Analysis from the winning team

[BUSINESS CASE] CONTEXT
ALDO GROUP :
A Major Organizational Challenge
On March 24 and 25, 2006, Excalibur Desjardins, the Canadian
university tournament in human resources, welcomed
students from 24 universities in Québec and elsewhere
in Canada. The six finalist teams were required to
examine an actual business case focusing on the
Aldo Group.
Background
The Aldo Group is a privately held Canadian company that has
been active in fashion footwear and accessories since 1972. Under
the leadership of its founder/owner Aldo Bensadoun, who is still
actively involved in the organization, it has become the country’s
major player in its industry. The Group owes its reputation as a
retailer to its ability to research and develop new concepts and
create its own products.
Aldo Shoes started by setting up footwear concessions within a
Quebec clothing chain. It then expanded rapidly, opening four
stores elsewhere in Canada. By 1980, it had some 30 stores to its
credit and had launched its diversification and market segmentation
program by acquiring stores operating under the Pegabo banner.
Twenty-five years later, the Group now has a total of 750 stores
in North America, Europe and 20 other countries, operating under
such names as Aldo, Transit/Spring, FeetFirst, Globo, StoneRidge
and Aldo Accessories. What’s more, each banner supports a particular cause, for instance contributing to the fight against AIDs or
breast cancer or participating in various other charitable initiatives.
The company’s commitment to community causes helps make both
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its human resources and its clientele more aware of important social
issues. Moreover, the Aldo Group has built up a client base that
includes all age brackets. While the Aldo and Transit/Spring banners
appeal mainly to 18-to-34 year-olds (primarily middle-class youth and
students), Globo and FeetFirst target families and an older age group.
The company’s non-unionized workforce is made up of part-time
(75%) and full-time (25%) personnel. The Group employs 15,000 people
in all, including about 600 at its head office in Montreal. The head
office team mainly focuses on product design and the analysis of
fashion trends and marketing techniques. In addition, it is responsible for the design and development of the Group’s stores worldwide, using material from local suppliers.
Furthermore, in Montreal, the company’s distribution centre is
staffed by a team of 400 people who are in charge of receiving and
checking products made around the globe and oversee orders and
their delivery to the Group’s stores all across North America. The
company’s operational structure is supported by leading-edge
technology to ensure this strategic supply management.
Each store is staffed by a manager, an assistant manager, salespeople, cashiers and a merchandising clerk. Because of its high
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[BUSINESS CASE] CONTEXT
staff turnover, the Group tries to recruit people who are interested
in customer service and fashion. In addition to base pay, the company offers a generous incentive program for its full-time workforce. Part-time personnel can also earn good commissions when
they reach their sales targets. Thanks to this approach, Aldo Group
has been able to keep its workforce highly motivated, reward its
efforts and carry on its high standard of customer service.
Challenges
Having achieved such robust growth over the last five years, the
Group now faces a substantial organizational challenge. In 2006, it
plans to open 150 stores in the United States. In the meantime, it
continues to expand globally, particularly through developing its
network of franchises and licenses, marketing new concepts and
expanding its e-commerce sites. In fact, the company expects to
achieve $1 billion in sales by the year-end and aims to double its size
within the next five years. Two goals implicit in this international
expansion are to achieve a workforce of 25,000 and to maintain
the high standard of customer service. It also hopes to reach these
objectives without increasing its current management team.
To meet this challenge, Aldo is counting on its strong entrepreneurial culture, which has proven so effective thus far : rapid
turnaround, significant flexibility and the ability to adapt to
market changes and needs. For example, it now takes only four to
eight weeks to disseminate and implement a new market strategy
organization-wide. The Group’s status as a privately held company
gives it considerable freedom of action in this respect. Because it
hasn’t had to worry about shareholder returns, it has been able to
concentrate on consumer needs rather than on the exponential
growth of short-term sales. Business has steadily developed as
a result of this approach, making the company less vulnerable to
economic fluctuations.
