Staff Management, Trusts, Pensions Used By John Lewis And Marks And Spencer

Introduction

Marks and Spencer (M& S) is a company based in Britain. It is one of the most successful retailers in the United Kingdom with about seven hundred and sixty stores all over the world. It was founded by Michael Marks and Thomas Spencer and has Sir Stuart Rose as its Chief Executive. Some of the countries in which the retail sores are found include Japan, Switzerland, Kuwait, India, Poland, Italy, Saudi Arabia, Indonesia, Turkey, and Jersey among others. Most of the stores are found in the UK i.e. they are five hundred and twenty in number. The company deals in the sale of clothing items and also in the food sector. Other items that the company sells include household items, furniture, electronics and other technological devices, it also engages in the sale of coffee. The company has been relatively successful in the industry and even recorded a profit of one billion pounds about nine years ago. It was however faced with a crisis in the year 1998, but it has since recovered from this crisis and is no on a stead rise again. (Faragher, 2007)

The company has been well known for some of the policies it offers to its consumers. One of the policies was that items can be refunded back to customers as long as they had receipts even if the products had been purchased a long time ago. The Company recorded a profit of slightly over half a billion pounds in the year 2006. M& S also boasts of having a large employee base-it has close to seventy one thousand staff members under its wing.

John Lewis was a company is also another retail chain of stores that is slightly smaller than the former mentioned Company. John Lewis (JL) has one hundred and twelve super markets and twenty six stores under its name. There are sixty eight thousand employees working for the Company. JL is well known for the way it shares profits, partnership with emeployees and equity.

Marks and Spencer

Staff management at Mark and Spencer

Marks and Spencer is well k own for the kind of management system that it adopts. This is one of the major contributors towards its corporate identity. Corporate identity is a crucial part of any business because it is what customers recognise about the Company. M& S prides itself in the fact that it has a very strong corporate culture. This simply means that the Company has been having a strong sense of culture and management skills. This has even led to some emulation from certain companies with reference to M&S. However, this does not men that staff management at the Company has not had some flaws. This was especially visible when the Company was forced to close down stores in parts of France. This occurred due to the fact that there were inadequacies about the benefits and job protection offered by Marks and Spencer yet the same incentives were what the Company had become identified with. The Company also failed in communicating adequately to staff members prior to closure. This meant that the Company had found itself in bridge of the law and had therefore revealed weaknesses in its management system. (Dale, 2001)

Trainee Management Schemes in Staff management

This kind of scheme has earned the Marks and Spencer Company an award from the Times. This was ion recognition of the fact that the Company employs a high number of graduates to work for them. It was given position seventeen in this category for this role.

This kind of scheme normally involves provision of training for graduates who may be new to the company or those who may have worked for the company before but are interested in developing themselves within the organisation. This training lasts for a period of twelve months. But before one becomes an accepted trainee within the company, they pass through rigorous training and selection before gaining access into the Company.

First of all, applications are done openly and transparently through the internet. This method is quite appropriate because it ensures that all people who are interested gain access to the process without segregation. All applicants do this through a Communication Centre belonging to Marks and Spencer.  After sending their applications to the Centre, applicants are required to do a psychometric test. Those who pass the test will be deemed capable of performing managerial tasks.

The tests come in two categories. The first is numerical while the other is verbal. The purpose of providing two types of tests is to give a fair chance to differing personalities. This is a very crucial aspect of any fair recruitment process. Reason being that some people are bubbly and talkative and may seem quite impressive during the verbal tests yet such people may be very poor at performing tasks. The numerical tests are also important in analysing other types of personalities. Some people may be shy and withheld during verbal interviews. Others may panic suddenly and consequently loose composure. This other types of tests allow M& S management to zero in on the most suitable candidates and overcome initial barriers in selection. (Berry, 2007)

Applicants are then subjected to an Occupational Personality Test. This type of test aims at investigating what type of personality the applicant possesses. This is because managerial positions can only be done by certain types of personalities. Not everyone is cut out for this kind of position. People who take up managerial positions must be leaders. This means that they must be influential and must be able to affect the actions of other members of staff towards achievement of the goal. This is the reason why the test is done as the last thing during the application.

