Introduction
Organizational behavior of companies significantly affects their financial performance, cost-efficiency, and their long-term sustainability. It also shapes public opinion about these businesses. In many cases, journalists focus on the losses or revenues of many corporations without speaking about their HR practices, workplace hierarchy, leadership approach, or structure.
This report is aimed discussing organizational and human problems encountered by Marks & Spencer which is one of the largest retailers in Great Britain (Moss & DeSanto 2002, p. 259). Within the recent years, this company had to cope with different problems. In particular, some corporate leaders left the company while many of their business initiatives were discontinued due to certain reasons. Moreover, the sales rates of this retailer declined during 2012 (White, 2012).
It is vital to understand the main origins of these problems. Furthermore, this paper will offer recommendations that can help the managers of Marks & Spencer overcome these challenges and better withstand the competition. Overall, the challenges encountered by this company can be attributed to the hierarchical structure of this business and the relations between senior executives and frontline personnel.
The Organizational Problem
It should be noted that Marks & Spencer is one of the oldest retailers in the United Kingdom. It was founded in 1884, and currently, it operates 703 stores in Great Britain (Moss & DeSanto 2002, p. 259). Furthermore, this organization has already entered foreign markets, and it can be regarded as a business with a fully-developed culture as well as policies (Moss & DeSanto 2002, p. 259). However, the competitive position weakened of this company in comparison with its major rivals such as Tesco or Wal-Mart. On the whole, it is possible to argue that the origins of the problems can be traced to extreme centralization of this company and its leadership approach (Simmons 2003, p. 20).
In particular, close attention should be paid to the top-down approach to decision-making (Simmons 2003, p. 20). The problem is that the decisions of senior executives are imposed on the managers of local stores, while the initiatives of other business administrators are not taken into account (Simmons 2003, p. 20). This approach leads to the situation when the best practices and models are adopted at a very slow rate or not adopted at all. Moreover, one should mention that within the last decade this organization was governed by six chairmen; none of whom served for more than 4 years (Grover, 2012, unpaged). This rotation is a sign that this organization struggles to cope with serious challenges.
The same thing can be said about other corporate leaders of this business, for example, one can mention the leave of Kate Bostock, the director of General Merchandise allegedly because of low sales rates (Grover, 2012, unpaged).
To a great extent, this tendency can be explained by the belief that only senior managers have a decisive impact on the performance of an organization. Provided that these results are not achieved, these professionals are most likely to be dismissed. However, this view of a business completely overlooks the role of frontline line personnel. This is why financial analysts and business consultants are very skeptical about the ability of new senior executives to bring improvements and the long-term prospects of Marks & Spencer (Grover 2012, unpaged).
Currently, this organization attempts to develop strategies that can improve their competitiveness and increase their revenues. Nevertheless, these attempts may not be successful because the employees are not sufficiently empowered, and their initiatives are not always supported. These are the main aspects of this problem, and one should understand how these issues can be addressed.
The Summary of Academic Literature on the Problem
Researchers pay close attention to various organizational problems that businesses face because of their organizational behavior. One of the trends that they identify is that companies tend to become more bureaucratic as they grow in terms of their size and profitability (Ericson 2007, p. 26).
As a result, they become less responsive to various economic changes or the strategies of their competitors (Ericson 2007, p. 26). This is one of the main issues that executives should bear in mind when they develop strategies or policies of their companies (Ericson 2007, p. 26). This is one of the main obstacles that should be overcome. Additionally, scholars point out that such companies do not give much authority to frontline managers who work with employees and customers on a daily basis (Ericson 2007, p. 26).
Very often, these people only have to follow the instructions given by senior management, but sometimes they do not understand the rationale for these initiatives or their goals (Diabay & Burrow 2007). This is another organizational issue that should not be overlooked. This policy pursued by Marks & Spencer could be justified at the time when this retailer was favored by many customers in the United Kingdom and its leading positions were not threatened.
Nevertheless, this model is no longer applicable when this retailer faces significant competition from British and foreign businesses such as Tesco or Wal-Mart (Simmons 2003, p. 20). Moreover, this approach is not very effective at the time when many retailers use online technologies in order to serve customers. These are some of the dangers that managers of Marks & Spencer should be aware of. Their initiatives can be effective, only if they pay close attention to these issues.
Apart from that, scholars note that large and centralized businesses often fail to empower their employees who tend to believe that their contribution is not valued by senior management (Sims, 2002, p. 72). In their opinion, their role in the company is minimal and their motivation eventually declines (Sims, 2002, p. 72). Moreover, they can be afraid of openly expressing their opinions because their employment contract can be terminated (Sims, 2002, p. 72).
