Human Resource Development – The Case of ALDI

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Executive Summary

Employees are the most valuable resource of organisations, especially in the case of the retail industry. They serve as the front-line of organisations, which could result in improved satisfaction and loyalty of customers; therefore organisations like Aldi must continually focus on offering training and development opportunities based on their needs and requirements. Since the company has experienced a drastic decline in its profit for 3 consecutive years, the findings of the study have indicated that this was primarily the result of capability gaps, which can be reduced through the inclusion of benchmarking, 360-degree review, and training need analysis.

In all of these models and theories, the primary concern is the reduction of capability gaps through informal and formal training sessions, as well as mentoring that could help Aldi to transform employees into store managers. For instance, the 360-degree appraisal tool can be used by the managers in improving the performance and skills based on the feedback from other employees, which can help in an overall reduction of capability gaps.

This would even be in accordance with the Resource-Based View theory. Likewise, benchmarking the performance of top performance could act as a source of motivation and best practice for the remaining employees, while providing the management with an insight into the skills that must be developed within the employees for their optimal level of performance, which could ultimately improve the company from its consecutive 3 years profit decline.

Introduction

Employees, in the intensely competitive business environment, are the most valuable asset because they are primarily responsible for serving the customers in the service industry for optimal level of satisfaction and loyalty (Banfield and Kay, 2012, p. 5). Therefore, it has become significantly important for companies to ensure that their employees are highly skilled and competent.

Considering this, organisations have continually focused on the application of a variety of tools and techniques to determine and identify the capability gaps of the existing staff, which ultimately leads to training and development efforts based on the analysis (Brewster et al., 2011).

In the case of Aldi, it was prominent that the 5^th biggest grocery retailer’s aggressive expansion plans to increase the number of potential sites from 700 to 1000 stores would result in several implications for the human resource management department with respect to the core functions i.e. recruitment and selection, and training and development.

Considering this, the purpose of this report is to offer a comprehensive strategic human resource development implication plan to ensure that the business successfully survives and thrives in the globalised era based on the skills, knowledge, and competencies of the employees.

Task 1: Methods of Identifying Capability Gaps

Capability Gaps

Capability gaps, in the contemporary business environment, have become a rising concern for organisations with respect to their employees, which has significantly limited the businesses in terms of achieving the mutually shared goals and objectives in the most effective and efficient manner (Capron and Mitchell, 2009, p. 298).

With respect to employees, the concept of capability gaps can be defined as the inability of the employees to execute a specified course of action based on the gaps resulting from lack of sufficiency and/or proficiency, or even from no existing capabilities (Henfridsson, Mathiassen, and Svahn, 2009).

Moreover, the gaps in capabilities can also be a result of lack of employee’s knowledge or skills, constant changes in the technology, vagueness in terms of organisational goals and targets, lack of leadership capabilities, or lack of training and development opportunities due to lack of monetary resources that are important to cover the expenses associated with the programmes (Carbery and Cross, 2015).

Considering this, organisations have focused extensively on offering the employees a variety of training and development opportunities to ensure that their inabilities could be replaced with an existing capability solution, which could ultimately lead to the minimisation of future gaps (Jennings, 2000, p. 7).

Therefore, it has become fundamentally important to identify capability gaps in employees to meet the continually changing business needs. In simpler words, if the organisation fails to evaluate the capability gaps in employees, it would result in reduced productivity and performance, which could result in the loss of competitive advantage.

Over the years, several methods and techniques have been proposed to identify the existing capability gaps in employees, while offering a variety of recommendations to ensure that the capability gaps are reduced to minimal, which could ultimately result in improved performance, profitability, and market share. The most prominent models or theories are as follows;

360-Degree Review

In the contemporary business environment, a company can identify the shortage in skills through the use of feedback. In particular, a business can use 360-degree review, where the performance of the employees is solicited from managers, peers, colleagues of an employee, which highlights the areas of concern with respect to skills and competencies of the employee (Heithfield, 2016). Since this tool requires gathering feedback regarding the performance of the employee, it helps the management in identifying the areas that must be taken into account for development.

The most prominent aspect of this tool is that it allows the management to ask and receive feedback from a variety of internal stakeholders regarding the performance of the employee, which provides the management with an ability to analyse the feedback to understand the patterns of behaviour, or skill shortage (CIPD, 2017). The ultimate goal of this tool is to offer the employees constructive feedback without overwhelming them with extensive data.

With respect to the case of Aldi, the company is in need of almost 600 managers for the retail stores. In this regard, 360-degree feedback can play an influential role in determining the skills and competencies required by employees to undertake the role of managers (Aldi, 2017).

This implies that the management must focus on conducting feedbacks and reviews, which would help them in managing and reducing the capability gaps. Since Aldi’s profits have dropped consecutive for 3 years (i.e. 17 percent fall in profits) (Aldi, 2016), the company must use 360-degree feedback in order to analyse the overall capability gaps in order to plan its aggressive expansion.

