HUMAN RESOURCE MANAGEMENT IN THE RETAIL INDUSTRY: THE CASE OF TARGET CORPORATION IN CANADA

Question

HRM Issue Topics: job analysis and design, recruitment and selection, training and development, performance management.

Write a report and make sure to include:
• A brief description of the organization and the HRM issue.
• An analysis of the HRM issue. Describe the issue in detail. Explain why the issue needs improvement in the organization; make a case for change. Please include in your analysis a comparison of practice in your own organization with industry best practice or with practice in another organization.
• A set of recommendations to enable improvement or change. Explain what could be done to bring about improvement. These recommendations should follow logically from the analysis above; they should not be an unconnected after-thought.

Answer

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Contents

Introduction. 2

Description of the Organization: Target Corporation. 2

Analysis of the Human Resource Management Challenge. 2

Recommendations. 5

Reference List. 6

Introduction

Description of the Organization: Target Corporation

Target is a leading retailer in the United States headquartered in Minneapolis, Minnesota, and founded by George Dayton. It has over 1700 stores in the United States where it operates under Target, Super Target, City Target, and Target Express brands. It operates as a discount retailer primarily involved in selling products at prices that are below those of the prevailing market environment. Currently, Target is the second-largest retailer in the United States after Walmart. The company was originally named Good-Fellow Dry Goods, but it was later officially opened as Target in 1962. Its early operation was governed by strict Presbyterian principals with George Dayton being a member and strict follower. As a result, Target had a very family-oriented market approach which has catapulted it to multi-million dollar status within a few decades (Rowley 2003).

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Shortly afterwards, the company came into the hands of Dayton, who replaced the Presbyterian structure with more secular guidelines. This transition was characterized accompanied by many acquisitions for the company. In combination with growing demand for Target’s products, these changes allowed the company to acquire a wide variety of goods on wholesale and to transition to a highly profitable discount retailer. Consequently, it was able to successfully expand into other states while simultaneously building a reputation for efficient marketing, excellent customer service, stores’ appearance and employee satisfaction.

Target Canada Co. was the Canadian Subsidiary for the Target Corporation. It was achieved through the acquisition of Zellers, a major local discount retailer. Target Canada opened its first store in 2013 and it had been operating over one hundred stores in Canada by 2015. However, it filed for bankruptcy during that year and officially closed all its stores within three months. Target Canada’s failure was because of an overly aggressive expansion strategy that failed to consider highly localized issues such as price, distribution and human resource management. The human resource management challenge was particularly instrumental in its failure because it did not customize strategies to the local labor market’s needs, but instead, it adopted a U.S. HR model in the hope that it work equally efficiently in Canada.

Analysis of the Human Resource Management Challenge

Zellers was officially acquired from the Hudson’s Bay Company in 2011, but it was not until March 2013 that Target opened its first store amidst uncertainty over instability. It commenced operations under the presidency and management of Tony Fisher who had risen through the ranks while working for Target in Minneapolis. Target Canada’s HRM issue was mainly related to the company’s management of training and performance issues. The stores were having difficulties with their supply chain prior to their closure. Employees and senior branch managers had been struggling to stabilize its supply management structures and inventory.

One of the most limiting factors was the inventory technology adopted by the Canadian subsidiary. Senior officials and store employees found the newly technology proved difficult to use. Therefore, the retail group had essentially failed in its training at both primary and secondary levels (Castaldo 2015). Management did not allocate enough resources and time in building an efficient training curriculum and guide. Following the integration of a completely new technological system that would be used in daily operations, the company did not outsource training specialists who would study the inventory system and tailor it its needs before developing an appropriate training curriculum. This situation further worsened the already deteriorating supply chain challenge that Target Canada was experiencing. Nevertheless, the company went ahead to become fully functional in all the acquired stores despite being unable to train its employees adequately.

The result of a poorly developed training curriculum was a staff that was often unsure and not confident. This weakness was manifested in their immediate performance constraints which triggered strict and harsh performance management strategies. Even though the initial point of failure was in the choice of the technology, some managers at Target seemed aware that the system, though perfected and successful in the United States, would be completely difficult to use in Canada. Thus, it became logical to concentrate on training on the technology while training employees on an alternative technological system as back-up platform. Consequently, SAP, a technology developed by a German software company, was introduced. Though highly successful in many global operations, the software, requires careful planning and assimilation due to its data conversion limitation.

Moreover, a host of American professionals were brought in to set up the system and train the employees. Target’s training and employee department in the United States operates very effective, and it is one of the distinguishing aspects which Target takes pride in. Target Canada failed in its training solely on the basis of poor consideration of the cultural and organizational differences between Canada and the United States (Castaldo 2015). Furthermore, the company, which predominantly trains young employees on-the-job for long periods, only had a few months or weeks to train its newly-hired employees. Therefore, the subsidiary opened its stores without first satisfying all its core requirements on its human capital. Its employee experience, which was well reputable and which had attracted many potential employees was soon a cause of dismay and discontentment for the employees and the general population.

