking.

General Motors would hold to happen a spouse to organize a strategic confederation to retrieve from the immense fiscal loss. From this confederation, both companies are possible to larn from each other on the engineering and trade secrets.

Develop a faculty which to assist retrench workers to happen a new occupation. This will avoid them from paying more money for their compensation of retrenchments

Outsource to states like China or India. Cheap labours will profit companies to retrieve them from fiscal loss.

Make a wages programme where employees are rewarded by their directors based on their ability to work in a group

Make a talk to all employees at least one time in 3 months to explicate the company ‘s vision, scheme and aim. This will do employees experience a sense of belonging and may be able to work excess for the company.

6.0 Decision

In decision in order for General Motor to remain in concern, directors must alter the way by accommodating to the current issue and environment. By utilizing both Balance Score Card and High Performance Work System they may win from maintain losing their market portion. Retrenchment and closing down workss will merely do state of affairss even worst despite it is necessity to make infinite and clip to retrieve. Until General Motors can do autos that appeal to purchasers they will go on to free money and their market. Human Resource directors must move rapidly and efficaciously to get the better of this issue in General Motors.



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Autospies Website ( 2008, February 12 ) . GM Report Losses Of $ 38.7 BILLION in 2007! Retrieved September 2nd 2008 from hypertext transfer protocol: //

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General Motors Website ( 2008 ) . General Motors Corporate Information- About. Retrieved August 30th 2008 from hypertext transfer protocol: //

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Pangakar M. and Kirkwood T. ( 2007 ) . Associating Learning Strategy to the Balanced Score Card. Journal of Strategic Management, 297 ( 5 ) , pp 38-52.

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Rouse, D. ( 2000 ) . Manufacturing advantage: why high public presentation work systems pay off. Journal of Team Performance Management, 96 ( 5 ) , p. 1420

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Thompson F. , Baughan D. and Motwani J. ( 1998 ) .A instance of advanced integrating of high- public presentation work squads. Journal of Workplace Learning, 10 ( 3 ) , pp. 157-164.

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Appendix 1


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