Assessing The Corporate Structure Within Lvmh Business Essay
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Published: Mon, 5 Dec 2016
LVMH Moët Hennessy Louis Vuitton S.A. (Euronext: MC), usually shortened to LVMH, is a French holding company and the worlds largest luxury goods conglomerate. It is the parent of around 60 sub-companies that each manage a small number of prestigious brands These daughter companies are, to a large extent, run autonomously. The group was formed after mergers brought together champagne producer Moët et Chandon and Hennessy, a leading manufacturer of cognac. In 1987, they merged with fashion house Louis Vuitton to form the current group
The group is controlled by the Christian Dior group, which owns 42.4% of shares and has over 58% of voting rights. Bernard Arnault, majority shareholder of Dior, is Chairman of both companies and CEO of LVMH. His successful integration of various famous aspiration brands into the group has inspired other luxury companies into doing the same. Thus Gucci (now part of the French conglomerate PPR) and Richemont have also created extended portfolios of luxury brands. The oldest of the LVMH brands is wine producer Châtea d’Yquem, which dates its origins back to 1593
LVMH is based in Paris, France. The company is listed on the Euronext Paris exchange and isa constituent of the CAC 40 index. As of 2008, the group revenues of â‚¬17.2 billion with a net income of â‚¬2.318 billion. The group currently employs 77,000 people. 30% of LVMH’s staff work in France. LVMH operates over 2,300 stores worldwide. Its current business plan aims to tightly control the brands it manages in order to maintain and heighten the perception of luxury relating to their products. For example, Louis Vuitton products are sold only through Louis Vuitton boutiques found in upmarket locations in wealthy cities or in concessions in other luxury goods shops (such as Harrods in London). This practice contrasts greatly with less exclusive brands which can be bought in shopping malls around the world
At the end of 2008, the only declared major shareholder in LVMH was Groupe Arnault, the family holding company of BernardArnault. The group’s control amounted to 47.42% of LVMH’s stock (with 42.42% held through Christian Dior S.A. and 5.00% held directly) and 63.40% of its voting rights (58.02% by Dior and 5.38% directly). A further 3.4% of shares were declared as treasury stock, with the remainder being free float
DEPARTMENTS OF LVMH
Wines & Spirits
Fashion & Leather Goods
Perfumes & Cosmetics
Watches & Jewelry
(Annual report LVMH-2008)
MISION AND VALUES OF LVMH
Be creative and innovate
Aim for product excellence
Bolster the image of our brands with passionate determination
Act as entrepreneurs
Strive to be the best in all we do
(Annual Report LVMH-2008)
Definitions of Human Resource Management
Human recourse management is a strategic and coherent approach to the management of organization’s most valued assets: the people working there who individually and collectively contribute to the achievement of its objectives.
(Michael Armstrong, a Hand book of Human Resource Management 2003)
The HRM models are
The Matching model of HRM
Harvard model of HRM
Best practice model
The contingency model
Guest model of HRM
Warwick model of HRM
Storey model of HRM
We can use Matching Model for LVMH
Models of HRM
1. The matching model
The Michigan model is also known as the ‘matching model’ or ‘best-fit’ approach to human resource management. In essence, it requires that human resource strategies have a tight fit to the overall strategies of the business. As such, it limits the role of HR to a reactive, organizational function and under-emphasizes the importance of societal and other external factors. For example, it is difficult to see how the current concern for work life balance could be integrated into this model.
Fombrun et al identified four common HR processes performed in every organization:
Selection: matching people to jobs
Appraisal of performance
Rewards: emphasizing the real importance of pay and other forms of compensation in achieving results
Development of skilled individuals
These processes are linked in a human resource cycle.
The matching model has attracted criticism. At a conceptual level, it is seen to depend on a rational, mechanical form of organizational decision-making. In reality, strategies are often determined and operational zed on a more intuitive, political and subjective level. Certainly, the decision-making is more complex than the model allows. It is also both prescriptive and normative, implying that the fit to business strategy should determine HR strategy
(Bratton, J.,Gold, J., Human Resource Management p-18))
Resource based Strategy
The resource-based view of strategy is that the strategic capability of a firm depends on its resource based capability. Resource-based strategy theorists such as Barney (1991) argue that stained competitive advantage stems from the acquisitions and effective use of bundles of distinctive resources that competitors cannot imitate.
