Contents

• This report is based on the following case study -
• ABASCO is a successful fashion wholesale company who operate in the retail clothing industry. The company was formed and has evolved over the last 5 years. It all started in 2009 through the merger of 3 smaller companies that were individually owned by separate entrepreneurs. The 3 owners are John Stone, Harry Silverman and Mark Cliffe and in 2009 they decided that amalgamation was the way forward in order to survive and prosper in tough global clothing markets. The combined company was named ABASCO(A Big And Successful COmpany) and was established as a private limited with the shareholding split equally 3 ways.
• The Owners/ Directors
• John Stone is a 32 year old successful fashion designer who gained a Degree in Fashion from Huddersfield University and went onto to establish a good name with major fashion brands for his creativity and innovation in both men’s and ladies fashion clothing. John is a self-made business man who operates from a small office in Huddersfield and was and still is always keen to take new graduates from the University and undergraduates, on placements, in order to keep his office fresh with the latest ideas and fashion creations. After leaving University in 2005 John has won several awards for his designs, the most prestigious being the Drapers Young Fashion Designer of the year in 2006.
• Harry Silverman is from a wealthy background and has inherited the family warehousing and distribution business with sites in St Albans, Hong Kong and Istanbul. The sites in Hong Kong and Istanbul are strategically important as they were established ‘gateways to the manufacturing worlds’ of South East Asia and Turkey where many of the clothing factories that service the western fashion clothing industry reside. The site in St Alban was equally important as the UK base where bulk packages were imported to and onward shipped after being broken down and distributed throughout the UK to high street fashion outlets and online retailers and catalogue companies. The St Albans site is also a key site for ‘reverse logistics’ purposes. Harry’s family lease these sites on a long term rental basis back to ABASCO from the Silverman family Trust Fund.
• *Reverse logistics is the process of moving goods from their typical final destination back up the supply chain for the purpose of capturing value of surplus garments, returning poor or defective quality garments and refurbishing activities. Returns management is increasingly being recognised as affecting competitive positioning for the retail industry and especially online retailers.
• The third of the owners is Mark Cliffe. Mark at 50 years old is older than the other 2 partners and had a long and experienced career as a business relationship manager, before setting up on his own. His key skills are that of an independent Clothing Trader, who supply high street outlets with branded goods from the ‘grey market’ and also buy back out of season stock from high street chains and resell these onto the likes of TK Maxx and other discounted Designer Outlets. Also through online trading companies like Alibaba www.alibaba.com and eBay, www.ebay.com.
• *A grey marketor parallel market is the trade of a commodity through distribution channels which, while legal, are unofficial, unauthorised, or unintended by the original manufacturer. The most common type of grey market is the sale of imported goods (brought by small import companies or individuals not authorised by the manufacturer) which would otherwise be more expensive in the country to which they are being imported.http://www.merriam-webster.com/dictionary
• Mark had a long standing wide and influential network of contacts in the retail fashion industry and was well known by many of the Buying Directors and owners of key fashion retailers.
• The Workforce and Organisational Structure
• ABASCO employs approximately 120 staff across their offices in Huddersfield, St Albans, London and its mobile field sales force. There is no HR department or HR staff at all, but the PA to Harry Silverman, Ms Gloria Moneypenny who is based at the St Albans site, takes care of the staff records on a Microsoft Excel database which she manually updates when line mangers tell her of any changers to new starters, leavers, pay increases, sick absences and maternity leave. Once a month Gloria tries to ensure that the payroll system that works off the Sage financial software system is updated to reflect any staff changes. However keeping accurate staff records is a continuous problem and there have been many cases where new staff have not been paid or staff leaving have been overpaid for months after leaving. The Directors have often thought that it would be very valuable if the system could capture and record staff qualifications, experience and skills, so that when new work is being tendered for, or is won, the company could quickly get the right people assembled into a team and mobilise projects far more rapidly, thereby giving an advantage over their close competitors.
• Recruitment and selection is left to the line managers within the organisation, who use a recruitment agency called Planet 24, to fill vacancies. The process is far from efficient and relies heavily on Planet 24 to find staff in the locations who they, as recruiters/head-hunters, feel will fit in with the culture of the organisation, fit the brief job description and can be employed at the lower end of the wages spectrum. Turnover particularly in the St Albans site is high at 14% attrition per year. The fees for the recruitment agency are 18% of first year salary.
• The organisational structure is a flat, functionally based one with a total of 8 functions each being led by a team manager who in turn report directly into one of the 3 owners. The 8 line managers also conduct a basic annual appraisal and if they feel a member of staff is performing well and are potentially in the ‘likely to leave’ category, they recommend to one of the owners that a pay rise is awarded. Over and above this no one has received an annual increase in salary for the last 3 years.
• At the warehouse in St Albans, pay is quite low in a range of £18-£22,000. At the Huddersfield design office salaries range from £25-£40,000, largely dependent on length of service rather than performance. Staff based in the London office are paid £25-£30.000, whereas the field sales forces’ total reward includes a base payment of £30-£45,000 plus an incentive bonus scheme, additional annual leave and a company car/allowance. It has been mooted that a simple pay banding scheme should be considered, but this has not been progressed.
• The investment in training and development of staff is low as is the case in many SME organisations (Small Medium Enterprises) where training cost are seen as relatively high in relation to company turnover and talented people tend to move around the industry in order to seek career progression. Therefore the general approach at ABASCO is to try and recruit new staff with good CV’s who can bring new skills into the business and pass these onto existing staff wherever possible. The Design office staff are slightly different in this respect and are given time during the working week to go ‘comp shopping’. This involves looking around the high street stores and online retailers to see what designs are coming out of the major fashion brands and using these to ‘spark more innovation’ in their own work.
