Human Resource Management Report: Aldi's Competitive Advantage

This report provides a comprehensive analysis of Human Resource Management (HRM) practices within Aldi Company, with a specific focus on Aldi's operations in Australia. The report begins with an introduction to HRM, defining its core functions and objectives, and then delves into Aldi's workforce planning strategies, highlighting the distinction between strategic and operational planning. It then provides an overview of Aldi's background, emphasizing its global presence and business model as a value-for-money retailer. The report analyzes Aldi's HRM strategies, including recruitment, employee motivation, and career progression, emphasizing the company's focus on creating a positive work environment. The report then explores the application of the Resource-Based Theory at Aldi, demonstrating how the company leverages its human resources to achieve a sustainable competitive advantage. The report also examines the strengths and weaknesses of Aldi's recruitment and selection approaches, including its methods for identifying and attracting talented individuals. The report concludes by summarizing the key findings and implications of Aldi's HRM practices, showcasing how the company's people-centric approach contributes to its overall success in the competitive retail market.

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Human Resource Management
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Introduction
Human Resource Management (HRM) refers to a term which is used in the description of
formal systems that are developed for the management of individuals in any given organization.
Human Resource Management involves human resource managers whose responsibilities
include among others employee compensation, designing/defining work, and staffing. HRM can
also be defined as process that involves the hiring as well as the development of employees so as
to make them become valuable to their respective organizations (Armstrong et al, 2015). In
essence, HRM also includes carrying out analysis, panning for the needs of personnel, provision
of the required incentives and benefits, management of salaries and wages, resolving of disputes
or conflicts, and ensuring that there is effective communication in all the organizational levels.
The major purpose of Human Resource Management is to ensure that there is
maximization of organizational productivity through optimization of employee effectiveness.
The major mission of HRM is to ensure that there is acquisition, development, and retention of
talent and ensuring that the workforce is effectively aligned with the organization. From the
recent past, there has been a significant recognition regarding the importance of human resources
to the general health of an organization.
The major aim of this research is to explore the functions associated with Human
Resource Management in reference to Aldi Company. This report will present an overview
regarding human resource management including its roles and strategies. It will present an
analysis of the company’s strategy towards performance in order to survive in a market which is
highly competitive.

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P1 Workforce Planning
Workforce planning refers to a set of procedures that are used by an organization in order
to maintain and retain the most efficient management and employee team possible while
ensuring that it maximizes its profits and attains long-term success. It is important to note that
workforce planning is mainly divided into two categories namely strategic and operational
workforce planning. Operational workforce planning is known to function on a “person-to-
person” level and ensures that any employee related operations are streamlined. This can be done
through optimization of the work schedules as well as employee hours and also through
optimization of talent distribution among departments and divisions.
On the other hand, strategic workforce planning involves broad-based issues which
evolve over a long period of time and can indeed comprise of all the major aspects of a business
entity. Examples include determination and evaluation of potential sourcing options, forecasting
of the future talent needs for an organization, and the implementation of an “effective workforce
analytic strategy”.
Background Organization on Aldi Company
Aldi or ALDI is a renowned international “discount supermarket chain” that has over
10000 stores based in 18 nations (Neglia et al, 2016). The company is based in Germany and was
founded in 1946 by two brothers namely Theo and Karl Albrecht upon taking over their mother’s
business store that was based in Essen and which was not only in operation since the year 1913,
but was also known to be one of the largest companies that were privately owned in the world.
The name Aldi was introduced in 1962 by the two brothers and it was a syllabic abbreviation for
the terms “Albrecht Diskont. It is also prudent to note that the operations of Aldi Nord in
German is comprised of 35 “individual regional companies” that have about 2500 stores based in
Northern, Western , and Eastern German while the Aldi Sud has got 32 regional companies

