Describe about the Human Resource Management for Leading Retail Store.
Woolworths Limited is a leading retail stores with its presence in Australia, New Zealand and South Africa. It is a part of the fiercely competitive grocery and supermarket industry in Australia. The other top three players in this industry are ALDI, Metcash and Coles. The advent of the German based ALDI and its cost cutting strategies has forced the top players to adopt new strategies to maintain its hold on the consumer base. The changing lifestyle of the consumers and the transformation of the marketing trends have influenced the strategies of the organizations (“Supermarkets and Grocery Stores in Australia Market Research | IBISWorld”, 2016). However, the recent market analysis has seen the downfall of Woolworths and it is taken as one of the most shorted stocks in the S & P ASX200 index. Nonetheless, this might prove to be beneficial for Woolworths as it is expected to turnaround (“Woolworths is being hammered and everything that can wrong, is going wrong. But that’s exactly what you want with a turnaround.”, 2016). Under such conditions, the HRM plays a vital role in improving the strategies and policies of Woolworths to improve its position in the market.
The review methodology deals with the review of the current strategic Human Resource Management (HRM) of the Australia based company Woolworths Company and helps in giving an overview of the strategic tools implemented for HRM. The report will start with the context of Woolworths and the methodology would also involve getting to know the background and context of the chosen organization, that is, Woolworths. The key managers would be interviewed in the process and the annual report of the organization would be analyzed. The HRM audits and other sources would also be studied in detail in order to reach a conclusion regarding the strategies of the Woolworths Company. The review methodology would also require a SWOT analysis of Woolworths and the team’s perception of the HRM challenges and opportunities would be looked in to. The methodology would end with the other observations and conclusions that are gathered during the investigation.
Woolworths Limited is one of the foremost Australia based retail stores that can be found throughout the nation and also in New Zealand. The Sydney Morning Herald holds that it is the second largest organization in Australia by revenue coming straight after Wesfarmers (“Coles puts Wesfarmers on top”, 2016). It was founded in the year 1924 by Percy Christmas, Stanley Chatterton, Cecil Scott Waine, George Creed and Ernest Williams. Its headquarters is at Bella Vista at New South Wales and it has ever been considered as one of the biggest retail outlets in Australia (“Who We Are – Woolworths Limited”, 2016). They specialize in food, liquor, petrol, general merchandise, home improvement and hotels (“Who We Are – Woolworths Limited”, 2016).
Woolworths is a New South Wales based company in Australia whose farsighted founding CEO Percy Christmas had a vision in mind: to provide a store where the people can get good things at a cheap rate (“Who We Are – Woolworths Limited”, 2016). The employers and employees have maintained this vision even after 90 years of their establishment. They serve about 28 million customers each week and they have more than 198,000 people working in their organization (“Who We Are – Woolworths Limited”, 2016).
Nonetheless, the year 2016 is proving to be full of turmoil for Woolworths as the Moody’s has depicted a decrease in market shares being in competition with Aldi, David Jones and Aldi. The general perception that the consumers are viewing the products of Woolworths as costlier as opposed to other retail stores has been the reason behind the downfall (“Businessfirstmagazine.com.au”, 2016).
By interviewing key managers
In an interview, Matt Keogh reveals the HR strategies, challenges and the successes achieved at Woolworths. Matt Keogh is the divisional Director for HR of Woolworths. He was asked about the biggest challenges for Woolworths (“Human Capital Review – Interview with Matt Keogh – Woolworths Divisional Director for HR”, 2016). He replied that the biggest challenge that he faced in terms of the HR is the appeal and retention of the talents that would enable Woolworths to realize its dreams and visions. The key goal of this organization is to provide innovative and premium service to its customers and hence, it was dependent on the talented employees acquired by the Company (“Human Capital Review – Interview with Matt Keogh – Woolworths Divisional Director for HR”, 2016) The other major challenge faced by Woolworths was the question of sustainability in their organization, particularly in the South African context. They want to work keeping in mind the best interests of the community and the environment at large. They just do not want to bask in profits and successes pertaining to their organization. They also want to be embracing “the benefits of diversity” and renovate the organizational culture for the better (“Human Capital Review – Interview with Matt Keogh – Woolworths Divisional Director for HR”, 2016). When asked about the response of the HR department to those challenges expressed by Matt Keogh, he expressed a list of focus areas which will help in retaining the best talent of the industry. The purpose of the HR department is to implement an “employee value proposition” required to attract the prospective employees. Those points of importance include the improvement of the capability of the workforce and to augment the growth of the future employees. It also includes the system of giving rewards to employees who succeed in observing the rules and regulations of the company and also aid in following the strategies formulated by the Company (“Human Capital Review – Interview with Matt Keogh – Woolworths Divisional Director for HR”, 2016). This approach would create an environment of encouragement and motivation in the workforce which would ultimately prove beneficial for the company in the long run. The HR policies also aim to establish a loyal bond between the employee and the employer so that the Company does not fail to deliver its promises to the customers. Matt Keogh was also asked about the position of HR department as a “true business partner” to which he answered that the HR has the important role to play as a business partner. The HR team needs to make sure that the strategies developed should reveal an understanding of the business orientation and Hr proficiency (“Human Capital Review – Interview with Matt Keogh – Woolworths Divisional Director for HR”, 2016).
