Gaining or maintaining an edge over other companies has become the priority of organizations, necessitating a fundamental rethink of the corporate strategies and business models (Khandekar & Sharma, 2005). In regards to Marks & Spencer, its decision to restructure its management and operations to include seven new, profit-accountable business units was implemented to gain momentum in the intensely competitive UK retail market. However, such a dramatic shift of personnel and their individual roles and expectations of executive performance create situations in which strategic HRM issues might well arise.
The first strategic human resources issue facing M&S is in measuring productivity within each business unit. Strategic HRM, by its very definition, is the organizational use of employees to gain or keep a competitive advantage against competitors (Mathis & Jackson, 2003). Strategic HRM involves designing and implementing a set of proactive HR policies/practices that ensure that an organization’s human capital contributes to the achievements of its corporate objectives (Wan et al, 2002). Human capital and productivity go hand-in-hand, as the executives at M&S were likely selected to manage the business units based on competency levels and the strategic decision to split the management group into high-visibility business units was likely based on the company’s determination that each leader could outperform the competition. Measuring, rewarding or disciplining based on future productivity levels within each business unit becomes a tremendous potential issue in terms of strategic
HRM practices. For instance, Marks & Spencer indicated that each business unit would be fully profit-accountable stating that “no one under-performing part of the business will be able to hide behind results of the group as a whole.” (Beardwell et al, 2004). Having made this statement, M&S now maintains a strategic obligation to continuously monitor the productivity of each unit leader and establish a method to reward or discipline the performance levels of management. If the main goal of the restructure was to create a competitive advantage over rival retail units, strategic HRM must identify opportunities for improvement based on managerial performance. especially to satisfy the stakeholder position.