Organisationa communication

1 Organisational Communication, 3P65 Professor: Lena Wilkinson Seminar: Thursday, (Lena Wilkinson) Work Title: The Emerging Perspective within a Clothes Shop Written by: Peter Packroff (3691581)

Introduction The ambition of this essay is to examine the atmosphere within a clothes shop, and suggest changes that can lead to greater work satisfaction, not only to apply this specific case, but what can also be applied to this type of business in general.

More specifically, a department run by a major department store in Denmark called “Imperial” (alias).

Through journals and other sources, the essay will attempt to show how the company’s functional approach resulted in a gap between leaders and staff, and created a mutual mistrust. It will suggest how the management could have made better use of the staff as monitor, and how an invitation toward better communication, might have led to better results.

The essay will focus on the case from the Emerging Perspective, on how to penetrate more democracy in their leading style, contra the leaders’ strong hierarchal structure, which can block for useful communication.

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2 The case: “Imperial” “Imperial” (alias) had been very successful since its opening in 1889 of its first department store in Copenhagen, Denmark. In 1950 it implemented a new “open look” store design, and made all shops merge into each other. At same time, when they were registered on the stock exchange market, they expanded and opened another 6 stores around Denmark, offering all luxuries from food, housing and clothes. Their department of clothing, which this essay concerns, took up 4 out of five levels, being their main focus area.

Something started to go wrong in the mid 1990’s and their first loss was a reality.

First, the board (consisting of family members to the original owner and some members of the top of Danish business), fired all the top leaders and the entire management.

They also laid-off half the floor-staff, due to mistrust and big losses - that were understood theft (but what was never proven). In attempt to rescue the ailing business, they leased out some shop areas to private chains, who worked independent of “Imperial’s” management. All private run shops made a profit. Five years went by, but with continuing losses. And the creditors were getting impatient.

One, of many new employees that were hired, reported that the management left him alone on his first working day, being responsible for 3 counters, (3 shop areas). He soon learned that the private shops had 2 full-time staff, to one shop area. He experienced that “Imperial’s” stores that expensive $300 trousers were laying on the floor. Customers were lined up – and some even left the store in anger, as there was no service.

Same salesperson soon learned that he, though he was paid the lowest legal wages, got double the wages than many other staffs, as most of them were trainees, who (according to the law) were paid a lower rate. However, all staffs in the private shops

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3 made more money, and they even had bonus arrangements. They were also offered better staff advantages as a 50% discount, versus “Imperial’s� 10% off.

Some staff members added an extra discount, when they sold clothes to each other (against the rules).

As he continued explaining; all staffs were too busy and stressed, and there was no time for fun, or chat. They always had to cover other shops, and never stayed in same shop for a whole day. There was not even enough time to fold the clothes nicely. And if they were lucky to find the time, they were not aloud to change the clothes on the display dummies, or have any influence on the store design whatsoever. The same applied to the clothes they stocked - Everything was decided from the top of the organisation.

A few times, when above mentioned person came up with some suggestions, he found out, that all ideas addressed to the management, had been lost somewhere in the system. Above mentioned person quitted his job 3 months later, together with many others, as they found no work satisfaction, and were stressed down.

The organisation described The company has been in business for over 100 years, and the organisational structure has been more or less unchanged since then. (A general company structure is attached in the back of this essay).

The board consists of 8 members. As the family members possess the stock majority, their position is secured. The chairman is the grandson of the founder. There are no females represented in either board or in top positions. There is a CEO for each

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4 department store. He meets with the two directors and a representative from the store design/ purchase office, weekly, and with the department managers daily.

The Purchasing/ design departments purchase etc. according from the top managements’ overall quarterly strategy, and are responsible for every aspect of shop design, decoration, how the clothes should be displayed on the tables and purchasing.

The Shop Managers meet with department managers once a day and report. The managers are supposed to work along with the staff, and supervise the staff. The Department Managers collect data from all shops, but do not work on the floor and handle customers. The shop assistants serve and handle the customers, and open and closing tills, morning/ evening. They fold all clothes and have the responsibility to keep the shop tidy.

Problem outline The company’s main problem, is their continuing loos a money. For many years they have made a huge loss, and the creditors are about to stop funding. Something drastic needs to be done. A failure in doing so might result in a bankruptcy or a sell off for a price below value – leaving the stock holders with a big depth to creditors.

