CASE ONE: TANGLEWOOD STORES AND STAFFING STRATEGY

Case one principles: 1. You will first assess the urre!t o"erati!# e!$iro!%e!t for Ta!#lewoo& i! ter%s of it o%"etitors' stru ture' e%"lo(ees' ulture' $alues' a!& hu%a! resour es fu! tio!. ). The! (ou will the! &e$elo" re o%%e!&atio!s for how the or#a!i*atio! shoul& staff its o"eratio!s' fo usi!# o! strate#i &e isio!s "ertai!i!# to staffi!# le$els a!& +ualit(. Section Objectives The goal of this section is to help you learn more about the basic environmental concerns the Tanglewood Department Store chain is facing. This information will help you to understand how competition, strategy, and culture jointly inform the effective development of a selection plan.

Organization Overview
Tanglewood is a chain of general retail stores featuring items such as clothing, appliances, electronics, and home decor. The company operates in the moderate price niche, targeting middle- and upper-income customers. Tanglewoods strategic distinction is an outdoors theme, with a large camping and outdoor living section in every store. The store also distinguishes itself by its simple, elegant, and uncluttered design concepts for the store and their in-house products. The companys mission statement is!

Tanglewood will be the best department store for customers seeking quality durability and value for all aspects of their active lives! "e are committed as a company to providing ma#imum value to our customers shareholders and employees! "e will accomplish this goal by adhering to the core values of responsible financial management clear and honest communication and always keeping performance and customer service in the forefront!
Tanglewood was originally founded in "#$% by best friends Tanner &merson and Thurston 'ood. The initial concept was a single store in Spo(ane 'ashington, named Tanner'ood, which sold a combination

of outdoor clothing and e)uipment that the pair had designed themselves. The employee handboo( notes that, Tanner and Thurston financed their early store plans with credit cards and personal loans from friends and family. They had so little money that they slept in sleeping bags in the bac( room and put every penny they made bac( into the stores. The first stores uni)ue merchandise offering and personable sales staff made them successful )uite rapidly, allowing &merson and 'ood to move out of the bac( room and add several more stores during the late "#$*s. The merchandise offerings e+panded over time to incorporate more conventional retail items, while still retaining the elegant, yet outdoors loo( for the stores overall. &merson and 'ood eventually decided to rename their store chain Tanglewood in "#,-. .uch more rapid growth began around this time. /s &merson put it, we worried for a long time that e+panding would compromise our vision of a small, personable shopping e+perience. 'e had always wanted to run the type of store that we would love to wor( and shop at. /round "#,-, after we had "* stores, we reali0ed we had developed a fairly successful blueprint for running stores with a strong base of employee participation, customer satisfaction, and profitability. So we decided to spread out to cover the northwest. During the "##*s the e+pansion strategy really too( root. .ost of the e+pansion occurred by purchasing other e+isting stores rather than building new stores. &merson and 'ood had been heavily involved in the management of the stores, but found that increasingly the corporate administration was a more pressing concern. The company arrived at a regional structure for its operations. &merson and 'ood too( on the positions of 1&2 and 3resident of the company, respectively, while a team of regional managers more directly oversee day to day operations. The company currently has a total of 4-5 stores open in the states of 'ashington, 2regon, 6orthern 1alifornia, 7daho, .ontana, 'yoming, 1olorado, 8tah, 6evada, 6ew .e+ico, and /ri0ona. 3rior to any further e+pansion, however, the company needs to consolidate its current management strategy. The process of growth has been very )uic( in the last % years, and has involved buyouts of several smaller chains of department stores. 'hile all the stores under the Tanglewood name have the same basic loo(, the management styles and human resource 9:;< practices still reflect the historical differences between stores. 'ood noted in a recent interview with =usiness .onthly, Tanglewood really needs to slow down and ta(e a hard loo( at our corporate culture. ;ight now, we need to consolidate and ma(e sure were as close to the companys original mission as we can be. 2ur success is due entirely to our strong culture>this is something we need to hold on to. These concerns have lead Tanglewood to bring in e+ternal human resources consultants li(e you to help centrali0e the organi0ations practices. /nother major concern for Tanglewood has been the westward e+pansion of companies li(e ?ohls and Target. The possibility of more direct competition has lead Tanglewood to critically e+amine their :; policies and practices. @or staffing, in particular, the organi0ation feels there absolutely must be a wor(force of committed, )ualified individuals who will help carry the Tanglewood philosophy into the future.

