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)
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)
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)
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:
(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.
References and Bibliographies:
Linda,M.(2001) ‘An Introduction to Human Resource Management: theory and practice’, Hampshire, New York: Palgrave Publishers Ltd
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Torrington,D. and Hall,L. (1998, 4th edn) ‘Human Resource Management’, Upper Saddle River, New Jersey: Prentice Hall Inc
Maund,L. (1999) ‘Understanding People and Organisations: An Introduction to Organisational Behaviour’, Cheltenham: Stanley Thornes
Schuler,R.S and Jackson,S.E (2000) ‘Strategic Human Resource Management’, Journal:Personnel Review,29(6),816-821
James,A. and McGoldrick,A.E. (2001) ‘HRM service practices: flexibility, quality and employee strategy’, Journal: International Journal of Service Industry Management,7(3),46-62
Huang,T.C (2001) ‘The effects of linkage between business and human resource management strategies’, Journal:Personnel Review,30(2),132-151
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