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Cutbacks also has proclaimed their commitment to communities & environment through their session statement, “Contribute positively to our communities and environment”. They achieve this by organizing community programs and events at least twice a year; these events facilitate donations of funds, contributions for noble causes, and also provide job opportunities. ; As for their commitment to environment, they play an active role in instilling environmental responsibility among their employees. They also strive to use, buy and sell environmentally friendly products.
Significance: Why has the disciple of HARM gained importance in recent times? This is because Organizations has realized the importance of contribution that people can make to an organization. It has in recent years been identified and recognized that human resource is the most valuable and powerful assets any organization can possess as its people are the most fundamental element in determining the scale of success of any organization to a great extent and also firms can gain competitive advantage.
HARM helps to channel the needs and competencies to harness a lot of talent and capabilities and to make the best out of them. HARM should be aligned and integrated with the Business strategy to be successful. Impact of Human Resources on Organizational Performance Source: (Steven H. Bates, 2003) Cutbacks has realized in their initial stage itself that People can contribute tremendously to the organization if HARM is administered wisely and strategically and also if they are well motivated and paid.
The reasons why people management should be considered a vital element: ; Service is delivered by people, HARM strategies ensures customer service is excellent, which in turn would lead to customer satisfaction ; Less competent HARM leads to unsatisfactory customer service which will lead to poor performance and organizational efficiency ; knowledge comes from the firm’s people and hey should therefore be skilled and trained ; well motivated staff is always more productive, enhancing the sales at Cutbacks ; Provides competitive advantage to firms.
Services at Cutbacks are known to stand out compared to other firms in the same field due to staff commitment to the brand. HARM can make a significant contribution to the competitive advantage of a firm if the firm is capable of tapping their people’s exceptional skills and core Competencies. It is hence understood that by developing and maintaining competitive advantage, a company can be successful and remain profitable. HARM stakeholders:
These are the groups affected by business practices ; customers- expect exceptional service or/and better product ; Employees- expect attractive job and sound compensation ; shareholders- expect a return on money invested ; Community- expects activities and projects that minimizes harmful effects to environment CUTBACKS – Company Profile Cutbacks is the world’s largest coffeehouse company; Stardust’s first store was opened in Seattle on March 30th 1971 by three partners. The firm believes in supplying and serving the best possible coffee. The name, ‘Cutbacks’ was taken from the novel ‘Mob Dick’ (Cutbacks, 2012).
Major Achievements: ; International Corporate Achievement Gold Medalist , 2005 ; Great places to work’ Institute named Cutbacks Top 10 Best Workplaces in the ASK, 2007 ; Awarded Most Ethical Company in Europe’ , 2009 ; Named twice as Mobile Marketer of the Year, 2010 & 2012 Leadership Style at Cutbacks Adopted By Howard Schultz: “We are not in the coffee business, serving people; we are in the people business serving coffee. ” -Howard Schultz, (former) CEO of Cutbacks. * Transformational Leadership: This style is often considered to be one of the effective styles to adopt in business situations.
This approach inspires, encourages and motivates people to perform their best and by leading as example. These leaders take initiatives to add value to the organization. * Schultz is also known to adopt ‘engaging employees’ approach. An engaged employee is completely involved, committed and enthusiastic about their work. Roles and Responsibilities 1. Strategic Partner: To align HARM strategies with business strategies. (None R. Et al,2003) 2. Administrative Expert: To design and deliver efficient HARM practices and processes. 3. Employee Advocate: loneliness commitment & contributions of the employees to be managed.
Irrespective how skilled the workers may be, if they are detached or angry, they will not contribute their efforts to the firm’s success, nor will they stay long with the firm. 4. Change Agent: This requires HARM to help transform firms to meet the new competitive conditions. In today’s rapidly changing competitive world, constant change and capacity for change should be developed. (None R. Et al, 2003) Shift of focus in HARM function: 1 . Self-Service : Online access to information and transactions relating to HER for employees. 2. Outsourcing: The practice of outsourcing HER activities to specialist service providers.
