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IS APPLE A DAY KEEPING THE EMPLOYEES AWAY? - An HR case study on Apple Inc.

Project by,

Konetisetty Nitya Kalyan(DM15125)

Malhar Divyang Lakdawala(DM15129)

Pradeepta Mohan(DM15136)

Ravi Jyoti(DM15140)

Sachin Menon(DM15146) Vishvender Singh(DM15167)

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Contents

COMPANY INTRODUCTION ..................................................................................................................... 3

PROBLEM STATEMENT ............................................................................................................................ 4

CASE ANALYSIS ........................................................................................................................................ 6

CONCLUSION ......................................................................................................................................... 10

BIBLIOGRAPHY ...................................................................................................................................... 11

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COMPANY INTRODUCTION

Apple Inc. is an American multinational company, headquartered at Cupertino, California, that

designs and manufactures electronics and software products. The company was established on April

1, 1976 three smart men - Steve Jobs, Steve Wozniak and Ronald Wayne. Timothy D. Cook is the

current CEO of Apple. The company has nearly 80,000 permanent and 3,300 temporary employees

worldwide.

Apple provides a wide range of hardware products that include Macintosh computers, iPod and

iPhone while the software products include Mac OS X operating system, iTunes media browser, Final

Cut Studio, iLife suite of multimedia and creativity software and Logic Studio (Fig 1). The company

operates from fourteen countries and maintains 408 retail stores in addition to the online Apple

Store and iTunes Store.

Fig 1: Evolution of Apple products

Apple has many competitors in the business world. The biggest competition to their smart phones

comes from Samsung who produce the popular Samsung Galaxy. In the world of laptops and

PC's/Macbooks, Apple competes with Microsoft, HP and many others. In the world of portable music

device, Microsoft's Zune is considered to be the biggest competition to iPods.

Apple is the largest publicly traded corporation in the world by market capitalization, with an

estimated value of US$415 billion as of March 2013. Its worldwide annual revenue in 2012 totalled

$156 billion and that for Q4 alone was $36 billion. The most profitable products for Apple in the

recent years have been the iPhone and iPad which constitute nearly 70% of their revenue (Fig 2).

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Fig 2: Segment wise revenue for Q4 FY 2012.

PROBLEM STATEMENT With its innovative capabilities and cutting edge technology, Apple Inc. has managed to stay on top

of the game. The company has been able to achieve a large market share due to its technological

innovations. The professionals at Apple Inc. have attributed to the success story of the company.

Employees at Apple Inc. have a great sense of commitment and satisfaction about their work. Apple

has been successful in making employees feel that their work really matters and has a significant

impact on the world. This has been possible due to the high talent pool available at Apple Inc.

Employees are extremely smart and they appreciate having the opportunity to be surrounded by

highly knowledgeable peers. Though this nurtures competitive environment, it also helps in bringing

out the best in each employee. But this has put a high level of stress on employees to perform

nothing short of their A-game. Apple Inc. is reputed for its zero tolerance for poor performance. In

addition, the high level of performance has generated many arrogant employees. As a senior

software engineer at Apple Inc. put it, “Most professionals have an inflated view of their abilities and

it shows in their attitude.”

In recent times, it has been found that most young professionals love to work for companies that

produce their favourite products and services. The company needs to be innovative and best-in-class

in whatever they do. The nature of the work, compensation and work-life balance are additional

factors that young professionals look for while choosing their careers in an organization. Apple Inc.

has been successful in providing good compensation to its employees. Many young professionals

consider Apple Inc. as their dream company due to the high compensation provided by them. But in

recent years, many employees have raised concerns over the perks provided by Apple which is not

on par with those offered by Google or Facebook.

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Low salaries were a particularly common complaint from Apple employees. Worldwide, Apple's

stores sold $156 billion in merchandise. About 30,000 out of 43,000 Apple employees work in Apple

Stores, as members of the service economy, and many of them earn about $25,000 per year. They

work for the most valuable company, inside the world’s fastest growing industry run by one of the

country’s most richly compensated chief executives, Tim Cook. For the last ten years, Apple has

taken advantage of the strong demand for its jobs, particularly in today’s weak economy when Apple

is seen as a “cool” place to work: it has no difficulty replacing those workers that it disposes of.

