Home Depot is an Atlanta-based company operating in the housing market. In the previous years, the retailer has been faced by different challenges in its human resource. These challenges have been fertilized by the economy teetering on the recession and the housing market being on doldrums (Bhatia, 2008). The retailer has also been facing challenges in work training and customer service. This has made it be a poor performer compared to its competitors in the market. Recently, the retailers made a decision to revamp their human resource function. This was done by eliminating some employees such as the HR managers in the different stores. This is likely to have effects on the general performance of the retailer. This paper will analyze the pros and cons of the action taken to revamp the retailers HR function. This will further involve comparison of the retailer within the broad retail industry.
Pros of revamping the HR Function
The main HR function that has been undertaken by Home Depot is restructuring the workforce. This is likely to have some advantages to the retailer for instance through cost savings. There are different costs that will be cut such as the ones that were used to pay the HR managers in the different stores. Downsizing is usually among the first considerations during poor economic conditions (Grossman, 2008). Considering that the housing market is facing challenges, elimination of some jobs would help the retailer to manage its profitability. Other costs that are incurred in training will also be controlled.
With downsizing, there is a substantial probability of increased efficiency. Since in downsizing the jobs that are considered are the ones that contribute least to the business’s profitability and the ones that affect the core operations least, then performers are usually separated from non-performers. Since the business retains the performers, then this will have an impact on the work efficiency (Kavilanz, 2009). The conditions of the employees retained are also enriched and allowed to perform greater responsibilities. The unnecessary tasks are usually eliminated as all efforts are put towards the most profitable and core organization activities. This means that there is a probability that the downsizing in Home Depot will result to improved efficiency.
In many U.S. organizations, it has been observed in the past that downsizing results to closer relationships between the employees and their leaders (Grossman, 2008). This is usually possible because of the small employee population that is easy to man and establish strong relationships with, unlike the wider group. This is usually crucial as it ensures that the daily running of the stores will also be under the leaders. As a matter of fact, this may result to increased accountability and transparency. It is an advantage that can see Home Depot arise strongly and shun its competitors.
Cons of revamping the HR Function
Despite the advantages of downsizing and changes in the HR function, there are some risks that are usually associated with the same. These are usually the cons with the most common one being that there is usually loss of skilled and reliable workers (Kavilanz, 2009)). Since different employees have different skills and capabilities that become crucial in decision making, this becomes a disadvantage to the organization when downsizing is done. Therefore, Home Depot will lose some strategic planners who probably had the ideas to help the retailer in coming years.
Downsizing has also been noted to lead to disruption of the workforce. This happens as the retained may be required to include different tasks or even undergo some training. In some organizations this impacts may be short term, however, in others they are usually long term (Bhatia, 2008). Although the leaders in Home Depot may note the disruptions they make on the workforce, this will still have some impacts on the retailer.
Dimensions of the retail industry that make Home Depot’s delivery of Hr desirable/undesirable
There are different dimensions of the retail industry that need to be considered in understanding how effective the actions taken by Home Depot may be of importance. One of the dimensions is that the customer is usually the source of a retailer’s success, profitability, and competitiveness power. Retailers link directly with customers as they are the last people to get the products or services to them. This means that a retailer must win its competitors to ensure that it wins customers from far and wide. The step taken by Home Depot is desirable to its profitability and customer relations (Kavilanz, 2009). The retailer will have to be more customers focused than in the past. On the other hand, the staff will be motivated and closely monitored to ensure that they are on the right track with the customers.
Another dimension of the retail industry is that it is extremely sensitive to changes in the economy. Changes in the economy usually have a direct impact on the retailers. Considering the recession period in the United States that has affected the housing market at large, then Home Depot is on the right move. This will help the business to run smoothly unlike in a case where all profits are used on employees.
On the other, it is also crucial that employees are also customers in the retail industry and the industry is closely monitored. Although downsizing has been a common practice in businesses, in the U.S., this has its effects. For the case of Home Depot, this may be undesirable since its image may be viewed negatively whereby customers will think that they are greedy for profits. Many customers will not have the right understanding of the downsizing as competitors may, on the other hand, take advantage of this to build their images (Bhatia, 2008). The employees eliminated may also react negatively and spoil the image of the retailer. This means that Home Depot will find it hard to win the trust of customers. Although this may be short term, the adverse effects of it may be extremely severe.
The move taken by Home Depot is not a new one as many U.S. organizations have often done this. The rollercoaster economy forces organizations to find themselves in such unavoidable circumstances. The pros of the action taken by Home Depot are more than the cons. In addition, the retailer has a capability of shunning the cons. This is a strategic move to ensure that the retailer does not become bankrupt as it has been the case with some retailers. Considering the broader retail industry, the move by the retailer is likely to have desirable outcomes; however, there are some dimensions of the retail industry that may make it undesirable. The retailer has to be strategic to ensure that they consider the dimensions of the retail industry and be pragmatic.
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