Finally, members who get accepted into the Company undergo rigorous training for a period of one month. The reason why the duration is slightly long is because the Company would like trainees to be well equipped for the challenges that lay ahead in the managerial positions which they will hold. This Company has the advantage of having young members of society working for it thus encouraging injection of new ideas and brainstorms. A company that is characterised by young people working for it is quite progressive and always incorporates new and creative ideas of doing things. The Company also has unconventional ways of management because of recruiting young staff members to work for it.

Customer service training in staff management

The Company uses a method called Mary Gober to train its staff members. This helps members of staff to be on top of their game when it comes to treatment of customers. This implies that staff members become very well versed in treatment of customers and service delivery is improved. What the training normally provides members of staff is that they are able to treat customers in a friendly way; they are also able to give courtesy to customers and to show them that they are interested in serving them. In addition, members of staff are also equipped with the knowledge to serve customers in the best possible way. This means that they are able to answer any questions asked by clients and their abilities are maximised. (Thomson, 2003)

Members of staff are required to attend seminars where they are informed on how to deal with consumers. These kinds of seminars are common in most of the stores that are affiliated to the chain stores. Consumers and other parties have it easy when they require details about certain issues in the Company because they are able to identify members that have undergone training because they normally wear a brooch on items of clothing.

Charity Awards for volunteer employees – staff management

Marks and Spencer has a programme that has been put in place called Mark and Start. This programme aims at involving most members of staff in volunteer efforts especially towards the disadvantaged in society. In so doing, employees identify with the Company and it creates a strong sense of loyalty and commitment to Mark and Spencer.

The Company gives awards to those who have performed well in charity work. This can be regardless of the fact that the volunteer work was done outside of work time. Awards are also given to those who support a Breast Cancer Campaign or to those who work with local issues that may need assistance. Normally what the Company does, is that it receives applications from is employees. These employees are the ones who feel that they have participated well in Charity events. In the year 2006, there were about three hundred and fifty applicants interested in receiving awards. The Company then follows set criteria to determine who is most suitable for an award and in which category will that person fall under. This process is done with the assistance of experts in that area, one such example is the Charity Aid Foundation. This latter mentioned group also examines applications and gives its recommendations to M&S management concerning judgements. (Staff writer, 2007)

Such awards are a conscious effort in use by the M& S Company to ensure that its employees feel appreciated as any awards given to them are an indication that the Company recognises their efforts ad is willing to boot these efforts through awards. Employees will reciprocate this sign of care through more output in the Company.

Payroll giving Schemes – staff management

The M&S has receives awards from the charity Aid Foundation (CAF) for having payroll giving scheme in place. These awards are given to employers who engage in causes that are geared towards employee motivation and support. For an employer to qualify for an award, they need to be offering a payroll giving scheme. The first thing given to such Companies is a logo to indicate that it has implemented such a scheme. Then the company is given an award depending on the degree which it rewards its employees. This can be ranging from bronze awards. These are awards that are given to employers who pay relatively few employees using this scheme, then there are the silver and gold awards given to employers who engage slightly more than the bronze category and also for those who engage the highest percentage respectively. M& S fell in the gold category and has shown commitment towards staff management and motivation.

IT systems that protect pension scheme details

On 5th May, this year, the Company lost a laptop that had a lot of information regarding staff member’s pension scheme details, names, addresses and other personal details. This potentially put all the people who were enlisted in the laptop at risk of identity theft if a person with a hidden agenda accessed the information in the laptops. But the Mark and Spencer Company had come up with a strategy in Information Technology to protect their employees. The Company had installed passwords to protect the laptop and this meant that information could not be easily accessed without having a go ahead from relevant authorities. This simple yet effective method of protecting personal information ensured that no one faced identity theft and that they were secure. Such kind of protection by the Company contributes towards a feeling of security among employees and consequently leading to motivation.

