ASSIGNMENT COVER SHEET

UNIVERSITY OF SUNDERLAND

BA (HONS) BUSINESS MANAGEMENT

Student ID: 189152585/1

Student Name: NGUYEN PHUOC MINH

Module Code: HRM325

Module Name / Title: Strategic Human Resource Management

Centre / College: Ho Chi Minh City University of Technology and Education, Nguyen Trong Tuyen
Campus
Due Date: 11th January 2019 Hand in Date: 11th January 2019

Word length: 3289

Students Signature: (you must sign this declaring that it is all your own work and all sources
of information have been referenced)

Nguyen Phuoc Minh

 UNIVERSITY OF SUNDERLAND

HRM325

STRATEGIC HUMAN RESOURCE MANAGEMENT

STUDENT NAME: NGUYEN PHUOC MINH

STUDENT ID: 189152585/1

LECTURER NAME: DR. WILLIBETH C. CANDOL

TUTOR NAME: PHAM QUOC DU

DUE DATE: 11th JANUARY 2019

HAND IN DATE: 11th JANUARY 2019

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Table of Contents
Executive summary.........................................................................................................................3

Introduction......................................................................................................................................4

1. An overview of Tesla Inc............................................................................................................5

2. Critical assessment of Tesla’s HRM system...............................................................................7

2.1 Recruitment/selection............................................................................................................7

2.2 Performance Management System........................................................................................7

2.3 Reward management.............................................................................................................8

2.4 Training and development.....................................................................................................8

2.5 Employment relations............................................................................................................9

3. Tesla’s SHRM models...............................................................................................................10

3.1 Best Practice........................................................................................................................10

3.2 Best fit..................................................................................................................................12

3.2.1 Life cycle best fit model...............................................................................................12

3.2.2 Best fit & competitive strategies...................................................................................12

3.2.3 Strategic Configuration.................................................................................................14

4. SWOT analysis of Tesla’s HRM system...................................................................................15

5. Recommendations for improvements........................................................................................16

Conclusion.....................................................................................................................................19

References......................................................................................................................................20

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Executive summary
Overview

This report was created with the aim of analyzing the importance of strategic human resource
management to the objectives, mission and vision of the business as a whole. Additionally, the
report also includes a critical assessment of Tesla Inc.’s human resource management and
generates recommendations for improvements.

Highlights

Tesla Inc. is a fast-growing company in the electric vehicle industry with huge amount of
financial capital, nice locations, access to large pool of talents all over the world. With that said,
the HRM system of the company is great too. The organization has a very detailed recruitment
and selection process, tight PMS, a generous reward management system, decent training and
development system but somewhat a confused and controversial image regarding employment
relations. The company is also capable of realizing the implications of its manpower to the
organizational goals and objectives, which is shown in the abundant application of SHRM
practices and models to its operation.

The problems

 Tesla’s training and development department is great at attracting and building a

talented young workforce but not effective at developing existing employees.
 The company’s image is heavily affected through employment relations issues,
especially related to Elon Musk’s tweets and unreasonable worker lay-offs rumors.

Solutions

 Aside from operating the Tesla START program, the organization should expand a lot
more academic opportunities for its employees through company’s own designed
programs or outsourcing.
 As CEO of Tesla, Elon Musk should stop talking in an unprofessional manner publicly
to avoid unnecessary controversies. Additionally, Tesla should be more open about how
the company treat its employees in order to increase transparency.

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Introduction
In the past, most companies merely viewed their workers as a mean or a tool to accomplish the
job that they were assigned to. However, in this era, top executives from medium and large
corporations are starting to realize that the workforce is one of the most vital parts of their
company, hence the concept of Strategic Human Resource Management were created. While
HRM mostly focuses on recruiting, training and compensating employees for their contributions,
SHRM bring these practices to the next level by linking them with the objectives of the company
as well as the company’s mission and vision statement [ CITATION Get19 \l 1033 ].