For its future development, the Aldo Group can also rely on the
three values underpinning its management philosophy, i.e. love,
respect and integrity. Love, which the company translates as a
keen interest in people as individuals, its partners and products;
respect of others for what they are; and integrity in action are all
values the company promotes among its management and staff.
These values are reflected in its hiring, training and customer
service practices. For instance, the Group has set up programs to
integrate new recruits. It also regularly reinforces these values and
implements various other initiatives to support them. The well-being
of its human resources, which is a key priority for the organization,
also has the advantage of giving it a competitive edge. Owing to
this rewarding approach, the Group can count on a loyal, committed
workforce that has been strongly attached to the company for a
number of years. The challenge is now to ensure that these values
are promoted worldwide since they are crucial to successful growth.
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The organization’s workforce is young and non-unionized. Its
high turnover rate, due to the temporary nature of much of its staff,
has prompted the company to examine various hiring practices.
The Group’s plans to double its branches mean that it has to be open
to the rest of the world and address various cultural and legislative
differences, while maintaining a simple yet efficient operational
structure. To ensure compliance with standards in the host countries,
the Group relies on franchises. In addition, Canadians appear to be
more than willing to accept key positions abroad to promote the
integration of the Aldo culture.
The success of the company’s international expansion depends
moreover on strong leadership. Aldo Bensadoun has built up a
solid management team made up of one president and nine vice
presidents who ensure continuity and future success. Keeping the
management team small is one of the Group’s strategic choices. Each
and every step in its development has been marked by a concern
to keep administration overhead to a minimum. User-friendly tools
and systems have also been introduced to standardize and adapt
operations and reduce errors.
The Group wishes to continue this approach in the future, particularly in light of its expansion plans. It hopes to be able to integrate
15,000 new members into its workforce without having to institute
new administrative functions.
Your team of consultants is required to analyze the situation
and recommend the most effective human resource management
strategies that would allow Aldo Group to preserve and promote its
organizational culture as it expands and, at the same time, promote
growth by maintaining customer satisfaction and a small administrative structure.
Your role
YOU ARE REQUIRED TO :
1. clearly outline your understanding of the situation
of Aldo Group;
2. identify the human resource challenges facing the Group;
3. recommend an action plan to address these challenges.
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[BUSINESS CASE] STUDENTS’ ANALYSIS
SHOES FOR
EVERYBODY
BY THE TEAM FROM THE UNIVERSITY OF CALGARY
The following is the analysis of the Aldo Group business case
presented by the top winning team from the University of Calgary.
The team was comprised of Gillian Hynes, Jodi Cantafio and Taryn
Stuart. Competitors were allowed only 90 minutes to study the case.
oday, Aldo Group has one objective: to succcessfully achieve
international expansion in the next five years through
hiring new recruits, while maintaining Aldo values and a
small management team.
T
Challenges
TRADUIT PAR DANIÈLE VEILLETTE
The first challenge facing the Group is recruitment. The company
would like to hire 10,000 new employees, which is a challenge in
itself. It also wants to make sure that these people are committed
to customer service.
The second challenge is to make sure that its values -- love, respect
and integrity -- are adopted worldwide and to integrate the cultural
diversity of all its employees within this global expansion.
The third challenge is to attain the above goals without increasing
the size of its management team.
First challenge : recruitment
The first step of the action plan is recruitment. The best way
to recruit employees, particularly in large numbers, is through
referrals from current staff.
Studies have shown that this is a most effective recruitment tool,
particularly if referrals are tied to monetary bonuses. If an employee
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refers a candidate who is successful in a position for X number
of months, it makes good sense to compensate this employee.
Aldo can also recruit high-school graduates. They are a perfect
demographic for part-time work and about the same age as
Aldo’s workforce.
Career fairs are another effective way to reach a diversity of
candidates. We’ll also be looking at other more innovative and
creative options. Given Aldo’s values and culture, the Group could
also focus on hair and fashion shows via a variety of media, print
ads and handouts. It could consider placing ads in magazines,
particularly fashion magazines; there are some excellent ones in
Canada that feature clothes. Canadian magazines would be ideal
for a Canadian company.
