MHRM 6901 Week 11 Strategic HR Capstone Paper Example

Phasing the Second Restaurant Contract Behind a Technician Apprenticeship: A Strategic HR Capstone for Hartwell Baking Company

Student Name

Walden University

MHRM 6901: Capstone: Strategic Human Resource Management

Instructor Name

Month Day, Year

Phasing the Second Restaurant Contract Behind a Technician Apprenticeship: A Strategic HR Capstone for Hartwell Baking Company

Recommendation

Hartwell Baking Company should take on its second restaurant contract only if the customer agrees to a ramp: roughly six tenths of contracted output from the new Janesville line during the first twelve months, rising to the full order by the eighteenth month. Three people commitments must travel with that schedule: a two-year apprenticeship that trains eight maintenance technicians a year, a pay increase that brings technicians to 95 percent of the regional market and a night premium of $1.50 an hour. Should the customer insist on full output from the start, Hartwell should walk away from the contract. Numbered facts (F1 to F21) refer to the register reproduced as Appendix A.

The Organization and the Question

Hartwell is a family bakery with plants in Milwaukee, Green Bay and Janesville and roughly 900 people on its payroll (F1, F2, F4 to F7). The offer on the table would have Hartwell bake buns for a fast-casual chain's restaurants in the region, lifting revenue by close to a fifth (F16) and easing the owners' worry about depending on one burger customer (F20). Staffing the high-speed line around the clock means adding fourteen technicians to the maintenance roster (F17). The capstone set out to answer one question: can Hartwell staff this contract with qualified technicians on the customer's timetable, and if it cannot, which HR strategy would make the contract workable?

Finding One: The Year-One Shortfall

In its first contract year Hartwell would need between 25 and 29 newly hired or newly qualified technicians. Fourteen are for the new line; the remaining 11 to 15 replace people who quit or retire (F8, F9). Against that, the bakery's own record shows it brings in about eleven a year, nine from the outside labor market after an average search of sixteen weeks (F11) and perhaps two from the production floor (F13). Appendix B tests every staffing option the capstone considered, including a second recruiter, vendor technicians and better pay, and none of them reaches the full-output requirement inside year one. Cappelli (2008) warns that firms facing uncertain demand for scarce skills cannot count on buying talent when they need it, and Hartwell's sixteen-week searches show what that warning looks like on a plant floor.

Finding Two: Pay Makes the Shortage Worse

Hartwell's technicians earn close to nine tenths of what the illustrative regional median pays, and the extra hourly amount for nights is $0.75, compared with an illustrative $1.75 elsewhere (F10; Appendix C). When technicians leave and give a reason, about two in three point to pay or to night work. The turnover review by Hom et al. (2017) makes clear that pay is only one of several reasons people quit, so a raise will not end departures. The estimate in this paper is narrower: annual technician turnover should fall from roughly 18 percent toward 13 percent, and offers should be accepted more often. Running the new line on three shifts raises the stakes of the night premium, because a larger share of the roster will work nights than ever before.

Finding Three: No Internal Route to Technician Roles

The company's public letters promise to grow its own people (F18), and production supervision shows that promise working. Maintenance does not. Seven in ten technicians hired over the last three years came from other employers (F12), training spending is close to $180 per person per year (F14), and the six production workers who have been picking up maintenance skills on their own have no curriculum, no schedule and no promise of a job at the end. The human resource architecture proposed by Lepak and Snell (1999) holds that skills which are both valuable and particular to one firm are best built inside it, and keeping a high-speed bun line running is exactly that kind of skill. Bidwell (2011) adds evidence that people hired from outside are paid more than internal movers into comparable jobs and perform worse during their first years, so Hartwell's habit of buying technicians is costlier than its payroll shows.

