Human Resource Department of Marks and Spencer - Essay Example

? MODULE NUMBER: SEMINAR GROUP NUMBER: STRATEGY ANALYSIS OF MARKS AND SPENCER (HUMAN RESOURCE DIVISION) ID: SUBMISSION DATE: WORD COUNT: EXECUTIVE SUMMARY This report involves the study of the Human Resource (HR) division of Marks and Spencer; a company headquartered in London, England, United Kingdom. The company incorporates many divisions which include officials holding key positions. However, this study focuses only on the Human Resource division. The company’s performance has been analysed through balanced scorecard analysis and thorough emphasis has been put on the financial perspective, customer perspective, internal business operations perspective as well as learning and growth perspective. The analysis has been carried out using Key performance indicators (KPI), which are essential in determining the nature of performance being shown by the company, has been outlined in the appendices. The balance scorecard and the strategy map formulated can serve as an effective guiding tool for the company, which when followed in a proper way, can be utilized to predict its effective future plan. This study contains suitable recommendations based on the key parameters used for the purpose of analysis which can serve as a benchmark for the company to evaluate its performance thereby comparing them to the performance of other peer organizations. The recommendations made can contribute significantly towards the identification of the company’s strength and weaknesses in the HR division and help it to bring about improvements in its financial and non-financial performances. In the end, critical discussion and evaluation has been done suggesting the usage of balanced scorecard analysis and strategy map. Table of Contents 1. Introduction 4 2. Vision and Strategy 4 3. Balanced Scorecard for Marks and Spencer PLC (Human Resource Division) 5 3.1. Financial Perspective 5 3.2. Customer perspective 6 3.3. Business Operations perspective 6 3.4. Learning and growth perspective 7 4. Strategy Map 7 5. Recommendation 8 6. Critically discuss and evaluate 9 9 Reference List 10 Appendices 12 1. Introduction Marks and Spencer (M&S) group PLC is headquartered in London, England, United Kingdom and the company is an international retailer listed as a holding company of M&S group of companies. Having a worldwide presence, M&S offers varied line of products to its customers ranging from clothing; home ware and food retail (Reuters, 2013). The report will conduct a thorough analysis of the human resource division of M&S thereby identifying its vision and strategy. In addition to that, a balance scorecard and strategy map will be formulated from the Human Resource Division perspective depicting the alignment between the strategies adopted and their significance towards the company’s goals and targets. 2. Vision and Strategy The HR team of M&S deals with ‘people’ side of the organization which adheres to find the right mix of talented people to join them and then ensuring their happiness & growth alongside the growth of the company (Marks and Spencer, 2013). Their vision is to employ a rigid and disciplined workforce where the leadership team along with the workforce will ensure that all their tasks are directed towards the achievement of the strategic objectives (Marks and Spencer, 2013). Their focus lies in making the workforce understand their strategy, embrace it and motivate them towards supporting strategy execution. In addition, they also want to ensure the integration of a competent workforce (especially people holding the key positions) and imparting them the necessary knowledge and skills through various training programs whereby, the workforce can be of significant contribution towards achieving sustainable success (Huselid, 2005b). The strategies of M&S’s human resource division can be best explained by the HR architecture that they follow. Employing the right mix of qualified HR personnel whose competencies can be aligned to the needs of the business (Marks and Spencer, 2013). Following proper HR practices thereby choosing a dedicated team which thrives for excellence and then providing them proper training on product knowledge and other areas of their business through a 15 month HR scheme held both in their stores and head offices (Marks and Spencer, 2013). In addition to that, another strategy that M&S follows is to maintain an appropriate workforce cost thereby ensuring value maximization for the company. All these strategies are directed towards providing world class buying experience to the customers and maximizing value for the shareholders (Huselid, 2005a). 3. Balanced Scorecard for Marks and Spencer PLC (Human Resource Division) It is a strategic planning and management tool which is used extensively by business and industries, non – profit organizations as well as by the government all over the world in order to establish an alignment between the business operations and the strategy and vision of an organization. Its primary utility is to improve internal and external communications within an organization and monitor its performances in order to keep it focused towards company’s strategic objectives (Balanced Scorecard Institute, 2013). (Source: Huselid, 2005b and Balanced Scorecard Institute, 2013) 3.1. Financial Perspective According to Appendix 1, it can be seen that Marks and Spencer’s human resource division’s focus lies in giving returns to their shareholders in the form of dividends whenever there is excess cash flow and the company doesn’t have any profitable projects for investment. The sole objective behind