Improving organisation performance – Human resource management

Medicine and health
December 13, 2017
corporate social responsibility
December 13, 2017

 

 

Improving organisation performance – Human resource management

Assignment Brief
Working on the JPL case study write a 4000 words essay which addresses the following tasks.
1. Drawing on relevant theory critically analyse the extent to which JLP can be considered as a high performance work organisation. As part of

your analysis, critically evaluate the links between bundles of people management practices and sustainable organisational performance.

2. Critically examine the role of culture in creating and sustaining high performance work organisations.
Note: Please read the suggested outline and case study of JLP below.

 

Suggested Outline
Introduction
A short intro identifying the topic and outlining the purpose of the report – around 150 words
Question 1: HPWS
You can begin with a brief overview of the concept of HPWS (definition, the fact there is a multitude of frameworks/models associated with the

concept) and in conjunction with this discuss the idea of bundles of HR practices.
You can then move on to apply these ideas in depth to the case study. Assess JLP’s HR practices and clearly explain whether they approximate those of

a high performance organisation (and why). Same with the idea of HR bundles. Do the practices support each other and are they also aligned with the

organisation’s business strategy (and focus on high quality)? In the course of your discussion you may want to briefly compare JLP to other high

performance organisations but the purpose of this would be to further justify your argument; you are not comparing for the sake of comparison – around

1750 words.
Question 2: Culture in relation to HPWS
Again, start with an overview of the concept of culture (meaning, origins, the purpose it serves in organisations) and point towards its role in

building and maintaining HPWS. You may also want to consider the idea of socialisation (integrating members into the organisation, its vision and its

values).
You then apply these insights into the case by discussing the cultural issues JLP was facing and what they tried to accomplish by re-defining their

values. As part of your analysis you may also want to briefly assess JLP’s culture by drawing on the FOCUS model featured in the article by Hartog and

Verburg (from session 4) – around 1750 words.
Conclusion/recommendations
Summarise your conclusions (key points from your analysis in relation to both tasks) and outline some recommendations to the case organisation. The

recommendations need to flow from the points you raised previously in your analysis – around 500 words or so.

Case study
The business and the partnership
The John Lewis Partnership is a visionary and successful way of doing business, boldly
putting the happiness of partners at the centre of everything it does. It’s the embodiment of
an idea, the outcome of nearly a century of endeavour to create a different sort of company,
owned by partners dedicated to serving customers with flair and fairness. All 84,700 or so
permanent staff are partners who own the 39 John Lewis shops (30 stores and 9 John Lewis
at home), 290 Waitrose supermarkets, an online and catalogue business, a production unit
and a farm with a combined annual gross sales of over £9.5 billion. Partners share in the
benefits and the profits (www.johnlewispartnership.co.uk/about.html) of a business that puts
them first.

As a business JLP operates in a variety of highly competitive business environments;
the UK food retail business has traditionally been dominated by Tesco, Sainsbury’s and
Walmart (Asda) and John Lewis compete not only with other department stores but also with
specialist high street retailers of clothing, electrical goods, furniture and furnishings.
Success in these markets requires very high standards of efficiency and effectiveness
and it is interesting to consider the extent to which the JLP’s distinctive organisation
and culture explain its success.

 

How successful is it and how is it successful?
John Spedan Lewis has been quoted as saying the supreme purpose of the John Lewis
Partnership is simply the happiness of its members, an unusual objective for a business
organisation. While many commercial organisations consider the happiness of the workforce
as one of several key aims, few hold it to be an overriding one. JLP‟s structure is an
example of representative democracy; all partners elect representatives to the governing
Partnership Council; elected representatives account for 80% of Council Members, with the
remaining 20% appointed by the Chairman. The Chairman and Senior Directors are required
to give an annual account of their stewardship at a full Council meeting and report back to
the Council a number of times throughout the year. Further means of communication and
decision making include branch forums and divisional councils which reflect the varying
operating units including warehouses and factories as well as shops. Partners can therefore
influence decisions and affect the company’s activities and there is a direct pay-off in the
shape of an annual bonuses based on the company’s profits. The Chairman and other
directors must ensure the continuing solvency of the business as well as keeping funds
available for growth, but beyond this, the annual profits are redistributed to members.
“…the structure of the JLP as an employee-owned partnership is a concept at odds
with all other ownership structures from tightly controlled family firms to private-equity
backed businesses and stock market listed companies. Instead of profits flowing to the
shareholders, at John Lewis, they flow to the staff, in the form of annual bonuses.”
(The Guardian 2010)

