HARRODS

Human Resource
Management
Harrods Case Analysis
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Contents
Introduction.................................................................................................................................................3
LO 1# Understanding the difference between personnel management and human resource management
.................................................................................................................................................................... 4
P 1.1 Distinguishing between Personnel Management and Human Resource Management..................4
P 1.2 Assessing the function of the Human Resource Management in contributing to the Harrods
purposes..................................................................................................................................................6
P 1.3 Evaluating the roles and responsibilities of line managers.............................................................8
P 1.4 Analyzing the legal and regulatory framework...............................................................................9
LO #2 Understanding how to recruit employees.......................................................................................10
P 2.1 Analyzing the reasons for HR planning at Harrods........................................................................10
P 2.2 Outlining the stages that Harrods can adapt in planning human resource requirement..............12
P 2.3 Comparing Harrods recruitment and selection process with John Lewis.....................................14
P 2.4 Evaluating the recruitment and selection techniques..................................................................15
LO 3# Understanding How to Reward Employees in Order to Motivate and Retain Them.......................16
P 3.1 Assessing the link between motivation theory and its reward with an application on Harrods
case study..............................................................................................................................................16
P 3.2 Job evaluation and other process determining pay......................................................................18
P 3.3 Effectiveness of reward system in different context.....................................................................20
P 3.4 Monitoring employee performance in Harrods............................................................................21
LO #4 Mechanism for cessation of employment.......................................................................................22
P 4.1 Reasons for cessation in Harrods..................................................................................................22
P 4.2 Employment exit procedure in Harrods........................................................................................23
P 4.3 Impact of legal and regulatory framework on employee cessation in Harrods............................24
Conclusion.................................................................................................................................................25
Bibliography &References.........................................................................................................................26
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Introduction
Harrods is a reputed retail store in UK delivering products and services to the upper class
customers through value added services. They ensure satisfactory service to their customers
delivered by the employees of the company. The employees of this company play an important
part in order to achieve its business goal and success. Through an effective HR department, the
company has a HR program that deals with this group of internal stakeholders in an efficient
manner.

Combining departmental HR offices into one single group, company’s HR functions are now
running more smoothly than before. The new owner of the company hired external source to
guide them through this transaction in association with its HR department. The result of this is
satisfactory as problems regarding its HR functions have been identified and solutions are
provided. Integration of organizational value with employees goal achievement process have
helped the company to bring success.
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Human Resource Management

LO 1# Understanding the difference between personnel management

and human resource management
In a retail shopping business where the employees make direct communication with the
customers and the sales, which is at the center of the business depends on it, it is important to
manage the employee groups in an efficient manner in order to keep the sales volume high and to
achieve the organizational goal. This is true not only for retail business but also for businesses
and organizations where the relationship among the employees and the stakeholders are
indirectly related.

P 1.1 Distinguishing between Personnel Management and Human Resource

Management
Both the PM and HRM deal with managing the employees of the organization yet there are many
differences between these two management system. The differences of them are discussed below
through the example of HR Management in Harrods and personnel management in small retail
stores like in departmental stores.

Considering the employee management system in a departmental store, the idea of personnel
management would be clear to understand. In a departmental store, the manager does not have to
integrate any goal with his employee management system. The managing process is not aimed to
achieve any long term goal. On the other hand, the human resource management process in
Harrods is designed in such a way that the employees of the organization uphold the five basic
value of the organization aiming to achieve the organizational goal. Thus, HRM can be defined
as a strategic planning process while on the other hand personnel management deals with tactical
plans.
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Figure 1: Differences between personnel and HR management.

In a departmental store, an employee candidate does not have to go through any recruitment
process. The store manager can hire any personnel instantly regardless whether it’s an
emergency or regular hiring process. But in Harrods, an employee is selected through a
recruitment process where he or she has to meet with some criteria or requirements. Even for an
emergency employee demand situation like in holidays, Harrods has a recruitment method that is
followed to hire employees in instant situations (Legge,2005).

