Human resource management

Managing the Human Resource Assignment

Name: Heba M. Ali

Student No.: STU20199

Prof.: Dr. Sarah Mollitt

Word count: 3900

Due Date: 22 April 2013

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Contents

1 Executive Summery..........................................................................................................3

2 Introduction.......................................................................................................................4

2.1 Current Situation.......................................................................................................4

3 Literature Review.............................................................................................................5

3.1 High commitment’ model.........................................................................................5

3.2 Model on HRM, performance, commitment and service quality...............................6

3.3 Model on HRM system, Attitudinal Outcomes and HRM Outcomes........................7

4 HR practices for ‘competitive advantage through people’................................................8

4.1 Building competitive advantage through Training and recruiting.............................8

4.2 Employee Recruitment..............................................................................................9

4.3 Recruitment Process..................................................................................................9

4.4 Employee Training..................................................................................................10

4.5 Culture at the Container Store.................................................................................10

5 Possible problems associated with a manager trying to link HRM to performance.........13

6 Comparison of High Commitment Model and the Container Store HRM practices........14

7 Reference........................................................................................................................18

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1 Executive Summery

Through this project report author will examine a case study on The Container Store which is a specialized retail store in the storage and organization retail industry which is a sub-segment in the furnishing and house wares industry.

This business segment can be identified as a declining business segment but The Container Store has managed to stay profitable in the business whith their effective HRM practices. They use numerous methods to motivate their employees and get 100% performance out of them. Through this project report author will explain one by one these menthods which used by the container more.

Further more through this report author will discusss on high commitment HRM and its application on The container store and other HRM performance related models such as Model on HRM, performance, commitment and service quality and Model on HRM system, Attitudinal Outcomes and HRM Outcomes. Through all of these models and examples author will try to highlight the factors which lead to increased employee performance.

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2 Introduction

2.1 Current Situation

The Container Store is one of the well reputed employers in United States of America and had won the award for the best employer in consecutive years in year 2000 and 2001. In a declining business segments they have manage to stay profitable as well as they have recorded an annual growth rate of 20% since year 1985. They believe well trained and empowered employees are the main factor for organizational success and to satisfy its customers. The Container store spend 18% of their sales income on employees which is 3 to 4% is industry standard. They have their own business model as well as training schedule and remuneration page which are also above the industry standards.

The Container Store is a specialized store in the storage and organization retail segment which is a sub-segment in the furnishing and house wares industry. They have more experience in the business and should deliver greater quality and quantities than other retailers who are in the same business, to do so their employees should be well trained, informed, motivated and loyal to the business organization. Employees at The Container Store consists of all above characteristics and it proves by the market information, 11.6 % Americans are employed in the retail industry but there is an employee turnover of 90% per year – main reason not providing adequate training. But employee turnover at The Container Store is less than 10%.

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3 Literature Review

3.1 High commitment’ model

This model describes seven components which should be followed by HR professionals in order to create a high commitment, high performance organization culture. This model was introduced by Pfeffer in 1998.In this assignment high commitment model will be described with the examples which extracted from a case study on The Container Store.Seven components of high commitment model can be shown as followed,

Job security and the status of the internal labour market

Employee selection and hiring process

Training and employee development

Information sharing within the organization

Tem work among staff members

High compensation on high performance

Equality and less status within the company

Pfeffer (1998)

3.2 Model on HRM, performance, commitment and service quality

Following model shows how to link creation of a service culture within an organization and customer satisfaction.

As the first step HRM professionals of the organization need to create a service culture within the business organization. In order to do that they need to treat their employees above the industry standard and organize activities which directed on employee well being and shows them that they are the most valuable asset which organization has.

While shaping the employee mind on HRM and service quality, organization itself needs to bring forward new initiatives on quality and culture. Through that organization can create a service culture which primarily focuses on customers.

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After creating a service oriented culture, employee behaviour will turn into a service oriented one. Then it should be directed to satisfy customers through providing exceptional customer service through employee interaction.