Keeping the customer satisfied
JLP’s unique ownership structure means that staff are highly motivated and experienced
partners are determined to serve customers well, drive sales growth and rebuild profitability
for the long term. This provides confidence that the partnership will remain resilient through
the recession and emerge stronger as markets improve. In January 2008 Waitrose and
John Lewis came first and second in a survey of customer satisfaction with retail stores. The
John Lewis Partnership won ‘Retailer of the Year’ at the Oracle Retail Week Awards 2011.
The judges highlighted initiatives including John Lewis’s multi-channel operation and its ‘at
home’ format, as well as Waitrose’s convenience shops and new partnerships with retailers
such as Boots. It is also piling the pressure on its arch rival Marks and Spencer by using the
power of the Waitrose brand to sell kitchen and home ware products through the Waitrose
on-line shopping service as well as in some of the larger stores. Like most retail businesses
the JLP experienced falling sales during the economic downturn of 2008-9 although
Waitrose remained robust and reported double digit sales growth in the 3 months to August
2009. The introduction of its “essential‟ range may well have helped stem the tide of
customers heading for cheaper rivals as recession hit. Part of its strength has been the
company‟s focus on quality and value for money. John Spedan Lewis introduced the “never
knowingly undersold‟ principle in 1925 that remains popular today.

Taking Waitrose as the main example this means a defining principle of “quality food,
honestly priced‟. The effect can be seen in a number of ways including a relatively early
decision to integrate local products into its range thus anticipating a growing interest in
localism and the environmental problems associated with long distance haulage. In 2001 its
television advertising campaign announced that it was selling only free range eggs and it has
gone on to establish links with farmers whose meat and poultry are produced according to
high standards of animal welfare. This fitted well with a trend towards concern among UK
consumers about the ethical production of food and questions about food safety and
traceability. In 2005, the year of Live8, the partnership launched the Waitrose Foundation,
which runs parallel to its commitment to fair trade.

The JLP initiatives have been supported by superior advertising since 1997 and the award
winning television campaigns since 2001 gave a distinctive edge to its marketing which has
been copied by rivals including Marks and Spencer. The advertisements generally focus on
the provenance of the products and the lives and work of individual producers and suppliers.
Indeed the company name appears only at the end of the advertisements in a way which
emphasises the relationship between producer and consumer and positions the company as
a discreet intermediary between the two rather than a dominant brand.

And so?
Any company can start spending money on corporate social responsibility ventures; all the
main supermarkets do and many publicly announce a specific percentage of profits for the
purpose. What appears to make Waitrose different is the coherence and integration of a
number of features including:

• Structure, systems and culture (partnership and councils)
• Segmentation and positioning (middle class educated professional in metropolitan and
suburban areas)
• Produce strategy and upstream relationships (high quality, locally sourced, fair-trade)
• Customer service (universally appreciated in surveys)
• Specific CSR initiatives
• Marketing communications (innovative, engaging, perfectly targeted, understated)

Traditionally Waitrose was admirable but not very exciting. Today the Waitrose brand is cool
with a seemingly effortless stylishness that makes some of the others look flatfooted, loud
and desperate. It has formed a strong bond with a very profitable niche market of customers
who love being treated that way. And it only works because the offering as a whole fits
together and is utterly credible.

The egalitarian and democratic principles and practices are still upheld. The Partnership’s
board delegates responsibility for the running of the JLP to the chairman and then monitors
him against the company principles and the viability of the business. The Chairman, in turn,
delegates to the organisation’s managers and holds them to account. Additionally, the
company-level Partnership Council, its working groups and store-level equivalents all hold
management accountable and serve as the internal sounding board for commercial and
operating decisions. In the words of Jane Burgess, a senior manager working with the
Partners Council and responsible for the efficacy of the co-ownership relationship, the
Councils have a

“holding up a mirror role … it is for management to decide what to do; the Council’s role is not
to input into decisions but to reflect partner opinion back, to seek explanations for decisions …
We say „this is what [a given decision] feels like to partners‟ … [The Councils] ensure that
partners‟ opinion has influence on what they experience in the organisation”.

“Managers here have to be prepared to be open to challenges [to their decisions] and to be
articulate enough to explain their decisions in a way that [The Council] representatives can
repeat back to partners …[Managers must think] „I may be asked in an open forum why I‟m
doing this‟” (interview, Kim Lowe, General Manager, John Lewis Aberdeen)

Its commercial success, as we have noted, depends on performance in some very tough
markets. How has JLP maintained and grown its business?

