ALDI Business expansion through training and development Essay
ALDI Business expansion through training and development
Aldi (short for Albrecht Discounts) is a globally operating and expanding discount retailer with over 8,000 stores all over the world. The company was founded in 1913 in Germany by two brothers. In 1960 the former Albrecht KG was separated in Aldi Sued and Aldi Nord. The headquarters are located in Essen (Aldi Nord) and Mülheim an der Ruhr (Aldi Sued). Both companies still have a friendly relation and use the same brands occasionally but operate independently. Aldi Nord operates in Denmark, the Benelux countries, France, the Iberian Peninsula and Poland. Aldi Sued makes its business transactions in countries including Ireland, the United Kingdom, Greece, Switzerland, Hungary, Austria, Slovenia, USA and Australia. In Austria and Slovenia Aldi is represented by Hofer KG. Overall Aldi is one of the world’s biggest grocery chains. The sales strategy is well known as they offer the opportunity to buy cheap and good/fresh food. The main focus is on key markets in Europe, North America and Australia. Store layouts are simple and opening hours focus especially on the busiest times of the day. The retailer is a specialist in food, beverage and household items but within the years the portfolio was extended.
The company acts now among other things for example, as travel agency. Many of the offered products are own brands. The number of other brands is limited to a maximum of two for an item. Therefore it is possible to keep the shops smaller and to sell a larger quantity of a specific brand. The slogan “Spend a little, live a lot” reflects the strategy of Aldi. In a nutshell to keep prices low they are not taking effort on presenting their variety of goods. Worldwide main competitors of Aldi are Wal-Mart Stores, Inc., METRO AG and Lidl Dienstleistung GmbH & Co. KG. Particular Austrian competitors are Zielpunkt, Norma and Penny. The strategy of the mentioned chains is similar. They are all driving their main business in the food industry as they are primarily competing on price in order to increase their market share. Main customers are bigger families, housewifely people and people with less income. The marketing mix of every business is different. Aldi focusses on providing high quality products that are cheaper alternatives to famous brands. Moreover, the advertising strategy is very simple and cost saving.
Apart from a weekly newsletter of special offers Aldi is not advertising at all. Primarily this low price grocery chains arose due to the increasing population and economic challenges. Therefore it was necessary to construct bigger plants which resulted in fewer and larger firms. This had a negative effect on farmer’s return and all of a sudden people started to concern about the products they were consuming. Aldi was very hard affected by these changes and implemented sustainable products. Now they offer especially in the diary product sector regional goods. Certainly important to mention is the simple organization structure of Aldi. The very flat management hierarchy allows leaders to get their people known. At Aldi managers should be open for new ideas, improvements and it is common to involve all employees in decision making. They represent a philosophy of promoting and supporting talents within the organization.
Consequently the performance of each employee is recognized easier. As the responsibility is increasing within promotions it is essential to support a transparent and effective decision making system. Subsequent the discretion of the Aldi organizational chart. On the very top of the management is the Vice President followed by several Directors like Director of Warehousing & Transportation and Director of Administration. The District Managers are directly reporting to the Director of Operations and are leading the individual Store Management Teams. The number of Store Employees is based on the frequency of customer visits.
Worth to mention is also financial situation. The revenue of Aldi was not published until 2000. Since 2001, Aldi Nord publishes its numbers in the Federal Gazette. Sales in Germany in 2010 amounted to 22.5 billion euros. Furthermore the worldwide turnover was 52.8 billion euros. Aldi Nord and Aldi Sued are completely family owned. The capital is very solid and Aldi has no liabilities. Aldi Nord owns all logistic centers. Leased objects are increasingly replaced by own objects. Aldi Sued also owns almost all buildings and land but had to borrow money for further expansion properties. So they left the path of total independence. The return on sales constitutes between 3 and 3.7 % in 2010. The core values and principles that the brothers founded are still important for decision making today.
These are presented from the management team as follows: Consistency – leads to reliability. We mean what we say. We are consistent in our dealings with people, product, price and all other aspects of our day to day professional life. Simplicity – creates efficiency, clarity and clear orientation within our organization as well as for our customers. Responsibility – stands for our commitment towards our people, customers, partners and the environment. It also includes principles such as fairness, honesty, openness, service orientation and friendliness. Aldi places great emphasis in efficient human resource development. In the daily sales business they try to keep everything simple and cheap. This can only be realized with an increase of company’s performance. Furthermore it demonstrates how the training and development program ensures that their employees have the required skills. First of all the goal is to identify training needs in order to be prepared for the future. It is mandatory to plan both, the number of workers and specific skills and requirements.