In order to demonstrate a compelling and interesting report, a case study of Tesla Incorporated
will be included so that the audience will have a clear view on how SHRM is applied in a
corporation and how to react to changes and how to improve the existing HRM system. The
report’s structure will be divided into 5 parts. The first part will give the readers an overview of
Tesla’s company profile and its organizational structure. After that, the second part will include a
critical assessment on the company’s HRM system. Then, an academic discussion of SHRM will
be demonstrated in the third part and the audience will also learn how SHRM is applied in Tesla
as well. The fourth section will include an analysis on Tesla’s HRM using the SWOT model.
Finally, in the fifth section of the report, the readers will be shown how an enterprise make
changes in order to constantly improve its HRM system.

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1. An overview of Tesla Inc.
In 2003, a group of engineers founded Tesla with the aim of proving that instead of relying on
gasoline cars to get around, they can also utilize electric automobile, which can be quicker, more
environment friendly and more fun to drive. However, nowadays, Tesla has expanded its
business into multiple aspects as well, including producing and selling clean energy products
such as battery energy storage, solar panels, solar rooftiles, etc. In short, from focusing mainly on
producing electric vehicles, Tesla’s mission now has evolved into making the world a better
place by reducing partly or completely the use of fossil fuels and move towards a zero-emission
future [ CITATION Tesnd \l 1033 ].

As of 2021, the company has employed more than 70,000 people from all the continents in the
world, whom have been carefully selected and trained in order to bring an exquisite experience
to any customer that comes to the company. The company’s financial status has been in good
shape also, which the revenue of the firm in 2020 was $31.5B, a 28.3% increase compared to
2019. Not only that, it has been reported that the net income of the enterprise in 2020 was
179.3% higher than the previous year, which was a huge success for the company [ CITATION
Glo21 \l 1033 ]. With this positive momentum regarding organizational performance, the firm
sets out a very ambitious goal, which is “By 2030, we are aiming to sell 20 million electric
vehicles per year” – said Robyn Denholm, Board Chair of Tesla [ CITATION Eva21 \l 1033 ].

Figure 1: Tesla’s net income growth [ CITATION Glo21 \l 1033 ]

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Now, when talking about the source of the success of Tesla, there will be many factors involved
such as initial capital, locations, logistics, leadership, etc. Keep in mind, these are all essential
parts of an enterprise, however, if a company has all the money and modern machines in the
world but with incompetent or inadequate manpower, all those resources will be meaningless.
Indeed, human resources management is one the most important element that can be easily
overlooked. As in Tesla’s case, the top management is able to see the importance of SHRM thus
they have created many HR practices that link the employees’ jobs and goals to the
organizational objectives as a whole. These are some very interesting and worth learning HR
practices from the Anti-Handbook Handbook published by Tesla itself in 2021:

 Employees can talk or email to anyone to suggest what they think is the most efficient
way to solve the problem for the benefits of the whole organization.
 Top executives believe in trusting the employees more than opposing strict rules and
regulations to manage them.
 Employees can even contribute ideas to improve the company even if it is outside their
area of responsibility.
 Etc.

Figure 2: Tesla’s Anti-Handbook Handbook

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2. Critical assessment of Tesla’s HRM system
2.1 Recruitment/selection
Recruitment and selection are some of the most basic practices for anyone working in the HR
department. Recruitment is about finding and attracting a large pool of candidates applying for
the job, while selection is about narrowing that pool down then employ the most competent
people. For recruitment, Tesla advertise its jobs through many head hunter websites such as
LinkedIn, Glassdoor, Indeed, etc. However, candidates can also look for jobs at Tesla’s own
company, which is way more detailed and appealing. The site is professionally designed so that
the applicants is carefully lead into each category, from desired department to desired factory to
the list of available jobs and then the job description and requirements [ CITATION Tes21 \l
1033 ]. The selection process at Tesla is well designed too. According to Jobtesprep (n.d), this is
the selection process at Tesla that every applicant has to go through:

 Application: Candidate submit his/her CV for desired position.

