Ll Bean Case

Introduction This case study examines how L.L. Bean successfully restructured benefits and human resources’ business units by aligning organizational goals with compensation and total rewards. Internal, external strengths and weaknesses are examined, as well as recommendations for the expansion of the current benefit programs at L.L. Bean.

Total Compensation at L.L. Bean Total compensation is a traditional term that refers “to the combination of base salary, annual incentives, long-term incentives (including equity awards), benefits and perquisites” (Kantor & Kao, 2004, p. 11). After the restructuring in 1996 due to declining performance (Reed, 2009) traditional benefits provided by L.L. Bean were expanded to include; on-site fitness programs,

Bean was not able to maintain sales during recessionary times, and this lack of resilience represents an external weakness, or a weakness that is due to an environmental factor (Kotler & Keller, 2012). Additional marketing and expansion into the Japanese market was undertaken as defensive versus offensive activity and potentially illustrates the lack of a plan for environmental or external impacts, therefore highlighting an additional L.L. Bean weakness.

Strengths

The most evident internal strengths of L.L. Bean are with the leadership’s intrinsic ability to acknowledge things gone right and things gone wrong. When faced with declining sales or the need for globalization; the CEO and leaders either expanded, restructured or otherwise embraced the need for change. Changing in the face of adversity versus continuing with an ineffective value or operational system represents a considerable internal strength. The external strength of L.L. Bean is their successful marketing and resultant L.L. Bean brand awareness (Kotler & Keller, 2012). L.L. Bean has a strong brand identity (Reed, 2009) and this is a result of the combination of marketing with operational benefits since L.L. Bean “operates on the belief that the brand should reflect Bean’s values, not just the product it sells” (Reed, 2009, p.

2019). The decentralization of HR, although positive; could be problematic if too much autonomy results in a lack of focus on L.L. Bean core values. A central Human Resources department should be created and maintained to best represent and communicate the goals and values of the organization.

The role of Human Resource departments continues to expand in recent years, providing further evidence the L.L. Bean should include a centralized HR team. For example, Brown (2014) notes that “our pay and rewards methods have been getting more and more complex over the past two decades, yet there are fewer HR and middle managers in our leaner organisations [sic] to help communicate them and ensure they are implemented and operated effectively” (p. 150). Additionally, “addressing globalization, innovation, technology and environmental matters moves HR beyond its traditional role” (Phillips & Phillips, 2016, p.