Marks & Spencer Company’s Talent Management Strategies

Introduction

Marks and Spencer (M&S) is a large British retailing brand that specializes in clothing, food products, and home supplies. The company has almost 1000 stores across Europe and employs over 80,000 employees in various positions (M&S 2018). The company has not been doing well in the past decade and has suffered from a significant proliferation of products, with consumer interest in clothes falling and interest in food products rising. As a result, M&S had to downsize many of its shops and close others and lay off over 4,000 employees in Europe and the UK in an effort to improve the standing of its shares and reduce losses (M&S 2018). Nevertheless, it remains one of the largest employers in the UK and requires a vigorous HRM strategy to ensure that all vacancies are filled by qualified candidates. The purpose of this paper is to identify the company’s talent management practices as well as environmental and regulatory factors that shape the company’s strategy and to provide recommendations for employing and retaining high-quality human resources.

Existing Strategies at M&S

Business Strategy

The company’s business strategy since its inception has involved the provision of daily consumables and affordable clothes in the same retail line. However, during the last decade, sales in the clothing sector have dropped, while food sales have gained ground. In 2013, the food sector accounted for roughly 53% of total sales for M&S, with 47% coming from clothes and home products (M&S 2018). By the end of 2018, food constituted 61% of all revenue, with clothes dropping to 39% (M&S 2018). This indicates the company’s shift from equal parity between the two sectors and towards the food industry. With overall sales dropping in both, M&S is seeking to form a business strategy around what customers need rather than what the company can most readily provide.

HR Strategy

M&S is following the standard causal model of HRM, which starts with discussion and elaboration of the overall strategy at the top of the company and then in the HR department, which results in improved financial performance (Bratton & Gold 2007). The role of HR in this model is modest, as they do not take part in determining the company’s overall goals, strategies, or vision/mission development. Instead, the HR managers receive overall strategic instructions from above, and it is their job to see them through. Hiring, training, appraisal, and compensation procedures are usually aligned with the organizational strategy.

Recruitment and Selection Strategy

According to the M&S annual report from 2018, the company’s retaining rate stands at 82%, with 18% of workers being rotated on a yearly basis (M&S 2018). The majority of turnover is found in the line employee and line manager sector, which is notorious for being the most labour-intensive and stressful area compared to logistics, sales, or other departments. The company receives a large number of applications on a daily basis. The most sought-after role for the majority of the applicants is the position of customer assistant, which receives roughly 35,000-40,000 applications a year (M&S 2018). The total number of applications for all positions in the retail chain is 200,000 each year. With such a large number of potential employees, the company has no issue replenishing employee ranks even with its high turnover rate.

The largest issue in the recruiting and selection process is, arguably, processing all these applications. To that end, M&S implements WNCVolume software to create a semi-automated application classification and processing system. The system allows for limiting the number of potential applicants in certain areas and restricts the number of applications to one per position. The primary criterion for passing the first step of the two-step recruiting process is the ability to correctly fill out the application. The second stage involves personal interviewing, where every individual is graded based on the company’s four values, which are as follows (Eccles & Serafeim 2013):

• Inspiration – M&S is looking for individuals who are driven to succeed and make a career in the company. To that end, they seek to hire individuals established in their local communities over part-time workers such as students. This strategy helps reduce turnover.
• Innovation – The company is looking for employees that could bring something new and refreshing to the table. This criterion is most important for managers and employees in positions of responsibility.
• Integrity – M&S has an ethical framework that upholds environmental friendliness, equality of opportunity, respect for customers and fellow colleagues, as well as diversity and social responsibility to local communities. Integrity in employees means following this framework at all times, without compromising the company’s interests or the community for personal gain.
• Touch. The ability to stay in touch with your fellow team members and form a good cooperative relationship with everyone involved.

It must be noted that skill and previous experience, while important, are not as significant as initially thought. According to the M&S annual report, the company sees itself as a University of Talent for the retail industry (M&S 2018). The company follows the recruitment strategy of person-organization rather than person-position, meaning that a personal fit with M&S’s existing culture is more important than previous experience.

Performance Management

M&S implements a variety of metrics in order to grade the performance of its employees. It uses logistical and statistical software as well as a variety of standards to grade individual performance and to ensure the expected minimum is maintained while encouraging employees to go above and beyond the call of duty (Purvis 2015). An example of such measurement can be seen in the cashiers’ department, where there is a speed norm for scanning a particular number of products. The software records the amount of time required to scan an individual purchase and compares it to the average time for the chain. An employee’s efforts are graded using the result.

However, M&S also relies on input from its managers in order to evaluate performance. Line managers are expected to identify and communicate local targets and company goals to individual employees and grade their performance in situations where simple metrics would not be appropriate. This evaluation is conducted once every 12 months (Keay & Iqbal 2018). In regards to overall strategic and financial performance, M&S utilizes standard financial performance indicators as well as comparative analysis with reference to the rest of the retail industry.

