A REPORT ON A PROPOSED RESTRUCTURING STRATEGY FOR MARKS AND SPENCER GROUP,

BECKY WASE DIOR.
FLORENCE MANU.
STOIK MUSAH.


16 NOVEMBER 2006.



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1 EXECUTIVE SUMMARY.
The subject of this report centres on the possibility of Marks and Spencer Group to keep profit growing and its recent sign of improvement,amidst strong opposition from companies like Tesco in its core retail operations.The management intends to explore the complexities involve within , outside and internationally –of these envisaged challenges ,and requires advice on the possible strategy for the application of a change management initiative for the Marks and Spencer Group.For this reason ,since Marks and Spencer is a global company .The report discuss indepth ,literature studies in domestic and international retail operation.It explores the general management of retail expansion, strategic withdrawal,divestment,investment in non food retail areas, and complexities in the learning process of retailing formats.It is believed that a comprehensive understanding of the idea behind each critism and strategies, will help inform better judgement on the subject.



2 INTRODUCTION.
This report centres on the activities of Marks and Spencer Group within the ever changing international and domestic retail industry.It explores the activities of its competitors particularly Tesco Plc,and other major retailers.For this reason a financial comparism on both company(Tesco and Marks & Spencer) was given with insight on the international presence of both companys.Possible areas of difference was identified between the two companys operation. In understanding these differences , discussions on the wider literature and research studies was introduced on this subject.In the end ,a sustainable strategy based on internal and external analysis,using SWOT Analysis was given.And the human resource and personnel implication of the implementation process of the strategic options, from the SWOT analysis was addressed, with detail insight on the specifics inherent in every item on the strategic options given.This was followed by a short recommendation on the reengineering process for M&S.


3 MARKS AND SPENCER OVERVIEW.
Historically Marks and Spencers relationships with its customers and suppliers was admired worldwide as the UK leading retailers of food , mens,womens and childrens fashion(whitehead 1994).These products form the core business together with home furnishings, accessories and financial services, which were introduced in 1985( Smith Bearney Cited in Withead 1994).Marks and Spencer has being built on a philosophy of a top down management approach to its formal operation(Tse 1982).Until the late 1990s Marks and Spencer was hugely successful both in terms of profit and market share .The company achieved this position and maintained it by establishing a set of fundamental principles which were held as core and used in all of its business operation(Tse 1982).But today the UK retail industry has changed dramatically and traditional stores like M&S in almost every other country face similar challenges. Specifically retailers of other brand in low cost fashion, are taken business away from department stores and established chains. At the same time supermarkets have moved aggressively into selling cloths, household goods and prepared meals(pioneered by M&S).The British firm has struggled , sacrificing its legendary high quality and employee friendly culture to make the cost savings needed to keep profit growing.M&S problem began in October 1998 when it halted its expansion programme in Europe and America (Beaver 2001).However in 1998 ,the company admitted having financial difficulties worldwide, having been hampered by tough trading conditions.In November that same year M&S announced a 23 percent decline in first half profit causing its shares to fall drastically- this was blamed on a turbulent competitive environment from its competitors who were offering similar priced goods,yet more design focus with uptodate fahion,and of which comparism could be made against the more traditional M&S merchandise.(Nardine Collin 2004).To overcome these difficulties ,M&S has began implementation of various restructuring strategies from splitting the company into three: Retail Business, Overseas Business, and Financial Service. Alongside the company has embarked in a companywide strategy to breakdown the power of the traditional consumer buying perception which was established around the product line , as well as the application of current basic retailing skills in a lot of its area of operation(Economist 7/17/2004).

4 TESCOS PLC OVERVIEW
When you consider the approach tesco has taken in penetrating the UK retail industry you will discover that, the strategy of tesco developing market share for goods outside the usual supermarket arena had led to Tesco surpassing other rival retailers to become one of the biggest supermarket in the UK(Palmer 2005).Until the 1970,Tesco operated on the “Pile it High Sell it Cheap Formular” the founding fathers imported from the USA( Corporate Watch).However during this period the UK retail industry was changing , leaving the company with slim margin and a serious image problem.In the late 1970s the company decided to try something new, dramatic and different from other retailers- this early adopters approach of the company has resulted in the many reason behind the company major feat in the UK retail industry .The company launched “ The Operation Check Out” which cut prices across the board and started a price war with major rival retail giants(Julia Finch2004).Tesco decided to modernized itself, closing some unprofitable stores and extensively upgrading and enlarging others .At this time Tesco prioritised the development of large out of town stores where parking was convenient , the selection of goods broad and where a higher volume of business could be generated at increased margins while reducing overhead (Management Today 2003).Then Tesco begin to open petrol stations on the grounds of its superstores .The idea was successful and by the early 1990s according to 2000 edition of Mintels European Retail Ratings ,Tesco was among UK largest independent petrol retailer ,and by 1995 Tesco became the first supermarket to introduce a companywide loyalty card.At first the other retail giants were sceptical about the idea, but the concept caught the public imagination leaving other retailers racing to catch up.These retail giants have eventually follow suit.

5 FINANCIAL STATEMENT AND CURRENT PERFORMANCE OF BOTH COMPANIES.





















































LIQUIDITY POSITION:
The current ratio determine how much of the current asset exist to cover for a company’s short-term liabilities or debt. All through the five years of analysis M&S current asset was enough to cover for its immediate financial commitments compared to that of Tesco, whose Current Ratio only shows high current asset in year 2004 and year 2005. Tescos year 2001 through 2003 current asset position was too small to cover its short term debt. Consequently Tesco may not be able to meet its short-term debt as at when they fall due.However Marks and Spencer Debt liquidity position was very much higher than that of Tescos Plc. Similarly when stock was deducted from the Quick Ratio, the quick ratio figures reflect the same drop,in the current asset position for Tescos Plc, while M&S maintain high current asset over its current liabilities. In otherwords Tesco hadly have the company’s cash tied down in the bank or in near cash or liquid form-the money is always reinvested, leaving no room for idle cash.This is a reflection of the companys ambitious quest to continue its expansion programme in other areas in the retail industry. Unlike M&S tactful and calculative investment drive -the companys high liquidity position reflect the company has at its disposal funds to embark on any change process in its operation. It just need to seek viable investments that generate meaningful return for the owners of the capital invested.

PROFITABILITY POSITION:
The Return on Capital Employed(ROCE) measures the return earned from the use of the companys resources- invested on the business.It shows how much extra profit will be earned by the business.The ratio should be as high as possible to generate profit for the owners of capital invested. Tescos Plc performance in this ratio was brilliant compared to the figures behind M&S. M&S only shows evidence of improve extra profit on resources invested in the companys business in year 2003,at 22.29% increase,this continued in year 2004 with a much higher percentage increase at 31.90% .Year 2005 ROCE was also remarkable-the company came up with a 142.90% increase:the highest through out the five years of analysis-the success of the M&S womens wear division,and that of Per Una Label must have accounted for this brilliant performance in 2005.Like wise,the period of year 2003 through 2005 (of high figures)should be the years of complete restructuring of all M&S operation,when the company realize the need for improvement in the companys operation.
Moreover,the Net Profit Ratio considers the profitability of a business after taking account cost of production and expenses. With reference to the above, Tesco Plc percentage return on profit less cost of production and expenses was controllable too low over the five years of this analysis (2001=3.36%, 2002=5.28%, 2003=5.45%, 2004=5.43, 2005=5.75) .That is to say, controllable in the sense that –from year 2002 through 2005 , the company maintained on average, a 5% return on profit after cost of production and expenses was deducted from profit, compared with that of M&S whose profit was less in the first 2years (2001, 2002) of the analysis, and starts to gain momentum during the companys restructuring years of 2003 through 2005 ( 2003=8.89%, 2004=11.51%, 2005=10.99).M&S profit position between these 3years was far better than that of Tescos Plc.

EFFICIENCY POSITION.
The Stock Turnover Ratio determines,on the average –the number of days ,stock is held before it is sold . If the Stock Turnover period is high , it indicates that too much money is being tied up in stocks, which could have being released to other areas of the business to generate other profit return..Similarly ,if this is done the cost of holding stock as those of warehousing damage , deterioration and obsolescence could be saved. In the same way, M&S (2001=32.9days, 2002=28.0days, 2003=24.4days, 2004=26.36days, 2005=26.28days) indicates the business is holding much of its stock in the companys warehouses unsold in a longer period of time than Tesco PLC .Tescos always low price policy may be the reason why the company maintain less amount of stock in its warehouses-since stocks are always being sold out as a result of consumers increasing preference for product with low price and added value, which Tesco is offering.
In addition , the Fixed Asset Turnover Ratio determines in financial analysis, how efficiently the assets are working in other to generate some form of income /gain /value or turnover for the business. In other word, if there is a high ratio of turnover to assets, it implies a good application and efficient use of company’s assets by management. However if the ratio is low , this implies that the assets are not being utilized effectively enough. That is to say from the analysis , for every 1pound of asset Tescos employ in its business operation –the company generates in (2001=2.27pounds,2002=2.23pounds2003=2.01pounds 2004=2.18pounds,2005=2.19pounds). While in the case of Marks and Spencer , the company generates for every 1pound invested- a return of (2001=1.93pounds, 2002=2.37pounds,2003=2.33pounds,2004-2.27pounds,2005=2.24pounds).
Subsequently the Debtor Turnover Ratio determines if a collection period (In days) is deemed to be too slow .This will ultimately affect the cash solvency of the business, and it is an important consideration in any financial analysis of a given organisation. If the debtor turnover ratio is high , the company should review its credit control procedures. For this five years of analysis on the financial report of both company , Marks and Spencer over 40days (On the average for the five years), is a very long period of time for a company to have its funds in the hands of its debtors compared to that of Tescos Plc(4days, 6days, 7days and 8 days) for the different years respectively. Marks and Spencer needs to review its credit control systems and policies. Perhaps, the collection systems could be improved by given discounts for early settlement or preparing detail age analysis of debts and putting increasing pressure on late payers. Equally, if the creditors turnover ratio is too high, this is seen as the company –taking longer period to pay its creditors and suppliers, which on the fact ,strategically it seems a good thing .However the company should be careful not to get a reputation as a slow payer and find itself on a “Stop List”( A list kept by suppliers and Bankers of customers they will only do business with if goods are paid for –upon collection). Again M&S 121.8days (Minimum period of paying its creditors over the five years of analysis) is a very long period of time with 162.1days in 2005 ; this is just too much compared to that of Tesco Plc. Which on the average-through the five years of analysis maintains a 70days payment period to creditors. M&S should realized that delays in offsetting ones debt may put key suppliers and creditors out of business and take away valuable source of supply and finance credit.