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which have 1600 stores In Southern and Western Germany. It is important for all and sundry to
note that in Australia, ALDI company operates as “Aldi Sud” and thus not only is a “perfect
exemplification” of an effective “process based retailer”, but it also operates predominantly as
being a value for money retailer which focuses highly on the cost leadership.
Scope of this Report
Due to an increased competition in the Australian and international retail industries,
numerous stakeholders have to ensure that they account for efficient strategies which would lead
to higher competitiveness in their respective area of operation. It is prudent to note that even
though there are numerous resources within Aldi Company that can be used in order for it to
attain competitive advantage, it is important to note that one of the most important human
resources are the people or the employees (Gunnigle et al, 2015). This report will thus
specifically analyze various factors in the Human Resources Management with special reference
the ALDI’s arm in Australia which has made it possible for the company to attain a competitive
advantage. In essence, this report will also analyze the Human Resource strategy of Aldi whilst
ensuring that the role played by HR function in the company is effectively evinced. The report
will also illustrate the human resource planning, job design and analysis and various aspects that
are applied in the human resource management in the company.
M1 ALDI’s Human Resources
Aldi Company has realized that people are actually the key to its success and therefore it
has ensured that there is actually an efficient Human Resource system that highly focuses on the
delivery of an “industry leading training package”. In addition to that, the staff or employees at
Aldi are highly motivated while the process of recruitment at the company also accounts for the
selection and recruitment of energetic individuals who have the positive attitude of working. As

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regards to the issue of career progression, there is always an internal promotion mechanism at
Aldi which enhances motivation among the employees in the workplace. The company has
therefore ensured that each of the retail stores is considerably small and has a lower number of
employees so that communication is effectively fostered. This is an important human resource
strategy because it positively affects employees’ psyche in a manner that suggests that workers
should not just be considered as being a number.
Major Human Resources at ADI
As a Company, ALDI is keen on ensuring there is betterment of its employees’ welfare
and as a result, it has ensured that there is development and implementation of effective Human
Resource system in the organization. Among one of the renowned HR initiatives that were
embraced by Aldi is the fact that it was among one of the first retailers that provided its
employees or workers with “paid maternity leaves”. That apart, ALDI also has higher salary
scales especially when it is compared to other retailing companies dealing in the same products
and services (Parker et al, 2015). The working conditions at ALDI Company are not only
exemplary, but they are also rated among the best in the competition.
As an organization, ALDI has embraced operational efficiency as its core strategy and
thus it accounts for the use of effective human strategies which allows it to operate in an efficient
manner. Human resources at Aldi are indeed a source of competitive advantage for the company
because they have helped it to exploit the potential for the synergies and also in the
implementation of its competitive strategy. The secret behind the success of Aldi as a company is
founded on the fact that the company has implemented human resource strategies that have
resulted in the development of unique sources of competitive advantage.

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D1 The Use of Resource Based Theory at Aldi
The use of human resources at Aldi has been employed or applied with an aim of
providing Sustainable Competitive Advantage (SCA) in the company. However, it is important
to note that the achievement of the SCA at Aldi can only be made possible through the
fulfillment of the four major requirements. One of the requirements that have to be fulfilled is
that the human resources at Aldi must be applied with an aim of adding value to the processes
that prevail within the company. The second requirement is that the skills which are set by Aldi
ought to be rate. Indeed, the evaluation of the recruitment strategies as well as the HR
development strategies depict that in nature, such skills are bound to rate.
As a result of using efficient Human Resource Development Strategies as well as its
effective implementation, the achievement of the third factor which is imitation of skills through
competition would be quite difficult (Mortimer & Ingersoll, 2015). Based on the main Human
Resource initiatives that have been embraced at Aldi, it can truly be asserted that the company
has a “Human Resource Centric Strategy”. This could easily be proved from the fact that the
company has strategies that are focused on the enhancement or betterment of the employees’
welfare thus making the implementation of the HR systems in the company to become effective.
It can also be truly asserted that the effective employee motivation strategies that are prevalent
through the innovative strategies in HR have enabled Aldi as a company to succeed.
The resource based view of Aldi clearly states that individuals or people for that matter
are the key to each and every success. This is quite true because any major competitive
advantage in all industries ought to be leveraged through HRD functions. Since time
immemorial, Human Resource functions have faced a significant battle in justification of its
position in various organizations, Aldi included. Through forcing human resources to support the
daily business functions and activities, thus resulted in the development of Strategic Human