As Boxall (1996) comments; ‘competitive success does not come simply from making choices in the present; it stems from building up distinctive capabilities over significant periods of time’. Teece et al (1997) define ‘dynamic capabilities’ as ‘the capacity of a firm to renew, augment and adapt its core competencies over time’.
(Michael Armstrong,2000, Strategic Human Resource Management, p-33)
The ‘best practice’ rubric has been attacked by a number of commentators. Cappeelli and Crocker-Hefter (1996) comment that the notion of single set of best practices has been over stated:
There are examples in virtually every industry of firms that have very distinctive management practices. We argue hat these distinctive human resource practices hlp to create unique competencies that differentiate products and services and, in turn, drive competencies that determine how firms complete.
Purcell (1999) has also criticized the best practice or universalist view by pointing out the inconsistency between a belief in best practice and the resource based view, which focuses on the intangible assets including HR, that allow the firm to do better than its competitors. He asks how can ‘the universalism of best practice be squared with the view that only some resources and routines are important and valuable by being rare and imperfectly imitable?’. The danger, as Legge (1995) points out, is that of ‘mchanistically matching strategy with HRM policies and practices’.
Accordance with contingency theory, it is difficult to accept that there is any such thing as universal best practice. What works well in one organization will not necessary work well in another because it may not fit its strategy, culture, management style, technology or working practices. As Becker et al (1997) remark: ‘organizational high-performance work systems are highly idiosyncratic and must be tailored carefully to each firm’s individual situation to achieve optimum results’.
(Michael Armstrong, 2000, Strategic Human Resource Management, p-65)
For the reason given above, it is accepted by most commentators that ‘best fit’is more important than ‘best practice’. There can be no universal prescriptions for HRM policies and practices. It all depends. This is not easy to say that ‘good practice’, ie practice that does well in one environment, should be ignored. Benchmarking has its uses as a means of identifying areas for innovation or development that are practiced to good effect elsewhere. But having learned about what works and, ideally, what does not work in comparable organizations, it is up to the firm to decide what may be relevant in general terms and what lessons can be learnt and adapted to fit its particular strategic and operational requirements. The starting point should be an analysis of the business needs of the firm within its context (culture, structure, technology and processes). This may indicate clearly what has to be done. Thereafter, it may be useful to pick and mix various ‘best practice’ ingredients and develop an approach that applies those that are appropriate in a way that is aligned to the identified business needs.
But there are problems with the best-fit approach, as pointed out by Purecell(1999) who, having rubbished the concept of best practice, proceeded to do the same for the notion of best fit:
Meanwhile, the search for a contingency or matching model of HRM is also limited by the impossibility of modeling all the contigent variables, the difficulty of showing their interconnection, and the way in which changes in one variable have an impact on others.
In Purcell’s view, organizations should be less concerned with best fit and best practice and much more sensitive to processes of organizational change so that they can ‘avoid being trapped in the logic of rational choice’.
(Michael Armstrong, 2000, Strategic Human Resource Management, p-66 )
Human Resource Management VS Personal Management
Human resource management was first known as personnel management. However the present status of the field of human resource management has been achieved after years of evaluating development.
In personnel management people were manage stick administration but in human resource management people are consider resources, develop people and get them to manage them self. Organizations now consider the human resource as a resource that could be developed rather than just be managed.
Personnel management is more administrative in nature, dealing with pay roll, compiling with employment law and handling related task. Human resources on the other hand are responsible for managing the work force as one of the primary recourses that contribute to the success of the organization.
Personnel management manages people by strict administrative system but human resource management considers people as a resource that can be developed.eg; Train and developed persons.
Personnel management is less concentration on employee’s future potential and getting the best from employees through training, development and motivation. but other hand of human resource management identifies employees potential, areas for improvement, strength and weaknesses identifies training needs and trains them achieves result through motivation and job satisfaction.
Human Resource Management from a strategic perspective and its implications for the role of the line managers and employees
Human resource management is very important to build up relationship between line managers and employees. Below I mentioned area of covering strategic human resource activities.
Designing and developing human resource strategies.
Contributing to the corporate plan of the organization.
Integrating human resource activities to the main purpose of the organization.
Incentives and benefits.
APPLY GUEST MODEL OF HUMAN RESORCE MANAGEMENT TO LVMH
LVMH using human resource management functions for build up their business. Especially they apply guest model for following functions.