Personal loans and other types of loans

The Company offers a number of loans for its employees towards the system. The Company offers a low interest rate on such loans for its employees. This is 8.9 % for loans that range between ten thousand and twenty thousand pounds. The firm does not charge any extra charges for the loan regardless of time. This is a relatively fair deal for its employees because most people complain of spending most of their time and resources towards servicing the loan rather than clearing the whole debt. M& S recognises this inadequacy in loaning systems and solves it by providing affordable cover. (Berry, 2007)

The Company has also instituted a number of buying plans for employees who are need of purchasing certain items. One such example is the Car buying plan. The loan is replayed at a very low rate. This is probably because these payments can be deferred. M& S allows up to sixty percent of the loan to be differed.

There are several other types of loan schemes offered by M and S that are all designed towards ensuring that employees can plan for their future or they can implement important projects in their lives. This kind of commitment by the Company gives members of staff the feeling that they have strong back up and that the Company is committed towards their progress. Some other schemes that available in the Company include Holiday Home Safe, Fixed Rate Savings, Save and invest, Travel Money and other types of buying plans.

Provision of good pension schemes and bonuses to employees

The Company rewards its employees through bonuses after the Company has recorded a rise in profits. This was witnessed this year when the Company recorded approximately one billion in profits. The profits were an indication of the sales recorded this year and they were around eight point eight billion pounds. These profits need to be enjoyed by the members who contributed the most to its delivery, these are the employees. Mark and Spencer took a large portion of this amount and gave back to staff members. It gave them eighty million pounds in bonuses.

The bonuses will be enjoyed by all members of staff in the country. There are about seventy thousand of them. However, the Company will give different amounts to different members of staff depending on the weight of their job. For example the Chief executive is due to receive about 1.23 million pounds more that his personal salary which is close to a million pounds. What the Company is doing is not an isolated incident as it offered similar bonuses in the year 2006. Last year it gave seventy three million pounds in bonuses to its employees. (Staff writer, 2007)

M& S do not mind such generous contributions to go to their members of staff in terms of bonuses because the team has predicted increases in he profits they receive. Besides, the company’s shares have almost doubled in the Stock exchange indicating that it is in steady rise and can afford to give mouth watering schemes and bonuses to employees.

The Company has a problem when it comes to pension schemes. This is due to the fact that the Company recorded a deficit of about seven hundred and four million in 2007. This means that there must be strategies to solve the problem. The Company has put in place a scheme that allows it to deal with all the one hundred and twenty three members’ expecting pension payments from it. Members of staff normally receive a specific fraction of their salary for every year that they have worked for M & S. (Sparrow, 1994)

The company has done this through collaboration with the M & S pension scheme fund. Here, M& S gives out property to the pension scheme fund then this same property is leased back to the retailer as the company pays back the pension deficit for a period of fifteen years. This scheme will enable the pension fund to be self sufficient because if the retailer is unable to make payments, then the property is redirected to the fund. This is the breakdown of payments made by the Company with regards to pension schemes for the past two years

2006- forty million pounds in the first quarter

2007- five hundred million

Another plan which the company has implemented towards the pension scheme is through direct or indirect contribution from emeployees’ salaries. The Company has issued out three alternatives to members of the pension scheme; members could decide not to contribute any amount at all to the pension scheme and could consequently receive very low rates on their pensions, or members could give about seven percent of their salary in the next three years and lastly, members could also choose to neglect payments but they must put a limit on the level which their pensioned salaries will reach. This method of solving the pension deficit problem puts the choice in the employee’s hands. If they choose to contribute from their salaries, then they will earn more pensions in the end and if they decide not to, then the amount received will be very low.

