valuating Human Resource Management at ALDI: A Comprehensive Analysis

NotesMonkey

ALDI

Evaluation of ALDI

Human Resource Management

Contents

Introduction and Organizational Objectives ................................................................................................. 3

SWOT Analysis: ........................................................................................................................................... 3

Themes .......................................................................................................................................................... 4

Argument ...................................................................................................................................................... 4

Expectancy Theory ....................................................................................................................................... 5

Motivation Theories and Recommendations ................................................................................................ 5

Performance Management ............................................................................................................................ 6

Performance Management Theories and Recommendations ........................................................................ 7

Conclusion .................................................................................................................................................... 7

Appendix ....................................................................................................................................................... 9

References ................................................................................................... Error! Bookmark not defined.

Introduction and Organizational Objectives

Anna Albrecht has opened its first small retail store of food in 1914 in Germany at the mining town of

Essen. Started with a very small outlet then but now it has somewhere around 7000 stores in its account

in 70 countries of the world. It has 365 stores only in Australia which are located at NSW, Queensland,

ACT and Victoria. The first store of ALDI in Australia was opened in 2001 at Bankstown and

Marrickville (Perry, 2008) . With its innovative ideas and skilled Human Resource it is introducing higher

quality and new private-label groceries. There are a number of choices available in grocery and food

shopping. The major focus of ALDI is to deliver exceptionally high quality of products that could match

with competitor’s product but keeping the prices lower than that of the competitor’s product. The HR

force of ALDI counts approximately 8,000. These people are employed in distribution centers, stores and

supply chains (Kim, 2000). With all these specifications ALDI has become the very first company to

introduce the concept of unit pricing in Australian market. Not only is this but it the only chain of

supermarket in Australia which is selling food free from artificial colors. All the branded food products

are available without artificial colors across Australia. To reduce the shares of competitors’ products it

has introduced some unique offers.

SWOT Analysis:

Being a private company ALDI is not free from competition. With this effect it has a number of strengths,

weakness, Threats and opportunity (Kaplan, 2005). These are the factors which affect the objectives of

the company and help in framing the strategies.

The SWOT analysis of ALDI is listed below

Strengths Weaknesses

• Dominant presence across Australia.

• Wide range of healthy branded food.

• Low market prices and high quality

goods.

• Positive image among customers.

• Large HR force

• Globally tested business model

• Market share is small

• Recruitment policy is not diversified

• Some customers may perceive its goods

as low in quality and cheap

• It sells brands which are not widely

known.

• Not using an advanced technology to

match with the competitors.

• Inefficient Performance management

tool.

Fig 1: SWOT Analysis

Source: Blustein, 2014

Themes

The SWOT analysis of ALDI has brought into focus several HR issues. The two areas which are

Motivation and Performance Management have been selected which could be managed by the company

in a better way. Furthermore these themes would be analyzed in a length and several recommendations

would also be provided. If those recommendations would be implemented by the company then it will

help in achieving the objectives of the company (Huselid, 2014).

Argument

The point of argument here is that ALDI can enhance its performance by introducing the theory and

practice of HRM specifically in areas of Motivation and Performance Management. It would further help

in keeping the employees motivated by measuring their performance in a right manner. ALDI has a huge

workforce but it seems to dissatisfied with motivation and performance management norms of the

company.

Motivation

One of the most important factors related to Human resources is nothing but motivation (Delery, 2007).

Motivation holds an equally important place in Organizational behavior as well. The world has become

very complicated and challenging and organizations have to play a crucial role in the achievement of

missions and social goals. Human factor is an important and integral factor of any organization (Delery,

Opportunities Threats

• Provides job to only locals

• It can increase market share by adding

new products

• It can make available different

methods of shopping to the customers

• It can also use social networking and

ecommerce sites to make a customer

base.

• There is a lack of skill in HR force

• Only limited numbers of products are

available.

• It is not changing according to

customer’s needs.

• Price strategies are also limited.

• Lack of equity and motivation.