Electronics and appliances stores typically post $206,000 in revenue per employee. Divide revenue

by the total number of employees and we find that each Apple store employee that includes non-

sales staff brought in $473,000. It has apparently made a tactical decision that the costs of selecting

and training new workers is worth the turnover rate that its low pay generates. In addition, the lack

of promotions in Apple Inc. is seen as another de-motivating factor by the employees.

Apple Inc. has achieved huge success due to its Innovation. Employees are encouraged to provide

novel ideas and these have constantly contributed to the success of the company. But, more than

often the ideas are not attributed to the employee who originally presented the idea. Employees at

Apple Inc. often complain that their ideas get stolen by their seniors or peers.

Apple has been in the news for having a very secretive work environment. Keeping the information

confidential is definitely advantageous for the company, but hiding it from its own employees is

unwarranted. The employees often complain that the need for secrecy comes in the way of their

work and they find it arduous to coordinate different aspects of the project. The morale of the

employees goes down; as they cannot give relevant inputs on the project they are working on.

Further, the last minute change in plans causes the same work to be done twice. It is difficult for

Apple to address this issue as Apple owes its success to the secretive policy it has adopted.

The poor HRM practises at Apple Inc. have raised eyeballs in the recent years. Employees have

constantly faced difficulties due to the stringent HRM policies and lack of transparency. Moreover,

after Tim Cook took over as the CEO of Apple there have been various changes across the

organization. This has led to lack of clarity amongst the employees about the Business Objectives

and Strategies of the organization.

In light of what has been mentioned in this section, it can be understood that many of the problems

surrounding Apple can be resolved using appropriate Human Resource policies and using this case

we would like to shed light into four major issues and provide recommendations that Apple Inc. can

incorporate to resolve these issues.

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CASE ANALYSIS:

1. False ownership of ideas:

Good ideas are occasionally stolen and attributed to others at Apple. This has become a

tradition in Apple in due course of time and is prevalent across all the departments of the

company. It weakens the enthusiasm of the employees at the lower level and prohibits the

growth of deserving candidates, leading to employee de-motivation and frustration causing

attrition in the organization.

Recommendations:

Start an online portal where individual’s can share their idea. The best ideas can then be

selected and a mentor can be appointed who would provide further guidance in adding value to

the idea. The HRM policy should have enough provisions to accolade the original presenter of

the idea and also recognize the contributions made by the mentor.

2. Zero tolerance for poor employee performance :

Apple does not accept anything short of A-grade performance from its employees. Though this

has contributed to the high performance delivered by the organization, it has also increased the

stress levels of its employees.

Recommendations:

The performance of most employees tends to fall short once in a while. Apple needs to be

sensitive to the possibility of such scenarios and understand the real reasons for such

shortcomings. For e.g. an employee might not do well on a particular task due to lack of

appropriate knowledge or availability of required resources. Hence, the HRM needs to address

the following issues:

i. What is the gap between the desired performance and the actual performance of the

employees?

ii. Is the employee consistently performing poorly?

iii. Is the reason for the shortcoming related to the ability of the employee or lack of

motivation?

Pros

• Encourages high participation by employees

• Transparency

• Builds employee's trust in the system

• Ensures positive participation by the mentor

Cons

• Finding the best idea(s) from the pool of idea(s) might turn out to be a difficult task

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iv. Can appropriate training sessions resolve the issue?

v. What additional inputs need to be provided to improve the employee efficiency?

By identifying the answers to the above questions, Apple can choose to implement the

following solutions:

i. Training: If an employee lacks the required technical or business knowledge to perform

a task, the HRM can provide appropriate trainings to better equip the employee.

ii. Compensation & Rewards: If an employee lacks motivation to work, which then affects

the quality of his/her work, the company can help improve employee motivation by

providing compensation and rewards. Another reason for lack of motivation could be

the absence of a challenging career in which case the HRM has to provide job

enrichment by encouraging the employee to take up more challenging tasks.

iii. Providing Feedback: Providing constructive criticism may not just help employees

understand their areas of improvements but also provide them with possible solutions

that they can implement. The HRM policies should facilitate a positive feedback

sessions without personal biases by providing a mentor who works in different

department.

3. Lack of perks and promotions:

Lack of proper compensation program and promotion can lead to frustration amongst the

employee leading to high attrition. Apple is facing high employee distress due to its poor perks

and lack of promotions.