INVESTMENT POSITION
The Earnings Per Share ratio reflects the earnings achieved by an individual ordinary share to anticipate the company’s current investment performance and pessimism in the company’s market future. As an investor, the ratio tells you how much you earn in return for 1pound of your share invested in the company. Between the two companies, M&S earnings per share in year 2001 was up 0.9 p as against Tescos 0.8p.In 2002 M&S was down with 0.4p while Tesco had 0.9p earnings to its shareholders. In 2003 both companys maintain same amount of return to their shareholders. While in 2004 M&S regain investors confidence with 0.17p return to investors as against 0.11p paid by rival TescoPlc. In 2005 Tesco Plc staged a brilliant return to maintain its lead position among investors preferred choice of investment over M&S by offering a 0.29p return on every 1pound shares held by each investor. That same year M&S struggled with a 0.18p return to investors individual share held. In the whole both companys struggled through the five years of analysis to win the confidence of their investors.
Similarly the Dividend Per Share Measures the dividend return of the companys share price and its useful prediction of incoming cash flows from holding the companys shares, if the company pursues a consistent dividend policy. From the analysis both company maintain a consistent growth increase over the five years period of the analysis. But overall M&S figures was the highest. It started with a 0.81p in year 2001, when Tesco was paying out dividend of 0.39 that same year, and closed at 0.64p in year 2005 while Tesco maintains a 0.60p that same year. In addition to the above an investor who want a regular pay out of most of the companies profit should invest in a company with high dividend cover. Notably, the dividend cover ratio shows the number of times that the ordinary dividend could be paid to shareholders out of the available earnings.It gives the investor an idea of the proportion of earnings returned to the companys shareholders.It provides a useful indication of how much profit is being retained for future growth. M&S figures in this report analysis depicts the company only began having –high earnings cover on its proposed dividend from year 2003 through 2005. Perhaps this was the period the company began a massive re-engineering process in its business processes to change public perception of M&S failing performance. This is because , there was a steady growth increase in the figures in year 2003, year2004 and year 2005 i.e (2003=1.95times, 2004=2.1times, 2005=2.89times. This implies that ,in year 2003 the earnings available could cover the proposed ordinary dividend 1.95times , and so it goes for the other years through 2005. Unlike Tescos Plc that has always maintained a high dividend cover from 2001-the companys earnings available could cover the proposed ordinary dividend paid out 2.32 times, in 2002 it was 2.12times, in 2003 it was 2.14 times, in 2004 it was 2.14times and 2005 it was 2.32times. Also from the analysis M&S lower dividend cover in 2001 and 2002 indicates the company was distributing more of its profits to shareholders at those period of time than Tesco Plc does.

LENDING AND INTEREST COVER POSITION.
The Gearing Ratio determines how a company is financed. It determines if the companys long term borrowings makeup a high or low proportion of the company’s capital and reserves. This gives the investor insight ,if the company exist off its own capital , utilize a realistic proportion of its credit potential, or its highly geared and possibly in a risky situation as it is surviving on others capital. From the above excerpt one begins to wonder if the massive expansion (Tesco) and massive restructuring exercise (M&S particularly investment in BP petrol Stations) is brought about with borrowed capital. This is because the high figures all through the five years of both company’s in the analysis, indicates TescoPlc and M&S are highly geared companies or maybe the companies are making use of their credit potentials from their financiers to finance their investment drives . In the same way, the interest cover which indicate if the company is paying more as interest to service debt – is well covered by the net profit of both companies. Come to think of it UK retailers maintain close ties with their bankers, and every aspect of business revolve around banking in the UK.For this reason it is not surprising that companies as these retailers are highly geared.
















6 ANALYSIS OF THE CURRENT UK RETAIL INDUSTRY AND THE MAJOR RETAILING COMPANIES INVOLVED
Since the 1990s, the UK retail industry has undergone a profound transformation. Each retailer has adopted the nature and condition of its commercial range in other to meet with the changes in the environment.(Tordjman1994).The growth in absolute and relative size of the retailers not only replace the manufacturer dominance in the supply chain but also eliminated many wholesalers and started the trend towards backward integration of the retail business- were retailers started looking inwards to modify areas of their operations (Davis and Ward 2000).From the research and studies of Morganosky (1997),there emerge findings that suggest-when an increasing diverse array of retail format is developed , competition between all types of retailers heightens,i.e the present scrabble among the major retailers on the market for ready meals .Today ,the four major food retailers –Tesco, Sainsburys,Asda and Safeway dominates UK grocery retail, others following their lead are Morrison,Somerfield,Iceland,and the likes of M&S and Kingfisher. A brief introduction of the major and dominating retailers in the UK retail industry is discussed below.
Asda-Owned by Wal-Mart Stores, one of the leading US retailers, Asda is the second biggest supermarket chain in the UK with 17% of the market share. This includes sales of non-food items. Asda overtook Sainbury’s in July 2003 (they are now floundering with 16.2% of the market) although it is still a long way off Tesco's almost unassailable 28% market share. As of June 2004 Asda operated 259 stores and 19 depots, mainly in Scotland and northern England, and employed 122,000 staff (Mintel Retail intelligence 2004)
Sainsbury- Sainsbury was UKs biggest grocer until 1995, when Tesco aggressive Pricing strategy and rapid investment on non food retail areas overtook Sainsburys in UK grocery retail. Although Sainsbury operations in the UK reflect brilliant financial performance lately. The company is still behind Tesco in the industry today.(Mintel Retail 2004)
Morrison- Morrison is still struggling to absorb safeway.The company recently sold out 10 of the 52 stores it acquired from safeway to Tesco.There has also being ripple effect in the entire industry lately, as a result of this acquisition by Morrison.(Mintel Retail inteligence 2004)


As this big four become ever more concentrated and consolidated, their increasingly levels of power have provided them with the means to exercise substantial control over the supply chain. Dobson Etal (2003) describe this control as one in which the retailer effectively becomes the “gatekeeper” for access to the consumer ,by maintaining dominance via geographical space and multiplicity of outlet .In this situation traditional retailers continue to operate in a mature saturated market where growth is difficult .The resultant effect is a dominating drive for diversified investments in non food areas .As a result of this phenomenon , consumers are more informed of price variations and search for value retailing , especially in the food sector(Newman and Cullen 2001).The tendency therefore, is for consumers to switch stores or shops in multiple locations at will .The independent studies of (Hogarth Scoth 1999,Shannon1999) claims to have detected signs that British consumers are paying more attention to the relationship between price and performance. Consumers appear s to be shifting away from these retailers strategy of added value on product items ,under which they can automatically charge a high price for brand names, to more value for less money .An example of this can be seen with Sainsbury who was criticized for struggling to reposition this customers expectation , who are becoming more focus on price for value ,following the loss of the market leader position to Tesco- due to the application of this price swap mechanism by Tesco.(Voyle etal 1999).This singular activity and competitive strategy of Tesco has resulted in a situation in which difficult choices has to be made by some retailers to cut prices and struggle to reposition themselves as both price competitive and offering a superior service .It is not too surprising that retailers have opted to differentiate their formats and further diversify in areas seems inevitable i.e Pharmacy,Finance,and Petrol Station ( Asda , Sainsbury,Tesco and M&S has moved in this direction ).Here the struggle is not only in the area of ready meal items for consumers but in other non food areas. These new divergence from core retail business have also influenced the diversification of supermarket format ,where by existing retailers seek to reinvent themselves. Here Newman and Cullen(2001) observe a number of indentifiable retailers responses as seeking out of town outlet for massive space ,including car park for customers ,changing store image by adopting exclusive internal design-as its being done by M&S , organizing welcome greeting and choir songs for customers at the entrance door-Asda does this as well, Changing opening times –some retailers open 24hours of the day. Similarly retailers as Tesco Plc in the course of customers operation, open a new cashier till, when ever there is more than two persons waiting on a cashier till.

7 INTERNATIONAL RETAIL OPERATION OF BOTH COMPANY.

International retailing has being an important factor between supermarket giant within UK retail environment. Since the late 80s all through the 90s many major UK retailers has increasingly embraced this phenomenon in their activities amidst the ever saturated UK retail industry. While successful international activities may act as a catalyst for further international activity, it is also true to say that retail companies react in this direction as they learn particular valuable lesson from experience of other retailers in the international market(Alexandra and Quinn 2002), and they inturn follow suit to take advantage of the same opportunities.
However there are different studies in this perspective, but a common area peculiar among all international retail literature in this subject – is in the major retailers activities towards expansion, strategic withdrawal(Burt 1986;Tordman 1988) ,problems encountered in these foreign market (Alexander 1990) and diverstments(Fletcher 2001).The general management on these issue, and the understanding of international retailing activities can be only developed through the examination of actual retail case histories. Their experiences actually reflect the experience of a significant number of UK retailers in overseas markets. This report now briefly examines the international activities of Marks and Spencer Group and Tesco Plc in the context of the wider literature.