They are using human resource strategy for innovation the company. Regularly they check other retailers of the market. After that they focus their business for current market. Normally they evaluate the cost of product. Some time they control the unnecessary cost per product. eg; they searching current market and stopping over production
Human resource management practices; LVMH specially using human resource practices for recruitments. They are choosing correct person for correct job category. They offered training period for new employees. Always management evaluating employees and giving rewards for them. eg; bonus
Human resource outcomes; They always get ideas from customers and offers range of options for flexible working. eg; part time work, career break
Behaviour outcomes; The management always evaluating workers and motivate them. It has good team workers. Every time they corporate with others and helping them.
Performance outcome; LVMH evaluate everybody performance and using some human resource practices for increase productivity. Human resource department discuss with employees and this time reduce their absenteeism and labor turn over.
Critically evaluate the Guest model of human resource management
Human resource management is deferent from traditional personnel management. However, Guest has acknowledged that the concept of commitment is messy and that the relationship commitment and high performance is difficult to establish. The strength of the guest model is that it clearly maps out the field of human resource management and classifies the input and comes. The model is useful for examining the key goals usually associated with the normative models of human resource management; strategic integration, commitment, flexibility and quality.
Aim/Purpose: Why have a Strategy?
To set the context for learning and development within the LVMH to answer the questions that staff, managers, and customers might have:
Why is learning and development important?
How does learning ‘fit in’ with staff roles, delivery of key services?
What does the LVMH mean by learning and development? How do staff and managers make sure they have the learning they need?
The aim of this strategy is to provide a practical map and guide of how learning and development supports the work of the LVMH, at an individual, team and organizational level.
The strategy aims to set out the current aims and objectives and also map the future so that there is a ‘vision’ of how learning and development will support the LVMH both now and in the future across Provider and Commissioning.
The purpose then is to provide a framework for learning for LVMH which will:
Set out the LVMH’s commitment to providing learning and development for all staff
Ensure that staff are equipped with appropriate skills, experience and support to enable them to continue to provide high quality care and services
Ensure that processes are in place for staff to achieve their potential and that individual contributions are valued and acted upon
Ensure that staff identify training needs and undertake appropriate training as part of their role and that training needs are identified at an individual, team and organisational level
Ensure that high quality training and development is commissioned as needed
Effective learning and development processes and systems are in place that are accessible and clear.
Supporting the LVMH to deliver its strategic aims and objectives
The LVMH’s key strategic aims are to:
Engage with the target customers and their needs.
Commission a full and equitable range of high quality, responsive and efficient services, within allocated resources, across all service sectors.
Directly provide high quality responsive and efficient services where this gives best value.
The achievements of the strategic aims are supported by a set of key values. LVMH values are the qualities, standards and principles that the LVMH believes will help it and its staff to succeed. The values are:
– Be creative and innovate
– Aim for product excellence
– Bolster the image of our brands with passionate
– Act as entrepreneurs
– Strive to be the best in all we do
Core principles for Learning and Development across the LVMH:
To provide opportunities for learning, high value of skills about international marketing, personal development and skills enhancement at all levels. There is a need to widen participation to ensure lower band staff have the development they need
To encourage continuous learning and space for innovation and creating something new so that services are adapted and improved as a result of learning
To be more than fit for purpose but in pursuit of excellence
Endorse the principles of becoming a Learning Organisation
Identify a systematic process and framework for identifying, planning, delivering and evaluating learning and development at an individual, team and organisational level
Support and develop a culture that encourages confidence, motivation and creativity in staff allowing them to be innovative, take risks and realise their full potential
Ownership of learning and development by individual members of staff so that they can see the value of learning and how it will support them
Staff are our ‘customers’. The learning and Development team need to ensure that effective feedback and quality assurance processes are in place
To be able to measure success
The strategy should:
Mean something to staff and Managers, be ‘live’ and real and practical, mapping the current and future picture and progress
Be organic in that the Learning and Development team continually assess and change the strategy and vision through its own learning
The Learning and Development strategy should strengthen and be integral to the LVMH organisational objectives and performance management frameworks
Identify localised examples.