Employees’ interactive part of the service always should match or go beyond customer perception on interactive part of the service and it will lead to perceive service quality of the customer. Other than the customer expectation on interactive part of the service quality, extrinsic organizational factors, customer expectation and external environment will influence the perceive service quality.

Through this model Schneider and Brown (1985), tries to describe how to match or go beyond customer perception on interactive part of the service and how it leads to perceive service quality of the customer through fulfilment of employee well being.

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HRM System ‘Bundles’

(Concern for employee well being)

Employee perception on HRM

Service culture concern for customers

Organizational quality

initiatives/culture

Service Behaviours

Customer perception on interactive part of the service

Perceive service Quality

Extrinsic Organizational

Factors

Customer Expectation and External environment

Schneider and Brown (1985)

Employee commitment

3.3 Model on HRM system, Attitudinal Outcomes and HRM Outcomes

Following diagram shows the relationship between HRM system, Attitudinal Outcomes and HRM Outcomes, first HRM professionals of an organization should design HRM systems with the use of organizational values, strategies and policy objectives. These HRM system policies should align with internal and external contingencies which affect the organization and its employees.

Through this model Catherine L. Wang, (2008) tries to explain the relationship between HRM systems and HRM outcomes. Positive HRM systems and policies will create positive HRM outcomes while negative ones will create negative outcomes.

Catherine L. Wang, (2008)

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The HRM System Attitudinal Outcomes HRM Outcomes

The ‘surface level’

Guiding principles, implemented policies practices aligned with internal and external contingencies

System architecture

Values strategies and policy objectives

Positive

Productivity Quality Innovation Attendance Stability

Negative

Absence Staff

turnover Conflict Low moral

Work Attitudes

Pay satisfaction

Sense of job

Security

Sense of commitment and respect

Perceives fairness and commitment

Perception of customer orientation

Perception of reasonable workload

Value congruence

Citizenship behaviour

Job performance

4 HR practices for ‘competitive advantage through people’

4.1 Building competitive advantage through Training and recruiting

Today business environment in retail industry is very competitive and diverse; to survive in it managing the financial resources and human resource is very important. As a measure for reducing cost of the business organizations tend to cut down the cost of training and development expenditure on employees saying employees in retail industry does not have proper talent. But not having talent is not the real issue; not having appropriate responsibilities to showcase their talents is the main issue for this unproductively and lack of talent.

The Container Store has identified this issue and they have addressed this issue in a manner which turning it in to a competitive advantage from a burning issue. In the Container Stores busines philosophy (Kalyani 2006) one average person equals three lousy people, one good person equals three average people and one great person equals three good people and employing one great person and paying him twice the market price is more productive than employing three good people.

By following this philosophy they have created a very attractive working environment for employees to work and a culture which share among each other. Employees at The container Store helps each other and shares their knowledge among them. According to a survey findings at Container Store reviles (Kalyani 2006) 97% of employees agreed that people at the organization care about each other at the company. Well performing employees are recognized and they are willing to share their secret of well performing. This culture was created through having a strict training and recruiting policy, some vacancies are kept vacant for months till selecting the most suitable and matching person to the organization.

4.2 Employee Recruitment

As mentioned earlier, The Container Store has adopted a very strict and selective recruiting policy. They tend to keep vacancies for months till they find the most suitable and matching person to the organization. In the other hand they encourage their employees to refer candidates to the organization and they rarely place advertisements on recruitments.

The Container Store believes it is not the duty of the organization to the find suitable people to work but it is the duty of 2500 employees who work at the organization. And they pay $200 for every successful recruit to the employee who introduced them. This help to minimize the cultural and behavioral issues within the organization.

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4.3 Recruitment Process

The recruitment process at The Container Store is called the (Kalyani 2006) “Focused people strategy” – through thisproces the container store attarct the best people to the organization and the process of selection consists of selection test and two to three interviews.

In the recruitment process container store has taken measures to avoid discriminations base on gender and other factors which result bad image to the organization as well as huge settlement charges. In The Container Store 62% of the employees are women and they gives a great example to other retailers on gender discrimination and fair opportunities to everyone. And they believe women employees are good team players.

