Value propositions are defined as an area that an organisation will choose to excel in in order to gain competitive advantage and become an industry leader. (Treacy & Wiersema, 1993). Treacy and Wiersema, 1993, suggests that there are three generic value propositions (disciplines) that a firm can choose to focus upon in order to succeed within their operating market. These three propositions are:
– Operational Excellence: focusing on cost leadership and providing their consumer convenience at a competitive price.
– Customer Intimacy: focusing upon meeting the customer’s requirements by tailoring their service/product to their needs.
– Product Leadership: focusing on product innovation and development to continuously produce state of the art products and services.
(Treacy & Wiersema, 1993)
In order to dominant the market, the company will need to focus on adding value to their consumers with one of the above value propositions to gain competitive advantage. Treacy & Wiersema (1993) suggest that there are four rules in which the firm should follow:
1. Aim to excel within one of the value proposition.
2. Maintain standards on other value propositions.
3. Increase value to the consumer’s year-on-year to control the market.
4. To support chosen value proposition, the organisation will need to deliver a high-standard operating business model.
In the case of GCS, it is evident that the firm has adopted to follow an operational excellence approach within their business model to gain competitive advantage in the recruitment industry. GCS’s Managing Director, Chris Bartlett, explains that the firm has implemented a “360 recruitment” strategy. Within this approach, the recruitment consultants manage the end-to-end process from finding the vacancies to placing an appropriate candidate (King, Chung, & Hunter, 2014). Compared with the other recruitment consultancies that adapt a “selection and search” approach where there are multiple employee’s involved in the placement of a candidate. (King, Chung, & Hunter, 2014). This approach, shows GCS adopting an operational excellence value proposition, as it allows GCS to streamline their internal processes, therefore, minimising the inconvenience for the client as they will only need to communicate with one individual in the firm. This will allow GCS to build strong relationships with their clients as well as gaining a competitive advantage over the other recruitment agencies in the industry. The 360 recruitment strategy also reduces costs for GCS as they are standardising their procedure by using one recruitment consultant to complete the tasks of many roles therefore reducing the number of employees needed. (toolshero.com,2018)
Supporting the operational excellence that GCS has adopted, the firm also is categorised and organised into technology areas, such as Oracle, rather than into industry sectors, such as healthcare (King, Chung, & Hunter, 2014). This approach allows GCS to meet and solve the direct recruitment needs of the operational managers (King, Chung, & Hunter, 2014) by allowing the consultants to be more reliable and precise with the placement of candidates into vacancies. This supports the operational excellence approach because it is another way in which GCS is streamlining internal processes, this process can lead to a reduction in the number of errors made as the firm can choose a candidate with the desired technological skills to fill the client’s vacancy. Also allows GCS to meet the operational manager’s direct recruitment needs to a high quality standard, ensuring the consultants to maintain good relationships with the clients also gaining competitive advantage and a unique selling point for GCS.
Even though, it is also evident that GCS has elements of customer intimacy and product leadership within their business model in order to maintain the propositions. It is clear that GCS have adopted an operational excellence approach within their business strategy to become an industry leader within the recruitment market.
Human Resource Management (HRM) is defined by Boxall & Purcell (2016) as “a management activity concerned with ‘human resources’”. The implementation of a HRM system within an organisation is to serve functions from providing talented labour to maintaining training services (hrpayrollsystems.net, 2018). HRM is crucial for an organisation as it determines “the survival, effectiveness and competitiveness of businesses” (Zeng, 2018) In order for the HRM system to be effective, it should work alongside the businesses goals and objectives they want to achieve.
Strategic management and HR practices should be integrated in order to be a crucial element in a business (Boxall & Purcell, 2016). One approach is “best-fit” school, this is linked with the contingency perspective and that is important to the theory of strategic management. This approach argues that HR strategies should be adapted for its wider environment as well as other areas in the firm’s strategy (Boxall & Purcell, 2016). The other approach is “best-practice”, this argues that an organisation should adopt HR practices that are “best” for their strategy in order to manage their workforce. (Boxall & Purcell, 2016). Both of these approaches would work alongside a theoretical framework of either, strategic-fit approach or the human resource advantage framework.
