CRITICAL EVALUATION OF THE HUMAN RESOURCE STRATEGY OF GOODY’S LLC
The word ‘strategy’ has been derived from the Greek noun ‘strategus’ which refers to the ‘commander in chief’. In the management view, the word ‘strategy’ has been used to refer to a lasting planning, that is a specified pattern of decisions and practices that are taken by the upper management of an organization to achieve some goals that have been set by the organization. Wheelan and Hunger (1995) define strategic management as the collection of management choices and activities that affect the long-term performance of an organization. Strategic management can also be viewed as the set of activities that drive the organization to better results (Hill & Jones, 2014). This is the general view of management strategy, and therefore management strategies involve decision making, planning which will be reflected in the long-term performance of the organization.
Armstrong (2006) defines human resource management strategy as the intentions and arrangements that an organization of how it is going to achieve the business aims that should be achieved through people who are employed in the organization. HRM strategies are based on three principles; first, the human resource is an essential basis for competitive advantage in the industry. Second, it is the human beings who put the strategic plans on an action, and finally, logical principles should be used to come up with the destination that the business wants to reach and the means to get there (Rao, 2014). Therefore, Armstrong views human resource management strategy as the blueprint that shows how an organization intends to achieve its general goals using its employees. Human resource management strategy is also defined by Fottler et al as the complete collection of managerial practices that are associated with coming up and maintaining a credible workforce (2010). The human resource managers have been observed to take strategic views of their job and to acknowledge the important relationship between the strategies of the organization and the human resource strategies. Fottler et al view are based on the principles of coming up with an employee base that can achieve tasks that are allocated to them (2010).
Human resource strategies define what an organization has planned to do about its human resource management in terms of policies and practices and how they will be put in line with the objectives of the business. Richardson and Thompson (1999) suggest that there are two crucial components of Human Resource strategies: there should be strategic objectives which the organization intends to achieve and two, there should be a laid out plan of how the objectives are supposed to be achieved. No universal strategy that can be applied in various organizations since they are different in nature, this is shown by Armstrong and Long (1994) and Armstrong and Baron (2002) which show that the human resource strategies vary from one organization to another.
This paper is divided into sections to enable easier navigation of the paper. The first section is the background. The background provides a brief history of the Goody’s LLC; the founders the year it was founded and a brief description of the evolution that the organization underwent. The section describes the line of business that the organization undertakes, the nature of the business products and the financial status that the organization has. The background section also describes the other general properties of the organization such as the vision, the number of employees, and the market share that the organization possess. The second section is the main component of the paper, which is the analysis. This is an analysis of the human resource management strategy of Goody’s LLC. This section mainly involves evaluating the significance of managing the human resource as a key part of the organization with reference to the Goody’s LLC organization. In the analysis section, we also discuss the responsibility that every employee carries out in an organization, look into the human resource activities in the organization such as recruitment, selection, and retention of employees, and provide some recommendations on how the human resource management activities may be carried out in a better way.
Background
The Goody’s LLC is a family clothing company that is situated in Knoxville, Tennessee, the United States of America. The company’s mission is to be the first choice of customers who value aware, for affordable family wear, to be identified for the best selection, the best value, the best customer services, and the best shopping experiences. The company is has a chain of stores located in over three hundred and thirty-five location including; Alabama, Arkansas, Florida, Georgia, Indiana, Illinois, Louisiana, Kentucky, Mississippi, Missouri, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee, Texas, and Virginia. The stores are majorly located in malls providing the market with a variety of clothing and accessories for women, men, and children (Advameg Inc., 2018).
In 1953, Mike Goodfriend and his family open a two thousand square foot small discount-clothing store, which was the first Goody’s store. The store was located in Athens, Tennessee and was majorly a family business. The store had a big “G” over the door as the logo and mainly sold clothes whose styles had been outdated. The store had poor customer service and poor lighting but got continuous customers due to the great prices that they offered. The store experienced slow growth for the following twenty years. In the mid 70’s, Goodfriend got a breakthrough and the chain grew to twelve stores and generated an estimated $12 million annually. Despite this, Goodfriend still faced a challenge from the national stores that had outlets and discounters who offered more and more discounted prices. Goodfriend turned to his son, Bob for help. Bob joined the business in 1972, bringing a change to the line of business that the store had. The store now offered popular fashion names and latest trendy apparel at modest prices. The focus of the store change from targeting families seeking discounts to a modest family looking for the latest trendy apparel at good prices. The store was then renamed to Goody’s, which was the college nickname of Bob. After this shift, the company grew to have twenty-one store by the year 1979. Bob also took over the control of the company becoming the president and the CEO (Advameg Inc., 2018).
