Introduction
The following research paper shall try to assess the issue of strategic human resource management at Sears. The main focus of the paper willl be on the key human resource infrastructure that Sears has implemented and which has proven to be a success. Use shall also be made of the various human resource approaches and theories in discussing the case.
In addition, the research paper shall also attempt to formulate possible research questions that could be asked in a bid to address the challenges facing Sears as the company tries to remain competitive.
Understanding of the case
The following research paper is an attempt to examine the issue of strategic human resource management at Sears. In particular, the research paper shall attempt to examine the nature of HR management systems implemented at Sears. Therefore, the writer shall try to evaluate the significant transformation that the organisation has undergone under the leadership of its CEO, Arthur Martinez.
As a result of this transformation, the management at Sears has paved way for the adoption of high impact HR policies by the organisation. The management at Sears has realised that one way of transforming and turning around the organisation is by developing and communicating the company’s corporate vision, mission, and goals to its workforce.
Before the organisation could arrive at this decision, it had to first experiment with the more ‘traditional’ vision and mission statement. However, when this could no longer work, the management saw it fit to drop the idea and instead, adopt a more integrated conceptual model of organisation performance that connects employees, shareholders, and customers.
This was because the traditional approach showed minimal direct effect on employee behaviour. Through this experimentation, Sears has also realised that by transforming the organisation into an environment worth shopping, the company is in effect helping to improve the behavior of its employees and by extension, increase customer retention and sales revenues.
By executing this process, it also emerged that very few employees of the company were aware of the operation and financial aspects of Sears’ business (Kirn et al. 334). Once the organisation had realised this, the management deemed it necessary to come up with an intervention strategy that would help to enhance the economic literacy of its employees. In addition, the intervention strategy that the company developed was also geared towards reinforcing its vision and mission, and integrating these elements with the three Cs model.
The three Cs models that Sears has adopted entail creating an ideal environment where the company’s employee can go about their job-related activities. This is aimed at changing employees’ attitudes towards their jobs and the company in general. The other C involves creating a compelling place where customers can shop. This is aimed at increasing customer retention and satisfaction. The third C involves creating a compelling place for investment.
By creating an ideal environment for investment, the company is looking forward to increasing its growth revenue, increasing its return on assets, as well as increasing its operating margins. In other words, the three Cs connect employees with the shareholders and customers. To further reinforce the three Cs, Sears has since developed Learning Maps that touches on such diverse areas as the company’s ownership, the company’s performance indicators, and customers, among others. This helps to inform and engage the workers.
In a bid to reinforce its mission, vision, values and goals, Sears has also developed the Sears University. The goal is to enable employees to integrate the company’s leadership dimensions with the aforementioned three Cs. Teaching at the university is conducted by the company’s managers as they are more knowledgeable about the company’s desired leadership dimension.
Classes are normally conducted in the form of team or work groups. Such an arrangement has been deemed necessary as it is an ideal way of facilitating the transfer of knowledge. It is important to note that this project has largely been successful due to strong ties between Sears’ strategy, the curriculum, as well as the company’s senior management buy-in (Kirn et al. 336).
The impressive turnaround at Sears can also be attributed to the incentive compensation and performance management systems that the organisation has put in place. In a bid to achieve this goal, multi-perspective performance appraisal, hitherto only directed at the company’s managers, has now been implemented en masse by the organization. This has played a key role in increasing employees and managers accountability to the organisation’s shareholders.
The remuneration that the employees and the management at Sears earn is usually pegged on the company’s performance. As such, both the employees and the management have a duty to ensure that the company succeeds as they are also likely to benefit in the process. At the same time, there has been an upward improvement in incentive pay levels.
This is aimed at retaining employees with high potential and also attracting potential employees with similar qualities. Sears has also improved its performance competency by improving its employee selection system. This system include among others, the use of selection tools that can detect the dependability and customer service aptitude of an applicant.
Analysis of human resource theories and concepts applicable to the Sears case study
The management at Sears has approached its management issues from a broad spectrum perspective by focusing mainly on strategic HR issues and processes.
A high number of organisations are now opting to address this issue. For a long time, financial and economic issues of an organisation have been instrumental in shaping the business process of an organisation. However, many organisations are now realising the need to also address their human resource issues and policies as well, as these have been seen to have a direct impact on the firm’s well-being and financial status.
Majority of the organisations tend to adopt a reactive approach in dealing with their human resource issue. What this means is that issues only get to be deal with after they have already happened. Other firms though tend to be more proactive (Thompson and Richardson 19). In this case, they are able to forecast the likelihood of certain issues happening and so they put in place the necessary mechanism well in advance to deal with such issues.
In the case of Sears, the company’s transformation under Martinez has also seen it embrace a more proactive approach to issues (Kirn et al. 332). This is evidenced in the choice of employee selection system and in the company’s decision to improve employee behaviour as a way of improving customer retention and also increasing sales.
The way an organisation manages its human resources will undoubtedly have a bearing on its performance. So far, numerous studies have been carried out with the intention of identifying specific management practices that when successfully implemented are bound to result in more proactive, satisfied, as well as motivated employees.
On the other hand, it is not until recently that focus has shifted to there has been a focus on how employee relations and people management affects the firm’s bottom line. In a research study conducted by Guest and Conway (27), the findings of this particular research revealed that one of the fundamental aspects of good people management practice is skills development, job design, as well as creating an environment that affords both employees and the management regular and systematic involvement in the activities of the firm.
