Human Resource Management Practices Marks and Spencer - Case Study Example

Human Resource Management Practices – the case of Marks and Spencer Executive Summary In order to evaluate the human resources management strategies followed by a specific organization it is necessary to identify in advance all issues that will possibly affect a proposed plan of HR policy especially if this one involves in changes required in many organizational sectors. In this context, it has been stated by Gubman (2004, 14) that ‘human resource strategy and planning has changed and grown significantly during the last 25 years while we can track these developments from functional strategies in the 1980s to capabilities strategies in the 1990s to results strategies today”. In other words, HR management is a necessary tool of corporate restructuring. However its use should be made very carefully trying to take into account the firm’s strengths as well as its potentials for the future. On the other hand, in the case that HR professionals are called in order to propose specific plans of HR restructuring, then they should have a series of competencies which fall in the next categories: “knowledge of business (which includes financial, strategic, and technological capability), knowledge of HR practices (which includes staffing, development appraisal, rewards, organizational planning, and communication) and management of change (creating meaning, problem-solving, innovation and transformation, relationship influence, and role influence)” (Jamrog, 2004, 60). Introduction In order to evaluate the role of human resources management in the improvement of the firm’s performance we should ‘test’ the practices followed by organizations within a particular industrial sector. In most cases these practices present similarities, however there could be elements of the operational strategy with significant differentiations among the participants/ companies. For this reason any relevant comparison should take into consideration the particular characteristics of each specific organization trying to ensure the protection of the persons involved (i.e. publication of data only in cases where it is strictly permitted by the law). The issue of the effectiveness of HRM practices followed in specific companies has been the study of many researchers throughout the years. In the particular case, Marks and Spencer has been a company with a long history in the British retail sector. The company which was found on 1884 operates currently worldwide with about 515 stores and several franchises. Current paper examines particularly the issue of application of “best practice/high commitment” model of HRM presented by Marchington & Wilkinson (2002, 179). The application of the particular model is examined in combination with other HR – related issues trying to identify the strengths and the weaknesses of the above model as well as the potential choices available to the company in case that the above model does not produce the required result. In order for this research to be conducted more accurately a company of the UK market, Marks and Spencer, has been used as an example. A series of issues of HR management are developed throughout the paper presenting the HR policies followed by the above company and making the appropriate comparisons with the model of Marchington et al. (2002) which is the main HR model examined in this paper. It should be noticed that in current paper the human resources strategies followed by the firm are going to be examined in order to identify the reasons of its success. The relevant research will be based on a series of views stated in the literature regarding the design and implementation of HR strategies in the organizational environment. Moreover, a series of data involved in the operational activity of Marks and Spence are going to be presented combined with the most characteristic HR strategies as they are ‘imposed’ in the firm’s stores worldwide. Literature Review The evaluation of human resources management of a particular organization is not an easy task. In fact there are many issues that need to be considered before implementing any relevant strategy. On the other hand, there are many HR models available to managers in any industrial sector. However, the application of these models on a particular organization has to follow certain principles especially the ethics of the market and the aims of the specific organization. Moreover, human resources management can be used as a multi – dimensional strategic tool in order to improve the company’s performance. Indeed the study of Jackson et al. (1995, 237) showed that HRM is often used “as an umbrella term that encompasses specific human resource practices such as recruitment, selection, and appraisal; formal human resource policies, which direct and partially constrain the development of specific practices; and overarching human resource philosophies, which specify the values that inform an organizations policies and practices”. From a different point of view, HR can be used for the evaluation of the whole company’s projects in accordance with the ‘powers’ granted to the HR professionals. On the other hand, HR managers can develop a series of HRM strategies which should focus on the increase of the firm’s profitability through the improvement of employee relations in all organizational sectors. Towards this direction Sims (2002, 3) stated that “human resources involve HRM programs aimed at developing HRM strategies for the total organization with an eye toward clarifying an organization’s current and potential problems and developing solutions for them; they are oriented toward action, the individual, the global marketplace, and the future”. In other words, HR should be considered as a significant tool for any HR practitioner. From another point of view, the use of HR strategies within a particular organization can offer to the manager of the firm a significant support which is necessary particularly in cases that changes are attempted to be implemented in the organization. In this case, organizational leaders should follow a specific strategy trying to persuade the employees on the necessity of the changes attempted applying all the appropriate measures for the protection of employees’ rights both in the short and the long term. In this context, Ashforth (1995, 97) supported that there is a specific relation between motivation, emotion and leadership in any organizational environment and that under these terms leaders should “persuade with logic, but they should motivate through emotion; they should also come to grips with the challenges of emotion, a key driver of productivity, quality and other factors that lead to business success”. In other words, the basis for a successful implementation of a particular HR strategy is the participation of the employees involved and their active involvement during the whole procedure. For this reason Hamilton (1995, 399) noticed that “establishing a personnel unit and designating a personnel officer is dependent upon a number of variables including number of employees, type of organization, size of budget, and expectations regarding the personnel unit”. An issue that should be taken into consideration is the fact that the HR strategies used for the improvement of firms’ performance are not the same among organizations in all countries. They can even present differences across the particular regions of the same country. Generally, the role of local culture and ethics is crucial for the development of such a phenomenon. Referring to the case of Britain Scullion (1994, 86) noticed that international firms operating in the specific country present a series of common characteristics regarding the HR strategy that they follow. These are: “international staffing, international recruitment and a variety of issues surrounding the problem of shortages in international managers” (Scullion, 1994, 86). In accordance with the above mentioned, the role of HR management in the promotion of organizational performance is crucial. However, any relevant effort cannot succeed without the active involvement of employees. This issue should be taken into consideration by the firm’s HR department which also needs to ensure the protection of the employees’ rights. At a next level, it should be noticed that organizational leaders may have to proceed to measures that could be characterized as ‘hard’ by the firm’s employees. Regarding this issue it is noticed by Luthans (1998, 17) that “the traditional role of the HR/personnel department has essentially been functional in nature and has revolved around specialized tasks such as HR planning, recruiting, job analysis, performance review, compensation, training, and legislative compliance”. The application of a particular HR plan should be followed by the appropriate provisions in case of its failure. In any case, the realistic measurement of the market should be considered as necessary. Towards this direction, Lajara et al. (2002, 34) noticed that “an essential requirement for the success of the cooperation scheme is that the participating companies have the internal capacities needed for the performance of the activity that is the object of the agreement while human resource management mainly refers to the following performance areas: leadership and employee motivation and HR practices (recruitment and selection, training performance appraisal and compensation management)”. On the other hand, the provision of appropriate reward to the employees is considered as necessary. For this reason, it is stated that “an organization could increase productivity simply by increasing the happiness and satisfaction of its employees, and both organizations and employees would benefit” (Landy, 1989, R. Wright, 2000 in Barrick et al., 2003, 30). It should also be noticed that the choice of the strategy followed each time regarding the rewarding of the employees belongs to the corporate leader and at a next level to the HR manager who can apply a series of tools in order to measure the performance of employees and propose the appropriate HR strategies. In this context, it is noticed by Ramlall (2003, 60) that “it is only through performance measuring that one can really articulate the benefits of HR strategies in achieving the organizations business strategy and in the process enhance the credibility of the HR profession”. However, the use of specific tools of performance measurement cannot guarantee the quality of the results produced. Regarding this issue Gelade et al. (2003, 383) supported that “few organizations can evaluate their performance accurately by averaging the performance of their employees; in most cases, the performance of an organization is determined by the productivity and efficiency of such higher-level organizational entities as departments, retail outlets, plants, or teams which constitute - in the language of operations research – the so-called "decision-making units" (DMUs)”. The strategies proposed above could be equally applied in all companies operating in a particular area without any particular change. The specific issue was examined by Gooderham et al. (1999, 507) who supported that “despite their very different assumptions, both rational and institutional explanations of organizational structure and management practices predict similarity among firms that operate in the same industry within the context of a simple country”. The existence of common practices and ethics in companies operating in a specific country or region can promote the development of their activities as they are more ‘accessible’ to foreign investors who can invest more easily in known and ‘tested’ organisational schemes. Regarding specifically the HR model proposed by Marchington and Wilkinson (2002, including in their next work of 2005) this has the following characteristics. At a first level the employee involvement is being highlighted as a significant part of any HR strategy. Regarding this issue it is noticed by Marchington et al. (2005, 75) that “there are a number of reasons why employee involvement is an essential component of the high commitment paradigm: First, open communications about financial performance, strategy and operational matters not only ensures workers are informed about organisational issues, it also conveys a symbolic and substantive message that they are to be trusted and treated in an open and positive manner; Second, for team working to be successful workers require information in order to provide a basis from which