The most important factor that makes difference between personnel management and HRM is
integrating employees in the decision making process. Involving the employees in the all level of
decision making process plays an important role in Harrods. The employees of this organization
have the chance to give their opinion on the all aspects of the organizational decisions and the
decision makers make it sure that the voices of the employees are being heard. Beside this, the
employees themselves are being authorized to make independent decisions in many aspects. This
strategy helps the employees to develop decision making ability and leadership quality. While in
a departmental store or any other organization where personnel management strategy is
followed, decision making process is centered and most of the time autocratic. Dominating
culture is practiced in personnel management process.
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Human Resource Management

P 1.2 Assessing the function of the Human Resource Management in

contributing to the Harrods purposes
The core idea of human resource that differentiates it from personnel management is that the
employee management system is integrated with the organizational goal. HRM tools are being
used by Harrods in order to successfully carry out the value of the organization and achieve
business success.

To achieve business success, Harrods has identified employee engagement as their first priority.
Employee engagement process has been functioning in different way and manner throughout the
organization. Below the employee engagement process followed by Harrods is discussed briefly.

In a retail store where employees maintain direct communication with the employees, it is very
much important to make it sure that the employees are involved in the decision making process
of the organization. Thus, engaging employees into the business operation not only motivate
them to serve more effectively but also results in a higher business success.

Harrods uses different tools in order to engage employees in its operations. For instance, the
level managers brief the employees’ everyday’s goal and target sales volume which has a direct
effect in employees’ everyday performance.

There is an employee forum formed by selected employees who work directly to find issues and
make direct influence in organizational decisions addressing them. This strategy makes the
employee important which most of todays’ organizations failed to create as the employees are
treated as a part of the organization.

Appraisal and rewarding systems are introduced in Harrods so that employees feel motivated
toward sharing ideas and thoughts. Employees are considered to be the prime source of
information in this organization which is one of the most effective strategies being followed.

There is also another important HR functions being followed such as recruitment and employee
selection tools. As the target customer group of the company needs to be dealt carefully, Harrods
needs to run a selective recruitment process that makes sure that best employees are being
selected. The recruitment process is followed by several process and steps. (Munir, 2012).
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Figure 2: Effect of ‘happy employees’.

It is believed in Harrods that happy employees are capable of delivering the best performance.
Thus, after conducting survey throughout the company, the HR department has undertaken
initiatives that make the employees satisfied, resulting a higher level of performance. The chain
effect of this is that customers get satisfactory services from the employees.
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P 1.3 Evaluating the roles and responsibilities of line managers

Line managers can be considered as the intermediary of the two most important part of any
organization: executives and employees. Not everyday employees get directions from the
executives. It is the line managers’ duty to lead the employees to the right direction.

One most important role that the line managers play in Harrods is leading the employees. Not
every employee is capable of delivering the best performance. It is the responsibility of the line
managers to lead these employees to the right direction so that they can deliver their best
performance.

Mentoring the employees is another important role that the line managers play in Harrods.
Leading and mentoring might seem similar to some extent but yet there are differences between
them. Mentoring the employees means, showing the employees how to do things rightfully while
on the other hand leading means taking the employees to this right direction.

The line managers are also a helpful hand to their subordinates. In the moment of difficulties,
line managers help their subordinates to resolve the problems. This role playing also helps the
line managers to develop leadership skill in them. (Vernon, 2004)
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P 1.4 Analyzing the legal and regulatory framework

The reputation of an organization does not only depend on its action toward its external
stakeholders but also how the organization treats its internal stakeholders such as its employee
does also matter. Organizations must follow the legal frame work regulated by governmental
bodies to ensure that the employees are being treated accurately.

In Harrods, the HR department is responsible for maintaining the legal and regulatory issues
related to its employee. This department makes sure that labor force is being paid off accurately
for their work, labor hour rule is being maintained throughout the organization, labor committee
is working independently etc. Business partners who are the external stakeholders of Harrods do
also maintain and follow legal framework and HR department observe their activities.

