Office Depot is a retailer of office supplies, operating in 53 countries around the world, but with a primary focus on the American market. The company is relatively young, having been founded in 1986 in Fort Lauderdale (OfficeDepot.com, 2011). The company competes as a "category killer" in office supplies, with a focus on a cost leadership business model (QuickMBA, 2010) that relies on high volumes and low margins for success. The company's success in general relates to its ability to execute this business model and to the broader macroeconomic conditions. It has approximately 40,000 worldwide employees. Most of these are low-level retail workers. At the managerial level, it is critical for Office Depot to have a high level of competency, because the managers are responsible for the effective implementation of the company's broad strategy.
This paper will focus on the role that human resources plays in the success (or lack thereof) at Office Depot. Special attention will be paid to the role that the line workers and the managers play in implementing strategy; on different methods of attraction, retention and compensation are utilized by Office Depot and on the company's total compensation system. An assessment will be made as to whether or not Office Depot should become unionized, and the company's policies overall will be evaluated, in particular against the degree to which they support its broad corporate objectives.
According to the Office Depot website (2011), the company sees itself as "a global supplier of office products and services." The company operates as a cost leader, using its economies of scale and scope both to generate competitive advantage. The size of the stores attracts customers, and this delivers economies of scale in purchasing to the company. In turn, the company can use these economies of scale to offer lower prices to consumers, making it a more attractive option as a result.
Internally, the organizational structure is broken down along both functional and geographic lines. The divisions are North American Retail, North American Business Solutions, and International The international operations are primarily retail. In North America, the retail division consists of wholly-owned stores, meaning that the staff work for Office Depot. However, the company keeps many of the store staff on contract as a matter of policy. In part, this allows the company to maintain flexibility. Office Depot is vulnerable to changes in the business cycle. For example, in the past few years, the struggling U.S. economy has had a significant impact on the revenues and profits at Office Depot. The company's revenues were $15.5 billion in 2007 and profits were $394 million. Revenues declined in the subsequent years and the company began taking on steep losses (MSN Moneycentral, 2011). This highlights the need for Office Depot to maintain a degree of flexibility with respect to the sale of its in-store sales force.
The company's human resources structure is based along five units: Corporate, stores, supply chain, business solutions and international. Each of these divisions is responsible for individual hiring. Workers at the store level are typically hired at the store level, however with all positions there is some degree of coordination with head office. Many elements of hiring, therefore, are centralized at the company's Florida head office. Most other human resources policies are also determined and implemented centrally.
The focus of this section will be on the North American retail division, which covers retail operations in the United States and Canada. There are five main roles in the retail division: customer service specialist, department manager, assistant store manager, store manager and district manager. These positions are critical to the company because North American retail contributed $4.962 billion in sales to the company in the 2010 fiscal year, accounting for 42.6% of total company revenues (2010 Annual Report).
The company determines its needs based on two factors. The first factor is the number of stores -- these positions other than customer service specialist are all determined by the number of stores. The latter position -- customer service -- is determined more by expected demand. Expected demand is evaluated at the corporate level, where hours available are determined. This is based on a combination of past performance and the economic outlook. For the most part, it appears that past performance is a more important determinant in the budgeting of the key CSS role, as indicated perhaps by the fact that the company's cost structure did not make a downward adjustment in line with revenues -- management might have been unable or unwilling to make a downward adjustment in staffing levels based on the expectation of weak economic performance.
Recruitment and Selection
There is a centralized hiring process for Office Depot. The company's website, OfficeDepotJobs.com (2011), is where most of the preliminary elements of the hiring process take place. The company relies on an online application mechanism to recruit for all of these retail positions, when recruiting externally. The Office Depot Career Network allows users to perform basic and advanced job searches to identify positions. In this way, Office Depot does not make a point to actively recruit external candidates. Its system is passive, relying on candidates to find it and work through the application process. After that has taken place, the company becomes more directly involved, and local managers become responsible for the hiring process in the Retail division.
The job descriptions for these positions outline the responsibilities of the position. These become more sophisticated the higher the position is, so a CSS for example may have a fairly basic job description whereas a regional manager will have a sophisticated outline of his/her responsibilities and the measures that are going to be used in his/her performance evaluation. The text describes two main types of job descriptions: specific and generic. The text prescribes that specific job descriptions should be utilized for positions that "emphasize efficiency, control and detailed work planning" (p.69). For the most part, this describes the jobs in Office Depot retail. Each worker has a section in which he/she works, and has specific responsibilities within that section. The jobs each have measures for performance evaluation. In this respect, Office Depot appears to follow the advice of the text with respect to job descriptions in its North American Retail division.
The text defines recruitment as "the process of generating a pool of qualified candidates" and selection as "the process of making a hire or no hire decision regarding each applicant" (p.161). Office Depot most likely operates in a high turnover industry, especially at the CSS level. The company therefore has incentive to reduce turnover for this position. The company also has incentive to ensure that its managerial hires are superior, because superior managers are worth 40% more to the company than average ones (p.162). The company's recruitment tool is basic. If the company feels that it can generate a strong enough candidate pool with its website, then this may be adequate, but there is a lot of competition for low-end retail workers, and the recruitment process may not be strong enough to build the best pool of candidates. Office Depot's selection process should, according to the text, evaluate workers on both their ability and motivation. The selection process does focus on both of those attributes. Office Depot realizes the value of motivation, and understands that sales ability correlates more with motivation than with any measurable variable like experience or education. The emphasis on motivation therefore roughly corresponds with the textbook advice on selection.
The other element of the company's recruitment is internal recruitment. While it seeks to build its pool of candidates with external candidates, most managerial roles are filled by internal candidates. Internal recruitment is conducted through the website channel, as well as through informal channels within stores or regions. The company relies on its ability to identify managerial candidates from within its CSS staff and promote from within. This is congruent with the recommendations in the textbook regarding the importance of having mechanisms for the hiring of internal candidates.
Some of the lower level talent is on contract as well. This fits nicely with the textbook's idea of evaluation hiring. This method allows the company to not only avoid the risk associated with bringing untested employees into the company on a permanent basis, but also to maintain a degree of flexibility in the number of employees, important because of how highly correlated the company's revenues are with the business cycle. Office Depot typically only brings the best employees on permanently, after they have demonstrated aptitude and a willingness to stay with the company. When turnover is high, as it is in the retail industry, companies in the industry need to ensure that the are only extending benefits to those employees who have taken on a permanent role within the organization.
Having well-trained employees is essential to success. Well-trained employees at the CSS level deliver the customer service that can win or lose customers, and they can increase sales if they are skilled at the sales…