4.4 Employee Training

The successful candidates will go through a comprehensive training program which covers organizational history to how to dress when comes to work. And the top management at container store believes that organization can increase the employee productivity as well as their loyalty by providing adequate training to perform their job role. To achieve that objective each store has assigned a (Kalyani 2006) full time sales trainer called as “super sales trainer” dedicated only to train employees at The Container Store. Employees at The Container Store are dividing into two as full time employees and part time employees and their training hours are base on that segmentation. Full time employees will be trained for 235hrs in the first year and 160hrs annually, part time employees are trained for 100hrs while industry average for training hours per employee is less than 10hrs per year. The specialty of this process is the training opportunities which have provided to the part time employees, most of the other retail organizations neglect that segment.

First week of the employment include the first training program which is the orientation program and it is called the foundation week to welcome the employee. In this week employees will be taught on company history and the company philosophy which is called as “do unto others philosophy”. Do unto others philosophy include six factors and they can be shown as follow,

Help other employees when they need

Man in the desert

One great person equals three good people

Intuition does not come to unprepared mind

Provide the best selection every where

Create an air of excitement

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Those factors are focused to create a healthy environment to employees as well as to the customers at The Container Store. The management has assigned a dedicated person to manage these core principles of the organization.

Training programs are designed to cover aspects such as inventory control, space planning, marketing and visual sales. These training programs not only cover classroom training but also skits to give training on products and job functionalities, and some training programs are focused to develop skills when employees are promoted or taking up new job responsibilities.

4.5 Culture at the Container Store

The organizational culture of an organization is also a vital factor for the organizational success, The Container Store has identified this and they have created a positive organizational culture for its employees to work at. Following are some key action which they took to achieve this,

Thought process of the top management

Management at The Container Store believes teamwork of the employees is the largest contributor of the organizational success; therefore they encourage employees to share their knowledge among fellow coworkers as well as to introduce their family members and close associates to the organization as employees and work hand in hand with them.

The staff members at senior management level also prefer calling them by their first name instead of ‘Sir’, ‘Madam’ or ‘Boss. This also enhances the likability of the working environment among its staff members.

At The Container Store part time employees are called “Prime Timers”. Through this process part time employees also feel that they have been recognized by the organization. The loyalty among part time employees will increase and it will also result higher productivity than in the industry level among part timers.

Recognition of employees

The employees who perform exceptionally and professionally are always recognized by the top management of the company. For example – Performance recognition letters will be sent by the chairmen to acknowledge the good work of employees.Employees themselves recognize good wok and help they receive by at least saying ‘thank you’ or ‘job well done’.

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Regular communication within the organization

Regular communiation and organizational transperancy also enhance the employee knowlede on the working environment and this will help to complete their assigned duties more effectively and efficiently, spread good word of mouth about the organization and also to enhance loyalty among employees. Following are soe actions which taken by The Container Store to enhance internal communication and transperancy.

o Access to all financial information such as profit, sales cost of the organization

o Regular communication through notice board, emails and meetings

o Access to upward communication through available communication channels

Performance base rewards

The rewad and promotional machanism of the organization is purly based on the employees preformance. The performance are mesured from a appraisal system and it will be conducted by the immediat supervisor of the each and every employee. Other than to employee work performance employee characteristics such as attitude, passion for knowledge and communication also will be assessed. the persormance measureent system can be alloborate as follow,

o First review of an employee will be conducted after the first 45 days of the employment. If the employee’s performances are up to the expectation it will create a salary hike of 50 to 70% of the hours pay.

o Next reviews will be carried out in every six months and employee salary increments and promotions will base on the score which they get in those evaluations.

Employee benefit package

The employees at The Container Store are entitling to a huge package of benefits which does not provide by any other company in the retail industry. The benefits can be listed as follow,

o Salaries which are above the industry average

o A welcome box with Container store products worth around $150 when an employee starts work at the organization.