 Phone interview: Hiring manager ask some questions about applicant’s interests in the
organization and some basic skills.
 Interview: Deep and more detailed interviews with some professional managers
 Exam: Candidate takes some tests for the company to evaluate his/her skills. One of the
most important examinations is the Hogan Personality test, which helps top management
of Tesla knows how the candidate will fit into the work culture.
 Assessment center: If the applicant passed the exams, he/she will be invited to the Tesla
Group Assessment Centre so that the company can appraise the candidate’s presentation
and teamwork skills.

2.2 Performance Management System

Performance management process is about communicating the organizational objectives to the
employees of the company, linking them with personal and individual goals in order to motivate
them to work harder for the better of both sides as well as tracking and analyzing organizational
and individual performance. At Tesla, according to the Anti-Handbook Handbook, employees
and their supervisors are highly encouraged to discuss their performance and objectives on a day-
to-day basis, which is very common for Japanese enterprises. Besides, the organization also

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apply the traditional way to manage performance which is conducting annual reviews, the reward
its workers based on the achievements they have accomplished. In addition, according Andrew
Thompson (2018), these are some of the indicators that the firm has used to determine
organizational performance:

1. Powertrain units/day (for Automotive production)

2. Automobiles/day (for Tesla car production)
3. Inquiries addressed/day (for Customer service)

2.3 Reward management

In order to make employees feel valued and motivated, an organization needs a well-designed
reward management system. Apart from motivating the people, reward management also helps
the company in recruiting new talents, ensuring the firm’s financial stability as well as
compliance with labor legislation. In Tesla’s case, it has been reported that the company is one of
the most generous organizations in terms of providing benefits and perks. According to Cameron
Soregaroli (2021), when working at Tesla, employees are offered up to 35% discounts on the
company’s merchandise and numerous services such as childcare, travel and entertainment. Not
only that, the firm also offers good disability insurance to people that cannot partly do their job
due to medical barriers, which is 66.7% of the worker’s salary for up to 17 weeks. Additionally,
when being an employee of Tesla, all one’s fees regarding basic healthcare, medication and
services are covered by the company, including Accidental Death & Dismemberment Insurance.
Furthermore, in regards to employees’ wellness and PTO, Tesla is generous too. Tesla is one of
the rare organizations that dare offer their employees unlimited vacation days. On paper, this
may seem like a bad idea. However, it has been reported that the perk was rarely abused in Tesla
and in return has increased the trust between the employees and top management [ CITATION
Cam21 \l 1033 ].

2.4 Training and development

Training and development can be identified as the most important factor in shaping an employee
according to the organizational goals and work culture. Indeed, every company needs to build
adequate or great training and development programs and system in order to bring benefits to
both the organization in terms of profits and employee in terms of career path and salary.
According to Abigail Johnson Hess (2018), in 2018, Tesla announced a program called Tesla

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START program which was dedicated to students who want to work in the electric car industry
in the future at Central Piedmont Community College (CPCC) and Rio Hondo College. When
attending this 12-week program, students did not merely receive useful information about
technical skills and work culture at Tesla, but also receive a wage for joining these classes. The
amount of money was not disclosed by the company itself but according to some unofficial
sources, the wage range was about $9-$10 per hour. Furthermore, if a student scored more than
80% in the program, he/she will be secured a job at the company center after graduation. As we
can see, with this program, both sides are winners. While Tesla can secure a pool of talented
future employees, the students are able to earn college credits, wage and an opportunity to secure
a prominent future job from attending this program.

2.5 Employment relations

Employment relations is the word that describe the relationship between the employer and the
employees both as an individual and a collective unit called the trade union. The reason that this
concept is that in most medium to large enterprises, individual workers cannot easily
communicate to the top management regarding work problems, well-being, wages, benefits, etc.
because the distance between those two positions are too large. Therefore, ER became to exist
with the aim of creating collective bargaining and agreements, then translate them into individual
contracts of employment in order to resolve possible conflicts occurred in the workplace as well
as enhance the trust between the employer and the employees.