The company designed a new corporate headquarters in 1990 when the company left the town of Athens and moved to Knoxville. The headquarters contained an office complex and a custom-made 344,000 square foot clothing distribution center. The center enabled the company to receive new fashion apparel in a day and pack them into transport trucks for distribution to the stores the following day. This ensures that there is little or no delays in the getting the latest trendy apparel to the consumer. The distribution center could process 350,000 garments daily without stretching and had computer links to every chain. The company prospered experiencing tremendous growth mainly due to the technological advantage. In the year 1991, the company recorded returns of $273 million in annual sales and had ninety-one stores. The company had a public offering October of the same year, having elected conformist board of directors it was able to grow its base of capital. In a period of three years, the company had expanded to one hundred and seventy-one stores. The company also changed its look, remodeling its interiors and changed from discount house to department store. The prices of Goody’s remained relatively lower compared to the other department store (10 to 30 percent lower) (Advameg Inc., 2018).
Everything was well in the company until the traditional board of directors started conflicting with Goody’s management. The management desired to follow a more aggressive purchasing strategy, keep the stores more updated to latest trends, and better stocked. These conflicts lead to Henry call and Tom Kelly, the chief operating officer, and merchandising executive respectively to leave the company in 1992. Bob Goodfriend was also removed from the board. He, however, was absent for only three months has sued the company and got compensation of $1.24 million in legal settlement and fees. The conflict leads to the decline of the company’s returns by 5.6 percent of sales before tax. Goodfriend was reinstated back to being company board chair, Henry Call and Tom Kelly returned to the company as president and executive vice president in 1995. The store had not yet returned to its normal profit margin, in 1996, it was still at 3.4 percent (Advameg Inc., 2018).
Previously in 1993, Goody’s decision to create its own private label products. Having the private label meant that the company would have a wider control over its stock, for brands that were manufactured by other companies were largely under the control of the manufactures. This meant that the company could directly address customer needs and tastes. One of the labels that were manufactured was Ivy Crew for men that become a familiar collection of clothing for the company. The company contracted overseas manufacturers in Southeast Asia and Central America and was able to grow its private labels and distributed them to all its clothing departments. Goody’s remained committed to the national brand name fashions but encouraged its customers to buy its own house labels. The political environment in 1996 was calm and hence favorable for Goody’s to thrive. The company opened twenty new stores that year and only closing one. The new management team had been selected and the policies were shifted from reducing prices quickly on apparel with low demand towards having stable and moderately priced stock. The management made huge investments in inventory and moved to the suburbs. The company’s sales grew by seventeen percent compared to 1995 ($819.1 million) and the stores ended the year without having any long-term debt. In the same year, the company introduced gifts and accessories into their inventory which ended up being successful and profitable (Advameg Inc., 2018).
In 1998, the company achieved its $1 billion sales and expanded to Texas, despite this, the profits began to depict signs of weakness. The warm weather condition in the other quarters of that year resulted in the reduction of profits by 17 percent in 1998 and the revenue continued to go down in 1999. In 2000, Call resigned from his position. The management decides to restructure the company in order to encourage more sales. In 2001, the terrorist attacks and unpredictable weather negatively affected the sales and inventory levels. The company recorded a loss of $20.2 million in the same year. 2002 was another poor year for the company has just expanded by two stores and closing other 6. In 2003, profits started climbing up. Goody’s acquired Duck Head brand for $4 million. The company currently has a workforce of approximately ten thousand people (Advameg Inc., 2018).
Analysis
Goody’s has a human resource department that is in charge of taking care of the basic human resource activities. The basic roles of this department are outlined below each accompanied by an in-depth evaluation.
The first human resource core activity is staffing or recruitment. Recruitment is the basic human resource activity since it determines the workforce that the organization will have hence has a great impact on organizational performance. Goody’s staffing criteria seem to have a basis on performance related HRM strategies approaches of human resource strategies. The recruitment process is mainly focused on getting a workforce that has a high-performance capability. This principle is the core of high-performance management approach of HRM strategy that aims to affect the results that the organization gets in sections that include productivity, quality, customer satisfaction, expansion, and revenue returns (Appelbaum, 2000). This approach goes in line with the vision of the company to have a satisfied customer base, thus having maximum profits. The company is involved in carrying out intensive recruitment procedures will the aim of selecting the best of the candidates who have the capability of improving the performance of a specific section of the organization. The high-performance management approach involves having rigorous training for the employees especially the recruits so that they can have reliable knowledge and skills to carry out the tasks to their best (Thompson & Harley, 2007). The practices that involve the high-performance management approach greatly put input in the skills and the abilities of the employees, designing of work that ensures proper coordination among the employees (Thompson & Heron, 2005).