The selection process
Obviously, we also need to address the selection process. We
recommend a hurdle system for new employees. Since we know
that personality is very important to Aldo, recruiters could start
with an internet-based personality test to determine whether
candidates are extrovert enough, conscientious and open to working with customers in the innovative world of fashion.
Candidates that score well on the personality test will be invited
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[BUSINESS CASE] STUDENTS’ ANALYSIS
to an interview to get to know them better and determine whether they would really do well in the company. This can be done
through behavioural descriptive interviews. We also know that
past performance is an excellent indicator of future performance.
It’s important to see how candidates will react in tough situations,
particularly in customer service, to gauge how they’ll react in the
future. The interview focus should be on customer service, innovation and employee creativity. If Aldo can hire based on personality, we know that the company can retain these employees.
What they can bring to the business in terms of personality is
more important than their technical skills. We really believe that
this will improve retention rates and lower turnover.
Compensation
Compensation is of course a crucial factor in retaining employees
and attracting key people in the industry. Aldo has an excellent
commission system for its part-time employees and a generous
benefit system for full-time staff. The Group should maintain
these systems. Commissions encourage employees to be innovative and demonstrate entrepreneurship. The company should
ensure that there are no scheduling biases in the franchise stores.
In general, more sales are made in the front of the store than in
the back. Employees should also understand that they are being
treated no differently than their co-workers and that they are
being compensated fairly.
Performance management
We would now like to address performance management techniques, one of which is “walking around.” This technique can be
applied at the franchise level in malls, as well as at the headquarters and office level.
Management by walking around consists in having managers
and executives meet employees face-to-face and listen to their
concerns. Franchise managers need to see for themselves the
interaction between employees and customers. Employees’ customer service should be directly linked to their compensation
through evaluations. If they can actually see the connection
between the service they provide and their overall compensation
or raises, they will really see the benefit in customer service.
Management by objectives is another technique that encourages employees to give their very best. This technique involves
a manager and an employee sitting down together and determining goals. Here again, it can be implemented at head office or
at a base level. A manager can sit down with an employee and
ask: “What are our goals for the next six months, for next year?
Are we going to increase your individual sales by a certain percentage? If you’re in management, how efficient are you going to
be in the next report ?” Determining goals promotes responsibi-
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lity. These techniques significantly improve employee retention
and motivation.
Managing diversity through communication...
Aldo is a very diversified company that has plans to increase
its expansion on the international scene. That’s why cultural
diversity and the integration of all its employees will be a serious
challenge. Communication is the first and absolutely essential
step to managing this diversity. The company needs to support
the new stores that will be opening up around the world and
clearly communicate what is happening internationally.
The Group should create an international network so that
employees in Canada, the United States and Europe, or wherever the stores are, are all integrated and can communicate on
an informal basis.
The internet and the intranet (if there is one at head office) are
probably the most effective and most inexpensive communication
tools for a large and expansive company like Aldo. Telephone
calls or newsletters won’t be effective enough. The internet and
intranet can quickly disseminate information on a timely basis. In
addition, the Group should make sure that the head office, departments and new stores are equipped with posting boards where
managers can post information received from around the globe.
For example, if there is a new store opening in Germany, the
event should be announced and celebrated. Other wins, such as
sales achieved this year, should also be posted.
Contact information is very important. We know that
Canadians are willing to go overseas. Let’s give others the opportunity to travel -- from the US to Canada or the US to Europe.
Contact and worldwide information let employees know what
is going on globally and give them the opportunity to ask questions. We believe that the communication strategy will promote
Aldo’s cultural values and disseminate them throughout the
entire company.
…and training
It is also important to make sure employees receive cultural training. The Group’s international expansion may place some
people, e.g. head office employees working abroad or even franchise holders, in situations they are unprepared for or that make
them uncomfortable.