Recommendations:

Apple can motivate its employees and resolve the problem of lack of perks by the following

methods:

Pros

• Encourages employees

• Reduces Stress levels

• Provides an atmosphere for improvements

• Identifying the areas of improvements helps in designing appropriate solution

• Mentoring improves understanding of the nuances of work.

Cons

• Mentors may not be interested in helping the employees or might not be available always to provide support.

• Feedback sessions may not be helpful if the mentor doesn't identify the appropriate areas of improvement.

• Understanding the real motivational factor can be difficult as each employee is motivated by different things.

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i. Replace subjective performance measures with objective performance measures by

linking the appraisal process to objective performance instead of supervisor’s

perception of employee performance. This can also be accomplished using a 360

feedback.

ii. Provide a nominal perk based on the performance of the employee.

iii. Bring transparency in the performance evaluation methodologies to remove

discrimination.

iv. Perks could also include provision for better health facility, more family time, time for

vacation and improved work-life balance. The HR department can use these alternative

perks instead of salary hike to satisfy its employees.

v. HR department needs to categorize employees into different categories of

promotability on the basis of their objective performance and 360 review and this

process needs to be done in two phases:

- Mid Term review: where employees will be given their feedback and areas of

development. The supervisors should evaluate the objective goals fulfilled till the

midterm review and also establish additional objective goals for the annual review

- Annual review: In the annual review, the supervisor should evaluate if the

employee has been able to attain his objective goals for the year.

4. Change in organizational culture and poor HR practises:

Poor functioning of human resources department reflect the overall ill state of affairs of an

organization and its possible uncompetitive position in the marketplace. There are many

negative outcomes of a bad HR Department out of which some are listed below:

Lack of clarity regarding the business objectives.

Pros

• Motivates employees

• Increases transparency

• Provides an atmosphere for improvements

• Identifying the areas of improvements helps in designing appropriate solution

• Gives rise to a healthy work environment

• Since objective goals are measured, it helps in eliminating unfair practises in rewarding an employee.

• Builds employee trust

Cons

• Defining a balanced objective goal may be tough as expections of supervisors vary

• Employee might fail to meet the objective goals due to market or economical issues. For e.g. if the objective target is to sell 500000 iPhones and there is no demand in market for iPhones, then the employee would fail to achieve his objective goals.

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Creates organizational bottlenecks

Employees will not be able to share their personal and professional problems if HR

department is not cooperative.

The lack of proper HR policies undermines the organization’s effectiveness, brings down

employee morale and hence affects the organization’s profitability.

Poor functioning of HR department may cause miscommunication between the HR

department and the senior management leading to poor decision making on critical

aspects.

Lack of transparency in the HR policies may lead to misconceptions which may lead to

unethical practises at the work place.

The overall employee morale will come down and frustration would increase if HR

practises are twisted.

Recommendations to improve HR department’s working in the organization:

Training HR department- Regular training and evaluation of team members in HR

department is a way to ensure that the HR department is well versed with the policies

and is competent to resolve employee issues.

Training Employees – It is also important to make sure that employees across all levels

are aware about the organizational changes and have adequate information about the

new policies in place. This can be facilitated using a training program for employees.

Providing constant assistance – HR needs to nurture a friendly atmosphere at workplace

by providing constant assistance to its employees.

Finding Gaps – Understanding and identifying gaps in the organization can help to

reaching an appropriate solution.

Pros

• Increases transparency

• Builds employee trust and confidence in the policies

• Creates a positive work culture

• The employees and the organization work hand in hand to achieve the organizational goals

• Encourages active participation

Cons

• Training could be a time consuming process and involve huge investments

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CONCLUSION

The Human Resource Management in an organization has to identify the areas of

improvement and provide solutions to maintain the integrity of the organization and

improve employee morale. In short, the major driving force for any organization’s growth

can be summarised as shown below in fig 3.

Fig 3: Driving force for organizations

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BIBLIOGRAPHY

http://www.businessinsider.com/the-biggest-complaints-employees-have-about-working-at-apple-

2012-6?op=1&IR=T

http://en.wikipedia.org/wiki/Apple_Inc.

http://www.apple.com/in/

http://news.cnet.com/8301-17852_3-57573473-71/apples-biggest-problem-people-might-quit/

http://visual.ly/apple-stores