to offer their suggestions and contribute to improvements in organisational performance and Third, participation can provide management with some legitimacy for its actions on the grounds that ideas have been put forward by workers and/or at least considered by them before decisions are ultimately made”. Apart from the importance of the employee involvement for the success of any proposed HR plan, Marchington et al. (2005) highlight the importance of a series of issues that need to be taken into consideration when designing and applying any HR strategy. These issues are presented in Figure 1 below. From another point of view, Marchington et al. (2005, 72) refer to the recruitment strategies applied by managers in most organizational firms and come to the conclusion that “even though employers have always wanted to recruit the best people available, this is nowadays more likely to be systematised through the use of sophisticated selection techniques and taking greater care when hiring; increasingly, employers are looking for applicants who possess a range of social, interpersonal and team working skills in addition to technical ability”. The issue of selection is crucial for the success of a particular recruitment procedure. However, the ‘obligations’ of the employer do not stop here. More specifically, after having chosen the ‘appropriate’ employees, employers need to ensure that these will be given the necessary training in order to understand the culture and the needs of the particular corporation. Indeed, Marchington et al. (2005, 72) support that “having recruited ‘outstanding human talent’, employers need to ensure that these people remain at the forefront of their field, not only in terms of professional expertise and product knowledge but also through working in teams or in interpersonal relations”. If the above practices are followed by employers it is very likely that they will be able to create an extremely competitive team of employees capable to face any potential challenge within the workplace. Figure 1 – Components of Best Practice – High Commitment Plan (source: Marchington et al., 2005, 71) The Best Practice – High Commitment Plan presenting above is characterized by a series of rules/ guidelines for employers regarding the HR strategies implemented in their firms. In the study of Marchington et al. (2005) there is no particular definition of the above plan. It is mentioned however that “In recent years, there has been much interest in the notion of ‘best practice’ human resource management (HRM) which is sometimes referred to as ‘high performance work systems’, ‘high commitment’ HRM, or ‘high involvement’ HRM; whatever the terminology, the idea is that a particular set (or number) of HR practices has the potential to bring about improved organisational performance for all organisations” (2005, 72). Under these terms, the above model is expected to lead to the improvement of firm’s productivity mainly through the recognition of equality in the workplace and the fair rewarding of the firm’s employees. Findings – Employment conditions in Marks and Spencer Marks and Spencer has been a company with a strong culture. The British traditions which were ‘preserved’ carefully by the firm’s owners have been the major characteristic of this organization which managed to survive in the modern commercial despite the turbulences occurred in the global commercial market. Recently the firm decided to change its terms of employment and apply a ‘diversity’ HR policy trying to attract employees from all races and genders proving that the firm recognizes the value of equality in the workplace. The company was founded in 1884 by Michael Marks and Tom Spencer and has kept its principles until now despite the extremely competitive conditions of the British retail market. Today the company has more than 500 stores in UK and abroad. There is also an extended network of franchises both in the regional and the international market. In accordance with the firm’s website in 2005/06 the company employed “around 67,000 people including 65,000” [1] in its UK operations. On the other hand it is noticed that the firm’s managers try to apply a diversity strategy which will also promote the personal development of the employees. More specifically, it is noticed that the firm wants its workforce “to reflect the diversity of its customers; for this reason approximately 24% of the employees are aged over 50, and the majority (77%) are female; overall, the workforce reflects the ethnic make-up of the UK population with 14% coming from ethnic minorities” [1]. It should also be noticed that the company has “written commitments to equal opportunities covering age, disability, race, marital status, political opinions, colour, gender, sexual orientation, hours of work, national origin and religious beliefs” [1]. In this way the personal development of the employees both in the short and the long term can be ensured. Currently the company provides to potential candidates the chance to enter the company through specific programs (like the Trainee management scheme or the Graduate scheme). These schemes offer to the interested candidates the chance to learn the organizational environment and decide whether they would like to remain and work on a permanent basis (or through a temporary – work scheme). Analysis and Discussion The modes of employment offered by the company can be divided into further categories (as already mentioned above). However, there are also a series of benefits provided to the firm’s employees which (benefits and other advantages) the potential candidates would consider as significant. More specifically, the company provides to its employees a ‘benefits package’ [1] which includes the following benefits for the firm’s employees: competitive rates of pay and performance related rewards, employee discount, pension (a customized retirement plan for the firm’s employees), increased period of holidays, optional subscribed company benefits and so on. There are also provisions for bonus and other extras in accordance with the performance of employees even if they have been recently hired (there is a provision for a proportionate bonus especially designed for new employees). With the introduction of the above measures the