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Resource Management in Aldi. Aldi has to ensure that it uses Strategic Human Resources
Management (SHRM) to keep its operating costs as low as possible. This has been done by the
SHRM managers who extensively explored the relationship between Human Resource
Management and the business strategy that is used by Aldi to support the strategy in the wake of
growing acceptance of internal organizational resources as being the major sources of
competitive advantage. This has greatly given legitimacy to the assertion to Human Resources
that indeed, people are strategically vital to the success of the company (Kaine, 2016). Aldi has
both operated as well as maintained its organizational core competence in keeping the prices low
by heavily depending on its employees. This has been done through ensuring that only the right
people are placed in the right positions through the application of best practices in order to
achieve its goals.
It can truly be asserted that the functions of HRM at Aldi has been enhanced through the
ability of the company to enhance numerous practices among them creation of a conducive
working environment. To ensure that an effective working environment is enhanced at Aldi, the
company ensures that the employees are kept in small working environments so as to deliver or
present a “feeling of importance) among all of them. Other significant Human Resource
functions that has been embraced at Aldi and which has proved to be so beneficial are the
rewards and recognition. This is based on the fact that team based as well as individual
recognition are applied in a way that the employees of Aldi are kept motivated. Career and talent
management has also played a significant role in the success of the company (Aldi) in that it has
embraced a simple management structure which has allowed its employees to effectively exploit
their skills through provision of supported training. Through the use of compensation of

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compensation as a function of Human Resource Management, competitive salaries as well as
outstanding benefits are given to employees of Aldi Company.
P2, M2 Strengths and Weaknesses of various approaches to recruitment and Selection for
Aldi
In order to ensure that the right people having the right skills for the right jobs and right
attitudes are hired in the company, Aldi usually traverses across various universities in Australia
in order to find the right candidates who have the potential of fitting into the job positions. Some
of the qualities that Aldi looks for when recruiting and selecting employees includes honesty,
team player, diligence, dedication, and education (Wortmann, 2015). As a result, throughout the
year, ALDI usually travels across numerous Australian universities and recruits potential
candidates through national careers, employment expos, as well as through fairs. Aldi argues that
potential job candidates who have been graduated by respective university degrees usually think
smarter harder as opposed to other people and therefore the best to employ.
The major strength in the in the recruitment and selection process for Aldi lies in the fact
that the company has since time immemorial highly invested in numerous graduate training
programmes which also provide a financial package that is attractive. For instance, during the
global financial crisis, Aldi actually offered approximately 150 fresh graduates with jobs.
According to the most recent development, it was suggested that the company is aiming to fill
approximately 200 graduate positions during the last four years and even open about 25 new
stores this year. The company anticipates that each of the new stores that will be opened will
bring about not only smarter shopping experiences, but also retail competition and employment
to the local Australian communities.

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On the other hand, one of the major weaknesses associated with the recruitment and
selection process at Aldi is that the decision to employ university students or graduates who have
no experience implies that the company may lack the right people with the rights skills.
P3 Benefits of Different Human Resource Management Practices to Aldi
As earlier on noted, the management of a successful large business entity such as Aldi
involves the acquisition, development and maintenance of numerous resources and practices.
Such resources include among others buildings, equipment, land, technology, materials, and
more importantly people. The success of any company is highly reliant on good employees who
possess the right skills in achieving the aims and objectives of the company.
M3, D2 Training and Development Programs
One key HRM practice that is quite beneficial to Aldi is the training and development
needs. This refers to both the opportunities and experiences which are needed for people to train
as well as develop so as to achieve personal and organizational objectives (Pervan, 2015). The
training and development programs that have been put in place by Aldi have helped the
employees to be in a better position of identifying their own personal training as well as
development needs. This is quite beneficial because they not only help the employees to enhance
the skills they have on their respective skills, but also benefits the company (Aldi) in that highly
skilled employees implies higher productivity hence profitability. Having a highly skilled
workforce implies that Aldi’s productivity and profitability will be subsequently increased. This
is attributed to the fact that highly skilled employees are capable of executing their tasks quickly
and efficiently thus leading to higher output hence profitability.

