Corporate Strategy and Strategic Issues

Researchers describe that today; many successful organizations are increasingly tying Human Resource Management closely to the business practices. Hollinshead and Leat (1995) also describe there should be a link between HR policy, strategy and practice and overall corporate strategy in its competitive environment. Coopers and Lybrand ( 1992 ) also express that corporate strategy sets the agenda for HR strategy and HR strategy exists to support the achievement of the corporate strategy. Therefore, integration between corporate and HR strategy is necessary so that the latter supports the accomplishment of the former.

In this report, we will discuss about the link between Marks and Spencer's Corporate Strategy and HR strategy. Firstly we will start discussing about strategic issues and corporate strategy of Marks and Spencer by using SWOT analysis and culture web. Secondly we will discuss about best practice and fit ( Contingency ) theory. Thirdly HR strategy and activities of M&S will be explored. Fourthly we will critically analyse the findings of M&S 's HR against best practice and fit models. Finally, conclusions and recommendations will be followed.

The reason why M&S is chosen is because of its reputation among competitors such as Tesco, Sainsbury and ASDA. Strategic HRM Armstrong ( 2001 ) describes that " strategic HRM is making decisions on the plans of the organization concerning the employment relationship and its HR policy ". It is an essential component of the organisation's corporate strategy. It aim is to generate strategic capability by having skilled, committed and well-motivated employees within the organization to achieve sustained competitive advantage.

Later we will discuss whether M&S's HR activities follow this principle. Marks and Spencer M&S, formed in 1894, is one of the world's leading retailing groups, over 300 stores in the UK and more than 500 outlets around the world ( See Appendix 1 ). It is one of the UK's leading retailers of clothing, foods, home ware and financial services, and serving 10 million customers a week in over 300 UK stores. It employs over 62,000 staff in the UK ( See Appendix 2 ). Because of sales declines and losses, M&S changed its Chairman position from Peter Salisbury to Luc Vandevelde in 1999.

M&S suffered losses until 2002 ( See Appendix 3 ). Because of losses, M&S announced Recovery Strategy to deliver faster recovery in March 2001. It includes ( i ) total focus on UK retail, to restore the trust and confidence of core customers, ( ii ) value realisation and closure of loss-making business around the world and ( iii ) improve capital structure and return i?? 2 billion of cash to shareholders. Chairman ( Luc Vandevelde ) also says that recovery strategy is to regain leadership and build on unique customer relationships with new products and services.

After setting effective strategy, M&S gets the profit in 2003 ( See Appendix 3 ). Corporate Strategy and Strategic Issues of M&S " Corporate strategy is concerned with an organisation's basic direction for the future: its purpose, ambitions, resources and how to interacts with the world in which it operates. It is the identification of the purpose of the organisation and the plans and actions to achieve that purpose " ( Lynch, 2003 ). To achieve purpose effectively, M&S sets vision, mission and value ( See Appendix 4 ).

To understand corporate strategy, firms need to realise firstly its strategic issues. To understand it, firms need to use strategic issues tools that is SWOT analysis and culture web. SWOT analysis SWOT analysis is identifying strengths and weaknesses which exist within the firm and examining opportunities and threats in the firm's environment. " It aims is to identify the current strengths and weaknesses are relevant to and capable of, dealing with the threats and opportunities in the business environment " ( Johnson and Scholes, 2002 ). SWOT analysis of M&S is in Appendix 5.

Culture Web "Organisational culture is beliefs, attitudes and values that exist in an organisation". "The cultural web is a representation of the paradigm of an organisation and the physical manifestation of organisational culture" ( Johnson and Scholes, 2002 ). The cultural web of M&S is in Appendix 6. Let us discuss about M&S's HR strategy and activities. Before we will discuss it, we will discuss firstly about Best Practice and Best Fit ( Contingency ) HRM thinking. Later on, the comparison will be made between those concepts against the outcomes of M&S's HR activities.

Best Practice J and J ( 2003 ) describe " best practice is the idea that a particular bundle of HR practices has the potential to contribute to improved attitudes and behaviours, lower level of absenteeism and labour turnover, and higher levels of productivity, quality and customer service, ultimately generating higher organisational performance and profitability ". Boxall and Purcell ( 2003 ) agrees that all firms will see organisation's performance improvements if only they identify and implement best practice .

