Topic: Contemporary Human Resource Management
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Case study Southern Foods
HR strategy in an uncertain context: Southern Foods Limited
Author: Carol Woodhams, Manchester Metropolitan University
Southern Foods Limited (SFL) manufacture and supply customised menu items to the food industry. Their range includes a number of savoury and sweet
sauces, marinades and stuffings in a chilled or frozen form, which are developed in partnership with the food retailer. Their range of savoury sauces
alone encompasses some 65 different varieties from standards like cheese and bolognese to the more exotic spicy mango salsa and Szechwan. SFL
occupies a fully integrated processing plant near Chichester town centre and employs 250 people.
The increase in convenience food production and growth in the takeaway food sector has impacted very profitably on the business. The company has
developed a line of relishes and sauces that Billy’s Big Boy Hot Dog Restaurants Ltd (the market leader) currently use.
Billy’s Big Boy is an American fast-food chain of global proportions. Big Dogs (their premier product) are now on sale in over 100 countries. They
open approximately 100 new restaurants a year in the UK alone. Restaurants vary in size from large inner-city restaurants over several floors, which
employ many hundreds of staff, to small units located in railway stations, staffed by only a handful of operatives.
Although Billy’s Big Boy are the purveyors of fast-food meals, they have very little in common with the hospitality sector and much more in common
with retailers. There is no menu flexibility, no locally determined specialities, and no need for catering expertise. The company is proud that the
quality and ingredients of its individual food items are completely uniform throughout the UK, and vary little across the world. For this reason
Billy’s Big Boy tend to emphasise single-supplier relationships, and have a very high level of determination over the quality, costs and ingredients
of their finished products. The Billy’s Big Boy emphasis on standardisation of product extends to production of their Relish Pot for their chicken
(Chickie Dog) range. This menu item, which is particularly popular with children, offers a barbecue-, tomato- or curry-flavoured Relish Pot
accompaniment. For 15 years these pots have been manufactured at SFL.
That is not to say that Southern Foods have a contract with Billy’s Big Boy. Although the company has had to make considerable changes to its
production processes, it has no written contract that confirms the relationship between the massive American giant and the smaller UK company. And
although Southern Foods is delighted with the business that is coming its way (Relish Pot consumption is currently running at 350 million per annum),
there is a price to pay in terms of both the lack of security in the relationship and in the demands that Billy’s Big Boy has placed on the Southern
Foods production processes.
In order to ensure the consistency and quality of the Relish Pot, Billy’s Big Boy imposes rigid standards on both the production process and employee
behaviours at SFL. The company has had to install three new Austrian-manufactured machines that have cost £1 million each to buy, ship and install.
In addition, the company is required to demonstrate its continued commitment to Billy’s Big Boy by showing continuous development and investment in
this sector of its business. Quality is measured by statistical process control. There is also an enforced emphasis on continually increasing the
efficiency in the production capabilities in terms of reducing the cost per case and increasing the output per head. In line with the ‘Big Boy Way’
(the corporate philosophy of the American giant) a continuous improvement team measures all aspects of the process. Data must be kept up to date at
all times to fulfil the demands of the Big Boy quality inspectors, who frequently drop by unannounced.
In practical terms, this demanding and unstable relationship between customer and supplier has meant that a corner of the factory in Chichester has
become a micro-reflection of the American company itself. This corner is known as the B’s Unit. The specialised nature of the training means that
staff who work in the B’s Unit are dedicated to it alone and are the most highly skilled workers in the factory. To keep costs down, staff have been
cut to the minimum. At any one time two mixers, three machine operators, one palleting employee and one unit leader staff the corner. The machines
run for 16 hours a day over two shifts. The B’s Unit employees (14 in total) generally regard themselves as the best in the organisation and are
highly committed and intrinsically motivated. In the main, they work hard. They are, however, somewhat disgruntled that they are paid the same as
lower-skilled workers, and morale is showing signs of dropping. At the present time, nonetheless, productivity is slowed only when employees are sick
or on leave, for they are not trained in each other’s work. Cover from within other areas of the factory is not allowed under the terms set by the US
organisation.
Current scenario
Two weeks ago the Big Boy inspectors dropped in with information on a new business strategy. They are intending to introduce special promotions of
hot dogs influenced by international cuisine and they are requesting that Southern Foods become involved in the development and production of shorter
runs of promotional relishes (the first of which will be sweet-and-sour). The potential benefits for the business are substantial, particularly if
any of the promotional relishes become part of the permanent menu.
The managing director has called a board meeting to make clear the implications for the business. He has decided that there is not enough stability
in promotional relishes to justify the purchase of a fourth machine. Instead he has decided to ‘sweat’ the current assets even harder. He has decided
that the B’s Unit must operate for 24 hours a day, that one of the three machines should be devoted to promotional relishes, and that more efficiency
in labour costs must be made. He wants times of slow production to be eliminated. He has decided that he can afford only another six staff to cover
the additional production requirements, particularly because he now considers that the B’s Unit staff should be on an enhanced reward package. He
also wants to be able to return to the current shift pattern in the case of the relish promotions not being continued. He has given you, the human
resource director, a week to come up with innovative ideas that might help solve these business problems and also to identify areas of potential
dispute within the workforce and with the unions.
You have decided that pursuing a strategy of human resource flexibility can solve many of the issues raised by the managing director.
Part 1 Diagnostic Report
The first part of the assignment consists of a diagnostic review of an organisational problem or issue and is submitted by 14th November 2014. The
purpose of this first stage of the coursework is to:
• provide a clear and detailed description of the organisational context
• identify an area(s) of HRM, relevant to a specific organisational context, which it would interest you to study in greater depth, explaining
why this is important for the organisation
• identify the likely sources of information and literature relating to this topic, through a preliminary review of the relevant literature
• highlight the key questions you would like to explore relating to that topic area, and in this process set the objectives for your final
report
The report should be approximately 1,500 words.
it is important that you use relevant literature to provide evidence to support your arguments.
Part 2 Final Report
You will receive formative feedback on the first report submission which then leads to a process of research into relevant areas of HR practice, in
order to meet the objectives you have set. In your final submission your report will:
• provide a comprehensive and critical review of the relevant literature
• explain and discuss what answers this has provided to the questions you identified in assignment 1
• provide some recommendations for organisational improvement specific to the chosen context.
While it is useful to provide a brief account of the organisational background in the report introduction, you should not repeat the description of
this that you provided in the first report. The final report will be read in conjunction with your first submission.
You are not expected to provide detailed and implementable recommendations (with costs, timetables, for example) but should consider how this
specific organisation or sector might address the issue, taking into account what you know about the organisational context.
This final submission is due to be submitted by 12th December 2014 The report should be approximately 3,000 words.
In both reports it is important that you use relevant literature to provide evidence to support your arguments. This must be referenced correctly,
using a standard format consistently throughout (Harvard is preferred) Both the assignments should be presented in basic report style. This means in
appropriate formal writing style, with contents page, sections and subsections, a clear introduction and conclusion etc.
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