Reference no: EM131198843

Read the case study below and answer the questions that follow:

HR strategy delivers industry-leading performance at Mitchells & Butlers: Change-management program recognised in CBI awards

A coherent HR strategy focused on delivering the company's key strategic goals has helped a UK operator of restaurants and pubs to post industry-leading sales and profit growth over the past three years.

Mitchells & Butlers operates 13 key brands (including Harvester, Toby Carvery, Browns, All Bar One, Vintage Inns, Crown Carveries, Ember Pub and Dining and Sizzling Pub Co) across 1,600 businesses. Employing 40,000 people, its revenues in 2010 were £1,980 million.

Its recent success has been achieved despite the challenging economic climate, regulatory changes, duty and commodity-price rises, changing consumer habits and supermarket competition.

In recognition of its success, the company won the Confederation of British Industry People award for successfully devising and implementing a program to change the organisation into a food-led business. The award recognized that HR played a major role in planning, communicating and implementing a performance-led people strategy that aligned with the company's strategy to become the UK's preferred choice for eating out.

The three interconnected strategic objectives set by the board in 2010 were to:
- drive sales by reshaping the business around food-led brands in the value, mid and premium-market segments;
- increase staff engagement, productivity and levels of discretionary effort; and
- develop a management culture focused on increasing shareholder value.

Challenges facing the HR team

The challenges facing the HR team were significant. It had no dedicated strategic voice at executive level. Retail-staff turnover was running at 120 percent, with a relatively low corporate-staff turnover. Recruitment processes were paper-based. Third-party agencies were used with no return on investment.

Training, devised at brand level, was fragmented, with a high level of face-to-face interaction and no visibility of costs and returns. Cross-brand movement of talent was fragmented. The company had insufficient food skills in face of a significant food-growth strategy. Company-level employee communication was slow and ineffective.

The steps towards transformation
As a first step, the board had appointed an HR, service and productivity director to the executive committee. The priority was to develop a greater understanding of the issues by talking to key stakeholders and obtaining empirical information relating to HR practices such as recruitment, selection, training, development and reward; their relationships with HRM outcomes (such as retention, productivity and staff satisfaction) and performance outcomes (such as safety, service and sales).

A small HR team - focused upon turning data into insights that would improve performance - was a key factor in establishing organisational credibility and momentum.

A project brief was agreed and a business case developed to invest in technology as an enabler to develop online recruitment, training and communications. A project team was established to develop, consult with relevant people, test and review before each element was introduced and fully implemented.

In addition, there was a significant restructure across the HR department to centralise core recruitment and training activity but also to align HR business partners to the brands. A balance was required to maintain key relationships and accountability for delivery in the brands while maximizing the economics and flexibility of people and resources across the company.

Leading a strategic-change programme required trust and confidence in making appropriate decisions, with ongoing communication to address issues and share successes. This was led entirely by an internal team with no external consultants. There was a desire to seek "best in class" and emulate what had worked for other organisations.

There were no shortages of information and suppliers providing products but it was difficult to identify a benchmark organisation or best-practice tool that covered all aspects. It was critical to have an integrated strategy and approach that would work for Mitchells & Butlers with multiple brands and formats.

Innovation was required in the areas of food development, food training and communication. This was achieved by implementing a new food-development and training team. A food-training and innovation center was opened which delivered structured programs to management teams.

Internal-communication reforms

A further change saw the employee-communication function separated from external communications and positioned in the HR department.

The wide-ranging internal-communication strategy included:
- regular communication forums;
- enhanced employee-induction programs;
- employee intranet and a dedicated retail employee website (Ourhub);
- company poster "What's cooking?";
- targeted e-mails to senior and mobile employees;
- a structured meeting process from executive through to retail staff; and
- web-casts.

The company's external communication to key stakeholders (including shareholders, investors, MPs, police, media, suppliers and customers) is carried out through the website, stock-exchange announcements, analyst calls/seminars, trade publications, social media and advertising.

Excellence in leadership has been demonstrated by:
- communication of the strategy to all stakeholders and encouraging a two-way communication process;
- creating a strong project-leadership team of HR specialists - recruiters, trainers, reward and development experts;
- consulting business heads, operations teams and experts to continuously improve the quality and consistency of recruitment and training;
- recruiting new people to the organisation to increase expertise;
- engaging and motivating employees through offering accredited training as a ladder to improved job prospects; and
- the ability to see a return on recruitment and training investment.