Competition and $ndustry"

The Tanglewood Department Store chain operates in the nondurable general retail industry, which fits into industry -%4"** as classified by the 6orth /merican 7ndustry 1lassification System 96/71S<. This industry engages in the sale of consumer goods including clothing, small appliances, electronics, and
"

7nformation on the retail industry is adapted from Standard and 3oors 6et /dvantage, 9http!AAwww.netadvantage.standardandpoors.comA6/S/ppA6et/dvantageAshow7ndustrySurvey.doB fileCAregD""*5Areg"""*5.htm< and Eahoo finance 9http!AAfinance.yahoo.comA<.

other housewares. The retail industry accounts for over F5 trillion in annual sales. ;ecent estimates indicate that the retail industry employs appro+imately 45 million people. / comparison of several top retail stores is presented below. The operating revenues indicate total sales for these organi0ations, and the compound growth rate trac(s changes in the sales for each retail chain. The financials show that Tanglewood is a moderately si0ed organi0ation with strong growth potential.

2perating ;evenues 9in millions< Dillards @ederated Dept. Stores J.1. 3enny ?ohls Sa(s Sears, ;oebuc( Tanglewood Target 'al.art ,,"$* "%,$,, 54,5-$ #,"4* %,#"" -",5II % &'' -5,#"$ 4--,%4-

1ompound Growth ;ate 9H< % yr " yr 5.$ -4.I -*.5 4-.*.$ "*.4 *.* (!) #.I "%.$ -".4"., "." -4.I *.$ *+!& "*." "4.5

&mployment 6umber of 9in ",***s< Stores %""" "-$ ,% %4 4-# ,) 54, ",%** 55* -%$ ",*4* I** 5%* ",#$* &+) ","-$ -,,**

Dillards @ederated Dept. Stores J.1. 3enny ?ohls Sa(s Sears, ;oebuc( Tanglewood Target

;2; 9H< ".$ -.* "." $." ".4 5., +!* 5.,

3rofit ratios ;2/ 9H< ;27 9H< 4.* %.% -.5 ".# "".".% 5.5 *&!% I.5 "".5 %., 4*.5." 4-.I *%! & "#."

'al.art 5.5 #.* 4".I /ll three profit ratio figures indicate corporate profitability. ;2; is return on revenues C 9net income for the past year< A 9assets minus liabilities< ;2/ is return on assets C 9net income for the past year< A 9average assets< ;27 is return on investment C 9net income for the past year< A 9total stoc( value<

Competitive -esponse and Strategy

The companys specific niche is similar to that occupied by ?ohls or Target, appealing to middle- and upper-income consumers loo(ing for convenience and reasonable prices. This means that Tanglewood uses a layout and provides the same products offered of general merchandise retailers. Tanglewood also focuses on stoc(ing )uality products, providing customer service, and a more designer appearance than discount stores. This strategy is further supplemented by the companys trademar( loo( which involves an outdoors theme, complete with real wood dKcor and use of natural colors. Li(e its competitors, Tanglewood has developed several proprietary brands of merchandise which are designed to complement its loo(. 'hile the actual products are made by subcontractors, &merson and 'ood have personal responsibility for all products that are produced. Their own brands include =urford ?itchen, which includes wood-accented, rustic, sturdy (itchen utensils, and 'ilderness 2utfitter clothing and camping goods lines. The stores also have emphasi0ed small home electronics, housewares, and bedding accessories. Despite the companys effort to emphasi0e its western appearance and theme, there is no shortage of high-technology innovations in the way that Tanglewood operates. They have wor(ed hard to ensure that their web portals provide a clear guide to merchandise available in the stores. Through their 1ounty Store concept they have also made their stores a pic(-up location for items ordered online. This allows them to utili0e their low-cost shipping arrangements to the benefit of customers. &merson notes, 'e have a lot of consumers in places li(e rural 7daho, who dont want to drive an hour to one of our stores and then find out what they wanted isnt available. The online 1ounty Store ma(es sure that if they want something, we will have it in stoc(. 7n addition, online shoppers who visit bric(s-and-mortar locations also often buy other merchandise in the stores.

Organizational Structure
The structure of most retail stores is relatively similar, and Tanglewood has essentially evolved to have a structure that loo(s something li(e the familiar organi0ational hierarchy. This appearance is deceptive, because employees at all levels of the corporation are encouraged to ma(e suggestions regarding operations. .ore than one major operational change has come from an employee suggestion. &ach store is managed by a single individual who has three assistant store managers wor(ing beneath him or her. The /ssistant .anager for Softlines is in charge of all areas related to clothing and jewelry. The /ssistant .anager for :ardlines is in charge of all non-clothing merchandise, including sporting goods, bath, bedding, and home decor. /nother way to thin( of the distinction is that Softlines consists only of things that are worn, while :ardlines consists of nothing that is worn. The /ssistant .anager for 2perations and :uman ;esources is primarily responsible for activities, including security, clerical wor(, merchandise loading and warehousing, cashiers, and human resources management. /lthough the /ssistant .anager for 2perations is technically in charge of the smallest number of employees, this tends to be a more powerful position because it includes more managerial responsibilities, including staffing the store and training new hires. Department managers are in charge of specific product groups such as electronics, womens clothing, or shoes. @or each shift there is also a designated shift leader who completes most of the same tas(s as store associates, but also has some administrative responsibility. 2verall, with " store manager, 5 assistant managers, "$ department managers, appro+imately 4- shift leaders, and appro+imately "$* associates, there are around 4"% employees per store. /ll employees, full or part time, are members of the core wor( force. Tanglewood does not e+tensively use a fle+ible

