Problem
Case Study: A-List Hair Products
A-list is an up-market hair salon employing top hair stylists and colourists. This small firm is proud of its superior market position having media, music and fashion stars as clientele. Its salon employees are highly trained specialists, whose expertise is widely acknowledged as some of the best in the industry. As well as serving high-end clientele in its salons (where the prices charged would be way beyond the average person), the company launched a home hair care range several years ago to serve a completely different market - individuals (mainly women) who treat their own hair rather than using local hairdressers. The firm sells its products via high street shops and on-line. Before the Covid 19 pandemic, high street sales were good but sales on-line were only a very small part of the firm's turnover, just a few hundreds of £s of sales per day.
March 2020 brought with it the Coronavirus lockdown. All hair salons in the UK closed and restrictions on movement meant that the public were able to make only necessary journeys for food, medicines and limited periods of exercise. The most vulnerable were unable to leave their homes at all for many weeks due to shielding. As no one in the country could attend a hairdressing salon, mobile hairdressing was also precluded and unnecessary travel was banned, on-line hair care sales boomed almost overnight. Within a week daily sales multiplied ten-fold and within a fortnight one hundred-fold - sales were increasing exponentially - and the business became very profitable. With its increased revenue the company decided to expand into overseas markets setting up online businesses in the USA and various countries in Europe. It rapidly expanded its staffing to ensure that customer service operations for its online businesses provided excellent service across its global operations.
By 2022, however, the market had changed considerably. Post-pandemic, hairdressing salons were open again and people could travel to get their hair cut and coloured. The digital business slowed down with online product sales declining while the salon business increased. Staff employed in the digital/online part of the business became concerned over their job prospects and many resigned to further their careers elsewhere.
As staff reductions in the digital side of the business were managed through labour turnover - i.e. natural wastage leading to the loss of staff across a range of functions (sales, marketing, administration, customer service) - those staff who remained were asked to take on duties that they had not done before. A small salary increase was awarded for picking up the duties of departed colleagues.
This approach was beneficial to the company as it was able to make savings on salaries without having to make redundancies. However, it also resulted in significant skills gaps in some areas if no one was able to perform the job roles that had become vacant. This was not helpful to improving the performance of the digital side of the business as marketing operations and customer service standards declined.
By the autumn of 2022, the profitability of the digital side of the business had become a cause for extreme concern. Although sales revenue from the salon had been keeping the company profitable until now, the overhead costs of the declining online business suggested that the company could become unprofitable.
A-list currently employs a small administrative team of 25 non-hairdressing office-based personnel who between them manage payroll, marketing, sales, customer service and all other office-based functions, managed by a Team Leader. (The warehouse and product buying/ordering staff are based and managed separately.) A-list has no HR officer; the Team Leader looks after all staffing issues related to this 25-member office team, reporting directly into the firm's owner.
Pay rates are just a little above minimum wage, and staff motivation in the office-based team (which was high during the pandemic) is now falling fast. Team meetings - which were held every week online during the pandemic where everyone could contribute their views on how to improve the customer and employee experience - have rarely taken place recently due to the increasing pressure of work involved in covering the roles of departed colleagues.
The firm's owner has decided to introduce a change programme to increase online and high street sales in the UK. She has also decided to close down the international online business operations. Staffing will need to be reduced by one-third in the administrative/digital side of the business by the middle of 2023. Remaining employees will be asked to adapt to new roles, take an agile and flexible approach to their duties and to focus on developing and growing the UK online and high street sales business.
Task
The firm's owner has employed you on a short-term contract as an HR consultant. You have been tasked with providing advice on the following aspects of the change management programme:
To assess the impact of the proposed change programme on current staff members in the administrative team and their potential response to the change.