It includes emphasising on ( i ) enhancing employee abilities and skills through good recruitment and strong training, ( ii ) motivating through strong incentives, ( iii ) opening up opportunities to contribute employees ideas through work redesign and employee participation. Pilbeam and Corbridge ( 2002 ) describe best practice model assumes that HR policies and practices accomplish to achieve high organisational performance by increasing productivity, quality and reducing absent rates and wastages.

Best practice's HR policies include flexibility of organisational structure, employees' commitments to organisation, flexible employees' performances to achieve high quality, integrating HRM into strategic planning and employees' working life quality. J and J ( 2003 ) describe best practice consists of ( i ) employment security and internal promotion, ( ii ) selective hiring and firing, ( iii ) extensive training, learning and development, ( iv )employee involvement and voice, ( v ) self/managed teams and team working, ( vi ) high compensation on organisational performance, ( vii ) reduction of status differentials and ( viii ) harmonisation.

Best Practice model ( Appendix 7 ) consists of making fundamental choices based on external stakeholders ( i. e. shareholders, government, unions ) and situational factors ( i. e. the state of market ). Hollinshead and Leat ( 1995 ) also agree that stakeholder interests and situational factors influence HR policy choices. Best Fit / Contingency Best fit model describes that HR strategy will be more effective when it is integrated with its specific organisational and environmental context ( Boxall and Purcell, 2003 ).

Armstrong ( 2001 ) describes that there are two types of fit, that is external and internal fit. External fit means that "HR strategies are congruent with business strategies, match the firm' stage of development, take account of organisational dynamics and are in line with the characteristics of the organisation. It can be classified as contingency model". Internal fit means ensuring HR policies are designed to fit with and support each other and it can be achieved by using shared process such as competence analysis, performance management, employee development and reward.

Pilbeam and Corbridge (2002) describe that best fit models focus to align HR policies and practices with the business strategy and assume that different HR strategies are suited to different business strategies. However Boxall and Purcell ( 2003 ) express that fit is defined by the firm's competitive strategy than its stage of development. It is innovation ( i. e. selecting and developing people with required skills and assessing performance ), quality-enhancement ( i. e. rewarding people according to their performances and giving training for achieving quality targets ) and cost leadership ( i.e. reducing the cost through productivity planning and finding and developing skilled people ) ( Armstrong 1999 ).

J and J (2003) also describe that in matching HR strategy with overall business strategy; organisation can gain competitive advantage from innovation, quality and cost reduction. However Resource-Based view of HR describes that sustained competitive advantage cannot be achieved by just aligning HR to corporate strategy. To achieve those, organisations need to develop human capital resources ( Pilbeam and Corbridge 2002 ).

Pfeffer (2003) also describes that there are 16 practices for achieving competitive advantage through people. (Appendix 8). Let us discuss HR activities of M&S. HR strategy of M&S M&S's HR strategies are to recruitment effective people and to train those people by motivating (rewarding) in order to achieve the best organisational performances. HR activities of M&S Recruitment and Selection "Recruitment and selection is a matching activity between applicant and job and it is important to the function of an organisation.

Inappropriate selection decisions reduce organisational effectiveness" ( Pilbeam and Corbridge, 2002 ). To recruit effective people and improve recruitment methods, M&S used GASS (Graduate Application Screening System) since 1988. Its aim is to reduce interviewing time load on management staff. M&S recruitments about 230 graduates from many universities and polytechnics for management careers. M&S offers placement programs for those students to achieve effective people. M&S also use on line recruitment and selection method.

Training and Development " Training is a means of making better use of human resources in the organisation by developing people to meet the requirements of the job to be done " ( Reid and Barrington, 2001 ). M&S provide employees with all the structured formal training and practical on-the-job experience to develop into motivated, skilled and customer-focused employees. M&S also offer manual handling and equipment training since 60% of workplace illness is related to muscular stresses and strains.

M&S's philosophy is 'To provide regular, focussed and engaging training interventions, which develop the talents and capabilities of 60,000 unique individuals '. Performance Management Researchers describe that to achieve sustained success for organisation, managing employees performance effectively is important. M&S reconginses everyone needs a flexible and diverse range of skills to perform effectively. For this M&S makes teams. Specialists across the company help team leaders to develop career plans of all employees. All employees can review their performance progress with their line manager, using agreed objectives.