HRM in the John Lewis Partnership (Dietz and Nwanze 2012)
For successive HR teams, the challenge has been to reconcile the business context (growth
and profit) with the partnership context (governance) and the employment context (a “happy‟
place to work). The essential logic of the Partnership’s HR strategy is to design work and
the employment experience in such a way that transfers responsibility for the success of the
business to the partners and to look after them and equip them with the knowledge, skills
and attitudes to develop the exceptional customer service for which the Partnership is justly
famous. This is depicted in the figure below:

Remuneration and benefits
Partners are paid no more than retail staff at rival chains but the bonus is a significant top-up.
On the other hand its directors are paid substantially less than their boardroom
counterparts in businesses like Tesco, Marks and Spencer, and Sainsbury’s (The Guardian
2010). In addition there are opportunities for individual performance related increments, for
example, through skills acquisition and/or exceptional contribution, as assessed in the
annual performance appraisal process.

All partners receive bonuses which are calculated as a percentage of their base pay. It has
been suggested that the egalitarianism is a refreshing change at a time when “bonus‟ has
almost become a dirty word, conjuring up images of overpaid corporate executives and
obscenely rewarded bankers for whom a £1m handout is small change (The Guardian
2010). Managers earn considerably less than they might otherwise get in comparable firms
but this is off-set by the profit-related annual bonus. Everyone, from the Chairman to
weekend shelf-stackers receives the same percentage bonus, typically 10-20% of salary.
“There was clapping and cheering and whoops of delight in John Lewis department
stores and Waitrose supermarkets the length of the country this morning. Middle
England‟s favourite retailer was unveiling its annual profits and said it had made
enough money in the teeth of the worst recession since the second world war to pay
an annual bonus equal to 15% of salary to its 70,000 staff. They will all get the same
percentage – from chairman Charlie Mayfield down to sixth formers who spend a few
hours each weekend stacking shelves in Waitrose” (The Guardian 2010).

A further aspect of the objective of “partner happiness” is the extensive range of benefits and
services which the JLP provides to its workforce. There is a non-contributory final-salary
pension scheme and many direct forms of assistance including a loans scheme. While other
companies, Barclays for instance, have been closing their defined benefits schemes, yet
maintaining bumper payouts for investment bankers, the JLP reduced the period staff have
to wait to sign up for the scheme from 5 to 3 years (The Guardian 2010). Holiday entitlements are generous
as are discounts on purchases and the partnership owns social
and sporting amenities as well as several holiday centres which provide leisure activities and
accommodation for partners and their families.

 

Training and career progression
The Partnership aims to offer every customer the best possible experience, so all partners
are supported to gain the skills and knowledge they need to perform to the best of their
ability. This starts with a comprehensive induction programme, and continues during
Partners careers through a range of vocational training opportunities, appraisals and access
to a variety of learning resources. Customer service skills are the first priority because only
through delivering excellent service can the position as a leading retailer be maintained.
Partners receive regular feedback on performance, and are appraised formally each year
against a framework of behaviours.

As more and more customers opt to shop online, a company’s delivery drivers are
increasingly the human face of the organization – the only direct point of contact that
shoppers have with a member of the company’s team. Training for these drivers must reflect
this new reality. They must have the skills, knowledge and confidence to provide great
customer service. In 2009, John Lewis approached Cognisco to develop a single, tailored
training and development program for drivers across the company (HRM International Digest
2011, 19 (6)).

The Partnership wants to provide long-term satisfying careers for Partners who are
encouraged to fulfil their potential by taking on new challenges or developing a career in
management. To achieve this the JLP:

• promotes suitably qualified Partners into vacancies rather than recruiting newcomers
• encourages changes of responsibility on a trial basis if necessary
• helps Partners to learn as much as they can about the Partnership and its activities
• provides knowledge and training to help Partners carry out their responsibilities better
• encourages Partners general education and interests in fields not directly related to their
work.

Across the Partnership, high-calibre managers are crucial to maintaining the position as one
of the UK’s leading retailers. Managers come from a wide variety of backgrounds – school
and college leavers, graduates, experienced retailers, career switchers and those returning
to work after a break. The JLP aims to have a training scheme that will suit everyone. In
September 2011 the Partnership was placed number 11 in the Times Top 100 Graduate
Employers rankings and were also voted the best graduate employer for opportunities within
sales and retailing.