As the opening dates drew nearer, the management began to experience a delay in merchandise distribution, with some orders disappearing. The effects of the low knowledge and skill level on the supply technology began to manifest. After investigation, it emerged that basic entry errors at the initial stages had caused the overall supply breakdown (Span 2015). The lack of knowledge and competency in technology use created a situation of a lack of accountability along the managerial and supervisory ranks. In an attempt to rectify the errors, employees had to correct the entire system entries, a task that would at times take took over a week to accomplish. The employees described this task as one of the hardest and most pressurized periods in their tenure in employment. Meanwhile, these efforts constituted a mere short-term fix since there continued to be a gap in supply chain between stores and distribution centers.

Furthermore, the poor training attached itself to the communication stream, severing it to the extent that the head office did not have a clear picture of the fact that most stores had no stock despite there being excess inventory at distribution centers. The communication breakdown offset by the poor system training was evident even among the senor officials who were in constant disagreement regarding the most appropriate solutions to be taken.

The performance management structure also suffered as a result of inadequate training. This problem trickled down from the highest managerial position to store employees (Span 2015). In light of this realization, it has become an open secret that the Canada Target launch was ill-timed. Fisher, the subsidiary’s president, was originally a very hands-on leader who used a highly effective leadership style. However, in the wake of the continuing supply challenges, he as well as other senior officials became less visible, and this led to deepening concerns over the firm’s prospects in Canada.

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Target’s failure was a major challenge that needed to be addressed through in-depth reflection on basic performance management principles in business. By assuming a less visible approach during these uncertain times, the management did not motivate the employee who felt completely abandoned and neglected. By this time, Fisher left the corporation and was replaced by Mark Schindele. The corporation bean to stabilize in this new leadership environment even after the adoption of a new inventory management software. With time, the new system also began to portray dangerously hidden challenges. It was being used even as the company’s technical team continued to observe the SAP system, and this is how alarming discoveries were revealed later in 2014. Additionally, Target developed a new marketing strategy in addition to launching a spirited attempt to diversify into apparel and accessories.

Target continued to experience losses despite the huge expansion investment. Finally, in January an official statement of the bankruptcy filed was made at the headquarters and in individual stores. By this time, the employees were aware of impending layoffs and loss of jobs. The corporation did not make any efforts to promote performance and confidence for the employees. The performance management failed completely to perform its basic responsibilities during this time.

In contrast, Walmart successfully entered the Canadian market, and it has since established a very stable and successful basis. It fully understood the cultural and consumer differences between the US and Canada. This was very important Walmart’s HRM as well as its expansion strategy in Canada.

First of all, Walmart hired all former employees from the former Woolco which it had acquired. In contrast, Target did not take on the employees of Zellers after acquisition. Instead it took up fresh and young graduates who had no experience in retail and who were even more unable to cope with the crisis as it developed (Heller 2015). Due to the fact that Walmart retained previous employees, their training had aspects of the US systems as well as contributions from experienced Canadian employees. Walmart also invested a great amount of resources and time in employee training and specified it to the Canadian consumer market. This reveals that Walmart, as opposed to Target conducted proper research prior to their entry and expansion. Their training program was synchronized to correspond to the steady and slow expansion which Walmart adopted.

Secondly, Walmart also experienced basic operational challenges and ended up shutting down some of its stores in 2009. However, it had put in place a stable performance management team that ensured the employees in the other stores remained calm and efficient at a time when Walmart stores were at the risk of closure (Cheng 2015).

Recommendations

It is unclear how soon Target will make another attempt at entering the Canadian market. The retailer has demonstrated difficulty in making HRM and operational adjustments to other non-US markets. First of all, Target should prioritize studying foreign markets before making entry deals. This has to be followed with local consultation and testing. Even though the initial limitations by Target Canada were as a result of poor operational planning, their human resource management and lack of culture consideration propelled the corporation to its closure.

An alternative would have been to invite not only American abut also Canadian professionals at the initial stages. These local professionals would have identified the local differences that make the Canadian consumer market extremely different from the American consumer market.  The fact that they did not take on previous Zeller employees reduced any chance the opportunity had of understanding the market.

Secondly, Target ought to develop a stand-alone and independent performance management strategy that can cope with expansion challenges in new markets as an added challenge that such ventures experience. The performance management strategy has to factor in the new market’s culture and operational ethics to create balance between the brand identity and the local identity.

Finally, training of employees is a crucial part of market dominance especially for a brand that prides itself with one of the champions of employee-satisfaction strategies. This way, the HRM function should be able to sustain itself despite the existence of other operational and functional limitations in the course of the company’s operations.

Reference List

Castaldo, J 2015, ‘The Last Days of Target: The untold tale of Target Canada difficult birth, tough life and brutal death’, Canadian Business.

Cheng, A 2015, ‘What Wal-Mart got right in Canada, and what Target botched’, Market Watch.

Heller, L 2015, ‘Why Walmart is winning in Canada’, Forbes.

Rowley, L 2003, On Target: How the World’s Hottest Retailer hit a bull’s Eye, Wiley, New Jersey.

Span, S 2015, ‘Why Target Canada Failed: It was Culture and Management’, TLNT, Talent Management, and HR.

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