Whole Foods Markets - Comparative Analysis Evaluating Business Success - Research Paper Example

ORGANIZATIONAL BEHAVIOR Comparative Analysis to Evaluate Business Success TABLE OF CONTENTS Introduction ……………………………………………………………………….. 3 Framing of the Research ………………………………………………….. 3 Organizational Behavior Aspects: ………………………………………………… 4 The case of Whole Foods Market………………………………………….. 4 The Case of The Kroger Co ……………………………………………….. 6 The Case of Safeway Inc …………………………………………………. 7 Comparison and Contrast of Organizational Practices at Supermarkets.. 9 Behavior policies and practices and its impacts on productivity and ……………... 9 Diversity Management Practices ………………………………………………… 10 Organizational Behaviour Motivational Theories ………………………………… 11 Leadership and Management characteristics………………………………………. 12 Ethics in Management and Leadership ……………………………………………. 13 Formal and informal power structures ……………………………………………. 14 Conflict Management …………………………………………………………….. 14 Mechanistic and organic structures of organizations ……………………………. 14 Conclusion ……………………………………………………………………….. 15 References ………………………………………………………………………… 16 Introduction Progressive organizations in today’s business environment look and act very differently from those of past years. Various factors like intense competition, radical changes in marketing techniques and constantly emerging computer and information technologies have greatly influenced such organizations to come up with new features, new ideas and innovative strategies. When it comes to the supermarket industry, a good number of large companies plays vital roles in the market with more effective ways to set up high performance working and positive business environment with successful workers and highly effective managerial and marketing strategies. Out of the best performing grocers in the US, Whole Foods Market, Safeway and The Kroger Co are some of the very popular names, each in rigorous competition with the other, that are setting up powerful business strategies in order to sustain competitive advantages. This piece of research work is about the success keys and organizational behavior that these companies have set up in their business way. This paper examines the organizational behavior aspects that has led Whole Foods Markets to its success path, in comparison and contrast with two other major grocers in the US, namely Safeway Inc and The Kroger Co. Framing of the Research This research paper focuses on the basic organizational behaviour aspects of each companies and explains how the behavior policies and practices impacted on their business performance. Various organizational theories and practices like diversity management, motivational theories, leadership and management aspects, ethics in management, formal and informal power structures and conflict management styles are detailed in the paper. Organizational Behavior Aspects: Human capital is one of the most powerful assets of a company. Schermerhorn, Hunt and Osborn quoted Stanford Scholar Jeffery Pfeffer’s points “ People are an organization’s most important assets” (p. 1). Organizations that are able to create positive work environment, encouraging human resource practices and progressive learning atmosphere will be able to gain better competitive advantages through increased productivity and better returns as well. The very basic principle of Organization Behavior is that people are the key to success, especially in today’s fierce competitive environment. According to the words of Virgin Boss and Richard Branson, the only one thing that keeps your organization alive is the people you work with. People within an organization is primary and the rest all the rest is secondary. Every single employee can make greater difference and therefore motivating them and finding the best are some of the basic things an organization must be aware of (Buelens, Kreitner and Kinicki, p. 6). A thorough look in to the organizational practices of Whole Foods Market in comparison and contrast with its competitors, The Kroger and Safeway, can help us understand how different organizational practices have been applied by these companies and how these could help them achieve their organizational objectives. The case of Whole Foods Market Whole Foods Market, one of the very successful grocers in the US, with an annual revenue of $ 8.75 billion is employing more than 43,000 people throughout more than 190 stores (Yahoo Finance). At its core business strategy is its motto ‘ Whole Foods, Whole People and Whole Planet’ which is the key component to a better communication to both its employees and customers (Stern and Ander, p. 93). This is not its working philosophy but also a motive to structure a unique organizational culture. The Whole Foods Market, as described in its website, is an organization that establishes a standard for excellence in food retailing. It always finds its business success through ‘customer satisfaction, team member excellence and happiness and larger community support’ (Bateman and Snell, p. 139). The above strategic goal illustrates how it shaped its organizational behavior with an aim to achieve customer satisfaction and public support through ‘team member excellence and their happiness’. Whole Foods Market uses Strategic map to provide a tool to its managers to communicate