Retailer was recently taken over by a Us-based investment firm with a lot of experience in the US retail industry. The predominant approach to HARM in The US and The Netherlands shows some major differences like HARM in the US is characterized by relatively low Job security, focus on high performance work systems, and an increasing use of variable pay systems, contrary to Dutch HARM, with relatively higher Job security, higher wages with less variable pay, and attention for employee wellbeing.
Alongside these differences, there are also some differences specific to the two firms with Retailer having stakeholder approach and Investment firm having shareholder approach. This takeover presents a dilemma for Retailer HRS and the ore issue is how to best fit Retailer values with shareholders approach of the Investment firm without comprising its stakeholders interests. Est. 1. Describe and evaluate the HRS policies and practices at Retailer before and after the take-over. What are the strong and weak points?
Firm creates value through understanding the factors that determine the profitability and Retailer begins with indemnifying the value of a firm’s human resources to organization. At Retailer, their philosophy was people are the primary link in the value chain, and thus, value is created by focusing first on employees, which can simply describe as “Employee- Service-profit” manner. This was a firm’s culture from its inception since their seven culture keys were formulated by the management team and reflected desired behaviors of employees.
Upon doing so, management and employees treat each other with dignity and respect and this serves as a model for how the customer is ultimately treated which cannot easily be imitated by competitors. For example, each store manager has autonomy to hire new employees when needed and select people with the potential to grow to higher functions within the store who fit well into firm culture as well as group of people working in that store.
This industry is also usually characterized as having relatively low skill requirements and high dependency for employees. Retailer, however, has attempted to focus on all levels of staff as the key to its competitive advantage and invests or provides Job-specific training to utilize rare characteristics of the human resources. In addition, in order for Retailer’s human resources to provide a source of sustained competitive advantage, firm has always chosen to retain as many employees as possible by transferring to a different department or store.
We believe that strong points at Realize before the take-over re – ; Low turnover, on average 5% High level of employee engagement & loyalty Future-oriented approach & flexibility in employee recruitment ; on employee development Despite its strong point, Retailer has also some weak points like – ; Strong focus Low flexibility of employees to adjust with Job demands (busy days or timings, different departments etc) ; Middle layer inflexibility leading to not enough growth opportunity for young employees After take over by Us-based investment firm, firm uses a shareholder approach with more focus on increasing shareholder value by decreasing costs/ increasing revenues.
This value places the customer at the center, emphasizes the serving role of employees, importance of high performance and expects full flexibility of employees. In order to achieve these goals, firm is now more centrally managed than ever with tightly managed output, costs and efficiency. All this has effect on Retailer’s culture being a misfit with organization’s values. Strong points after take-over are – Clarity on differences between employee’s true and actual performance Weak Mismatch of new policies with core values of Retailer ; Erosion of Retailer culture, a source of competitive advantage leading to happy employees = happy customers SQ a. ‘Best Practice’ and ‘Best Fit’ models are two dominant approaches in the HARM literature that explain how HARM affects performance. A.
Which of these two approaches do you believe to be part of the HARM policy and practices at Retailer before the take-over? Explain why. We believe that the HARM policy and practices at Retailer before the take-over is “best practice” model. Prefer defined “best practice” in 1998 as a set of seven aspects-? 1 . Employment security 2. Selective hiring 3. Self-managed teams or team working 4. High pay contingent on company performance 5. Extensive training 6. Reduction of status differences . Sharing information According to this set of definitions, it’s obvious that Retailer took “best practice” model HARM policy before the takeover because we could see a bunch of facts of Retailer’s HARM strategy as below-? 1 .
Employment security by Dutch law (connect with “employment security’) 2. Formal written guidelines for recruitment and selection of candidates-?future oriented approach (connect with “selective hiring”) 3. Flexible working hours, result focus (connect with “self-managed teams or team working”) 4. Reward bonus on very good performance (connect with “high pay contingent on company performance”) 5. Job-specific training programs (connect with “Extensive training”) 6. Positive appraisals & collective bargaining agreement (connecting with “Reduction of status differences”) With the five facts mentioned above, we can easily regard the HARM policy of Retailer as “best practice” model. B.
Which of these two approaches do you believe to be part of the HARM policy and practices at Retailer after the take-over. In other words, do you believe that the take- over has changed the overall approach used in Retailer or not? Explain why. We believe that the HARM policy and practices at Retailer after the take-over is “best it” model. In other words, the HARM approach is totally changed after the take-over. “Best fit” model argues that HRS strategy becomes more effective when it is designed to fit certain critical contingencies in firm’s specific context. (Boxful & Purcell, 2000) It is mentioned in the case that the new performance-driven HRS policy replaced the culture driven HRS policy of Retailer.
As we can see, to fit the core competency of Retailer and for the competitive advantage, the new HRS policy was designed by the investment company with a “stakeholder-based strategy’, Most of the facts which ere aligned with “best practice” approach was changed-? 1 . Job security “If you don’t perform you will get fired” 2. Flexible working hours -> Large spread of working hours 3. Result focus -> Procedure control focus 4. Job-specific training programs -> General retail training programs 5. Positive appraisals -?> New appraisal standards 6. Collective bargaining agreement-?> Incentive pay The change of the HRS policy changed the culture and key value of Retailer.