When talking about employment relations at Tesla, there are many controversies to be discussed.
From the general view, Tesla has been accused by a lot of organizations of being anti-union
including UAW (United Auto Workers union), The New York Times, CNBC, etc. However,
when looking closely, everything is not completely as it seems. According to Johnna Crider
(2021), in 2018, when Joe Marshal asked Elon Musk whether he was anti-union, he responded
“They can form a union whenever they want & there’s nothing I can do to stop them. California
is a very pro-union state. They just don’t want to.” Furthermore, in 2018, when being accused by
the UAW of firing employees that wanted to unionize, Musk stated that “only known union
person fired was a guy who repeatedly threatened non-union supporters verbally & on social
media & lied about it.” In addition, it is strange that an anti-union company offer employee
relations management jobs in the first place. Indeed, in the company’s own career site, one can

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find a position called Senior Employee Relations Partner which has the responsibility of
investigating employees’ concerns, including satisfaction level, harassment, discrimination,
racism, violence, etc. then report them to top management to generate solutions [ CITATION
Tes211 \l 1033 ].

3. Tesla’s SHRM models

3.1 Best Practice
The best practice approach in SHRM suggests that there a list of HR practices that have been
researched and proven to be beneficial for organizational performance, hence could be applied
into multiple companies in order to yield better results. Jeffrey Pfeffer – a U.S academic in the
HR field – stated that enterprises could build a strong workforce and ensure long-term
organization performance based on a list of 18 HR practices. These are some of HR practices
mentioned by Pfeffer.

 Realistic job previews

 Use of psychometric tests for selection
 Well-designed induction program
 Regular assessments
 Flexible job descriptions
 Regular feedback on performance
 Profit-related bonuses
 Harmonized holiday entitlement
 Etc.

At Tesla, we can actually see many resemblances between the Pfeffer’s list and the company’s
HR activities, which will be discussed as follows.

Realistic job previews: One of the good things when looking for a job at Tesla is that the job
descriptions and requirements are written very carefully and thoroughly. This gives the
candidates a vivid and realistic vision of what working for the company would be like.

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 Figure 3: Example of a job description at Tesla [ CITATION Tes211 \l 1033 ]

Use of psychometric exams: Aside from appraising new candidates’ technical and soft skills,
Tesla also pay heavy attention on the mental health and social abilities of its people, thus require
everyone to take the Hogan Personality Inventory test (HPI), which is also the most popular
personality test among the most fortune 500 companies in USA [ CITATION 123nd \l 1033 ].

Regular feedback: According to the Tesla’s Anti-Handbook Handbook, managers, supervisors

and their subordinates should discuss work performance every day. Not only that, if an employee
feels like he/she needs any feedback or input from his/her manager, one is highly encouraged to
initiate the conversation and ask for it instead of staying silent.

Harmonized holiday entitlement: Even though Tesla’s employees are given unlimited vacation
days, not many workers abuse this entitlement and holiday plans are very well-organized.
Employees are expected to book days-off in advance and their vacation plans should not collide
with each other which put the company into a disadvantaged circumstance[ CITATION And18 \l
1033 ].

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Profit-related bonuses: Not only being known for offering its people attractive benefits such as
short-term and long-term disability insurance, the 401k retirement plans, unlimited vacation
days, Tesla also has the Employee Stock Purchase Plan (ESPP), which encourages the
employees to be the company’s investors by giving them discounts on the company stock
occasionally. With that said, by owning the company stock, employees will also be beneficial
based on the profits that the company earns [ CITATION Cam21 \l 1033 ].

3.2 Best fit

Unlike best practice, the best fit approach does not include a bundle of fixed HR practices that
multiple businesses can pick from but encourage them to tailor their HR activities according to
the circumstance that their business operations are in. There are three best fit models that most
companies are accustomed to: lifecycle, competitive strategy and strategic configuration. With
that said, this report will mainly focus on how Tesla tailor their HR practices according to their
respective competitive strategies.

3.2.1 Life cycle best fit model

The life cycle best fit model suggests that a company’s HR practices should be aligned to the
stage that the company is currently positioned among 4 stages: start-up, growth, maturity and
decline.

Figure 4: The life cycle best fit model

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3.2.2 Best fit & competitive strategies
Michael Porter (1985) stated that businesses have three main strategic options to gain
competitive advantage which are: cost reduction, innovation, and quality enhancement. Then, in
1987, Schuler and Jackson demonstrated how companies could match their HR practices to each
of the strategy.

