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Written Analysis of a Case

Human Resource Management at


Gourmet Foods

Taniya H. Anwar
Javeria Iqbal
Shahreyar Babar
Zainab
15th March 2015

Person Profile
M. Nawaz Chathha founded Gourmet Sweets and Bakery in 1987. From the onset
Chathha managed all major decisions at the company; he ran the company like a
small family run business. He single handed management style didnt allow him to
delegate authorities to others in the organization. He seldom relied on his staff for
key decisions; as he believed no one had the experience and knowledge he had
acquired while working at Shezan Bakery.
Chahttas had a single marketing objective more products at lower prices. He
seldom based his decisions on market research; but rather his instincts.
Chathha believe in hiring large numbers of people and let fate decide their future.
Those who survive gained experience and were promoted. He didnt believe in HR
management so he never invested the time or money to develop a department
until 23 years later.
Chathha has four sons, two who have entered the family business.
He is 77 year old; age is catching up to him as well. He does not have the same
energy level, nor dedication as he did when he started the company.

Company Profile
The primary business of Gourmet Bakers and Sweets was retail of basic food
items, bakery items and desi sweets (mithai). Gourmet targeted the middle and
lower middle class, offering quality products at cheaper prices. The public
welcome Gourmet; sales were strong in the initial years. From 1987 to 2006
Gourmet sales increase by 25% per annum; from 2006 to 2009 sales jumped to
65% per annum. It seemed like there was a Gourmet outlet on every other street
corner in Lahore. Gourmet continually expanded their offering water, dairy, ice
cream, beverages and even a high end brand, Bon Vivante.

In 2010 the sales were hit hard due to the rat invasion incident . Gourmets image
was battered consumers could not get the image of rats running over the cake out
their minds.
Gourmet fought back hard; Chathha implemented new sanitary standards. New
company policies allowed Gourmet to apply for ISO certification.
Today Gourmet operates as Gourmet Foods, with a total of 98 sales outlets in
Lahore, 5 production plants and 2 restaurants. In 2009 Gourmet Catering was
launched, headed by Mr. Jamil Chahtta.
Mr. Chathhas focus has always been to cut costs and keep sale prices low. As a
result there was low maintenance upkeep in all the departments, especially the
production department. Quality was being compromised at time.

Human Resource Department


Human resource management was also sacrificed in reduce cost.
Mr. Chathha was the sole decision maker; he has a very vaderah mindset when
it came to running his company. The inflexible management structure didnt allow
for others to contribute their ideas to the development of the company. Everything
had to be done the Chathha way.
Initially there was no formal HR department for hiring and developing employees.
Candidates for senior posts were hired by Mr. Chahtta himself. Each department
has its own procedure for recruiting and hiring employees. Experience was more
important qualifications or training. There were no corporate policies regarding
staff management and development. The majority of the lower level staff was
illiterate. To keep the costs low there was no formal training given to the
employees. In case of any emergency or absentees of the employees, no
substitutes were available. There was no incentive plan for the workers and
bonuses were given only twice a year on Eids which was given only if the they
were able to meet the demands.

With the expansion in the business divisions and product lines, in 2010, Mr.
Chathha realized the need for a human resource department. Unfortunately it was
never a serious attempt just two managers were named - the individuals
managing the production earlier were made HR heads. Although they tried to
establish policy and standards, for the most part Gourmet continued to operate as
usual.
Human capital was still down at the manger level; individual candidates
were not properly matched to needs of the job/role
Training was nonexistent
There was no development plans for staff
. Mr. Chathha still ran the company, often down to small details.

Problem Identification
With the very aggressive expansion strategy, Gourmet was not about to control
their growth. A number of problems emerged almost simultaneously:
The sole decision maker was not able to be at all places all the time, leading
to delays in key decisions
Staff morale was very low leading to high turnover of staff
Following the rat incident, consumers had an increasingly negative image of
Gourmets quality and hygiene standards
Customer satisfaction was dropping as well due the lack of well-trained
skilled sales staff in the outlets
As a result of the above points, sales dropped dramatically.
To make matters worse, there was no human resource expertise till 2010,
and was still not properly implemented

As Mr. Chathha had a tendency to act instinctively and not from careful
formulated strategies based on research and facts; market research was but
an afterthought.

Core Issue Identification


Mr. Chathhas sole proprietor management style does not match the needs
of a growing enterprise.

Justification of Core Issues


For over twenty years Gourmet Foods had envious growth and results. Chathha
had started with a single store and plant and grown to 100 outlets and 5 plants.
Yet all decisions were still being made by a single set of eyes. Chathha refused to
delegate any key responsibilities or decisions to his supporting staff.
Despite the need for specific qualified staffing to manage the increasingly complex
operations, no true investment in human capital was done. Chathha didnt believe
HR had a role in his operation; it was just overhead. First-hand experience was
everything he believed.
Due to the increasing issues arising, after twenty three years without an HR
department, Chathha assigned two plant production managers to head the newly
formed HR department. The HR department was set up to underperform from the
start.
The managers were clearly not qualified, having no relevant experience
The department was understaffed, for such a large organization.

Gourmet had grown to point that further growth would be painful as Chathha was
unable to watch all activities of the organization
Crashing sales (lack of knowledge of market needs)
Declining quality perception in the market (Rats incident had gone viral)
Service level in outlets declining increased complaints
If Gourmet desired to continue to expand Chathha needs help. He cannot
continue to run the 100+ shop just like he did when he first opened. It was
absolutely necessary he not only looked to others for fresh idea and solutions but
also delegated the authority to others to get things done.

Recommendations
It is essential to develop a highly skilled and talented labor pool. This can only be
done with a strong HR department that is develop empowered to hire and develop
the right people.
It is critical to have qualified experience HR professional lead the
department.
The department must be staffed with the proper team, and enabled via
appropriate budgets and executive sponsorship.
HR corporate policies must be established and implemented
Performance appraisal systems should be separate for each department
according to the related jobs.
The employees should be recruited and selected through a proper screening
process and interviews.
A formal separate training programme should be started for the employees
where they can be trained on job according to their respective jobs.
Chathha must decentralize of business planning and operations of different
business entities. The different business units know best how to manage the
operational aspects. An appropriate level of executive oversight and approval will
be necessary only.

Chathha has done an amazing job to start and develop the original business. Any
organization lead by a single hand must plan for their future in case something
happens to their leader. As Chathha is 77 years old succession planning is ever
more important. He must begin to groom his successor, and put into place policies
to ensure his successor success.

Justification of Recommendations
M. Chathha needs to really focus on what will happen when he is longer able to
come to work. He must plan for what is needed in order for Gourmet to open the
next 100 stores.
As Gourmet continues to expand, M. Chathha is not able to be everywhere at all
times to make decisions. The problems will just get worse. He needs a team not
only to help him continue to grow the Gourmet empire but continue his mission
when he is no longer able.

Conclusion
From the onset, Gourmet was run like a family business with Chathha as the
father figure controlling each decision. Gourmet was his child. Gourmet has
grown up and now needs to be run as an enterprise if it is to succeed and
continue to expand. A professional skilled team needs to be put in place, and
continually develop according to the every changing world and needs of the
consumers.
M. Chathha should trust his team to continue to expand his vision. He should take
an advisory and oversight role, gently guiding his child from afar.

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