That the shop is more than 100 years old and rich in traditions invites the idea that the leading style can be characterised as emotional, and build on old values. Since the family has still got stock majority, their position as chairman is, in this case, specified.

This might lead to dispute problems within the board, if the stock holders disagree with direction the board wants to go. This will block for effective communication.

The staff members are unhappy, in all aspects. The trainees might not get the support they need, in order to meet the requirements of their studies (to become “skilled

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5 shop assistants�). And the staff members are not able to carry out their work in a satisfactory manner.

The Imperial staffs envy the other staff members of the private shops, as they do same work, but under different terms and conditions. Imperials’ staff discount arrangement does not meet the expectations, and cannot compete with the franchisers shops - or with the market in general.

Research Perspective The present leading style is based on a functional approach. More specifically the leading style can be associated with McGregor’s Theory X: For

McGregor,

Theory

X

represents

traditional

institutional

organization, with its hierarchical pyramid of subordinates and superiors based on the presumption that most people need, indeed actually prefer, external control (Millichap, J.R., 1986)

The organisational structure is hierarchal and their information flow has to pass through all links, to reach the management. All managers in the above case are hired externally, and no internal recruiting is carried out. The top management is male dominated only, and has not adjusted to the contemporary expectation of balance of genders.

The reason for choosing an emergence perspective versus the functional approachmodel is an attempt to contrast the two, in order to stress the need of radically transformation of the company, to meet the more democratic contemporary culture,

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6 which means; more involvement by using some of below mentioned tools. As part of the emerging perspective, the essay will focus on 4 main areas: Firstly, to understand the core problem, which affects all other aspects of the organization, the essay will look into the principles of the psychological contract, and how the expectations are not being met.

The essay will describe how the term locos of control can be applied on this case, and how the employees can gain more control in the daily work life, in order to feel that their individual performance has an influence on the operation of the company.

The knowledge management, a.k.a. personal information management will be addressed, meaning; how the management should use the intelligence, the company already possesses through its employees.

Finally, the essay will approach the suggestion of implantation of a reward system, and an introduction of more staff advantages that might lead to greater work satisfaction, and greater revenues.

Communication Problem

The psychological Contract affects not only employees within the company, but also customers: Psychological contracts consist of the beliefs employees hold regarding the terms of the informal exchange agreement between themselves and their organizations (Rousseau, 1989, 1990). Psychological contract violations occur when an employee perceives that the organization has failed to fulfil one or more of its obligations comprising the psychological contract.

(Turnley, W. H./ Feldman, D.C. 1999 p887)

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The break on the psychological contract in this case, concerns both employees and customers: The better the understanding of a luxury image, the higher the expectations.

However, the store does not live up to the expectations; e.g. that expensive clothes should not lie on the floor. The staffs expect maybe higher payment, or a better education as outcome.

As for the employees, a break on the psychological contract will either lead to low loyalty and low work quality, or they might even choose the exit. The stress-levels can also become a threat, as one of many researches on this area, speaks for it self: In their study of 600 employees they found that one in three considered quitting work in 1990 due to stress, and one in three expected to burn out on the job in the future. Fourteen percent quit or changed jobs during the year due to job stress. Seven out of ten said job stress lowered their productivity. (Barrios-Choplin, B./ McCraty, R./ Sundram J./ Atkinson, M.,1999)

A staff deficiency and lack of qualified staff, as a result of above, can well become a threat to the company, and needs to be avoided. Same research suggests that high levels of occupational do not improve, but reduces productivity: Unhappy people can seriously affect employee morale. Whether they leave or not, Disaffected workers can damage the attitudes of other workers (Caplan and Teese,1997). Negative feelings impact the quantity and quality of work, absenteeism and tardiness, cooperation with supervisors, and a company’s ability to attract desired applicants. (Kreisman J.B. (2002) p.7)

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As concerning the customers, a break on the psychological contract might lead to a customer defection. The customers have more choices than the employees. What characterise both parts is that they probably will not return, once they have used the option to exit (GUEST, D.E. 1998).

The idea of locus of control (LOC) was created by the psychological movement in the 1960’s.

Rotter (1966) defines internal LOC as that situation in which individuals feel that some reinforcement follows and is caused by some action on their part. (Hamilton, J.P. 1991 p.1)

Hamilton (1991) refers to the individual (employees) who believes that he/ she is in control of developing, and managing the situation in general. Also, that the employee is in control of the environment.