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Job Analysis
Job analysis is an effective Human Resource Management practice that consists the
determination of the nature and responsibilities of different employment positions in the
company. This can comprise the determination of the experiences and skills that are required in
order to effectively execute duties associated to a particular position. It also involves the
identification of industry and job skills and the anticipation of future skill requirements and
employment levels (Lee & Vachon, 2016). It can truly be asserted that job analysis is the
cornerstone stone of Human Resources practice since it helps in the provision of genuine
information regarding the jobs that are used in the hiring and promotion of people, establishing
of wages, determination of the training needs, and making vital decision regarding HRM. This
practice is quite essential to Aldi because it helps the management of the company to ensure that
the right employees are allocated the right jobs and given wages or salaries that are par with their
qualifications.
On the other hand job analysis is important to employees in that it helps them to be
allocated the tasks or duties which are appropriate with the relevant skills and knowledge that
they have. This makes them to execute the tasks that are allocated to them with easy. This is turn
helps in increasing the productivity and output of the employees thus leading to profitability.
When a company becomes profitable, it becomes apparent that employees will also benefit in
that they may receive increased wages.
P4 “Organization, Utilization, and Maintenance of an organization’s workforce”
This is indeed an important function and practice in HRM. Aldi has designed an effective
organizational framework which makes maximum use of the company’s human resources and
develops a system of communication that aids it to operate or run in a unified way. Aldi has

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ensured that it has complied with all the appropriate safety and held requirements and all the
relevant “worker-management” relations. The company has also ensured that it has fully
complied with all the federal laws that make the company’s employees become protected from
any hazards that can arise in the workplace. This is quite beneficial to both Aldi and its
employees in that the company will save the resources that could otherwise be used in the
treatment of its employees when they get harmed or injured while at the workplace.
On the other hand, compliance with the federal laws by Aldi which ensure that
employees are protected from any form of hazards while at the workplace is quite beneficial to
the employees as well because it makes them become healthy thus carry out their duties
effectively. It can truly be asserted that the effective organization, utilization, as well as the
maintenance of Aldi’s workforce will ultimately raise the productivity and the productivity of the
company (Jenkins & Williamson, 2015). This is quite true because a healthy workforce implies
that such people are capable of achieving the set organizational goals within the set time frame
without cases of injury or harm. As a result, this translates to higher productivity and profitability
of the company.
Performance Appraisals
This refers to a practice in which the job performance of ALDI’s employees are assessed
and then feedback given back to employees about both the negative and positive aspects of their
performance. This is quite beneficial to Aldi as a company because it helps it identify any weak
areas among its employees and take corrective action that can be used to rectify or correct them.
On the other hand, employees stand to benefit highly in that they are in a better position of
ascertaining their weaknesses and strong points thus helping them enhance areas they are
perceived to be week. The effectiveness of using performance appraisals as an HRM practice lies

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in the fact that the company will gain by ensuring that appropriate people are placed in jobs
which they are highly skilled it thus leading to higher rates of production as well as profitability.
P5, M4,D3 Analysis of the Internal and External factors which affect HRM decision
making at Aldi
Just like any other successful organization, Aldi always keeps track of all the internal and
external factors which can have an impact on the decision making process of its business. The
company thus comprehends all the types of circumstances which can change or alter the “all-
important bottom line”. The company well understands that comprehending both the internal as
well as external factors which affect it gives it the much needed intelligence that can enable it to
sort its priorities as well as make the relevant strategic plans for its future.
Internal Factors that Affect HRM decision making at Aldi
The good thing about these internal factors is that the company is capable of controlling
them. It is prudent to note that internal factors such as image, credit worthiness, and business
reputation are due to the way that the company is run (Pitsis et al, 2015). On the other hand,
internal factors such as the management structure, staffing, and the physical décor of Aldi as a
business entity are based on the business decision made and thus they can be changed whenever
necessary. Some examples of the internal factors that affect the decision making process at Aldi
include among others:
Owners: These are the individuals who have invested in the organization and have
property claims and rights in the company. The owners of Aldi Company have a significant say
in the decision making processes at the organization and they also have the rights to alter the
policies of the company at any given time.