Rewards

Employees and managers alike have a fixed salary with additional bonuses awarded for individual and collective performance. The company utilizes a number of key performance indicators, including working speed, movement speed, the number of goods delivered, sold, and transported between aisles, as well as numerous other metrics, which constitute individual employee performance (Scott & Walker 2017). Collective performance includes surpassing yearly sales and revenue goals established by M&S. In addition to these rewards, every member of the company receives special offers, bonuses, and purchase benefits.

Training and Development

As was already mentioned, M&S utilizes a person-organization recruitment model, meaning that it is often required to build an employee from the ground up. As such, the company utilizes several approaches to developing its managers and employees, which are as follows (Scott & Walker 2017):

• On-the-job training. For the majority of low-tier roles and positions, on-the-job training is the primary method of development. A new employee is attached to a more experienced employee or a training manager and is given tasks they would perform as a full-fledged employee. Through work-based training, the new employee learns all the necessary steps and standards while the company’s training expenses are reduced.
• Off-the-job training. This type of training is typically utilized for managers and specialists who cannot be engaged in work without prior preparation. The company conducts classes to explain the main duties, systems, and standards in the business. After that, the employee is moved to an on-the-job training schedule.
• Coaching. Available to established managers and specialists, coaching involves one-on-one sessions with experienced professionals or specially hired coaches to improve performance.
• Online training. M&S uses an intranet system in order to store relevant training materials that all employees can use to develop new skills and improve performance.
• Career planning. The company features a transparent career-planning system with all the requirements and parameters for each role presented to the employees. They can plan their careers by allocating time to training and practising skills for their next role.

Regulatory Factors

Gender Pay Gap

One of the most relevant regulations affecting M&S and the issue of the gender pay gap is the Gender Pay Gap reporting regulation of 2017, which requires all British companies to report hourly wage pay gaps, the proportion of men and women in each position within the organization, and bonus pay gaps, among other metrics. In 2017, M&S reported a 3.3% difference in hourly wages between men and women (M&S 2018). At the same time, the percentage of women in each pay quartile (from highest-paid to lowest-paid) significantly outnumbered the percentage of men, ranging between 66.3% and 75.4% of total workers (M&S 2018). Significant differences remain in the bonus pay gap, where women received 15.9% smaller bonuses than men, while mean bonus pay is 53.4% lower (M&S 2018).

Equality Act of 2010

The Equality Act of 2010 united the previous nine acts adopted by the UK parliament in an effort to eliminate sexual and racial discrimination in local businesses. The current version of the document addresses numerous concerns regarding equality in the workplace, such as (The National Archives 2010):

• Equality of pay;
• Laws against sexual discrimination;
• Relationships between races;
• Discrimination against individuals with disabilities;
• Employment equality based on age, sexual orientation, and religious beliefs.

M&S complied with the provisions of the Act for 9 years and saw considerable achievements during that time. The gender pay gap fell from 12.3% to 3.3%, the number of females in high managerial positions increased considerably, and the level of sex-related discrimination and harassment dropped. Some discrepancies between bonuses may be explained through the analysis of individual employee performance in relation to how they received their bonuses. M&S is considered one of the most gender-friendly employers in the UK.

Environmental Factors

Corporate Social Responsibility

Corporate social responsibility (CSR) is a popular concept among large modern businesses that have recognized their potential influence on communities, the population, and the environment (Grayson 2011). Researchers state that companies engaging in charitable and responsible corporate behaviour not only help improve the overall situation on planet Earth but also gain significant reputation boosts from their potential customers. Millennials and Gen Z customers are extremely aware of various global, environmental, and economic issues, making a well-thought-out CSR strategy a necessity (Grayson 2011).

M&S has an expansive CSR policy colloquially known as Plan A that includes over 100 goals to be achieved by the end of 2025. The plan was adopted following extensive customer feedback that outlined the following trends in customer behaviour (M&S 2019):

• Customers prefer companies with public positions towards world problems;
• Customers seek to make meaningful connections with other people;
• Customers want to be enabled to do the right thing and make a difference;
• Customers are aware of local and global injustices;
• Customers care about quality and about how goods are made.

Based on these facts, M&S outlined various social, environmental, and economic goals as part of its CSR strategy. The company’s main area of interest lies in sustainability, as they seek for all the products provided by the company to be sustainability-certified, with 50% of them adhering to the highest Gold Standard (M&S 2019). Transparency is the second goal, and pursuant to it, the company seeks to eliminate various discrepancies and discriminations in pay while promoting ease of access to relevant information. Environmental friendliness and recycling is the third major area, as the company seeks to donate to environment-preserving facilities, use recyclable materials for packaging, and purchase goods and services from environmentally responsible vendors. Finally, to promote the goals of social justice, M&S vowed to purchase their products from employers who treat their workers fairly and responsibly.

Core Position Analysis: Customer Assistant

Job Description

The position of customer assistant is one of the most popular jobs that M&S has to offer, with over 40,000 individuals applying to the position on a yearly basis. The purpose of a customer assistant is to advise customers on various goods, products, and services, as well as answering their questions regarding the company. In addition to the employee’s direct duties, they may also be employed in various routine tasks in the store aisles.

