Business Development in Licensed Retailing - Dissertation Example

FridgeCom Case Study Table of Contents Question 3 Question 2 11 Reference 17 Bibliography 20 Question In the corporate world, leadership has a great role to play to make the organisation achieve its corporate goal. Therefore, leadership can be considered as one of the vital factors for the organisation. Even Andrea Jung, who made Avon a profitable and successful company, has pointed out that a manager must possess four vital components to be successful leader. These are: passion, compassion, courage and an attitude to make a difference (Hitt, et al., 2006, p.278). Before talking much about different leadership styles and its contribution in an organisation, it is quite essential to develop a clear understanding that who is a leader and what the term leadership stands for. Generally speaking a leader is a one who can lead his or her followers to achieve a common goal (Haslam, 2004, p.53). Scholars on time to time basis made several attempts to define leadership but they realised that “leadership has been a complex and elusive problem largely because the nature of leadership itself is complex” (Daft, 2007, p.4). Traditionally leadership was viewed as an influence of leader over the followers to achieve the common goal but in contemporary business environment leadership can be considered as “the process of producing direction, alignment and commitment in collective” (Velsor, 2010). Many a time, people do get confused with the concept of leadership and management. Leadership is just one of the basic characteristic to be possessed by the manager to fulfil their job responsibilities. Apart from the leadership quality, a manger must possess other qualities like motivational skill, time management ability and efficiency to conduct planning, managing and execution of day to day activities (Cherry & Jacob, 2005, p.367). However, it must be understood that a manager may not possess leadership qualities and a leader not necessarily be a leader. The leadership style followed by different leaders varies from individual to individual. These leadership styles are influenced by several internal as well as external factors. The internal factors are specific to a leader and these can be called the leadership traits. Again, the external factors such as the organisational culture, the job responsibility and the internal situations are equally important. In the early days the scholars identified some of the vital traits which must be present in a leader and this theory was called “trait theory”. This theory was proposed by Sir Francis Galton in 1869. Some of the common teats to be possessed by the leader were need for achievement, intelligence, decisiveness, self confidence, initiative and supervisory ability (Manning & Curtis, 2002, p.16). As per this theory a leader is born with these characteristics but researchers found several leaders who succeeded in motivating their followers to achieve the common goal but they do not fit well in the trait theory as a leader. One of the exceptions is servant leaders. These leaders do not possess a charming personality neither they are achievement oriented; rather they are more inclined in serving the followers so that they can achieve the common goal. Even Jesus has been called a servant leader. Therefore, it can be concluded that the concept of leadership provided by the trait theory was not much effective in explaining the concept of leadership and different leadership style. After trait theory, the researchers who criticised presence of specific trait said that leadership is an outcome of specific behaviour followed by the leaders after considering his/her characteristic as well as the external environment. They finally introduced the behavioural theory of leadership. As per Lewin’s behavioural theory, a leader may possess either one of the leadership style proposed. The three different types of leadership style are: authoritarian, democratic and laissez-faire (Borkowski, 2009, p.174). Authoritarian is the one who prefer not to delegate the responsibility and thus take majorities of the decision by oneself. These leaders are dominating and aggressive in nature. In the given case of FridgeCom, the MD of the company, Mike Wilson is a typical example of an authoritarian leader. As per the information provided in the case study, he hardly prefer to delegate responsibilities to the subordinates and if he ever has to pass on the responsibility it’s just for his own sake as because he needs time to play golf. This business was started by his grandfather as a family business. With time the business has expanded a lot and today it is a well diversified international brand but till date the MD possesses the paternalistic family approach. His can be concluded as a person who prefers to dictate his own decision and others have to just accept it. Therefore, he is a perfect authoritarian leader. Lewin’s behavioural theory also identified democratic leadership style where the leader provides more authority to the followers to assist the leader in achieving the common goal. Such leaders are very different to the MD of FridgeCom. In contemporary management environment majority of the top level managers prefer to follow democratic leadership style as this is more suitable in the present work environment (Grint, p.157). Laissez-faire style of leadership is different from both autocratic as well as democratic style. Such leaders provide no specific direction to the followers and thus the followers are free to do whatever they feel like (Lumpé, 2008, p.9). The management grid proposed by Blake and Mouton was based on two parameters of leadership. These are ‘concern for people’ and ‘concern for task’. They segregated each of the components on nine points scale. Therefore, the manager who is neither concern for the task and nor for the people is on 1,1 matrix and it is called “Impoverished management”. In the given case study of FridgeCom none of the managers belongs to this category because all of them are committed to the organisation so they possess high concern for the task. The managers who have high concern for the people but have low concern for the task belong to 1,9 matrix and are called ‘country club