this strategy is to increase the shareholder value thereby increasing the dividend payout year on year in order to retain the shareholder’s trust. This is evident from the increase in the equity dividend payout in the year 2012 from what it was in 2011 (Marks and Spencer, 2012). The KPIs included in the analysis are essential in assessing the performance of the company from the financial perspective. Henceforth, necessary steps can be taken in order to maintain a stable dividend payout ratio as a reduction in dividends paid is not perceived well by investors. As far as the profitability of the company is concerned, this can be realized by generating revenue stream from current customers. The target behind this specific strategy is to maximize the operating profit of the company. The KPIs critical to the performance assessment of the company are Gross profit and net sales. The company should adhere to increase its customer base by improving the quality of products and services on offer as well as through effective marketing strategy. This step is essential for the company to realize its targets as a greater number of customers will ensure a consistent increase in profits. 3.2. Customer perspective It is evident from appendix 2 that, Marks and Spencer’s emphasis is on the services provided to its customers. The goal behind this strategy is to address core customer specific needs by providing them with quality products and services. The KPIs bearing significance towards the achievement of this goal are customer loyalty which represents a customer’s attraction towards the products and services offered to them by the company and is realized by the repeat purchase behaviour of the customers (Srinivasan, Anderson and Ponnavolu, 2002), customer satisfaction and the number of current and existing customers. The company should follow the KPIs thoroughly in order to assess their performance thereby learning about their strengths and weaknesses. In that way they can work on improving on the specific sectors deemed necessary. This will help the company to achieve their target of providing world class buying experience to the customers. In addition to that the company should take necessary steps to recruit highly efficient, qualified and talented individuals in order to allocate them into the new M&S outlets. Another metric to be considered from the customer perspective is to ensure a very good employee customer relationship as this will ensure a consistent growth in the number of customers thereby rendering the company profitable. This step will also ensure a greater customer loyalty achievement. 3.3. Business Operations perspective As far as the business operations perspective of a company is concerned, it is evident from the balance score card of M&S (appendix 3) that, the primary concern of M&S’s Human resource division is to ensure employee welfare. The main goal behind this objective is to establish a robust and authenticate assessment procedure for the targeted employees. The company’s target is to maximise its value thereby building and managing a highly efficient workforce. One way of ensuring this is to do an in – depth assessment of target employees through well designed training programs and moulding them according to the operational needs of the company. The Key performance indicators significant towards ensuring the employee welfare are administrative expense per employee and customer satisfaction. It is believed that the better the welfare of the employee, the better will be customer service offered by the employee. And the better the customer service, greater would be the customer satisfaction index. The other metric under the business operations perspective is HR Alignment, which focuses on keeping the workforce cost appropriate thereby maximising value for the company by adopting cost – effective investment strategy (Huselid, 2005a). One way of achieving this objective is to design cost effective training programs. 3.4. Learning and growth perspective The learning and growth perspective of an organization involves a process of collective learning followed by an individual, team and the organization itself. This process is not only critical in terms of the organizational performance but it also has a significant contribution towards transforming an organization into a learning organization thereby ensuring its rapid growth (Chiu, Tsai and Chung, 2007). As can be noted from appendix 4, performance evaluation is a key parameter that M&S is focused on. It can be said that the company believes in the formation of a highly efficient and a talented workforce in order to maintain a high satisfaction level for their customers. Moreover, performance evaluation is related to finding the employee skill gaps and providing them with the necessary training in order to identify their strength weaknesses and work upon their improvement. The officials holding key positions in the Human resource division of M&S must cater to manage employees as humans rather than resources. They should treat their employees with consideration, motivate and encourage them to give their best performance by offering performance based appraisals, provide them with quality training and mentoring, include them in the decision making process. In this way, the Human resource division can make sure to attain favourable outcomes from their employees (Marescaux, De Winne and Sells, 2013). In connectivity to the above described metric, well defined training and development program is another factor M&S emphasizes on. This is evident from a well defined training and development scheme that M&S has which is a 15 month HR scheme held both in their stores and head offices, primarily involved in providing their employees with training on product knowledge and other areas of their business (Marks and Spencer, 2013). This is done to ensure that proper knowledge is imparted to the employees so as to ensure an all round development with a target of providing optimum customer welfare. 