Reasons of the above two are: ; to save money and efforts ; to increase HER operations efficiency ; spend more time on strategic functions and important business issues However, Outsourcing should be carefully considered as lack of understanding may arise regarding the capabilities of the outsourcing provider, Sometimes even failure in achieving goals and substandard delivery of services may occur. (T. Starter , 2005 . ) Factors Affecting Cutbacks HER practices HER practices are strongly affected by the Internal & External environment of Cutbacks.
Various Models of HARM: ; Harvard Model ; Michigan Model Guest Model ; Warwick Model There are various f HER models developed by scholars which fall either under the soft or hard perspective to HER. Below are two models that represent one hard and soft approach each 1 . MICHIGAN/ MATCHING MODEL This model is the ‘hard’ approach to HARM where Human resources are matched with the jobs in the organization. This model suggests the HER should be treated just like any other resources by utilizing it to the maximum along with other resources to attain organizational goals. 2.
HARVARD MODEL Harvard model emphasizes on the human element of HARM and employees re given importance just like any other resources and treated as assets rather than costs. This model is based on human relations and their outcomes are committed & motivated employee providing competitive advantage. High Commitment HARM (WHICH) under WHICH, the company’s human resource is considered as an asset whose value can be improved and enhanced by increasing the levels of involvement, commitment, motivation and flexibility of the employee. Past studies have reported that this style of HARM have supported companies to grow and perform better.
Though this model has been developed from the Harvard Framework model, it is different from it where companies are encouraged to adopt bundles of the practices that are best suited to their organization type and does not have to stick to a set of practices WHICH is fundamentally based on treating employees in a just and fair manner with respect which in turn will serve as motivation to them to reach to their full potential. WHICH promotes Employee engagement which give competitive advantage, improved service, higher productivity and lower turnover. HCI HARM consists of the following HER practices (Prefer, 1998): Cutbacks and High Commitment HARM
Cutbacks have in their initial stage itself recognized the very importance and value of their employees which is reflected in their mission statement, stating the they intend to provide a great working environment and to treat their employees with dignity and respect. They therefore have aligned their HARM strategy with this model of WHICH which undoubtedly has played a part in their success. This can be confirmed by taking a look at their past achievements. Though this model has a multiple advantages, it does have its set of demerits too. Cutbacks adopts WHICH model, consisting of the above seven practices. Employment/Job security Job security is an essential element of WHICH and is an important step in gaining employee commitment and loyalty. Simply put, it is when employees expect to continue working with the organization in the future and when organizations reduce job redundancies where ever possible. It is not practical to expect quality work, commitment and ideas from employees without providing employees job security and concern for their careers. (Prefer, 1998) Prefer (1998) suggests the following as an alternative to downsizing and lay- offs which negatively affect the employment security. Reduce labor costs by reducing wages ; Reduce work hours proportionately ; Production workers to be put into sales to increase demand ;Freeze recruitment temporarily Though job security is not openly guaranteed in Cutbacks, their organizational design and structure illustrates their last options as lay-offs with their massive expansion programs, job opportunities are always growing and giving employees some relief. Also, Cutbacks work force constitutes mainly the part-timers, Cutbacks can easily reduce working hours rather than looking for lay-offs or downsizing.
Cutbacks HARM practices and benefits are eased on Schultz philosophy, Of treating employees like their own, so that they be loyal and give their best. 2. Selective Staffing/ Hiring: Recruitment should not only focus on the right person possessing right technical skills for right position, rather, also consider the personal qualities and attitudes of candidates, as skills can be acquired over time. Also, Selective hiring gives preference to recruit people who fit the company culture: for instance, people should be hired keeping the Cutbacks atmosphere in mind which is direct, open, fast-paced and energetic.
