Organsiational Behaviour Management - Exam Essay

Organisational Behaviour - Management Individual Assignment 07/11/2005 Day Seminar Teacher: Barry Wright Written by: Peter Packroff

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Introduction

This assignment will examine a case study, which is written- and experienced by the author himself.

The case study explains how a department store loses revenues and sales, and has lacked in acknowledging the need of providing a challenging and inspiring working environment. A lot of different factors are decisive in relation to turn the business back on track.

As the case study will reveal, the top management tensed to believe that all decisions and change could be made from top and down. However, in order to experience a positive organisational change, it is important to understand “who are going to make that change”. So this essay will concentrate on the management style of the company and how they (should) use rewarding in their stores, what can reflect the overall attitude – and might be blocking for change, if not considered.

The case

“Imperial” (alias) in Copenhagen, is One of Denmark’s biggest department stores.

The main store, in Copenhagen, opened 1898 - so it has a long and proud tradition.

"Imperial's" image is luxury, spanning from housing inventory, to perfume shops and luxury clothing, with a range from DG, Donna Karen, Ralph Laurent, Boss etc.

During the 1950’s, when they were registered on the stock exchange, they revolutionised the Northern European philosophy of department stores, with keeping the floors open, and all shops “flowing” into one another. This innovation led to huge

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revenues. But during the middle of the 1990’s “Imperial” was loosing sales. In fact, from year 2000, the numbers kept going down. The top management mistrusted to the staff, and fired all top managers. When that did not work, they fired all department managers, and then half the floor staff, and took onboard some inexperienced workers (cheaper) and trainees – who were paid less than 50% compared to a non-educated full-time staff, as their job was part of their 3 year education.

Another step to win revenues was taken, to lease out shop areas to independent shops.

The author was hired for a gents clothes shop on the “gents floor” (where this essay will be focusing), and he soon experienced a negative attitude in all levels of the organisation. Over the 3 months he was employed within the company, he did some remarkable observations: On his first day, he was put on the floor alone, being responsible for 3 counters, and experienced all the clothes to be flowing around, due to their continuing salesstrategy. Often the staff ignored the customers, as the staffs were too stressed. Also, he experienced that the staff were helping each other to a non-contracted (illegal) discount, because they only got a 10% discount, and “found it necessary to reward them selves.

One major disturbance the author experienced, was that he had absolutely no influence on what the shop looked like, how it was decorated, or what they stocked.

Everything was decided from the very top.

The author experienced that expensive clothes was flowing on the floor, but was in comparison neatly hanging, in the independent shops. The author learned that the staff in the independent stores were less stressed, had more staff, and enjoyed a discount of 50%, and even were given a higher salary.

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Also, the author experienced to be moved around the different shops, run by “Imperial”, so he never specialised, or felt any home in one specific department.

(In the end of this essay is attached a chart, which illustrates the managerial hierarchy in the company).

Problem recognition, sum up

- General bad atmosphere - Unhappy/ unsatisfied customers (no service) - Unequal wages and advantages among Imperial staff and private staff - The staff has no responsibility - A major mistrust on all levels - An invisible management - No job satisfaction - No benefits or bonus system

The Theory X

One major problem, mentioned above, is the mistrust to the employees. The management does not actively show that they believe in the employees’ abilities. The management makes no effort to increase job-satisfaction, and the individual’s responsibility. McGregor (p.43, Management) introduced a Theory X and Y. X being categorised; as the managing to seeing the staff to “dislike the work (and to work)”,

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and “need to be led” (controlled), what can be argued to be a somewhat old fashioned leading style.

The structure and management’s attitude in this example, clearly matches the Xtheory. To some extend, the management’s mistrust is to some extend reasonable, as they have experienced big losses as form of theft. However, there has been no attempt made from the managements’ side, to change this problem, e.g. through a rewarding strategy for its employees, and providing better staff -benefits.

The psychological contract

A psychological contract is the expectation(s) the employee has to the work place: Either as the relation between the company and the employee, or, the employees’ expectations to the company, to live up to certain standards. In this case, it could be the expectancy, that the employee should earn same benefits, as the “norm” is, in many other shops – to get the clothes to purchase price (50% off), or, expecting a 300 dollars pair of trousers, not to mess around on the floor.

Another expectancy, could be to the management, to expect higher standards from the employee, as he/her is dealing with very expensive luxury products – Could be met, e.g. by providing the employee more information/ education in the fabrics, designs, products etc.