company ensures the existence of equality and fair rewarding in the workplace, two significant factors for the improvement of the employees’ productivity and the following improvement of the firm’s performance. The company used as an example in the particular paper has to face a particular challenge: the quality of services provided to customers. Because of the importance of this issue in the area where this company operates (retail sector), the company should try to follow a series of specific guidelines proposed by Kundy et al. (2004). In accordance with the above researcher “excellence in service delivery is heavily dependent on the way a workforce is managed, and the workforce directly influences the following five dimensions of service quality: a) Reliability: Ability to deliver services as promised; b) Responsiveness: Willingness to provide prompt service and help customers; c) Assurance: Ability to communicate credibility and to convey trust and confidence; d) Empathy: Willingness to provide caring and individualized attention to customers; and e) Tangibles: Maintaining the appearance of physical facilities and personnel” (2004, 40). The above guidelines if combined with the rules included in the High Commitment Plan proposed by Marchington et al. (2005) (Figure 1) they can lead to the increase of the employees’ productivity and therefore the improvement of the firm’s performance. In order to evaluate the effectiveness of the plan proposed by Marchington et al. (2005) regarding the appropriateness of the HR strategy produced, we should primarily examine the characteristics of a successful human resources strategy as they have been developed in the literature. In this context, it is noticed by Walker (1999, 11) that “a great human resource strategy provides a compelling and convincing business case for aligning people and organization with business strategy commanding the attention of management and builds the necessary commitment for required resources and support for implementation; great strategies create a dissatisfaction with the current state (pain or opportunity) and build an acute sense of urgency and readiness to change”. In accordance with the above the proposed plan of Marchington can be considered as leading to a successful HR strategy to the extension that it refers to all stages of recruitment process (from the selection stage up to the provisions for compensation). Conclusions The application of the appropriate HR practices is a challenging task. Regarding this issue it is noticed by Korman et al. (1999, 3) that “the world of work in which human resource management (HRM) operates has changed dramatically in the last half century; not surprisingly, therefore, the HRM concepts and practices being created and carried out today are also increasingly different from those of the past”. On the other hand, Megginson (1972, 75) referring especially to the role of technology in the improvement of organizational performance, he mentions that “while technology can increase productivity and give major emphasis to social and economic development, the other factors are equally important; management exerts strong influence upon the types and extent of utilization of technology as well as the supply of natural, financial, and human resources while productivity involves using knowledge, skills, attitudes, motivations, and methodology of people in an existing culture”. In other words, technology can have just a supportive/ subordinate role in the improvement of the firm’s performance. In the long term, technology can have significant effects on the firm’s productivity, however in the short term it is not likely to provide the required results. Moreover it should be noticed that the evaluation of HR strategies cannot be always precise. In fact it is very likely that this evaluation will refer to general applied issues and principles. This happens because “human resource strategies sometimes sound great, with important issues and grand plans and objectives, but lack the crucial attention to implementation while the final and vital phase of strategic management is execution of plans; many companies have operational plans for the human resource function or department, detailing priorities and planned actions for the year ahead; these help communicate priorities and shape budgets, but they are merely an implementation component of a great human resource strategy”. In any case, the decision on the application of a particular HR strategy belongs to the firm’s HR manager who will also decide on the supportive tools that will be used during the implementation of the above plan. The importance of HR strategies for the development of the organizational performance has been highlighted by Walker (1994, 59) who supported that “Recruiting, selection, assignment, and other staffing actions are crucial in matching available resources with required staffing levels and mix of capabilities; managing performance aligns individuals and teams with the objectives of the business; training, education, and job-related learning are crucial to the development of needed capabilities and performance while managing change and building organizational effectiveness are central to effective business repositioning, including mergers and acquisitions, restructuring, and strategic shifts in markets, products, and services”. The constant interaction between employer and employees is therefore recognized as a necessary criterion of success for any HR plan while the application of the relevant principles of commerce can guarantee the credibility and the validity of the terms applied. Recommendations Generally, it is stated by Schuler et al. (1998, 159) that the HR practices in a particular workplace should be based on the following criteria: “a) the business structure, b) the legislative and employment relationship context, c) the patterns of HRM competence and decision-making and d) the national culture”. At a next level, Levine (1995, 83) supported that “in certain occasions, the employee involvement could lead to significant problems for the company’s profile towards its stakeholders as it has been found that a related set of problems occurs in financial markets, where owners and investors are concerned about whether managers are abusing