HARM can take psychological sets of applicants’ performance to check their suitability to the Cutbacks’ philosophy. In a nutshell, they should be culturally fit employees. This to an extend also helps in stronger team bonds as they will have similar job views , since team performance and team collaboration is a must in Cutbacks culture where the store acts like a team and this element is also Vital to go hand in hand with Cutbacks’ small company culture.
However, this concept may have some negative effects, as focus is mainly on the recruits fitting into the company culture, which may lead to certain groups being isolated from he recruitment process giving rise to homogeneous groups which will hinder diversity. Additionally it IS recommended to look for young talent by conducting campus recruitment, participation in employment fairs at universities etc. This way, capable young graduates with a good educational background can be hired and trained to be a competent employee.
Cutbacks has previously conducted interviews for business management Graduates in the reputed Wharton Business School, Kellogg Business School, University of Washington and Arizona State University . However, this method has not en very common in Cutbacks before and is only picking up. Therefore, in order to grow their talent base and to support their growth and expanding business and to support staff turnover, importance should be given to adopt this method consistently.
They could also offer internships to undergrads so that they can get work done without having to pay much and also the interns who are talented enough, could be hired. This would give the firm the idea if the intern could be a possible asset to the firm and then hire them when required after they have graduated. 3. Extensive Employee Training & Development: After recruiting the right people for the right job, it should be ensured that proper training is provided. Training enhances productivity, performances, skills and attitudes of employees.
Human Resources needs to provide training in various areas like interpersonal relationships, company culture, technical expertise etc. And also aim at offering employees clear cut information about their position, roles & responsibilities and incorporates the Company values and culture into them. Cutbacks is famous for its intense training program for all levels of employees. ‘First Impression’ program for Baristas who are the mint of contact to their customers and hence have to complete a 24- hours training before joining their respective stores.
Cutbacks also trains the employees on ‘Star Skills’ based on inter-personal relationships. They also provide training for their managers. Training & Development is one of the most critical methods to gain High Commitment from employees and Cutbacks have realized this and have invested significantly on their training programs. This shows the company’s concern for employees which will help increase employee performance, and also creates internal labor supply to et the needs of Cutbacks. Cutbacks offers adequate training to its new staff and also periodic training whenever necessary to its existing staff.
It is reported that the staff feels valued to undergo such trainings by Shattuck since it contributes to personal growth & enhances motivation levels. However, Cutbacks should regularly review their training policies and also consider their policy relating to re-environments for training coo Reese the employee undergoes from an external source on their own. This change should be justified by stating the fact that Cutbacks already gives internal raining rated high in quality and relevance to its staff and develops them to enhance their core skills.
Improvement in efficiency & work quality after the training sessions should be measured with evidence. Additionally Cutbacks is recommended to take measures on Talent management to identify employees who have the managerial capability and talent and they should be motivated & enabled to grow through training, development and also newer job experiences. By creating jobs with new assignments in which employees require to apply their existing skills or to acquire new skills which make them ore competent, Cutbacks can avoid turnover of their best employees. C. Humidity , 2007) 4. Employee involvement, information sharing /Communication Communication is an effective method to get the employees involved and make them feel important and trusted. This also creates a positive work environment. (Lawyer, 1986). Cutbacks maintains the ambiance of a small company and open and direct flow of communication is encouraged. Often top management would ring up or pay a visit to any Cutbacks store at random just to speak to the manager and to thank employees for their excellent services.
Another tool is conducting regular surveys to get employee feedback on the company and its HER programs and also the ‘Mission Review’ program is one such example of fostering open communication and information sharing. Even though Cutbacks encourages free communication, it takes serious action against those joining union activities and has previously fired employees guilty of it. Although union is a component for participative communication, Cutbacks is against unions as they have explained themselves stating their openness to hear employee grievances and complaints and hence discourages any union involvement.