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o Employment opportunities to work as permanent or part time employee in flexible positions, employees are allowed to select their interested field of work.

o Job security in a financially stabilized company

o Extensive training programs, which designed to cover job roles and individuals requirements

o Payment 68% of the employee’s health care insurance which include their family members – full time and part time employees both are entitle to this benefit.

o Incentive programs base on employee performance

o Savings plan, with company contribution

o Programs such as wellness programs to enhance employee health and safety

o Free yoga classes for head office staff and company subsidized meals

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5 Possible problems associated with a manager trying to link HRM to performance

Problems associated with the organization

As plus points, problems also can be seen in The Container Store. HR manager need to find solutions to these problems and settle them as soon as possible. Following can be identified as problems which associate with The Container Store.

o Flat structure limit employee growth, Company’s management structure is a (Kalyani 2006) flat structure and the management view is development of employee’s skill is important than other things. But this can be turn into a burning issue in the long run and can lead to high employee turnover. Therefore shoving a clear carrier path is very important for employee retention and to enhance their performance.

o Most of the promotions at the company are based on the manager’s recommendations. This may cause problems as well as conflicts among employee and have adverse effects on employee performance. The promotion mechanism should be transparent and everyone should have an agreement on the system. Through the current system managers can do favouritism and can affect other employees badly.

o In some occasions sales clerks are earning more than managers, this also can create problems. There for establishing a clear remuneration system is important. System should motivate people as well as shouldn’t de-motivate another part of employees.

o The Container Store tries to be transparent as much as possible, this also have adverse affects on the company. If sensitive information goes into the competitor’s hands, it will bring negative effects to the company.

o High expenditure on employees also considered as a problem to the organization, if employees tend to move away, it will create problems to the stability of the company.

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6 Comparison of High Commitment Model and the Container Store HRM practices.

Basically, the idea of the High Commitment Model is to enhance employee productivity and performance. And this also called the notion of ‘best practice’ human resource management (HRM). When applying this model to organization HRM professionals need to analyze and evaluate the applicability of the model to the organization. The idea of this model is to have improved organizational performance through employee satisfaction.

High commitment model consist of seven components and it can be shown as follow,



Training and employee development


Tem work among staff members

High compensation on high performance


Pfeffer (1998)


Employment security is one of the important factors which lead to employee performance of an organization. When employee start feels his or her job is secured they tend to give their 100% while they are working in the other hand if they start to feel they are going to lose their job or they are facing a layoff employee performance tend to go down.

Loyalty of the employee is also starts to grow when their job is secured according to Holman (2003) a recognized employment contact will enhance the employment relationships between employee and the employer.

The Container Store is operating in a declining business segment though they have stood profitable while treating their employees well above the industry standards. They have recognized the importance of employment job security and internal labour markets. Therefore they offer proper contracts to its employees with a remuneration package which is well above other retail business organizations.

While other retailers start to lay off employees due to declining profits, The Container Store kept and looked after employee well being since they believe employees are the most valuable asset to the organization. According to Pfeffer (1998, p66) employee

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reductions will cut down an important organizational asset and leave it to grab by competitors.

Furthermore Pfeffer (1998, p183) recommends that without going to employee layoffs organizations can follow actions such as reducing working hours of employees, reducing wages to bring down the labour cost, stoop over staffing by freezing the recruitments and finally job role changes such as putting production employees to sales activities to increase the business revenue.

There are concerns on spending on employees by The Container Store; some think that it will make the organization financially in stabilized. Therefore organization’s financial flexibility should be maintained by balancing it between employee workload and their salaries.


According to Boxall (1996, p66–67) an organization can achieve competitive advantage though attracting and selecting best employees in the market and training them to fulfil the business objectives.

And also in The Container Store they believe (Kalyani 2006) one average person equals three lousy people, one good person equals three average people and one great person equals three good people and employing one great person and paying him twice the market price is more productive than employing three good people. This also gives a competitive advantage to the orgazation.

In now a day’s employees not only look for technical skills within candidates but also their interpersonal skills. An applicant for the container store required to undergo several interviews after completing an ability test and in order to maintain teamwork and healthy relationships among employees; they motivate current employees to introduce their family members and friends to the organization.

There are some problems in the employee selection process in the container store, they take time to recruit people and they tend to keep vacancies open for longer times. This may cause bottlenecks in the work processes of the organization. Other than that The Container Store follows a good hiring and recruitment process to attract best people in the industry.