managers’. These persons are interested in fulfilling needs of the people and thus they rely more on relationship. Again, none of the managers of FridgeCom belong to this category because of their high concern for production. Figure 1: Management Grid (Source: Griffin, 2006, p.475) The managers who are high on the concern for production but low concern for people are called “authority compliance” and they occupy the 9,1 position in the managerial grid. These people are more interested to improve the production volume and quality, so they pay less attention to the human element. Generally, the managers who belong to the floor and are responsible for supervising the ground level workers commonly follow such a typical leadership style. In the case study of FridgeCom, David (Dave) Gill, the finance director is the one whose belongs to this category. In the given case it is clearly mentioned that his sole motto is to cut down the operational cost and to improve the profitability state of FridgeCom. He is so much focused about the cost component that hardly bothers to pay attention to any other matter. As per Dave, an organisation should use only the cost and profit parameter while making any vital decision. The finance director believes that all other parameters as “woolly thinking” and thus he pays no attention to them. Dave is efficient in his functional area as he developed efficient management accounting software to monitor and to control cost incurred throughout the organisation. However, he failed to understand that in an organisation, the human resource is one of the vital resources which need special treatment as compared to other resources such as land, capital and material. Therefore, his negligence towards people who work in the organisation and excessive focus over the production makes his leadership style a typical example of authority compliance. The managers who have equally high concern for people as well as for the product belong to 9,9 in the management matrix and such a leadership style is called ‘team management’. These leaders assist the followers (subordinated) to achieve the common goal by providing them required knowledge and skill. They lead by developing a strong bond of mutual relationship and respect. In an organisation the concept of team is quite common. These teams act as a highly interactive group where people have to put their effort together for achieving the set target. In such circumstances the team leader is responsible for motivating the members and providing them with the required technical assistance so that they succeed in their task. In FridgeCom, Doug Statin is the one whose possess high concern for people as well as for production. He is with the company from last twenty years and at present working as a team leader on the production floor. He knows how to manage the workers by taking care of their needs and requirements, and motivating them to perform high. He is always there to assist the workers with his best of the ability. His caring nature makes him a loving and caring leader among the members working under him. His popularity in the production department makes his an ideal leader to be followed. His experience, his binding with the subordinates and with workers makes him highly popular. Not only people of his department but employees and managers from other functional departments also respect his lot. All this information is enough to conclude that Doug Statin’s leadership style is influenced by a charismatic leadership patter (Charteris-Black, 2007, p.12). The management grid also identified a group of managers who are neither high nor low in any of the two parameters. They lie on 5,5 position in the matrix and the leadership style is called ‘Middle of the road management’. These managers try to maintain a balance between concern for people as well as production. Their main aim is to maintain a stagnant condition in the organisation so that employees can finish up their assign task by maintain required quality standards. At the initial stage of one’s career a manager may follow such managerial style to be in the safer position. Even in a well established company like FridgeCom, Sandy McMahon belongs to this category. As she possesses less amount of job experience (just two years as production manager) she is not that much efficient in handling politics of organisations. However, her subordinates consider her competent in her work and the performance of the production department under her supervision is performing as per the requirements. With time, Paul Hersey and Kenneth Blanchard introduced “situational leadership theory” which is extension of other models and theory proposed under behavioural theory. These models specify that a leader should be efficient in changing his/her leadership style as per the requirement of the followers. A leader must set a balance between supportive behaviour as well as directive behaviour to assist the employees to finish the task. Figure 2: Situational leadership model Source: Blanchard, 2009, p.77 If a manager fails to change ones required leadership style, he/she may fail to achieve to manage the situation. Thus, such managers lose control over the situation under adverse condition. The human resource directive, Veronica King, is one such manager who lacks the ability to change the leadership style to cope with adverse situation. As pointed out in the case study of FridgeCom, she possess a sound track record of managing the HR related activities but in harsh situations she fails to maintain consistency and start using managerial speaks without knowing exactly that she is talking bout. In the contemporary management style, the transformational leadership style is gaining high popularity. A transformational leader is a combination of “charismatic, visionary and inspiring” (Marshall & Coughlin, 2010, p.3). Sebastian Parker, who is at present working as a consultant possesses the required characteristic of a perfect transformational leader. He is often hired not just because of his technical knowledge; rather his ability to provide smooth, quick thinking and diplomatic problem solving to the client makes his so popular. Helen Wong, who is working under his leadership, is quite confident about his leader