Malaysia Herbaline Spa

The case study discusses the human resource strategy of a fast-growing company in the highly competitive beauty spa industry in Malaysia. It examines how the founders' personal values and philosophies are expressed in the human resource policies and practices and the influence of these on the company's customer service delivery and service culture. The two co-founders, Mr. Low Chee-Kwong (CK) and Ms. Liu Kim-Hwa (Kim), created a niche for themselves in a highly crowded and competitive beauty industry with a business model based on a “Beauty, Stress-free” philosophy. The company’s “stress-free” service strategy comprised several major elements which are-“5-star” service was delivered at “3-star” prices, only natural plant extracts were used in the production of products (used in the treatment) and providing stress-free environment and ambience. HerbaLine's focus on excellent customer service enabled the founders, Mr. Low Chee-Kwong and Ms. Liu Kim-Hwa, to position the beauty spa operator as a viable alternative to expensive, high–end international beauty chains and low–cost, no–frills, individually–operated beauty salons.  The success of their service strategy was reflected in their growth from one outlet in 2000 to 55 outlets (23 owner-operated and 32 franchised) in 2014. By 2007, HerbaLine had 12 owner-operated outlets in shopping malls scattered around KL city and a franchise network of 50 outlets dispersed across 12 states in Malaysia. In 2007, the company launched its new retail concept of standalone “beauty houses”, because there are some limitations on the part of shopping mall retail outlets operating in shopping malls. The beauty houses aimed to create a resort-like ambience for customers based on an Asian tropical theme, giving them 5-star environment, 5-star service at 3-star price. However, as the total number of outlets grew, CK and Kim were becoming increasing troubled by the growing gap in service delivery between HerbaLine-owned outlets and franchised outlets. For HerbaLine, it was essential to continuously improve on the key elements of beauty spa operations in order that the company’s philosophy and service standards remained relevant in a competitive environment. Ck and Kim felt that a new growth strategy, in particular with regard to human capital, was necessary to ease this problem and enable HerbaLine to move to the next phase of growth. In late 2011, the owners launched an “Internal Franchisee” scheme whereby promising and capable employees be offered profit sharing in the company-owned retail outlets. The company had a clear career progression policy for beauticians-beautician, assistant supervisor, supervisor, manager and partner. Ck and Kim believed that attitude was more important than skills, as skills could be acquired with the right attitude. Therefore, they are conducting a one-month orientation program at HerbaLine’s corporate headquarters in Kuala Lumpur and it’s mandatory for every new recruit to attend this program. In first week of the orientation, new recruits are learning much more about company, its culture and the formal training programme commenced in the second week. They are considering HerbaLine staff as an important component of company’s repertoire of services and products, providing many incentives to its staff such as-increment in salary, one month paid training, “co-pay” scholarship benefit available for senior employees and annual trips for employees who met their sale targets for the year. Ck and Kim fostering a family-like culture in HerbaLine, by celebrating various occasions such as employee birthdays and baby showers. At HerbaLine a major events are Company Annual Dinner and the Big Gathering during Chinese New Year. These company-wide events allowed employees not only to get to know colleagues from other outlets, they also allowed their family members to experience first-hand the culture and the people in the company. Moreover the owners of the HerbaLine are following Buddhist teachings and incorporating into their work values. Having practiced and benefited enormously from Buddhist meditation, they also strongly encouraged their staff to take up such meditation practices so as to enhance their own well-being. It was also the norm for staff members to do a 20-minute meditation before the start of each business day. Ck and Kim wanted that there must be a one HerbaLine outlet in every Malaysia town. With the “Internal Franchisee” scheme in place, they are planning to increase its outlets to 80-100 outlets within Malaysia by 2024.