Learning and Development: Strategic Aims and Objectives
To Meet PCT Commissioner and Provider Strategic Aims, Values and Vision
Ensure staffs are working safely and competently and have the skills and knowledge they need to deliver high quality services:
Deliver first class Induction
Provide high quality marketing Training
Ensure all staff are attending Statutory /Mandatory training
Ensure store Supervision systems, training is in place
Develop IT skills of our staff
Support the LVMH to develop the workforce of the future:
Work with Provider and Commissioning Directorates to support development of LVMH into the future
To work with HR and OD Director to embed values of the LVMH through education and training systems and processes
Support the development of new roles
Identify training and development for new services as they are developed
Support the workforce planning agenda
Support the LVMH in the delivery of its Inequalities Agenda
To ensure integrated working with Public
Ensure Equality monitoring and performance targets are met
To provide an equality and diversity training programme for all staff
Complete an Equality Impact Assessment on the Learning and Development function
Develop systems to include staff feedback into improving learning and development within the LVMH
Develop first class leaders and managers within the Provider and Commissioning arms of the LVMH
Identify management and leadership strategy for all managers at appropriate bands
Delivery of in house leadership programme
Develop a management skills programme, identify skills / competencies for Managers
Develop and provide Team Leader Training
Support Managers to access external management and leadership programmes as appropriate
Develop mentoring, coaching and shadowing for staff
Provide training and support for Managers in Skills & Knowledge to manage change efficiency and confidentially
Delivering high quality, innovative and creative learning opportunities
Support the LVMH to become a learning organisation and embed the philosophy of the teaching lvmh
Promote the principles and philosophy of the learning organisation and the teaching LVMH
Embed the learning culture
Encourage new ways of learning, training, e-learning
Support the organizational development agenda
Develop work with neighboring LVMHs
Ensure accessible and excellent high quality training, learning and development provision is in place
Develop the LVMHeducation and training team and service
Commission training and development, both now and in the future
Development of ‘self service’ training administration system
Ensure effective systems and processes are in place
Development of Learning Centres and accessible ways of learning
Develop a Quality Assurance framework for Learning and Development
Demonstrate the value of learning within the organisation
Benchmark against competitors
Develop measurable standards for learning and development processes
Ensure robust data collection and reporting
Develop a system for feedback from staff, partners ‘customers’
Quality assurance, monitoring, evaluation systems put in place eg.
i. Train the trainer, standards of delivery for trainers
ii. Contracts for external trainers
iii Staff and partner organizations
iv Staff questionnaire/feedback
Use existing resources creatively and plan resourcing for the future such as
LVMH training budget
Sponsorship / grants
Service Standards will be included for each strategic objective and identified in the work programme.
Responsibilities / accountability: Training Governance
All members of staff have a responsibility for their own learning and development, supported by Managers and the Learning and Development Team. For detailed guidance on roles and responsibilities on identifying learning and development
Success Criteria: benchmarking, quality assurance processes: How will we measure Progress and Achievement?
Through regular reviews of the Work Programme
On going consultation with staff
Evaluation and collation of feedback
Review and Monitoring
Quarterly review of strategy and work programme may monitor by Human Resources Committee.
Recruitment refers to the process of attracting, screening, and selecting qualified people for a job at an organization or firm. For some components of the recruitment process, mid- and large-size organizations often retain professional recruiters or outsource some of the process to recruitment agencies.
The recruitment industry has five main types of agencies: employment agencies, recruitment websites and job search engines, “headhunters” for executive and professional recruitment, niche agencies which specialize in a particular area of staffing and in-house recruitment. The stages in recruitment include sourcing candidates by advertising or other methods, and screening and selecting potential candidates using tests or interviews.
(Armstrong, Michael (2006). A Handbook of Human Resource Management Practice)
Selection is the process used to identify and hire individuals or groups of individuals to fill vacancies within an organization. Often based on an initial job analysis, the ultimate goal of personnel selection is to ensure an adequate return on investment–in other words, to make sure the productivity of the new hire warrants the costs spent on recruiting and training that hire.
Several screening methods exist that may be used in personnel selection. Examples include the use of minimum or desired qualifications, resume/application review, oral interviews, work performance measures (e.g., writing samples), and traditional tests (e.g., of job knowledge).
The field of personnel selection has a long history and is associated with several fields of research and application, including human resources and industrial psychology.
Recruitment and Selection of LVMH
They are based on higher requirements for professionalism in the evaluation and selection methods, while offering candidates a unique experience that gives them useful feedback for their professional development. Not only are technical skills assessed, but also the ability to produce and communicate results, the ability to work in a group, the ability to have a strategic vision while knowing how to make a daily commitment and, finally, the potential to become an enterprising leader motivated by a desire for ongoing improvement. Assessment of these aspects is made by LVMH group managers through interviews as well as individual and group role plays. At the end of this intensive day, whatever the result, each candidate receives several in-depth analyses to assist him or her in understanding how he or she was perceived and the contents of the assessment.