Why the Three Parts Must Go Together

Each element answers one finding, and each fails without the other two. The ramp cuts first-year demand from about 27 people to about 21, a gap that better recruiting and a small vendor crew can fill. The raise keeps the technicians Hartwell already has, along with the ones it trains. The apprenticeship produces qualified technicians in year two, just as the line moves to full output, and gives substance to the grow-from-within promise. Take away the raise, and newly certified apprentices become easy hires for better-paying plants nearby. Take away the apprenticeship, and the same shortage reappears in month eighteen. Take away the ramp, and year one fails no matter what else is done.

Cost and Return

Appendix D builds the first-year bill at roughly $1.04 million. The raise and the night premium, with payroll charges, account for about $370,000. The apprenticeship costs about $250,000 once apprentices' useful work is netted out (F21). Three vendor technicians bridging the gap cost about $420,000, a figure that shrinks in year two as the first cohort finishes. Set against that bill is roughly $23 million of new first-year revenue at reduced output and close to $38 million in each later year. Cost-benefit studies reviewed by Muehlemann and Wolter (2014) show that training firms often earn back apprenticeship spending through trainee output and cheaper later recruiting, and Lerman (2014) summarized evidence that employers who train their own workers keep them longer.

Limits

Four things could change this recommendation. Sales has not yet asked the customer about a ramp, and a refusal turns the recommendation into a decline. The market pay figures are illustrative, so the turnover and hiring gains from the raise are estimates built on exit reasons rather than measured effects. Retirement counts rest on what technicians say they plan to do, and plans shift. The apprenticeship estimate has not been priced by a training provider. Becker and Huselid (2006) argue that an HR strategy has to fit the firm's competitive position; the doubts listed here concern the size of the estimates, not that fit.

Implementation

Month one: the sales director takes the ramp proposal to the customer. Quarter one: Hartwell announces the raise and the night premium, selects its first eight apprentices, starting with the six workers already learning on their own, and signs a twelve-month agreement with a vendor for contract technicians. Month six: the Janesville line starts at reduced output. Month twelve: the second cohort begins. Month twenty-four: the first cohort qualifies. Every quarter, HR reports four numbers to the owners: technician turnover, days to fill a technician vacancy, apprentices still enrolled and on-time output from the new line. If technician turnover is still above 15 percent at the close of year one, the owners should reopen the pay decision before the line goes to full output.

Conclusion

The contract Hartwell wants is within reach, but not on the customer's first timetable and not with the way the bakery has staffed maintenance until now. A ramped schedule, a pay correction and a homegrown technician pipeline together turn a promise the bakery could not keep into one it can, and they make the company's own words about growing its people true for the workers its growth now depends on.

References

Becker, B. E., & Huselid, M. A. (2006). Strategic human resources management: Where do we go from here? Journal of Management, 32(6), 898-925. https://doi.org/10.1177/0149206306293668

Bidwell, M. (2011). Paying more to get less: The effects of external hiring versus internal mobility. Administrative Science Quarterly, 56(3), 369-407. https://doi.org/10.1177/0001839211433562

Cappelli, P. (2008). Talent on demand: Managing talent in an age of uncertainty. Harvard Business Press.

Hom, P. W., Lee, T. W., Shaw, J. D., & Hausknecht, J. P. (2017). One hundred years of employee turnover theory and research. Journal of Applied Psychology, 102(3), 530-545. https://doi.org/10.1037/apl0000103

Lepak, D. P., & Snell, S. A. (1999). The human resource architecture: Toward a theory of human capital allocation and development. Academy of Management Review, 24(1), 31-48. https://doi.org/10.2307/259035

Lerman, R. I. (2014). Do firms benefit from apprenticeship investments? IZA World of Labor, Article 55. https://doi.org/10.15185/izawol.55

Muehlemann, S., & Wolter, S. C. (2014). Return on investment of apprenticeship systems for enterprises: Evidence from cost-benefit analyses. IZA Journal of Labor Policy, 3, Article 25. https://doi.org/10.1186/2193-9004-3-25