wor(force, such as temporary employees. / core wor(force is viewed as essential for the organi0ational values and culture, described below, that Tanglewood see(s to develop and maintain.
;egional .anager 9"4 total<

Store .anager 9about 4* per region<

/ssistant Store .anager for :ardlines

/ssistant Store .anager for 2perations and :;

/ssistant Store .anager for Softlines

I Department .anagers 9Sporting goods, electronics, (itchen, bath, outdoor, domestics<

% Department .anagers 9Security, /dministration, 'arehouse, 1ashiers, .aintenance<

I Department .anagers 9'omens, mens, misses, children and infants, shoes, perfume and jewelry<

"4 Shift Leaders 9Two per Dept. .anager<

Store associates 9/bout I* total>"* per department manager<

2perations associates 9/bout %* total>"* security, % admin, "* warehouse, 4* cashiers, % maintenanceAcustodial<

"4 Shift Leaders 9Two per Dept. .anager<

Store associates 9/bout I* total>"* per department manager<

Stores are organi0ed into "4 geographical regions, with appro+imately 4* stores per region. &ach region has a regional manager who oversees operations of the stores. The store managers report directly to the regional managers. There is considerable variation between regional managers in how they run their :; practices. The tendency for some regional managers to encourage human resources practices which are counter to the Tanglewood philosophy is a major reason that an e+ternal consulting firm was brought in to centrali0e human resources. The brea(down of stores and employment by division is as follows!

Division " 4 5 %

/rea 1overed &astern 'ashington 'estern 'ashington 6orthern 2regon Southern 2regon 6orthern 1alifornia

Stores 4% 4% ", "I 45

31s 5,"4*,*** 5,*"",*** ",,%*,*** ",$"*,*** 5,***,***

31sAS "4-,,** "4*,--* "*4,$$, "*I,,$% "5*,-5%

&mployees %,-** %,-** 5,#** 5,-** -,#**

7daho "$ ",5II,*** ,*,5%5 5,$** .ontana and 'yoming ", ",-",,*** $,,$$, 5,#** 1olorado 45 -,%%*,*** "#$,,4I -,#** 8tah "# 4,5%",*** "45,$5$ -,"** 6evada "# 4,4-",*** ""$,#-$ -,"** 6ew .e+ico ", ",,$%,*** "*-,"I$ 5,#** /ri0ona 44 %,%,*,*** 4%5,I5I -,$** Total 4-5 %4,5** Note: PCs is the population of the area covered; the abbreviation PC for Tanglewood means potential customers. The PCs/ is the number of potential customers per store. !mplo"ee figures are rounded to the nearest hundred. Organizational Culture and .alues
'hereas many elements of the Tanglewood operational plan have been based on other firms within the retail industry, the companys culture and values are distinct from most of its major competitors. @rom its inception, this company has emphasi0ed employee participation and teams. /t orientation, every employee hears the philosophy that 'ood and &merson proclaimed as their vision for employee relations, 7f you tell someone e+actly what to do, youre only getting half an employee. 7f you give someone the space to ma(e their own decisions, youre getting a whole person. .ost retail stores have a strict hierarchy with assistant store managers providing directives to their subordinates, and most associates primarily follow orders. Tanglewood, on the other hand, has allowed each department manager to formulate distinct methods for running their departments in coordination with the employees they supervise. There is still a well-defined ordering of job responsibilities, but efforts are made to involve employees in the decision process when possible. 2ne of the most important cultural elements of the organi0ation is an emphasis on straight tal( in all areas of the business. The company provides employees with information on the companys share price and overall profitability for each )uarter, along with other details about company activities. 3rofit-sharing for all employees is part of the companys push to encourage employees to thin( li(e managers. 7n addition, mandatory wee(ly store meetings 9one meeting for each shift< give employees a specific time to voice their suggestions for in-store improvements. /ssociates who ma(e suggestions that are implemented by management receive financial bonuses. Department managers are also given financial incentives for successfully developing and implementing new policies and procedures, further reinforcing the participatory management style of the company. &very shift is run based on a team concept. 'hile the most senior associate is designated as a shift leader, the other members of the team are encouraged to provide ongoing suggestions. /ll employees share all tas(s, so there are no designated customer contact or display employees. 7t is also e+pected that associates will ma(e themselves available to help the other members of the team. Muarterly performance evaluations include several items specifically reflecting the associates interactions with other team members and initiative to improve the department. =ecause of the heavy emphasis on employee suggestions, Tanglewoods upper managers have ample opportunity to observe the leadership and decision ma(ing )ualities of their associates. This is one of the main portals through which promotion and advancement are achieved. /ll new employees without retail e+perience, even those with college degrees who are targeted as having management potential, spend a