John Lewis

Staff management at John Lewis through cooperation with staff

John Lewis most outstanding feature when it comes to employees is the fact that the Company is a worker-coop. This means that members of staff are part owners of the Company. There are set rules and principles on operation o the Company by the employee trust. There are several benefits that have resulted from such an arrangement, the first one being that employees perform to their maximum potential. This is because they will not look at consumers and buyers as a means towards an end, but they will consider them as an income source. They give them utmost attention because they realise that there are direct benefits that come from increased sales. (Guerby, 2006)

The motivating factor behind this kind of treatment is the fact that employees realise that success of the business means success for them. Other types of emeployees simply do not care because they know that whether sales are low or high, they will still get their salaries. Productivity of members in John Lewis staff is quite high because of the reasons mentioned above. This model was adapted after it had been discovered that most professional businesses that were successful were partly owned by workers, these included accounting firms, law firms, medical practitioners and others. Other benefits of co ownership include;

Standards have been raised in the retail industry because of co ownership and competition
Retailers are able to have professional autonomy
Retail workers can come together and exchange ideas on best retail practises
It places a lot of emphasis on human capital as the most vital asset thus showing that property rights theories in economics are true.

John Lewis has served as a role model in this regard for companies who plan on adopting this kind of partnership. One such example of a company is the cosmetics company and chain store Lush which is preparing to follow the JL direction. (Armitage, 2007) Most people may be misguided by the term co ownership and may mistake this to mean that decision making is slow and more emphasis is placed on sustaining the relationship of the company members rather than getting any work done. On the contrary, decision making is not delayed in the Company because the company does not have any stakeholders externally. This means that it can focus on long term decisions instead of making choices that suite the short term. (Guerby, 2006)

Pension scheme arrangements

John Lewis has some challenges in the administration of pension schemes. This is because in the year 2002, the Company had a deficit of about two hundred million. Yet at that same time the company’s assets in the pension scheme fund were about one billion yet liabilities were 0.18 billion more. The Company was however optimistic that those differences were caused by changes in market forces. (Cope, 2002)

Some of the workers in the company began registering complaints that John Lewis was focusing mostly on pension schemes as the amount that was going into the fund was rapidly increasing. However, this was not the case with bonuses. So they were requesting for more funds into the bonus schemes rather than pension. The Company decided to examine the issue and change payments because members whose ages were far from retirement preferred receiving more bonuses and fewer pensions than vice versa. The Company had close to sixty thousand emeployees under its wing. All the emeployees are considered as co owners in the Company. (Cope, 2002)

Salaries and payments to workers

JL has put in place a policy that allows employees to receive a level of performance salary plus the commercial rate that is prevalent at that time. In the year 1998, workers received a bonus of approximately two thousand pounds more than their salaries. This was a considerably good level of pay because most workers in retail worked for very long hours and earned little. This meant that the government had to chip in to be able to cover this difference in payment through income support payments. But this was not the case for JL employees who are catered to adequately. Shown below is a summary of earnings in that year

Total employees 41,100

Full-time employees 24,800

Part-time employees 16,300

Total employees, weighted for part-timers 31,000

Partnership bonus GBP 57.0 mill

Pay (before bonus) GBP 371.3 mill

In the year 2007, the Company had one fifty five million in bonuses for all its employees. This was about eighteen percent of what partners receive in their salary. This was a record increase of twenty nine percent of what partners got in the year 2006.

The Company has also instituted a mechanism for distributing profits as follows; JL removes a percent of the profits earned, this is fifteen percent of the amount earned in profit. The rest is then invested back in the business and used for operation costs or expansion processes. However, there are also net assets that are left behind and these are the one that should be allocated to shareholders.

Acceptance of critism from employees at JL

The Company has instituted a system that attempts to control how managers perform. This is done through anonymous letters that are published internally in a magazine belonging to the Company. Employees can be able to register any problems or complaints that they may have and can therefore bring about change in the Company. (Maund, 2001)

Managers themselves are required to respond to these anonymous letters in a manner that is truthful. They are also supposed to treat each member with respect regardless of their status in the Company. Such an attitude contributes towards employee satisfaction and ensures that all staff members feel like they are part of the team in spite of the amount they earn or skills they posses.

This level of transparency could be the treason why the JL partnership is quite a success at this moment. Managers who accept public scrutiny and critism ensure that they are at their best behaviour to minimise these critisms and to make a good name for themselves. Consequently, critisms raise the standard because managers know that they are subject to correction.