The intense search by Goody’s to get the best from the employees by recruiting employees they feel are best suited also can be view as the resource-based approach. The foundational aim of resource-based human resource strategy is focused on coming up to the achieving in the strategic link between resources and openings from the effective placement of resources (Sung & Ashton, 2005). The approach address ways in which the firm could the long-term planning ability by the development of managers and other staff who can be able to come up with strategic plans and understand the main issue of consideration (Barney, 1991). This approach is made in the basis that the organization can gain a competitive advantage if the organization can get and develop a workforce that enables it to get knowledge faster and apply the knowledge more effectively compared to the rivals (Hamel & Prahalad, 2005). Goody’s selection focuses on skills and experience since they desire to get a competitive advantage over other players in the industry. The resource-based approach suggests that the human resources include the experience, knowledge, judgment, wisdom, and risk-taking capability in relation to the organization (Barney, 1995). Kamoche (1996), views that the resource-based approach views the organization as a set of tangible and intangible means and abilities that are required to come up with a competitive product. Goody’s invests in the staffing process to ensure that reliable employees are taken in, trained and properly oriented into the company so that the company can come up or modify their products to be competitive. The company’s HRM strategy is in line with investing in the employees so that they can add their value to the company, which is basically the resource-based approach (Boxall, 1996). The recruitment and selection of the employees are important since it affects other core human resources activities in Goody’s LLC. For example, recruiting people who have a lower skill level or experience will lead to the need of having greater expenses in training and development activities.
The second core human resource activity in Goody’s is employee training and development. Employee development is a framework attempts to help employees grow in personal and organizational skills, knowledge, and abilities (Jehanzeb et al, 2013). The main components of employee training are based on the orientation, operational and managerial skills of the employee (Barton & Debrah, 2006). The development programs are composed of the qualities and structures that are used by organizations to develop their businesses in corporate level (Kottke, 1999). Goody’s has annual intensive development programs for the employees. The employees are made familiar with new technologies and policies that may be introduced and the trends that are currently in the clothing industry. These programs are also meant to enhance mutual commitment and motivation among the employees. The company invests in self-drive within each employee so that they can work efficiently with minimal supervision. The high commitment management approach has its stress on the essence of improving mutual commitment (Walton, 1985).
The development programs instill the value of responsibility to the employees in addition to improvement in the primary skills and knowledge of the field of work. The programs partially do this by delivering the mission of the organization and support the employees to learn the culture of the organization, thus the management is able to point out the strategic goals which the employees get a chance to learn about (Kottke, 1999). The development is also mainly done to discourage employee turnover that leads to gaps in the organization thus the organization incurs extra costs of fresh recruitment and training (9Osibanjo, 2012). The major aspects of high commitment management approach include pushing for commitment so that the employees can regulate their behavior by themselves and not by pressure from another individual and there is high level of trust in the relations within the organization (Wood, 1995). The Goody’s LLC has also some form of team formation that is used for controlling the flow of information, some tasks are also allocated in a team, and creation of groups in solving problems.
The employees are also involved in the management of quality since the company has some private brand labels to encourage commitment. Therefore, Goody’s majorly applies the high commitment management approach in the development of human resources. This however does not mean that other approaches are not applicable in this situation. The high performance management approach comes in as well in this case. Goody’s invests in the training of the employees with the main aim of improving the organization’s performance and this is a principle behind the high performance management approach. High performance management approach encompasses having extensive and thorough training and development for the employee and providing incentives (among other performance appraisals) to improve the productivity of the employees (Armstrong, 2006). Since the training includes offers to further education which is available for some few employees especially the top level or those in the section that is most important to the company an element of the resource-based approach creeps in. The approach suggests that with an aim to improve the strategic capability an organization ensures the development of top-level management and other strategic staff in order to gain competitive advantage (Armstrong, 2006). The incentives ( in Goody’s case it involves promotion and compensation plans that entail the recognition and financial gratifying of outstanding employees), educational opportunities and the training programs are the investment that the organization has put on the human resource so that the value of the firm increases through having a more intelligent and qualified workforce in place. The approaches show that the main reasons for setting up such human resources strategy is to achieve the overall success of the organization which thus mean that the human resource strategies are in line with the business strategy which mainly focuses on performance.