MARKS AND SPENCER
Marks and Spencer international retail activities has been marked with successful performance in the past and also relatively below industry standard in recent years.The company first attempt, at internationalisation was through exporting .As a result of its close and controlling relationship with suppliers ,which we discussed in its overview ,M&S was able to develop and export its unique private label brand: St Micheal to countries as Canada – which was its first area of international operation .In 1975, through a joint venture approach to market penetration with Cortifel : a retailer and manufacturer in Spain ,the company subsequently moved into a number of European markets(Briggs 1992).First it was France and Spain , its expanded through company owned store in Belgium,Ireland,and the Netherlands( Quinn and Alexandra 2002). Again through franchise operation the company expanded through Austria, Gibralter, Greece, Hungary, Malta, Norway and Portugal in the 1970s,1980s, and early 1990s (Alexandra 2002).During this period M&S undertook expansion from Canada to the US. In the US, the company acquired the Brookes Brothers Men’s Wear Retail Chain and the Kings Supermarket operations- a small New Jersey food retailer with 47 stores in the US ,and 21 stores in Japan(McGoldrick and Blair 1995).The Brookes Brothers 21 stores in Japan was the gateway for the companys expansion in the Asian markets of Singapore,Malaysia,Philipines and Korea. This number grew to 148 in 1999 with franchise stores in Hong Kong (Croft 1999).
In the late 90s, particularly 1997 the company took a giant step in its international operation amidst the saturation of its UK domestic market to engage in an ambitious expansion programme to increase further expansion in France, Germany, Hong Kong and the launch of a new franchise operation in Poland and Australia in response to global dictate of off shoring (Olins 1997).The result of this bold step was the weakening of the company home base operations. The company was facing harsh trading conditions as a result of poor UK clothing sales, amidst other trading clothing labels like Gap, Next,Primark,Newlooks,Acadia Group etc, subdue demands in Asia , and a disappointing sales in the Canadian market, for the St Micheals design to sufficiently understand the Canadian market(Piercy 1999). Also at this same period ,power tussle in the board of the company began to raise public concern on the management of the company. Similarly trading in Germany and other Europe market soon began to give the company cause for concern. Consumers quest for price and trendy fashion fail to see the value of the St Micheal brand. Subsequently price were cut and the company took step to improve its performance(Retail Intelligence 1999). The company began to cut down, on its international operation .The company sold off its retail chains in Canada , it reduces the companys presence in HongKong and the franchise operation in Malaysia,Korea,and Singapore. And in 2001 the management decides to effect the closure of its European subsidiaries, and its Brookes Brothers and King Supermarkets in the USA. The company indicated that its immediate focus would be on the core UK market to address the problems encountered in that market (Corporate Watch 2004).


TESCO PLC
Tesco success in recent years was brought about , mainly from overseas expansion. As the company engage in massive expansion overseas , its operations diversify to higher margin non food merchandise and at the same time regularly supporting and improving a strong UK core business, which was cultivated on low prices, building customer loyalty, and expanding into other retail services as legal,insurance,banking and telecoms services (Data Monitor 2004). Tesco initial international advancement was in 1979 when the company purchase the Irish Three Guys Retail Operation. This was subsequently divested to the Dublin based supermarket company HWilliams in 1986 due to problems of immature structural capacity for expansion of the company within their domestic market (Palmer 2005).In the works of Muskett(2000 ), his research findings on Tesco international operation reveals that towards the end of the 1980s, the company embarked on research efforts into possible international growth options and this primarily centred on the US market but also covered several European countries –the company spent several years engaging in these market analysis, in the end the product of this research effort was the Buyout of Catteau – a national retail chain in France. This move by the company serves as a platform for its future European expansion. Later in 1997,Tesco withdraw completely from France and focus on emerging markets in eastern European Countries, were strong retailing activity as in the UK was absent. The company acquired a global supermarket chain in Hungary –in total of 43 small stores (Palmer 2002). The intention of the company was not to trade the stores in the longterm like the French case : Catteau, but rather to secure a foothold in the market and learn from these businesses, while later building a larger hypermarket business based on their experiences. Through this means the company subsequently acquired in 1995 Savia SA – a retail chain 36 small stores in Poland. In 1996 the company penetrated the Slovakian market ,through the acquisition of Kmart. At the peak of the companys voyage in these emerging economies , the company re- entered the Irish Market: prior to this period the company pulled out of an Ireland Operation which was running at loss. The second attempt on the Irish market with the acquisition of ABF Irish Food retail chains became a major break in the performance of Tescos European operations. Following this acquisition the company secured a position as the largest food retailer in Ireland with 109 supermarket stores (Palmer 2005).The success of the Irish operation was followed by another international expansion programme in Asia. Tesco bought a contolling stake in Lotus ; a retail chain of 13 retail outlets stores –which presently has 64 stores in Thailand. In Korea the company formed a joint venture with Samsung ,one of the countrys largest conglomerate to maintained hold in the Korean market. Through this partnership Tesco entered the difficult Japanese market painstakingly in 2003, through equity stakes in CTwo Network- a successful retailer with 78 supermarket chain in Japan ( Corporate Watch 2004). During this period Tescos stores in Malaysia SDN BHD was also established as a joint venture with a local company SimeDarlyBehad in 2002. Although the company was placed under strict government regulation to control and curtail its expansion programme in the country, Tesco eventually has as at today 5 functional stores in Malaysia with plans to open more (Corporate watch 2006).


COMPARISM
The cases presented above clearly demonstrated that retail internationalisation is not a purely progressive process of contemporary academic principle of business operation and management. Learning about strategies in retailing, were different global markets and market conditions are involved , for expanding firm , is not just about analysing trends and anticipating what steps ahead- one get lost somewhere along the line in the process of analysis. For getting a perfect strategic fit sometimes entails : the longer you are in that direction of international global complexities the closer you get to what you need to succeed .This section provides an overview of the measurable extent of knowledge emerging from the activities of the two companies international operations. The important lessons learned are compared under the following headings.


ORGANIC STORE BY STORE DEVELOPMENT
The ambitious international expansion programme of marks and spencer group plc by penetrating several market at the same time at the height of its weakening performance in UK domestic market ,exposed the company to multiple risk of massive start up loss. Alternatively a store by store development program allows for a more strategic approach to internationalisation. The logic behind this approach by tesco is the use of such single unit stores to develop knowledge of the international competitors that has already establish there . Another reason is that , the small presence would facilitate the inplementation of an acquisition strategy by securing the necessary contacts and networks into foreign retailers and local suppliers ,especially considering the challenges associated with family owned and controlled chains .Also,retaining a direct and small operating presence in a competitors major market would lead to important insight into the competitive behavioural dynamics of competition that otherwise would not be possible without a direct presence(Palmer 2005).Strategic in terms of the choice and selection of market – some companies look at emerging economy with high income and population, also proximity in procurement and distribution as well as the store location in the overseas country. This strategic learning process allows you to have the lowest cost base. Unlike Tesco whose expansion was spatially characterised as being regional in nature and less global oriented.Tesco decision for penetration and dominance of the central and eastern European markets arises from reasons –that the chances of large retail multination companies (like Wallmat) presence was slim. The company thus incrementally entered these markets rather than entering the different eastern Europe countries market at the same time


APPLICATION OF MULTIPLE MODE OF ENTRY IN FOREIGN MARKET.
Marks and Spencer mode of entry in most cases in foreign markets was through franchise arrangements apart from the US and North America operation. Where the Brookes Brothers operations which included 47 stores was acquired by the companys Canada operation .Even at that, other similar acquisition in Europe reflect franchise characteristic with a mixture of joint venture approach. Only in the partnership with Cartifiel the Spanish retailer and manufacturer that this was not the case (Briggs 1992). Similarly this was Marks and Spencers first joint venture in the course of this study .Overall there exist in the company international operation (i)franchise(ii)joint venture(iii)acquisition of existing retail chains. Unlike Tesco whose mode of entry in the companys international operation fall under all three, alongside application of other multiple entry mode strategies within one and different countries in eastern Europe, by acquiring relatively small convenience stores in Hungary,a supermarket business in Poland and a departmental store in Czech Republic and Slovakia(Changs 1995).This was very unusual for such a large company to acquire single supermarket store in the form as above.The logic behind this approach by tesco is that , the small presence would facilitate the implementation of an acquisition strategy by securing the necessary contacts and networks into foreign retailers and local suppliers

EXPERIENCE AND THE KNOWLEDGE THAT A STRONG MARKET POSITION OF AN ACQUIRED COMPANY SOMETIMES ABSORB MISTAKE.
The advantages of a dominant market position by the acquired company for learning lie in the success that such a position implies.A small market position hardly absorb relatively small mistakes. In the course of M&S expansion it appears that M&S was just concern in establishing presence in countries of her export operations- at the initial stage emphasis was not much on dominating the market they operate in, unlike Tesco that seek not only to penetrate but establish a strong market leading position. Think about all the emerging market the company operates in –there exist evidence of aggressive expansion and dominance within a short period of time.

EXPERIENCE WITH LEARNING PROCESS AND STRUCTURES ABROAD.
Ascertaining whether a firm possesses an intent to learn is an important factor influencing their learning behaviour(Tsang 1999).Intention relates to commitment. On the surface it appears Tesco possesses a learning intent. In the studies of Tescos international operation by Tsang (1999), management was asked to discussed the structures and processes through which the international learning was disseminated back to the UK market .Critically the company’s expansion into central and eastern Europe coincided with the company’s ambition to broaden their non food merchandise in the UK market. The moving force was then on the diffusion of what the company had learned from developing a new format which accommodated non food items in overseas market. This had a catalyst effect, overtime the company began to employ personnel whose sole responsibility was to transfer the company format learning back to the UK from abroad. At the home market (UK) Tesco adjusted operational retailing activities, sometimes with minor modifications and at other times ensuring fundamental transformation of the format. Analyst believe this is an area companies could learn and experiment at the extremities of the company(Wigley2002).Even at that, internationally, the company competes directly with some of the best food retailers in the world notably Carrefour,Auchan,and Ahold, as a result the company is better informed on how to merchandise non food departments. Through this process management form more realistic perception of foreign market which they apply in the UK market ( Alexandra 1997).





HOME BASE STRENGH DETERMINE PROWESS ABROAD
This was the particular reason that prompts M&S withdrawal of its international operation. The failure of the company’s operation in its UK market to compete effectively with present day events resulted in a complete disorganization of future prospects in its international operation – for majority of its international outlets are dependent on its UK operation. Similarly a disruption of M&S UK operation tend to reflect in its overseas operation .Thus if you are struggling in your domestic market, what credibility do you have to show that you can manage a business in another country.Tescos international operations programme was driven by a relatively strong domestic position. Critically its international integration process was actually supported from earnings from the company’s core UK businesses.


