BUSM4499 HRM Essay: Analysis of Tesla

Introduction 

Human resource management holds the position of backbone of organization, as humans are core resource of organization which can define performance prospects of an organization. The underlying essay is aimed to carry out investigation of real world organization to recognize HR issues faced by company and how these issues affect overall organizational performance. For this purpose, Tesla Motors has been chosen that is considered as renowned player in automotive sector. Tesla’s background, context of industry, information on stakeholders and overall industry trends details is given firstly. Secondly, the focus is maintained on describing the nature of organization and its strategy. The five key HR issues of Tesla are then presented including; talent management, diversity management, health and safety, unionizing and creation of quality employees experience. Followed by this, HR performance chain of Tesla has been presented and then company is recommended to take steps through which it can overcome HR related issues and can improve its performance. 

Tesla Motors – Context and Industry Insight

Tesla Motors is American based automobile manufacturing and energy generating company. The main specialty of company is linked with generation of electric cars, which are aided by solar city subsidiary of the company (Tesla 2018). Tesla motors operates in automotive industry, which is considered as energy and labor intensive industry. There are many players operating in automotive industry and Tesla can be considered as younger player which has changed the face of industry based on its innovations related to renewable energy and self-driving vehicles (The Guardian 2018). Tesla has entered into the industry in 2003 and has competed with companies which are operating in industry for several years, having significant brand image (Tesla 2018). However, Tesla has competed with all the existing players based on innovative electric cars and it has created market for luxury electric and sustainable vehicles. It seems that Tesla has stood out of competition since its inception and it is likely to innovate the automotive industry. 

There are number of external stakeholders within automobile industry, of which customers hold the core importance and they have both interest as well as power to influence profitability of business (Wang & Shyu 2008). Other stakeholders include; Government, environment protection groups, local communities, pressure groups and suppliers are considered as external stakeholders of Tesla. Current trends in industry are driven by innovation, technology and sustainability. The players in automotive sector are thriving to manufacture vehicles which are energy efficient, have low emissions and are sustainable in nature (Matousek 2018). Tesla is considered as pioneer of this technology and it is efficiently producing vehicles which comply with most recent trends of industry (Tesla 2018). 

Description of Organization and nature of work

Tesla motors is operating to manufacture vehicles and it is considered as a technology selling company in automotive industry. The core specialization of company is in electric and sustainable vehicles which consume less energy and are environmentally friendly. The company has created sense of urgency based on need of innovative and electric vehicles. Another innovative product of Tesla is self-driving cars which are intelligent and does not require human input (Matousek 2018). In terms of technology, the company produces and sells batteries, motors, autopilots, sensor and artificial intelligence. 

The strategy of company is termed as Complex Coordination by the investors of Tesla, as it fits different pieces together. The core target customers of Tesla were affluent buyers who are willing to purchase luxury cars which are sustainable (Teclemichael Tessema & Soeters 2006). However, latter the company has also targeted low end customers. On the other hand, the production strategy of Tesla includes the vertical integration, which enables the company to operate multiple factories for generation of economies of scale. The 80% of vertical integration of Tesla’s production is different other automotive companies, which outsource around 80% of their operations (Houser 2018). The sales strategy of Tesla is based on online selling as well as sales through company owned stores and showrooms. All of these departmental strategies combine to generate differentiation for Tesla, which is generic business strategy of Tesla. 

The performance of Tesla can be witnessed by the fact that company’s sales have increased from 48,000 in 2017 to 182,400 in 2018 (Tesla 2018). However, the overall operating income of Tesla was in negative which shows that company is experiencing performance issues, which could be linked with performance of human resources (Houser 2018). The net income of Tesla was US$−0.976 billion in 2018, which calls for attention for company to take actions for improvement of company’s performance. 

Human Resource Issues faced by Tesla

Talent management: The management of talent is crucial for company to assure success, yet Tesla has failed to retain talented workforce. The rate of turnover of top management has remained significant in case of Tesla, as recently Gabrielle Toledano, who was head of HR in Tesla has resigned (Hinchliffe 2017). The resign of head of HR has been followed by resignation of head of accounting as well as head of communication. These recent incidents have shattered the employee base of the company and Tesla had to struggle hard for acquiring talented employees to fill these vacancies (Forbes 2017). As aligned with talent management process model, retention of workforce is the core focus of organization’s talent management, which seems missing in case of Tesla.  

Diversity management: Being an internationally operating business, Tesla has diverse members in its workforce and implication of fair practices for diversity management seems a significant challenge in case of Tesla. It has been reported by employees of Tesla that they have experienced racism and some have claimed that they are being taunted and accused for being homosexual (Houser 2018). Likewise, one of the engineer of Tesla has filed a case against company, as her complaints against pervasive harassment were not addressed by the company (Matousek 2018). She claimed to receive unfair treatment against male workers, at the time of promotion and reward distribution. Tesla has thus been accused for its toxic culture, where diversity is not respected and managed in effective way, indicating that it is a major issue for HR of Tesla. 