the funds entrusted to them”. In other words, employees should be welcome to participate in all corporate initiatives; however their level on intervention in the organizational issues should be closely monitored by the company. Generally, it is stated by Walker (1998, 9) that HR strategies may involve in significant amount of money, however in the case of recruitment process it is noticed that “costs of human resource processes and initiatives (investment of money, time, and other resources) are best measured in relation to their outcomes”. In the case under examination the relationship between the company and the employees can be characterized as extremely successful. In this company the involvement of employees in the organizational issues is direct and equal. The relevant findings of the study of Walker (1994, 60) could be possibly applied here. In accordance with the above researcher “managing people was a line management responsibility long before there ever were human resource staff functions; managers generally acknowledge responsibility for managing their people; yet human resource staff have taken on more and more functions in support of managers over the decades, including employee relations, sourcing and screening talent, handling performance problems and terminations, and career development”. As for the application of the HR model proposed by Marchington et al. (2005), this can lead to the creation of an ‘efficient’ organization, however it can be doubted how the principles and the rules presented through this model can be easily adapted at the modern organizations which are characterized by the high level of competition among the employees. On the other hand, the existence of skills/ competencies in employees – which is a necessary requirement for their placement in a particular organizational position - cannot guarantee at an absolute level the success of the corporate plans. References Ashforth B. E. (1995). Emotion in the workplace: A reappraisal. Human Relations 48(2): 97 Barrick, M., Ryan, A. (2003). Personality and Work: Reconsidering the Role of Personality in Organizations. Jossey-Bass. San Francisco Gelade, G.A., Ivery, M. (2003). The Impact of Human Resource Management and Work Climate on Organizational Performance. Personnel Psychology, 56(2): 383-398 Gooderham, P.N., Nordhaug, O, Ringdal, K., (1999). ‘Institutional and Rational Determinants of Organizational Practices: Human Resource Management in European Firms’. Administrative Science Quarterly, 44(3): 507-526 Hamilton, D. (1995). The Personnel Function in Small Public Organizations. Public Personnel Management, 24(3): 399-407 Jackson, S., Schuler, R. (1995). ‘Understanding Human Resource Management in the Context of Organizations and Their Environments’ Annual Review of Psychology 46: 237-254 Kim, P. (1999) Globalization of Human Resource Management: A Cross-Cultural Perspective for the Public Sector. Public Personnel Management, 28(2): 227-238 Korman, A., Kraut, A., London, M. (1999). Evolving Practices in Human Resource Management: Responses to a Changing World of Work. San Francisco: Jossey-Bass Kundu, S., Vora, J. (2004) Creating a Talented Workforce for Delivering Service Quality. Human Resource Planning, 27(2): 40-53 Lajara, B.M., Lillo, F.G., Sempere, V.S. (2002) ‘The role of human resource management in the cooperative strategy process’, Human Resource Planning, 25(2): 34-46 Levine, D. (1995). Reinventing the Workplace: How Business and Employees Can Both Win. Brookings Institution. Washington, DC Luthans, K. (1998). ‘Using HRM to Compete in the 21st Century’. Management Quarterly, 38(4): 17-23 Marchington, N., Wilkinson, A. (2005) Human Resource Management at work. CIPD Megginson, L. C. (1972). Personnel: A Behavioral Approach to Administration. Richard D. Irwin. Homewood Ramlall, S.J. 2003. Measuring Human Resource Managements Effectiveness in Improving Performance. Human Resource Planning, 26(1):51-64 Schuller, R., Rogovsky, N. (1998). ‘Understanding compensation practices across firms: the impact of national culture’. Journal of International Business Studies, 29(1): 159-172 Scullion, H., (1994) ‘Staffing policies and strategic control in British multinationals’, International Studies of Management and Organization, 24(3): 86-97 Sims, R. R. (2002). Organizational Success through Effective Human Resources Management.Quorum Books. Westport, CT Walker, J. (1999) What Makes a Great Human Resource Strategy? Human Resource Planning, 22(1): 11-14 Walker, J. (1998). ‘Are We Using the Right Human Resource Measures?’ Human Resource Planning, 21(2): 7-10 Walker, J. (1994). Integrating the Human Resource Function with the Business. Human Resource Planning, 17(2): 59-71 www.marksandspencer.com [1] Personal Learning Statement The examination of the human resources practices followed by the case under examination led to the assumption that inside a particular organizational environment employee is a significant asset. Towards this direction, the implementation of a series of plans for his/ her fair treatment (including fair remuneration) should be regarded as expected. However, because of the extension of the phenomenon of globalization, managers in the HR departments have to face a challenging task: the retention of the balance between the firm’s growth and the satisfactory remuneration of the employee (in certain cases this target is not feasible). For this reason, it has been supported by Kim (1999, 227) that “the examination of the Todays leaders must assume the responsibility for creating new models of management systems because many of the assumptions on which management practice were based are now becoming obsolete; foreign competition and the need to trade more effectively overseas have forced most corporations and government to become increasingly culturally sensitive and globally minded”. In other words, corporate leaders must have significant skills and competencies combined with a flexible mind that can retrieve solutions in cases of severe turbulences or organizational crisis. At the same time the application of the Best Practice – High Commitment Plan as suggested by Marchington et al. (2005) should be regarded as an excellent proposal for the handling of difficult and long lasting organizational problems. Read More