Analysis of Human Resource Management Practices and Compensation Challenges at Sportsman Shoes

by | Aug 28, 2024 | human resource management

 

Analyze the Case Study for Competitive Strategy at Sportsman Shoes on page 24 of your textbook. Prepare a paper answering the following questions:
1. Following Sportsman’s shift in competitive strategy, what are some considerations for the company’s human resource management practices?
2. What kind of challenges do you think that Sportsman’s faces specifically in the area of compensation?
Support your analysis with at *least two RECENT scholarly sources* to substantiate your insights.

Case 1: Competitive Strategy at Sportsman Shoes

Sportsman Shoes has been a leader in the shoe industry for more than 30 years. Sportsman manufactures and sells athletic shoes for all types of sports. The company has pursued a low-cost strategy to sustain its success. It sells a limited number of shoe designs and has held costs low through manufacturing efficiency and standardized operations. However, the past years have been a struggle at Sportsman. The shoe market has seen a rise in the availability of low-cost imported shoes that has threatened Sportsman’s competitive position. As a result, company executives have decided it is time for a strategy shift.

Sportsman executives have done extensive market research and determined that many niche athletic shoe markets exist where athletes are willing to pay more for shoes designed to meet the unique needs of their sport. There are very few competitors in these niche athletic shoe markets, and most do not have Sportsman’s experience in keeping control of manufacturing costs. Sportsman has determined that, with talented shoe designers in place, they can manufacture athletic shoes to meet the needs of the niche markets using their current manufacturing facilities and employees. By designing shoes that have features that differ from competitors and meet the specific needs of a new group of customers, Sportsman believes the company can create a competitive advantage. Further, while their shoes will not be as low cost as they were in the past, they will likely be able to sell their shoes for less than market competitors and still make a healthy profit.

Therefore, Sportsman has decided to shift from its current low-cost strategy to a differentiation strategy and will begin production to make specialty athletic shoes. Sportsman must now make many tactical decisions in various functional areas of the company to support its decision to shift its overall business strategy. Its priority is to restructure the product development function. As it will need to understand the needs of the niche markets and design shoes to meet those needs, it will need to hire and retain talented shoe designers. The company will also need to hire operations specialists to transition its manufacturing operations to produce the new shoe designs. Beyond hiring new staff, Sportsman also must consider the implications for current employees to help them successfully transition to their new work requirements. Therefore, there are several considerations the company must address in human resource management.

TEXTBOOK AUTHOR: Martocchio, J. (2020). Strategic Compensation: A Human Resource Management Approach. Boston: Pearson Education.

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Analysis of Human Resource Management Practices and Compensation Challenges at Sportsman Shoes

Introduction

The competitive landscape of the athletic shoe industry has shifted dramatically, prompting Sportsman Shoes to transition from a low-cost strategy to a differentiation strategy. This strategic pivot necessitates a reevaluation of the company’s human resource management (HRM) practices and highlights particular challenges in compensation. This paper will analyze the implications for HRM practices post-strategy shift and explore the specific challenges Sportsman faces in compensation, supported by recent scholarly sources.

Considerations for Human Resource Management Practices

Following the shift in competitive strategy, Sportsman Shoes must consider several HRM practices to align with its new focus on differentiation.

1. Talent Acquisition and Retention

The need for skilled shoe designers and operations specialists is paramount. To attract top talent, Sportsman must enhance its recruitment strategies by promoting its commitment to innovation and specialization in niche markets. This may involve developing partnerships with design schools and attending job fairs that focus on specialized skills in footwear design (Brewster et al., 2020). Furthermore, retaining these talented individuals will require creating a supportive work environment that fosters creativity and collaboration.

2. Training and Development

As the company transitions to producing specialty athletic shoes, existing employees may require training in new design technologies and manufacturing processes. Sportsman should implement comprehensive training programs that focus on upskilling current employees, which can enhance productivity and morale (Kaufman et al., 2021). Additionally, ongoing professional development opportunities will help employees adapt to evolving market demands and maintain high-quality standards in production.

3. Performance Management Systems

To ensure that employees align with the company’s new strategic goals, Sportsman must establish performance management systems that emphasize innovation, quality, and customer satisfaction. This could involve setting clear performance metrics related to design excellence and customer feedback (Martocchio, 2020). Regular performance reviews and feedback mechanisms will be essential to drive improvements and recognize high achievers within the organization.

Challenges in Compensation

With the shift to a differentiation strategy, Sportsman Shoes faces several challenges in compensation structures that could impact employee motivation and retention.

1. Balancing Cost and Competitiveness

Transitioning to a differentiation strategy means that Sportsman may not compete solely on price but must offer superior product features. Consequently, the company must balance its compensation packages to ensure they are competitive enough to attract skilled designers while maintaining cost-effectiveness. This may require conducting market research to benchmark salaries against competitors in niche markets (Kaufman et al., 2021).

2. Incentive Structures

Given the emphasis on innovation and high-quality outputs, Sportsman may need to develop new incentive structures that reward creativity and successful product launches. Traditional pay scales may not suffice; instead, performance-based bonuses linked to the success of new shoe designs could be more effective (Brewster et al., 2020). However, establishing these new incentives poses a challenge: ensuring they are perceived as fair and achievable by employees.

3. Equity and Internal Pay Structure

As Sportsman hires new talent at potentially higher salary levels, it risks creating disparities among existing employees who may feel undervalued despite their experience. To mitigate this challenge, the company should conduct a thorough review of its internal pay structure to ensure equity among employees. Transparent communication about compensation philosophy will be crucial in maintaining morale during this transition (Martocchio, 2020).

Conclusion

The shift from a low-cost strategy to a differentiation strategy at Sportsman Shoes necessitates a comprehensive reevaluation of human resource management practices and presents specific compensation challenges. By focusing on talent acquisition, training, performance management, and developing competitive compensation structures, Sportsman can position itself for success in the competitive athletic shoe market. Addressing these HRM considerations will be vital for the company to foster innovation, retain top talent, and ultimately achieve its strategic objectives.

References

– Brewster, C., Chung, C., & Sparrow, P. (2020). Globalizing human resource management. Routledge.
– Kaufman, B. E., & Hotchkiss, J. L. (2021). The economics of labor markets. Cengage Learning.
– Martocchio, J. (2020). Strategic Compensation: A Human Resource Management Approach. Boston: Pearson Education.

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