Contemporary Management Issues Concerning the Management Practices at the Coles Retail Chain - Case Study Example

Student: Lecturer: Unit: MM200 Course: Contemporary Management Semester; Date: Word count: 2528 Management study on Coles Introduction In the contemporary management course this semester I have familiarized myself with many issues affecting organizations the world over. The case study of the Coles revival presents a real life learning opportunity on how top management can be such a great factor in the success of an organization. This paper will comprehensively relate the concepts in module one and two of the contemporary management course to the management practices covered by the Coles case study. These will de discussed under the headlines below. Mobilizing people in organizations Human resource has become one of the contributing factors to the success of any performing company. According to Kakabadse, Bank & Vinnicombe (2004), to achieve the goals and targets of a company, the key is in hiring competent and highly motivated staff that you will work with as a manager. It does not end there; the manager is constantly in the business of mobilizing the people in his organization so that they can pursue a common goal with everybody playing their part. Mobilizing people calls for high skill in understanding why people are willing to do something in with all their heart in some situations and completely not interested in the company’s success in other instances. Successful companies will always treat their staff members as team members rather than workers to the company. Diversity in the employees is always a common phenomenon in successful firms as it brings in different perspectives, talents, experiences and world views of solving some problems through formulation of effective strategies (Viljoen & Dann, 2003). Employees are motivated through matching of people to jobs, fair remuneration, better working environment, and rewards for their performance, equity in the system, setting realistic goals, training and development. In relation to the Coles case in matters regarding the mobilization of people in an organization, we can say that the company has really scored high on this. When the general manager Ian McLeod took over the company he brought a wealth of experience with him to Coles. One of his major concerns was the fact that employees were not happy working at Coles. If asked where they work many would say they work in retail. Ian was determined to make them proud working for Coles. The major step he took towards realization of this is to hand picking his management team of former British based retail and marketing specialists. The management involved it staff more in introduction of new plans to make their projects more successful. A firm that is determined to succeed through the combined effort of management and employees has to involve the employees in strategizing and running the business. Director of stores Stuart Machin acknowledges that the company now has to test and approve the applicability of new concepts before they fully roll them out. Initially 70% of the workforce in Coles was on casual basis. This meant they lacked motivation and commitment to the success of the company. They did not feel accountable at all. After the new management took over 80% of the work force was in permanent employment while the remaining casuals had been guaranteed at least 24 hours per month. This new developments lowered absenteeism from 12% to 2%. The staffs turn over on the other hand lowered from 37% to 26%. This was a testimony of employee satisfaction in their job which is usually reflected by the level of commitment they give to their work. Staff training is reviewed twice a year. As observed by Hephaestus, (2011), the training and development is part of succession planning where the future leaders at Coles are expected to come from within the organization. The employees are also engaged regularly to give their views on leadership, policies progress and strategies. The direct engagement of staff and having a genuine concern in their wellbeing means that the management can count on their employees to show their appreciation by being committed and motivated to drive sales up at Coles as a team. Contingency variables How an organization is structured is strongly related to how successful a company can be. Good structures allocate a task and provide a mechanism through which the various tasks in an organization can be coordinated successfully. Structures must change as the environments and situations change (Schermerhorn, Davidson, Poole & Chau., 2011). In other words an organization should be as dynamic as possible. There are four contingency variables that should concern a manager; Size, strategy, technology and environment. Strategy- this follows three dimensions; innovation, cost minimization, and imitation of best practices Size- organic to mechanistic in growth, meaning a company should grow at its own pace in a healthy fashion that will enable the management not incur diseconomies of scale as the organization becomes too large and bureaucratic. Technology- the structure should be adapted to reflect technology Environment-business environments keep on changing; as such mechanistic structures are more suited as they reflect stability Coles introduced an automated ordering system to improve the quality of its fresh products. The management also implemented a new system of warehousing designed to minimize the costs as much as possible in ensuring there is just enough inventory for sale. The