4. Strategy Map A strategy map includes parameters used for the balanced scorecard analysis and establishes a link between the four perspectives of a balanced framework as explained in fig -1 (Kaplan and Norton, 2004). In other words, it portrays the cause – effect relationship between a firm’s intangible assets and their outcomes (Euler, 2013). Appendix 5, depicts the visual framework outlining the cross relations between the balance scorecard metric of M&S from all the four perspectives. As can be seen that the fundamental basis of a company’s success lies on how the workforce performs. That's why the strategy map has been outlined in the reverse order. Starting from the learning and growth point of view, M&S should cater to understand the skill gaps present in individual employees. Thereafter they should focus is designing a well developed training program through which quality knowledge can be imparted to the employees. Henceforth, quality assessment programs should be established in order to focus on the targeted employees and at the same time the company has to make sure that the workforce cost is kept within an appropriate limit. These two factors constitute the business operations perspective. Employees should be given proper feedback and depending upon their performances they should be trained further if necessary. From the customer’s perspective, it can be explained that employees who underwent quality training process will always thrive for excellence thereby adhering to address specific customer needs and providing them with quality service in order to ensure that they are satisfied. This in return will establish a productive employee – customer relationship which is a key factor in driving a company’s success upward. Thereafter, the company can generate huge revenues from their current customers as a result of the employee – customer relationship and the customer satisfaction resulting from it. Finally, generating good revenues will always increase the shareholder value thereby ensuring a stable and sustainable future for the company. 5. Recommendation In order to ensure a consistent growth for the company, the HR division of M&S should emphasize a lot on employee welfare and development as they are the fundamental basis of the company’s success. A well designed governance of employee training and performance should be established in order a form a highly efficient and talented workforce. The HR officials should treat the employees with consideration and take effective measures to ensure that employees are always motivated and encouraged to give their best performance. This can be done by offering performance based appraisals to them. In addition to that, employees must be given constant feedback on their performance in order to help them identify their strengths and weaknesses and work on improvements. In order to make this process efficient, well defined training schemes should be formulated which will impart quality knowledge to the employees and help them to contribute effectively towards customer welfare. Continuous assessment of targeted employees should be carried out as this will give rise to a highly qualified and efficient workforce working collectively towards value maximization for the company. However, the HR division also has to keep track of the workforce cost in order to maintain it within an appropriate limit. A well trained and motivated workforce will always adhere to provide high quality customer service. The HR division should adopt proper employee allocation strategies which will involve hiring more qualified and talented people and allocating them into new and upcoming stores in order to provide world class buying experience to the customers. The company should also focus in imparting quality knowledge and skills to the employees in order to help their customers make informed choices. This in return will establish a stable employee – customer relationship thereby ensures a consistent growth in the number of customers. A growing list of customers will always be responsible for a constant revenue stream for the company. But the company has to make sure the sustainability of this list as well by taking solid measures to increase their customer base and improve upon their products and services. A stable revenue stream will generate cash flows and henceforth can be paid in the form of dividends to the shareholder by the company so as to compensate the shareholder for the trust shown by them towards the company. 6. Critically discuss and evaluate The balance scorecard is an efficient strategy and measurement tool which can be utilized for the purpose of evaluating an organization's performance. In addition to carrying out performance evaluation tasks, it also helps an organization to identify its visions and goals and outline strategies accordingly. The balanced scorecard and strategy map outlined in this report will help the M&S HR division to utilize it as a guidance tool and synchronize its financial objectives, customer needs, business operation plans and learning and growth process. It can also be used by the company to set a benchmark to evaluate their own performance and compare it to its peer organizations and thereafter make necessary improvements. Reference List Balanced Scorecard Institute., 2013. Balanced Scorecard Basics. [online] Available at: [Accessed 18 September 2013]. Chiu, C. C., Tsai, C. H., and Chung, Y.C., 2007. Using Balanced Scorecard to explore learning performance of enterprise organization. The Asian Journal on Quality, 8(1), pp. 40 – 74. Euler., 2013. The Balanced Scorecard and strategy maps. [online] Available at: [Accessed 17 September 2013] Huselid, M.A., 2005a. HR Architecture Drives Strategy Execution. [online] Available at: [Accessed 18 September 2013]. no in-text Huselid, M.A., 2005b. HR scorecard – Workforce scorecard – Balance Scorecard. [online] Available at: [Accessed 18 September 2013].