Explain Plural Franchising Entrepreneurship -Myassignmenthelp.Com

Question: Discuss About The Explain Plural Franchising Entrepreneurship? Answer: Introducation Human resources management is important in organizations for a number of reasons. It is the component within organizations that oversees the human capital. Its functions include selection and recruiting employees, dealing with issues of compensation and staff development. There are several theories that have been postulated on human resources management. The different theories set up the foundational position from which the concept has developed. It explains why different companies adopt approaches that fit their organizational structures. The model that was adopted by Uber is that of agency which is heavily influenced by the resource-based theory. Background of Article The article that will be used in this report is from the Business Insider Australia, dated June 30, 2017. It is captioned Uber Australia is settling unfair dismissal cases, despite insisting drivers are not employees. The author of the article states that Uber in Australia is engaged in settling cases instituted by former drivers who used to work for the company (Yoo, 2017). The company insists the deactivated drivers were not employees but partners. Uber claims that those dismissed were abusive or violent towards their customers. The effect of settling the cases instituted in effect cancels the employment contracts between Uber and its drivers. Primary Human Resource Theory adopted by Uber The human resource theory adopted by Uber is that of Agency which creates the roles of principal and agent. In this case, Uber is the principal while the drivers are the agents. The drivers using the app provided by Uber are able to offer taxi ride services to their customers. They provide their own cars and are given the latitude and flexibility to manage their schedules. Uber provides minimal oversight to the conduct and behavior of its drivers and intervenes when specific issues are brought to its attention. There are two main problems associated with this theory: differences in attitude between principal and agent and conflict in desires and behaviors. Conflict in Behavior Conflicts may arise in the relationship between the agent and principal. The agent may behave in the manner that may not be representative of the core ideals and principles of the principal (Shapiro, 2016, p. 406). In this context, the driver employed by Uber may decide to behave in a manner that breaks the code of conduct prescribed by the company. Uber in this case states that the drivers were either violent or abusive towards their customers. This goes against the community guidelines set by the company and this can justify the dismissal of the driver. This is on the basis that the driver is not an employee and once the terms of agency have been breached, the agency is terminated. Differences in attitude The differences between the agent and principal primarily focus on the element of risk. This difference is seen with the degree of risk each partner in the agency is willing to undertake. Within the context of Uber, the drivers may be willing to engage in behavior that is risky in competing for customers when competing with traditional taxi services and drivers. Others may cross the professional boundary lines when soliciting for customers using their mobile devices. What they may assume is ordinary and common in the course of doing business may constitute as risk to Uber. The difference in attitude may be influenced by the outcomes of such behavior, with Uber bearing greater liability than the driver. Agency Loss Agency loss refers to the concept that is used to determine whether the agent has breached the interests of their principal. It shows the outcomes that are beneficial to the principal and are harmful to the agent. When the agent acts consistently with the best of interest of the principal, the agency loss is minimal tending to zero. When the agent acts in their own interest, disregarding the principals interest, agency loss is high. Xie (2017, p. 1) states that the agency loss is also high when the principal does not have enough knowledge about the activities of the agent. The lack of this information leads to agency loss. Within the context of Uber, the company may not always know about the behavior of their drivers. The local set up of Uber is minimal which works to reduce overhead costs. The best way that the company gets feedback about errant behavior of its drivers is through the social media or formal complaints instituted at the courts. The lack of close supervision of its drivers means that the principal has very little information whether they are working in their best interest. The disconnection in attitudes and interests between Uber and its drivers in Australia is what led to the agency loss which triggered the court cases. Settling the cases was the final step of canceling the agency relationship. Secondary Human Resource Theory adopted by Uber The other secondary that is seen to work at Uber is the resource-based approach. This theory rests on the postulation that companies poses resources that are unique and which cannot be easily imitated or substituted. The companies that own these resources are able to gain a competitive advantage over their competitors (Tabares, Alvarez, Urbano, 2015, p. 155). The competitive advantage translates into more clients and customers as well as more profits. In this theory, the resources are given the major role of achieving the organizational goals and objectives. There are two main resources which are important: the tangible and