Enhancing Sales and Profitability through Strategic HR Practices

The assignment content discusses various strategies for increasing sales and profitability, and achieving desired goals. It highlights the importance of human resource practices in achieving a competitive advantage. The references provided include academic journals and books that discuss topics such as strategic human resource management, knowledge management capacity, organizational learning, and value creation. The summary does not include specific information about how to apply these strategies, but rather provides an overview of the content.

Human Resource
Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Assessing the role and priorities of the HR function..............................................................1
Analyzing the different internal and external influences on HR functions............................3
The changes and its impact on the structure of HR function.................................................5
Recommendations..................................................................................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
Human resource management depicts the formal system that is developed for managing
people within the businesses. The major responsibilities of human resources managers is staffing,
employee compensation and designing work etc. Apart from this human resource department
have many other responsibilities of management to training and development of employees
(Kaplan and Norton, 2005). This report is based on a case scenario of IKEA the largest furniture
retail chain in Netherlands. This report will outline the challenges and issues that facing
management of people and work and the applications of strategic HRM models and their theories
and approaches. Moreover, this report will also cover impact of strategic approach to people in
organization. Strategic human resource is an approach to manage human resources which
supports long term business objectives and outcomes within a strategic framework. The
competitive strategies in IKEA is a method by which the firm can attain competitive advantage
in the retail market and HR strategies provide these competitive strategies a coordinated set of
actions which is integrated with organizational culture and systems that supports these
competitive strategies for achieving the goals and objectives. Furthermore, the cost reduction is
the procedure utilized by the firms to reduce costs and increase the profits. As per the company
services and products, these strategies can be different. Fixed job description is a management
tool which clarifies the work functions and reporting relationships in the organization. However,
the narrow job description provides constrictive information about the job in the organization.
Assessing the role and priorities of the HR function
The changing nature of work have changed the roles and priorities of the HR functions.
The priorities of HR function in IKEA are as follows, Talent management: Human resource management is wide area that showcases the
specific strengths in critical issues like talent management and talent recruitment.
Nevertheless, There is still more opportunities for improvement in workforce of IKEA.
The improvement in employees performance hits the revenue and profitability of the
firms (Sirmon, Hitt and Ireland, 2007). Through talent management the HR department
of IKEA can encourage and retain employees who are individually performing well in the
organization and completing the tasks by working efficiently in their respective area of
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work. Apart from this retaining the talented employees in the organization is also a major
priority of the HR functions. Learning and development: Further, The another major priority of HR function in IKEA
is focusing on effective learning and development of the workforce. IKEA keep
improving their employees learning and development activities. The HR department of
IKEA not just provide training to their employees but also enables them for effective
learning (Subramaniam and Youndt, 2005). Most of the people are well aware that
regular development of skills and knowledge is essential for improvement in capabilities.
Thus, the HR professionals in cited firm focus on individual employee's learning and
development. Moreover, development of global skills and competency is also a priority in
HR functions. Thereby, the firm designs' training and development in these aspects. Diversity and work life balance: Furthermore, diversity and work life balance is
necessity of HR functions. In order to achieve the progressively varied and sophisticated
requirements of the customers, IKEA provides a wide range of products with higher
value and innovation to their customers (Kaplan and Norton, 2005). These values and
innovations can only achieved through a changing work environment and different
perspectives and knowledge in work life. However, The HR functions of IKEA manage
these diversities in organization by flexibility, wellness and by making positive
environment at workplace. Succession planning: Succession planning is procedure of identifying and developing
the employees with the potential to achieve the short term and long term goals of the
organization. Succession planning helps the HR department of IKEA in increasing the
availability of experienced and capable workforce in business (Storey, 2007). Thus, the
succession planning is become one of the topmost priority of HR functions. The another
reason HR managers of IKEA follows the succession planning is the changing
environment of the businesses.
 Career development: Furthermore, Career development is a lifelong process of managing
learning, relaxation and transformation in order to move towards a personally discovered
and developing future of the individual employees. Through career development of
employees in the organization the HR department designs and implements the various
training and development programs. The career development of the employees will also
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help the organization in achieving its goals and objectives. However, Career development
of workforce is priority of the HR functions (Hooley, Greenley, Cadogan and Fahy,
2005).
However, in changing work environment the priorities of HR functions are changing. The
HR functions are focusing more on these priorities to compete with changing work environment.
Analyzing the different internal and external influences on HR functions
The factors which influences the HR functions are not static. To operate the
responsibilities and priorities of HR functions such as, talent management, career development,
succession planning, diversity of work life balance and learning and development of the
employees the HR managers of IKEA have analyzed various internal and external factors that
affects the HR functions (Hatch and Dyer, 2004). These Internal and external factors are as
follows,
Internal factors: Lack of motivation: The most common cause that influences the succession planning and
career development of the employee is lack of motivation at workplace. Motivation and
enthusiasm of the employee apparently affects the desires and interest. The motivation of
the employee is very important in order to achieve the goals and objectives of the firm.
