Abstract
The period of economic recession impacts significantly on the nature of the organizational learning strategy. According to a survey conducted by Personnel Today, in 2009, economic recession affected the learning and development strategy by 59% globally (Personnel Today, 2009). Economic recession is usually a long duration of economic decline characterized by low output, unemployment, a decline in the availability of credit, reduction in the level of trade, and fluctuations in currency value. These challenges affect the ability of industries to manage their human resources (HR) effectively. In particular, the period of recession affects the ability of the management to recruit, and retain a high-qualified labor force.
This paper critically analyzes some of the impacts of the Economic Recession from 2007 and 2012, and how it impacted on the Organizational Learning Strategy in the Beauty Industry. Also, it explains how organizational learning strategy influences specific organizational capabilities that contribute to improved firm performance. The paper winds up by describing the applicability of the organizational learning strategy in SMEs. This section focuses on The Haslam Hair Salon as one of the growing Medium Sized Enterprises.
Introduction
Impact of Global Recession from 2007 to 2012 on Organizational Learning Strategy
The U.K Cosmetic Industry is segmented into 5 business areas: skin care, hair care, toiletries, fragrances, and color. The skincare segment is the most dominant with approximately 26.7% market share, followed by Toiletries by 23.8% while Hair care has 19.6% share (Flevy.com, 2014). According to the Hair and Beauty Industry Authority, the industry has approximately 36000 hairdressing businesses and an annual turnover of about £6.2 billion (inc. spa) (HABIA, 2016). Though most of the hairdressing salons operate on small scale, large salon chains and independently owned outlets have been established. Also called as Cosmetic and Personal Care, the market has not only been able to achieve stability and continuous growth; it has had a great ability to resist unfavorable economic conditions.
However, just like any other industry, the beauty industry productivity was reduced during the 2009 recession period though it soon improved in 2010 (Barbalova, 2011). A significant phenomenon on the implementation of the organization learning strategy was also experienced. Its ability to promote innovation and competitive advantage aspect of the industry was reduced (Personnel Today, 2009). As a result, effective human resource management became a major concern. This impact was highly manifested as the industry was forced to reduce its human resource to minimize the costs of salaries and remuneration for the employees.
Ideally, though the period of economic recession led to decline in the beauty industrial growth, it was also a major driver in the beauty industry’s growth prospects. Effective implementation of OL was seen as a source of innovation to develop new strategies to counter the economic downturn, especially in human resource management.
The effect of the recession on organizational learning strategy was experienced on the main stages of HRM process including planning, staffing and retention, training and development, and job design and work system.
Human Resource Planning
Economic uncertainty impacts on the process of HR planning as the industrial management attempt to predict the nature of the supply of the workforce to sustain its employment expectations (Cameron, 1994). During the recession period, the employers in the beauty industry had to apply predictive mathematical techniques that relied on data regarding the employees’ turnover in various positions. In assessing the demand for labor, the industrial management had an incentive to minimize its costs for labor during the period. This succession planning created a serious challenge as the industry risked losing its talents. The industry had to integrate an effective OL strategy to create a balance for the management to both endure the recession period and also meet its objectives when the economic situation improves.
Job Design and Work System
The economic recession period impacted significantly on the industry’s strategy to design its job and work systems. As the industry reduced its labor costs through workforce reduction followed by a reorganization of its operating structure, there was a shift in the relatedness of jobs in the new structure. This process created an increased risk in situations where the employees did not have the skills and knowledge required in the new tasks assigned. Also, it led to uncertainties among the employees relating to their role in the industry.
Training and Development
During the recession period, resources allocated for training and development purposes were logically cut off. Even for the firms that perceived training and development cost as a long-term form of investment faced a challenge justifying the process of resource allocation to such programs. Changes in the role of employees, as well as its organizational structure, created a greater need to train them as they were assigned new additional tasks. As a result, frequent adjustments were made to enhance training program objectives. In particular, the industry had to develop new organizational learning strategies through learning and talent development strategy. Efforts were prioritized to ensure that employees’ objectives were aligned with the industrial requirements both during the recession period and after recovery.
Staffing and Retention
During the recession, the process of managing and retaining a high level of talented employees became difficult. The reduction in HR staff created a challenge in maintaining effective employee within in the shortest timeframe (Cameron, 1994). In essence, resources to retain the qualified employee became unavailable. Besides, budget reductions restricted the ability of the industry to provide competitive retention practices. Ideally, the industry had to formulate new OL strategies in an attempt to revise its employee retention process and ensure that resources were allocated effectively towards programs and initiatives that kept the highly qualified personnel from leaving.
How Organizational Learning Strategy Influence Specific Organizational Capabilities That Contribute To Improved Firm Performance
The economic environment in the beauty industry is changing rapidly. This change has been characterized by globalization, change in customers taste and preferences, as well as the ever-increasing market competition. Thus, to compete profitably in such environment, the industry needs to formulate continuously new strategies to improve their performance, reduce various operation costs, create innovative products and improve quality production of cosmetics in the market (Leonard, 2011). This efficiency can be achieved by developing an effective organizational learning Strategy. Some of the specific approaches in organizational learning strategy that can contribute to improved firm performance include creating competitive advantage and formulation of strategic human resource management (SHRM).