INSTITUTE INTERNATIONAL LEARNING STRUCTURE.
Within the context of international retail expansion, Alexandra(1997) suggested that retailers have lacked systematic internal processes to support their decisions with respect to appropriate host market strategies.As far as internal learning structure is concerned. It is proposed that innovations and continuous improvements are more successful attained by the proactive formalisation and development of internal learning mechanisms. This learning structure M&S lacks, as a result, it failed to understand its environment of business. Every of its operation was centred on routine bureaucratic practice of age long tradition. Prior to the company’s present restructuring exercise, senior management appointment was exclusively reserved for those who grow through the organisation career path. The company looks inward for everything without looking outside the box.


8 PROPOSED SUSTAINABLE STRATEGY FOR MARKS AND SPENCER REENGINEERING PROCESS USING SWOT ANALYSIS.

Before discussing indepth the diagnosis process of a sustainable strategy for Marks and Spencer . It is important to first provide a useful conceptual framework for examining what is required for the re-engineering process. This is carried out by conducting a conceptual internal and external analysis of (i) the company (ii) its operative environment and (iii) and business strategy, using SWOT analysis.

EXTERNAL ANALYSIS

MACRO ENVIRONMENT: Presently the UK competition commission investigating UK supermarket retailing activities on behalf of the office of Fair Trade for existence ,or possible existence of monopoly situation in relation to the supply of groceries in the United Kingdom (Andrew Hollingsworth 2004). The investigation areas of focus were primarily of: barriers to competition, intensity of price, and the exercise of buying power in the supply chain. The objective of the commission is to break large supermarket chain as Tescos Plc to provide fair competition in the retail industry .The need for this objective came to the fore after the various complexities that arises as a result of the bidding for Safeway Stores retail chain. If this eventually works out as proposed perhaps, there is possibility of a new system of approval for supermarket development. All this development is aimed at reviving the ailing UK economy by encouraging retailers like M&S at the other end of the industry. Economically, although the industry is saturated there is still other related non food areas that is yet to be exploited-today the high street food chain hopes to have an extra 200 outlets in British Petroleum Garages. It will launch more into instore bakeries, restaurant and deli (The Sun Wednesday, November 8, 2006.pp44). In the same vain, income and purchasing power tend to be on the rise in the UK as a result of organisation insatiable demand to run processes to meet global dictate. And people are utilized for this process – given them opportunity to earn more and at the same time cutting them off their domestic life. There is the need for availability and convenience of ready made food items on the street to compensate for that loss of domestic cooking routine practice. What consumers require now is the convenient food items that will fit in their round the clock work schedule. Also the introduction of B2B internet exchange site and world retail exchange has helped Marks and Spencer a great deal to achieve the above excerpt (Andrew Hollingsworth 2004).

MICRO ENVIRONMENT.
Apart from Tesco and Asda whose dominant influence is felt in the UK retail industry.The only hang on major retail supermarket chain is Sainsbury , and internal problems and strategic errors have left Sainsbury struggling lately( Coporate Watch 2006).The company believes it could abandon the classic focus on price in favour of refurbishing its stores ( their own term for aesthetic design) and supply chain improvement .The company’s loss of market share to Tesco illustrate evidence of struggling performance. Infact internal boardroom issues resulted in the resignation of the chairman in July 2004(Corporate Watch 2006).The other retail giant in the picture is Morrison Stores, who is still struggling to complete fully its integration process after it acquired Safeway. If M&S reposition itself firmly in its everyday commodity food product, with calculative timing, it can compete favourably with Sainsbury in the area of geographical coverage. At this end Marks and Spencer can stand tall to face Tesco with the high street retail giant (M&S) meal solution. The company’s M&S brand in its product still enjoys wide positive appeal for value and quality, irrespective of present ailing performance. Asda parent company (Wallmat) is still indecisive to establish fully in its Asda UK operation.

INTERNAL ANALYSIS.

STRENGTH AND RESOURCE CAPABILITIES.
When it comes to business operation in organisations, brand image means almost everything to a considerable extent influences what choices –consumers make , and for a longtime now M&S enjoy this patronage. For any consumer searching for good quality need not look further than the company’s own St Michaels Brand Label (Benady D 2005).Without exception this apply to foodstuff, clothing and other non food items .Futhermore the company has the facilities and the structures in terms of asset ,chains of outlets on ground which it has acquired over the years .This can be constructively utilized to reposition the company to start a fresh. Similarly the proceeds from the sale of its international operations can also serve to suit this purpose as well .

WEAKNESS ( COMPETENCE).
From research findings it is obvious that the company possess only a handful experts and people who have the knowledge to provide specialist service at the strategic decision level of the business to improve performance . At the management level the people component appeared far less radical in thinking. They engage in strategies which on the surface appear necessary but in reality are not sufficient to deal with the magnitude of M&S problems. And this reflects in the working culture of the line management and inturn on the staffs working at the level of clerical operation and shop floor. The working culture was marked with bureaucratic and rigid procedures with a resistance to change . Other areas of weakness were in the area of its service standards, and lack of appeal of the St Micheal brand to the under 30s age bracket(Tony Grundy 2005).


From the foregoing the factors for analysis can be simply reduced to the following bullet points below.( See Appendix for figures)

STRENGTH

• High Brand Recognition (30) .
• Facilities and Resources. (13)
• Partners and Alliance (15)
WEAKNESS

• Mgt (recent take over battle ) (7)
• People (Competence) (3)
• Failure To Appeal to
the Under 30s age bracket (5)


OPPORTUINITIES

• Favourable Legislation (6)
• Consumers Changing Habit (5)
• Worldwide Retail B2B Tech (5)
• Clarify Brand Message through new
M& S Brand campaign.

• Signs of recovery in Germany which should help lift all European market.
• Falling prices for items has stimulated demand and a more impulsive driven market.


THREATS

• Activities of Competitors(Acadia)(15)
• Brand Not Trendy Perception ( 12)
• Management Incompetences (7)




STRATEGIC OPTIONS PROS CONSTRAINTS
1) Partnership and Alliance Help you to stay informed and broaden your perspective Fear of acquisition attempt.
2) Brand Repositioning The brand clearly has considerable economic value. An extension of the branch can generate cash flow Fear of not administering the right standard. i.e. Loss of public respect in the brand
3) Facilities and Resource utilization Resources can be used to affect change process.BPO,TQM,KBS processes can be use to improve business operation. Company’s credibility can facilitate credit. Inability of the management to maximize the use of M&S facilities and resources.
4)People competence Scout for change agents and drivers of change. Partnership with reputable MNE in people development program can help lay a foundation for this.i.e worldclass retailers like P&G. Management awareness of the need for strategic Human Resource Practice in the overall reengineering process.
Key words- KBS: knowledge base system, BPO: Business process reengineering, TQM: Turn Around Quality Management.



9 HUMAN RESOURCE IMPLICATION AND STRATEGY IMPLEMENTATION.


PARTNERSHIP ALLIANCE
The biggest theory in managing systems and processes in the models of Human Resource function is business partnering. This new paradigm is the future direction of the HR function using Ulrich (2005) business partnering model. The company can affect its strategy on partnership via the following components of the Ulrich model.
Shared Services:
Here the company can engage in streamlining of its systems and work process to make them more efficient. Department and units that show areas of underperformance are made redundant. And important functions that require specialist functions like data process, learning structures are outsourced to specialist consultancy units. Consider the performance of M&S relationship with George Davis (formely of Next)to form an alliance to create a new sub brand called Per Una. The result was a brilliant sales performance on that label displayed in the same store where other M&S label was displayed (Collier 2004) other partnership as this should be encouraged in other facets of the organisations operations.
Centre of Excellence.
Seek expert in various field of the organisation areas of interests in the company’s operation. Maintaining a league of resource persons, investment banks, financial advisors both internally and externally who have knowledge to provide specialist services to the business to improve performance. The HR function here is to link their expertise into every single area and level in the organisations structure.

Strategic Partners
Set the company to work very closely with worldwide leaders in retailing business. Tesco funds a partnership with Procter and Gamble leadership development program to help train Tesco’s senior management staff on Global Retailing Strategy (Mark Palmer 2005). This can act as an agent for transferring knowledge regarding the dynamics in other international markets- in effect accelerating the learning curve for a less experienced retail multinational.

Organisation Employee Involvement.
The Human Resource Function should have as its objectives in the change process of Marks and Spencer to help make employee contribution align with partnership, with institutions as(i) consultants, (ii)outsourcing organisations and (iii)investment banks.

BRAND REPOSITIONING
Developing the strength of a brand is not deemed to be easy. There is no single approach to developing a strong brand. Branding logic appears to vary for each individual brand. For example Marks and Spencer brand power is different from Tesco’s even though both are all strong brands in the global retail category. While marks and Spencer is a long established brand, Tesco emerged only recently and is as well a strong brand.Think about the sales performance of Tescos Clothing labels-cherokee,florenceand fred,and agels and heroes jeans Therefore the alternative path to consider in building a strong brand need to be better explored. Like the goal of logically creating to be different or develop what is broadly conceptualised as “brand meaning”.( C.K. Keller 1999). By this reasoning, managing the brand by creating meaningful association is the central task. The goal is to keep consumers actively engaged with the brand and to cultivate meaning. Within this perspective, managers need to find a consistent fit with all of the business decisions that could potentially affect consumer initiated brand meaning like especially the value that brands hold in being able to increase demand. Some brands are thought to be attractive due to their potential uses. This expectation and perception can alter consumers’ behaviours that affect the product. (Mark Kay 2003). By contrast if these techniques can alter behaviour, behavioural change can also be altered if marketing considerations are designed to manage these behavioural changes towards these expectations about the M&S brand. Another way is that M&S can redefine their brand by connecting it to distinct social values to appeal to customers’ perception like price or other consumers’ perception and loyalty to the brand.The sub branding by the company lately is a welcome development.These sub brands are:



WOMENS WEAR- MENSWEAR
• Look behind the label, .Blue Harbour.
• Body, .Blue harbour vIntage
• Truly you, .Collezione,
• Ceriso, .Autograph,
• Adored.,
• Per una,
• Limited collection,
• Autograph,
• Classic,plus,

MATERNITY,
• Look behind the label,
• Body,
• Truly you,
• Ceriso,
• Adored.






FACILITIES AND RESOURCE UTILIZATION.