If the individual does not believe he/ her has a responsibility for own (or company’s situation) this will result in neglect and renunciation of responsibility (Sheerman, 2005). In this case, the individuals feel no responsibility and have no ideals within the company, to inspire them, and to urge loyalty. As the individual has no responsibility, the individual will not come to the understanding that the individual employee can affect the company.

If no employees within the organisation belief they have this control, it will not be possible for the leaders to motivate and urge the employees to reach the common goals.

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9 The Knowledge Management is as principle understanding the collection of data, as not only being raw facts and numbers, but also understood as e.g. “emotional data”, characteristics that cannot immediately be transformed into digits.

As concerning the designs of clothing in a clothes shop, it can be difficult to share and communicate this information, as it is highly subjective. Miller, R.

(2005) assesses a

survey which examines use of data, bases as part of an effective knowledge management strategy, and how to share useful information. I.e. the knowledge management is understood as an interactive approach to communication and information sharing

In relation to the success of franchisees, effective knowledge management can help each employee accessing - and share information e.g. online with the head office, but can also pass useful information on to the top, and to the actual brand (clothing company) who can change/ improve their stock, which again positively affects the franchisee.

“Imperial” has no such information system. And because Imperial, contra the franchisees, works as a “distributor” with no direct access to the brand (except form their sales department), they cannot affect – or improve the communication.

Problem solutions The attitude problem within the company is a fierce circle. The management cuts down on the staff advantages and in same time expect them to work harder. The unequal relation between the franchise-employees and “Imperial’s” employees, can work as a negative reinforcement – with a negative outcome: The staff can understand the low wages, high level of stress and no advantages, as a punishment, even though they work hard - and therefore loose motivation.

Kreisman J.B. (2002)’s paper, concerning motivation and its necessity, also addresses the difficulties in today’s business world: The Emerging Perspective within a Clothes Shop

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10 What we’re faced with today, is an extremely dynamic and volatile work environment marked by continued turbulence in the economy. Managers face a difficult challenge of motivating and retaining employees in an environment of increased uncertainties (Mitchell, 2002). (Kreisman J.B. (2002) p.5)

To turn this negative process, the author believes a major transformational restructuring is inevitable: “Imperial’s” overall goals, in order to create a better atmosphere, should to either; creating better work conditions (such as staff advantages for its employees), or, they can also try and eliminate the inequality with going smaller; inspired by the success of the franchise-model. This could be done by reforming the entire department store’s shop-structure, and run the shops individually – or perhaps to invite external investors to open a line of franchisers within their shopping centre.

The idea with having an overall purchase department and stylists was to gather these functions into one location, which is easier to control and cut job positions.

However, by allocating the different job tasks, “Imperial” might be able to improve in many aspects: The trainees will get the responsibility and challenge, they expected which can raise the educational standard, and attract more and better new applicants.

The employees within the company should, at least for periods, be located on a specified location, so they can become familiar with what each shop stocks. Thereby the employee can faster, and more effectively recommend – and suggest different and more items, which improves the level of service, and not at least; improves the opportunities for up-selling.

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11 Improvement of staff advantages, as a matter of staff discount on the clothes the shop stocks, has more major strengths: In this case, it can prevent the staff from being attracted to “helping themselves to achieve discounts”, and thereby affecting the bottom-line negatively. The staffs’ involvement might increase, as they identify themselves with the profile of the brand – which again affects the relation to the customer positively. The staff member would also function as a “walking mannequin”, which might have a stronger effect than display dummies. Another aspect on this matter is the psychological effect of this discount: It works as a reward, when an employee can purchase an item for less than half the price, as clothing usually has a profit margin of 50% or more (with no expenses for “Imperial”).

The staff – who will be highly professional and skilled in this field – will then be able (with his/ her professional expertise) - to advice and comment on the items, and pass the useful information on to the management, the designers and the organisation, and thereby being part of the organisation, using the principles of knowledge management. If such a discount on the other hand is not provided, the staff will be likely to feel that the owners will only make money on them, and make them spend their hard earned minimum wages, only to their profit – This is not the signal, the management should be interested in communicating.

If the staff member could become more involved in the process of store decoration and display, the locus of control could be improved, as the employee could feel the affect of his/ her actions – which will also work as a positive reinforcement, when the sales then might go up.

