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By 2017 Tesla Motors briefly had a market value higher than the much-larger General Motors. Tesla’s strategic plan, formulated in 2006 by company founder Elon Musk, was to start by offering a high-performance energy-efficient electric roadster “without compromises” and then expand to offer less-expensive family cars, while eventually enabling battery recharging with solar power devices.

By early 2017, it was clear that Tesla was not soon going to achieve its goal of producing 5,000 Model 3 family sedans per week, and the company also faced numerous human resource management–related challenges.

For example, hundreds of workers stopped building Tesla’s battery factory near Reno, Nevada, claiming that outside contract workers were lowering their pay. Workers at Tesla’s car plant complained of high employee accident rates. Musk reportedly said that Tesla wasn’t
skimping on safety to make more profit, but rather to survive and continue to offer employment.

Tesla also laid off about 700 workers at its California manufacturing facility. Many union activists asked why, having to ramp up production of the new Tesla Model 3, the company would dismiss so many employees. Some felt it wasn’t because of poor performance reviews, but because Tesla wanted to fire employees who wanted a union. Elon Musk defends dismissing the 700 workers. Basically, he said (1) most companies have performance reviews and use them to screen out employees, and (2) because it wants the highest-quality cars, Tesla needs to have higher performance standards than its competitors. As Musk says, if a little company wants to compete with a giant one, the little one must have a lot more skill, or it will get beaten.

Some of Tesla’s HR procedures are also somewhat unusual. For example, Tesla requires that new employees sign confidentiality agreements prohibiting them from discussing Tesla’s business strategy and working conditions. The United Auto Workers filed unfair labor practice charges against Tesla, claiming that such agreements violate employees’ rights.

Tesla does use some sophisticated HR tools to improve its HR processes. For example, they used talent analytics to determine if employee referral programs improve their recruitment and retention processes and distributed an employee engagement survey.

By May 2017, Tesla appointed a new HR head, Gaby Toledano, with the title Chief People Officer. In announcing the appointment, Tesla noted that she would help Tesla address its labor and harassment disputes. Ms. Toledano acknowledged that some disputes between workers weren’t reaching the HR office fast enough, but she said she’s working on the problem. Furthermore, Tesla employees receive antidiscrimination and antiharassment training.

Source: Dessler, G. (2020) Human Resource Management, 16th Edition, Pearson, pp. 91-92.

Questions

1. Was Tesla’s human resource strategy consistent with its overall strategy to produce “uncompromising” high-performance cars? Justify your answer.
(20 marks)

2. Explain four HR tools that Tesla can use to produce “uncompromising” high- performance cars.
(20 marks)

3. Based on the case study, provide examples for Tesla of at least three strategically required organizational outcomes, and three required workforce competencies and behaviors.
(30 marks)

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