Business Process Re engineering:
This requires taking a comprehensive view of the whole exisiting business. It involves thinking about what must be done,why it must be done,and how to go about the restructuring exercise(Gibson etal 1999).Business Process Reengineering encourages organisations to think about the acceptable processes of business operations within organisations and to question whats the alternatives to improve business operations within and between organisation.Before performing this process the HR function should perform business process management that define the process and activities of Marks and Spencers Group, and build standard process guidelines and performance benchmarking that support this process(Leonid and Alexander 1999). This it does by(i) Simplifying the organisational structure(ii) Remove unnecessary business processes(iii) increase greater flexibility and ability to change based on market condition(Leonid and Alex 1999).

Knowledge Based Systems:
This technology may be applied to a wide variety of human resource management activities to motivate employees and thus facilitate the effective use of its workforce (Donnell 1990). It can be used for manpower planning, recruitment, selection, staff development, performance appraisal and regulatory compliance. The objective is to get the right number and types of employees doing appropriate amount of work at the right time. Three basic phases are involved i.e. (i) Forecasting the future demand of a particular skill (ii)Analyzing the supply of resources and (iii) reconciling the most critical discrepancies between demands and supply by initiating or modifying the HRM activities.



PEOPLE COMPETENCE.
In the battle against competitors, the skills and motivation of the employees are important strategic aids in the realization of the company’s objectives. Strategic responsiveness in turbulent times requires individual competences and fundamental personality characteristics that are inherent in a persons action in relation to all kinds of tasks an situations (Jay.D.Jurie 2000). This involves being agile, open to the environment and capable of picking up those weak signals that are indicative of the need for change. The focus in the above excerpt is on competence necessary to perform certain duties in a superior way. As far as knowledge and skills are concerned, many people are equal as can be seen from: for instance, Diplomas, Certificates, and work experience and work results. It is precisely the employees’ effort, enthusiasm, motivation and self image that distinguish the successful employee (superior performer) from the unsuccessful one. The company should therefore consider the identification of the competences alongside the recruitment and retention of employees possessing these (buzzing) competences as one of the core objectives of the strategic staffing embedded in their strategic Human Resource Management practice. For this will help to facilitate superior work performance in the organisation work process.The appointment of Yasmin Yusuf as creative director –help the david beckham 07 label for boys.





10 RECOMMENDATION
From the foregoing, the future in the application of change management initiative for the Marks and Spencer Group, will consist of the management of M&S diagnosing the current state of the organisation from the mental framework of the paradigm highlighted in the analysis above and formulate a vision of the desired future state of the organisation. This vision must be continually and collectively constructed in the re engineering process in line with the strategic options. which is followed by a consistent upgrading of systems and structures which facilitate improvement in efficiency and effectiveness of the specifics inherent in every item on the strategic options.
Any tangible changes should be recognised and acknowledged and measured over a strategic parameter to review where the change process is in accordance with the company vision. Where there exist areas of failing performance, adjustments should be made. And automatic response to redress areas of failing performance should be instituted, when they don’t measure up to standard. To set the organisation in the direction of the vision again. This should be a continuously reviewed process until a desired balance of strategic fit is attained.
Although this is an evolutionary process,that requires a considerable time frame. A genuine commitment from organisation participants and involvement of resources constructively in line with the stated strategic option will to some extent successfully guide the organisation towards the path to recovery.






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APPENDIX









1 2 3 4 5 score
√ 5
√ 5
√ 5
√ 5
√ 5
Average score 25
STRENGTHS
1) Brand

-Public awareness…...……………………….
-Age and tradition……………………………
-Reflects British culture………………..........
-Quality………………………………………
- Class………………………………………..


1 2 3 4 5 score
√ 1
√ 2
√ 2

Average score 5
2) Price

-Expensive…………………………….............
-Non frequent reduction………………………
-How much to pay for M&S product
in place of another alternative……….........



1 2 3 4 5 score
√ 4
√ 4
√ 3
Average score 11
3) Value
-Quality………………………………………..
-Worth the standards………………………….
-Is it worth benefits……………………………

4) Facilities & Services (fashion, food finance)
1 2 3 4 5 score
√ 5
√ 3
√ 2
√ 3
Average score 13


-Asset…………………………………………
-Floor layout/Shop layout…………………….
-Quality of services…………………………...
-Sensitive to customers needs…………………


1 2 3 4 5 score
√ 2
√ 1
Average score 3
5) People/HR
-Creativity…………………………………….
-Autonomy as against
following procedure…………………………..


1 2 3 4 5 score
√ 5
√ 5
√ 5
Average score 15
6) Partners/Suppliers
-with George clothing…………………………
-with Next……………………………….........
-Per Una Fashion label………………………..

Key (1) poor (2) below expectation (3) above expectation (4) good (5) excellent



THREATS
1 2 3 4 5 score
√ 1
√ 3
Average score 4

1) Rival outlets clothing

-Can it withstand other cheap
clothes labels………………………….........
-Is it possible in the future? ............................


1 2 3 4 5 score
√ 3
√ 2
√ √ 2
Average score 7
2) Management
-Positive opinion about present management……………………………….
-competence positive………………………..
-can management face challenges…………...


3) Weak working culture within
1 2 3 4 5 score
√ 3
√ 1
√ 1
√ 3
Average score 8

-staff opinion about present changes…………
-are they supportive…………………………...
-still show confidence in the brand……………
-encouragement of people to think
individually outside the formal strategy………


1 2 3 4 5 score
√ 3
√ 1
√ 1
√ 3
Average score 12
4) Old Brand
-can it be changed easily?..................................
-is M7S meant for the rich?...............................
-Is M7S meant for the old?................................
-Is the brand trendy?..........................................


1 2 3 4 5 score
√ 5
√ 5
√ 5
Average score 15
5) Rural Competitors (Food & Retail)

-strong dominant market position………... …..
-strong asset capital base……………………...
-strong public awareness of product…….........


1 2 3 4 5 score
√ 1
√ 1
√ 3
Average score 5
6) Public Label Expectation
-Is public hopeful of M&S recovery?...............
-public confidence of M&S
regaining its lost glory……………………….
-Public opinion to still identify with
the brand……………………………………..
Key
(1) Strongly agree, (2) Disagree (3) Neither agree nor disagree (4) Agreed (5) Strongly agree







stoik musah writes from LBS. EMAIL stoik_joy@yahoo.com

Does Organising or Partnership Offer a Path to Trade Union Revival.

By
Stoik Musah.
LBS,United Kingdom.





Labour movement revival studies is such a critical contemporary subject that, the understanding of its context will seek first, to broaden our frame of reference with the causes of union decline, and then- reflect on the circumstances given rise to these causal factors. The learning process derive from this reflective exercise will help to provide understanding on the rationale behind the strategies for union renewal debates. This essay therefore sought to obtain knowledge on the path to trade union revival within the broader framework of the organising and partnership model approach.

Studies on this subject reveals that from the 1980s through the 1990s changes in the UK domestic market exposure to globalisation, competition and multinational companies drive for continuous innovative work practice has frustrated the capacity for trade unions to either raise pay or block changes in staffing levels and working practices using collective bargaining (Heery 2002). This form of unionism based on bargaining is becoming unsustainable as organisation employ the use of HRM practice as team briefings, team working, quality circles and profit sharing schemes to promote greater levels of commitment among workers in the organisation. In consequence, rendering trade union activities less effective among employees (Kochan and Lansbury 1997).

Similarly, another factor that can contribute to the decline in unionisation (workers representation) activities is the extent and scope of legal support required for workplace union participation. The argument here is that, there is a relationship between the extent statutory provisions supplemented by legislation, supports unionisation purpose, for employees in the workplace. For example in the UK the neo-liberal policies of the conservative government was bent on weakening trade union influence in the work place and to create circumstances within which management could re assert authority among employees (Waddington 2003).In the same way the labour constitutional reform of the 1990 which was accompanied by a parallel initiative to diversify sources of funding to the union also contributed to the weakening of the scope of unionisation mobilization in the UK, as a result of the influence exerted through this mechanism, the union has failed to secure any major changes in the UK government industrial policy(Bach 2002; Waddington 2003). This was the main point of conflict between the unions and the party in Tony Blairs second term. The aftermath of this conflict of interest was the questioning of the source of financing the labour party, the eventual expulsion of the rail, marine and transport union for supporting non union labour candidates, the withdrawal of the fire brigade union and the success in union election of anti-Blair candidate to name just a few (Bach 2002).

Furthermore the works of Hoffman (1993) suggest that the difference in the rate of unionisation between men and women arising from segregation of employment, has accounted for a shift in trade union membership growth –considering the position women occupy as the mass of UK working class population. This often discourages women commitment to union activities. Similarly the decline in the rate of unionisation among younger workers tend to be much higher than among workers above 46years of age (IRS 1994).For this reason Hoffman (1997) argues that younger workers are more individualized as a result of the social changes in the 1980s and 1990s, with the consequences that they are less susceptible to the collectivism that underpins trade unionism. Furthermore, to strengthen his position Hoffman (1997) emphasis that the formalities in trade union practice, do sometimes inhibit younger people interest in its cause. These young people tend to be more attuned to the greater informality which they are used to, like those concerned with anti-racism, animal right and environment. They prefer to give much of their commitments to these issues. In addition, other contributory factor to this trend is the relative decline of trade union membership among migrant workers and workers from ethnic minorities (Waddington 2000). Above all the sectorial difference in the rate of unionisation in the UK organised private sector is also a major area of concern for union decline. In general terms, the decline in the entire UK manufacturing employment has resulted in a large scale trade union membership loss (Waddington 2000).

For the most part, these analysed causal factors have resulted in union organisation becoming less effective in the workplace and in the broader society at large. The dominating effect of this trend is that union membership has become less attractive to potential members. For this reason the extent of the decline in membership, alongside the relative absence of union representatives in the workplace has raised the profile of issues, debates and organised labour effort to identify comprehensive proactive strategies that can both broaden the perspective and reverse this decline in union activities. The most significant strategies in today’s revitalization literature are reforms of union structures, coalition-building, international solidarity, and organizing and labour management partnership (Hickey 2003; Terry 2000; Kelly 2003). Our focus therefore is not on the first three- of which there have been somuch in depth studies till date, but on the last two (Organising and Partnership), which is central to current debate on present and future directions for unions in general (Heery 2002).