Equal Employment Opportunity (EEO) plays an important role when it’s about appointing
candidates in posts. HR designs the recruitment process in such a way that it avoids all kinds of
discriminatory procedures. Also the pay scales are designed to meet the demand of the
employees. Also Harrods HR department ensures other legal and regulatory activities such as
maternal leave, Equal Pay Act, Sexual harassment law etc. is being carried out through the
organization. (Jackson, 2014)
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LO #2 Understanding how to recruit employees

Hiring a wrong person for a job will lead to many probable problems such as non-professional
customer service resulting dissatisfied customer which will as an effect leads to business failure.
So it is important for an organization to conduct a proper job analysis, and run a careful
recruiting process and select and choose the right employee for the right post.

P 2.1 Analyzing the reasons for HR planning at Harrods

A manager who’s been working hard may end up unsuccessfully because wrong person was
hired into the business. Or unrest may take place as the employees were not paid in appropriate
manner. To avoid such problems, an organization must have a proper HR plan and program to
run the business successfully.

After the acquisition in 2010, the new owner of Harrods reformed the HR planning program
followed by the identification of some problem regarding their HR function. Orion group was
appointed as an external agency to work jointly with the HR department to carry on this reform
process. Some important reasons of this planning program are discussed below:

1. Turnover rate: Harrods was then experiencing high turnover rate. The reason was
unidentified. Then the survey conducted through the employees revealed the reasons and
the HR department took initiatives to reduce the turnover rate helped them to avoid both
monetary and other cost regarding this issue.
2. Hiring the right person: For a retail business, it is important to hire the right person for
the right post as mentioned earlier that employees are the direct medium here to
communicate with the customers. Harrods run a effective recruitment process that starts
from application selection and ends up with hiring the best possible candidate for a post.
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Figure 3: HR planning importance.

3. Employee performance: Harrods believes that satisfied employees are capable of

delivering higher performance in the job. So employee satisfaction level is carefully
observed in the organization and necessary steps are taken if dissatisfaction is observed.
4. Effective decision making: It is the employees who know the best about the customers
demand and preferences. Their daily dealing activities make them an expert on this.
Involving them in the decision making process is helping Harrods to generate more
customer driven ideas and take the right decision.
5. Development: Not all the employees are capable of delivering their best at the first place.
They need grooming, skill development and improvement in order to serve better. HR
planning helps to develop skills of the employees and leadership qualities of the
managers. (Boudreau & Ramsad, 2007)
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P 2.2 Outlining the stages that Harrods can adapt in planning human resource
requirement
Harrods is very much careful when it’s about selecting a candidate against a vacancy announced.
Candidates must fulfill requirements for a specific post in order to get selected.

The process starts with defining a job post which is job analysis ends up with writing a job
description. This stage describes what the job is, what requirements are needed, responsibilities
and duties of the employee, expected standard of the performance and working condition. For
instance, the duties of a storage manager are different from the duties of a floor manager. Their
working condition is different too. While the storage manager have to deal with product and
inventories management, the floor manager is responsible for the employees working on the
floor or a department.

Forecasting is the second important stage that Harrods follows. They forecast their vacancies
through different Medias and for higher level recruitments, they hire external agencies to find
them a perfect candidate. For a post, both internal and external sources are used. Higher level
post are fulfilled by internal sources. This serves two purposes: work as a reward of current
employee performance and increase the level of employee loyalty. (Francis and Keegan, 2006)

Figure 4: Harrods recruitment process.

After the recruiting process, employee selection and testing process begins. This is to ensure that
the right persons are being selected among the candidates. The HR department of Harrods, in
association with the departmental and executive managers runs this process. Some factors are
considered while running this process. Internal and external sources are used to collect
information about the probable candidates. Candidates reliability is measured through their past
work history, validity is measured through their job switch tendency. And also other types of test
are run for each different post. For instance, a sells person must have the physical ability to work
effectively, a floor mangers must have the manner and personality enough to deal with his or her
subordinates.
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Today’s HR recruitment process involves background investigation. Harrods, as a reputed

business firm must maintain a process that will helps them to avoid any lawsuit that may harm its
reputation. For this reason, before selecting a candidate, a background check is conducted to
avoid a potential hazard causing by employees.