intangible. Tangible resources In the case of Uber, the driver is the tangible and most important resource. The driver is the face of the company and is tasked with ensuring that the expectations of the company are met in terms of customer satisfaction. The driver is also important in that they add value to the company by coming on board with their own investment in the form of their vehicle. The driver contributes significantly to the profitability of Uber by how productive they are in doing business. The drivers can be seen and quantified in terms of how many hours they log in per day and how many miles they cover. The vehicle that they own is part of the extended tangible resource they also bring on board while working with Uber. Intangible resources The intangible resources are those which cannot be quantified easily and which are hard to touch and see. These include the skills of the employees, the brand name and reputation. In the context of Uber, its app constitutes part of its intangible resource. Drivers are given access to the company app when they sign up with it. The app is a form of franchising that seeks to reduce the dangers of moral hazard and adverse selection (Gillis, Combs, Ketchen, 2014, p. 450). The brand reputation as being the most cost-effective taxi service constitutes the intangible resource of Uber. The tangible and intangibles should work together in order to produce the competitive advantage at Uber. In this particular case, the alleged misbehavior of its drivers led Uber to withdraw access by the drivers to its app. Recommendations There are four main recommendations that can be made in this case with regards to the human resources management adopted by Uber. While the style adopted prima facie by Uber is that of agency, in practice it breaks down to institutional isomorphism (Bailey, 2013, p. 108). Institutional isomorphism states that companies may behave in the manner that navigates the laid down rule and norms in order to appear as being legitimate. Uber can enter full employment contracts with its drivers which are renewable every six months. This will formalize the agency relationship and reduce agency loss. The company can also draft a form on accountability that discharges the company from liability in the event that they breach the agency relationship (Bodreau, 2017, p.4). This will also reduce agency loss and will reduce the conflict of interest between agent and principal. The drivers will be more careful as they know the consequences of their actions with regards to the company. Clear outcomes should be spelt out in terms of remedial and punitive actions that Uber may take. The company can also redesign its app so that its customers can give real time feedback on their experiences with the drivers. The total logged feedback received about a driver can be analyzed every month to gain knowledge about their behavior. Drivers whose behaviors are not consistent with the values of Uber can be warned or their contracts canceled. This works or reduces the agency loss by making the principal more knowledgeable about their drivers. Uber can also make use of its community of drivers in peer management in management using smart and soft power (Savaneviciene Stankeviciute, 2017, p. 199). ). A driver who shows consistency in behavior that is consistent with its values can be elevated as a peer leader. The peer leader can handle the issues that should have been handled by a substantive human resources department. Any concerns raised by the drivers can be channeled through the peer leader. New drivers can be inducted into the accepted culture and values expected at Uber. This will help to reduce the conflict of interests and divergent attitude. Conclusion Human resources management is important in managing the human capital in organizations. There are different theories that guide companies in the approach they take with regards to human resources practices. The approach taken by Uber in theory is that of agency where the company is the principal and the drivers are the agents. In practice, the company also engages in institutional isomorphism in order to appear legitimate. The company can enter into short-term contracts with its drivers which are renewable in order to reduce the agency loss and this is helpful in reducing court cases instituted against the company. References Bailey, J. R. (2013). The Iron Cage and the Monkey's Paw: Isomorphism, Legitimacy, and the Perils of a Rising Journal. Academy Of Management Learning Education, 12(1), 108-114. doi:10.5465/amle.2012.0248 Boudreau, J. (2017). Uber Is Finally Realizing HR Isnt Just for Recruiting. Harvard Business Review Digital Articles, 2-4. Gillis, W. E., Combs, J. G., Ketchen, D. J. (2014). Using Resource-Based Theory to Help Explain Plural Form Franchising. Entrepreneurship: Theory Practice, 38(3), 449-472. doi:10.1111/etap.1200 Savaneviciene, A., Stankeviciute, Z. (2017). Smart Power as a Pathway for Employing Sustainable Human Resource Management. Engineering Economics, 28(2), 198-206. Shapiro, S. P. (2016). STANDING IN ANOTHER'S SHOES: HOW AGENTS MAKE LIFE-AND-DEATH DECISIONS FOR THEIR PRINCIPALS. Academy Of Management Perspectives, 30(4), 404-427. doi:10.5465/amp.2013.0158 Tabares, A., Alvarez, C., Urbano, D. (2015). Born Globals from the Resource-Based Theory: a Case Study in Colombia. Journal of Technology Management Innovation, 10(2), 154-165. Xie, J. (2017). INFORMATION, RISK SHARING, AND INCENTIVES IN AGENCY PROBLEMS. International Economic Review, 58(1), 157-182. doi:10.1111/iere.12212 Yoo, T. (2017). Uber Australia is settling unfair dismissal cases, despite insisting drivers are not employees.