HRM in Marks and Spencer Essay

Introduction and Background Marks and Spencer, established 1894 in Leeds,UK and as one of the most recognized brands in the UK and worldwide, had been hugely successful in terms of both profit and market share until the late 1990s. However, after that it suffered a reversal in its fortunes. Correspondingly, its organizational structure and culture also underwent certain transformation. The set of dramatic changes include changing top executive and their managerial philosophies. Now, it seems to be on the road to recovery after these radical changes. This article focuses on human resource management in M&S, analysis ranges from its traditional paternalism culture to new HRM practices. Paternalism & Unitarist Characteristics Under paternalism, employers and employees view the company as a family. It’s different from traditional manufacturing culture. The separation between the shop floor and management and feelings of ‘them and us’ are what might be expected within a traditional manufacturing culture, where the employment is full-time, long-term and relatively stable and the typical workplace is a large firm or store. The corporation is a stable sovereign organization with a clear division of labors and everyone abides by the social contract. Similarly, Unitarist deems the business organization as a team united by shared interests and values with senior management as the sole source of authority and focus of loyalty, conflict is seen as irrational and unnecessary. Historically, Marks and Spencer fits into an anatomy of paternalism with characteristic features of hereditary family ownership, personal relations between employer and worker, a sense of UK religious mission and a commitment to social welfare and public service. The ideal type paternalist workforce matches these, with family employment through large kinship networks and is embedded in a surrounding occupational community. Moreover, there was a feeling of camaraderie and close-knit family atmosphere within the stores and they employed staffs who are most suitable and can readily become part of this family. In addition, every M&S store is identical and the store managers followed central direction. The highly centralized authority also means that there exists little disagreement with policies sent down from the top. Also, there had never been a CEO of M&S who had not been a member of the founder’s family or a lifetime employee. The first exception is Vandervelde who had been appointed to the position of chairman at M&S in 2000 from outside the organization. Therefore, this kind of HRM is a typical form of paternalism, which totally breaks with trade unions and has highly centralized authority and represents the characteristic of unitarist as well. Organization’s success is depended not only on reducing costs but also on improving the performance of the workforce. The organization’s objective or their currently expect of their employees may be completely different from what they expected in the past due to the changing external environment such as new competitors or new technologies, internal strategy such as focusing on reducing costs and cutting the full-time sales assistants in store. Some of the external environment and the individual factors driving psychological contract research are illustrated in following figure. Old Contract (Greenbury) New Contract Change environment Stable, short-term focus Continuous change Culture Paternalism, time-served, exchange security for commitment Those who perform get rewarded and have contract developed Rewards Paid on level, position and status Paid on contributions or performance-based Promotion basis Expected, based on time served in store and competence Less opportunity, new criteria, for those who deserve it Personal development The organization’s responsibility Individual’s responsibility to improve employability Consequently, employee’s job descriptions might be broadened and their psychological contract will shift correspondingly. Evidence suggests that these changes represented a threat to the reciprocal nature of the psychological contract with consequences for both employees and employers. Meanwhile, the strength of the psychological contract is dependent on how fair the individual believes the organization is in fulfilling its perceived obligations that the organization treats them fairly, respects their efforts and rewards them justly, it’s based on mutual obligation. In addition to the summarized old contract characters, evidence also shows that Greenbury only used sales figures and visitors to stores as the basis to make judgments on how M&S was operating, whereas lost touch with what their employees’ opinions or wants. It makes employees feel their roles are unimportant; also it weakens their morale and motivation. ‘The Thrill of the Purchase’ article states this famous paternalistic culture of M&S. They offered cradle-to-grave benefits for employees but rigidly governed the way that managers operated. Moreover, every aspect of the company was rule-driven. Most of employees feel rule-bound and they are not encouraged to use their personal discretion as well. Nevertheless, they gradually realized their culture are fall-out-of-step and with the implementation of new HR strategic, M&S becomes open and receptive, moving from a culture of paternalism to a more sophisticated culture of choice. Matching employee behaviors and HRM activities to competitive strategies Michael Porter’s generic ‘low-cost’ or ‘differentiation’ strategy can be adopted in the Marks&Spencer case. Namely, each Porterian competitive strategy involves a unique set of responses from workers or ‘needed role behaviours’ and a particular HRM strategy that might generate and reinforce a unique pattern of behaviour (Schuler and Jackson, 2002). Therefore, any inconsistency in internal HRM practices will likely lead to ‘role conflict or ambiguity that can interfere with