Diversity and equal opportunities
Part of being an employer of distinction is to create and nurture a culture that values the
differences of those who are engaged in the Partnership, whether as Partners, customers,
suppliers or as part of the wider community. Embracing diversity helps the JLP to attract,
retain and develop Partners while developing a creative and innovative culture and
appealing to a wide range of customers. Diversity in the Partnership is based on three
values:

• Partners are treated as individuals and with respect, honesty and fairness
• Employment policies are fair and provide equal opportunities for all, regardless of age,
gender, ethnicity, social background, religion, disability or sexuality
• The Partnership respects and reflects the communities within which it trades.

This direct form of “industrial democracy‟ and high level of worker participation means that
trade union membership is very low. Little wonder that partners stay with the business twice
as long, on average, as other high street retail staff. The consequence of this is reflected in
increased levels of knowledge and customer service (The Guardian 2010). While this
sounds like worker heaven those made redundant will disagree. Regardless of expanding
numbers of stores which have recruited new staff, others in warehouses and backroom jobs
have necessarily been let go, partly as a result of automation.

The appeals of the JLP model in the current economic climate are manifold: a sense of
purpose, clarity in objectives, a stake in the success, a common experience shared by
managers and subordinates alike and avoiding the impersonal and indifferent requirements
of outside investors. In March 2010 a national newspaper asked “Is the JLP the best
company to work for”? (Henley 2010). Yet in the past couple of years the Partnership’s
“employer brand”has come under careful re-examination.
The Challenge: A ‘New’ Employer Brand
The overall revision of the business strategy in 2007, of course, had implications for the HR
strategy. The rapid expansion and growth of the business meant that staff numbers had
doubled in less than 10 years, presenting the challenge of inducting around 9000 new
entrants each year. In addition, a network of smaller shops meant that staff in these
locations could not enjoy the same facilities as those in the larger department stores. The
changing nature of the workforce in terms of ethnicity and age (traditionally white, female,
40-45) some new recruits – notably younger entrants – viewed aspects of the Partnership’s
HR as overly paternalistic.

Undoubtedly, the language of the founders had become extremely outdated. This presented
challenges in respect of change management to the HR team who needed to find
imaginative and appealing ways to articulate more explicitly the terms of the Partnership
“deal” with its staff. It appears that the balance had been lost between the rights and
responsibilities, as partners understood their entitlements but had lost an understanding of
the responsibilities that went with it (psychological contract) such that “some partners are
really only partners on bonus day”. While the majority of staff were aware of the “happiness
of employees” they tended to overlook the need for a successful business for this to be
possible. Something had been lost in translation!

Revisiting the founding principles the HR team found plenty of misunderstandings. In
keeping with the company’s principles the team undertook extensive workforce consultation
through focus groups, leading to the identification of several themes supportive of the
„powered by our principles” values introduced in 2005-6:

 

• Show enterprise
• Achieve more
• Be honest
• Give respect
• Work together
• Recognise others

Arising out of this research came several themes supportive of the “powered by our
Principles” values and extending to other critical themes:

• Leadership (line managers) most important to “happiness”
• Need to recruit on compatible values as much as technical ability and experience
• Fairness: balance between discretion and consultation
• Flexibility, work-life balance, transfers, working hours
• Well being and health
• Development opportunities

Eventually three commitments were decided as appropriate to all partners:

1. Take responsibility for business success: to “deliver the right experience for customers‟
and “generating profits for us all to share”
2. Build relationships powered by our principles: honesty, respect and encouragement
3. Create real influence over working lives: opportunities to develop oneself at work, to
balance work and life priorities and to support one another with a pronounced emphasis
on how to reconnect work with the rest of the partners’ lives outside the JLP.
The HR team has followed up by reappraising “the partner experience‟ from recruitment,
through deployment and development to exit to test whether current HR practices are
compatible with the three commitments. “HR touchpoints‟ have been created to reinforce the
messages behind the three commitments. For example:

• The recruitment touchpoint has seen the web site redesigned to give greater
prominence to the Partnership‟s values and its “difference‟ as an employer.
• The HR team is working with a consultant in psychometric testing to produce a scale
that taps the extent of candidates’ affective support for the three commitments.
• On the touchpoint of reward the bonus remains unchanged but the Partnership is
considering a “cafeteria‟ style range of benefits, reflecting that different things matter
to partners at different stages of their lives and the benefits offerings should
accommodate that diversity of needs.
• Finally the staff attitude survey has been redesigned into sections themed by each of
the commitments.

 

 

 


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