Raleigh & Rosse Strategic Human Resource Management - Case Study Example

STUDENT NAME AND NUMBER: COURSE AND TITLE: 21407 Strategic Human Resource Management Executive summary The case study involves analysis of Raleigh & Rosse which has been experiencing a gradual drop in its sales and revenues since 2009. The CEO wants to respond quickly in order to prevent further drop in the following year. Thus report aims to provide the best alternative using the following process: Problem/ issue statement, data analysis, suggested Alternatives, Key Decision Criteria, Alternatives analysis, Recommendations, Action and Implementation, and Ethical Issues. The main issue is a flawed performance management system which has affected sales, profitability, and employee morale. The best alternative is based on key decision criteria that are based on increased sales and market share as well as improved profitability. Table of content 21407 Strategic Human Resource Management 1 1.0 Introduction 4 2.0 Problem/ issue statement 4 3.0 Data analysis 4 4.0 Suggested alternatives 5 4.1 Improvement of sales associate-customer relationship (Alternative A) 5 4.2 Modification of Sales-Per-Hour program (Alternative B) 6 4.3 Implementation of behaviour-based management system (Alternative C) 7 5.0 Key Decision Criteria 8 5.1 Improvement of sales associate-customer relationship (A) will: 8 5.2 Modification of Sales-Per-Hour program (B) will: 8 5.3 Implementation of behaviour-based management system (C) will: 9 6.0 Alternative analysis 10 7.0 Recommendations 11 8.0 Action and implementation plan 12 9.0 Ethical issues 13 10.0 Conclusion 13 References 14 1.0 Introduction Raleigh & Rosse has been experiencing a gradual drop in its sales and revenues since 2009. In order to prevent continued drop in its revenues, a quick decision needs to be made. This report explains the process of providing the best alternative to prevent this drop. The process include the following steps: problem/ issue statement, data analysis, suggested alternatives, Key Decision Criteria, Alternatives analysis, Recommendations, Action and Implementation, and Ethical Issues. 2.0 Problem/ issue statement The company wants the managers to own their business and the sales associates to own their relationships in order to maintain and improve customer satisfaction. The problem is a flawed performance management system. This problem has led to declining of sales in the company and unhappy employees who have taken a court action to resolve their issues. If not addressed, the problem will lead to loss of morale of the employees, lack of customer satisfaction that will result to loss of revenue, and damage of the reputation. This will cut the link between the activities of human resource (planning manpower, performance appraisal, employee benefits and compensation) and the strategic objective of the business (Chang & Huang, 2005). 3.0 Data analysis The problem arose due to introduction of a performance measurement system known as Sales- Per- Hour (SPH). The issue was created by a distinction between ‘selling’ and ‘non-selling’ hours where non-selling hours led to decrease in SPH. Non-selling hours are essential for customer satisfaction but they negatively affect the SPH. The manipulation of the system led to unethical issues. A 2004 court case that an employee was compensated due to wrongful termination based on SPH system is an indication of loss of morale for employees. On January 2010, the lawsuit filed by all sales associates on violation of the federal wage and hours laws based on the same SPH system is an indication of a flawed performance management system. Such cases led to lack of customer satisfaction, more decline in sales, and damage of R&R reputation reflected by reduction in its profitability and it market position. Caldwell et al (2011) identifies lack of awareness of ethical duties as a barrier to establishment of work environments that satisfy the employees. Based on 5-year statistical summary, the results in 2009 net sales ($400,432) and net earnings were least while the number of stores owned by the company had increased (38). Instead of dropping, sales and net earnings figures were supposed be rising. These are the impacts of the SPH system. These issues mostly affect the employees given that they are forced to lose a lot of ‘off the clock’ hours working for the company in order to achieve the SPH target. The decision made will affect the company as it will lose its reputation, customers, and resources in addressing these issues as well as revenues. From the calculations using the SPH system, the employees benefit more if they achieve the SPH target. That is, if an associate underreports his or her hours, it means SPH will be improved and there will be more rewards. But if an associate reports more hours (above 40 per week), the SPH will be reduced below the target. Less hours means less time for customer satisfaction hence, the system advocates for less hours in order improve SPH. This is an indication of loss of customer satisfaction as well as reduced revenues. 