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Human Resource Management at The Foschini Group

By Garima Saxena, 3EA
Human Resource Management at The Foschini Group

The Foschini Group's (FOS) Shani Naidoo was in excellent spirits when she walked out of a two-day group strategy meeting in October 2009. As managing director for group human resources (HR) since 2005, it was evident that the changes she and her team had implemented had successfully made HR a critical part of Foschini's overall business strategy. In pursuit of their vision to get rid of the company's silo mentality, the HR team had introduced a totally new, centralized HR model. Despite the shake-up, Naidoo believed there was still a great deal more that needed to change. She did wonder, however, if she might have gone too far.

George Rosenthal, a Russian immigrant to South Africa, opened his first Foschini store in 1925. His idea was to sell well-made, up-to-date and inexpensive women's fashion, imported from the United States. In just over a year, he had opened nine stores around the country and, within three years, Foschini had become a household name in international women's fashion. In 1937, Foschini was the first local fashion chain to become a public company. It had grown substantially since then by establishing new brands and acquiring existing retail brands.

In 2009, FOS (with its head office in Cape Town) comprised 14 trading brands, had more than 1500 stores around the country, and employed over 15 000 people. It targeted the broad, middle-income population of southern Africa, mostly as a credit retailer. The ratio of cash sales to total turnover was approximately 36%.1 Doug Murray was appointed as the new CEO in January 2008, having joined the group in 1985. He took over from Dennis Polak, who had retired after 10 years at the helm. It was Polak who had appointed Naidoo to the operating board in 2006. A new chairman of the FOS external board, David Nurek, took office in April 2009.

a) FOS's retail products included clothing, jewelry, accessories, cosmetics, sporting and outdoor apparel and equipment, cellular phones and homeware. Its divisions included:
b) Foschini, which included Donna-Claire (fashion for fuller-figured women), Luella (a footwear, handbags and accessories range) and Fashionexpress (for the lower-income market)
c) Markham (originally Markhams), a men's fashion outfitter
d) Exact! (originally launched as Pages) for men, women and children's fashion and accessories in the lower-income market
e) Sports division, which included Sportscene (a blend of sports and fashion for the youthful market), Totalsports (positioned as a premier sportswear shopping destination) and DueSouth (outdoor lifestyle wear)
f) Jewellery division, which included American Swiss, Sterns and Matrix
g) Decor division, which included home (offering home decor products) and homelivingspace (selling furniture)
h) TFG Apparel Supply Company (which managed the supply of locally made apparel, and coordinated the merchandise sourcing, shipping and quality assurance activities); and
i) FG Financial Services (which managed the group's in-store credit card programme)

FOS also held a majority share (55%) in the RCS Group, which was an operationally independent consumer finance business that provided a broad range of financial services under its own brand and in association with a number of retail entities in South Africa, Namibia and Botswana.

Standard Bank held the balance of RCS Group shares. Murray reported cost containment strategy as a success factor of Foschini's management team at such time.

The need for change in human resource management approach at Foschini was because of presence of separate HR function for each division and brand wherein all HR leaders worked in silos, devising separate strategies. This created inconsistencies in HR processes and limited staff movement and no inter brand competition for resources and best practices. The Implementation Plan for the change management consisted of:

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Eleven Centre of Excellence were identified for the entire process who initiated policies and processes which were carried out throughout the group. The tasks for individual centre of excellence is mentioned below:

a) Knowledge Management: The aim of this COE was breakdown of silo mentality, increase collaboration between different management teams and ensure overall projects drew staff from all over the group.
b) Talent Management: The aim of this COE was to integrate talent management framework, linking person's development to leadership pipeline, develop individual development plan, competency assessment and development, centralisation of the function, enablement of functional experts to facilitate workshops and development of centralised academy for store managers.
c) Performance Management: The aim of this COE was the standardization of Performance Management process ensuring each role is broken down into deliverables on a five-point rating scale and biannual performance reviews with the HR director reported to the board twice a year.
d) CSI, Sustainability and Wellness:The aim of this COE was to enable Feel Good Project which focused on developing skills among unemployed women and provide support to over 50 CSI projects like Rural Education Project, Leap Science and Maths Saturday School Project and WHEAT Trust.
e) Broad based Black Economic Empowerment (BBBEE): The aim of this COE was to ensure that there are more black people in management positions, ensuring Store managers, area managers and RMs were of diverse background and implement executive coaching and training plans for them.
f) Compensation and Benefits: The aim of this COE was to ensure clocking system in all stores for compensating overtime, ensure centralization of capturing employee data, alignment of rewards to staff positions & performance, match people's salaries to market value, performance related incentive bonus to be paid on a biannual basis.

Management of human resources is the most important function in any organization. It is essential to achieve a balance between caring for one's employees, helping them work to their maximum potential and achieving the goals of an organization through the work the employees put in. Human resource management involves both strategic and comprehensive approaches to managing people, as well as workplace culture and environment. The role of human resources professionals is to ensure that a company's most important asset, its human capital is being nurtured and supported through the creation and management of programs, policies, and procedures, and by fostering a positive work environment through effective employee-employer relations. The concept behind human resource management is that employees who are subject to effective human resource management are able to more effectively and productively contribute to a company's overall direction, thereby ensuring that company goals and objectives are accomplished.

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Article by: Garima Saxena, 3EA