Organisational Behaviour - John Lewis - Case Study Example

Organisational Behaviour 1.0 Overview John Lewis is the UK’s largest department store group with a network of 26 selling branches, plus distribution centres and production units, stretching from Aberdeen in the north east of Scotland to Bristol in the south west of England. As in most companies, John Lewis places their customers before self. Customer needs are their prerogative. Apart from the network of 26 exclusive selling branches of John Lewis, Waitrose is the supermarket division of the John Lewis Partnership, with over 180 branches across the country.  Offering oustanding customer service and a wide range of quality products, Waitrose was voted the nation's favourite supermarket in a recent 'Which?' magazine survey. Whether it’s a John Lewis or Waitrose, customers benefit the same kind of hospitality and attention as its products. The company structure is such that whether its John Lewis or Waitrose, the policy has always been to recruit experienced professionals from a variety of backgrounds. In all cases, people who have good communication skills coupled with an outgoing and friendly personality, common sense, the ability to work in a team, commercial awareness, energetic, resilient and adaptable are traits desired (John Lewis Partnership, 2007). 2.0 Business Culture Globalisation has made tremendous impact on the way businesses are run today. Competition is not just from within the country, but outside as well. Markets have become global and so too have standards and practices. Mergers and acquisitions is the name of the game. In today’s highly charged global scenario, a wave of mergers is about the only remaining tactic for continued growth, as an integration of two organisations can cut costs, reduce competition and consequentially increase market share. Leaders meticulously design the strategic intent, resources, systems and structures to propel a successful union. However, despite the scrupulous efforts and hard work, money and precious time go down the drain as most corporate marriages fail. In fact, recent surveys reveal that hardly 10-15 per cent of the mergers are successful; about half these result in culture clashes. During a merger, or an association, as in the case of Waitrose, executives diligently assimilate the various synergistic features right from assets and equipment to technology and strategies, but forget to discount the complexity of variant cultures. Most conglomerates barge into the acquired company and obliterate the long-standing traditions, practices and policies to meld it into a faceless subsidiary. Even in case of an equal alliance, the combined entity loses the erstwhile individualistic charm and appeal as they overlook the people factor. Corroborating this theory is a recent ‘Making Mergers Work’ study by the Society for Human Resource Management, wherein HR professionals listed incompatible cultures as the biggest obstacle to success in mergers and acquisitions. They emphasised that the companies may look at all the financial matters, but it’s really the cultural and people issues that can mean the demise of a successful merger. Therefore, despite staggering market opportunities and synergies, the amalgamations often lose ground due to the avoidance of culture conflict. So, what makes a partnership tick successfully? It’s the people and the organisational culture. The recipe for getting a successful merger off the ground is shifting the spotlight from deal-making to merging-of-cultures. In fact, culture has been attributed to being one of the most important factors in building relationships. Historians, believe it or not, have attributed the success of the Roman Empire in part to the successful merging of conquered cultures into itself. Therefore, the punch line is, pay more attention to people; not profits, as with people, profits will come in automatically. How do cultural variations integrate? Every organisation has its own unique way of doing things, be it management, employment, or compensation to investment. When two firms seek to merge, customary differences are more than likely to crop up. Structured-entrepreneurial, proactive-reactive, centralised-decentralised, formal-informal or extravagant-economical, each firm has its own firm belief in what is right and what’s wrong. This is where cultural differences emerge. Management has always devised a set of ethics on which the company and its employees perform. This is the organisational culture. The practice continues till the company becomes non-existent. Culture cannot be changed within a company, unless there is the influence of an external factor. This so-called external factor is either a merger or an acquisition. Partnerships are the association of two companies working within a set of rules and regulations, for the benefit of each (The Hindu, 2007). Culture change management is a tough volley and can be successful only when employees ascribe to it. However, predisposed workers lose motivation and experience job insecurity in the face of a merger. So, leaders should use persuasion, not coercion, to mobilise the apprehensive workforce. Culture