And finally, with an interview the process comes to an end. Harrods HR department runs the
interview process and helps the departmental mangers to choose the right person for the right
post. (Ulrich, 2012)
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P 2.3 Comparing Harrods recruitment and selection process with John Lewis
In Harrods the recruitment process starts with application acceptance. If the application meets the
basic requirements, the candidate get selected for further process. On the other hand, in John
Lewis, the recruitment process starts with answering a questioner.

The main difference between Harrods and John Lewis is that in John Lewis the recruitment
process is technology based where on the other hand Harrods process is analog in many extents.

Harrods run their recruitment process in colleges and universities in order to get their desired
employees. While on the other hand, John Lewis announce their vacancy through online
mediums and sometimes outsource recruiting agencies.

In John Lewis, candidates have to gone through six step selection process where in Harrods its
starts with an interview and ends with it. (Barney, 2005)
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P 2.4 Evaluating the recruitment and selection techniques

Harrods recruitment process gets complex as moving onto the higher level of post selection. The
selection process for a floor manager is not followed by a hiring process of an executive
manager. Both the process is perfect regarding their job value.

The complex procedure followed by John Lewis may neglect potential employee who is able to
perform better but yet got eliminated because he or she may not have pass the numerical test.
Also, the verbal test that John Lewis follows may violate Equal Employment Opportunity law.

But yet, simple interview process that Harrods follow may not work all the time as it does not
ensure that proper talent will be selected as it depends upon many other factors. (Guest, 2010)
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LO 3# Understanding How to Reward Employees in Order to Motivate

and Retain Them
It is difficult to keep the working momentum of the employees throughout the year. Besides, it is
not always possible to run appraisal program, give the employee bonus and rewards as
organization’s economic condition does not always remain the same. Company has to design the
rewarding system in such a way that it satisfies both the employees and the company’s economy.
Besides, non-economic benefits are not also always available.

P 3.1 Assessing the link between motivation theory and its reward with an
application on Harrods case study
One word to describe what motivation is ‘to make move’. In Harrods case, motivating its
employees would mean bringing out the best performance from the employees everyday through
recognizing their work. Maslow’s hierarchy of needs theory will be used here to assess the
motivational activity running in Harrods to carry out its rewarding process.

Every human activity is derived from human needs. There are several levels of needs that arise
from the organizational environment. Work activities are directly affected by these needs. A
simple appraisal program or an occasional bonus cannot motivate the employee for very long.
Hierarchy of needs theory suggests that there are five levels of human needs that need to be
satisfied.

Figure 5: Motivation theory and effect.

Self-actualization needs come first in the hierarchy line. To satisfy this kind of need organization
needs to assign challenging and creative task to the employees. In Harrods case, it is visible that
employees specially the managers are always assigned with these kinds of working activities. For
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instance, line managers are asked to solve problems instantly or on the spot which requires
enthusiasm and creativity.

Participation in decision making plays an important role in Harrods motivational strategy. In

every level of decision making process, employees are given to the power of making decision on
their own. Autonomy is in the core of Harrods decision making process. Every manager is free to
give their opinion and the company makes sure that the voice of these employees is being heard.
This gives the employees motivation to integrate their ideas and innovation to improve
company’s overall performance. (Bowen and Ostroff, 2004)

Employees always want recognition for every good thing they for the company. Harrods make it
sure that the employees are being recognized for their participation. Higher level mangers
appraise the performance of the employees and this value recognition process allows the
company to make decision later on promotional decision making and whether to give employees
important tasks or not.

Now the lower level of motivation model suggests that employees need a friendly environment
to assess their job, they need friendly coworkers, pleasant supervisor. In Harrods both of these
are strictly maintained. The line mangers have a friendly relationship with the store employees.
Line managers are encouraged to have chitchat with the employees outside the office and store
too if they requires any suggestions, advice or coaching. They are encouraged to sit in coffee
shops or in Harrods re-innovated canteen to discuss issues.

