CASE STUDY

Julian Richer (born 1959) is the Managing Director and founder of Richer Sounds, a hi-fi and home cinema retailer specialising in audio equipment such as LCD televisions, DVD players and amplifiers.

In 1978, aged just nineteen, Richer opened his first store in London Bridge. The company has 53 retail outlets throughout the UK. In 1994, his flagship store in London Bridge set a new Guinness World Record for the highest sales per square meter of any retail outlets in the world- a staggering £195426 ($322450) per square meter- a record held for over two decades. Richer Sounds has also won many awards, including Which? magazine's Best Retailer Award and Sunday Times award for Britain's Best Employer. The company is also one of the UK's most generous donors, allocating 15$

Richer believes it is vital that his staff have fun and enjoy their work. He is renowned for empowering staff to make a difference to the company. Each week, he looks at employee suggestions and awards up to £20,000 (322450)persquaremeter−arecordheldforovertwodecades.RicherSoundshasalsowonmanyawards,includingWhich?magazine′sBestRetailerAwardandSundayTimesawardforBritain′sBestEmployer.ThecompanyisalsooneoftheUK′smostgenerousdonors,allocating15Richerbelievesitisvitalthathisstaffhavefunandenjoytheirwork.Heisrenownedforempoweringstafftomakeadifferencetothecompany.Eachweek,helooksatemployeesuggestionsandawardsupto£20,000(33,000) for an idea. Each month, the top three salespeople get to use his personal Bentley or Rolls-Royce for a weekend. He only promotes people internally. Richer argues that businesses with demotivated staff face lower productivity due to higher absenteeism, labour turnover, theft and customer complaints.

[Sources: www.richersounds.co.uk, www.richerstudentszone.co.uk and The Richer Way, By Julian Richer]

With reference to the above case study answer the following questions:

(i) Examine how motivation can lead to improved productivity of his Organisation.

(ii) With reference to features of Human Resource Management, explain:

(a) Staff function

(b) Pervasive function

(iii) What are the advantages of internal sources of recruitment?

(i) How motivation can lead to improved productivity:

Motivation can significantly lead to improved productivity in Richer Sounds in the following ways:

1. Increased Effort and Performance — Motivated employees put in more effort and perform their tasks with dedication. Awards of up to £20,000 for employee suggestions and use of luxury cars by top salespeople inspire them to perform better.

2. Reduced Absenteeism and Turnover — Demotivated staff face higher absenteeism and labour turnover. By keeping employees motivated through rewards and recognition, Richer Sounds ensures stability of its workforce.

3. Improved Quality of Work — Motivated employees are committed to delivering quality service, leading to satisfied customers and fewer complaints.

4. Encouragement of Innovation — Recognising employee suggestions encourages a culture of innovation and continuous improvement, which directly enhances productivity.

5. Reduced Theft and Wastage — Motivated employees who feel valued are less likely to engage in theft or careless wastage of resources, ensuring efficient use of company assets.

(ii) Features of Human Resource Management:

(a) Staff Function — Human Resource Management is a staff function, which means it is an advisory function that supports and assists the line departments (production, marketing, sales). The HR department does not directly produce goods or services or sell them but provides expertise on recruiting, training, and managing employees who carry out the line activities. In Richer Sounds, the HR function would advise managers on how to motivate staff, design reward systems, and handle employee suggestions.

(b) Pervasive Function — Human Resource Management is a pervasive function, meaning it is performed at every level of the organisation — from the top management to the lowest supervisory level. Every manager who supervises subordinates performs HR functions like assigning work, motivating, evaluating performance, and developing employees. In Richer Sounds, Julian Richer himself looks at employee suggestions every week, demonstrating that HRM permeates all levels of the organisation.

(iii) Advantages of Internal Sources of Recruitment:

1. Employee Morale — Promotion from within boosts the motivation and morale of employees. Their loyalty and commitment to the organisation increase. (Richer Sounds promotes people only internally, which keeps employees motivated.)

2. Economical — Internal recruitment is economical as the cost of advertising and screening external candidates is avoided.

3. Familiarity — Employees are already aware of the policies, rules, and working conditions of the enterprise.

4. Experienced Staff — Employees who are transferred or promoted are already experienced, so the organisation need not provide extensive training.

5. Easy Evaluation — The management can easily evaluate the performance of existing employees from their service records.

6. Upgrading — When one employee is promoted, several others below his rank are automatically upgraded.

7. Reduced Turnover — Internal recruitment minimises labour turnover and absenteeism, as employees see growth opportunities within the organisation.