within an organisation is equally important in the context of organisational success. Culture is built over years of practice and cannot be changed overnight. The culture that one wraps around people can not alter them as individuals, but will definitely influence their behaviour. Culture shapes the way one invests his/her energy, adjust their capacity to absorb change, and affect their desire to do more than expected. Culture does make a difference in the way a company functions. Culture cannot be thought overnight, it comes with continuous practice and certain external drivers. Drivers are instigators that lead to harmony, unity, performance, and loyalty. In an organisation, behaviour is driven by a set of drivers. Irrespective of the incentives or motivation, certain levels of employees are bound to revolt cultural and structural changes. When an organisation makes adjustments to its existing work ethics (culture), workers tend to interpret this as being provocative. No organisation would like to be at the lower rung of popularity in terms of production or quality. With the advancement of science and technology, new ideas and machineries have enhanced production and quality. The import of such technology or idea may not find favour with the working class of some organisations. This culture invasion can be seen as a provocation into their privacy or termed an identity crisis. In such situations, workers take a rigid stance to block entry of technology or idea that make them insecure and go on the defensive. It is in such situations that HRM needs to address the concerns of these workers. HRM policies must support employee grievance and at the same time be pro-employer. Using various HR techniques, HRM should be able to bring these workers to understand the importance of any new development that the organisation initiates, and that with the growth of the organisation, they grow too. Cultural changes are imperative in this world of globalisation. Global competition means performing to global standards. This can be achieved only if the workers; the backbone of an industry, makes a strong effort to absorb these changes. This can be done by proper management of human resource management. HR plays a vital role in the development of organisational culture. Molding an individual to perform to the organisation’s benefit is what organisational culture is all about. In order to attain this, HR has to implement the following: Reward systems The way performers and non-performers are identified and treated The influence of supervisors and managers, and what objectives are placed before the team The nature of work, and the degree to which these tasks are mechanised The structure (Neville Lake, 2002). There are many ways to impart training with success, but training in culture is a different proposition altogether. Culture comes with age and repetition. It’s easy for somebody to stand up and say that this has got to be done this way or that way, but unless it is put to practice, and I mean real practice, the exercise will be one big letdown. Being upfront and sharing information about intentions, targets, benchmarks and the course of action is the way to develop organisational culture. As managers, they need to establish a rapport with their colleagues and explain the organisational needs and the reason for any imminent changes and at the same time, letting them voice their views, concerns, queries and doubts. This will make the job easier and more successful to implement. Highlighting the new market opportunities, professional satisfaction and financial rewards will help employees change their style of working to suit the new cultural initiative of the organisation. Nothing sums it up better than what Chris Burand, President of consulting firm Burand & Associates said, ‘The merger of companies (or an organisation and its employees) is very much like the joining together of different families to celebrate the holidays. Each family has its own traditions, and those traditions must be merged carefully and thoughtfully to ensure future harmony”. This will lead to an amalgamation of two entities into one great company with a happily ever after culmination. (The Hindu Apr 11, 2007) 3.0 Culture vs. Structure Organisational Culture: Organisational culture is made up of three important components; values, rituals and leadership. An organisation’s culture is made up of the certain elements that combine to define organisational purpose and deliver organisational goal. These elements are intricately related to enhance: • Organisational values and beliefs • Human attitudes and behaviour patterns • Organisational structure (MGS Debenham, 2004). Organisational culture is not time bound. When changes to organisational priorities take place, organisational culture too changes. This is a continuous process and cultural changes have to be embedded in the workers mind and attitude always. This is the work of HRM. Cultural values have a significant impact on business structure, business strategy and economic performance at the national level. John Lewis is a well known departmental store group and this has come about because of the importance