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Introduction ALDI is a global food retailer. Since opening its first store in 1913, Aldi has established itself as a reputable retailer operating in international markets including Germany, Australia and the U. S. Aldi has over 7,000 stores worldwide. What distinguishes Aldi from its competitors is its competitive pricing strategy without reducing the quality of its products. In fact, in some cases Aldi’s products are 30% cheaper than those offered by its competitors. Aldi can do this because the business operates so efficiently. The Times Case Studies, 2011) ALDI and HR Aldi has a very flat organisational structure. In the UK it is split into 5 regions (there are 62 internationally); each region operates individually, only sharing the purchasing function. Each region has 5 departments, and there are only 3 levels between the Store Assistants and the Managing Director of the Region. Organisational Structure Noticeably, there is no IT, Marketing or HR function in the structure. IT and Marketing are both outsourced to third parties.
IT are called on as and when needed by whichever department needs them at the time, whether it be till maintenance, or maintaining the logistics software package. Marketing is outsourced to a company in Atherstone, and their link in the organisation is the Trading function. HR is stripped back within ALDI, and is headed by 2 HR Managers in the Store Operations Function. All area managers within ALDI are trained in HR, and deal with all personnel issues, from Recruitment, to performance management and Training and Development.
The HR managers in Head Office purely focus on making sure the Area Managers are up to date with new legislation and policies. ALDI adopt a grandfather technique, where, store managers have little to do with HR. It is their job to focus on the store, and deal with staff rotas and minor issues. This way, store employees report to their line manager for operational issues, and the Area Manager for HR issues. The only HR issue not practised by Area Managers is Payroll, which falls into the Finance Function.
ALDI is extremely focused on productivity and efficiency, and because of this, the Neston Region in the UK is trialling using a HR Agency (Kinetic), to manage a major amount of its HR function. The agency takes care of Recruitment, Induction, Payroll, Development, Performance Management, and acts as a HR Manager for the agency staff within ALDI. ALDI intend to get to a point where 70% of store staff is through an agency, with exception to Store Managers, Assistant Managers, Deputies and Full Time Staff. This saves money as it takes a lot of responsibility off Area Managers, leaving them with more time to focus on operations.
According to Righeimer (Date Unknown, p. 4), most organizations view the department of Human Resources (HR) as an administrative function and ignore the need and opportunity to align it with its strategic plans. Aligning HR and strategic plans is an important endeavour for every organisation. Studies strongly support the alignment between strategies, HR, and performance and thus show the potential role HR can play in implementing strategy and developing an organisation’s competitive advantage. How HR activities support the organisations strategy
Recruitment and Selection, Performance Management, and Training and Development are three HR activities that support the organisations strategy. (Hameed, 2011) Recruitment and Selection According to ALDI’s strategy (2012), “We want every ALDI employee to have a rewarding career, with opportunities to grow and develop, whether they work in our stores, distribution centres or management teams. We expect our people to be committed, hard-working and take ownership of their responsibilities. In return, we provide salaries that are considerably above the rest of the industry. The recruitment and selection activity supports this by ensuring the right people are hired first time. It is vital to find committed, hardworking people, who have a pride in their work and take responsibility for their success and mistakes. Productivity, quality and service are three of ALDI’s focuses, so HR’s ability to attract and select people with the right knowledge, skills and attitude is vital. As it is down for the most part to the Area Manager to fulfil this HR role, it is vital they have the skills to recognise the right sort of employee who would fit in the business.
The major disadvantage of using the agencies, as currently being trialled, is that the agencies do not work in the stores, and are an outsider to the culture and work ethic of ALDI. For that reason, the Area Managers should have complete control, as they know what sort of person they need, how to motivate them, and exactly what is expected with ALDI’s culture. Performance Management “We have developed a range of high quality, structured training programmes to enable our employees to fulfil their roles successfully.
ALDI Managers have a responsibility to develop and motivate employees, rewarding excellent performance and continuous improvement. ” (ALDI, 2012) A HR activity that is also performed in part by Area Managers is performance management. As Area Managers spend a lot of time in stores, they can see the productivity of staff, who is excelling and who needs a little motivation. The store manager reports performance to them also, so they get a complete picture. The agencies receive reports from the Store Managers, only if something is not working out.
The agencies manage the performance of their employees, but do not really focus on opportunities or continuous improvement, as they do not have the power in store to do so. Likewise, store managers and Area Managers do not focus on the agencies employees, as technically they are not their own. If this was fully down to the Area Managers again, and Store Managers were given a greater role, staff could be managed better. Stand out performers could be recognised better, and future progression would be a benefit.
Also, employees would be more engaged and productive with a clear structure and with everyone being part of the same “team”, no “us” and “them” as such. Training “We want to attract the best talent and ours are among the highest advertised starting salaries for graduates in the UK and Ireland. Over 85% of our Directors are recruited from within the company, demonstrating the importance we place on training and development and rewarding performance. ” (ALDI, 2012) The Training and Development aspect of HR is focused highly on, within ALDI. There is constant training available and succession plans in place for most stores.
