Understanding The Concept Of Human Resources Management Commerce Essay

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A company's proposition towards the method through which it aims to compete successfully, thereby survive, and grow constitutes its strategy. There can be several approaches to strategy formation including business reversals, product revising, new product development, etc. These strategies depend upon the trends and conditions external to the organization. There has been a general trend where strategic management is considered as an activity aimed at filling the gaps created by the SWOT analysis. Michael Porter has developed a number of models that helps in analyses of opportunities and threats posed by the environment. Porter also suggested a five forces model that explained the relationship between strategic opportunities and structure of the industry. However, the story told by SWOT framework is only one side of the coin. As explained by it is of equal importance to study the internal strengths and weaknesses of the enterprise in order to develop successful strategies to attain a competitive advantage. One such strategy is gaining competitive advantage through human resource strategy. As suggested by Barney (1995), in case a firm is able to obtain and develop human resources in a way that it enables the organization to apply its learning more effectively, the firm can achieve a competitive advantage. Container Stores is using a resource-based approach where the major aim is to improve resource capability in order to achieve strategic fit between resources and opportunities and obtaining added value from the effective deployment of human resources. A critical analysis of philosophies, practices and policies of the company is presented in the following sections that make it clear that investments made in people can definitely add value to a firm.

RECRUITMENT POLICY OF THE CONTAINER STORE

The Container Store follows a highly selective recruitment policy where workforce is selected after a rigorous analysis. Further, the company prefers to hire people through a referral program instead of looking out for the appropriate people to fill the vacant positions. In case of service organizations it is of utmost importance that a careful recruitment and selection of staff is made in order to enhance the possibility of a more efficient operation and better quality. As explained by Strother (2006) a high standard of employee selection particularly the front-line enables the managers to make an efficient use of organization's human resourced development dollars. People who are recruited based on referrals of old employees are expected to come in with the qualities and values emphasized by the organization. They are in a better position to produce high productivity results and benefits from training and performance improvement programs of the organization. In the words of the philosophy of "like attracts like" applies here, because when a company has a set of employees who are indeed the very best for their jobs, it will be able to maintain the high standard of its workforce in terms of skills, abilities, motivation level, morale, values and beliefs. Employees at all levels along with the leaders and managers share a common values and beliefs that makes it easy for leaders to generate efficient performance standards from subordinates. Another characteristic of the recruitment policy of The Container Store is that the company follows a policy to turn its best customers into loyal, top-performing employees. This helps the company to form its customer-service policies in accordance with the expectations of its customer base which is the foundation for the success and stability of any service oriented organization. It will further help the company in achieving its objective of providing best service to its customers and ensuring a stable and profitable business.

The theory of Resource-based HR strategy forms the base of recruitment policy of The Container Stores. Conner and Prahalad (1996) and Berner (1991) explained that a company can generate sustained competitive advantage through the unique bundle of resources at the core of the firm. The resource-based approach describes that business firms can build their businesses on the basis of resources and capabilities currently possessed by them. The theory states that a superior performance can be attained in comparison to the competitors in the same market through the bundle of resources such as tacit knowledge, management skills, employment of skilled personnel, etc. In contrast to Input /Output model that focused on accumulation of resources necessary for implementation of strategy as suggested by the analysis of external environment; the resource-based approach emphasizes on firm's internal environment, in terms of its capabilities and other resources and considers them as critical for the determination of strategy to be adopted in order to achieve a competitive advantage.

Select a strategy that exploits the firm's resources and capabilities in best mannerThe resource based theory is the basis of strategy analysis and human resource strategy followed at The Containers Stores. The theory if depicted in the following figure:

Strategy

Appraise the rent generating potential of resources and capabilities.

Competitive Advantage

Identify resource gaps that needs to be filled.

Invest in replenishing and upgrading the resource base of the company.

Identify Firm's Capabilities along with the resources needs for each capability

Capabilities

Identify and classify firm's resources. Appraisal of strengths and weaknesses relative to competitors

Resources

Figure 1: A Resource-Based Approach to Strategy Analysis

Source: The Resource-Based Theory of Competitive Advantage: Implications for Strategy Formulation - Robert Grant (CMR 1991)

As per the framework shown in figure 1, a company needs to determine its capabilities and the required resources to make those capabilities more competitive in order to develop a strategy based on those core capabilities. The Container Stores have followed the same framework and approached the achievement of the competitive advantage through replenishing, and constantly upgrading the firm's human resource in order to use a human resource strategy to achieve organizational goals of sustainable and profitable growth.