Person Specification

The company has very few specifics for the job, as it is a low-entry level position. There are no hard requirements for the age or gender of the applicant, and the main qualities include the following (M&S 2017):

• A passion for M&S products;
• Extensive knowledge of the company’s merchandise;
• A “sixth sense” for the customer’s wants and expectations.

As can be seen, most if not all of these qualities are subjective, as knowledge of the company’s merchandise can only be obtained on the job, as it would not be reasonable for individuals to know the full extent of products M&S provides without working there.

Recruitment Channels

M&S recruits customer assistants by using their own site, headhunting sites, and recruiting services as means of enlisting the required personnel. The majority of the applicants visit the company’s site, while a smaller percentage comes from third-party job sites. Recruitment agencies are usually used to find specific talent related to the industry. Individuals with previous work experience typically come from this recruitment channel.

Selection Methods

The first step of the selection process involves filling out the application correctly. Those who have managed to do so are invited to the interview. Some of the factors that get evaluated (although not specifically required) include appearance, age, previous work experience, family status, and willingness to learn. This position is typically occupied by young men and women seeking to gain job experience or to advance further up the career ladder.

Performance Management Criteria

The performance of each specific customer assistant is graded by their supervisor. There are very few metrics that could accurately assess the performance of an individual in such a position. M&S includes self-reporting practices, which involve the number of customers assisted a day, the usefulness of the advice provided, and increases in the intent to purchase (M&S 2017). Other metrics include friendliness, overtime hours, and the number of days absent from work.

Recommendations

M&S’s continuous drop in sales is caused by an outdated business model coupled with poor HR management practices. The shops are currently geared towards the previous generation of customers, which has been shrinking due to age, whereas the attempts made to entice new generations of customers were insufficient. Although the company embarked on a substantial campaign of SCR in order to promote itself and improve its image, nearly all of M&S’s competitors have been doing the same (Grayson 2011). SCR, therefore, is not a tool to increase sales and potential, but only a requirement to stay in the game. Therefore, the company’s efforts should be focused on improving its marketing and recruitment strategies.

The reason why the company is losing money in the clothes and home supplies sector is that M&S clothes are perceived as cheap, similar to competitors’ offerings, and unattractive to the modern customer (Toms & Zhang 2016). Clothes are typically bought by young people, who enjoy self-expression, unique designs, and representative brands. In order to improve their sales in this regard, the company needs to revamp its wardrobe and produce a variety of different outfits to suit all needs. The stock should be renewed once a season in order to keep the selection fresh and to cater to the newest fashion trends.

The overall sales decline over a long period of time can be explained by lazy and ineffective marketing campaigns. Although the company has made significant efforts to improve the customer experience, it does not do enough to make these efforts known. Other large chains are beating M&S in advertising, whereas the company relies on its size and brand name to do the talking for them. This approach works on older customers familiar with M&S as a brand, but younger individuals receive their information from the internet, where the company is just one of many competitors. The company needs to reinforce its image and present itself to the younger generation as innovative and agile if it wants to stop its decline.

Finally, the company needs to critically appraise its personnel retention, compensation, and hiring practices. As the analysis above showed, the company has a relatively high retention rate for a retail enterprise, and good equality scores as well. However, the evaluation of recruitment practices suggests the quality of low-tier employees has been neglected. With the number of potential candidates exceeding demand by a large margin, M&S could afford to pick the best possible individuals for each position (Wood & Payne 1998). Not only would this improve the quality of labour, but it would also reduce turnover.

Reference List

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Eccles, RG & Serafeim, G 2013, ‘The performance frontier’, Harvard Business Review, vol. 91, no. 5, pp. 50-60.

Grayson, D 2011, ‘Embedding corporate responsibility and sustainability: Marks & Spencer’, Journal of Management Development, vol. 30, no. 10, pp. 1017-1026.

Keay, A & Iqbal, T 2018, ‘Sustainability in large UK listed retail companies: a sectoral analysis’, Deakin Law Review, vol. 23, p. 209.

Purvis, M 2015, ‘Direction and discretion: the roles of centre and branch in the interwar management of Marks and Spencer’, History of Retailing and Consumption, vol. 1, no. 1, pp. 63-81.

M&S 2017, Salesfloor customer assistant, Web.

M&S 2018, Transformation underway, Web.

M&S 2019, Plan A2025, Web.

The National Archives 2010, Equality Act 2010, Web.

Scott, P & Walker, JT 2017, ‘Barriers to ‘industrialisation’ for interwar British retailing? The case of Marks & Spencer Ltd’, Business History, vol. 59, no. 2, pp. 179-201.

Toms, S & Zhang, Q 2016, ‘Marks & Spencer and the decline of the British textile industry, 1950-2000’, Business History Review, vol. 90, no. 1, pp. 3-30.

Wood, R & Payne, T 1998, Competency-based recruitment and selection. Wiley, Chichester, UK.