The psychological contract can be the expectancy one has on forehand, when signing the contract. A “break” on the psychological contract, after a long-time employment, can also be the lack of expected rewards, when doing a good job - The expectance to be rewarded, when working hard, and when showing loyalty to the organisation.

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Locos of control

As a manager, it is important to understand that working 37 hours in a clothes shop can become an empty feeling, when folding the same piece of clothes over and over again. The decision making processes, of which the floor staff can be a part of, can from the managements’ viewpoint be very limited, and the management can thereby oversee the possibilities of promotion. This can lead to the employee feeling that he/she is not in charge of controlling the developing and the situation. When all responsibilities are taken away from the employee, he/she can easily loose trust in him/her self.

Locus of control (p382, management) is described as “the level of control, you have on your situation”. In this case, there is no opportunity for developing personal skills, or gain more responsibility. All decisions are made externally/ from top.

When the staffs are very limited in numbers, it is not possible to control the mess of 300-400 dollars trousers that are thrown on the floor. I.e. the employees have no control of their situation, what can lead easily lead to job dissatisfaction.

Job Enrichment

There are a number of approaches to job enrichments, among others; Frederick Herzberg (p389 management), who introduced a two-factor theory. “Satisfier factors and Hygiene factors”. He argues “if you want people to do a good job, give them a good job to do”.

Both the satisfier factors, as e.g. rewards and payment, and hygiene factors (work environment), must be positive, in order to create a satisfying work place. I.e. a high

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payment does not necessarily create a higher job satisfaction, if the environment is not of satisfying standard.

The hygiene factors – the physical environment in which this employee is working – are at no mean satisfying: The job environment is too stressed, there are too few employees, and there are not enough tools (or freedom) available to the individual departments, to improve these factors.

Changing the hygiene factors can first of all be done by taking on the necessary number of employees it takes, to physically being able to create a satisfying shoppingand working milieu. It does not take the customer long to realise, that if the customer cannot find a staff member to serve him/her, the customer might be better off doing the shopping somewhere else.

When folding the same pair of jeans all day, it can make a huge difference, if the employee actually is satisfied with the design of them etc. If the employee could participate in the ordering processes, the staff’s enthusiasm and involvement would be likely to transfer to the store’s customers.

Looking at the attached chart in the back, you see the link between floor departments and management – the department, of decision makers who place the orders, and with shop decorators. Creating a job that “is good to do”, could be reforming the formal structure, and either cut away job-position within this department, so the decision making was placed with the department managers’ – in cooperation with the shop assistants instead, or, by setting up work groups of shop assistants, in close relation to the persons responsible for the orders. Not only could this create a bigger involvement

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and job satisfaction, but could also be using the full potential available, though the changing process can bring some complications in the transformation process.

Another area mentioned above, is the need of influence of the shop decoration.

Working 37 hours a week in the same settings, folding the same clothes etc. can become very trivial. Also, working full time in “other’s” environment, can lead to the employee not feeling comfortable, or able, to relate him/her self to the settings.

Therefore, involving the employees in how the settings are set up, can create the notion of a “home atmosphere”, and make the employee create an environment they can be proud of. Another way, they visually can display their worth.

The rationale, of keeping the employees in one department, is to make the employee more aware of what are stocked in specific shop-areas, and would maybe feel a greater obligation to the specific department, where terms, such as honour, can come in. Also a notion of feeling attached to a specific department, could make it easier to implant a reward system in the company.

Reward systems

A major contributor to job enrichment is of course rewards. Referring to previous mentioned psychological contract, an expectancy of a reward does not necessarily mean higher wages or bonus. The fact, that the store is known for its high class luxury image, can attract employees, who simply want to learn, improve, and get as much information as possible. A reward could be to offer the employees training courses, and match their requirements for achieving more knowledge, best possible.

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The case study reveals an unequal relation of rewards within the organisation. The private shops are an extension to “Imperials’” shops, but with much better conditions, in terms of work environment and benefits. Therefore Imperial should try, of course, and match these conditions best possible.

Figure 14.4 (p359 Management), illustrates the Equity Theory and role of social comparison. The model calls above mentioned example; Perceived Inequality.

The Expectancy Theory is illustrated in figure 14.5 (p.360 Management). The Expectancy Model (as with the psychological contract) is explaining the common sense of expectations: “if you work hard, you will get rewarded”.

In this case, “Imperial’s” employees experience a “double” Perceived Inequality: There is no relation between working hard, and the outcome/ reward. Also, the private shops receive better awards, even though they produce the same piece of work – or even less.

Page 364, Management, describes 4 major reinforcement factors: Positive Reinforcement, Negative reinforcement, Punishment and extinction.

