A Report on HRM and FM Strategies of The Body Shop Case Study

Introduction - Impact of HRM and FM Strategies on The Body Shop’s Growth

A Human Resource Management or HRM strategy aims to recruit, manage, and develop people in a way that contributes to the achievement of an organization's long-term objectives. Whereas, Strategies for financial management (FM) include allocating and monitoring monetary resources to accomplish organizational objectives. Human resource management has focused on attracting and retaining top personnel and financial management guarantees the efficient use of an organization's financial resources (NAWANGSAR et al., 2023). When combined, they help a business be more efficient and competitive and expand over time. In this report, the author has evaluated different HRM and FM strategies of The Body Shop.

1.1 Background of the organization

The Body Shop is a skincare, cosmetics and perfume firm in the UK. It sells 1,000 products in 3000 stores, including company-owned and franchised locations in over 65 countries. Its overall income in 2022 was around £408 million. The three-storied names in cosmetics that make up Natura & Co. are bound together in mission. With 40,000 workers in over 100 countries, the three companies that make up the fourth biggest cosmetics group in the world are Natura, Avon, and The Body Shop (Kogut et al., 2022).

2.0 HRM Strategies

Recruitment, development, training, and employee relations are all parts of HRM (human resource management). This is a systematic approach to managing an organization's staff. Talent acquisition, staff engagement, evaluating performance and creating a healthy work environment are all parts of HRM’s broader responsibilities in companies (Sharma and Ahmad, 2022). HRM has encompassed a wide range of strategies, including the hiring strategy, development programs, pay and benefits packages and employee retention strategies (Malik et al., 2022). Strategic human resource management connects HR practices with overall company objectives, with a focus on workforce planning for the long term. In contrast to operational HRM, which entails routine administrative duties, tactical HRM is concerned with urgent HR issues. Organizational success is driven by a motivated, competent and adaptive staff. This has been achieved via the successful integration of these strategies.

2.1 HRM Strategies of the Body Shop

The Body Shop's progressive HRM strategies are well-received since they reflect the company's commitment to sustainability and ethics. The company's hiring strategies prioritize diversity and inclusion with a focus on finding people who share its commitment to sustainability and ethical business practices (Oluyadi and Dai, 2023). Skills improvement is the primary goal of The Body Shop's training and development programs. Those have included instruction in sustainable operations and product knowledge.

The extensive benefits package shows that the corporation cares about its employees. Programs that promote health and well-being are part of this effort to create a supportive workplace. This brand takes a more all-encompassing approach to compensation and benefits. This reflects the larger goal of the brand by acknowledging not only performance but also workers' commitment to social and environmental problems. Flexible scheduling, paid time off, discounts, health, vision, and dental insurance, etc., are all part of the employee benefits package (AlAbri et al., 2022). Additionally, full-time workers are eligible for tuition support.

The Body Shop's dedication to a socially conscious and engaging workforce is shown by the incorporation of HRM initiatives. This has led to employee satisfaction and the organization's overall performance.

2.2 Strengths and Weakness of the HRM Strategy of the Body Shop

Strengths

• Ethical and Sustainable Focus: HRM strategies align with the company's commitment to environmental consciousness and cruelty-free practices.
• Inclusive Recruitment: The Body Shop prioritizes diversity and inclusivity, contributing to a vibrant and varied workforce.
• Training for Sustainability: They focus on skill development, especially in sustainability practices and enhancing employee expertise (Saraswati and Wirayudha, 2022).
• Comprehensive Employee Benefits: The company offers a robust benefits package, promoting employee well-being and satisfaction.

Weaknesses

• Resource Intensity: Implementing extensive sustainability and ethical practices may demand significant resources.
• Potential Cost Challenges: Comprehensive employee benefits and sustainability initiatives could pose financial challenges.
• External Perceptions: External stakeholders may question the scalability and impact of HRM strategies on broader corporate objectives (Kalei et al., 2022).

3.0 FM Strategies

Financial management is the practice of developing a plan for a company and then keeping each division accountable for its execution (Eun et al., 2021). With effective FM, the VP or CFO of finance can provide information that helps with long-term planning, investment choices and funding strategies. The primary roles of FM are profit maximization, compliance assurance, financial scenario development, relationship management, and cash flow and liquidity tracking.