In order to do so, the company can also hire external consultants for collecting and analysing the feedbacks obtained from the employees (ACAS, 2017), while helping the employees to improve their overall performance, which could ultimately help the business in improving its financial performance. More importantly, the tool would help the business to offer training and development opportunities to the employees based on their shortcomings, which could be in accordance with CIPD and the government regulations with respect to skills improvement in employees (Gov.uk, 2017).

Benchmarking Performance

The most prominent tool to identify the existing skills gaps in the workplace is benchmarking performance, where the company focuses on highlighting the top performers of the organisation, while comparing their performance with others in the workplace (Andriotis, 2017). This implies that this tool helps in setting a point of reference with respect to the skills needed for overall success in the workplace. In this matter, the most commonly used activity is observed, where the performance of top performers is benchmarked, which serves as the best practice for the remaining workforce.

In the case of Aldi, it is evident that the company has failed to satisfy their stakeholders with the continually declining profit for 3 consecutive years (Aldi, 2016); therefore the company must use this tool to set the best practice for the remaining employees. In simpler words, the tool would help in demonstrating the ideal competencies at work, while helping the organisation in determining the capability gaps that exist within the workforce.

This would ultimately help the business in setting the required training and development programs into actions that could help in the overall reduction of capability gaps within the organisation. For instance, if the top performer’s performance is the result of technical knowledge, the other remaining employees should also be offered technical training, which would satisfy their capability gaps, while making them the perfect solution for the job (ILM, 2017).

Moreover, it would also be in accordance with the resource-based view, where it has been argued that organisations must use their resources in the most effective manner; thus benchmarking would help Aldi in successfully improving the capability gaps in employees, while working towards its aggressive expansion plan.

Training Need Analysis

The last theory related to the identification of capability gaps is Training Need Analysis (TNA) that focuses extensively on the need of employees. In this theory, the organisations are recommended to consider the need of every employee and department individually, which could help in improving the overall performance of employees (Brown, 2002, p. 571). Training Need Analysis can be further categorised into person analysis, task analysis, and organisational analysis.

With respect to person analysis, the individual need of employees should be taken into account, and they should be provided with sufficient training and development sessions to ensure reduction in capability gaps with respect to the need of employees (Kennedy, 1982).

On the contrary, task analysis focuses on the skills needed to perform the tasks in a most effective and efficient manner; therefore employees are required to be provided with the best training available to ensure that capability gaps are addressed in an optimal manner (Kennedy, 1982). Lastly, the organisational analysis focuses on predicting the strategy for the success of the business in the forthcoming years. By all these aspects, TNA helps organisations in identifying the gaps between the current and required levels of knowledge, skills, and aptitude (Kennedy, 1982).

With respect to the case of Aldi, TNA can prove to have an influential role in changing the attitude and behaviour of employees through the training and development opportunities offered to them for eliminating their capability gaps. With respect to the person analysis,

Aldi must focus on reducing the capability gaps (i.e. transforming employees into managers) through the use of mentoring, which could prove to have an influential impact on the attitude, and knowledge of the employees under the supervision of experienced leaders (Carbery and Cross, 2015). This would ultimately offer the business exceptional managers over the years, which could also help in further strengthening the organisation’s competitive advantage in the grocery retail industry across the globe.

Task 2: Coaching and Mentoring vs. Management Training Programme

Coaching and Mentoring

Coaching and mentoring, over the years, have gained exceptional importance with respect to the development of human resources within an organisation (MacLennan, 2017). In a business environment, coaching and mentoring have been argued as a process that allows both companies and their employees to achieve their full potential.

There are several similarities shared amongst coaching and mentoring; for instance, 1) both help in facilitating the exploration of needs, skills and motivation to help an individual make lasting change, 2) help in the setting of goals followed by methods to assess the progress of these goals, 3) helps in encouraging commitment to action while helping individuals to develop lasting personal growth, and 4) helps in the encouragement of people to continually focus on improving their competencies for the achievement of desired goals and objectives (Hawkins and Smith, 2007; Banfield and Kay, 2012).

Though, both coaching and mentoring share some similarities, coaching can be defined formal structured association that focuses exclusively on the improvement in behaviour and performance of employees, while ensuring that the work issues are resolved in the most appropriate manner; whereas mentoring can be defined as an informal association that focuses on two-way communication, which is mutually beneficial for the employees and their organisations with respect to long-term career movement (Northouse, 2015).

Over the years, both the terms have been used interchangeably; however, the concepts are significantly different. In particular, mentoring focuses on relationships in comparison to tasks; the core focus of coaching in organisations (Northouse, 2015). Likewise, mentoring focuses on long-term growth through associations that can help in developing a working environment based on trust, which ultimately leads to increased performance and success. On the contrary, coaching’s focus remains on the short-term achievement of goals and objectives, and the process lasts until the short-term goal is achieved.