The five cultural dimensions developed by Geerte Hofstede, a
professor at the University of Maastricht, i.e. power distance,
individuality, masculinity, long-term orientation and uncertainty
should be addressed in this training. We believe that making
employees aware of these dimensions will better prepare them to
understand other cultures. Fear often occurs when people don’t
know what to expect. Other culture-specific factors should also
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be taken into account. For instance, sizing for shoes in Europe is
very different than in Canada. Executives and employees should
be aware of this difference.
In this respect, videos, simulations and role playing can be
useful training tools. They can help employees understand what
to expect in another country and make their experience even
more successful. Aldo may initially need to outsource training
since the Group wants to keep its management team small. In
fact, outsourcing would be most effective since it would be
cheaper in the long term.
Second challenge :
to communicate values
It is extremely important to promote Aldo’s values and we want
our communication strategy to focus on them. We want to stress
love, respect and integrity and make them the major components
of the strategy we mentioned above.
The posting boards and intranet reinforce the small wins
made in terms of these values. Holding weekly meetings with
store employees to discuss how these values can be promoted is
also useful.
In addition, managers have to “walk the talk.” It’s not enough
to simply tell employees to show love, respect and integrity, they
have to see that their managers apply these values to them. Store
managers must be encouraged to set the example and should be
provided with the tools they need to do so. We believe that an
international community initiative could promote the Group’s
international expansion. It would encourage the social responsibility that is so important to Aldo.
For instance, if Aldo urged customers to bring in their old shoes
in exchange for a dollar, the project would attract customers,
increase the bottom line, recycle products on an international
level, and promote community involvement. It would encourage
competitiveness among stores to increase sales by talking about
Aldo’s “Shoes for Everybody.” This initiative could be extended
worldwide or be a joint project. We believe that it is an excellent
and cheap way to encourage employees and create loyalty. They
will be excited about working for Aldo, an organization that helps
people around the world. It is certainly a good way to promote
Aldo’s values on a global scale.
Third challenge :
to maintain a small management team
25,000 employees and senior managers may show some resistance. They should be given the training and tools they need to
be on top of the situation. The company should perform a needs
analysis, including an analysis of its personnel. It should ensure
that its senior management is ready, has the required knowledge,
skills and abilities, and is motivated. These managers want to be
part of this training and effective communication strategies
should encourage this attitude.
More specifically, training should focus on stress management. The Group has to deal with (and may already be doing so)
a lot of new information coming in and many new employees. As
employee numbers increase, so should the training available.
Delegation
Some tasks that upper management are responsible for could be
handled by branch managers or even by employees. Training
should thus be oriented towards delegation and leadership. Even
if Aldo Group already has solid leadership, it should be encouraged. This can be done cost effectively through simulations and
stress management workshops or through other less expensive
methods. Once training needs have been determined, Aldo will
be able to identify exactly what steps to take. Once again, the
training could address any management resistance that might
arise from additional workloads.
Employee involvement
Entrepreneurship and an innovative creative culture are the
two factors that make Aldo Group successful. And these factors
can be encouraged by promoting employee involvement.
Suggestion boxes and an “open door” policy will help ensure
that management at all levels is accountable to frontline staff.
WestJet and Norsk Canada are excellent examples of organizations that promote employee involvement. Representatives that
act a little like a union receive suggestions and complaints. If
an employee makes a useful suggestion, it should be implemented. Following up on employees’ suggestions makes them
feel more involved.
All our strategies work together, which in our view is important
for them to produce positive results. This also helps employees
feel they belong to the organization. Once they understand that
Aldo is working with and not against them, they will be prepared
to help the company and increase the bottom line. And that’s
what we want.
Training
A small management team worked for Aldo Group in the past
and the Group wants it to continue to work. However, several
issues must be addressed. The company needs to ensure that its
upper management has the necessary training. It will now have
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Conclusion
We believe the strategies we’ve outline will ensure that Aldo
Group can double its store numbers within five years and maintain the values that are important to it at a reasonable cost.