4.0 Suggested alternatives 4.1 Improvement of sales associate-customer relationship (Alternative A) One of the main problems that have resulted to continued decline of revenues in R&R is lack of understanding of the customer base. This is because every sales associate is determined to spend less time on customers in order to improve SPH. Thus, the relationship between the sales associate and customer is based on short-term goals which have led to change in the needs of the customers without recognition (Huselid, Jackson & Schuler, 1997). In order to address this issue, the sales associates will be required to provide a weekly form for measurement of customer engagement. The results will be discussed with the manager in order to understand any variations in customer needs. The following is an example of questions to be addressed for measurement of customer engagement; Measure customer engagement- (Scoring: 1= Not at all while 5= extremely) Generally, how satisfied are you with our product? How likely are you to continue choosing our product? How likely are you to recommend our product to a friend? Is our brand a name that you can always trust? Do you feel proud to be a brand client? Do we deliver on what we always promise? Is our company a perfect one for you? What would you like us to change on our products? Based on scores, the sales associate together with manager can decide on the best steps to take in order to improve customer satisfaction (Becker, Huselid & Ulrich, 2001). 4.2 Modification of Sales-Per-Hour program (Alternative B) Failure to achieve the SPH leads to fewer scheduled hours, substantial pressure, inferior hours and the possibility of termination. From the case study, it is evident that failure to achieve this target does not necessarily mean that the sales associate is not performing. But it may be because the sales associate spent more hours in addressing customer issues. This means that the SPH target is discouraging customer-employee relationship thus, jeopardising the understanding of areas that need improvement. In order to improve employee-customer relationship and increase the sales associate’s effort in achieving the target, SPH value should be calculated from a constant weekly 40 hours for all. For instance, in example 1, an associate working for 50 hours weekly selling $17,000 would earn $1,250 and have a SPH of $425 (instead of earning $721 with SPH of $340). In example 2, an associate working for 50 hours per week making $ 15,000 sales would earn $721 and a SPH of 375(instead of earning $576 and SPH of $300). By doing this, the following will be achieved: Everyone will work hard in order to attain a sales target of above $16,484, thus, increased sales (Way & Thacker, 2001). At the same time, the sales associate will have a good time to study the needs of customers, thus, R&R will be assured of future market. Understanding the needs of the customer means increased sales and profitability. The sales associate will confident with the program hence, elimination of court issues on working ‘off the clock’. 4.3 Implementation of behaviour-based management system (Alternative C) The SPH program has led to deception in order to attain the target. This has even resulted to court case due to wrongful termination of one of the sales associates as well as underreporting hours of working. In addition, the managers are being authoritarian, directive, controlling and dogmatic in addressing the issues of SPH target. These are signs of ineffective behaviours in management (Ellinger et al. 2008). Lying is among the most unethical behaviours in the place of work and if sales associates are deceiving l, it will not only harm the customers but also the trust that is essential for a flourishing economy (Carson, 2001). A behavioural and outcome-based control system will provide ways of directing, monitoring, evaluating as well as compensating employees. Coaching the sales associates will be an effective process that will assist sales associates to improve as well as grow and attain high level performance through provision of feedback, raising awareness and encouragement. It will enable and empower sales associates and open opportunities for learning leading to improved performance (Ellinger & Boston, 1999). Behaviour-based management system will lead to the following outcomes: Increased competence Increased sense of responsibility Higher levels of motivation of individual Increased customer orientation Increased sales 5.0 Key Decision Criteria 5.1 Improvement of sales associate-customer relationship (A) will: Maintain customer satisfaction as well as the corporate image Improve the morale of the sales associates Be consistent with the strategy of the corporate Retain flexibility Within our present & future resource capability Increase sales and market share Improve the corporate profitability 5.2 Modification of Sales-Per-Hour program (B) will: Improve the morale and safety of sales associates Maintain customer satisfaction and corporate image Be within acceptable risk parameters Maintain the corporate image Within our present & future resource capability Increase sales and market share Improve profitability 5.3 Implementation of behaviour-based management system (C) will: Maintain the corporate image and customer satisfaction Improve the safety and morale of sales associates Be consistent with the strategy or mission of the firm Within our present & future resource capability Increase sales and market share Improve or maintain profitability Alternative B will improve profitability more than A. This is because the sales associates will work harder in order to go beyond the target since higher sales will be reflected by higher earnings. At the same time, the sales associate will be working more hours so that if he or she misses the sales target, he will be able to get higher earnings due to more hours worked. More working hours means more time with customers which means that a better understanding of the customer needs leading to both short-term and long-term profitability. However, alternative A will improve profitability more that C given that there will be a good understanding of the customer through the assessment. This means more sales and more profits. Alternative C will ensure that corporate image is maintained through efficient management behaviours. This ensures that the unethical behaviours such as underreporting hours, lying and others issues the lead to court action are eliminated. This will maintain customer satisfaction as well as improved increased sales and improved profitability. 