Lastly, mentoring is driven based on development (Schein, 2010). This implies that mentoring focuses on the development of employees not only for their current jobs but also for the future that makes them feel more secure and driven towards the achievement of organisational goals and objectives. However, coaching’s purpose is to improve the performance of employees based on the requirements of the job, rather than developing them for future jobs or the acquisition of new skills (Schein, 2010).

With respect to the case of Aldi, it is evident that the planned expansion of the company would require both mentoring and coaching to ensure that the business remains competitive in the retail sector while offering a variety of training and development opportunities to employees. In the earlier phase (i.e. induction of new employees), it would be more appropriate to adopt the coaching approach as it would help the newly recruited employees develop specific competencies required on the job (Aldi, 2017).

This is in accordance with the dropping operating profit of 1.8% i.e. 255.6million, despite the fact that the company recorded outstanding sales in 2012 (Atherton, 2016). This would also be in accordance with resource-based view theory, where it has been outlined that the employees should have the skills and competencies to perform their tasks in the most efficient method. Since this approach is performance-driven, it would help the business achieve the desired level of success in the most aggressive manner (Carbery and Cross, 2015).

This can be achieved by on-the-job training, where the coach would guide the newly recruited employees about the processes and practices of the organisation. Though, coaching is short-term focused, it must be followed by mentoring approach as it would make the employees feel more secure and trusted under the leadership of experienced and wiser employees. Moreover, it would help the business with respect to the development of leaders from its existing talent pool, which could help Aldi with respect to the future management position.

Formally Structured Management Trainee Programme

Management trainee programme can be argued as a process of formally recruiting and selecting applicants while transforming them into leaders for tomorrow. In this process, the management trainee is offered training and development opportunities for a supervisory or managerial position, which has often been argued the best approach to prepare the employees to lead the organisation in the forthcoming years (Dysvik, Kuvaas, and Buch, 2010, p. 411; Mello, 2015).

Since they are provided with a variety of training and development opportunities, it helps them in understanding the importance of managerial roles; therefore they tend to focus more on the development of required skills, judgments, and know-how of being an effective leader. The formally structured management trainee programme focuses on offering meaningful opportunities as well as accelerated growth by aligning the employee’s personal development needs in accordance with the business needs (Carbery and Cross, 2015).

The foremost benefit associated with the management trainee programme is that the employees are expected to develop an understanding of all the facets of the business ranging from human resources to operations, and from sales to customer service (Mello, 2015). This ensures that the business has a flexible trainee with respect to the skills and competencies.

Moreover, a formally structured management trainee programme helps businesses in facilitating teamwork. Since management trainees are required to work in teams, they tend to develop an understanding of others in the team along with the cultural differences that must be avoided for the development of a healthy working environment. Furthermore, a delegation of tasks becomes more effective in management training programmes that could further improve the level of communication, engagement, and ultimately the moral of management trainees (Handy, 1999).

However, formally structured management trainee programmes are often criticised for being contractual, which significantly reduces the motivation and satisfaction of trainees, while increasing the level of job insecurity. Moreover, management trainees are required to take an active part in departments that they have the least interest in; therefore they tend to focus just on the completion of tasks, rather than developing traits and skills that could further help them in future.

With respect to the case of Aldi, formally structured management trainee programmes can play an influential role in the success of the business with respect to the planned aggressive expansion. In particular, the programme would offer the business a pool of talent capable of managing a variety of functions within the stores and could be considered for future managerial positions.

Since Aldi would be required to hire approximately 600 new store managers in the next 5 years, management trainee programme would offer the business with an ability to test and develop the skills and competencies of the management trainee and could select the most appropriate trainee based on his/her understanding and skills with respect to the functions and roles of a store manager.

This could further strengthen the company’s ability in decision-making as well as a delegation of tasks, which would reduce the burden from the human resource department. In simpler words, the department would have sufficient time to focus on the recruitment and selection of approximately 18000 employees for the successful achievement of the planned aggressive expansion plan.

Coaching/Mentoring vs. Formally Structured Management Training Programme

The differences between coaching, mentoring, and formally structured management training programme are as follows;

Focus

The focus of coaching is to offer structured support to the employees that could help the employees to find relevant and appropriate solutions to the issues at the workplace; whereas mentoring focuses on two-way communication (i.e. giving and receiving), where employees are offered guidance and direction (Handy, 1999; Schein, 2010).

This helps the employees to understand and evaluate the most appropriate solutions to the problem. On the contrary, a formally structured management training programme focuses on offering instructions and guidance to the trainees, rather than directly helping them in finding appropriate solutions.