2007). Any organization which treats its Human factor without empathy would not be successful in long

run. Thus it clear those organizations have to take care of the needs of its Human resources. In this series

the most vital factor with which an employee gets affected is Motivation. If an employee is motivated

properly then he would work with a great zeal and higher satisfaction. A highly motivated environment

induces an employee to work in the direction organizational strategies and goals. (Kramar, Bartram, De

Cieri, Noe, Hollenbeck, Gerhart, Wright, 2014). Motivation is related to the behavior of an individual it

suggests about why employees behave in a specific manner.

Expectancy Theory

VROOM (1964) was of the opinion that two types of people never exists the one who are not at all

motivated and the one who are completely motivated. It also suggests that situational context and the

differences in individual have a significant power to influence the levels of motivation. The major

assumption of this theory lies in the fact that when behavioral options are available in a particular

situation then individuals go for the option which has the highest motivation forces which are called as

MF according to the expectancy model. There are three perceptions of these theories which are

Expectancy, Instrumentality and Valence.

Expectancy or sometimes also called as individual expectancy is the probability assigned by an individual

that he/she has tried something. It is denoted by E. There is another perception in this theory that

whatever an individual has tried will lead to success which is denoted by P. These two things are

important for an individual to achieve desired goals. This model also suggests that the perceptions of an

individual are affected by self-efficacy, past experience and perceived goal difficulty. Instrumentality is

the probability that an employee has, about achieving the expected performance. It is directly related to

the rewards an employee is expected to get. The rewards include increase in pay, recognition, promotion

etc (Youndt, 2013). Instrumentality is affected by several factors such as policies, control, trust etc.

Valence deals with the value. It is the value which an individual has given to the rewards

Motivation Theories and Recommendations

Motivation theories give ALDI an insight to understand the needs of an employee and on the basis of the

needs the tactics which they should use to motivate their employees. Since the workforce of ALDI is very

huge i.e. 8000 employees it is difficult to ascertain the needs of every employee specifically. As the

theorists say that every individual has a distinct behavior so this is obvious that the needs would also

differ. But this problem of ALDI can be solved using expectancy model which focuses on individual

expectancy. The model depicted that individual should be rewarded in such a way that he should value his

rewards (Huselid, 2007) . So the next step which ALDI should take is to reward its employees in such a

way that they count upon the rewards. They should increase the pay of employees, promotion and

recognition should also be used to keep the zeal of employees alive. The problem with ALDI is that it had

more concern for production and less for people so it should devote equal concern to both the issues. The

major tenant of the Vroom’s Model of expectancy is that people are little motivated and they need some

more motivation to achieve the organizational goals. If ALDI wants the overall contribution of its

employees in achieving the goals of the organization then it should works towards motivating its

employees a little more. With that the employees will use their skills and knowledge in an effective

manner and the talent will not get wasted. This will ultimately help ALDI in diversification and market

penetration which are very necessary for it.

Performance Management

There are a number of activities in Human Resource Management starting from Selection to Motivation;

Performance management is something which plays a decisive role in Human Resource activities in an

organization. Performance management is the process where the performance of an employee is measured

using tools available in theories. There are several characteristics of performance management according

to Hewitt (1994) who analyzed a data from 18 companies. He suggested several characteristics such as

implementation at top, reasonable number of goals, simple process and additional feedback. Keeping the

method of performance management simple is very necessary so that employees will also understand the

whole mechanism. Another important part of performance management is getting feedback from the

employees. William M. Mercer (1995) said that An effective system of performance management is the

one which delivers the support and direction to the employees. The need of performance management was

realized when organizations have realized that they are not able to recognize the potential and skill of

their employees. At the same time it is also important at the time of increments and promotions. These

days companies are adopting expensive training policies for their employees. In this case it becomes

necessary for a company to ensure the outcomes of the training. Performance management is the tool with

the help of which companies can track the performance and by that they can know the effectiveness of a

training program. A strategy of change management would also be required to establish the link between

motivation and performance ( Mohrman, Resnick , Lawler 1989).