Harrods is very much strict in its safety and work condition policy. They ensure a safe
environment for its employees so that they can perform better. Redesigning its canteen was on
the list when the reformation of HR policies took place.

The priority of Harrods HR redesigning was to reduce turnover rate. The company has taken
initiatives that ensure job security for the employees. Besides, giving the employees other
facilities like refreshment program running, comfort through reasonable working hour are being
ensured. (Guest, 2010)
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P 3.2 Job evaluation and other process determining pay

Job evaluation process in Harrods is mostly determined by the description of the job which
identifies the key role and responsibility of the position and the pay scale is determined through
this.

The basic factors that Harrods counts in order to evaluate the job are such as skill,
communication capability, knowledge, smartness, working capability etc are considered. Besides
these, the major factors that determine pay in Harrods are described below:

Problem solving capability: Every job requires problem solving capability. For instance, an
employee working as a floor manager needs to know how to solve a customer’s problem in the
shortest possible time.

Pressure of work: In Harrods, there is always a rush of customers as the store is popular among
the people in London. Employees must have the capability to take the work load and pressure.

Knowledge: For the managerial positions it is a must to have knowledge on the specified field.
Also the sellers in the store need knowledge regarding Harrods products and services. (Vernon,
2004)

Educational Qualification: Harrods runs its recruitment process in the universities and colleges as
they seek smart and educated people for their store.

Figure 6: Job evaluation and pay determination.

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Training/Experience: Job evaluation process also consider whether the post needs any further
training or to recruit experienced person in the post.

To determine pay for a post other processes and factors are also considered:

Competitive Strategy: In past, Harrods has experienced higher job turnover rate. To get the best
employees from the human resource market, the pay scale in Harrods is designed in such a way
that it attracts the potential and talented people.

Equity: When determining a salary or pay scale, Harrods must consider whether the equity is
maintained or not. Employees working in storage cannot be paid equally as the floor employees.
(Barney, 2005)
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P 3.3 Effectiveness of reward system in different context

Harrods rewarding system can be classified into two following groups. These rewarding systems
best effectiveness is that it motivate the employees, high performance is assured, competencies
among the employees to give their best arises.

Financial reward: Financial rewarding system is followed in Harrods when an employee

performs better than the other and meets the standard. Financial rewarding system in Harrods is
specially followed to motivate individual for his/her performance. Excellent working
performance, better ideas, exceptional performance etc determines whether one should receive
financial reward or not.

Non financial reward: Harrods core rewarding strategy lies into non-financial rewarding
programs. Recognition among the others is all people want and Harrods uses this psychology of
the people in order to satisfy them. Job promotion, care benefits etc are the non-financial tools
for rewarding in Harrods. 9Guest, 2010)
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P 3.4 Monitoring employee performance in Harrods

In Harrods, employees are monitored carefully in different level. The purpose is to spot the
talented employees and appraise them, recognize their values. Also to involve them in the
decision making process more effectively.

The monitoring process in Harrods starts from the line managers who watch the performance of
the subordinates closely and carefully. How they are dealing with the customers, how well and
quickly they can solve the problem of the customers, efficiency in performance etc are
monitored.

The other way Harrods monitor its employee performance is through its HR department. HR
managers run through the departments and observe the employees and also the managers to take
initiatives if any lacking is observed.

The effective way to observe and monitor employee performance is through surveys. It helps
Harrods to identify problems regarding working environment, views of one regarding his/her
working mate or subordinates. (Francis and Keegan, 2006)
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LO #4 Mechanism for cessation of employment

Though Harrods main concern was to reduce the turnover rate of jobs meaning they are willing
to keep their employees but it is sometimes necessary to cut down some employees from their
job regarding many issues such as low performance, illegal activities, stealing which often
happens in retail stores etc.