individual performance and organizational effectiveness’. In the Devanna et al. model, human resource management strategy and structure follow and feed upon one another and are influenced by environmental forces. This basic model constituted the bare bones of a theory on SHRM. (Linda Maund, 2001:73) Porter’s model comprised three components: 1. Low-cost leadership or cost reduction strategy Using this strategy, organization will gain competitive advantage by being the lowest cost producer. Managers are attempting to increase the organization’s market share by emphasizing low cost compared to that of its competitors, they try to emphasize that their goods or services are cheaper. It’s an aggressive and tightly cost-controlled strategy that emphasizes overhead minimization. Meanwhile, it pursuits the economies of scale and primarily focus on increasing productivity through reducing output cost per person and reducing wage levels by all means. This approach takes effect by means of mass-producing, mass-selling to save the costs, whereby gain the price superiority. Moreover, it keeps manufacturing process simple and repetitive in order to save the costs of raw materials, whereas basically there are no improvements or expansion of their products. Greenbury, the former chief executive of Marks and Spencer, had decided that to control costs by means of cutting full-time sales assistants in stores, at the same time, bring in full-time, part-time and Saturday staffs to work in stores. Further, their approach is also rely on and highly trust the quality of British suppliers and M&S play as a bulk buyer who even buy up all the stock of specific suppliers, whereby conducting mass-selling to earn profits. In addition, as the Channel 4 programme stated at 25th Feb,2001 that operations of the organization within M&S is focused on short-term strategy rather than long-term one and they were firmly placed in the ‘middle ground’, emphasize getting generalized view of the market instead of trying to target various segments market. The overall strategy is risk-aversive and traditional. Hence, they are adapting typical cost-reduction strategy, meanwhile, with somewhat emphasis on quality aspect. In general, cost reduction pursued through increasingly using of part-time employees, subcontractors, work simplification, measurement procedures, automation, work rule changes, job assignment flexibility. Therefore, according to this competitive strategy, the expected employees behaviors should be followed the key cost-reduction strategy characteristics illustrate as follow: Low-cost leadership strategy (Greenbury) Needed Employees Behaviors Human Resource Practices Relatively repetitive and predictable behaviors Relatively fixed and explicit job descriptions A rather short-term focus Narrowly designed jobs Primarily autonomous or individual activity Narrowly defined career path, unitarism Modest concern for quality Externally, reliable suppliers; internally, QC function High concern for quantity of output Lean production, JIT system, fully participation Primary concern for results Minimal levels of employee training and development Low risk-taking activity Short-term, result oriented performance appraisals Relatively high degree of comfort with stability Close monitoring of market pay level 2. Differentiation or quality enhancement strategy This strategic emphasizes on enhancing products or services quality and offering products or services that different from those of its competitors. There are numerous ways to implement this strategy, the most common ones are advertising, offering distinctive product or service features, providing exceptional service, or relying on new technology. The organization is trying to make a unique product or provide a unique service with high quality to attract target customers and earn profits. Due to the risk-aversive and traditional managerial methodologies, actually Greenbury laid less emphasis on quality enhancement or on delivering products with unique quality. Therefore, by April 1999, in order to overcome the difficulties M&S had been facing, Salsbury, the successor of Greenbury, had devised a large-scale promotional campaign to try to restore its images as an innovative retailer offering unique quality products. He started to segment the market and offer different category products to its target customers with strong emphasis on its unique quality. Also, by moving away from its original bureaucratic culture and hierarchical environment, modest amount of cooperation was formed to enhance products quality. At the end of March 2001, for the future development of M&S, Vandervelde, the new chief executive of M&S, started to focus on its core 300 domestic stores by cutting or withdrawing its stores worldwide, and started moving business closer to the customer and selling customized products within the UK. For customized products, quality is a key success factor. Therefore, obviously, at this stage, M&S strategy focuses mostly on differentiation character. The matching HRM practices of this competitive strategy for M&S are summarized as following table: Quality enhancement strategy (Salsbury and Vandervelde) Needed Employees Behaviors Human Resource Practices Relatively repetitive and predictable behaviors Relatively fixed and explicit job descriptions More long-term or intermediate focus Giving employees more discretion Modest amount of cooperative, interdependent behaviors Mix of individual and group criteria for performance appraisal High concern for quality Extensive and continuous training and development of employees, QC function, TQM practices Modest concern for quantity of output High level of employee participation High concern for process Training and development of employees, TQM practices Low risk-taking activity Relatively egalitarian treatment of employees Commitment to the goals of the organization Applying Balance scorecard 3. Focus or innovation strategy