their strategic goals to its members and enable them to play their parts that they are expected to play in achieving the organizational goals (Bateman and Snell, p. 139). The organizational success and positive work environment can be achieved when people work together in the organization to accomplish a specific objective and with some kind of formal relationship among them. Newstrom and Davis identified four basic elements that are people, Structure, Technology and Environment, because, people use technology, to get their jobs done and therefore there is an interaction of these four elements (p. 5). Whole Foods Market recognized that customer satisfaction and larger community support are two very basic keys to success and this can be achieved only through ‘members excellence, better team playing and their happiness through motivation, incentives and positive work environment as well. The Whole Foods Market has found ways to achieve High Performance Working through Organizational learning and employee motivation as well. for instance, it has a compensation policy that no executive can earn in salary and bonus more than 14 times what an average Whole Foods market employee makes (Schermerhorn, Hunt and Osborn, p. 34). This compensation policy is designed mainly to encourage employees and tem members. The Case of The Kroger Co The Kroger Co, another successful supermarket in the US, with an annual revenue of $ 79.78 billion, is employing more than 334,000 through its 3250 stores. As it comprises of more number of stores and a very large number of employees, the lessons from its organizational structure, behavior and work environments will help understand how different organizational structures bring business success. The primary mission of The Kroger Co is ‘to be the leader in the distribution and merchandising of food, health, personal care and related consumable products and services’ (Abrahams, p. 279). In order to achieve this specific goal, The Kroger has established an organizational structure that it will strive to satisfy their responsibilities to the shareowners, employees, communities and other stakeholders. As part of its organizational behavior and organizational culture, it always treated its employees fairly and with respect, openness and honesty. It always solicited to employees’ ideas and rewarded meaningful contributions to the success of the company. It valued the ‘diversity of America’ and it strived to reflect the same in its workplace environment. It always encouraged its employees to be active, responsible citizens and allocated sufficient resources only to enhance the quality and standard of its employees’ life (Abrahams, p. 279). The above mentioned mission of The Kroger describes how it has structured its Organizational behavior. The Kroger has given extreme emphasis on motivating and promoting better environment to its people, because, it recognized that people are primary to the success. It considered almost all aspects of their employees betterment like their quality of life and standard of the living conditions. Treating the employees fairly, motivating them and ensuring the quality life of the employees are basic factors to enhance high performance working in an organization. Kroger’s greater emphasis on employees’ motivation, standard of life fair treatment shows that it has been on the way to achieve High Performance Working. According to the AMO theory of Purcell, , the High Performance Working can be achieved through enhancing the Ability, Opportunity and Motivation of the employees (Macky and Boxall, p. 539) . More specifically, Ability, Opportunity and Motivation leads to High Performance Working (Gerhart and Barry, 2005). The Case of Safeway Inc Safeway Inc, one of the largest food and drug supermarkets in the US, with an annual revenue of $40.94 billion, is employing 186,000 through around 1800 stores (Yahoo Finance). Safeway is highly committed to employee well being and employee diversity. Davenport and Barrow found that Safeway gives greater priority to the training and development of the employees. it has introduced a program called ‘Looking to the Future’ in order to help its people gain new skills and it provided a personal assistance program. Many people benefited from extending their roles and thus obviously motivating hem with more experiences. It has structured a very effective organizational behavior as its managers have better roles in leadership as they were given bonuses and rewards as long as they manage uncertainties surrounding them. As a very basic tenet to its success keys, it identified some 300 individuals in head office and some other areas whose roles, experiences, knowledge and skills made it necessary and they are retained, along with retention bonuses as well as rewards (p. 87). In short, Safeway has found a successful organizational structure by motivating both managers and employees by providing them with greater roles, rewards and bonuses and also retaining more knowledgeable and skilled people. Reward and recognition are most powerful tools of all the available Human Resource management strategies for motivating the people. With rewards, employees’ attention will be directed towards most important needs of their work as well to promote them put more efforts in (Jackson and Hitt, p. 