Initially, RestaurantCo takes on a resource-based view approach in which it views its employees “as part of the company’s assets” and put strong focus in building its employee relations. The resource-based view of a organization suggests that employees are seen as a pool of human capital with valuable knowledge and skills - a unique resource that is both difficult to imitate and replaced - thereby providing the important factor of competitive edge (Hendry & Pettigrew,1990; Barney,1991; Wright, McMahan, & McWilliam,1992; Leonard-Barton,1995). However, with the recent changes in ownership, the management of RestaurantCo adopted a more strategic approach in managing its business and its HR practices. The importance of strategic goals and managerial focus are stressed upon its employees, displaying signs of using an instrumental approach to its human resource management; also known as the ‘hard’ approach.
Referring to the case study, RestaurantCo was said to give a large amount of decision-making autonomy to its branch manager although as highlighted below, contradicts this autonomy given.
Previously, branch manager was given a fair autonomy to manage their own branch. They could order directly with the suppliers to meet the needs of their individual branch. However, the introduction of a cost-cutting strategy by the management reassigned this autonomy to the supply chain department, thus centralising the decision-making process. Defined by Management Study Guide, centralization is the process of which decisions or activities are all decided by only a few people. This resulted in delays and mistakes with deliveries as the supply chain department had limited understanding of the needs of the individual branches. Another situation arose with the introduction of the ‘Mystery Customer’ initiative. Assessors were engaged to appraise the customer service level of individual branches in which the appraisal was related to the branch manager’s performance bonus. This contradicts the given autonomy as the manager had to operate under the ‘surveillance’ by the senior management.
Senior management was shown to exhibit distrust in its branch manager to perform up to their roles. It is stated that “employees would perform at a higher level if the organization did not interfere too much with the employee groups’ norms” (2008, cited in LSE Research Online, 2010, pg 4). With the aspects as mentioned above, it was seen that the management have infringed the trust between the branch manager and the senior management, thus affecting the psychological contract between them. Psychological contract (2008, cited in LSE Research Online, 2010, pg 4) is “an implicit understanding between a group of employees and their foreman”, which means the trust and beliefs between the branch manager and the senior management.
Instead of rewarding only to the senior management in RestaurantCo with profit- sharing, HR can also have in place rewards for the lower management. These rewards can be in the form of monetary rewards such as profit-sharing schemes, and intrinsic rewards, such as empowering its branch manager with decision-making autonomy in their work-related matters. This process of spreading decisions to all levels and involving people who are closely related to these decisions is known as decentralization. By allocating...