There are trends in the business world that are shaping the course of the economy and the workforce. These trends have some negative impact on organizations in general and thus their effects are reflected in the human resource management practices. In this section, we study how labor and employment laws shape the business environment. The labor and employment laws determine the treatment that the employee get in an organization. Full compliance with these laws has been a challenge for many organizations. Labor laws provide the right to be unionized and enable the employees to take part in activities that would ensure that their demands are met (Edwards & Robinson, 2012). The challenge mainly comes in when unions negotiating for new collective bargaining agreements with hard conditions. The unions organize industrial action to further the meeting of their demands. Another issue that arises from the labor and employment laws is the wage and hour (Sachs, 2008).
The employment laws set the minimum wage, overtime pay, family, and medical benefits. The law protects the employee from being underpaid and this has shaped the business surrounding since businesses have to comply or they incur lawsuits or even shut down. In the case, of the United States, the case of exploitation of guest worker workers are common. The Immigration law was put in place to address these issues and hence organizations have to comply. In the case of Goody’s that has a large employee base, the labor and employment laws are a great consideration. The company ensures compliance by formulating and implementing strategies that ensure that the employees are well compensated for the input that they put in the company. In case of any financial difficulties the company has, an employee lay off plan. The recruitment strategy of the company includes recruitment of qualified personnel from any ethnic background or belief to prevent having any cases of discrimination. The human resource policies in Goody’s allow all its members to be unionized if they wish to so comply with the labor laws.
Recommendations
Goody’s human resource management approach in the two core human resource activities are mainly based on the performance of the organizations and there is little focus on the involvement of the employee. In the training and development of the employee, there should be some introduction of the high involvement management principles, this means giving the employee an opportunity to control and comprehend their work (Benson et al, 2006). This means that the employees are treated as being part of the organization and not merely as a means to achieve organizational success. Having the employees as part of the organization means respecting their interests and having a say in matters that concern them (Lawler, 1986). For example, the employees get a say in the form of training and development programs that they would like provided for them. The integration of this approach with the high commitment approach is consistent since the employees can dialogue with the managers in the teams on how they may be able to achieve the organizational missions (Lawler, 1986).
Even though there seems to be some link between the business strategy and the human resource strategy in Goody’s (vertical fit), the human resource strategy has not been put as an integral part of the business strategy (Alsalem, 2009). The vertical integration provides the correspondence between the business and the human resource strategy so that the human resource strategy can support the former. However, horizontal integration is still required to so that the different components in it can align together (Boxall, 1994). Goody’s, therefore, need to make the human resource strategy be the core of the business strategy. Goody’s may introduce some aspect of overarching human resources strategy where the intentions of the company implement how employees should be managed, trained and developed and what ways the company may be able to attract and maintain the people it requires and ensure that they are committed (Boxall & Purcell, 2003).
Conclusion
Goody’s LLC has two core human resource activities; staffing and the training and development of employees. Staffing is the basic human resource function since it involves selection of the persons who seem fit to work in the company and may drive the company to the desired performance. The process of staffing in Goody’s is majorly based on performance principles, which is the process focus majorly on acquiring a workforce that has the ability to perform highly. One of the approaches is the high-performance management approach that aims majorly on achieving good results in various sections of the organization. Goody’s has an intensive recruitment process that intends to provide the most suitable persons who can lead to higher organizational performance. However, this can also be viewed as a resource-based approach of HRM strategies since the approach focuses on where a relationship can be built between the resources and their effective distribution. The approach aims in developing managers and other staff who can be able with valuable plans and make the company have some competitive advantage in the market. Human resources include experience, knowledge, judgment, wisdom, and risk-taking abilities. Goody’s has invested in the workforce from the selection process to training to ensure they can add value to the firm.
The second core human resource practice is employee training and development. This is mainly done to ensure that the employee grows in both personal and organizational aspects. Goody’s uses this platform to introduce the employees to new technologies, trends, and policies. The main aim is to have a self-driven workforce meaning that it would require minimal supervision for the workforce to perform. New employees are able to learn of the mission and the culture of the organization through such programs. In some tasks, the employees may also work in teams that collectively solve problems. The employees are also involved in the making of some essential decisions. The main approach that stands out is the high commitment approach, but this does not mean other approaches are not applicable. The high-performance principle can apply here since the employees undergo vigorous training to enable them to have the skills and knowledge required to perform highly. The provision of incentives, recognition for high performing employees also reflects back as high-performance approach since it is done to entice high performance.
Finally, the company can make some improvement by also focusing on employee involvement in the organization. This involves applying some principles from the high involvement management principles which allow the employee to take control and understand their work. The employee is therefore treated as a partner in the company to encourage their active participation and commitment to the organization and its mission. Goody’s can also put more concentration into making the human resource strategy the core of the business strategy. The current situation is that the human resource strategy is consistent with the business strategy but it is not an integral part.
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