Health and safety: One major issue for Tesla is to assure health and safety of its workers, as tesla has always been alleged for violation of safety rules of industry. Health and safety management is core need of company and the recent reports have provide evidence of serious injuries in Fremont Plant of Tesla, such that workers suffered 8.8 injuries per 100, which is a substantial number to worry about health and safety practices of Tesla (Hinchliffe 2017). The employees of Tesla have also claimed that their health and wellbeing is considered as secondary to the productivity of company, which led them to dissatisfaction and stress. The evidences have also shown that based on unsafe working conditions in tesla, two of its HR heads have resigned with time gap of few months, which has brought the company in crisis in terms of management of human resources (Hinchliffe 2017). Therefore, management of employee health, safety and wellbeing is considered as one significant challenge for Tesla. 

Unionizing: Tesla has taken serious steps against unionizing and it has announced that if any employee will wear a pro-union shirt then he/she might get fired (Houser 2018). This has made it hard for employees to exercise their rights and thus they are getting stressed and dissatisfied by the practices of Tesla. Tesla needs to consider this issue, as there is no board where employees can freely raise their voices and thus their complaints are not heard (Saridakis, Lai & Cooper, 2017). It is making the workplace culture of Tesla even more toxic for workforce and thus causing dissatisfaction among employees.  

Creation of high quality employee experience: As noted, Tesla is experiencing high turnover of workforce and thus it is losing some of its most valued employees (Business Insider 2018). Being operating in highly competitive industry, it is the core challenge for Tesla to create experience of employees, which can enhance the intangibility of company’s human resources. As stated in Resource based view (RBV) rarity and value of human resources is based on creation of their experience. The workplace culture of Tesla is not satisfactory for workforce and all the preceding issue related to human resource management contribute to cause problem of creating quality employee experience. 

HRM performance chain in Tesla

The performance indicates the anatomy of performance, such that it helps to assess that how actions of human resources affect organizational performance (Bowen & Ostroff, 2004). The analysis of Tesla and its relevant industry reveals the performance chain of Tesla, shown in figure below.

Figure 1. HRM performance chain of Tesla 

The behavior influences are based on HRM practices and policies of Tesla and the identified issues of HRM practices of Tesla make it hard for company to attain the desired behavior of workforce (Delery & Roumpi, 2017). For instance, the issues are associated with talent management, diversity management, health and safety, unionizing and creation of quality employees’ experience.  Based on these issues the desired behavior of workforce are hard to achieve and it leads to adverse performance of the company. 

The work outputs of Tesla are associated with effective manufacturing and production of Tesla’s vehicles and technology. When desired behavior of Tesla is not achieved, then Tesla fails to achieve its work outputs.  The inability of company to realize its work outputs then contributes in failure of company to attain the desired performance results (Paauwe & Boselie, 2005). Thus, the declining income level of Tesla can be linked with its ineffective human resource management practices and the issues of HR being faced by Tesla. The investigation of Tesla’s performance chain thus reveals that issues in HR of company are causing problems in terms of overall performance of Tesla and thus changes are needed in HR policies and practices of Tesla. 

Advise for Tesla to improve the effect of HRM on organizational performance 

Tesla needs to assure high quality working conditions with greater prospects for employee health, safety and wellbeing. Likewise, company needs to take into consideration the theoretical aspects of motivation, such as ERG Theory and achievement motivation theories, which assert that fair and equal treatment, positive and high performance working conditions, employee wellbeing and voice for employees’ rights can all contribute in enhancing satisfaction level of workforce (Snape & Redman, 2010). Likewise, when employees will be offered positive and high quality working conditions, then the turnover of workforce will likely decrease and Tesla will be able to retain its top talented workforce (Singh et al. 2012). Company is recommended to make changes in its human resource practices and work culture to support wellbeing of workforce. Based on these reforms, Tesla will be able to overcome issues associated with human resource management and thus workforce satisfaction will contribute in raising the performance of workforce. These suggestions are in line with the views of Saridakis, Lai & Cooper (2017) who states that when any organization works for enhancing wellbeing of workforce, then results can be witnessed in the form of enhanced commitment of workforce and better employee performance. Therefore, Tesla can enhance performance of organization by overcoming HR issues. 

Conclusion

Tesla’s investigation has reflected that company is a competitive player in automotive sector which has brought innovation in terms of sustainable technology and innovative features of cars. Tesla adopts the strategy of differentiation and vertical integration, which has enabled it to compete within industry. However, the company’s net income has decline recently and it can be linked with HR issues of Tesla. For instance, the company faces HRM issues in talent management, diversity management, health and safety, unionizing and creation of quality employees’ experience. All of these issues cause performance issues in Tesla, as company fails to foster desired behavior from its workforce and needs to make changes in its existing HR practices to increase satisfaction and motivation of workforce. Tesla is recommended to take steps through which it overcome issues related to HR practice and can thus enhance positive behavior of workforce. Moreover, the insight of Tesla’s HR practices has also enhanced my understanding regarding the HR issues which could affect performance of organization. By implying the knowledge regarding HR theories and practical aspects of HR in organization, I could become an effective HR manager, as I will be able to overcome challenges associated with human resource management.