result was $ 1.4 billion over three years. $150 million was saved under a program by the finance director that involved better procurement practices. The company has also reviewed it relations with suppliers by ensuring they only buy from competitors who do not highly price their goods. Some suppliers such as Goodman Fielder could not put up with the new way of doing business by Coles and had to terminate business relations. Coles introduced private label bread to replace the highly priced Goodman bread. Within two years, strategy has become part and parcel of every aspect of the company. In meetings the agenda is more of strategic measures and short term tactics to improve sales rather than dwelling on the sales made without regard to what increased or decreased the sales volume. The focus initially was in ensuring good negotiations with suppliers in shelf space. But then the focus had to change to amore competitive one with structures in place to turn the focus into satisfying the customer who is at the end of the day, the king. Customers can fall into the trick of being loyal to a store brand but in the long run they will only be held by the quality and utility they derive with their money. Customer focus Otherwise known as the upside down pyramid, this focus offers a whole different view into the role played by managers within an organization. Each and every member of the pyramid is a value-added worker as such he is expected to create eventual value for the company’s customer. This means that the whole organization is devoted towards serving the customer by all means. The management is expected to support this course as policies and strategies have to have goodwill from the top management otherwise they will be efforts in futility. In order to be able to focus on the customers major changes in the structure and functioning of an organization have to be adjusted to conform to the customer oriented operations. This means the company has to work hand in hand with the employees to achieve this. For a manager to succeed in this then he has to be emotionally intelligent to be able to deal with people and handle some challenging situations (Robert, Vinod & Manas, 2008), in the upside-down pyramid model the management is at the bottom of the pyramid with the major function of supporting the operating employees to serve the customers. In the retail business, customer focus is the most important thing that a business can put its energy in. the business is majorly driven by customer loyalty. Customers can only be loyal if they are being treated in the way they feel that they are valued by the company. This is reflected with the staff friendliness, cleanliness of stores, high quality of the products on sale and a friendly price (Murray, Poole & Grant, 2006). Cole’s revival was as a result of the company adopting a customer oriented model where they directly engaged their customer whenever they wanted to introduce something new in the market. To achieve this, the company developed a plan known internally as the “circle for success”. The plan covers six goals: better value, better service, quality fresh food, smarter stores, excellent on-shelf availability and the best customer experience. The goals were made practical through ten functional programs that covered buying, distribution, store operation, the store network, customer service, value, fresh food, exclusive brands and marketing. If popular brands were not willing to cooperate with Coles to implement its strategy to avail goods to customers at an affordable price, the company concentrated its efforts to reinvigorate the sales of its private label brands. Through a customer feedback12 panel known as “Coles’ mums”, the company was able to improve quality and packaging to achieve a growth of $ 800 million in private label sales. Coles tracks its customer engagement through weekly focus groups and an online forum known as “tell Coles”. This enables the customers to express their satisfaction or frustration with various aspects of the company. This is very effective in letting customers feel that they are part of the Coles family and that their well being and satisfaction is taken care of. The company used this platform to seek the opinion of the customers before introducing in the market its controversial Australia Day milk price cuts. The cuts sparked a price war. The customers had given Coles a go ahead to introduce the cuts. Essentially then the customers are a key stakeholder in the revived Coles. Organizational structure An organization cannot run without a structure that outlines the duty of every individual in the organization. How an organization is structured has far reaching implications on its performance and growth. The common agreement is that an organization structure is how various parts of an organization are formally arranged. It shows the system of tasks, workflows, reporting relationships and communication channels that link the functions of different individuals and departments in an organization (Schermerhorn, Davidson, Poole & Chau., 2011). An organization structure is usually unique to that organization so that it can be dynamic enough to respond to changes in the internal and external environment (Hanson, Hitt, Ireland & Hoskisson, 2011). The structure also aids in implementation of strategies by top management teams as it provides for a system of issuing commands and assessing development. While informal structures can be effective in being dynamic and flexible, big corporate cannot adopt the style as they need to be guided by