As per the People Policy Committee Charter, Woolworths has formulated certain policies and performance with regards to the HRM department (“www.Woolworthslimited.com.au”, 2016). The HR department has the responsibility to review the policies of the Company and accordingly, the HR must make the rules to keep itself in align with the Company strategies. The HR department has to comply with the legislature sand the Government policies inclusive of policies pertaining to the Equal opportunity for women in the organization, sexual harassment, diversity and unjust dismissal (“www.Woolworthslimited.com.au”, 2016). The HR department is in sync with the Board of Directors of the Company regarding the objectives of Woolworths. They are also supposed to keep track of the progress of the company and also make relevant recommendations. The concept of gender diversity has gained immense movement in the market and the government has also taken positive steps towards promoting gender diversity in the upper echelons of the Company (www.Woolworthslimited.com.au”, 2016). Woolworths Limited has also positive steps towards implementing the same and hence it boasts of 50 % women employees on board (“Number of women on ASX 200 boards soars: report”, 2016).
Woolworths has established a People Policy Committee which oversees the HRM strategies on behalf of the shareholders and the management Board (“www.Woolworthslimited.com.au/annualreport”, 2016). The activities that would constitute the important activities of the Committee are related to acquiring an effective strategy that would enable the company to acquire the best talent to fulfill the goals and visions of the company. The committee is also responsible for the protection of the safety and the health of the employees, consumers and the suppliers. The committee has to assume the appropriate performance management and plan activities and policies (“www.Woolworthslimited.com.au/annualreport”, 2016). The HR policies should also involve remuneration policies for the shareholders and the remuneration market outside the organization. The committee also makes sure that the policies are complying with the policies of the Australian Government and are fulfilling the requirements of the good governance. The HR department also has to ensure about its regular reports to the shareholders by following the required standards (“www.Woolworthslimited.com.au/annualreport”, 2016).
The ASX has released the corporate governance statement of Woolworths which spoke of the HRM policies and responsibilities (“www.asx.com.au”, 2016). The People Policy Statement has the responsibility of handling the HR policies and the people relations. The People Policy Committee consists of at least three independent directors and the rest of the directors were responsible to the Board of management. The Chairman of the Committee must be an independent director and he is appointed by the Board of Management on the condition that the Chairman is not the Chairman of the Board. The current members of the People Policy Committee are Ms C Cross (chairman), Mr. R G Waters, Ms C J Hrdlicka and Mr. A D D Mackay (“www.asx.com.au”, 2016). Their roles have been under the strict observation of the Fair Work Ombudsman whose task is to make sure that the government regulations are maintained in the organization (“Welcome to the Fair Work Ombudsman website”, 2016). The Fair Work Ombudsman lay out the National Employment Standards which the HR department of every organization in Australia has to follow and formulate the strategies and policies accordingly (“Welcome to the Fair Work Ombudsman website”, 2016).
Woolworths has an enviable position in the market as the second largest retail outlet across the nation and also worldwide. However, in the year 2014 this retail outlet has been in the midst of a scandal related to the trolley contractors (“Woolworths under fire as Workplace Ombudsman takes on big chains”, 2016). Natalie James of Fair Work Ombudsmen has launched an inquiry into the physical harassment of the workers by the trolley contractors. Natalie connected this issue with the Company sliding down from 17th to 40th position on the AMR’s 2016 Corporate Reputation Index (“Woolworths under fire as Workplace Ombudsman takes on big chains”, 2016). Woolworths, however, has rejected such allegations and made a statement that they were aware of the rights of the workers and they were not going to support such practices. They have made sure that the trolley contractors are paying the worker fair price as they do not tolerate such malpractices (“Woolworths under fire as Workplace Ombudsman takes on big chains”, 2016).
Strengths:
The SWOT analysis is generally conducted to reveal the internal and external environment of the organization and its impact on the organization. Hence the importance of the SWOT analysis is undeniable and yet it has been often seen that the organizations have not given this analysis its due respect. In the case of Woolworths, its strengths have resulted in making it the second most important retail outlet of Australia and New Zealand (“Coles puts Wesfarmers on top”, 2016). Woolworths has occupied the position of a market leader in the retail industry of Australia which has given it an edge in the highly competitive market. The Company is able to utilize its resources for the achievement of its goals and visions. The company is also known for its technological advancement in the domain of the retail marketing and has been able to connect to the thousands of customers through its innovative strategies. Woolworths has also given importance to the significance of sustainability by adopting cost effective measures and implementing ways to reduce carbon footprint. Woolworths has also taken responsibility of minimizing wastage in case of packaging (“Unglobalcompact.org”, 2016).