Competitive Advantage
In the beauty industry, the concept of a competitive advantage arises where the firm creates unique product value for its customers. To achieve a competitive advantage, a firm has to offer a product or service that is highly perceived to be unique than those offered by competitors (Kotler, 2008). For these services to compete more broadly, the industry has to develop firm-specific strategies that enhance cost leadership, focus, and differentiation (Amar & Januj, 2008). Through organizational learning, firms in the industry are keen on health issues where salons have incorporated facilities like fitness centers and gyms to meet the changing needs of their customers. Others beauty firms are offering additional services such as refreshments, sponsoring beauty displays as well engaging in hair dressing competitions. All these approaches serve to create awareness of their existence, which creates a competitive advantage over other competitors.
Strategic Human Resource Management (SHRM)
SHRM has an active role in organizational learning by promoting efficient business strategy and creates an opportunity for the HR to be effectively utilized in the realization of the business objectives (Perez et al., 2005). SHRM is based on the idea that an organization can be highly effective if the human resource is managed using the right policies and practices. It creates an appropriate behavior, ideal level of competencies, and the right level of motivation within the organization.
Efficient HR management creates a highly integrated approach to manage the human resource activities including selection, training, and reward. SHRM has the following advantage to organization learning: Efficient integration of on-the-job learning with off-the-job learning experiences through simulated salon environments, innovative ways to support and implement latest technology such as salon software systems, as well as creating and maintaining a high level of competitive advantage.
Applicability of an Organizational Learning Strategy for SMEs: Haslam Hair Salon
The impact of the Organizational Learning Strategy on the beauty business performance and its application in formulating strategies in business are now becoming increasingly vital, especially in Small and Medium-sized Enterprises in the beauty industry. This section will assess the application of Organizational Learning in Haslam Hair Salon. Located in the Midlands area of England, the salon operates as a company with almost 30 salon outlets (Lee et al., 2006). Also, the beauty salon has developed a working partnership with two local education colleges, where it provides training and skills in Hair and Beauty. As a medium size enterprise, the salon has applied Organization Learning strategies in boosting its hairdressing services to its customers.
Franchising
Team learning is an important concept in the organization learning strategy as it allows the team members to come together and work as a team (Senge, 1990). To incorporate the concept of team learning, The Haslam Hair salon operates as franchised company. This means that largely former employees and trainees bring their training skills and high experience to the company (Felstead, 1991). Mainly, the salon has formed a business format franchises with the Clarke Anthony salon. Through franchisees, the company has been able to expand its operations by maximizing on the increased pool of skills. Also, the salon is in a position to exploit and promote its market services more efficiently by increasing the number of its outlets in other parts of the country. This has enabled the salon to attract more customers and maximizing profits.
Customer Service
The demand for high-quality hairdressing services has risen significantly. As a result, techniques to exploit customers’ services to maximize profit have become increasingly crucial (Eayrs, 1993).
Haslam Hair Salon provides excellent customer-driven service and outstanding interpersonal skills for its customers both with its franchisees as well as its employees. A key goal of the salon has been to offer their customers with what can be regarded as a “whole wow experience”. This way, the salon can favorably differentiate themselves from other competitors. For instance, the salon management introduced refreshments as a way to woo their customers in a manner that exceed their expectations, thus making the customers enjoy their services and wish to come back again (Lee et al., 2006). In essence, this approach has been considered as one of the salon’s standards and has been adhered to by all employees.
Creating Technology- Oriented Services
Hairdressing is driven by advancing technology and changing fashion, which requires the introduction of new hair styling, coloring and cutting skills, and equipment. These techniques require advanced training to help the employee update their skills and knowledge. Through organization learning, the salon is able to create technology driven services to produce qualified stylists that can match with the increasingly advancing hairdressing practices and also respond to the dynamic demands of the clients (Lee et al., 2006).
Adopting a Market Mix
It is undeniable that consumers want products and services that bring satisfaction in their lives. The approach of adopting a market mix helps the salon to provide a wide range of products to meet customers’ expectations. Additionally, it has helped the salon to introduce other name-brand products including Matrix, Paul Mitchell, Rusk, and Biolage (Lee et al., 2006). Since customers always demand convenience, a marketing mix has allowed the salon to provide a wide range of hair care brands and hairdressing services in one convenient location. Ideally, the approaches create superior customer based services that promote satisfaction to the clients.
Advertising
An effective model of advertising is a crucial concept in organizational learning strategy. Ideally, the salon advertising strategy is very simple: To develop a customer-driven promotion service, satisfied clients become the best marketing tool (Lee et al., 2006). By adopting an efficient marketing mix, the customers acquire a new brilliant look, which sells the brand name of the salon. In fact, most of the clients are referrals from the existing clients.
Conclusion
The effective implementation of organizational learning is a crucial aspect in enhancing efficiency in organizational performance by ensuring an improved process of creating, retaining, and disseminating knowledge within its Human Resource practices. Even during the period of Economic recession, effective application of OL has been seen as a source of innovation to develop new strategies to counter the economic downturn.
As revealed in the Beauty Industry, improving the core competencies of the business, particularly its Organizational Learning ability, results to the efficient performance of the business. Some of the key organizational capabilities of OL occur in enhancing Competitive advantage as well as its SHRM. Among other contribution, the applicability of effective organizational learning strategy has been manifested in Haslam Hair Salon. A major application of organizational learning has been experienced in creating technology- oriented Services, franchising, customer driven service, adopting a market mix, and through a customer driven promotion service.
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