• Locations
• ABASCO operates from 3 UK offices which are based in:
• Huddersfield where the staff are mainly designers,
• St Albans where the logistics, warehousing, finance and other operations are based,
• London where there is a sales office and the field sales force are based here.
• The Nature of the Business
• ABASCO supply clothing and footwear directly to high street shops, including Next, Warehouse, Foot Locker, Republic, JD Sports, etc. Their supply channel to mail order and online retailers such as Littlewoods, Redcats and the like, is also well established. ABASCO design the clothing and footwear in the design function based in Huddersfield but manufacture in Turkey, India and China. These goods are then shipped to the UK and distributed through the main warehousing function in St Albans and out to customers shop outlets. The field sales forces task is to seek new outlets and manage existing customer accounts. This ‘end to end’ supply management and the way ABASCO builds and maintains business relationships with key customers at ABASCO is seen as a key capability by analysts in the industry.
• Another key competence for the ABASCO business is having the capability forecast fashion demands and specify manufacture volumes accordingly without holding too much of a buffer stock. Then when fashion garments invariably do go out of season, having the network of outlets to off load manageable levels of unwanted stock in a cost effective way into the grey market and other channels.
• The Fashion Industry
• The fashion industry is a very fast moving sector with constant change and most recently with the acceleration of globalisation and huge technological advances in online selling and customer profiling make it essential that suppliers need to keep a close eye on the market place. Two sources of valuable information about how the retail industry environment is changing and what is shaping these changes are Drapers and Retail Weekly.
• Drapers is a well-established organisation and key resource for the fashion industry where supporting information can be found such as; salary benchmarking, Job Advertising, legal advice, ethical trading and current articles about markets and trading ideas. The website can be found at www.drapersonline.com/
• Retail Weekly is a media and knowledge bank organisation that analyses and reports on all aspects of the retailing industry. As well as being a readable weekly magazine for retail professionals to understand what is topical in their industry, it has also become a key resource for understanding and benchmarking what is affecting and shaping the industry.
• See link to Retail Week. www.retail-week.com
• Although there are many, often trivial, changes in the Retail industry, over the last 2 years there have been some mission critical factors that are changing the shape and foundations of the fashion industry that Drapers and Retail Weekly have reported on. The 5 issues that are giving major concerns for ABASCO are:
• Consumers’ statutory rights have been bolstered significantly in June 2013 with the introduction of the much-anticipated Consumer Contracts Regulations 2013. This places more responsibility on suppliers to accept greater responsibilities for returned goods.
• Ethical trading practices - High street chains including Marks & Spencer, Gap, Next, Tesco, Primark Warehouse, and Asda and many more familiar names have all been the subject of investigations in to poor working conditions in their overseas factories. It is no longer acceptable to turn a blind eye to unethical practices in manufacturing. This can severely damage brand image and business performance.
• On a more positive note, the global recession is over its worst and economies in the western developed countries that suffered the most from the 2008 economic collapses are improving. Drapers reported that ’the tide is turning for UK Retailers in the US and the richer countries of the European market’. For those who have invested in establishing business networks in there will be rich opportunities over the next decade.
• Technology will be a significant competitive differentiator in the next 5 years. Not only that, online retailing will become more sophisticated and reliable. ‘Click and collect’ systems and processes are gaining confidence and favour with customers, but also the growth of customer profiling technology. Understanding shopping habits, sizes, shapes, preferred styles, disposable incomes of individual shoppers will be sources of competitive advantage for retailers.
• Having sophisticated and wide reaching, rapid Logistics systems in a global economy will be a key factor in determining success and advantage over competitors.
• These factors along with others have made the owners stop and think about the future. Some key questions that were raised the last time the 3 owners met in the Huddersfield office were.
• Have we personally got the commitment to make the changes that are needed to survive and prosper? Or do we sell the business to a bigger player?
• If we stay with the business what needs to happen and how do we change from the current informal set up where only the 3 Directors have voice in decision making and formulating strategy, as well as managing the workforce on matters related to recruitment/selection, performance management, learning and development organisation structure and other people management issues?
• Do we have the talent; skills and resources that we would need to move the business to a new global level and exploit opportunities? What are these and how do we get them?

Description

This report is based on the following requirement -
The 3 owners have decided they need help and some consultancy advice. Hence they have approached the Business School for support. Your task is to write a report of 5,000 words in which you critically evaluate the people management practices of ABASCO.
Unlike a traditional business report you should make full use of appropriate literature to support your arguments and include academic references and quotations to demonstrate what might be regarded as good practice. A list of the books and articles referred to in the report should be included using the APA6th style of referencing.
Your report should take account of the following:
• Critically analyse the internal context of the organisation in terms of its culture and people management strategies.
• Here you should consider whether the people strategy is aligned to the overall business strategy and what effect the culture of the organisation has on this. (2,000 words).
• Focus on one of the following areas and critically evaluate whether it is aligned with the people and business strategies or stands alone. You must make it clear which area you are focussing on. (1,500 words).
• Leadership and management
• Recruitment and Selection
• Performance Management
• Learning and Development
• Employee Relations
• Make clear recommendations with regards to changes you would implement in your chosen area whilst considering the impact these changes will have on individuals within the organisation. (1,000 words).
• Provide an indication of cost and resource impact for your recommendations. (500 words).