417). The Safeway created positive business environment and satisfied employees mainly through rewards and recognition system. Attracting and retaining knowledgeable, skilled, well performing, capable and trusted employees is more similar to intrinsic type of motivation (Hosie and Sevastos, p. 305). Safeway’s strategy to retain 300 key individuals by providing additional pay and retention premiums is not only a way to motivate them but also a way to establish High Performance Working and to create an organizational learning and knowledge sharing environments within the workplace. Comparison and Contrast of Organizational Practices at each Supermarket All three supermarkets have specific goals and missions to achieve positive work environment and satisfied employees. All the three grocers found different ways to reach High Performance Working, Whole Foods by organizational learning and encouraging employees, The Kroger by AMO theory- enhancing employees’ Abilities, providing Opportunities and Motivating them, Safeway by reward, recognition and retention of skilled people. Behavior policies and practices and its impacts on productivity and performance Learning and successful organizations is always characterized by strong and positive culture that value human capital and stimulates earning, knowledge share and knowledge improvement in a High Performance context. As Schermerhorn, Hunt and Osborn pointed that in an organization with strong and positive cultures, the effect on members will be substantial and enduring. In those businesses with weak organizational cultures, the effect will be dispersed and less consequential (p. 34). High performance organizations are those that that have its own cultures providing its people a clear vision of organizational goals, encourage their learning attitude and motivate them towards achieving the goals. Whole Foods market, Safeway Inc and The Kroger Co supermarkets are among the top 20 most successful U. S grocers. There are a number of managerial and organizational strategic factors that led to their unique success. Among these factors are High Performance Working, employee learning, employee motivation, reward and recognition and so on. To be specific, the ‘executive salary and bonus restriction to be no more than 14 times of the earning of an average employee’ at Whole Foods is basically an organizational behaviour policy that has motivated its employees. Similarly, the retention of skilled and experienced employees at Safeway has helped it establish a learning as well as positive work environment. The emphasis on employees’ opportunities, well being, fair treatment and motivation at the Kroger also has brought almost similar outcomes. Diversity Management Practices As Jones noted, differences in the gender, race, religion and national origin of the members of an organization can have significant implications for the values of the organization’s culture and also its success (p. 14). The population of America includes different ethnic groups, race, religion and therefore managing the diversity in an American workplace context is not an easy task. The task and challenge is same for all the three companies, however, both Safeway and especially the Kroger have more number of employees as compared to that of Whole Foods Market. The views, individual preferences and cultural values are to be considered mainly when there are minority groups. Buelens, Kreitner and Kinicki found that organizations, often in compliant with national or international laws, have to take strategic decision of whether Affirmative action or Valuing diversity to be considered (p. 38- 39). Affirmative action focuses on achieving equal opportunities in an organization where as Valuing diversity emphasizes an awareness, understanding and recognition of human differences among the members. The Kroger Co has valued the ‘Diversity of America’ and tried to manage it effectively in its workplace (Abrahams, p. 279). The cases of Whole Foods and Safeway are also not different. They all valued diversity and managed the diversity of America in an effective way. Safeway has always been showing sincere commitment to employee diversity, especially to the people with disability. Safeway has more than 10,000 disabled employees in its stores and this number is increasing (Renda). Organizational Behaviour Motivational Theories All the three companies motivate their members in different ways in order to achieve high performance working environment. Whole Foods Market motivates by restricting the bonus and pays of executives, where as the Kroger motivates by treating them well and providing better opportunities and Safeway motivates its members by reward, recognition and retention strategies. More specifically, these three companies have applied different theories of motivation to promote their employees. “Motivation is individual forces that account for the direction, level and persistence of a person’s effort expended at work” (Schermerhorn, Hunt and Osborn, p. 120). All the three supermarkets have applied different strategies to motivate its members, but, obviously, that strategies account for the direction of their efforts expended at work. Whole Foods Market implemented Two-factor Theory of Frederick Herzberg. According to his theory, there are two classes of