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A corporation may maximize the advantages of its financial systems and procedures by using financial management strategies. There are different types of FM strategies (Adeyonu et al., 2021):

• Investment planning: This is a strategy for allocating funds for investment purposes.
• Revenue diversification: Increasing financial security by diversifying income sources.
• Risk management: It reduces potential financial losses by using measures like insurance and hedging.
• Capital structure planning: This involves striking a balance between debt and equity.
• Profit maximization: Maximizing profits involves implementing strategies that boost revenue and streamline processes to increase profitability.

3.1 FM Strategies of the Body Shop

Profit and Loss

Many British women have preferred The Body Shop's cosmetics, especially moisturizers and lotions. The extensive customer base has made it one of the country's most beloved beauty brands. Nonetheless, the brand's sales fell 8.4% at constant currency so it is looking for ways to save costs to boost its margins and generate more cash (?irjevskis, 2023). This drop is in continuation with layoffs that occurred in February 2023 at this company, when 25% of the management team and 12% of the total workforce were let go. The decline was attributed to factors including stagnant innovation and fiercer competition.

Balance Sheet

The most important financial data from the balance sheet for this firm in 2022 is as follows:

• The cash flow decreased by 68%.
• Its net worth fell to £232 million.
• A decrease of 38% brings its entire current asset to £214 million.
• The company's total current liabilities have increased by 5% to £245 million.

Sales Strategy

• Ethical Branding: This brand emphasizes cruelty-free, environmentally conscious products (Malhotra et al., 2020).
• In-Store Experience: The business has focused on creating a positive, interactive shopping environment.
• Promotional Campaigns: They engage customers through campaigns promoting social and environmental causes.
• Loyalty Programs: The company encourages repeat business with loyalty rewards and exclusive offers.
• Online Presence: They have leveraged e-commerce channels and social media for wider reach (Wulandari and Engriani, 2022).
• Limited-Time Offers: Using time-limited promotions has driven sales and created a sense of urgency.
• Partnerships: Partnerships with influencers and look-alike brands for enhanced visibility and customer acquisition.

3.2 Strengths and Weakness of FM Strategy of the Body Shop

Strengths

• Ethical Brand Resonance: The brand has focused on responsible and green actions for building customer loyalty and the appeal of eco-oriented clients.
• Multichannel Adaptability: The brand uses a broad approach in its sales strategy, encompassing both in-store experience and an exemplary online platform.
• Social and Environmental Engagement: Including social and environmental problems in sales strategy increased customers’ perception towards a positive impression of the brand, thereby increasing customer loyalty.
• Innovative Collaborations: Collaborations with influencers and like brands have improved visibility and increased new customers (Höfer, 2021).

Weaknesses

• Sales Decline Challenges: The recent 8.4% sales decline poses financial challenges, requiring careful cost management and strategic adjustments.
• Cash Flow Reduction: A substantial 68% decrease in cash flow signals potential liquidity issues, necessitating efficient cash flow management strategies.
• Net Worth Reduction: The fall in net worth to £232 million underscores the need for a reassessment of capital structure and potential capital injection strategies.
• Increased Current Liabilities: A 5% increase in total current liabilities highlights the importance of monitoring short-term obligations for sustained financial stability.

4.0 Evaluation of HRM and FM Strategies of the Body Shop

An analysis of The Body Shop's HRM and FM strategies shows that both play a significant role in the company's performance and provide their distinct capabilities. The FM approach stands out in ethical brand resonance because of its focus on sustainability, capacity to attract conscientious customers and promotion of brand loyalty. This ethical approach has favourably affected the company's reputation and position in the market.

At the same time, a more effective HR strategy is holistic employee benefits. It promotes a good work environment. The company's generous benefit package has boosted both productivity and staff retention. Employees' job satisfaction and loyalty have helped enhance the company's customer service and reputation.

However, public opinion and customer loyalty can be affected by FM initiatives. On the contrary, HR policies have a more significant effect on the internal wellness of the company. Two strong pillars of its sustainability, in the long run, are ethical brand appeal and extensive staff benefits.

Conclusion

Because of its combination of excellent human resource management practices and ethical financial management, The Body Shop is a company that is known to promote a good work atmosphere and appeals to people with moral principles. The strategies mentioned above all strengthen the firm's resilience, standing in the market and sustainability. Both policies have been the key to the success of this brand.

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