Historically the importance of human resources was long underestimated and the job of the HR departments in large corporations was mainly administrative (Noe et. al., 2010). The term human resource management only arrived in the United States of America in the 1980s. Only in the last decade business leader became aware of the importance of human resource decisions for the firm’s success (Malik, 2009). Previously companies mainly saw this function as an unimportant and inferior department, more and more corporations today are realizing the strategic value a good human resource management can have for the company, especially in service-driven western economies (Noe et al., 2010).
One of the most conservative industries concerning human resource management was the energy market, which placed less emphasis on it than most other industries. After all the common assumptions was that one is supplying a commodity and faces a stable demand. At the beginning of the millennium more than half (55%) of them engaged in outsourcing some or all of their HR functions in order to focus on the primary business and free up time for strategic action (Accenture, 2004). The energy market in Europe has been quite stable after its deregulation. Over time the industry consolidated and a few large corporations evolved. As one of the dominant players in the European energy market RWE AG is a good illustration of the changes the human resource department underwent. Founded in 1898 in Essen, Germany, RWE grew to become a dominant player in the European energy market with leading market positions in the largest European countries. Today, RWE employs around 72000 people and its revenues amount to € 52bn (RWE AG, 2011). Furthermore, today it views its employees as its most important asset for the long-term success of the company and the HR department as essential for the future success of the company (RWE AG, 2011). The purpose of the paper is to explore the human resource practices used by RWE and how these align with the overall strategy and the business model of RWE.
Table of Contents
1. Introduction
2. Business Model & Strategy
2.1 Business Model
2.2 Corporate Strategy
3. Strategic Human Resource Management
3.1 Human Research Management Approach.
3.2 Human Resource Configuration & Modes
3.3 Knowledge Management
4. Challenges
4.1 General challenges
4.2 HR specific challenges
5. Conclusion
Objectives and Themes
This paper examines the human resource practices employed by RWE and evaluates their alignment with the company's overall corporate strategy and business model in a rapidly changing energy market.
- Analysis of RWE’s business model according to the Johnson et al. framework.
- Evaluation of the strategic fit between human resource management and corporate goals.
- Examination of HR configurations, including knowledge management and talent development.
- Assessment of current challenges, specifically the impact of nuclear phase-out and an aging workforce.
Excerpt from the Book
3.3 Knowledge Management
Building on the previous part, RWE is producing in-house capacity through intensive training and development, but relies on acquisitions from external markets at the same time. However, regardless of make or buy decision of different employees, the human resource practices mentioned above, serve as important inputs in order to develop core competencies, which in turn result in superior corporate performance (Wright, 2001). The people management practices serve as basic inputs for intellectual capital, knowledge management and dynamic capabilities.
Although knowledge workers are one of the key ingredient for RWEs superior corporate sales growth and revenue, due to their creation, exchange and combination of knowledge (Collins, 2006). Every one of the 72,000 employees is a valuable asset to the company and is part of RWE’s human capital People management practice outputs flow into the knowledge management process. This process mainly determines a company’s competitive advantage in terms of core competencies. The driving question is in which way a company is able to communicate new knowledge into a sound business strategy, which further supports the corporate strategy. “The ideas management program” is a good example in this case. 6,800 ideas that employees brought in for innovation in 2011 achieved a contribution of €51,4m savings. The program aims refers to an exchange of information among divisions, which increase the transparency of hard- and software costs being incurred. This results in fewer administrative workloads.
Summary of Chapters
1. Introduction: Provides an overview of the strategic shift in HR within large corporations and the specific context of RWE within the European energy market.
2. Business Model & Strategy: Analyzes RWE's value proposition, profit formula, and corporate strategy, identifying it as an "analyzer" following a cost leadership path.
3. Strategic Human Resource Management: Details the HR approach, focusing on internal alignment, configuration modes, and the role of knowledge management in creating competitive advantage.
4. Challenges: Discusses external regulatory pressures, such as the nuclear phase-out, and internal HR hurdles like demographic change and female representation in management.
5. Conclusion: Summarizes that RWE's HR practices are generally aligned with its strategy, though the company faces significant future pressures that will test these methods.
Keywords
RWE, Strategic Human Resource Management, Business Model, Energy Market, Knowledge Management, Human Capital, Corporate Strategy, Analyzer, Organizational Development, Demographic Change, Nuclear Phase-out, Talent Management, Employee Training, Performance Appraisal, Competitiveness
Frequently Asked Questions
What is the primary subject of this publication?
The work explores how RWE integrates its human resource practices with its corporate strategy and business model to maintain its position as a leading European energy provider.
What are the core thematic fields covered?
The core themes include strategic human resource management, business model analysis, knowledge management, and the specific challenges faced by the energy sector regarding regulation and demographics.
What is the main research objective?
The objective is to evaluate the alignment between RWE’s HR department activities and the overall corporate goals, and to examine how these contribute to the company's success or failure.
Which scientific methodology is applied?
The author uses a strategic management framework (Johnson et al.), Porter’s generic strategies, and Lepak & Snell’s human capital configuration model to structure the analysis.
What topics are analyzed in the main body?
The main body treats RWE's business model, its "analyzer" strategic positioning, various HR configurations (commitment-based, market-based, etc.), and the contribution of HR to the company’s success.
How would you describe the key characteristics of this research?
The paper is characterized by terms such as strategic fit, human capital, vertical/horizontal alignment, and corporate competitive advantage.
How does RWE address the problem of an aging workforce?
RWE implements solutions such as early retirement programs, targeted training, and severance agreements to balance the need for retaining expert knowledge while attracting younger talent.
Why is knowledge management specifically important for RWE?
Knowledge management is critical as it enables RWE to optimize internal innovation, enhance cost-efficiency through ideas management, and maintain performance during the transition to renewable energy sources.
- Citation du texte
- MSc, Eda Aydin (Auteur), 2013, RWE. Analysis of the Human Resource Practices of one of Europe’s leading energy suppliers, Munich, GRIN Verlag, https://www.grin.com/document/282185
