The Foschini Group's (FOS) Shani Naidoo was in excellent spirits when she walked out of a two-day group strategy meeting in October 2009.

1. The Foschini Group
By Garima Saxena, 3rd Eye Advisory Ltd
The Foschini Group's (FOS) Shani Naidoo was in excellent spirits when she
walked out of a two-day group strategy meeting in October 2009. As managing
director for group human resources (HR) since 2005, it was evident that the
changes she and her team had implemented had successfully made HR a critical
part of Foschini's overall business strategy. In pursuit of their vision to get rid of
the company's silo mentality, the HR team had introduced a totally new,
centralized HR model. Despite the shake-up, Naidoo believed there was still a
great deal more that needed to change. She did wonder, however, if she might
have gone too far.
George Rosenthal, a Russian immigrant to South Africa, opened his first Foschini
store in 1925. His idea was to sell well-made, up-to-date and inexpensive women's
fashion, imported from the United States. In just over a year, he had opened nine
stores around the country and, within three years, Foschini had become a
household name in international women's fashion. In 1937, Foschini was the first

2. local fashion chain to become a public company. It had grown substantially since
then by establishing new brands and acquiring existing retail brands.
In 2009, FOS (with its head office in Cape Town) comprised 14 trading brands,
had more than 1500 stores around the country, and employed over 15 000
people. It targeted the broad, middle-income population of southern Africa,
mostly as a credit retailer. The ratio of cash sales to total turnover was
approximately 36%.1 Doug Murray was appointed as the new CEO in January
2008, having joined the group in 1985. He took over from Dennis Polak, who had
retired after 10 years at the helm. It was Polak who had appointed Naidoo to the
operating board in 2006. A new chairman of the FOS external board, David
Nurek, took office in April 2009.
a) FOS's retail products included clothing, jewelry, accessories, cosmetics,
sporting and outdoor apparel and equipment, cellular phones and homeware. Its
divisions included:
b) Foschini, which included Donna-Claire (fashion for fuller-figured women),
Luella (a footwear, handbags and accessories range) and Fashion express (for the
lower-income market)
c) Markham (originally Markhams), a men's fashion outfitter
d) Exact! (originally launched as Pages) for men, women and children's fashion
and accessories in the lower-income market
e) Sports division, which included Sportscene (a blend of sports and fashion for
the youthful market), Totalsports (positioned as a premier sportswear shopping
destination) and DueSouth (outdoor lifestyle wear)
f) Jewellery division, which included American Swiss, Sterns and Matrix
g) Decor division, which included home (offering home decor products) and
homelivingspace (selling furniture)
h) TFG Apparel Supply Company (which managed the supply of locally made
apparel, and coordinated the merchandise sourcing, shipping and quality
assurance activities); and
i) FG Financial Services (which managed the group's in-store credit card
programme)

3. FOS also held a majority share (55%) in the RCS Group, which was an
operationally independent consumer finance business that provided a broad
range of financial services under its own brand and in association with a number
of retail entities in South Africa, Namibia and Botswana.
Standard Bank held the balance of RCS Group shares. Murray reported cost
containment strategy as a success factor of Foschini's management team at such
time.
The need for change in human resource management approach at Foschini was
because of presence of separate HR function for each division and brand wherein
all HR leaders worked in silos, devising separate strategies. This created
inconsistencies in HR processes and limited staff movement and no inter brand
competition for resources and best practices. The Implementation Plan for the
change management consisted of:
Eleven Centre of Excellence were identified for the entire process who initiated
policies and processes which were carried out throughout the group. The tasks for
individual centre of excellence is mentioned below:

4. a) Knowledge Management: The aim of this COE was breakdown of silo
mentality, increase collaboration between different management teams and
ensure overall projects drew staff from all over the group.
b) Talent Management: The aim of this COE was to integrate talent
management framework, linking person's development to leadership pipeline,
develop individual development plan, competency assessment and development,
centralisation of the function, enablement of functional experts to facilitate
workshops and development of centralised academy for store managers.
c) Performance Management: The aim of this COE was the standardization
of Performance Management process ensuring each role is broken down into
deliverables on a five-point rating scale and biannual performance reviews with
the HR director reported to the board twice a year.
d) CSI, Sustainability and Wellness: The aim of this COE was to enable Feel
Good Project which focused on developing skills among unemployed women and
provide support to over 50 CSI projects like Rural Education Project, Leap
Science and Math’s Saturday School Project and WHEAT Trust.
e) Broad based Black Economic Empowerment (BBBEE): The aim of
this COE was to ensure that there are more black people in management
positions, ensuring Store managers, area managers and RMs were of diverse
background and implement executive coaching and training plans for them.
f) Compensation and Benefits: The aim of this COE was to ensure clocking
system in all stores for compensating overtime, ensure centralization of capturing
employee data, alignment of rewards to staff positions & performance, match
people's salaries to market value, performance related incentive bonus to be paid
on a biannual basis.
Management of human resources is the most important function in any
organization. It is essential to achieve a balance between caring for one's
employees, helping them work to their maximum potential and achieving the
goals of an organization through the work the employees put in. Human resource
management involves both strategic and comprehensive approaches to managing
people, as well as workplace culture and environment. The role of human

5. resources professionals is to ensure that a company's most important asset, its
human capital is being nurtured and supported through the creation and
management of programs, policies, and procedures, and by fostering a positive
work environment through effective employee-employer relations. The concept
behind human resource management is that employees who are subject to
effective human resource management are able to more effectively and
productively contribute to a company's overall direction, thereby ensuring that
company goals and objectives are accomplished.
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