Deputies are trained to do the Assistant Managers job in case of Sickness, Pregnancy or Resignation of the latter, and likewise with the Assistant Managers, they are trained to do the Store Managers Role. Store Assistants are encouraged to progress to Deputies based on performance. Training and Development is also evident throughout Head Office. Area Managers are only recruited through Graduate Schemes, and Directors are successful Area Managers. 85% of the Directors were Area Managers, whereas the other 15% are either from international ALDI head offices, or “born into it”, i. e. the Albrieght family.
The obvious disadvantage with the Agency is that they have no say or decision in regards to Training. As its employees are employed by them and not ALDI, they do not have access to the same training and development. How HR Professionals support line managers and their Staff With a 2006 ASTD study finding that 70% of training failure happens after the formal training finishes and a recent CIPD study finding that only 12% of employees feel that line managers take learning and development very seriously, it’s a little surprising that more is not being done to gain line manager support in the development process. Peterson, 2006) The role of the line managers has changed over the last twenty years.
There is a widespread drive to give line managers more responsibility for the management of their staff and to reduce the extent to which human resource departments control or restrict line management autonomy in this area (Brewster & Larson, 2000). HR professionals no longer have sole responsibility for the management of people, but share this responsibility with line managers. There is evidence that HR responsibilities are increasingly decentralized nd devolved to line managers (Cunningham & Hyman, 1995). In ALDI, Cunningham and Hyman’s point (1995) that responsibility is shared is correct, if not more centred toward the line manager rather than a 50/50 split. This is probably due to the amount of time passed since their original comment. It is interesting that what they originally said nearly 20 years ago still applies, giving the impression that the HR function has been under fire for quite some time, yet is still here in a pretty similar form in most companies.
The line manager in terms of ALDI would be the Area Manager and the HR Professionals for the Area Manager. With the Agency staff, their line manager for HR would be their external agency manager. HR professionals in ALDI support the line managers by providing updated regulations, policies and visions down, to be implemented further down. The obvious benefit of Line Managers taking a front line role in HR, is that they know the staff better. HR Professionals in Head Office do not work with the store employees and do not know about performance or what motivates each individual.
The CIPD states that where employees feel positive about their relationship with their front line managers, moreover, they are more likely to have higher levels of job satisfaction, commitment and loyalty – which are in turn associated with higher levels of performance or discretionary behaviour. (CIPD, 2012) As the HR professionals have empowered the Line managers as such, it improves employee engagement. Talent can be spotted, managed and trained, and with the right people in the right jobs, the team’s works better together and is more productive.
Consistency is an issue that can arise when different Line Managers have different attitudes and ways of working. This is when support from HR is vital as they can provide guidelines and policies that ensure the message across the company is consistent. With the agency, it does mean that the message HR is sending out, is not necessarily what the agency is doing / preaching. This is another shortfall in the HR process when it comes to agency working. If Area Managers had complete control and there was no agency, then the message would be consistent across the board.
Conclusion and Recommendations It is evident that HR takes a simple yet complex form in ALDI. Although it is missing from the organisational structure, it is practiced in part by at least 46 Area Managers. There is a big emphasis on Training and Development throughout the company, and HR activities are being used for succession planning and finding the next generation of ALDI AM’s and Directors. The use of the agency seems to be slightly detrimental to ALDI’s message, and outsourcing the HR like it is, will cause confusion, and splits in the teams.
They need to revert to AM as the main HR leader within the Area and only use agencies at times such as Christmas for relief workers etc. As AM know better than any agency, the staff recruited and selected will more than likely be more productive and fit the company better. Also, there may be an issue with succession planning if their aim of outsourcing most staff jobs out is achieved. It would seem that they would hire the people themselves, after trialling them with the agency, so why not just hire directly anyway.
The overall finding however, is that HR must remain in the company, and be managed as it once was. Eliminating the HR function more so than now, will cause major problems, and those problems are starting to arise now. If HR wasn’t managed at Head Office, then inconsistent practices would be followed out, creating discomfort within the stores and the ALDI mantra of Team working would be lost.
Works Cited ALDI, 2012. CSR – Our People. [Online] Available at: http://www. aldi. co. uk/uk/html/company/15435_25201. tm [Accessed 06 11 2012]. Brewster, C. & Larson, H. , 2000. Human Resource Management in Europe. London: Blackwells. CIPD, 2012. Role of Line Managers In HR. [Online] Available at: http://www. cipd. co. uk/hr-resources/factsheets/role-line-managers-hr. aspx [Accessed 06 11 2012]. Cunningham, I. & Hyman, J. , 1995. Transforming the HRM vision into Reality: The Role of Line Managers. Employee Relations, 17(8), pp. 5-20. Hameed, T. , 2011. Organisation Strategy and Human Reosurce. [Online] Available at: http://www. rutilities. com/2011/09/organization-strategy-and-human-resource/ [Accessed 06 11 2012]. Peterson, E. , 2006. Employee Relations. 2nd ed. Chicago: Hardwell Press. Righeimer, J. P. , Date Unknown. Aligning Human Resources and Strategic Plans, London: Maverick Electric. The Times Case Studies, 2011. Aldi – Competitive Advantage through Efficiency. [Online] Available at: http://businesscasestudies. co. uk/aldi/competitive-advantage-through-efficiency/introduction. html#ixzz2CEnCsFmq [Accessed 06 11 2012].