The principles of the organising model entails change in union interests, such that commitment of resources to recruitment becomes the primary objective of the union over servicing of existing members (Heery 2002).This extension of unionism (Union representation) to non traditional employment groups involves stimulating activism among their own workers which allow for freedom to resolve various unions problems with or without external representation. (Heery 2002). This approach to unionism denotes a set of organising techniques that can be deployed by trained organisers in dedicated organised campaigns. Heery (2002) posit that this techniques includes(i) mapping of targeted workforce to identify potential members and activist(ii)the use of representative organising committee to draw workers into the campaign(iii)reliance on action to render the union a visible focus for work identification(iii)person to person recruitment(iv)the use of advert or the media to pressure resistant employers. Overall the concept behind the model strategy is centred on the rationale that- the strength of the union is best sustained by effective workplace organisation.

On the other hand the Partnership Model is related to an approach to employment relation that involves mutual gain relationship between management and unions. The model emphasis that there are employers who find it both ethically responsible and economically effective to share with trade union issues on strategic matters of organisational change(Miquel Martins and Stuart 2002). In the context of the trade union interest, partnership is perceived to represent an opportunity for trade union to advance their historical concern to ensure that the right of workers in terms of the working environment i.e health safety, training, and non work related matters are enhanced by the employer. This emerge from a general desire to extend the political and social position of workers at work by having them enter into a new relation with management, the one based on a legitimate and independent voice (not managerial driven involvement) that allows risks to be shared, and common approaches to challenges be developed (Miquel Martins and Stuart 2002).

From the foregoing, the political idealogical starting point for both model seek possible answers to how trade union can redefine themselves and change in the present and in the future, adopting to the new working environment. The organising model has as its core principle the questioning of managerial legitimacy and emphasises the self organisation of workers in opposition to management as its principal organising dynamic (Kelly1996;Gall 2001; Heery 2002).This involves an attempt to organize workers through a bottom up organizing, and relying on collective strength to secure recognition(Herery 2002).This attempt to organise in the workplace often extends to offering valuable service to workers to support training in their fields, career development and job search. This is done through systematic planning using specialist techniques. From a critical perspective, within the aforementioned framework on the techniques to organizing, some critics and advocates of the model argue that it’s important to look beyond the aforementioned techniques, but on strategic issues as impact of these organising processes on the unions internal structures and forms of leadership. These Critics posit that full time union officers accustomed to serving existing members may well feel threatened by such strategic shifts in their routine functions (Frege and Kelly 2003; Heery 2002).Similarly rank and file union members will have to – in some cases - be convinced of the need to redirect scarce resources away from servicing the existing membership towards organising non union members.

In this regard, Carter (2000) observation on restructuring existing practice of unions may be the key to understanding the willingness to revert this trend. Carter (2000) argues from his observation that a consciously determined change in any complex organisation is difficult to achieve- this is because these policies are suppose to confront new circumstances, mediated by complex internal process. When such internal constraints are combined with the external obstacles to organising, as noted above, it is not surprising that the scope and nature of the possible organising model vary considerably (Carter 2000). While others argued that such situations had potentially profound implications for the nature of the relationship between union members, activist and officials. For instance Moris and Fosh (2002) question the effect on the union structures and the rationale behind the service strategy of organising. They argue that the treatment of individual union members as fee paying customers of service, diminish the traditional role of the union activist in the capacity of the union being democratic. Others strengthen this stance that exchanging benefit for membership contributions would lead to the relative exclusion of the representative functions within the union(Stirling 2005).In contrast Kelly and Heery(1994) who highlighted extensively; the concept of service for recruitment- in their works, reiterated that this service function is strategically aimed at encouraging workplace representation and expansion in the short run. In the event a general consensus exists that such approaches did not prove particularly effective in terms of recruiting new members (Carter2000; Stirling 2005; Waddington and Whitson 1997) nor it seems, were they any better at retaining existing membership (Richards 2006).

Instead several authors have argued for the continued prominence of collective reason for joining unions. Stirling (2005) points a strong evidence that new members join for collective reason related to support when facing problems at work, while Waddington and Whitson (1997) concluded that the individualisation of aspects of the employment relationship(i.e service for recruitment) do not necessarily mean the abandonment of support for a collective agenda. In any case, and in a valuable critical position William (1997) cast doubt on the value and validity of the notion of individualisation amongst contemporary workers in general, arguing that the view of workers becoming less solidaristic does not discourage the historical aspiration of trade unionism in general. To Williams (1997) the strategy of treating individual members as fee paying customers is not so much evidence of less solidarity for union cause or individualism as much –compared to the extent to which employers seek to resist unions to expand organising recruitment techniques to new potential non traditional employment groups (Williams 1997). Overall the practice of services by workers is prevalent where union organisation is relatively strong. Besides information reorientation mechanism can be devised by union leaders to educated members about the existence and impact of these external pressures on union revival change process(Flecher and Hurd 2001).

Turning to the manifestation of the labour management cooperation or partnership model as a strategic response to union revitalization. Much of the debate on its basic proposition has thus being seen as central to UK new labour government approach to labour policy and modernisation of UK employment relation (Martinez Lucio and Stuart 2000). In this context, state institutions as the Department of Trade and Industries- Partnership Fund, has provided subtle support and knowledge resources to locate new management-union relations within the paradigm of a broader set of interests, such as those of the individual, those of the employer and customer as well as those of the State. By applying this mechanism of partnership the state not only act as a third party and major guarantor of partnership, but as a facilitator of network and learning processes relevant to it (Rainbird 2004). Within the UK industrial relations policies and the ongoing difficulties management face in responding to the effect of environmental changes, alongside the likely impact of a potentially more labour friendly political environment. Authors as Arkers and Payne (1998) argued that management could not proceed to progress change without bringing unions on board in terms of decision making. Partnership thus afforded the union movement a clear opportunity for increase social and economic influence. In effect unions can deepen their institutional role at various levels at the workplace-such as strategic areas as training and quality management, alongside issues on the wider society at large (Arkers and Payne 1998).

However like many process of convergence that emerges from divergent positions and interests the partnership model is open to coexistence of opposing ideologies and political reinterpretations and uses (Martinez Lucio and Stuart 2004). Moreover much of the model debates has tended to focus on the extent to which partnership diminishes union representative capacity or the extent to which it enhances it. Within this broad paradigm, the critical considerations for most of the arguments includes the model commitment to business success and the sharing of this success, employment security, employment voice, opportunities for training and development, and flexibility (Guest and Pecci 1998 cited in Martinez lucios and Stuart 2002).These considerations, it is argued that successful partnership requires a set of reciprocal commitments and obligations between the organisation and the people working in it. These principles and commitments thus influences the institutional configuration(Thomas and Wallis 1998).Yet others question the content of the model principle ability to reshape management union relationships, raising criticism on the unmanaged political risk unions face adopting the model .For example Claydon(1998) argued the justification of the result of labour management partnership relationship when comparing and contrasting partnership and non partnership firm- the former do not appear to exhibit significant difference in terms of job security and profitability. In addition Taylor and Ramsey (1998) raise doubt that partnership based arrangements may draw trade unions into management strategy of enhancing work intensification. For example in the process of engaging in partnership, trade union may end up legitimating workplace change programmes that trade off employment security with greater work intensification. Put differently and to re-emphasise this position – a critical analysis on effective practice of partnership agreement on the part of trade union with management may lead unions to downgrade their activist resistant strategies, which can lead to a long term weakening of union structures (Geary and Roche 2003). Furthermore the content of the partnership model policies reveals more of a strategic human resource management driven work place strategy, and not simply a union oriented one (Stuart and Martinez Lucio 2000). Similarly from the management perspective Oxenbridge and Brown (2004) noted that managers expressed frustration with the lengthy negotiation and balloting process among union members the model practice entail. A related challenge was the tension that arise when key union representative loose the trust of their members as a result of their relationship with management. For example key union representative can become suspicious by union members on their stance from exposure to strategic information with management (Oxenbridge and Brown 2004).

Overall within these divergent positions of political interest from the two model there are areas unions position on workplace representation are compatible to management interest on various themes, and mutual problem solving- precisely where organising model idealogical roots share common interest with labour management partnership. For example labour management partnership agreement developing often in the aftermath of a strike in which the unions agree to support the company in return for the companys acceptance of the union (Hurd, Milkwan. etal 2003). Similarly this mutual agreement can also occur in the cause of union drive to extend workplace representation in non traditional sector were membership rate are low, unions ability to reach out to these employees in this sector maybe limited when they are unable to establish bargaining rights with employers in that sector (Bryson and Gomez 2005). To reverse this situation the available option open to unions will be negotiating terms of partnership with employers if they are to make substantial membership gains in the long run from that sector.

For this reason a thorough examination of the academic literature to the study of union revitalization cannot help but reveal the political reinterpretations of many views and experiments going on with both approaches- which suggest that a one path solution is far from being clear. The majority of the studies in this essay have focused on how trade union can reinvent themselves within the critical considerations embedded in the two model approaches. The essay discussed the factors resulting in union decline, tracing the circumstances that gave rise to these factors. Its framework embraces an indepth explanation and critical analysis of the two models. It introduced critics and advocates that seek to diminish or enhance the strong points of each model .Overall it highlights conditions and areas of compatibility of both model. Consequently there is no one size fit all paths to union revitalization. Whether to choose the path of partnership, that of organising or a third way will vary depending on the nature of the workforce being represented and the industry characteristics. Whatever the circumstances union revitalization may need to be embedded in an ideology that define union purpose in broad and ambitious terms, so that unions can position themselves as more than a narrow interest group. To some extent the organising model may satisfy this requirement, however history has it that the accomplishment of deeply held political ideologies tend to be the outcome of investing in complex sets of network resources, organisation and collaborative strategies, which partnership model entails. Whatever the circumstance unions should comprehend that any new path must be that which shows results.










REFERENCES

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Bach.S.(2002) Public Sector Employment Relations Reform Under Labour: Muddling through or Modernization?, British Journal of Industrial Relations, Vol40(2)pp319-339.