TRAINING INITIATIVES AT THE CONTAINER STORES

New recruits can perform best when they are indoctrinated into the corporate culture of an organization. The Container Stores follows the principle to make new recruits understand the corporate culture and various product lines of the company. A large amount of product and sales training provided through Foundation Week helps new employees to immediately understand company's commitment to their success. Another key aspect of the company's training process is that each member of the retail store is given an opportunity to experience and focus of frontline activities. This is done through rotation of store and distribution employees which fosters team building. A strong team acts as a powerful motivator for younger workers and assists everyone in understanding the big picture of the operations, opportunities and challenges faced by the organization.

The above points can very well be proved with the help of Human Capital theory as suggested by Becker in 1964. As stated by Becker and Mincer (1964), the education or training imparts useful knowledge and skills to workers that raises the productivity of workers which in turn helps in raising their future income by increasing their lifetime earnings. The theory of human capital draws a clear demarcation between general education and firm-specific training and argues that formal education does have an impact on employees' hiring decisions; however, in due course of time additional increase in salary, promotions, increments and overall career development depends upon the firm's recognition for need of training and improvement in skills. The theory forms the base of a continuous training policy of The Container Stores that aims at keeping its staff updated with competent skills in order to achieve a competitive advantage in customer service.

SOCIALIZATION AND CONTINUOUS LEARNING

The Container Store maintains 'customer service' as its core competency. It follows a systematic approach towards a human resource strategy where a self-motivated and team oriented staff is recruited, who already have a passion for customer service. Further, the company adopts some unusual methods to train its staff where the full-time salesperson receives more than 235 hours of training that too in a customized form so that it suits each individual's job functions and personal characteristics. Also, employees at the company are given an opportunity to choose the job of their choice that is again an effort towards generating high standards of performance through a well motivated, skilled and satisfied workforce. The concept of, Learning Organization' as provided by Peter Senge in 1990 explained that in a learning organization people are able to expand their capacity on a continuous basis in order to achieve the desired results. In a learning organization people learn from each other where expansive patterns of thinking are nurtured and collective aspirations are set free. Continuous learning approach followed by The Container Stores helps in reinforcing the organization's core values, motivating employees by building their self-confidence, and professionalizing the service delivery role. As stated by Gronfeldt (2006), learning is an alternative to boredom, burnout, staleness and ineffectiveness. As stated by Pedler (1991) learning cannot be developed by simply training the employees but through a continuous process followed by all levels in the organization where staff is provided an opportunity to transforms itself continuously. At The Container Stores such an approach is followed where training is not only provided to new recruits but also to old staff in order to sharpen their skills and learn new skills for a continuous improvement. Watkins and Marsick (1992) explained that there is a total employee involvement in case of learning organizations where a process that is collaboratively conducted, collectively accountable directed towards shared values and principles is followed throughout the organization.

However, only training and development initiatives cannot ensure development of organizational core competencies. All members of the corporate culture should foster a devotion towards continuing development of employees. Any knowledge management programme to be successful needs to demonstrate a common and consistent purpose of top management, line managers and the employees. In the words of without a consistent approach from all sections of an organization, it is not possible for an organization to achieve core or individual competencies in its human element. Furthermore, the leaders and managers are required to take an active participation in the process of linking individuals with various knowledge and expertise so that there is no risk of losing the return on investment made by the organization on its pool of talent.

ORGANIZATION STRUCTURE FOLLOWED AT THE CONTAINER STORES

The company follows a flat structure with an aim of focusing on talent and skills as compared to titles. The employees are allowed to learn from each other and in a collaborative which fosters team work. The company aims at making people work as a team with special emphasis on informal communication. Here employees have an access to all financial information like profits, sales and revenues along with the growth and expansion plans of the company. Despite of being a successful approach, such a structure may allow competitors to get the company sensitive information easily as all employees are aware of such information.

CONCLUSION

From the above analysis of human resource strategy followed by 'The Container Stores' it is clear that the company emphasises on customer service and believes in investing in its human resource in order to achieve the aim. Using Human Resource management as an important strategic tool can help an organization to attain a sustainable competitive advantage. Achieving competitive success through people requires working with and through people and viewing them as partners. In today's competitive environment, knowledge is the key advantage especially for companies into selling of ideas and relationships. The challenge to organizations is to ensure that they are able to find, assimilate, compensate, and retain competent workforce. In case where the external environment to the company is fluctuating, it is the capability and competitiveness of its internal resources that act as a stable basis for firm's identity, sustainability and growth.

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