Essential of international recruitment of LVMH
Sustained development of all LVMH activities enabled multiple jobs to be created in 2008 across the Group’s companies and brands: Wines & Spirits, Fashion & Leather Goods, Perfumes & Cosmetics, Watches & Jewellery, and Selective Retailing. LVMH has 77,087 employees worldwide, with the average number of employees over the fiscal year up 9.5% compared to the previous year. Through its policy of selling products with the “made in France” label, LVMH ensures that industrial jobs are maintained in France. The breakdown of the Group’s workforce by geographical region is stable and balanced. 74% of the workforce is employed abroad, essentially in the distribution networks of Europe, the Asia-Pacific region, and North and South America.
Workforce of LVMH by geographic region
26% France 19,737
22% Rest of Europe 17,226
22% United States 16,723
6% Japan 4,929
19% Rest of Asia 14,831
5% Other markets 3,641
(Source; LVMH Annual report-2008)
There are 74% of employees working internationally. Therefore international recruitment is important to LVMH. They are expecting a personal development within a professional, responsible team in the organization. identifying with the values of a company is a major element in attracting and motivating the men and women who join LVMH and invest themselves in the Group. The Group presents its corporate responsibility policy during the initial contact with candidates, for example during recruitment forums. The explanation of this policy is part of the integration process. The prevention of psycho-social risks in their orientation manuals or employee manuals, like DFS Group, Fendi or Glenmorangie. However they have consider the expectations and motivation of the teams.
Access and continued employment for older employees is also a constant concern, consistent both with the Group’s policy on diversity and with its
International Recruitment at LVMH
Here LVMH can find a step-by-step guide to recruitment.
International Recruitment &Deployment
e follow the extensive International Recruitment process as follows:
Advertisement using print media and internet including job display on our Job portal
Stage 2: Screening of applications received in response to advertisement.
Stage 3: Short listing, scrutinizing data according to the skills, knowledge and aptitude desired for the job.
Stage 4: Test &Interviews
Stage 5: Selection
Stage 6: Reference Check
Stage 7: Completing the Visa/Administrative Process following the acceptance of Job offer by the candidate.
Stage 8:Travel arrangement and deployment of the candidate to job location.
Selection Methods (Tests, Exercise, Presentations)
The most popular selection method is Interviewing ; however the decision making process at Interviewing panel stage will be improved if information additional to that obtained from the application form, CVs, references (for academic and research posts) and interview is available. It is therefore desirable that the selection process includes an additional selection exercise/test. This should be designed to gather information about the ability of short-listed candidates to carry out the specific duties of the post by testing aspects of the Person Specification, which cannot easily be evaluated by an interview or reference.
Some examples of selection exercises are given below, all of these would need to be carried out in accordance with good practice in Equal Opportunities: In setting up and running selection exercises the following principles should be followed:
Nature of Post:
Candidates could be asked to deliver a seminar, give a departmental presentation or write a report
Facilities Support posts
A practical test could be used to test an individual’s skills on relevant aspects of the job e.g. for a security post candidates could be asked to watch a video of an incident and write an incident report
Candidates could be asked to complete a speed typing test and/or an exercise on one of the Microsoft packages e.g. word, excel etc. For some posts an ‘in-tray’ exercise could be used to test organisational and prioritisation skills;
Candidates could be asked to diagnose faults on equipment and suggest possible methods of rectifying them
Posts involving finance
Candidates could be asked to interpret financial information or to complete a innumeracy skills test
Posts that require supervisors skills
Candidates could be asked to take part in a supervisory role play
The assessment of performance from selection tests must be made on a predetermined set of factors, rather than vague generalizations, using set criteria will enable an objective assessment of the test set;
There should be a clear understanding of what is being tested and what status the test/exercise has within the overall selection process;
If the test/exercise involves using a software package, experience of using that specific software package must have been included in the selection criteria for the post;
The test/exercise must be designed to provide an equal opportunity for each candidate to demonstrate his/her abilities, in accordance with the Equal Opportunities Employment Policy;
Where appropriate, selection tests/exercises must be adapted for a candidate with a disability. For further guidance on this the Recruitment Manager or HR Manager should be contacted;
The test/exercise must be properly planned in advance with each candidate given full information on what is involved and sufficient time for any preparation required;
The test/exercise must not be biased in favor of internal candidates, i.e. it should test basic principles in relation to the post, not knowledge of internal procedures;
The information gathered from a selection
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