In the case of Sears, the organisation has realised the need for skills development and in a bid to ensure that its employees have better skills in running the affairs of the company (Guest and Conway 27). The management has deemed it necessary to open the Sears University where managers can impart knowledge about the organisation’s corporate vision, mission, and goals.
Berndt (16) notes that there is a positive correlation between work performance and an organisation’s culture that allows employees to believe that indeed, their employers have their best interests at heart. Perhaps it is for the same reason that Sears has developed a plan to assess and change the attitude of its employees towards their jobs and the company as well.
Guest and Conway (28) talks of an association between the performance of a business and the application of sound human resource management practices. Towards this end, Guest and Conway (29) argue that such an association is largely determined by the commitment as well as the quality of the workforce. In a bid to improve the quality of its workforce, Sears has developed competency in the area of employee selection system.
To do so, the organisation has had to develop and execute a number of selection tools for its employees (Pfeffer 20). There is also a detailed employee interview guide in place to assist with this exercise. The organization has further made it a company policy that selection tools be administered to all potential applicants.
Theoretical approaches
According to Thompson and Richardson (11), the key fundamental approaches namely, the best practice approach, the configurational approach, and the contingency approach are best suited to summarise the relationship between business performance and people management. According to the best practice approach, any organisation that wishes to realise improved performance must implement key management polices to facilitate this.
Pfeffer (11) contends that the success of an organisation is largely dependent on the manner in which such an organisation treats its employees. Pfeffer (1998) observes that such practices include job security, ensuring that only the right candidates are recruited for various positions, increasing employee remuneration and pegging it on organisational performance, sharing knowledge and information.
In the case of Sears, the company has linked employee and managerial compensation on performance. Another incentive that Sears gives its employees in a bid to bolster its performance is annual stock option grants. The employee selection system that Sears has employed emphasizes on an applicant’s “dependability” and “customer service attitude”. This helps to improve customer retention and improve revenue collection.
Another theoretical approach worth of consideration is the contingency approach. Proponents of this approach contend that human resource practices and polices ought to be integrated with other organisational factors so as to realise improved performance (Berndt 18). In a bid to achieve this particular goal, the management at Sears has seen it fit to implement a strategy that would help to reinforce its values, vision, mission, goals, as well as the aforementioned three Cs.
The adoption of suitable human capital architecture would also go a long way towards enabling an organisation like Sears to implement its desired strategies. In this case, Sears should ensure that they select and hire employees in a manner that is consistent with the organisation’s operational goals and competitive strategy.
At the same time, the reward system that Sears has adopted should be a pointer to the components of a successful implementation of compensation and appraisal systems. There is also need to ensure that the strategies developed emphasize performance management system and training in line with the firm’s business objectives.
Challenges
Even as Sears may have realised an impressive improvement in its business over the past few years, however, it is important to note that lately, the company has started to experience a slowdown in such key areas as customer satisfaction ratings as well as decline revenues. In addition, there has been a reported change in attitude of the company’s associates. It is important to address this challenge as it might affect the competitiveness and profitability of the company in the long run.
Could Sears have reached its saturation point in terms of profitability? Was the management right in reducing the number of divisions that the firm operates, as a cost-cutting measure? Are there employees who are not able to connect with the company’s three Cs? Is there the likelihood of some of the current Sears associates opting to shift their focus elsewhere as the company is no longer in a position to maintain the organizational environment as an ideal place to invest, shop, and work? Should the management and employees be motivated in other more effective ways that the current forms of motivation?
Has the human resource department at Sears exposed all options that would enable the company to scale greater height of success? How best can the momentum to improve be sustained or improved? All of these are potential questions that the management and CEO of Sears need to think about if at all the company is to realise its set of goals, vision, mission, values, and goals.
Conclusion
The above case study reveals the importance of human resource functions in the success of a business entity. The ability of Sears to develop and execute viable human resource policies, practices and strategies has proven to be the magic formula that the firm needed to make a positive turnaround.
By embracing a human resource strategy that integrates the company’s values, vision, mission, and goals with its employees, shareholders and customers in the form of the three Cs, Sears has managed to record significant gains in employee behavior, customer retention, and increased profitability., the firm has also improved employee recruitment system by incorporating an assessment tool that evaluates the potential candidates’ dependability and attitudes towards customer service. In addition, the firm has pegged employee remuneration on the company’s performance.
All these strategies have seen the firm realise tremendous growth in profitability and market share. However, there has been a slowdown in customer satisfaction ratings, revenue collection, and in the attitude of employees, customers and shareholders as regards Sears being an ideal place to work, shop, and invest. There is need therefore to take appropriate action in a bid to get to the root cause of this problem and hopefully, salvage the situation.
Works Cited
Berndt, Adele. Customer relationship management & customer service, New Delhi: Junta and Company Ltd, 2004. Print.
Guest, David and N. Conway. Employee Motivation and the Psychological Contract, London: Institute of Personnel and Development, 1997. Print.
Kirn, Steven, Anthony, Rucci, Mark, Huselid and Becker, Brian. “Strategic Human Resource management at Sears.” Human Resource Management 38.4(1999): 329 335. Print.
Pfeffer, Jeffrey. The Human Equation: Building Profits by Putting People First, Boston, MA: Harvard Business School Press, 1998. Print.
Thompson, Mac and R. Richardson. The Impact of People Management Practices – A Review of the Literature, London: Institute of Personnel and Development, 1999. Print.