Table 1: HR behaviors in terms of different competitive strategies (Schuler & Jackson, 1987)

As can be seen, there are three competitive strategies that an organization can choose from to
gain competitive advantages. Choosing the cost-leadership approach means that costs are cut as
much as possible and product quantity is prioritized; innovative model suggests delivering
unique products and services which means risks are higher; quality-oriented is about bringing the
best quality products and services to the consumer but is short of quantity and high costs. In

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Tesla’s case, when the company was established in 2003, there were almost no competitors in
the electric vehicle industry hence its main competitive strategy is innovation. However,
nowadays, more and more manufacturers are jumping into this industry due to high demand as
well as for environment preservation, which is approximately twenty companies [ CITATION
EVC18 \l 1033 ], Tesla’s strategy now is a hybrid of the innovative and quality approaches.
Indeed, due to the fierce competition, aside from being unique and innovative, the firm also has
to be careful of maintaining and enhancing quality of its products and services in order to keep
its first position long-term.

Table 2: EV sales comparison [ CITATION Bru21 \l 1033 ]

3.2.3 Strategic Configuration

This best fit approach suggests that businesses adapt a policy of strategic configuration from
Delery and Doty (1996), then match it with one out of four types of businesses defined by Miles
and Snow (1978) that they belong to.

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Table 3: Strategic configuration and HRM (Miles & Snow, 1978)

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4. SWOT analysis of Tesla’s HRM system
After assessing Tesla’s HRM system and its SHRM models, the SWOT analysis below will give
the audience a summary of the pros and cons as well as opportunities and threats to the
organization.

Table 4: SWOT analysis of Tesla’s HRM system

5. Recommendations for improvements

Based on the assessments and the SWOT analysis of Tesla’s HRM system conducted above, we
will identify two HR aspects that need to be changed in order to improve organizational
performance.

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The first problem in the Tesla’s HRM is the training and development department. As already
discussed, training and upgrading employees’ skills is very important in maintaining and
improving the company’s products and services. However, in Tesla’s case, the company only has
the Tesla START program, which only caters to young people who have never known a thing
about EVs. With that said, the company completely lacks programs that develop existing
employees, hence may hurt the company in the long-term as most of the workers have to upgrade
their skills through self-learning. Therefore, to solve this problem, Tesla should either develop
their own training programs or outsource by partnering with colleges or universities to bring
qualified knowledge and skills to its existing and long-term employees.

The second problem that has been damaging Tesla’s image is employment relations. As already
mentioned, there has been a lot of confusions regarding the company’s stand on worker
unionization. However, one of the main points that have led the company into this controversy
mess is the vague and unprofessional way of communication of Tesla’s CEO Elon Musk.

*UAW:
United
Auto
Workers

17
 Figure 5: Tesla’s CEO’s tweets regarding labor union

From the tweets displayed above, it can be seen that Elon Musk did not directly prohibit his
employees from forming a labor union, but he did not seem to favor the idea of labor union
either. There were rumors of him firing workers who want to unionize too but a lot of them have
been proven to be false so there is not solidified data on whether he tried to sabotage
unionization or not. However, in order reduce the magnitude of this problem, Elon Musk should
be more professional when speaking to the public from now on, and try to avoid using words that
could cause vague assumptions for people from the outside viewpoint. Additionally, the
organization should disclose more openly the information in regards to how it treats its
employees to the public so as to increase transparency.

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Conclusion
In conclusion, managing human resources is already a tough job, but strategically managing
them is a whole different story. Through this report, the audience has been shown the importance
of the HRM system in the long-term business development of Tesla Inc. The readers also learned
about the company’s different aspects in the HRM system from recruitment/selection to
employment relations. Furthermore, the report introduced SHRM models to the audience,
including the best practice and best fit approaches and displayed how Tesla had put these
concepts into application. After conducting detailed assessments, the report condensed those data
into the SWOT matrix in order to identify the problems of the company. Finally, those problems
were addressed in the final section and recommendations were discussed as well.

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