The management has already made use of the punishment by sacking all suspected employees. As all employees already were given minimum wages, the management could no longer use the negative reinforcement, to e.g. reducing the wages, if the goals were not met. The management could of course criticise the employees each morning, when the goals had not been met, but it is doubtful that “fighting negative with negative”, would have a positive outcome, in an already negative atmosphere.

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As the employees were not given any bonus arrangement or attractive benefits, the management cannot use an extinction, which is removing some of these extra benefits – or not offering them the “annual X-mas party” (- which had already been removed, as part of the cut down).

In other clothes shops/ department stores, a bonus arrangement is provided, what could also be brought in as an experiment in this store. A bonus can work in different ways: For example as a fixed annual bonus, paid if the goal of the year is reached. It could also be a monthly percentage of the turnover, or even weekly.

This can also then work as individual bonus, a group/ department bonus, or as a bonus to the organisation as a whole.

As the management was clearly not visible to the floor staffs, an individual bonus/ positive reinforcement, can be difficult to justify and control.

Only if the store managed to organise its staff in such way, that the individuals could be attached to a specific department, a “group reward” could be made possible. The management could, of course, also decide to pay a bonus to the entire floor (all gents shops), but it is likely that an employee would feel more obligated to a group of 10, in comparison to a group of 100, and the bonus would then loose its meaning.

The outcome, of introducing these rewards and benefits, could boost the motivation to achieve the next goals. However, what is most important, is to appreciate the employees for the extraordinary work they do already provide, in this hard time, and focus more on creating an atmosphere, that is comfortable for both staff and customers, in order to turn the “black circle”

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Providing staff uniforms/ remarkable discounts, is also of importance, in order to represent the displayed clothes to the stores’ customers. As the turnover of clothes is often over 50%, it can be a relative cheap way of rewarding the store’s employees, as their can also be a psychological effect related to receiving a widget, worth 100 dollars on the label, but which only costs the store e.g. 50 dollars, what can make the staff feeling “extra” rewarded.

Conclusion

Many of the management theories, used in above examples, have often been seen and perceived as being common sense. Therefore it has also often surprised many employees; that what seem so obvious and straight forward, often can be prove to be an impossible mission to carry out.

The essay has come up with a lot of suggestions to improve the attitude in the work place.

It is the essay’s conclusion, that it is important to use all the sources of information available in the company. It is important to use the staff as monitor, and minimise the gab between the top management and the floor staffs - who carry out the final work, and has the customer contact – what is the foundation of the company’s existence.

As an “after play” it will be mentioned, that the company was bought up few years later, after an investment in e.g. another shop design, failed to stop the customer defection.

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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)

The board - Consists of two family members of original owners, and 8 other members, who are also active in other big financial companies etc.

CEO Financial Director

Department manager - Housing

Finance/ HR

Department manager Clothes

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 300)

Food

Store manager (x 3) Floor staff (x 50) 12

Bibliography Primary source: Author: Title: Edition: Editor: ISBN

Schermerhorn, J. (2005) Management 8th John Wiley & sons 0-471-45476-1 Related readings:

Author: Title: Edition: Editor: ISBN: Author: Title: Edition: Editor: ISBN: Author: Title: Edition: Editor: ISBN:

Ashkanasy, N.M./ H채rtel, C.E. J. Emotions in the workplace: research, theory, and practice Zerbe, W. J. 1567203647 ---------Dalton, M. (c1966) Men who manage: fusions of feeling and theory in administration New York: Wiley ---------Hopkins, T/ Laaman, L.L. (c2003) The certifiable salesperson: the ultimate guide to help any salesperson go crazy with unprecedented sales!

Hoboken, N.J: Wiley 0471478695 ----------

Author: Title: Edition: Editor: ISBN: Author: Title: Edition: Editor: ISBN: Author: Title: Edition: Editor: ISBN:

Lancaster, W. (c, 1995) The department store: a social history London; New York: Leicester University Press 0718513746 ---------Locke, E.A. (c2000) The Blackwell handbook of principles of organizational behavior Oxford, UK; Malden, Mass., USA: Blackwell 0631215050 ---------Riggio, R.E. / Murphy, S.E. (c2002) Multiple intelligences and leadership Mahwah, N.J.: Lawrence Erlbaum Associates 0805834664

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Journal Title: The Structure of Inequality: Conceptual Issues and an Analysis of Salespersons in Department Stores Journal: American Journal of Sociology, Jul92, Vol. 98 Issue 1, p67, 38p

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