The unique selling point offered as a company was the number and range of job prospects. The challenge was the lack of development programs and the conflict between specific brand values against the company values that are part and parcel of a larger organisation. Indeed, one part of the business, which operated to very specific independent brand values, would not agree to being part of the new company processes and so was excluded from the changes. However, within 12 months, this aspect of the business recognised the value of what was being created and quickly changed its mind.

The development of accredited training

Accredited training was developed for all levels of the organisation; National Vocational Qualifications, certificate and diploma programs in multi-unit leadership and master's level. This was supplemented by internal-development programs to assist internal succession.

Reports were introduced throughout the organisation; everyone was reviewed for their level of management and staff retention and succession. There was visibility on levels and costs of training undertaken. Directors and business managers were able to benchmark performance among their team in a balanced way, share successes and establish what the good managers were doing.

An employee survey was implemented across the organisation to understand the levels of engagement across the business. Leaver surveys were introduced to establish why people left the organisation. Information was provided to review and compare performance across the brands. Progress against the HR strategy and policy changes are discussed and agreed at the HR executive.

Employee engagement has been proved to correlate positively with good customer service and increased sales performance. The ability to engage employees at all levels of the organisation to deliver the best possible results for themselves and the company is critical. This is not only achieved through recruiting and developing the right people but also by inspirational leaders who motivate their teams and ensure competent people are rewarded and recognised through effective performance management.

The results in detail
HRM results were as follows:
- increased corporate employee engagement, at 82 percent, through training, communication and coaching;
- corporate employee job satisfaction high at 91 percent;
- staff turnover reduced from 120 percent to 80 percent;
- 500 percent return on investment for the multi-unit leadership program;
- 100 percent of line managers reported performance improvements; and
- productivity improved by 5.2 percent - 14 million more meals and 3 million more drinks were served with 700,000 fewer staff hours.

Company performance was as follows:
- increased operating margin of 16.5 percent (1.2 percent points higher than the previous year);
- growth in market share, outperforming by 8 percentage points compared with a decline in pub eating out and drink decline of 5 percent;
- increased sales performance of 0.5 percent and customer satisfaction up 2 percent despite the recession - which is correlated to sites with high levels of employee engagement achieved through training (evidence of how an excellent HR strategy can deliver more for less);
- average profits per pub are the highest in the industry;
- overall department costs have reduced by £163 million; and
- like-for-like food sales showed an increase of 5.1 percent in 2008, 2.5 percent in 2009 and 4.3 percent in 2010.

Reshaping the business continues

Mitchells & Butlers continued to reshape the business and move food volumes through the sale of 333 non-core pubs, the Hollywood Bowl brand and 44 lodges (hotels), all in 2010.

Food now accounts for more than 50 percent of sales and the future is looking very positive thanks to excellent leadership and the dedication of the teams. The strategy and future potential for growth as a food-led business is extensive, with total outlets expected to increase significantly and focus on performance improvements to increase profitability.

This will be achieved following an assessment of organisational capability to deliver the business strategy and the development of an integrated learning and development plan across the organisation, from retail staff to executive director.

There will be a set of competencies, values and leadership behaviours that go across the organisation. This will link into the recruitment, development, succession and performance-management process. A 360-degree review will be incorporated to provide coaching and feedback.

Liz Phillips, (2012) "HR strategy delivers industry-leading performance at Mitchells & Butlers: Change-management program recognised in CBI awards", Human Resource Management International Digest, Vol. 20 Iss: 1, pp.5 - 8

QUESTION 1

Discuss the significance of HR playing a major role in delivering the strategic goals of the organisation at Mitchells & Butlers.

Examine the challenges faced by the HR team in transforming the HR strategy through their various HR practices.

QUESTION 2

Mitchells & Butlers acknowledge the critical nature of employee engagement at all levels of the organisation.

As part of their strategic objectives, discuss how Mitchells & Butlers may sustain and improve employee engagement in sustaining a competitive advantage.

Examine the human resource management practices at Mitchells & Butlers that influence employee engagement.

QUESTION 3

Analyse Mitchells & Butlers approach to training and development and argue whether this approach may be regarded as strategic.
Assignment guidelines

Format: Assignments must be presented in 12pt Arial Font and in 1½ line spacing.
Structure: The assignment should be structured as follows:
- Title page (1 page)
- Table of contents (1 page)
- Question 1
- Question 2
- Question 3
- Bibliography

Length: Your answers to the three questions combined must be approximately 20 pages (i.e. 5000 words).