7BUS2039 0901 Strategic Leadership and HRM

7BUS2039 0901 Strategic Leadership and HRM

Introduction

This case study is about Adhunik, a multinational business, selling affordable furniture and home furnishings.

From humble beginnings in a warehouse in Birmingham, this family-run business has achieved phenomenal success in terms of growth in sales and profits. Its leaders are now looking to expand into global markets. The case study examines how the business has achieved success so far, its competitive strategy, leadership, and current HRM issues.

Background:

Harveen Anand                        Birva Anand                                  Dilraj Anand

Adhunik was founded in 2001, in a small warehouse in Birmingham, UK, by sisters Harveen and Birva Anand, and their father Dilraj. Inspired by trips to visit their extended family in India, the Anand family originally sold a small range of vintage wooden furniture and silk rugs, imported from India and sold mainly to the local Indian population in and around Birmingham.

The Adhunik brand gained notoriety through word-of-mouth in the community and soon the Anand family were selling furniture and home furnishings across the whole of the UK, via online orders and a delivery service. Demand for ethnic, vintage furniture grew in the mid to late 2000s and the business used their profits to buy a small warehouse, a small high street shop, and hired 2 more delivery drivers and warehouse staff to fulfil increasing customer orders.

With the support of a bank loan, Harveen expanded the product range to meet changing consumer needs. The family opened a further 3 warehouses across the UK in 2012, and then another 5 warehouses in 2014. They also relocated their high street shop to a much larger premises in a busy out of town retail park on the outskirts of Birmingham, opened a series of small shops in major UK cities and started to sell to other retailers such as Tesco and TKMaxx. The business started to sell urban chic furniture, and colourful, trendy furnishings which attracted price-sensitive consumers.

Leadership:

Harveen, the eldest daughter, studied Marketing at Sheffield University and was the person responsible for sourcing and buying products when the business started. She built the business website and ran several successful advertising campaigns on the radio and later via social media. She keeps her marketing knowledge up to date through gaining Chartered Institute of Marketing qualifications and attending CIM branch events. She also regularly travels to India to see what other furniture retailers are selling.

Birva, the youngest daughter is a qualified accountant, and has always taken care of the family business’s finances. She works closely with her father Dilraj and shares his passion for cost-saving.

Dilraj, the father, is a firm believer in keeping costs down and productivity high in business. He has suffered from high blood pressure and stress since the business started, so leaves most of the day-to-day decisions to his daughters and the warehouse manager. He prides himself on ‘paying as little as possible for human labour.’ He is not really interested in the lives of the managers or other employees in the warehouse and shop but makes the occasional unannounced visit to see where overheads can be further reduced. Last year his daughter Harveen suggested that the employees should receive an end of year bonus as profits were so good, but Dilraj said ‘no’. Whilst much of the profits have been reinvested into the growth of the company (opening up new warehouses and the out of town retail premises), Dilraj and his daughters have taken large dividends bringing their total income from the company to £100,000 per family member.

As Dilraj’s health continues to decline, his daughters are taking on more responsibility as leaders including the people management side of things.

Strategy:

As of February 2023 there are 40 Adhunik shops in large UK cities, including London. Two modern distribution centres have replaced the 8 warehouses. The shops are popular with couples and singles looking for affordable, good looking, durable furniture that comes ready assembled or can be assembled easily. Weekends are especially busy. The biggest shops have a café, and a team of design consultants who cover UK regions to help customers choose the right décor and furniture for their homes.

Harveen, with her strategic marketing abilities, has a vision of growing the business as quickly as possible and is currently looking at ways to market the brand more broadly in new global markets. She thinks Northern Europe, India and Nigeria would be ideal markets as research has shown that demand for affordable trendy furniture is growing in these parts of the World.

Birva, like her father, is keen to drive down costs as much as possible. She agrees with Harveen’s vision of international expansion but is more focused on UK operations for now. Recently, new functional teams have been brought into the business Head Office in Birmingham, including HRM, Marketing and Sales, IT, and Operations. Birva has met with all the new functional directors, including the new HRM Director, Sebastian Wolfe. As per her father’s advice, she has told him to prioritise keeping labour costs down in the shops, distribution centres and head office. She has also met with the new Buying team and they have been briefed to source suppliers of furniture in Southern Poland. After all, ‘buying cheaper stock will only add to the business’s profits’ she argues.

Competitors:

Adhunik are one of the cheapest providers of furniture. It has recently come to Birva and Harveen’s attention that Adhunik’s closest competitor, Picu Furniture, has installed new scanning machines in its distribution centres and at the checkouts in its stores. This excites Birva, who can see a future where checkout and warehouse staff might not be needed at all. Harveen is troubled by the fact that Picu is leapfrogging ahead of Adhunik. Last week she hired a secret shopper to go into Picu’s flagship store and saw that they are trialling the use of VR headsets for customers to visualise furniture in their homes. She is beginning to think that Picu is offering customers something better and more unique than Adhunik and fears customers might be lured away. Birva is already thinking about making the design consultants redundant and investing in VR headsets. Picu is moving away from being a low-cost provider to offering its customers a more unique experience and is gaining brand recognition and a foothold amongst high-earning, young professionals across Asia and Africa.