The strategic – fit approach is made up of two elements: vertical and horizontal fit. The vertical fit is achieving the organisational goals of a firm by aligning HR practices and strategic management process (Schuler & Jackson, 1987). The horizontal fit is the harmony of the HRM practices to ensure that there is good use of human resources. (Baird & Meshoulam, 1988).
Whereas human capital advantage framework can be developed in two different ways: Human capital advantage and organisational process advantage. When both of the sources work in harmony and reinforce each other, then the results will be more beneficial for the organisation.
Throughout the case study, it clear that GCS has adopted a strategic-fit approach in order to achieve their operational excellence value proposition. This is clear because GCS shows very strong evidence of certain HR practices being in place within the organisation to achieve the business goals of becoming an industry leader within the recruitment industry.
Within GCS, their recruitment and selection process is to hire individuals that possess the criteria they believe that a successful recruitment consultant should have from an interview based selection process. This includes traits such as they should “have a great memory” as well as being “energetic and enthusiastic but also resilient” and they also need to be “assertive” (King, Chung, & Hunter, 2014). When hiring, GCS would look for these skills as they believed if they were to hire individuals with the desired skillset already, it can decrease the amount they will need to spend on training and development of the employees. The specific recruitment and selection process can allow GCS to achieve their HRM goals as well as their business strategy to become the recruitment industry leaders. In spite of saving costs on training and development, their recruitment and selection process could lead to the firm not hiring people that could be beneficial in the long term.
GCS also has a strong presence of reward systems within their organisation, as “Working at GCS: You are your numbers” (King, Chung & Hunter, 2014). GCS believes that all results should be publically announced, success or failure. GCS also hold quarterly business meetings where all recruitment consultant’s performance’s are ranked. Those who have raised £1m for GCS are eligible for the exclusive “millionaires club” dinner with Chris and the other millionaires. (King, Chung & Hunter, 2014). The “millionaires club” is a way in which Chris & GCS reward the recruitment consultants who are making money and allowing the business to grow. This is a form of motivation as Chris believes that the “best recruitment consultants” were less motivated for deals that “paid them less” (King, Chung & Hunter, 2014). The motivation is that the individuals will want to achieve and close deals in order to become part of the millionaire’s club, in addition, the individuals may want to ensure that they perform well because they will not want humiliation of their “failures” or poor results being publically announced to the firm. In spite of this, it can be a cause of demotivating staff that were not achieving as well as others in the organisation due to the fact that they may be feel humiliated from public announcements.
Another reward system that GCS have in place is the commission based paying system, the consultants will be paid commission on the gross margins between the price charged to the client and what GCS paid the contractor (King, Chung & Hunter, 2014). This will motivate the staff in wanting to make sure that they achieve a large gross margin to receive more commission (King, Chung & Hunter, 2014). Both of these reward systems will link with the operational excellence and ensure that the company achieve their business goals because both reward systems are a way of which the firm motivates their staff to hit business goals and ensuring that they are providing a high level service to their clients.
The staffing and reward systems show a strong sense of GCS using a strategic-fit approach framework within their business model to achieve the operational excellence. Both of the HR practices fitted in with the vertical fit of the firm in order to help the organisation gain competitive advantage and market share. As well as fitting the horizontal fit of ensuring that each practice aligned with one and other in order to work in harmony, recruiting the correct staff lead to higher possibility of staff reaching goals and therefore receiving rewards from GCS. In spite of this, there are still areas in which GCS need to improve their HR practices to increase their productivity, performance and competitiveness within the market.
GCS uses a variety HRM practices such as 360-degree recruitment, reward based systems such as “millionaires club” and commission on gross margin and a specific selection criterion for their new recruits (King, Chung & Hunter, 2014). In spite of this, it is clear that GCS are missing key elements of HR practices which could improve their performance as well as gaining a competitive advantage over the other companies in the market.