6.0 Alternative analysis Improve profitability Increase sales & market share Maintain customer satisfaction & R&R image Be consistent with strategy of R&R Within our present & future resources & capabilities Within acceptable risk parameters Employee morale & safety Retain flexibility Improvement of sales associates-customer relationship (A) Better than C Better than C Highest Highest Better than C Better than C Highest Modification of SPH program (B) Highest Highest Better than C Better than C Highest Highest Highest Better than C Behaviour-based management system (C) Better than A 7.0 Recommendations It is recommended that modification of SPH is the best alternative based on the key performance indicators. This is because: Sales associates are working hard in order to achieve the target as this will lead to more earnings. For those who do not achieve the target, they also worker harder in order to get more hours of working because more working hours means increased earnings Since every sales associate works harder, they feel that they own the system thus, increased morale More working hours means that they have a good interaction with customers thus, maintaining customer satisfaction As a result of the above factors, the sales and market share will increase leading to improved profitability. 8.0 Action and implementation plan The sales associates, managers and customers will be impacted by the plan. The plan will be approved by the Chief Executive Officer. The managers will be responsible for reviewing and monitoring of the plan. The owner of the plan is the sales associated and managers and they have the authority to advocate for the plan sufficiently. The CEO, managers and sales associate representatives should be involved in actual creation of the plan. They should have knowledge and skills development and implementation of performance management system (Florida Department of Health, 2010). Goal statement 1. Increase sales 2. Increase the market share Objectives 1. Increase sales by 20% by the end of 2013 2. Increase the market share by 15% by the end of 2013 Strategies and activities 1. Strategy- Focus on ways of working with customers to understand their needs Activity- conduct survey of current services offered by sales associates to customers 2. Strategy – review the factors to consider in increasing the market share Activity- obtain data on current market share and competitors Evaluation indicators 1. Sales will have increased by 10% by April 30, 2013 2. The number of customers will have increased by 8% by April 30, 2013 Lead role: the managers is responsible for ensuring that the activities are completed Time frame: activities to be completed by December 18, 2012 9.0 Ethical issues Lying or deception is one of the unethical behaviours that are expected in the implementation of this alternative. This is because every sales associate is working out to attain the SPH target because if he or she fails to achieve, there is a possibility of termination. In order to be safe, some may look for other ways of achieving targets or bringing their colleagues down. This will result to unethical behaviours (Payne, 1999). 10.0 Conclusion Raleigh & Rosse has been experiencing a gradual drop in its sales and revenues since 2009. The main issue behind the drop is a flawed performance managment system. Other issues such as various law suits in regard to working hours and wrongful termination of as indicators of a flawed performance managment system. In order to adress these issues, there are three alternatives which include Improvement of sales associate-customer relationship, modification of the SPH program in existence and Implementation of behaviour-based management system. Based on key decision criteria, the modification of SPH alternative is the best due to predicted better increase in sales and market share as well as profitability. References Becker, BE, Huselid, MA, & Ulrich, D 2001, The HR Scorecard: linking people, strategy, and performance. Boston, MA: Harvard business school press. Caldwell, C, Truong, DX, Linh, PT, & Tuan, A 2011, ‘Strategic Human resource management as ethical stewardship’, Journal of Business Ethics, vol. 98, no. 1, pp. 171-182 Carson, T 2001, ‘Deception and withholding information in sales’, Business Ethics Quarterly, vol. 11, no. 2, pp. 275-306. Chang, WJ & Huang, TC 2005, ‘Relationship between strategic human resource management and firm performance’, International Journal of Manpower, vol. 26, no. 5, pp. 434-449. Ellinger, AD & Bostrom, R 1999, ‘Management Coaching Behaviours in Learning Organisations’, Journal of Management Development, vol. 18, no. 9, pp. 752-764. Ellinger, AD, Hamlin, R, & Beattie, R 2008, ‘Behavioural indicators of ineffective managerial coaching: A cross-national study’, Journal of Industrial Training, vol. 32, no. 4, pp. 240-257. Florida Department of Health 2010, Step 4 - Create and Implement Plan of Action, accessed on 25 August 2012, http://www.doh.state.fl.us/hpi/Step4.html Huselid, M. Jackson, S. & Schuler, R 1997 ‘Technical and strategic human resource management effectiveness as determinants of firm performance’, Academy of Management Journal, 40, p. 171-188 Payne, SL & Wayland, RF 1999, ‘Ethical obligation and diverse value assumption in HRM’, International Journal of Manpower, vol. 20, pp. 297-308 Way, SA & Thacker, JW 2001, ‘The Successful Implementation of Strategic Human Resource Management Practices: A Canadian Survey’, International Journal of Management, Vol. 18, pp 25- 32 Read More