the management gives to its trusted customers. The employees with John Lewis understand the importance of courtesy, punctuality, trustworthiness and helpfulness in drawing their customers to the store. This is the culture that is emphasised on all new recruits who join the work stream. An organisation’s culture can affect its business structure, strategy and performance. A company’s culture can be equated to be country specific, as most companies target the local market trend to impose themselves there. When Waitrose teamed up with John Lewis, the organisation had to revamp its existing business outlook and style altogether to match their principal. This made a lot of difference to both the organisations, as consumers began to recognise them for their work ethics and customer care. This was missing with Waitrose till they amalgamated into a single corporation. Human Resource Management (HRM) is a planned approach to managing people to performance effectively. It aims to establish a more open, flexible and caring management style so that staff will be motivated, developed and managed in a way that they can give of their best to support the concerned departments. Good HRM practices are instrumental in helping achieve departmental objectives and enhance productivity. In the larger interest of a company it is imperative that employees are taught the nuance of the trade. Personnel with positive attitudes and can lend themselves to the causes are what organisations look for. HRM is all about this. Employees are taught to be positive, deliver quality work, have a sense of humour, and work as a team. Employees should be interested in performing as a team and take joy in team results, rather than individual accomplishments. The work of HRM is to identify people with such qualities. Building a team with members with such exemplary qualities mitigate the work of an organisation and they can build a work force that is prepared for the culture one desire (Corporate Culture, Auxillium West –The HR Manager). Organisational Structure: There has been a lot said about what an organisational structure stood for. Every organistion has an entity of its own, be it its logo, work ethics, product or service, and motto. They all work with a varying level of professionalism. This comes about through the level of expertise and experience shown by the people who matter; the people in power. The ability to cause something to happen is in the realms of these men. It is these men who form the organisational structure (Mann, 1975, p.84)1. Many SME could possibly have a CEO heading the organisational hierarchy. The CEO has a team of managers heading various production/marketing/administrative functions. These managers are assisted by junior managers, officers and supervisors. Then we finally have the general workforce at production and maintenance level. This forms the structure of the organization. The John Lewis Partnership's reputation was founded on the uniqueness of its ownership structure and commercial success. The strategy of happiness to all its members through their worthwhile, satisfying employment in a successful business met with success and enhanced both, John Lewis and their partners’ position as an outstanding retailer and as a thriving example of employee ownership. Their strategy of Partners, customers and profit paid them well. Both John Lewis and Waitrose won the first and second prizes in their category during a recent polling on customer satisfaction. What are the parameters for the success of this organisation? The John Lewis Partnership has seven principles which define how they run their business. They are: Purpose Power Profit Members Customers Business Relationships Community And, what is the John Lewis organisational structure? The governance system of the Partnership was created by John Spedan Lewis, the founder of John Lewis, and this is set out in the Company's Constitution. In a nutshell, the structure is so defined to give the management the freedom to be entrepreneurial and competitive in a way the business runs for long-term success, while giving the company's owners and partners, the rights and responsibilities of ownership through active involvement in the business. The company believes in equal participation and responsibilities. The business ethic is so simple to follow that the management believes that whoever becomes a part of the John Lewis conglomerate, can play an important role in achieving greater heights for themselves and the organisation as a whole. The business is theirs and they should recognise this trait and work wholeheartedly to see it succeed further. This is seen from the way the partnership works in comparison to other retailers: What makes the Partnership different from any other retailer? Business partnerships are very important to John Lewis. Through their partnership, John Lewis strives to: 1. Ensure the happiness of Partners as the epicenter of all activities 2. Build a sustainable business through profit and growth 3. Serve customers to the very best of their ability 4. Care for the community and environment (John Lewis Partnership, 2007). All organisations have their