Performance Management Theories and Recommendations

There is a need to bring changes in performance management systems. It is clear that employees In ALDI

are somehow dissatisfied with the companies ‘ some policies and one of them is performance

management systems. ALDI needs to work upon a competitive model of performance management so

that their employees may feel competent enough not only within organization but also outside it. Other

companies which are ALDI’s competitors are using advanced performance tracking systems with a strong

feedback policy. The feedback process is always a joint obligation of employees as well as managers

(Baird, 2008). It is not only managers who have to do the efforts but employee also do the same. As

performance directly affects the satisfaction of employees and the output so it is necessary for both

employee as well as an organization. The market share of ALDI is lower as compared to that of its

competitors and one reason could be the lower output. It is important to discuss the ratings and reviews an

employee has secured by organizing a meeting after appraisal is over.

Conclusion

The ALDI’s analysis depicts that two major areas of improvement are Motivation of employees and

Performance management. If ALDI wants to achieve its organizational objectives efficiently, then it

needs to improve its motivational policies as well as Performance management mechanism. It is said that

Motivation is the factor which can take an organization to the path o success. Performance management is

regarded as a tool to check with the output. So if both of them are taken care to a great extent then it

would become very swift to achieve the goals for ALDI. On the basis of this the report tends to propose

following practices to ALDI to enhance its performance and overcome its weaknesses:

• Develop a motivation plan for employees in such a way that it would satisfy the needs of all the

employees accordingly.

• The motivation plan so developed should be competitive enough so as to give social security to

the employees.

• The top level management should actively participate in Performance Appraisal for the success of

the program.

• The feedback mechanism of performance management system needs to be strong.

• The techniques used for performance management should be advanced and serve the purpose of

organizational goal achievement

• There should be uniformity in Motivation as well as performance management systems.

• Ensure that the results and behavior expectations are tied to the strategic direction and objectives

of organization.

Appendix

Fig 1: Motivation and Theories

Recommendation Implementation strategy

Develop a satisfactory motivation plan To develop a motivation plan that satisfies every

employee, it is necessary to assess the needs of the

employees. There are a number of need based

theories of motivation such as Maslow’s Hierarchy

theory, ERG theory , Big Five model of Alderfer.

These theories will ascertain the employees’ needs

and after that Vroom’s expectancy model should be

applied.

Competitive Motivation Plan To prepare a competitive motivation plan the

organisation should analyse the external

environment. It should be known to the employer

what their competitors are offering to their

employees. It poses a great impact on social status

of an employee. The motivation plan should be

such that employee feels superior when he

compares himself to his peers in other industries in

the market.

Uniformity in motivation system The motivation policies and practices should be

uniform for all the employees. For doing this the

organisation needs to work upon one single model

of motivation which suits the nature of organisation

and then apply it for everyone.

Results and behaviour expectations tied with

strategic direction

The ultimate objective of any organisation is to

earn profit and for that strategic direction is

important. As referred in text that motivation is

directly affected by behaviour and behaviour

affects the strategic direction. To strike a balance

between these two the organisation has to make

clear the expected behaviour and the results. This

can be done by using MBO with a blend of

Vroom’s expectancy model

Performance Management and Theories

Recommendation Implementation strategy

Top level management’s involvement in

performance management

Performance Management is a function which

starts at the top level of management. For all the

activities and outcomes the devotion of top level

management is important. The top level

management should pick up the period in which

they are relatively free so that they can put more

efforts in performance management. The top

management is required to treat performance

management as an equally important function and

allocate resources for performing it.

Strong feedback system The organisation needs to draft policies in such a

way that it becomes a two- way communication

process. Employer should give an opportunity to

employees to keep their points in front and

employees should also accept the employer’s point

patiently. For this the organisation can make use of

feedback forms.

Advance techniques of Performance management There are two types of techniques of performance

management, traditional technique and modern

techniques. Modern techniques are free from the

flaws and are practical. So the organisation should

use modern and advanced techniques such as

BARS, MBO, 360 degree appraisals etc.