Claydon.T (1998) Problematising Partnership: The Prospects for a Cooperative Bargaining Agenda, In: Sparrow.P and Marchington.M (eds) Human Resource Management: The New Agenda, Financial Times Pitman Publishers,London.

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Fletcher .H and Hurd.R (2001) Overcoming Obstacles to Transformation: Challenges on the Way of a New Unionism. In: Waddington.J,Hurd.R etal (eds) How Does Restructuring Contribute to Union Revitalization.ILR Press,NewYork.pp 118-135.

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Hamann.K and Kelly.J(2004) Unions as Political Actors. In: FregeCarola.M and Kelly.J (eds) Varieties of Unionism: Strategies for Union Revitalization in a Globalizing Economy. Oxford University Press,Oxford.

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Hickey .R (2003) Collective Bargaining Ruptures : Conflict and Control in an Oil Refinery. Cornell University Masters Thesis,NewYork.

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Morris.H and Fosh.P (2000) Measuring Trade Union Democracy : The Case of the UK Civil and Public Services Association. British Journal of Industrial Relations, Vol 38,(1) ,pp95-114.

Martinez Lucio.M and Stuart .M (2002) Testing Times: Remaking Employment Relations Through Partnership in Britain. Employment Relation .Routledge,London.

Oxenbridge.S and Brown.W (2004) Achieving a New Equilibrium? The Stability of Cooperative Employer – Union Relationships. Industrial Relations Journal, Vol35 (5),pp389-402.

Richards.A (2006) Does Union Democracy Affect Organising Strategies? Some Evidence From Britain. In: Paper Presentation at Conference on Union Democracy. Harry Bridges Centre for Labour Studies, University of Washington , 25 february 2006.

Rainbird.H (2004) Assessing Partnership Approaches to Lifelong Learning : A New and Modern Role For Trade Unions ? In: Stuart.M and Martinez Lucio .M (eds) Partnership and Modernisation in Employment Relations .Routledge.London.

Stirling.J(2005) There is a New World Somewhere: The Rediscovering of Trade Unionism. Capital and Class, Vol (87),pp43-63.

Terry.M (2000) UNISON and the Quality of Public Service Provision: Any Lessons From the Rest of Europe? In: Heery.E, Kelly.J, etal (eds) Union Revitalization in Britain . European Journal of Industrial Relations,Vol9(1),pp79-97.

Taylor.P and Ramsay.H (1998) Union Partnership and HRM: Sleeping With The Enemy? An International Journal of Employment Studies,Vol6(2).pp115-43.

Williams .S (1997) The Nature of Some Recent Trade Union Modernization Policies in the UK. British Journal of Industrial , Vol35,(4),495-514.

Waddington.J and Whitson.C (1997) Why do People Join Union in a Period of Membership Decline? British Journal of Industrial Relation, Vol35,(4),pp515-546.

Waddington.J. 92003) Heightening Tension in Relations Between Trade Unions and the Labour Government in 2002, British Journal of Industrial Relation,Vol41,(2),335-58.
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Stoik Musah Writes from LBS,EastMidland, United Kingdom.Email Stoik_joy@yahoo.com

The Implications of Outsourcing practice in Organisations,HR proffessionals and HR Proffession at large.

By
Stoik Musah.
LBS,United Kingdom.







Human Resource Outsourcing from an organisational perspective is viewed as a form of predetermined external provision with another enterprise-mainly an outsourcing provider , for the delivery of human resource services that would previously have been offered inhouse(Elfing and Baven 1994,Finlay and King 1999).The fast changing market environment has forced organisation to redefine Human Resource department function to focus on truly strategic activities, if this unit truly desire to act in the capacity of always looking for better ways to do things.This essay will describe the reason organisations choose to take this path and also the various implications of outsoucing they face.

Outsourcing is a conscious business decision to move internal human resource work function to an external supplier. By this strategic move on the part of the organisation –it seek to rechannell human resource functions time and resources to help address the organisation top challenges. Since economically, it does not make sense for organisations to retain and develop in house capabilities to deliver human resource services that sometimes are non strategic, when outsourcing providers are in the same industry, that can provide this service more consistently and efficiently than themselves(The Organisation). Human resource services as employee services, pensions, international service personnel administration, recruitment and assessment, training administration, policy enquiries, resolutions and legal compliance, relocation services, benefit administration, payroll, forms submission, employee record keeping, HRIS, and benefit administration are human resource employment service and transactional service functions most organisations are moving out of the organisation to outsourcing providing institutions (Hesketh 2006).

This is aimed at relieving the organisation from the institutionalised inefficiency of the routine in house human resource process of these functions. Put differently, through the strategic use of an outsourcing provider, the organisation can dramatically reduce the task required to upgrade and maintained human resource systems (Handerer 2005). For example consider the benefits accrued to an organisation with access to an outsourcing providers automated technology on benefit administration as against the organisation highly administrative transactional human resource function of this service(Ashley 2006). Ashley(2006) major criticism of this traditional approach to benefit administration includes the fact that benefit enrolment cost per employee are high, this is because HR staffs are needed to process paper based enrolment documents. Besides the process requires a significant investment of time, and sometimes errors by employees in filling out forms and errors on the part of HR personnel’s. This error compromises the accuracy of this crucial data. These errors often passed to the insurers that administer these benefit plans. But an automated benefits technology solution from an independent outsourcer corrects most of these problems when they arise. Since user friendly web based forms replace multiple, difficult to use paper forms. The technology also allows the employees to enter their personal data information in one area, and all the related systems will automatically have this information. Safeguards and controls are also provided by the templates within the automated system to help prevent errors and reprocessing of enrolment. All these in built facilities help to increase the accuracy of the data, and save the HR department time and money at every step along the way. Through this process the HR department can reclaim more than half of the time that they previously devoted to these task (Ashley 2006).

Moreover, from the corporate governance perspective, another reason the organisation choose to outsource the HR function is that pressures from stakeholders, demands that management constantly streamline the way the business operates. This has forced management to reconsider how blending the services performed both inside and outside the organisation can help to contribute to the bottom line. In these evaluations, it can be argued that outsourcing has become one option on a larger menu of strategies for the search for efficiency, when you consider factors in organisational operating environments as corporate restructuring, downsizing and outsourcing (Laabs 1993).

Although the strategic literature on this subject suggest that the reason for outsourcing can be found primarily on cost disciplines (Quinn 1999).Outsourcing can provide companies with greater capacity for flexibility, core competence enhancement, and strategic repositioning especially in the purchase of rapid developing systems ( Carlson 1989; Harrison 1994).This is made possible by smaller specialised outsourcing providers who provide the organisations support, to adjust the scale and scope of their human resource service function capability upward or downward at a lower cost, to changing demand conditions and at a rapid rate(Armstrong 2006). Furthermore, Quinn and Hilmer (1994) posit that outsourcing can decrease the human resource service function design cycle time, if the client uses multiple best in class suppliers, who work simultaneously in individual components of the system. As each supplier can contribute greater depth and sophisticated knowledge in specialised areas –like in the area of complexities involve in the benefit administration process discussed previously- and thus offer higher quality inputs than any individual supplier or client .Perhaps, far greater than the above cited reasons why organisations choose the path of outsourcing will be the opportunity of full utilization of external suppliers investments, innovations, and specialised professional capabilities, which for any one organisation would require much time and effort to replicate(Currie and Willocks 1997).

Similarly following the economic postulation of Richardo(1962) on the possible effect in the organisation on the efficiency of production and resource exchanges. Four broad categories of changes emerge in the organisation activities resulting from outsourcing practice in the area of (i)Specialization in a particular HR function(ii)Clarifying configurational arrangements (iii)Flexibility and (iv)Cost savings. With reference to the aforementioned possible organisational effects, it can be asserted that having other enterprises specialist in provision of HR function allows the host organisation to concentrate on those activities in which it can establish distinctive core competence (Hamel and Prahalad 1994).Focussing on core competence and leveraging against other sourced relationship allows for the production of human resource services more efficiently while improving quality through the application of specialist knowledge (Alexander and Young 1994). It is this achievement of quality improvement through core competence focus that promotes competitive advantage (Kakabadse and Kakabadse 1999). Yet by contrast other writers criticize the hollowing effect-this excessive contracting out can result to. Considering the reduction of HR overhead cost and company size- so that the host organisation becomes a fraction of its old former self (Lambooy 1986; Davidow and Marlone 1992). British Petroleum and Marks and Spencers has being substantially moving in this direction whereby the systems integrators in almost all the HR functions are contracted out to a collaborating network of companies .For this reason, certain writers predict that this trend will continue, as companies will, in the future outsource those activities that held a commodity status and keep those that make them unique (Corring 1999). Above all, by exposing the organisation to market transactions disciplines through outsourcing practice, it is postulated that the efficiency of the current configurationally arranged enterprises are highlighted .Thereby questioning the level of changes needed for the organisations fundamental structural parameters (Domberger 1998).For this reason exposing the organisation to market disciplines assist the management to focus on configuring the organisation in a manner that sustains their competitive position, by enhancing their capability to offer goods and services at prices attractive to purchasers, which inturn promote conditions for innovative HR work practice (Grant 1995). In the same way , plausible as this may seem, it can be argued that contracting out weakened the organisation innovative capacity to facilitate efficient HR work process. To strengthen this point, Domberger (1998) posit that this situation arises as the competitive pressure to innovate is transferred to the suppliers. The writer asserted that technical progress on the part of the organisation in the longrun can therefore be compromised.