The idea of involving the staff more, in the running of the business, could also alternatively be appreciated by adjusting to a matrix structure (Philip, S.J./

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12 Robert, G.D.,1984). As an example, instead of having a shop-layout designer for each department, the management could have a project group/ manager, working horizontal, and implementing more different departments, instead of a top down approach. This would not only create a greater information flow, but also give a better understanding of the organisation, and help the demanded flattening of the structure.

The designer/ project manager could consult the employees in each shop, and thereby hear their opinions, and also give the staffs new input, which can be useful for their future career/ education.

Conclusion The essay has assessed how the department store in this case has been run. It has attempted to categorise the present leading style with theories as e.g. McGregor’s Theory X. The functional approach and a structure like above case, is not unusual for this type of business. However, it is the many different subdivisions, different brands and different life styles under one roof that make the structure become a problem.

Since more new shopping centres have occurred, “Imperial” is now being challenged, and the management has not been prepared for- and too slow to react and adjust to this challenge. Others successful department stores, competing in same field, lease out all the shops, but try and composite the shops’ life-style, so it fits their target group and balance best possible. “Imperial” attempted to remain in total control, but failed in doing so, by using their “half-way model”.

Therefore the author suggested a total transformation of the principles of their “department store”. The overall aim was to achieve an equal treatment of all employees under same roof, either by following a “franchise only- strategy”, or by changing their policies on e.g. staff discounts and staff advantages. Alternatively, and less demanding, could be introducing a matrix structure, which could help with flattening out the structure, and force through a better communication flow, by creating project groups that should involve all shops horizontal, instead of top-down.

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13 The author believes that such transformational process will be costly. There is a lack of staff, and staffs are necessary to bring the standard back up. Such a costly restructuring might be painful, and very difficult to force through. Also, it can be hard to persuade the stock holders to make further investments in this business, in order to push forward this transformation. However, it is a fact that if the company continues at same path, the company will soon loose its existence.

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14 Sources:

Primary Sources

Barrios-Choplin, B./ McCraty, R./ Sundram J./ Atkinson, M (1999); The Effect of Employee Self-Management Training on Personal and Organizational Quality (Source accessed 28/11/2005 http://scholar.google.com/scholar? hl=en&lr=&q=cache:JfJvUgPlluAJ:www.heartmath.org/research/research-papers/calemployee-training.pdf+employee+flee)

Hamilton, J. P (1991); The development of a communication specific locus of control instrument. Communication Reports, Vol. 4 Issue 2, pp.107-112

Miller, R. (2005); The Evolution of Knowledge Management. EContent,Vol. 28 Vol. 11, pp.38-41,

Rogelberg, S.G./ Luong, A./ Sederburg, M.E./ Cristol, D.S (2000); Employee Attitude Surveys: Examining the Attitudes of Noncompliant Employees. Journal of Applied Psychology, Vol. 85, No. 2, pp.284-293

Turnley, W.H./ Feldman, D.C. (1999); The Impact of Psychological Contract Violations on Exit, Voice, Loyalty, and Neglect. Human Relations, Vol. 52, No. 7, pp.895 - 922

Secondary sources

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GUEST, D.E. (1998); Is the psychological Contract worth taking seriously? Journal of Organizational Behavior, Vol. 19, pp.649-664

Millichap, J.R.(1986); Contemporary Management Theory and The English Department. ADE Bulletin, Vol. 85 pp.50-53

Kreisman, J.B. (2002) Insights Into Employee Motivation,Commitment and Retention.

Insights Denver, February,

Philip S.J./Robert G.D. (1984); Matrix Design: An Alternative Model For Organizing The School or Department. Association for Communication Administration Bulletin, Vol. 50, pp69-77

Schermerhorn J. (2005); Management. Wiley

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Share holders (30% of shares still belong to original owner’s family. Big parts of shares belongs to bigger organisations – not individuals)

Top management Consists of a board of two family members of original owners, and 8 other members, who are also in board of other big financial CEOcompanies etc.

Marketing Director

Department manager

Financial Director

Finance/ HR 20

Department manager

Department manager

Purchasing agent/ store designer (x2)

Purchasing agent/ store designer (x8)

Purchasing agent/ store designer (x 3)

Store manager (x 4)

Store manager (x 20)

Floor staff (x 50)

Floor staff (x 200)

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Store manager (x 3) Floor staff (x 100)

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