(no in-text) Huselid, M. A., and Becker, B., 2000. Strategy Map: Competency skill attainment focus. [online] Available at: [Accessed 18 September 2013]. Kaplan, R.S. and Norton, D. P., 2004. The strategy map: guide to aligning intangible assets. Strategy and Leadership, 32(5), pp. 10 – 17 [online] Available at: [Accessed 17 September 2013]. Marks and Spencer., 2012. Annual Report and Financial Statements 2012. [Online] Available at: [Accessed 18 September 2013]. Marks and Spencer., 2013. HR. [online] Available at: [Accessed 18 September 2013]. Marescaux, E., De Winne, S. and Sells, L., 2013. HR practices and HR outcomes: the rules of basic need satisfaction. Personnel Review, 42(1), pp. 4 – 27. Reuters., 2013. Marks and Spencer Group PLC (MKS.L). [online] Available at: [Accessed 18 September 2013]. Srinivasan, S. S., Anderson, A., and Ponnavolu, K., 2002. Customer loyalty in E – commerce: an exploration of its antecedents and consequences. Journal of Retailing. 78, pp. 41 – 50 [online] Available at: [Accessed 18 September 2013]. Appendices Appendix: 1 – Financial perspective of Marks and Spencer PLC (Human Resource Division) Marks and Spencer PLC: Financial Perspective All Financial Goals are for the corporation as a whole GOAL (Huselid and Becker, 2000) Key Performance Indicator (KPI) Target Initiative or ACTION Shareholders Increase shareholder value Equity dividends paid, Dividend payout ratio To increase dividend payout in order to retain the shareholder’s trust Emphasize on maintaining a stable dividend payout ratio as a decrease in dividends paid is not perceived wells by investors Profitability Generate revenue from current customers Gross profit, Net sales Increase operating profit Increase their customer base by improving their quality of products and services Appendix: 2 – Customer perspective of Marks and Spencer PLC (Human Resource Division) Marks and Spencer PLC: Customer Perspective All Customer Goals are for the corporation as a whole GOAL (Huselid and Becker, 2000) KPI Target (Huselid, 2005a) Initiative or ACTION Customer Service To address core customer specific needs by providing them with quality products and services Customer loyalty, customer satisfaction, number of customers Providing world class buying experience to the customers Proper employee allocation to upcoming stores, effective marketing strategies, hiring more qualified and talented employees Relationship To ensure a very good employee customer relationship Annual sales per customer, satisfied customer index (%), number of customers, Number of visits per contact with customers To ensure a consistent growth in the number of customers Imparting proper knowledge and skills to employees in order to help customers make informed choices. Appendix: 3 – Business Operations perspective of Marks and Spencer PLC (Human Resource Division) Marks and Spencer PLC: Operational Perspective All Business Operations perspectives are for the corporation as a whole GOAL (Huselid and Becker, 2000) KPI (BSC Designer, 2013), Target Initiative or ACTION Employees Establishing ongoing assessment of targeted employees Administrative expenses per employee, Customer satisfaction Build and manage an efficient workforce in order to contribute towards value maximization Thorough assessment of targeted employees and mould them according to the operational needs HR Alignment Keeping workforce cost appropriate $ investment in training and Incentives/ % increase in Customer satisfaction, $ investment in training and incentives/$ increase in sales Maximising value for the company thereby adopting an appropriate investment strategy Designing cost effective training programs Appendix: 4 – Strategic perspective of Marks and Spencer PLC (Human Resource Division) Marks and Spencer PLC: Strategic Perspective All strategic perspectives are for the corporation as a whole GOAL (Huselid and Becker, 2000) KPI (Huselid, 2005a) Target Initiative or ACTION Performance evaluation Understand employee skill gaps % of employees receiving performance appraisal Formation of a highly efficient and talented workforce Robust governance of employee training and performance Training and development Provide training to targeted employees Cost of trainee hour, no. of employees involved in training, payroll expense per employee, no. of training days and programs held per year Customer welfare Provide training through well defined training programs Appendix: 5 – The strategy map of Marks and Spencer PLC (Human Resource Division) Learning and Growth Perspective Business Operations Perspective Customer Perspective Financial Perspective Understand employee skill gaps Establishing ongoing assessment of targeted employees To address core customer specific needs by providing them with quality products and services Increase shareholder value Provide training to targeted employees Keeping workforce cost appropriate To ensure a very good employee customer relationship Generate revenue from current customers Read More