Consultation with staff management

John Lewis is well known for giving its staff the ability to influence decisions and actions in the company through creation of democratic bodies. One such body is the Partnership Council that is made up of all the members of staff. This body has a board and together, members have been granted the power to change management they feel unhappy with after intense consultation. This is especially due to the fact that the Partnership Council even has the mandate to vote out a Chairman. This type of management style ensures that there is accountability as managers are kept on their toes. Some administrators like Personnel director Tracey Killen have even pointed out that they have to rigorously adjust to such a method because every move they make is subject to scrutiny.

In line with this kind of attitude, John Lewis gives its line managers relative autonomy to go about its business. Most of the decisions are independent and it is only when the matter is very serious when the line managers involve the Human Resource Department. This also means that the company is not trying to create an image as being a good employer to the rest of the world or to other competitors; instead it focuses its energies on internal practices.

Other benefits offered by the Company

John Lewis caters for its partners through introduction of certain schemes designed to boost employee’s plans and ensure that they can achieve some of the goals that they have set. The first benefit is the ‘Bonus Save’ scheme. Here employees are allowed to invest some or their entire bonus as shares to the respective contributor. The maximum allowable investment is about four thousand five hundred pounds. (Faragher, 2007)

The ‘golden Jubilee trust’ is another benefit that comes with the Company. Here employees are allowed to work for any charity vent for long durations and may still be paid for the duration when they were away. The company also gives awards for participation in charity events and therefore shows care and concern towards its emeployees that establishing a sense of loyalty amongst them. ‘Once in a lifetime’- This is a trip that can be undertaken by members in the partnership who have formed a group or clubs and societies. Members who apply for funds can go to a destination of choice which they have never visited all their lives.

Incentives to retired members of the Company are also given. Here, members are given benefits even after retirement. Some incentives include access to financial loans, a monthly magazine and also a reunion lunch. Lastly, the Company allows all members of staff to ask for flexible workers hours regardless of marital or family commitments. This means that even if one does not have children or other commitments, they can be granted flexible working hours. (Faragher, 2007)

Conclusion

The two companies examined above have played their parts in providing pension benefits to their employees, engaging them in trusts and also in management styles. John Lewis is identified with a flexible management style and coop ownership. Mark and Spencer is identified with provision of good benefits to its emeployees and allowances. (Maund, 2001)

Reference:

Cope, N (2002): John Lewis weighs final salary pensions revamp; the Independent (29th April)

Guerby, L. (2006): John Lewis and school reform; Retrieved from http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/ accessed on 1st January 2008

Armitage, J. (2007): Lush to adopt John Lewis set up; retrieved from http://www.thisismoney.co.uk/ accessed on 1st January 2008

Faragher, J. (2007):  John Lewis Partnership; working in partnership; Personnel Today Magazine (17th April)

Staff writer (2007): Marks and Spencer: neat pension fund arrangement; Insurance Business Review

Berry, M. (2007): Mark and Spencer to revamp final pension scheme; retrieved from http://www2.marksandspencer.com/thecompany/mediacentre/pressreleases/2007/fin2007-01-23-00.shtml accessed on 1st January 2008

Dale, M. (2001): The Art of HRD: Developing Management Skills        , Vol. 3, Crest Publishing House, New Delhi

Sparrow, P. and Hilltop, J. (1994): European Human Resource Management; Melbourne Press

Maund, L. (2001): An Introduction to Human to Human Resource Management: Theory

And Practice: Macmillan, Palgrave

Maundy, L. (2001): An Introduction to Human Resource Management: Theory and Practice: Macmillan, Palgrave

Thomson, C. and Rampton, L. (2003): Human Resource Management. Melbourne press, New York

Sparrow, P. and Hilltop, J. (1994): European Human Resource Management in

Transition: Prentice Hall, New York

Maund, L. (2001): An Introduction to Human Resource Management: Theory And Practice: Palgrave, Macmillan,

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