strict procedures of going about business. The formal structure is planned, procedural, rigid, authority based and reliant upon position. Cole’s organizational structure has at the top 5 members of a highly effective management team. The team comprises of store development and operations director, finance director, group marketing director, merchandise director, and managing director. Each and every one of them has his own responsibilities to achieve through the guidance of the group managing director who hand picked the management team. The top management is equally capable of accomplishing their objective judging from the years of experience in the retail sector. It is a logistical challenge that the management has been able to overcome by coordinating the functions of 105,000 staff, 740 store managers and 66 regional managers. They were all working in over 750 locations. The team had to make adjustments into their functions including recognizing that they should give enough credit in recognizing the efforts of the staff members in their various capacities in the organization. Connecting management and performance The main purpose of any management team is to ensure high levels of organizational performance. Organizational performance can be realized through efficiency, effectiveness, satisfaction, and adaptability (Schermerhorn, Davidson, Poole & Chau., 2011). Efficiency- it is the ratio of resources used to produce goods and service. This can be reflected in such aspects as profitability, market position and productivity. Sales performance at Coles has improved with the company recording sales figures of $ 25.2 billion. This is a testimony of improvement in cost management practices and aggressive marketing efforts. Currently Coles stands second in the retail business after its major competitor Woolworths. However it is in a steady rise and the manager says the job is yet to be completed as currently there are only 150 stores out of the 750 that are in the new renewal format that is recording double digit growth. The company intends to be opening 20 to 30 stores per year to rival Woolworths in market share. The management has initiated a program to highlight top performers by introducing a scorecard measuring key performance indicators in every store to encourage competition internally but within the cultural mindset of the company. This is quite encouraging as people have to be constantly motivated by targets if the are to give their best in anything. Efficiency- this is the measures of goal attainment in the organization. At Coles efficiency is a matter of strategic concern since it takes center stage in meetings. It is not about the sales that have been made but how the management has been able to implement policies and achieve key strategic goals. Employee satisfaction- in order to have a long term efficiency employee satisfaction must be achieved. It is achieved through such practices as having a reward system to recognize performers. Having a development program to train and develop individual staff members to take up key tasks within the organization. After the new management team took office they have put a lot of interest back into developing their employees with the general feeling now being that the future management team at Coles will largely come from within the company. The employee turn over rate has also dropped to 26% from 37%. This is an indication that the employees are being satisfied by the working conditions and it is actually self motivating to be working at Coles. Adaptability – this is reflected in the employee attitudes and values. This is what defines the long term effectiveness. At Coles they are trying to retain and train their employees to make them feel that Coles is part of them. The general manager felt that he needed to make the employees proud of working at Coles and he is on that path. This will mean that he needs to inculcate the cultural values of Coles in them so that the organization can rely on them to further the long term objectives. Conclusion This case study discussion has exhaustively expounded on the contemporary management issues concerning the management practices at the Coles retail chain. It is evident that the cost control measures have been effective by the level of profitability achieved by the company within the three years period. The employees’ satisfaction has also been achieved through a human resource model designed to train and develop the employees. All stake holders are in agreement that Coles is in the recovery path with the commitment leadership of the top management. References Schermerhorn,.J.R, Davidson,P., Poole,D.,Chau,S.L., (2011) Management foundations and applications, First Asia Pacific Edition, John Wiley and Sons Kakabadse. A, Bank. J, Vinnicombe. S, (2004), Working in Organisations, Gower Publishing Ltd Hanson, D, Hitt, M. A, Ireland, R. D. and Hoskisson, R. E. (2011). Strategic Management: Competitiveness and Globalization, Pacific Rim 4th edition, Cengage, Australia.pp. 280-307 Viljoen, J. and Dann, S. (2003). Strategic Management,4th edition, Longman, Pearson Education, Australia. 75-78; 346-347 and 351-352. Robert, J, Vinod, S, Manas, K, (2008), Emotional Intelligence: Theoretical and Cultural Perspectives, Nova Publishers Hephaestus, (2011), Articles on supermarkets of Australia, including: Aldi, Coles, Franklins, Sims, Woolworths, Action, IGA, Bi-Lo, Food for Less, Hephaestus Books Murray, P., Poole,D., Grant,J., (2006) Contemporary issues in management and organizational behavior, Cengage Learning-Australia Read More