Lack of motivation is main reason for failure in career development and succession
planning (Chen and Huang, 2009). The reason for lack of motivation at IKEA can be lack
of faith in employee's ability, work pressure and not recognizing individual’s
performance. However, it is very important to motivate employees for their efficient
performance. The HR managers can motivate employees by many techniques like,
recognizing individual employee's performance by giving them employee of the month
awards. Further by providing them financial and non financial incentives will also help in
motivating their performance. The lack of motivation in employees affects the succession
planning and career development very much because of demotivation employee do not
participate effectively in any development and growth plan of the organization (Pynes,
2008). Retaining talent at appropriate positions: One more important factor that affects the
diversity and work life balance is retaining the talented employee at appropriate positions
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of the organization. The internal policies and practices make impact on HR functions. For
instance, IKEA is committed to promoting within the organization, Thus, the HR
manager ensures that employees are receiving the appropriate training and development
for promotion (Sirmon, Hitt and Ireland, 2007). Moreover, the firm provides them
training for retaining the talented employees on top positions so that employees will be
motivated and improve their performances. However, the HR department can provide
several other benefits to retain talented employees in the organization. Retaining the
talented employees in organization is very important in order to manage diversity and
work life balance.
External factors: Competition: The most important external factor that affects the succession planning and
talent management is competitors of business (Ulrich, 2013). The employees of the
organization cause the amount of compensation that a firm is providing to retain talented
employees in the organization and attract more employees in the organization. For
instance, in current market environment when businesses are competing with each other.
Managing right talent in the IKEA is becoming a difficult task for HR managers. The
firms use various strategies to attract talented people in their organization. Sometimes the
competitors of business also try to recruit employees from their competitor firms by
offering them attractive salaries and promotions. In these situations it is very difficult for
HR managers to manage talent in organization. However, The HR department should
evaluate the compensation structure regularly and should provide workforce effective
training and development for managing talented people in organization (Youndt and
Snell, 2004). The level of competition in businesses affects firm's ability of talent
management very much.
 Changes in business environment: Further, Changed business environment plays crucial
role in learning and development of employees. The business environment is consisted of
all social, political, economical, legal, technological changes, customs and practices of
businesses. It is very important for the firm to have the workforce who can adopt all these
development factors effectively. With changing technologies and economic conditions it
is essential for firms to provide essential training and development to their employees
(Zhu, Collins, Webber and Benson, 2008). Training and development programs in
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organization will help in developing the skills and knowledge of the employees.
Moreover, learning and development programs for IKEA's employee will enable the firm
to survive in current business environment. However, changed in business in
environment highly influence the HR functions.
The changes and its impact on the structure of HR function
The Netherlands furniture retail market is changing very fast. Over the next three years
Netherlands furniture retail market is expected to grow by 16%. This growth rate will come with
many technological and environmental changes that will make impact on IKEA's structure of the
HR functions. In current market scenario online shopping is increasing. However, the online
channel will be the fastest growth opportunity in next three years. As per technological changes
IKEA has also enabled its online shopping portal. That brings many development opportunity in
retail business of IKEA. These developments are,
 Increased sales and profitability of the firm.
 Strong competition to other brands.
 More efficient workforce.
In next three years time IKEA's furniture retail business can also have growth opportunity
in development of mobile apps for online shopping. These all development factors will impact
the HR functions of IKEA as the HR department of IKEA will have to recruit more talented
workforce who has efficient knowledge of current business needs and technological development
(Kang, Morris and Snell, 2007). The technological growth in retail industry will affect the
recruitment process of IKEA. However, the HR department will have to change their selection
criteria and employee screening method. The HR managers will have to judge candidates on
their global knowledge and technical skills. If candidate have all these potential to work in
current market environment than the firm can hire those employees. However, The HR managers
will also have to design some training and development programs for their employees to increase
their knowledge, skills and capabilities to perform better in current market environment.
Furthermore, in next three years discount will be also the fastest growing channel in
IKEA's business (Greenberg and Colquitt, 2013). In competitive Edge, the retail firms are
providing more discount on the products to attract more number of consumers. These discount
depends on the demand and supply of the products. However, these discounts can hamper the
business practices and make impact on HR functions as well. Thus, the HR department of IKEA
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will have to recruit efficient marketing and sales team which can make effective marketing
strategies for discounts and other promotional activities. The HR department will have to arrange
training and development programs for their workforce. Moreover, the firm can also motivate
employee's for their performance and work (Richards, 2015). Motivation is essential for
workforce in improving employees performance and encouraging them to improve more in for
future growth.