Similar problems are encountered by the employees of Marks & Spencer. For instance, one of the company’s whistleblowers was dismissed in 2008 (Fletcher 2008). To a great extent, this policy increases the insecurity of employees, and they are not committed to organizational goals. Employees are not afraid of criticizing the policies of top managers, even when they do not agree with their decisions. This is some of the issues that business administrators should take into consideration. The corporate executives of Marks & Spencer should remember that their workers are not likely to be affected, provided that they do not feel the support the top management.
It is worth mentioning that researchers pay close attention to the practices of leading retailers. Some of these companies operate a great number of stores that are located in many locations, and very often, these businesses turn into international corporations. As a rule, these companies attach much importance to the initiatives of frontline managers (Mukherjee & Patel 2005, p. 41). The most successful models or initiatives are later adopted throughout the company (Mukherjee & Patel 2005, p. 41).
To some degree, these businesses emulate the strategies developed by Walmart, the world’s largest retailer (Mukherjee & Patel 2005, p. 41). Unfortunately, the managers of Marks & Spencer do not attach much importance to these activities. This is one of the reasons why financial performance declined within the last two years and its competitive positions were challenged by other retailing chains.
Apart from that, scholars believe that in hierarchical organizations, exchange of information is very slow (Seth & Randall, 2001, p. 139). The problem is that workers cannot always communicate with managers and tell them about the problems that they face. Moreover, it is very difficult for such organizations to develop new strategies or plans because the main decision-makers do not know about the tasks that workers are supposed to do on a daily basis (Seth & Randall, 2001, p. 139).
Additionally, these organizations may not respond to the needs of clients as quickly as possible. These weaknesses are very important at the time when retailers continuously make new offerings to customers. This is one of the issues that should be addressed by the executives of Marks & Spencer because this company has a long history of being extremely centralized, hierarchical, and bureaucratic.
Furthermore, these limitations become most noticeable when economy passes through a period of recession. Under such circumstances, every industry becomes more competitive and businesses should find new ways of cutting costs or improving their supply chain. However, these goals can be achieved only when senior managers work closely with frontline employees.
Thus, one can also argue that the corporate leaders of Marks & Spencer may not improve the financial performance of this company unless they adopt a new leadership style and involve workers into decision-making. This is another argument that one can make. Thus, the effectiveness of this retailing chain strongly depends on the leadership of senior officers and their attitude toward their subordinates or colleagues.
The researchers, who examine the work of large organizations, believe that empowerment of workers is critical for the sustainability of these companies. First of all, they advocate the open-door policy which means that workers are allowed to refer to managers without hesitation (Rodriques, 1992, p. 82; Daft 2009).
This policy eliminates many barriers between senior officers and workers. Moreover, researchers suggest that top managers should organize workshops during which the managers of different stores can communicate with one another and share ideas (Rodriques, 1992). These practices are critical for the adoption of the best practices within the organization. These people should also be able to offer their suggestions to corporate executive.
Furthermore, companies should reward those people who give recommendations to senior officers of the company. In this way, they will increase the motivation of workers and make them committed to the goals of the company. Apart from that, the managers of stores give more autonomy to front-line employees, and they should be able to act independently without asking the permission of their superiors (Kusluvan 2003, p. 672). These are the strategies that are often supported by scholars who study organizational behavior. They believe that the empowerment of workers is critical for the better performance of a profit-oriented company that should respond to economic problems and new market trends.
On the whole, it is possible to argue that many modern firms often encounter various problems as they increase their revenues and expand their structure. Their most important task is to remain responsive to economic, legal or technological changes; otherwise, they may not remain competitive. Sometimes, companies cannot cope with their business task because these organizations become too hierarchical and bureaucratic. As a result, the senior managers of these organizations cannot develop effective strategies and plans. These are the most important challenges that researchers identify in their academic works and empirical studies.
Conclusion
This discussion indicates that the financial problems and decreased profitability of Marks & Spencer can be primarily explained by the organizational behavior of this company. One can distinguish such challenges as:
- Increased centralization of this company
- Lack of communication between senior managers and employees;
- Organizational barriers that prevent frontline personnel from taking initiative.
This company should change their policies regarding their employees. First of all, they should encourage the managers of local stores to communicate with one another and share ideas about the best business models and ways of attracting clients. Secondly, the corporate leaders of this company should communicate with frontline employees who better know the needs and attitudes of clients. Finally, workers should have more autonomy. These recommendations can serve the needs of Marks & Spencer; however, they can yield results only in the long term.
References
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Ericson, Mona, 2007. Business Growth: Activities, Themes And Voices. New York: Edward Elgar Publishing.
Fletcher, Richard, 2009. ‘Marks & Spencer ‘whistleblower’ Tony Goode loses employment tribunal case’.The Telegraph. Web.
Grover, Paul, 2012. ‘M&S clothing chief Kate Bostock to leave as sales plunge’.The Telegraph. Web.
Kusluvan, Sulih, 2003. Managing Employee Attitudes And Behaviors. Boston: Nova Publishers.
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