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[BUSINESS CASE] STUDENTS’ ANALYSIS
Remember, recruitment must be based on personality. Employees
that have a great personality will have excellent customer service
skills. They’ll want to work for Aldo and their values will be
aligned with the Group’s values.
Aldo Group should make sure that its values of love, respect
and integrity are adopted by all its employees around the globe.
By encouraging managers to “walk the talk” and through the
communication strategy outlined earlier, the company can
communicate its values at all levels, internationally, nationally
and on a community basis. Lastly, we believe that the “Shoes for
Everybody” project is an excellent way to promote the idea that
we can help not only each other but also the world at large.
All these objectives can be achieved without increasing the
size of the management team, which has worked for the company
in the past.
Aldo should focus on training to help its management meet
the challenges ahead and encourage employee involvement. All
the strategies should work together to promote the effective
commitment that will in turn strengthen employee loyalty.
These employees want to work for Aldo Group and, as such, are
the company’s best marketers. Let its human resources speak
for the organization.
We strongly believe that the strategies we have outlined:
recruitment, values and keeping the management team small,
will ensure Aldo Group can meet its aim of increasing its size
within five year and maintain a competitive advantage on an
international market.
[BUSINESS CASE] PROFESSOR’S ANALYSIS
MANAGING
GROWTH
BY DENISE GHANAM, CHRP, LECTURER, MANAGEMENT, ODETTE SCHOOL OF BUSINESS UNIVERSITY OF WINDSOR
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TRADUIT PAR DANIÈLE VEILLETTE
Despite the tight time constraints, the winning team has provided a
detailed analysis and implementation plan to address the human
resource challenges facing Aldo Group in its ongoing growth and
international expansion. The following are some comments on the
team’s assessment of the situation and their suggested organizational
actions, as well as some thoughts around the general issues introduced
by this case
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[BUSINESS CASE] PROFESSOR’S ANALYSIS
ldo Group is now a large Canadian-based global organization, with 750 stores in markets around the world.
While the main focus remains the North American
market, selling under the Aldo name, as well as eight other targeted labels, there has been rapid growth and expansion through
franchise and licensing arrangements. This has increased their
presence in the United Kingdom and Europe, with more aggressive development planned for elsewhere in the next five years.
Aldo has a goal to reach 25,000 worldwide employees and to have
doubled sales to approximately $2 billion by 2010.
In the immediate future, plans are to open 150 new stores in the
US for 2006. This growth strategy, coupled with a larger planned
e-commerce presence, will create a significant human resources
challenge for the organization. The team identified three key challenges for Aldo Group, including recruitment of the needed staff for
the expansion, maintaining the core company values during this
rapid growth, and ensuring that the organization does not become
top heavy and lose its entrepreneurial spirit as it expands. While
the first challenge is more correctly identified as effective staffing
(not just recruitment, because retention is actually the more critical
piece in this case), the group’s detailed discussion of the subset of
issues was quite comprehensive.
A
its targeted sales goals. As well, the idea of a bonus on successful
referrals from existing staff is excellent. This could even be
extended to customers, who can recommend new recruits who
would meet their own client expectations. In return for a successful
referral, they could receive store credits to be used towards future
purchases. This also contributes toward the increased sales goals.
However, with retention as a critical focus, Aldo Group should
undertake some type of employee survey to identify and address
the reasons for the high turnover of part-timers and to shore up
the support of its full-time staff. Even though retention is an issue
throughout the retail sector, it would help to set Aldo apart from
its competitors and give it information to use in devising effective
employment policies. Feedback from this data could be used by
individual managers to align their store management with best
practices from across the organization.
While I agree that more emphasis is needed on performance
management, especially to tie compensation to expansion goals and
sales results, MBO and management by “walking around” are likely
too labour intensive as approaches for a firm that wants to keep its
administrative structure simple. However, a clear connection of
individual goals and store level goals to raises and/or bonuses is
critical. This ties in nicely with the group’s next point on increased
attention to internal communication.