own set of structures to combat opportunities and consequences. It’s no different with John Lewis either. The organisation is engaged in networked and federated business structure, wherein the company has to pay for other administrative structures, processes and reporting relationships in return for greater control and order. Organisations are structured in order to: Ensure efficiency and effectiveness of activities in accordance to the management’s target Divide and allocate work, responsibility and authority Establish working relationships: Management, supervision, workforce Establish means to control work Establish means of retaining experience, knowledge and expertise Meet target expectations Provide the basis for a fair and equitable reward system (Richard Pettinger, 2004) Thus, whatever the structure of an organisation, the above parameters must be met to make the venture a success. John Lewis set an exceptional strategy in the development of their business structure. They were inclined to give more autonomy to their partners in decision making, provided they followed the basic culture of John Lewis, which is, customer satisfaction. 4.0 Conclusion With the emergence of transnational economy, there was an increasing realisation that organisations needed to operate in a global market. This led to local organisations to change their attitude and perception to analogise with the globally competitive environment. Strong HRM practices are characterised by an equally strong internal labour market, consultative decision making and enterprise unionism. Such practices, either individually or collectively, encourages the incorporation of employees into the mainstream (The culture of the enterprise). This results in a strong employee-management relationship, leading to employee identification with the firm, and a high commitment to innovative production practices that enhance the firm’s performance. In return the firm or organisation provides job security and rewards (John Benson and Philippe Debroux, HRM in Japanese Enterprises: Trends and Challenges). For an organisation to run, it needs the effective co-ordination of its stakeholders, suppliers, customers, and shareholders. How many times have one come across problems in industries due to unhealthy work environment that could be either due to poor man management, or weak working conditions. Either way, it is the organisation that suffers. The link to success is the well-coordinated response and functioning of the above entities, not necessarily in that order. However, as with any manufacturing company, man and machinery remain the two most important elements in production line. It is noticeable that the most important asset of an organisation remains to be humans. Without these two, no organisation can grow or for that matter, survive. It thus becomes mandatory for any company to devise policies that are pro-human in nature. “Functions such as managing cash flow, business transactions, communication, public relations, and production are part of human activities in sustainability and growth of an organisation. Unless human resources are looked after diligently by the organisation managers, the firm is likely to face unnecessary drawbacks, which could have serious repercussions on the organisation as a whole. It is no secret that humans are the driving force of any establishment, and it is they who possess the drive to make or break an organisation. In lieu of the current market and multi-polar world situation, the work ethics of most organisations are continuously changing. This change not only affects the business but its employees as well. In order to maximise organisational effectiveness, managers must be able to manage employee capabilities, their time, and talent. This is precisely what John Lewis has attempted to achieve through its structural and cultural changes, to good effect. 5.0 Bibliography 1.0 John Lewis, John Lewis Department Store, Partnership, http://www.johnlewis.com/Shops/DShome.aspx 2.0 The Hindu, Preventing culture shock key to successful mergers, National Newspaper, India, April 11, 2007. 3.0 Neville Lake, The Strategic Planning Workbook, The Sunday Times: Business Enterprise Guide, 2002, Kogan Page Limited, London. 4.0 Corporate Culture, Auxillium West –The HR Manager, www.auxillium.com 5.0 John Lewis Partnership, FAQ s about the Partnership, www.johnlewispartnership.co.uk/Display.aspx?MasterId=773891b4-4508-48a0-845e-f8bf003e0975&NavigationI 6.0 John Benson and Philippe Debroux, HRM in Japanese Enterprises: Trends and Challenges 7.0 HRODC Ltd, Organisation Structure, http://www.hrodc.com/ORGANISATIONAL.DESIGN.htm#Defining_Organisational_Structure 8.0 MGS Debenham, The Value of Organisational Culture and the Role of Competencies, http://www.qmconf.com/Docs/178.pdf 6.0 References 1.0 Lewis J, website, referred on 04.14.2007 2.0 The Hindu, print media, newspaper, referred on 04.14.2007 3.0 Lake N, book, referred on 04.14.2007 4.0 Corporate Culture, website, referred on 04.14.2007 5.0 Benson J and Debroux P, journal, referred on 04.14.2007 6.0 HRODC, website, referred on 04.15.2007 7.0 Debeham MGS, website, referred on 04.15.2007 Read More