Firstly, a recommendation that can give GCS a competitive advantage is to encourage employee voice. GCS currently does not allow a lot of opportunity for employees to have freedom of speech with regards to their workplace and job design. Employee voice will give employees the opportunity to have a say and influence over workplace decisions. This can include: ideas, responsibilities and outcomes of the organisation. (cipd.co.uk, 2018) GCS would be able to adopt either a direct voice, where the individual will be able to have a say about their job and working conditions in a more informal setting, or indirect voice, where the managers will consult and inform employees in a more formal setting. Implementing an employee voice system will allow the employee’s in GCS to be able to voice their opinions to their management, that could potentially lead to an improvement in the job design and therefore the performance of the consultants. In addition, implementing an employee voice system is likely to increase job satisfaction of the staff at GCS as they will feel that their opinions are being valued by senior management. This can be beneficial for GCS as the staff are going to be more motivated within their roles and therefore be likely to decrease the labour turnover and have a positive impact on organisational commitment. Also, higher levels of motivation are more likely that the staff will increase their performance in their roles by ensuring that they provide their clients with a high standard service meeting the operational excellence value proposition, this will also have an impact on the organisational performance helping GCS to achieve their business goal of wanting to be an industry leader. As well as keeping staff within GCS, an employee voice system will also allow the firm to gain a competitive advantage as it will allow the employee’s to have higher levels of employee skill and commitment to the firm. The recommendation will align well with the strategic-fit approach as the system will allow the firm to achieve their business goals and employee voice system will work in harmony with the other HR practices in order to achieve this.
Another recommendation GCS should implement would be to review their training and development plan that they offer to new recruits of the firm. Currently, the new consultants will progress through a basic scheme starting with being a Telecanvasser for six weeks, this involves “phoning up clients to ask if they have any vacancies” (King, Chung & Hunter, 2014). The employee would then progress through the organisation in order to reach the goal of being a recruitment consultant, which is likely to take 3 to 9 months. Even though, GCS hire employees that they believe to possess traits that make a successful consultant and provide basic training for the first 3 to 9 months. Once the employee’s reaches the goal of being “a recruitment consultant” and has autonomy over their work, GCS no longer provides a training scheme to allow the individual to continuously develop. This proves to be a problem for GCS and their value proposition, operational excellence, as the business environment is dynamic, therefore constantly changing, in order to stay competitive, they will need to provide their staff with extensive training that is up-to-date and relevant for the consultants. This will increase their knowledge and skill base allowing GCS be more likely to achieve their business goals, increase the overall performance of the firm and more likely to receive repeat business as clients will have trust in the consultants. Therefore, allowing the staff to have an opportunity to perform and excel within their role. All of which allows GCS to gain competitive advantage within the market. This can help the company achieve the overall organisational goal of “keeping the top performing consultants motivated” (King, Chung & Hunter, 2014). Implementing this recommendation will fit in with the strategic-fit approach that the firm has adopted, it will allow the firm to be achieve their business and HR goals, this aligns with the vertical fit of the strategic approach. In addition, investing time and money into the employee’s, this will increase their motivation and ability for their job and GCS, meaning that consultants will feel more valued and more likely to stay committed to the firm, this will contribute to the horizontal fit and alignment between the HR practices.
The final recommendation for GCS would be to change their performance management system (PMS) currently in place. GCS currently “evaluate performance” of their recruitment consultants by in quarterly business meetings, ranking their performances and publically announcing this to the whole team (King, Chung & Hunter, 2014). This process can be viewed as both motivating for the top performers as they will receive rewards and praise for their work, however, it can also be extremely demotivating for the lower performers in the team as they will feel humiliated and under-valued. If GCS adapted their PMS and allowed it to be a process of monitoring, coaching and evaluating the performance of the individuals on a regular basis following a cycle of goal setting, monitoring the goals and evaluating the results. This system will then link to the individual receiving an award for their achievements, in GCS case commission or “millionaires club” or if they are underperforming, the senior management team can provide the individual with training and development in order to achieve the goals in the next review. This would link with the second recommendation of implementing an in-depth training and development programme once the employee reaches the recruitment consultant role. It is apparent, that the current PMS is a hard approach where they want their employees to meet a KPI and get paid commission on gross margins. The recommendation to change their system to a soft approach of identifying areas in which opportunities for development and career advancements. In time, changing and adapting their PMS will have an impact on the wider organisation and other HR practices such as reward, as continuous evaluation and appraisals will increase performance from the consultants leading to more employee’s receiving rewards. This will cause harmonisation between the different HR practices in the organisation with operational excellence at the heart of the business strategy. This is due to the fact that having evaluation and understanding of where the consultant may not be achieving set goals, can lead to the individual seeing ability and opportunity to improve in order for the next review with the help provided by GCS.