One of the weaknesses that the company Woolworths has is its over reliance on the domestic market in Australia for its revenues. In the year 2013, the company made about 92.3percent of its revenues from the domestic market. In New Zealand also, its revenues is quite marginal amounting to 7.9percent of the total revenues (“Annual Report 2013 | Woolworths Limited 2013 Annual Report”, 2016). This over dependency on only the domestic market for the bulk of its revenues will make the company more country oriented. Hence, any kind of market fluctuations will inadvertently affect the financial status of Woolworths. The trolley contractor’s scandal also landed the company in the bad books of the Fair Work Ombudsman after Natalie James conducted an inquiry into the exploitation of the workers. Such an allegation was rejected by the Company although the scandal had resulted in the tarnishing of the brand in the market (“Woolworths under fire as Workplace Ombudsman takes on big chains”, 2016). Woolworths also has the reputation for higher prices of products compared to the other retail stores lies with Coles (“Price war: Woolworths vs Spar vs Pick n Pay vs Checkers”, 2016).
The overall change in the retail market may prove to be beneficial for Woolworths. The technological advancements of this retail outlet have shown promises in Australia and New Zealand. There has been an increase in the sales of Woolworths by 4.5 percent compared to the week following December in the previous year. The supermarket made revenue of around $10.35 billion in Australia and New Zealand and it was quite ahead of its rival Coles (“Woolworths posts ‘solid’ $15b quarterly sales”, 2013). The change in consumer lifestyle has also affected the sales and growth of Woolworths positively and this change has brought about new opportunities for the Company. The new marketing scheme of Woolworths called everyday-low-value pricing (ELDP) strategy has proved to be fruitful in attracting the attention of the consumers. This strategy has created opportunities of the company to win the trust of its customers. This will enable the company to defeat its close rivals Coles and Audi (Mitchell, 2015). Woolworths also has the capability to penetrate into foreign markets in Africa with the help of product designing and other technological advancements (“Woolworths to target growing market share”, 2016).
The key threat of Woolworths in the Australian market is its rival Coles and also the German retail store Aldi (“Aldi’s mighty challenge to big two”, 2016). According to the leading newspaper Herald Sun, Aldi is all out to take on 10percent of the market share in Australia by the year 2020. In terms of the retail analyst Thomas Kierth, the battle of the supermarkets has started with the rise of the leading retail outlets in the market like Coles and Aldi. The newspaper also predicts the growth in the share of the grocery sector from 6 percent to 10 percent by 2020 (“Move over Woolies and Coles…”, 2016). With the rise in the market share of Coles to 2.8 percent, Woolworths experienced a downfall of about 1.1 percent (“Worries over Woolies sales”, 2016). Rating agency Moody also spelled doom for Woolworths as the German based Aldi has expanded its customer base at an alarming rate and is posing as an imminent threat for all the established retail businesses of the country. The market shares of Aldi has also increased from 11.6 percent in March, 2015 to 12.1 percent in December (“Moody’s rings Aldi alarm bell for Coles, Woolies”, 2016).
Conclusions:
The strategies and policies adopted by Woolworths to gain market shares in Australia, New Zealand and South Africa are effective and innovative. The policies and regulations formulated by the People Policy Committee are in compliance with the government rules and regulations. The Australian retail market has grown competitive with the entry of German based Aldi into the market and the analysts have predicted lowering of the shares of the existing players in the retail market. However, these big companies like Woolworths and Coles have made sure that their marketing strategies are in keeping with the needs and demands of the consumers. The changing lifestyle and market scenario have caused the retail stores also to transform their policies. The HRM department has to bear the responsibility to keep track of these changes and formulate new policies accordingly. The SWOT analysis has helped in scanning the external and internal environment of the organization. The main advantage of Woolworths is its long standing prestige in Australia and the organization can bank on its brand image to keep its consumer base intact. Its large and satisfied workforce also contributes to its effective functioning effectively in its long 90 years journey. Hence the contribution of efficient HRM policies is undeniable in the making of Woolworths limited. Though there was a hit at the public image of Woolworths when the Fair Works Ombudsman accused its trolley contractors of physically abusing the workers. However, its CEO has made it clear that such malpractices were not tolerated in their organization.
The effectiveness of the marketing strategies of Woolworths can be ascertained through its rise and position in market. The departmental store chain has been responsive to the market changes though it faces stiff competition from Coles. In fact, in terms of gender diversity and sustainability report also, Woolworths is ahead of many of its competitors. It boasts of about 50 percent female workers on board and has made a name in the market for its fair work practices. The progress report of Woolworths also reflects this positivity in the organizational culture and hence it stands as a motivation for every other organization in the domain.
One of the key aspects for the success of any organization is the policies and programs adopted by the HR department. The HRM makes the rules in accordance with the visions and goals of the organization. In case of Woolworths, the People Policy Committee has the responsibility of overseeing the HR policies in the organization. They have formulated such practices which would enable the company to acquire the best talents available in the industry. Such policies have proved to be fruitful in keeping up strict rivalry with the other retail outlets like Coles and Aldi in terms of sales and market shares.
References:
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