because he takes utmost care to pass on the technical knowledge and assist her to develop the required efficiency to be a successful consultant in the international market. The above section discusses about some of the well known leadership styles using leadership theory which have been proposed on time to time basis by several researches and scholars. To further demonstrate the leadership style, real life characters (managers of FridgeCom) have been used and their specific leadership style is discussed in details. Such application of theory in the practical life make whole of the discussion interactive and interesting. Question 2 The labour force of any organisation primarily comes from the external labour market or the individuals who have been seeking employment actively. Human resource management helps to identify the best people who fit into the technical and social system of the organisation. The process of recruitment and selection is specifically important for the purpose (Pirakatheeswari, 2010). The role of information system has increasingly gained importance in the field of human resource. It is used as a tool by human resource professionals. The internet use has also increased in the HRM applications. Technology is used for searching talent and online screening of candidates. Training is imparted online. Thus it is seen that today technology plays a vital role in human resource practices. It is apparent that the biggest problem facing the organisation is its staff turnover. It is becoming extremely difficult for the company to retain its staff as they have been leaving from all levels of the company. This has been changing the nature of the workforce which is consequently causing an impact on the training functions of the company. This could be considered as a technical problem for the company, but the human resource issues cannot be ignored. Could the human resource and social issues be dealt with efficiently, the technical problems could have been brought under control to a considerable extent. When staff leaves the company, it is to be realised that they do so because of some unfair treatment on the part of the company. It must also be realised that the company’s success has been because of the staff members and that their contributions have proven to be beneficial for the company. Thus the contributions of the staff should be valued and the management should make attempts to retain them (Business Link, n.d.). The company tries to solve the human resource issues using information technology. Information technology has been used to transform the human resource management to strategic human resource management. “This strategic role not only adds a valuable dimension to the HR function, but also changes the competencies that define HR professional and practitioner success” (Boateng, 2007). In today’s competitive environment, the cutting edge of an organisation is determined by the speed with which it is able to respond to environmental changes, both internal and external. A computerised and designed HRIS can provide the relevant information system and analysis in a short span of time. The purpose of using the system is that it helps to maintain records in a systematic manner which allows easy access and retrieval of data (Pirakatheeswari, 2010). The retention of employees would be made possible by developing an effective HRIS which is a technical responsibility of the information system department. However, the system would fail if it fails to address the human resource issues. It should cover the areas of industrial relations and personnel management like training, development, counselling, communication and job enrichment. This is the reason why it is said that the problem in FridgeCom is not a purely technical issue. The effectiveness of HRIS would depend on the consideration of both the social and technical issues together. Issues like relationship between management and employees and employees themselves cannot be brought under the purview of technology. However, these are considered to be some of the major reasons of high rates of employee turnover. Factors like job stress, employee recognition, commitment and satisfaction are some of the major areas which need intervention for the curtailment of employee turnover. It is the responsibility of HRIS to address the human side as well as the technical side of the problem of employee turnover. It would not be judicious to separate the two aspects; rather they have to be addressed together. It is felt that the immediate problem would be to provide induction to the new employees. However, the real problem would be to fight employee turnover and devise a more strategic way of handling and identifying reasons why the company has been losing its staff at an alarming rate. This has also been causing a negative impact on the reputation of the company. HRIS depends heavily on accurate, timely and comprehensive data on the jobs and employees. The information system provides planners with the organisation and industry information (Compton & Nankervis, 2009, p.191). It is true that an important aspect confronting the organisation is developing the technology that supports the HR policies. It is evident from the case that Veronica, who is the Director of Human Resources, has to consult with a number of people to get some figures related to the various aspects of workforce. The present system in the company is extremely haphazard and unsophisticated. There was least accountability in the system and no one had taken the responsibility of maintaining the data for the last eighteen months and the data was highly inaccurate, redundant and unfit for the purpose of decision making. This called for the development of an IT enabled system which would reduce the gap between the business strategies and the HR strategies (Budhwar & Bhatnagar, 2009, p.201). However, developing the system would not be effective in fighting employee turnover. Turnover is not only about filling the vacancy. It requires a thorough research on the present status of the organisation. Turnovers may result from causes beyond the control of the management. Incapacity of a staff may cause him to leave the organisation (Ongori, 2007, p.50). The relationship between