Extensive training, learning and development

The Container store provide numerous training opportunities and programs to its employees, permanent as well as part time employees are included for those programs. They believe training helps employees to perform their job more easily and effectively as well as become loyal to the organization.

Under the high commitment model it describes the importance of extensive training, learning as well as employee development but these should be focused on employee requirements and organizational requirements if not these may be useless.

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If employees are over qualified additional (Grugulis 2003) training will add little to business performance or worker skills. Therefore scheduling training and development activities is critical for an organization. And also the quality of the training and deliverables of the program is important over other factors.


The sharing of information among employees is widely used at the container store not only the financial information of the business but also the future developments and plans also shared among its employees.

Through that they give a message that employees are trusted and important. And employee suggestions and ideas are well come for the future developments of the organization as well as these information will make employees work more effectively and efficiently.

In high commitment HRM, workers should able to participate in the process of decision making and should provide ample opportunity to convey their grievances and the container store has provided that opportunity to its employees.

The Container store can be considered as an organization which has high employee involvement and information sharing, some consider this as a treat to the organization. Revealing information such as future plans may give negative effects if they get into competitors hands.

Self-managed teams/team working

Team work can be considered as an important factor for the organizational success. And it will enhance the creativity and the productivity of the employees (Pfeffer 1998, p76).

The Container Store highly recommends and encourages team work as well as self- manage teams. They encourage their employees to share their knowledge as well as to help each other to achieve individual goals and organizational goals. They believe women are more team players than men and they have more than 60% women employees in the organization.

According to research findings employees who work as a team has more satisfaction than others who work individually. And also it describes (Kalyani 2006) peer pressure is more likely to generate better performance than supervisory control over employees. The Container Store is an organization which believes on team work and self-management teams for better employee performance.

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High compensation contingent on performance

The Container Store is an organization which pay it employees well above the industry standards, their other benefits are also well over other competitors. They believe paying twice a salary to a great employee equals to getting the service of three good people.

According to pfeffer (1998) salaries should be over the industry standards and they should be related to the employee performance.

The salaries and yearly salary increments of the employees at The Container Store primarily depend on their performance. They will have two yearly performance appraisals and form their first appraisal at the employment it will bring them a 50 to 60 % salary increment if they obtained the required marks. Therefore container store can be considered as an organization which has high compensation on high performance


The Container Store does not consider on status differentials, they speak to each other by their first names instead of ‘sir’ or ‘madam’ and it conveys a message to lower grade office staff that they are valuable assets to the organization and they are also should be treated equally.

They have a flat organization structure and most of the employees are given a designation which suits the job role and it is also encourage the employees and motivate them.

Sometimes this may cause problems to the organization; there can be employees who care more on their designation and job status rather than having equal status as others. In such situations organizations cannot get the full outcome of the reduction of status differentials.

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7 Reference

Baldwin, K (2008). Managing Employee Performance in Seven Steps. Online: Lulu.com. P 23 - 63.

Kalyani, M. (2006). Recruiting and Training as Competitive Advantage. The Container Store's customer service. 1 (1), p 1 - 9.

Armstrong, M (2008). Strategic Human Resource Management: A Guide to Action. London: Kogan Page Publishers. P34-56.

Philip Worsfold, (1999) "HRM, performance, commitment and service quality in the hotel industry", International Journal of Contemporary Hospitality Management, Vol. 11 Iss: 7, pp.340 – 348

Richard, SW (1998). Performance management: perspectives on employee performance. Michigan: International Thomson Business Press. p 1- 26.

Schneider, B (2004). Service Quality: Research Perspectives. Maryland: SAGE. P 15- 58.

Thor Indridason, Catherine L. Wang, (2008) "Commitment or contract: what drives performance in public private partnerships?", Business Strategy Series, Vol. 9 Iss: 2, pp.78 - 90

Wilkinson, A and Marchington, M (2005). Human Resource Management at Work: People Management and Development. 3rd ed. London: CIPD Publishing. p 1 - 9.

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Human resource management

Recruiting & HR

Transcript of Human resource management