Team work The ability to be a team player is one of the key characteristics companies kick for in a potential employee. Studies show, teams have reported increased levels of motivation, satisfaction, involvement and commitment as opposed to traditional methods. In early 20005, Cutbacks facilitated teams that are self-managed to empower their employees and are encouraged to take daily decisions and give in ideas. They give easy access to information and reduce ambiguity and vagueness and builds motivation which will positively affect the organization.
Whereas, some researchers are of the view hat implementing teams are difficult and are not practical. However, Cutbacks empower their employees by forming teams where more creative ideas are generated. Compensations or Pay: Companies have to offer attractive pay to employees. Cutbacks offers a package system rather than only pay. Their package includes stock options, health insurance and vision, dental care etc. Cutbacks also offers employees to choose their own benefits, which is famously called YES, ‘Your own Special Blend’.
They have non-monetary awards/ benefits as well, like giving assistance and care for the elderly and children and offering stock options. This benefit also extends over to the part-timers provided they work for a minimum of 20 hours per week. This benefit pertaining to the part-timers is a very rare benefit and Cutbacks were one of the pioneers in offering such kind Of benefits to its part-timers who constitute a large percentage of their total work force.
This has been a very good move for the company as this would instill a sense of belonging among their employees and also would receive more involvement and commitment from their side leading to employee engagement and also to some extend help in employee retention. This is indicated by their lower turnover rate. However, Cutbacks could implement the Pay-for-Performance (APP) Systems to encourage more productivity, and this may serve as a motivation to perform exceptionally well.
Even though, structure of present wage system information has not been revealed, but analysts have predicted they were among the highest payers in the industry in 2005. The best APP system suited to Cutbacks would be team-related rather than individuals since that would promote team cooperation and fit in with the team culture. Additionally, to avoid shortfalls, Fps should be designed differently for the various job types and positions. (H. Bernadine, 2006) Though favorable to employees, these liberal pay policies and packages have negatively reflected on Starboard’s financial strength.
Analysts suggest that HER costs surpassed the advertising costs in early 20005 which was met by a 1 1 cents increase in their already expensive beverage prices indicating that they want to pay their employees well, that they risked losing customers by adding that to their product, asking customers to pay more. Cutbacks have stressed time and again on justifying these costs as Ewing able to be an employee friendly organization who invests in their employees which in turn make employees more loyal and committed. Also to overcome problems of rising costs, Cutbacks can re-structure their policies on health insurance to be categorized by age.
Other related aspect is Performance Management System Performance Appraisals are gaining high importance as a tool for companies to improve and manage the employee’s performance, for analyzing training needs and scope for promotions, to take other staffing related decisions and also to determine whether other human resource activities (selection, training etc) are effective. Suitable appraisal systems to Cutbacks must be considered and implemented to attain maximum accuracy and efficiency. Once a suitable system has been adopted, it should be periodically monitored.
Only by maintaining a finely tuned system will it be beneficial for managers to make sound and rationale staffing decisions which in turn will boost Cutbacks’ productivity. This data should be integrated with other HER domains as this can be a critical component in making staffing decisions relating to promotion, retention and termination and performance related compensation system. H. Bernardino, 2006) Cutbacks should also provide training to all appraisers on MS good practices and they should also develop mechanisms to ensure openness, fairness and objectivity of the appraisal process.
Cutbacks can also implement performance appraisals externally by collecting feedback from customers to recognize the exceptional level of work which can lead to staff bonus. This Can serve as a motivational factor for them to perform exceptionally well as front-line staff. Reduction of status/harmonistic This is attained by treating all employees in a similar way by applying same leslies on everyone and encouraging everyone to make contributions by giving ideas and participate in decision making.
Cutbacks HER policies reflect on this, as they refer to all employees as ‘partners’ and their eligibility to hold shares in the company. Also by not capitalizing Job titles etc. These policies instill loyalty in employees. Benefits: WHICH, in present age firms has been well received due to its focus on hiring employees who are not just technically sound and good at work, but also are committed to their organization. WHICH will also develop behaviors that are classical self-regulated so that they don’t necessarily have to be regulated/ controlled by external factors.