RetailCo is a "typically Dutch" retail organization, which takes good care of its employees. RetailCo is a centrally managed company with headquarters and various divisions like food, sales and distribution etc. This case study focuses on the sales division, which is the key division of RetailCo, in which the largest part of the employees (about 85%) work. RetailCo has a unique culture and a separate collective bargaining agreement, tailored specifically to the needs of this company with its pros & cons. RetailCo was recently taken over by a US-based investment firm with a lot of experience in the US retail industry. The predominant approach to HRM in The US and The Netherlands shows some major differences like HRM 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 HRM, 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 RetailCo having stakeholder approach and Investment firm having shareholder approach. This takeover presents a dilemma for Retailco HR and the core issue is how to best fit Retailco values with shareholders approach of the Investment firm without comprising its stakeholders interests.
Qstn 1. Describe and evaluate the HR policies and practices at RetailCo 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 Retailco begins with indentifying the value of a firm’s human resources to organization. At RetailCo, 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. RetailCo, 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 RetailCo’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 ReailCo before the take-over are - · Low turnover, on average 5%
· High level of employee engagement & loyalty
· Future-oriented approach & flexibility in employee recruitment · Strong focus on employee development
Despite its strong point, RetailCo has also some weak points like - · 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...
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