Staffing and Retention
There is no doubt that large-scale growth and store expansion,
including a significant portion done in other countries, creates a
monumental HR challenge for Aldo Group. Given the average age
of its workforce, and the high dependence on part-time staff,
retention is the great test for this firm in order for it to maintain
its focus on excellent customer service and have its core values
of love, respect and integrity effectively promulgated throughout
the organization. Particularly as it expands, this growth will strain
the firm’s existing management structure to adapt to so much
new recruitment, selection, orientation, and follow-up training
activity. Given the importance of this effort to the success of the
expansion, Aldo Group may want to consider outsourcing the
front end of this to a firm with international and/or diversity staffing experience. This will give expertise to the recruitment and
selection functions that all local managers may not have, as well
as ensure a consistency of the skills and personality traits hired.
This also allows store managers to focus on the orientation and
customer service training piece. Hands-on training with a store
manager may improve working relationships, which in turn,
could lead to improved employee retention.
I liked the idea of an internet-based pre-screening personality
test to ensure fit with the corporate culture and a predisposition to
customer service. I would also test for creativity in thinking, given
the entrepreneurial spirit Aldo wants to foster to assist in achieving
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Communicating Values
Better communication (through internet, intranet, poster boards,
and face-to-face regular meetings as suggested) will all assist Aldo
in achieving its goals and retaining its employees more effectively.
As well, with a more diverse workforce, and more cultural differentiation, a variety of communication channels is key. This also
supports the second challenge of reinforcing the corporate culture
and values throughout the organization.
Additionally, the firm should consider expanding (or developing)
an internal job posting process, to facilitate those Canadians who
want to work in the US or Europe or Australia, as the company
expands. Bringing strong internal candidates to oversee international
store openings will help to make the culture transfer to the new stores
more effective and seamless. Using the community-based focus, like
the strong “Aldo for AIDS” campaign currently running, helps to promote the firm’s image as a good corporate citizen, while reinforcing
the caring values that are at its core. The “Shoes for Everyone”
initiative suggested by the team was a unique twist on that idea.
The Management Team
Naturally, an important part of dealing with a large change such
as this is effective training for the managers. Aldo Group wants
to continue to foster an entrepreneurial spirit of flexibility and
adaptability amongst its staff. This is particularly true for those in
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[BUSINESS CASE] PROFESSOR’S ANALYSIS
the Montreal head office who are responsible for product design
and selection, and for distribution. Their skills and ability to
respond quickly to market changes become even more important
as the company expands outside North America and puts more
emphasis on its e-commerce business.
Further, moving some decision making to the front-line store
management will ensure that the senior managers can remain
focused on the longer-term strategic goals of the organization.
This will help to keep the firm from getting top heavy, while
making it more market responsive. Additionally, allowing lower
level employees to become more empowered as decision makers
will increase their commitment and loyalty to the firm. This
relates back to both the issue of retention and the need for reinforcement of the corporate values. How better to stress the respect for and individuality of your employees than to give them
more say in how their jobs are done everyday?
Conclusion
This case encompasses the true challenge of human resources in
today’s market place. How can the way we deal with the people
in our firm influence and contribute to the attainment of our organization’s strategic goals and plans? Aldo Group must focus on
effective and targeted staffing for the planned expansion in order
to retain its strong customer service focus and keep sales growing.
Retail is, above all else, about serving the clients’ needs better
than any competitors can. In addition, the company must do more
to keep the effective employees it has, especially if it wants to
strengthen its corporate culture and share that culture with the
rest of the world as it expands into different markets. Finally, it
needs to do that while empowering employees to take more
ownership and decision-making authority so that its management
structure can remain small and responsive.
While these challenges are imposing, they are not insurmountable. A clear connection between the business strategy of international growth and the human resources policies of improved
retention, targeted and diverse staffing, strengthened internal communication, individualized goals and performance management, and
a strong corporate culture demonstrated by the actions of a lean senior
management team will help to ensure that Aldo Group is successful
in achieving the goals it has set for itself for the next five years.
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