The company can then recruit new staff and is furthermore able to ensure that training and development programs are ready when needed. Training needs are identified through constant monitoring of the company’s performance. Aldi expands rapidly and therefore it is necessary to recruit more than 4,000 people within the next 12 months. Therefore the retailer follows the strategy to offer industry-leading salaries to make sure that they also attract the best candidates. Clear and detailed job descriptions help the Human Resource Department to find people with the right set of skills and competencies. Moreover there is process of interview and assessment where managers will find out if the applying person fits. After the most suitable candidate is recruited the training period starts.
Depending on the position different trainee programs are offered. For example as a district manager you have to participate in a nearly one-year long training. This program is divided into several different phases where knowledge and skills are being strengthened. Furthermore the new recruits learn about the philosophy of Aldi and its expectations of them to make them feel part of the family. The training and development continues throughout the career with internal and external training seminars. Besides the effect of higher business efficiency training can enhance and motivate staff. Promotions are quite encouraging as personal growth and development is very much appreciated and supported. On the one side Aldi expects an immediate contribution to the business but on the other side they provide special trainings to help developing their careers within the company. Over 85% of Aldi Directors are recruited within the company. They start after school or college and work themselves up into the general management.
Additionally, they offer also an international Expatriate program. This is especially for experienced District Managers who want to learn more about the business in an entirely different culture. Aldi is looking for individuals who are willing to develop themselves further. What is more is that Aldi offers an internship of 10 weeks. During this period interns are given real responsibilities and they have the opportunity to show their competencies and skills. This work placement is for students in undergraduate or graduate programs and is well paid. Internships are very common in such big companies as they offer options for both, the company and the intern. The company has the chance to test the employee for a few weeks and can then decide to offer high potentials a permanent position. However, this is also an advantage for temporary employees because they do not have to sign a permanent contract. Furthermore, Aldi uses on-the-job trainings to continue the training of the employees. This form of education is taking place in the working environment. Skills are improved by dealing with daily challenges and employees get the chance to learn through re-equipment and materials.
Another advantage is that feedback is given right after the accomplishment of the task. Besides also Aldi benefits by saving costs as they don not lose working time and a specific training is although provided. In a nutshell, on-the-job training is very economical. There are four different forms of providing on-the-job trainings: Coaching: The trainee will be trained by a senior employee. These coaches are providing instructions to the trainees to improve their knowledge about the daily work processes. Even though coaching is often used wrongly as a synonym for mentoring. Mentoring: Is characterized by a strong communication between the trainee and the mentor. The main role of a mentors is to guide and help the trainee.
Additionally communication. Compared to coaching the relationship of these two parties is more personal. Job rotation: Means that employees are moved within different positions just for a planned period of time. As a result they should be able to gain a wider variety of knowledge and learn about the processes in other departments. „Sitting next to Nellie“: Is a training very special technique where skills are provided by working alongside to a colleague. This method is very popular. It shows much more efficiently than reading or studying a written documentation. At Aldi the training follows the principle “tell, show, do”. First of all the process is explained by the manager followed by a demonstration. Subsequently the trainee has to conduct the task and the manager observes. All kind of positions follow this structure.
Prospective area managers get the possibility to become acquainted with different departments. Thus the trainees understand how each department and processes relates to each other. In the trainee period of one year they are supported from an area manager and they get the possibility to represent the branch manager for four to six weeks. In addition to on-the-job trainings Aldi provides off-the-job trainings as well. As indicated, these trainings are taking place away from work. Whereas on-the-job training is very specific, off-the-job training transfers more general skills which are transferable and therefore can be used in many parts of the company. Aldi uses this kind of development for courses covering: Hiring Techniques: Recruitment, interviewing and selection
Performance reviews (appraisals)
Aldi Management System (how to develop and performance manage people) Off-the-job training shows positive outcomes like motivated staff and greater staff productivity. Moreover it provides employees with better skills and Aldi profits from improved customer service. Beside these positive aspects it must be admitted that off-the-job training creates higher payroll costs. These additional costs are shown in payments for the trainings organization, the training itself and absenteeism which has to be covered from other employees. Aldi decides whether on-the-job or off-the-job training is more suitable for the given aspect of training. In general the different internal and external training seminars accompany employees through their whole career. Aldi defines learning and growth as a career-long process where there is always an opportunity for more.