management and employees play a critical aspect of employee turnover. There should be a strong communication between the management and employees to reduce the gap between the two. The former problem can be managed to a considerable extent by the introduction of a proper program of training and development of employees. Training and development programs help in developing a resource which would try to achieve the organisations goals. Staff training has improved productivity of organisations and helped reduce employee turnover in the long run (Olaniyan & Ojo, 2008, p.326). Training plays the most effective role in improving the productivity of work, the quality of work skills and knowledge. On the other hand it reduces waste, accidents, lateness, absenteeism and most importantly turnovers (Butler & Park, 2005, p.14). An important way beyond the capacity of information technology would be getting the employees to participate in the decision making of the management. Research conducted has proved that there is a positive relationship between training and turnover (Jalette & Larose, 2006, p.231). Employees’ satisfaction depends predominantly on the decisions of the management. The participation of workers on the decision making of the management would give them a sense of security and satisfaction. This is one aspect which cannot be handled by information technology. It must come out of the management’s initiative and control. It is true that allowing the employees to participate in the management would increase their involvement with the work and thus reduce turnover. It is important that the management look into the psychological aspects of employees instead of only the technical aspects. It is quite clear that the problem faced by FridgeCom cannot be segregated as either technical or social because HRIS deals with both these issues. At present the company is facing high rate of employee turnover which has adversely affected all the specific functions. The production department is the one that has suffered the most because high rate of turnover left the production department with inadequate number of employees and hence the production cycle fails to achieve its daily target. As per the director of production department, it is the responsibility of the human resource department to supply required amount of trained labours. Therefore, the production department considers it as a technical problem because the HR department failed to replace the vacancy by trained new employees. However, the HR department has a different point of view. The director of the HR department explains that such a high turnover rate is quite abnormal as compared to the historical trends of employee turnover. Such high rate of turnover is creating an extra pressure on the HR department because within a short span of time it has to select and train the newly joined employees to take up the specific job responsibility in the company. This extra pressure is disturbing the stability with which the department conduct its normal activities. According to the HR director, there must be something wrong within the organisation’s internal structure which has resulted in the high turnover rate. Therefore, according to the HR director, the main problem is not just technical. The HR department of FridgeCom is very specific about corporate social responsibility and ethical issues. Before hiring an employee or making a contract with any supplier, the company ask for several details to verify that the person is genuine and not involved in any unethical activities. For this, the HR department has to capture several data which make the whole process cumbersome and time consuming. In last few days the HR director has noticed that it is becoming quite difficult to maintain data in a proper manner. Redundancy of data reflects poor data management and outdated information system. Therefore, the company do need a better information management technique which can be used to collect data from different departments and then store them in a centralised data warehouse. Such a centralised data warehouse will minimise the time to be used for inserting data specifically by a single department. The quality of data will improve because discarding the redundancy will make the data more reliable. After introduction of a centralised data warehouse, all the data from different department will be stored in a single storage unit. The data from the data warehouse will be accessible to all the departments; so, as and when the HR manager want to know about any specific information, it can be derived just by a single click. The HR manager has a firm believe that such a new and contemporary HRIS will assist the HR department to find out the root cause behind such a high employee turnover. With the help of proper data mining tools the changes taking place in the performance of the workforce can be studied at a much faster rate. As for example, if the IS system reflects a declining productivity of the employees, then the management can further conduct required inquiry to find out why is this is happening. Is this because of the changes introduced in the management policies or the changing needs of the employees is mainly responsible for this. Such vital information is of great value because the HR department will get a chance to take proactive action before the condition turns worst. This HRIS will have ample information about the employees which can be accumulated from other departments. As for example, information regarding the salary, incentive and other monitory benefit can be directly derived from the finance department. The information about the productivity is available in the production department. Therefore, while conducting the performance appraisal of the employees, the HR department need not to collect specific information; rather all the data can be derived directly from the centralised data warehouse. The process of developing a new HRIS is only possible if all the departments like the finance, production, R&D and HR work hand in hand. While developing the ERP system, all the directive and managers should cooperate with the system department and provide required information as and when required. 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