P 4.1 Reasons for cessation in Harrods

As a retail stores, Harrods needs its employees to work better than any other retailers to create
loyal group of customers. Consistence low performance of the employees may cause customer
dissatisfaction. Thus it is often requires to terminate some employee from their job if they
consistently perform lower than the general level.

In retail store, one problem is often observed which is stealing. Harrods is full of luxuries
products items. Though employee selection process is tight in Harrods and dishonest people do
not get a chance, but illegal activities are often observed as a result managers have to terminate
some people from their jobs.

There are other reasons too for termination from jobs. Sexual harassment may take place in the
work, misbehavior or unprofessional activity with the customer may cause cessation. (Ulrich,
2012)
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P 4.2 Employment exit procedure in Harrods

Most of the retail stores do not follow any formal procedure in order to terminate anyone from
job while Harrods follow a formal procedure to remove someone from his/her post.

If the management decides to remove someone from the job, they first send him/her a letter
addressing the reason of termination. If it’s about performance, they first send a warning letter. If
the performance of the employee improves over the time, they step back from their decision. The
failure of this causes the employee to lose the job.

Figure 7: Termination process in Harrods.

Regarding the other reasons such as illegal activity, the authority send the employee a legal
notice and give the employee a chance to come up with his/her arguments. Any failure of this
causes to termination. Company sends the employee the final notice of cessation.

If we compare this cessation process with other retailer i.e. Walmart, they do not follow any
formal procedure. The manager of the store have the authority to fire an employee right instant if
any disruption is observed. (Munir, 2012).
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P 4.3 Impact of legal and regulatory framework on employee cessation in

Harrods
Harrods is very much careful in their cessation process as any legal notice regarding this issue
may hamper their corporate reputation. Besides, UKs regulation regarding employee cessation
process is very much strict. If any organization terminate an employee without showing any
proper reason that might go into the court even if the employee wants.

The cessation process in Harrods is strictly maintained. Labor law and framework given by the
authority is maintained. They have their own attorney in case of any crisis arise. The company is
also well aware of labor rights, what they demand and their unity. Concerning all these, the legal
framework of cessation has been designed.

The terminated employees get all the benefits they were promised. This helps Harrods to make a
positive impression among the employees too. (Legge,2005).
 Harrods 25
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Conclusion
From the above discussion, it can be conclude that Harrods is practicing well maintained
business strategy in terms of employee management. Their corporation image is created in both
inside and outside their business through a proper management of employees. From their
recruitment process to employee cessation, expert and smart handling process can be observed.
The reformation of the company’s HR department after the change in its ownership has brought
some major changes which is and will be benefiting the company in long run.
 Harrods 26
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Bibliography &References
Legge,K. (2005) Human Resource Management: Rhetorics and Realities, Basingstoke:Palgrave

Munir, A. (2012). Motivation of Employees through Performance Appraisal: Factors of employee

motivation, Lambert Publishing, London, UK, pp. 319-351

Vernon, P. (2004) Delivering on the promise of HR transformation, Strategic Human Resources

Review, 3(6): p.20.

Jackson, S. et al. (2014) Toward developing Human Resource Management systems for knowledge-
intensive teamwork, Personnel and Human Resources Management, Vol.15, pp 17-70.

Boudreau, J. & Ramsad, P. (2007) Beyond HR: The New Science of Human Capital, Boston:
Harvard Business School Press.

Francis, H. and Keegan, A. (2006) The changing face of HRM: in search of balance‟, Human
Resource Management Journal, 16(3), pp. 231-249.

Ulrich, D. (2012) Human Resource Champions, Harvard Business School Press, Boston, MA.

Barney, B. (2005) Should Strategic Management Research Engage Public Policy Issues?
Academy of Management Journal, 48 (6), pp. 945-948.

Guest, D. (2000) Human resource management and performance: A review and research agenda,
International Journal of Human Resource Management, 8(3): pp.263- 276.

Bowen, D. and Ostroff, C. (2004) Understanding HRM-performance linkages: The role of the
“strength” of the HRM system, Academy of Management Review, 29: pp.203-21.