An example for the combination of internal and external training is Aldi’s apprentice scheme. Beside the regular apprenticeship the trainees are studying for an NVQ (national vocational qualification) in Retail Apprenticeship. When the traineeship ends after 3 years the apprentices gained Level 3 – advanced qualification. Due to the growth of Aldi, trainees have good opportunities to be promoted. Fully trained have the possibility to acquire a position as a deputy manager or assistant store manager. The next step on their career ladder is to become a store manager. All these forms of training provide employees with work-related knowledge and skills that are needed to carry out their jobs. Besides on-the-job and off-the-job training there is another possibility to educate the employees of a company. Development is similar to training as it supports personal growth and improves skills which are directly related to the job.
Furthermore, employees gain qualifications and which results in a higher value in the job market. At first glance it looks as if companies do not benefit from development, but they do in every way. Beyond employees can be used more flexible. Additionally they are able to take over more responsibility. Moreover, people are considered to be an important member of the business. Hence, the company cares about the performance and capabilities of employees, which enhances motivation. Aldi is greatly aware that further development of employees increases the change of losing high potentials. Due to better knowledge people are more likely to leave as other companies often promise better career objectives. Nevertheless Aldi is conscious of this risk but in order to remain competitive they prefer to invest in human capital. As this food retailer has a lot of subsidiaries it is possible to offer its employees relocation to different international countries. This helps to develop all-round expertise and motivation.
At first, strengths and weaknesses of each employee need to be identified. Next step is to help them to improve their skills. To support this process Aldi launched an appraisal form. In this special system the manager and the employee evaluate the past and current performance. According to this process it is easier to decide which development is necessary or useful for the individual. A very important procedure is also the personal goal setting. At Aldi managers and employees work very close together to find the right targets. The discounter also tries to attract especially university students. Students have the possibility to prove their theoretical knowledge during a one year long working experience. They enjoy the first time to be part of a company.
Moreover Aldi benefits greatly from this system. If the students are doing well they usually get a permanent job offer. In this case no further recruiting process is needed and subsequent time and money can be saved. In a nutshell Aldi puts great emphasis on training and development. Even though the company does not have a human resource department, it is rewarded with number 6 in “The Times Top 100 Graduate Employers 2013”. 85% of all directors have been recruited within the company this shows that the firm has a strong policy for internal recruitment. So promotion is permitted to every employee. Another factor of success is that staff is recruited from schools or colleges. The appropriate on- or off-the-job training guarantees that recruits are well-trained and lays the foundation of the employees’ careers. The retailer’s global competitor Wal-Mart has a similar training and development strategy. Wal-Mart uses a training and development system inspired by Nike.
The difference to Aldi is the e-training process, which is a web-based training concentrating on selling skills and product knowledge. Besides all these positive aspects some valuations of former employees on the internet tell another story. Zeit online reports that discounters like Aldi are fallen into disrepute and try to clear their names as good employers with training and development offers. On the one hand former employees are largely satisfied with Aldi’s further development, but on the other hand they claim that the promised prospects for promotions and career are rare. To guarantee that every employee gets equal career development opportunities, we would suggest a development account like Fraport AG uses. Fraport is the operator of the airport Frankfurt and organizes staff development with the so called Q-Card (qualification card).
The Q-Card is a credit account for further development, which gives each of the 13,000 employees the chance to redeem € 600 per annum for personal development. If the development credit is not consumed, it expires on their own responsibility. All in all, Aldi has an effective way to train and develop staff. Open communication of the career prospects brings orientation for recruits and employees. The flat management hierarchy combined with career possibilities enables the staff to take over responsibility. Training ensures well-trained employees and promotion is open to all staff. In respect of staff development Aldi deservers number 6 of the 100 Graduate Employers 2013. Primarily, people associate Aldi with cheap products, but hardly anyone knows that they care about their employees especially in staff development. (2739 words)