Context

With respect to context, mentoring focuses on the personal development of the employees with respect to the current job and future career; whereas coaching focuses exclusively on the current job (Mankin, 2009; Reees and Smith, 2014).

This implies that coaching focuses on the development of employees that could help the employees accomplish the goals and objectives of the organisation. However, the management trainee programme focuses extensively on teamwork with the organisation, where the employees are developed to become the leader in the near future.

Orientation

Mentoring, with respect to orientation, focuses on the application of ideas for the personal and professional achievements of the employees; whereas coaching focuses on probing i.e. asking questions, from the immediate supervisor to complete the allocated tasks in the most effective manner (Reees and Smith, 2014).

On the contrary, the management trainee programme focuses more on discussion and skill transfer, in comparison to application and probing, which allows them to develop an understanding of the tasks, followed by the most appropriate solutions based on the discussion in the team (Gilmore, 2013).

Goal

The goal of mentoring is to ensure intentional growth investment in employees that could help them to become better at the current job while focusing on personal improvement of employees with respect to their future career; however, the goal of coaching is task-oriented, which implies that the focus remains on the overall improvement in the performance of the organisation (Banfield and Kay, 2012).

On the contrary, the goal in the management trainee programme is collectively ranging from personal development to increase in tasks efficiency. This approach allows the organisation to develop flexible employees who could perform a variety of tasks, irrespective of the department.

Values

In mentoring, the values are entirely based on the experience, knowledge, and competencies of the mentor; whereas the values in coaching are dependent upon the motivation and skills of the coach (Banfield and Kay, 2012). On the contrary, the values in management training programmes are entirely dependent on the trainee (i.e. ability to learn and transfer the knowledge to his/her peers.

Most Effective Approach for Aldi

Considering the advantages and disadvantages of the earlier mentioned approaches and the case of Aldi’s aggressive expansion plan, the most effective approach for the company would be management training programmes. In particular, it would help the business in ensuring that the trainees have the most appropriate skills and attribute to perform the tasks at the highest level.

Moreover, under this programme, trainees would be offered a variety of learning opportunities that could help in organically creating more leaders in the future i.e. the next five years – 2022. Though training programmes are quite expensive, the long-term benefits would make the investment in such programmes worthwhile for the business.

For instance, Aldi would be provided with a stronger pool of trainees to be considered for the 600 positions of store managers and could help in improving the level of communication throughout the stores operating across the globe. Delegation of tasks would become significantly easier through the use of this approach, and Aldi could focus on setting aggressive ambitions, where the trainees would play an influential role in ensuring that the ambitions are reached in the most profitable manner.

Task 3: Recommendations

Based on the above-conducted analysis for the methods of identification of capability gaps and the selection of the best method for fulfilling the capability gaps of employees, the company follows an aggressive expansion strategy seeking to expand hugely over the next five years opening 300 new stores and in requirement of minimum 18,000 employees for the stores and 600 managers to manage the stores. From the analysis, the following recommendations have been made to Aldi for achieving its human resource management objectives to comply with its corporate expansion strategy.

• It has been determined that for the new stores and expansion, there are capability gaps within the company that needs to be addressed at first. Therefore for fulfilling the capability gaps, firstly, the activist and reflector learning styles are to be applied to the new employees of the company. The activist approach would generate new ideas from the employees and the reflector approach will develop the employees as their leaders by demonstrating them on the way of performing a task.
• Secondly, coaching and mentoring as well as management trainee programs are beneficial for the company and both can be adopted by the company as it requires both employees and managers. The coaching and mentoring will help the company to develop employees required for the new stores whereas the management trainee program will be focused upon developing the new managers required for the stores. Therefore, it is recommended for the company to adopt both approaches in order to develop employees as well as managers for the company.
• Thirdly, it is recommended for Aldi to prioritize their approaches as it can first work on a management trainee program to develop managers for its stores at first so that the employees under the manager can work accordingly. After the managers have been fully developed to perform their role effectively and efficiently, then the company should opt to go for mentoring and coaching approach for effective outcomes and professional development of employees so that managers and employees can work collaboratively towards the goal of the company that is to remain competitive in the business.

Conclusion

The analysis conducted above is for the retail store named Aldi which follows an aggressive expansion strategy and looks to increase its number of stores from 700 to 1000 and might as well the numbers can increase. From the analysis, it can be concluded that the foremost responsibility of the company is to identify the capability gaps and other gaps in human resource management that require supervision and fulfilment.

Then, the company should look for the most effective approaches to fulfil the gap and the final step is to implement the approach. In this context, it has been determined that the management trainee approach for the company is the best approach for fulfilling the capability gaps because the firm requires 600 new managers for its new stores and therefore, the capability gap exists. Thus, it can be concluded that the company should work upon the management trainee approach for fulfilling the capability gap in order to recruit fresh individuals and develop them into leaders of tomorrow.

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