Human Resource Management:

Sebastian Wolfe, HR Director

The newly appointed HR Director, Sebastian Wolfe, has spent his first few months getting to know the Adhunik business and its employees. Having spoken to the Anand family members and employees, he has built up the following picture:

Recruitment and Selection:

The Anand family has a habit of hiring extended family members for manager roles that (other staff feel) they are not qualified for. Most managers are hired from within and are warehouse or shop operatives who have excelled and know the business inside and out. However, the managers that are brought in from the outside and from the Anand family often do not know the business and have no inclination to learn it. There is also suspicion that these managers get paid a lot more money than other managers, despite these other managers working their way up from within and ultimately being ‘experts’ about how the business is run.

Harveen is keen to allow the newly appointed HR Director to take over the recruitment and selection of Head Office employees, but her father still wants to be involved in interviewing and agreeing pay.

Reward:

Shop staff are paid the National Living Wage. There are no increments for experience or tenure, evening/weekend work or overtime. All shop floor staff work on zero hour contracts and the Anand family argue this is necessary to meet peaks and troughs in demand. This low pay and ZHC means that Adhunik has mainly recruited students from the neighbouring Universities (Birmingham, Wolverhampton etc.). This has provided a source of good quality labour in the sense that these students tend to be conscientious, hard-working with well developed ‘soft skills’ which has benefitted the customer service roles particularly. However, once these students graduate they quickly leave Adhunik as they find higher paid roles that are better aligned with their skill set and personal development aspirations elsewhere. This means that Adhunik has a high labour turnover issue for customer service roles, and spends a lot of money on a big recruitment drive every Summer (as students leave very quickly after they graduate and find positions elsewhere).

Salaried employees (Managers, Head Office employees) earn about 10% lower than the Industry average and promotions are considered once per year. There is no bonus scheme in place.

Design Consultants who advise customers in the shops receive a base salary plus 10% commission on each sale.

Pension: The Government required plan.

Discount of 20% off food for staff who work in the shops with a café.

Holidays: Statutory minimum.

Learning and Development:

All new shop staff must complete a basic online induction training programme, consisting of a) Health and Safety Awareness and b) Customer Service Principles.

Distribution Centre staff must complete an online induction programme consisting of a) Orientation b) Processing orders and returns c) Health and Safety.

Managers at the shops and warehouses have to complete basic IT training, such as ‘Using Excel’ and recently Harveen has introduced extra training in a bid to encourage managers to be more effective. These courses are ‘Disciplinary Processes’ and ‘Having Difficult conversations with staff’; both are one-day courses at Head Office.

At Head Office, training is role-dependent and apart from covering basic induction training online, employees are usually assigned to a more experienced colleague to learn from, but this is proving difficult to organise as managers are usually too busy hitting deadlines and Key Performance Indicators to spend time mentoring or coaching new-comers.

HR Director’s recent initiatives:

One of Sebastian’s first initiatives has been to send out a Staff Survey to all managers within the business, and he has been analysing the feedback from it. This, he hopes, will give him and his team some valuable direction and open up conversations between the leaders and teams at Head Office. Some themes that have emerged from the survey are summarised (see Appendix 1).

Sebastian would like to find the underlying cause of these issues and is now considering sending the survey out to all members of staff, not just managers, particularly because he has just read some Glassdoor.co.uk reviews and ratings for Adhunik (see Appendix 2).

Sebastian is keen to voice his concerns about the key employee-related issues with Harveen and Birva, but this is the response he gets to his email (see Appendix 3).

He sighs and considers all the issues he is facing. He looks at the roles within Adhunik (see Appendix 4), wondering about the future direction of the business, the leaders’ styles and priorities, and what new HRM processes and practices might be needed to engage, develop, motivate and retain employees in the UK and abroad.

Appendix 1:

Staff Survey results:

Head Office managers are most unhappy about:

1. Low salaries compared to Industry average.
2. Lack of training and development opportunities.

Store managers are dissatisfied with:

1. Not having enough staff to cover peak periods, i.e. weekends.
2. Lack of performance-related pay

Distribution managers are complaining about:

1. Lack of time to train new warehouse staff properly.
2. High absentee levels amongst warehouse staff.

Appendix 2: Former Employee reviews

Former Employee, Warehouse worker, 1 year ago:

‘Diversity and Inclusion’

I was the only woman working in the Birmingham distribution centre. Also, I thought the managers were ageist – why is no one older than 25 there?

Former Employee, Marketing Administrator, 3 months ago:

‘Pay and conditions’

Pros: New Head office is really nice and modern.

Cons: No real induction or training for new employees; company only cares about saving money.

Appendix 3: Email from Harveen to Sebastian Wolfe (HR Director)

To: Sebastian Wolfe

Subject: Staff Survey results and HR issues

Dear Sebastian

Whilst we were interested to read your summary of the recent ‘Staff Survey’ we would like to remind you that as HR Director, it is your job to reduce labour costs in the UK, in our distribution centres, stores and here at Head Office. Please don’t waste any more time chatting to managers about how they feel. People will always complain.

As you are aware, Adhunik is about to undergo an expansion programme, investing heavily in new warehouses and stores in Nigeria, India and Europe, so that we can serve those markets. This is an exciting time for us and we don’t want to get distracted.

With that in mind, we will need to hire 3 Country Managers who can oversee operations in the above countries. They will have to ensure that our goals are being met abroad. I’ve done some research into pay by experience level for country managers, and an entry level manager earns around £30K per annum, whilst someone with 5 years’ experience earns double that. So hire people at the cheaper end of the scale Sebastian – you should know by now that we are all about saving money where we can. I will be away for the next couple of months as I’m travelling across India doing market research and Birva and father do not want to waste time on hiring people. Can I leave it with you please?

Harveen

Appendix 4: Roles and number of employees