However, they also try to design a new range of clothes for M&S through hiring famous innovators and conducting in-depth research to understand customers’ shopping habits and their demographics. This strategy emphasizes some of the innovative character, whereby gain advantaged of its competitors. It’s different from the previous two strategies. Meanwhile, the organization concentrates on a specific geographical area, specific group of customers. Overall, for firms pursuing a competitive strategy of innovation, the employees are encouraging to offer suggestions for new and improved ways of doing their job or manufacturing products. Eventually, this strategy will result in feeling of enhanced personal control and morale, greater commitment to self and profession. In addtition, selecting highly skilled individuals or training employees could be costly once adopting this strategy. Focus or innovation strategy (Vandervelde) Needed Employees Behaviors Human Resource Practices High degree of creative behaviors Selecting highly skilled individuals Long-term focus Appraising performance for its long-run implication Relatively high level of cooperative, teamworking, knowledge sharing and interdependent behaviors Using minimal controls Moderate degree of concern for both quality and quantity TQM practices, making a greater investment in human resources Equal degree of concern for process and results Providing more resources for experimentation Greater degree of risk taking Allowing and even rewarding occasional failure Uncertainty, unpredictability and constant change Compensation, incentives, giving employees more discretion Comparatively speaking, Low-cost leadership is effective but difficult to do in a high-cost organization. Differentiation can be profitable if target customers are not particularly concerned with price but it’s costly to implement, such as research and development, advertising costs. Focus strategy can gain quick returns but takes time to identify area or group and the cost could be even higher since it focuses on innovative aspect of products. Analyze Matching model and other HRM strategies From the above comparison, we can see that effectiveness will increase by melding HR practices with competitive strategy. The advantages of this model are obviously and are summarized as following table: Component Advantages Disadvantages Low-cost leadership Effective Difficult to do in a high-cost organization Differentiation Can be profitable if target customers are not particularly concerned with price Costly to implement, e.g. research and development, advertising costs Focus Quick returns Takes time to identify area or group (Linda Maund, 2001:55 ‘Adantages and disadvantages of Porter’s competitive strategies’) However, besides the disadvantages illustrated above, the practice of this matching model could also be problematic since achieving the goal of ‘close fit’ of business and HRM strategy can contradict the core ‘soft’ HRM goals of commitment, flexibility and quality. Work organization as M&S may adopt a ‘soft’ version of HRM for managerial staffs, which is consistent with its current strategy, whereas simultaneously pursuing a ‘hard’ version of HRM for low-level worker, which might undermine the commitment of the latter. Hence, the matching model is essentially unitary and it tends to assume that workers are unproblematic and will comply with managements’ perception of the ‘needed role behaviors’. Meanwhile, we also cannot ignore the fact that workers and their unions, especially for M&S’s famous British working union, might influence strategic planning. In addition, ‘excessive fit’ can be disadvantageous to gaining competitive advantage since it can make a company inflexible and incapable of adapting quickly to the external environment. Recalled that when Greenbury insisted on its cost-reduction strategy and its quality criteria, the environment of the whole market has gradually changed. Competitors targeted at niche market and adopted differentiation strategy to attract and gain credibility among numerous consumers, whereas M&S still keep its traditional or risk-aversive way to do business. Recommendation Other HR strategies suggestions for M&S: At individual level, employees’ motivation can be stimulated through appropriate job design and rewards. Also, emphasizing employees’ participation or empowerment, and it could be reinforced through encouraging front-line staff to solve customer problems on the spot, without constant recourse to management approval. At organizational level: Development through changing the paternalism structure and corresponding traditional culture to a culture of the individual and of teams. The organization should focus on building its growth valued (such as brand revitalized by Vandervelde) and rewards excellence. Meanwhile, strategy-focused organizations like M&S can apply the balanced scorecard to align their employees to their strategy. This strategy can be implemented through communication and education, personal and team objectives, and incentive and reward systems. They should extensively use self-managed teams and decentralization. Also, paying attention to reducing status differentials and encouraging willingness to share information. Finally, when individuals understand how their pay is linked to achieving strategic objectives, and set personal objectives to met and help to achieve the strategic objectives, organization’s effectiveness will expect to be achieved. Â   References and Bibliographies: Linda,M.(2001) ‘An Introduction to Human Resource Management: theory and practice’, Hampshire, New York: Palgrave Publishers Ltd Schuler,R.S and Jackson,S.E (2002, 7th edn) ‘Managing Human Resources: A Partnership Perspective’: Journal of Personnel Review,31(1),114-121 Tyson,S. and York,A. (2000,4th edn) ‘Essentials of HRM’, Houston: Butterworth Heinemann Torrington,D. and Hall,L. 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