In addition organisations that will survive in competitive markets need to display an ability to appropriately adjust their infrastructure scale and scope at low cost and at a rapid rate (Upton 1995). Outsourcing permits that competitive advantage through flexibility operates on the premise that networks of small enterprises aligned with their clients, underpinned by performance related contracts- are able to adjust more quickly to changing demand conditions than large integrated corporations (Child and Faulkner 1998). In contrast Korac- Kakabadse, Korac -Kakabadse etal (1998) are of the view that flexibility in work operations require a definition of organisational boundaries, which inturn induces possible further restructuring, and dislocation of resources .Thereby inducing a variety of costs, especially when associated with loss of employment, can result in the organisation losing its HR skills, competences and collective knowledge, and weakened commitment from retained employees after downsizing. For this reason numerous literature studies abound in organisational studies of outsourcing effect on employees like survival syndrome, erosion of the social contract, and disintegration of organisation culture etc. Furthermore other emerging practice in this subject by organisations has being the growth in relationship and strategic alliance that develop between organisations who engage in providing similar outsourcing services or product (Marcceau 1992).Despite the fact that some of these organisations may be competitors, horizontal interlinkages are becoming increasingly central to many firms competing success in outsourcing process(Child and Faulkner 1998).These alliances involves a number of often competing enterprises, corporating through a central basic source of activity which supports these prime relationships (Kakabadse and Kakabadse 1998). The key objective of such arrangement therefore is to achieve economies of scale through a beneficial local source delivery to its consortium members. For example a group of companies can create a joint venture company to carry out HR functions and services on behalf of all the individual companies –and any other firms in the market that are willing to utilize this service. The rationale behind this concept emphasised by Kakabadse and Kakabadse (2000) is that, although these HR services provided by the company are essential to all the individual organisation in the consortium- higher operational efficiency can be achieved through joint ventures economies of scale, at the same time making the individual companies concentrate on other essential task(Their core competences).
Alternatively some other organisation engage in inhouse insourcing practice to re-examine the firms service portfolio, to determine what is required to maintain economies of scale. In this practice all activities are essential rather than distinguishing between essential and non essential HR core competence. This idea is driven by management view as to the nature of the portfolio configuration that improves the organisations position in the value chain. For example the Engineering based group Vickers PLC took the strategic decision to sell off two of its profitable businesses Rolls-Royce Cars and Cosworth in other to generate the investment capital for acquisition and repositioning(TheWeek 1999). As a consequence, Vickers positioned themselves as a high quality marine engineering group ready to take advantage of Europe future marine transport requirements. Bearing in mind that sea transportation capacity will need to be enhanced due to the growing congestion of road and rail(The Week 1999).

Furthermore organisations also develop particular competencies through some activities that are supportive of its primary business purpose. The organisation may choose to further develop and exploit its in house nurtured expertise through spinning of such activities as a separate subsidiary organisation(Kakabadse and Kakabadse 2000).The logic is to provide the subsidiary organisation with the opportuinity for growth through full market exposure. This is done sometimes to exploit a new line of business. By separating its activities from its parent company. The newly formed company is free to maximize on its profit seeking intentions, through the application of its capabilities outside the existing structure. For example EDS currently one of the most powerful suppliers of IT services worldwide, began as GM spin off. Similarly the Gedes Group-specifically AudiVolkswagen GMBH, is a wholly owned subsidiary of Volkswagen AG, and is one of the leading system integrator in Europe(Venkatraman 1997).

Within the parameter of the above illustrations, outsourcing relationships are often described in terms of strategic alliances which implies a positive relationship, strategically forged between the contractual parties involved. Rubery, Machington etal (2003) argues that these positive connotations not only mask the true motive and nature of the contractual relationships, but also conceal the tension and conflicts in the process of managing these relationships- which are often a major source of pressure for the HR professional as well as the workforce who are responsible for service delivery. According to Wilmot (1997), the content and organisation of managerial work is shaped and reproduced by material subjects who are sometimes HR career professionals. For this reason, HR professionals as individualized sellers of wage labour and targets of control, are rendered anxious about their performance and career prospects.Willmot (1997) emphasise that, like other employees; they are discipline by a variety of audits and performance related pay schemes which are intended to secure their cooperation and trust(Willmot 1997). Invariably this inter-independence means that the HR professional tasks is closely linked to the organisational contexts and cannot be easily abstracted from it (Whitley 1989). As Whitley(1989) pointed out that the nature of any particular role and problem is dependent upon the context in which it occurs, such that if this changes- so too does the task. However studies in recent years on Human Resource Function has also pointed to the fact that career practice in this function has been intensified with reduced job security in a period of downsizing , delayering and outsourcing of organisational structure( Scarbrough and Burrel 1996).For this reason outsourcing relationship is seen as a dynamic platform on which the nature of work and career opportunities for HR professional managers take a different turn. As part of the HR professional work routine consideration emerge in managing the contractual relationship between the organisation and the outsourcing provider. The underpinning inter-organisational relationship is essentially a cost-profit relationship which is governed by a tight financial framework involving penalty for failing to meet performance criteria (Cook 2006).Similarly interpersonal contacts between the HR professional and the management of the outsourcing provider are identified as performing vital roles in problem solving, in exchanging social values and information, and in demonstrating commitment to credibility with the other party(Nooteboom 1999). For this reasons, the HR career professional is often put in place to manage the inter-organisational relationship. To oversee the business relationship, to trouble shoot operational problems and to win new business for the organisation. By this, the HR personnel may have no authority over controlling the contract existence between the two ends, but can flag up issues identified, were changes need to be made (Snow, Miles etal 1992).

In contrast despite the significant role these HR professional play within this tight line, Cook(2006) argues that their employment may be insecured than other employees for many reasons. Their employment contract may be tied to the length of the specific business contract and my not be taken on by the new employer who takes over the business .Their career progression maybe highly dependent upon the success of the contractual relationship with the outsourcing provider. Cook(2006) noted that they(HR professionals) need to bridge the differences between the two parties especially at hard times, for which they may receive no support from other managers as they may be accused for not being on their companys side. Also if they fail to develop a workable relationship, they tend to be replace by someone else. In some cases they may be sacrificed, not necessarily through their own fault, but in other for the firm to maintain and improve relationship. Infact even when the business relationship appears to be smoothly managed at the operational level, top management may still decide to terminate the contractual agreement as part of a wider strategic move(Marchington,Grimshaw etal 2004).Other authors like Bidges(1995) and Handy(1995) celebrate the coming of the boundaryless career era in which the lucky few are well equipped to span the organisational boundaries for their successful career. The reality may not be depicted as prescribed even for those who possess tradable skills. This is because organisational forms dictates how careers are managed(Miles and Snow 1996).While the career prospects of the outsourcing provider is precariously tied to the length and nature of the business relationship, the HR career professional tend to experience significant changes in their skill profiles and career prospects as direct consequences of the emergence of the business relationship(Mulholland 1998).In the same way, the sporadic creation of new division s and diverse business nature, render career progression of HR professionals less predictable. As Miles and Snow (1996) noted that competition for promotion may come from within as well as outside the firm, as organisations are increasingly looking for the required mix of skills to manage complex transition outsourcing process. Therefore the organisations form further influence the structure of the skill portfolio of the HR professional. To revisit the argument highlighted here- it can be further emphasize that, as each organisational forms increased in complexity, the required mix of technical, commercial and governance competencies change. This new skills requirement has brought changes in the work of the HR professional. Consequently the need for control, monitoring and accountability becomes more pressing (Buchanan and McCalman 1998).For this reason ,these managers not only have to report to a vertical hierachical structure within their organisation but also have to answer to a horizontal and diagonal monitoring structure consisting of monitoring cross functional teams (Buchana and McCalman 1998).

Furthermore financial awareness, customer focus and management innovations appear to be the major changes for the HR professional work function, and as such the organisation engage them in reskilling training programme to embrace the new company management style(Du Gay 1996). In the course of work process, the HR professionals have to make sure that performance targets are meet in order to avoid penalty and where necessary, make new claims for extra work. Similarly, they have to learn to manage their unit budget and to put a cost to every item that is purchased and every task carried out (Cook 2006). The recognition for data express the trend for the HR function to be strategic. By this the HR professional needs data to show when and where it can intervene in the matter of talent (Hesketh 2006).Prior to this era, the CIPD has largely overlooked this important distinction, focussing more on trends rather than results- on what HR does, rather than what HR delivers, and how this deliveries are interpreted in datas to support HR opinions at the board. Convincingly this in most cases influences consideration for business decisions. This is one area the CIPD should immerse its members and students on financial studies training- for this will lead to a more informed grasp of the resources required to deliver impressive change result, and value proposition in relation to the business model, during outsourcing partnership. The most recent development is that the CIPD has recognized a number of postgraduate qualification in some academic institution that closely match this requirement. The institute now devolve responsibilities to this institutions to function as training centres and empowered them to award graduate membership to successful students.

With regard to the aforementioned issue of training, Sisson(2006) posit that there is a strong case for an overhaul of the CIPD training and development syllabus. This is to enable the training and course content reflect the need of HR managers, to see the skills that they need to carry out changing HR function delivery proposition. Notably in (i)Business Skills-in the area of understanding realworld political business practices, commercial awareness, management data/analytic planning, mapping and prioritising project management.(ii) Reflective Service Specific Skills-This is where the social architecture or collective ways in which people work together are critically reflected on, to know how well processes are working in relationship with resources as technology, behavioural models and budget instruments(Hesketh 2000).



For this reason a thorough examination of the corporate landscape and academic literature cannot help but reveal the increase attention paid to this new breed of organisational practice- outsourcing. The majority of the studies here have focus on cost (Quinn 1999), efficiency ( Currie and Willocks 1997), quality and value creation (Hamel and Prahalad 1994), flexibility (Child and Faulkner 1998), and how organisation react to the call of outsourcing (Korac-Kakabadse 1998). The essay discussed the economic justification of HR function outsourcing and why organisation opt for this path. It highlighted the common HR function outsourced with specific reference to benefit administration .The essay discussed the implication and effect of this decisions on the organisation. Its framework covers the emerging application of strategic alliance by organisation who engage in similar outsourcing practice. Moreover the tension and conflicts in the process of managing the contractual relationship between the organisation and the outsourcing provider as seen from the human resource function was explored. Consequently the essay has demonstrated how the required mix of skills to manage this emerging relationship, question the training and development syllabus of the Chartered Institute of Personnel Management CIPD to improve the HR professional metrics ability. Although the critical analysis in this essay must be considered in the light of the limitation of study; as word count. For this reason brief discussions have been made to many important themes and conceptualizations i.e survival syndrome, erosion of the social contract, disintegration of organisational culture etc. However the essay has great potential for providing understanding on human resource function outsourcing, its implication on the organisation and the HR profession at large.


























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Stoik Musah writes from LBS. Leicester.United Kingdom. email:Stoik_joy@yahoo.com