I $ , # "* "" "4

period of time wor(ing in the store as an associate. This is seen as a way of preserving the companys uni)ue culture and values over time.

/uman -esources at Tanglewood

Nice 3resident for :uman ;esources

Staffing Services Director

1ompensation and =enefits Director

Training and Development Director

&mployee ;elations Director

;etention .anager ;ecruiting .anager Selection .anager &&2 1oord.

=enefits .anager Salary .anager Labor .ar(et /nalyst

&+ecutive 1oach Development .anager Training .anager

1ommunications .anager Legal 1ompliance and &&2 .anager

The basic structure for human resources at Tanglewood involves both corporate and store-level components. The corporate Staffing Services function, shown above, is a division of the :uman ;esources Department. The Staffing Services Director supervises three managers 9for the areas of retention, recruiting, and selection<, plus an &)ual &mployment 2pportunity 1oordinator. The corporate Staffing Services function performs data analysis and design of staffing policies and programs. Data regarding recruiting practices, methods for interviewing, testing and selecting employees, and employee turnover are sent from the individual store to the corporate head)uarters. /t head)uarters, the data are collected and statistically analy0ed. =ased on these analyses, specific recommendations are provided to the stores. @or e+ample, after data suggested that newspaper advertising for new recruits was becoming less and less cost effective, all stores were given a strong recommendation to switch to an internet-based strategy. /s another e+ample, the employee selection specialists in the corporate staffing function developed a format for interviews that is now used as a part of the hiring process for nearly all stores. &ach store is responsible for implementing recommendations provided by corporate. The store operations and human resources manager is responsible for overseeing each stores staffing, training, performance management, and e)ual employment opportunity practices. /s pertains to staffing, the manager of operations and human resources is responsible for planning, recruitment, and initial screening. Department managers interview finalists, then hiring decisions are made in conjunction with the assistant store managers. 3romotion decisions up to the department manager level are made within the stores. ;egional managers conduct the hiring for store managers, and wor( with each stores managers to determine promotions to the assistant store manager. :istorically, the corporate staffing function has not been strong. =ecause of the participatory philosophy of the stores, the role of corporate :; was primarily to act as an advisor to each regional manager. The companys plans for e+pansion have led to a change in this philosophy of late. &mersons directive to :; for this year is, help us to develop a plan, a way of using all our human assets in the service of our philosophy, our customers, and our employees. /s the company e+pands, the need for a central planning body in staffing is seen as an important way to maintain the distinctive flavor of the Tanglewood

e+perience. 7n addition, the sheer number of stores means that local leadership is becoming inefficient. 1entrali0ation will also serve to create staffing operations efficiencies.

0our role Eour role within Tanglewood is as e+ternal consultants for staffing services. Eou will wor( for Donald 3enchiala, who is the Staffing Services Director, with final oversight for your wor( coming from .arilyn /nchley, who is the Nice 3resident for :uman ;esources. =oth of these individuals were recently hired personally by &merson and 'ood as part of their plan to centrali0e and improve the human resources function. 3enchiala has e+tensive e+perience in managing staffing for department stores in 6ew Jersey and 6ew Eor(, while /nchley has wor(ed in a variety of corporate positions in the 3acific 6orthwest.

Specific 1ssignment 2etails 7n this assignment you will be concentrating on staffing strategies for Tanglewood. To begin the assignment, refer to &+hibit ".$ in the te+tboo( and to 3rof. Sashs slides. ". 1onsider Tenglewood business strategy and connect it to the (ind of wor( force may be needed. 4. 'hat are (ey positions within each Tanglewood storeB 5. ;eview the lecture and te+tboo( materials that discusses strategic staffing decisions and indicate which way you thin( Tanglewood should position itself along the continuum and why. @or e+ample, the first decision is to develop or ac)uire talent. 7ndicate whether you thin( it is best for Tanglewood to focus more on ac)uiring talent internally or e+ternally, for which positions, and whyB ;epeat this process for each of the staffing levels within each store.