In late 2004 IBM announced that it was getting out of the personal computer business and would sell its entire PC operations to Lenovo, the fast-growing Chinese manufacturer of personal computers, for $1.75 billion. The acquisition turned Lenovo into the world's third-largest PC firm. It also raised many questions about how a Chinese enterprise with little global exposure would manage the assets of an American firm that had 2,400 employees in the United States, 4,000 in foreign manufacturing facilities, and 3,600 sales and distribution centers in over 60 countries around the world.

Lenovo moved quickly to reassure employees that it was committed ti building a truly global enterprise with a global workforce. Less than 24 hours after the two companies announced the acquisition, the human resources department at IBM's PC division released a 59-point question and answer memo to all employees informing them that they would become employees of Lenovo, that their compensation and benefits would remain identical or fully comparable to their IBM package, and that they would not be asked to reallocate. The memo also made it clear that employees could accept employment at Lenovo or leave, with no separation pay. IBM would not consider them for a transfer within IBM or recruit or hire the new Lenovo employees for two years.

What really surprised many observers, however, was the composition of the top management team at the new Lenovo and the location of its global headquarters. Top exclusives at Lenovo were smart enough to realized that the acquisition would have little value if IBM's managers, engineers, and salespeople left the company, so they moved Lenovo's global headquarters to New York! Moreover, the former head of IBM's PCdivision, Stephen Ward, was appointed CEO of Lenovo, while Yang Yuanqing, the former CEO of Lenovo, became chairman, and Lenovo's Mary Ma became CFO. The 30-member top management team was split down the middle- half Chinese, half American - and boasted more women than men. English was declared the company's new business language. The goal, according to Yang, is to transform Lenovo into a truly global corporation with a global workforce that is capable of going head-to-head with Dell in the battle for dominance in the global PC business. The choice of Ward for CEO, for example, was based on the presumption that none of the Chinese executives had the experience and capabilities required to manage a truly global enterprise. for Lenovo, when deciding who should hold management positions, the national origin of candidate is not an issue. Rather, the decision focuses upon whether the person has the skills and capabilities required for working in a global enterprise. Lenovo is committed to hiring the very best people, whenever they might come from.

Commenting on the acquisition, Bill Matson, a former IBM executives who became senior vice president of the human resources at Lenovo, noted that the company would use the same set of principles to guide workforce management in all locations. He noted that "You have to establish the broad principles of how you want to manage your business, but then you have to be veryastute about how those principles are applied in every local market so that you remain responsive to the needs of people in different environments"

Questions (4 items x 10 points)

1. What is the staffing policy that Lenovo is pursuing?

2. What strategy do you think the company is pursuing? Does its staffing policy match its strategy?

3. What are the strengths of Lenovo's staffing policy? Can you see any potential weaknesses or problems that the company might encounter as a result of this policy?

4. What should the HRM function do to enable Lenovo to become a truly global enterprise?

Please give the correct response of the questions from 1 to 4.

1. What is the staffing policy that Lenovo is pursuing?

Answer :

When Lenovo acquired IBM late in 2004, IBM's PC division employees were promised that they will be receiving the same or comparable compensation and benefits that they received under IBM. They can either accept being a Lenovo employee or resign with no separation pay from IBM. Another shocking factor to the change was that the former head of the PC division, Stephen Ward, was appointed as CEO. Lenovo realized that the acquisition would have all been in vain if the key people in the organization leave, thus the decision came about the new CEO. All these are indications of a specific staffing policy: a geocentric policy. In a geocentric staffing policy, the main focus in hiring and retaining employees are based on their skills and capabilities. This means that there are less focus on factors such as gender, race, age, or on whether the employee came from the parent or the host country of the organization.

2. What strategy do you think the company is pursuing? Does its staffing policy match its strategy?

Answer:

In my opinion, Lenovo was going for a transformational strategy. Transformational strategy goes beyond the usual business operations of the organization. It is a strategy that encompasses the organization's human resources, processes, and technology. Transformational strategy requires radical changes to these key factors in order to cope up with various external factors affecting the business. In these modern times, it is normal for an organization to aim for a more global audience and Lenovo was no exception. Their first move towards globalisation was the acquisition of IBM. Having no prior experience on being a global brand, Lenovo did their best to acquire the best and experienced people they can have: IBM's staff. Their geocentric policy worked to the company's best interests in line with the strategy they are going for.

3. What are the strengths of Lenovo's staffing policy? Can you see any potential weaknesses, or problems, that the company might encounter as a result of this policy?

Answer:

The strengths of Lenovo's staffing policy is that it ensures that they get the best people for the key positions in the company. The geocentric staffing policy works to their advantage since it maximizes their HR's potential. This policy also encourages cultural diversity in their workforce, which is a plus since Lenovo aims to be a global brand and having a multifaceted organization will help achieve that goal. It will also work as a competitive advantage and help ease the transition when they move to other foreign markets if one of their key persons originated from that country. The disadvantage to this, however, is that it can be quite costly to implement. First of all, the geocentric policy aims to get the very best, and this might come with a high price tag since the people they are looking for have the most experience and is quite knowledgeable in their chosen fields. And secondly, it will be quite a transition for Lenovo, a Chinese company, to suddenly have a wide array of nationalities under their wing. As stated in the case, they have no previous experience in terms of globalization and I assume that their company are majorly, if not all, composed of Chinese nationals prior to the acquisition. It will take some time for acculturation in the organization and maybe even some culture clashes may arise due to the cultural differences. In work ethics alone, there are already major differences to eastern and western practices in doing business. There might even be some racism involved in extreme cases that will result to lower productivity in the company.

4. If Lenovo is to become a truly global enterprise, what should the HRM function do to enable the company to attain this goal?

Answer:

In order to be become a truly global enterprise, the HRM function of Lenovo should be able to keep up with the organization's growing number of employees that are necessary for their globalization. These people will come from many different cultural backgrounds and the HR management will be tasked for these people to cooperate successfully and bring about innovation in the company. They should be able to research beforehand on how these diverse cultures can become acculturated to each other. Another task of HR will be to organize the necessary trainings for the employees to ingrain in them the company's mission-vision and goals. As stated by Bill Matson from the case, Lenovo aims to remain responsive to the needs of the people from different environments. Lenovo has their own set of principles for this, which calls for only the best in the field. The HR management should be able to manage these people in order to achieve the company's goal of globalization. Lastly, HR should be able to identify who's fit for the key positions in the foreign markets they are trying to penetrate into during the early stages of the company's globalization strategy. These people should be given the trainings that are necessary to be competent in that particular foreign market they are being deployed into.