Moreover, in next three years retail industry will increase the use of product navigation
technology which will help the IKEA to complete the multi transmission shopping experience
for consumers by digitalise physical retail store assets. In-store navigation technology will help
customers to easily find the products they came to purchase without much searching efforts in
store. This technology will also increase the customer loyalty and sales by presenting relevant
products in customers in-store search of product location (Hatch and Dyer, 2004). However, The
Technological growth in all aspects of retail industry will help the firm to increase the
profitability and productivity which will affect the HR functions of IKEA as well. The HR
department will be responsible to recruit the talented people in organization who have the
knowledge of these technologies. Furthermore, The HR managers will have to provide training
to existing workforce to develop their technical knowledge and skills for providing effective
services to customers (Colbert, 2004). Thereby, several developments and growth opportunities
in retail business will affect the HR functions as well. The HR department will have to develop
according to current business environment.
Recommendations
With regards to strategic HR planning it is recommended for the IKEA to provide
training and development to its employees and increase their knowledge and capabilities. These
trainings and development programs in organization will not only help in gaining a skilled
workforce but also help in achieving short term and long term objective of the firm.
CONCLUSION
Hence, it has been concluded in this report that changing business environment have
changed the priorities of HR functions as well. Today's workforce is more informed than before.
The thought of presenting a developing and consistent organizations to employees is giving them
opportunity to grow in various fields of business environment. The HR functions play vital role
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in organization that helps organization in assessing the workforce according to current market
needs. However, the HR managers are responsible for providing training and development to
their staff which can develop their skills, knowledge and capabilities to perform a job effectively
and efficiently. Furthermore, the managers can also monitor employees performance. By
applying these strategies the organization can increase the sales and profitability easily and
achieve the goals and objectives as desired.
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REFERENCES
Books and Journals
Chen, C. J. and Huang, J. W., 2009. Strategic human resource practices and innovation
performance—The mediating role of knowledge management capacity. Journal of
Business Research. 62(1). pp. 104-114.
Colbert, B. A., 2004. The complex resource-based view: Implications for theory and practice in
strategic human resource management. Academy of Management Review. 29(3). pp. 341-
358.
Greenberg, J. and Colquitt, J. A., 2013. Handbook of organizational justice. Psychology Press.
Hatch, N. W. and Dyer, J. H., 2004. Human capital and learning as a source of sustainable
competitive advantage. Strategic management journal. 25(12). pp. 1155-1178.
Hooley, G. J., Greenley, G. E., Cadogan, J. W. and Fahy, J., 2005. The performance impact of
marketing resources. Journal of Business Research. 58(1). pp. 18-27.
Johnson, C. J., Nielsen, S. E., Merrill, E. H. and et.al. 2006. Resource selection functions based
on use-availability data: theoretical motivation and evaluation methods. Journal of
wildlife Management. 70(2). pp. 347-357.
Kang, S. C., Morris, S. S. and Snell, S. A., 2007. Relational archetypes, organizational learning,
and value creation: Extending the human resource architecture. Academy of Management
Review. 32(1). pp. 236-256.
Kaplan, R. S. and Norton, D. P., 2005. Creating the office of strategy management. Division of
Research, Harvard Business School.
Pucik, V., 2009. Competitive Advantage: The HRM Agenda. Knowledge Management and
Organisational Design. pp. 151.
Pynes, J. E., 2008. Human resources management for public and nonprofit organizations: A
strategic approach (Vol. 30). John Wiley & Sons.
Sirmon, D. G., Hitt, M. A. and Ireland, R. D., 2007. Managing firm resources in dynamic
environments to create value: Looking inside the black box. Academy of management
review. 32(1). pp. 273-292.
Storey, J., 2007. Human resource management: A critical text. Cengage Learning EMEA.
Subramaniam, M. and Youndt, M. A., 2005. The influence of intellectual capital on the types of
innovative capabilities. Academy of Management Journal. 48(3). pp. 450-463.
Ulrich, D., 2013. Human resource champions: The next agenda for adding value and delivering
results. Harvard Business Press.
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Youndt, M. A. and Snell, S. A., 2004. Human resource configurations, intellectual capital, and
organizational performance. Journal of Managerial Issues. pp. 337-360.
Zhu, Y., Collins, N., Webber, M. and Benson, J., 2008. New forms of ownership and human
resource practices in Vietnam. Human Resource Management. 47(1). pp. 157-175.
Online
Richards, L., 2015. The Effects of a Change in Business Environment on Strategic Planning.
[Online]. Available through: <http://smallbusiness.chron.com/effects-change-business-
environment-strategic-planning-4708.html./>. [Accessed on: 5th December 2015].
5 Priorities HR Can't Ignore in 2015. 2014. [Online]. Available through:
<https://www.cebglobal.com/blogs/5-priorities-hr-cant-ignore-in-2015/./>. [Accessed on:
5th December 2015].
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