factors, namely hygiene factors and motivator factors. Hygiene factors are sources job dissatisfaction like organizational policy, base wage, salary, working condition etc. Motivator factors are sources of job satisfaction like achievement, recognition, responsibility etc (Schermerhorn, Hunt and Osborn, p. 124- 125). By bringing a policy that no executive shall be paid bonus plus salary more than 14 times of an average employee. According to the theory of Herzberg, the job dissatisfying factors (mainly salary variances) are removed and thus it helped motivate the employees. When it comes to the motivation strategies of Safeway, it also obviously applied Herzberg’s Two factor theory. Reward, Achievement, Recognition and Retention are motivational factors (Schermerhorn, Hunt and Osborn, p. 125). When these are facilitated, the members will be motivated. Safeway’s strategy of recognition, reward and retention of skilled employees seems to be a most powerful tool for motivating the employees. The Kroger has always been treating its employees fairly and with respect, openness and honesty. Employees’ ideas are considered as meaningful. The Kroger’s example of motivational practices highlight the Equity theory of J. Stack Adams. According to him, people gauge the fairness of their working conditions in comparison with others. According to the theory, any level of inequity is a motivating factor (Schermerhorn, Hunt and Osborn, p. 126). When people at Kroger get extra fair treatment and reward for their works and contribution, they may believe that the rewards and fairness they receive are more favorable than others get from other companies. Leadership and Management characteristics Whole Foods Market, The Kroger and Safeway remain to be good examples of better leadership and management. They have been successful in its business and marketing ways because, their organizational activities are controlled, supervised and managed by qualified leaders as well as managers. An organization with no effective leadership and management will obviously be a failure. Leadership is an interpersonal influence that gets an individual or groups of people to do what the leader or manager wants to be done. One of the main Leadership theory is Path-Goal Theory of Leadership which states that effective leaders influence the employees to satisfy them and to increase their performance by making their need satisfaction contingent on effective job performance (McShane and Von Glinow, p. 422). Successful organizations will mostly have effective leaders and they bring success by strengthening the performance to outcome expectancy and by ensuring that employees will perform the desired tasks. According to the Path-Goal theory, leaders influence rather than just leading them, controlling and directing them. When they are influenced, other managerial and leadership functions can be done more easily and effectively. When it comes to Whole foods, Kroger or Safeway, the leadership and managerial roles can be explored from a number of competitive strategies that they implemented and found success with it. For example, Whole Foods’ culture is structured in a way that teams and team members are empowered to make decisions in matters that affect them (Wright and McCrea, p. 247). Empowering employees with decision making power is not only a way to motivate them but also an effective way of leadership to influence them and thus to get things done. Ethics in Management and Leadership Managing and leading people, especially diverse, can potentially create a number of ethical issues. According to Archie B Carroll, there can be immoral manager, amoral manager and moral manager. Immoral manager doesn’t subscribe to any ethical and moral principles like equality among employees, multiculturalism etc. The amoral manager is often failing to consider the ethical principles and acts unethically at different times, but unintentionally. The Moral manager incorporates ethics and its principles in to his personal goals. Or him, behaving in ethical way is his goal. Out of three models, it is found that most managers tend to behave amorally (Schermerhorn, Hunt and Osborn, p. 34) Formal and informal power structures People and their role and power in any organization can either be formal or informal. A formal group is officially designated to serve some specific organizational activities and therefore their power is also formal. Most critical and strategic decision making and controlling power normally are designated officially and therefore these are formal. Informal group and their power are not officially designated (Schermerhorn, Hunt and Osborn, p. 198). Conflict Management It is very likely that an organization faces various conflicts. These conflicts can be addressed in many ways. Conflict can be managed by eliminating the reasons for the destructive conflict. Schermerhorn, Hunt and Osborn identified both direct and indirect ways of managing conflicts. They considered appeal to common goal, hierarchical referral and altering scripts and myths as useful methods of indirect conflict management. Avoidance, accommodation and compromise are the other three useful tools for direct conflict management (p. 344- 346). Mechanistic and organic structures of organizations In today’s developed business environments, most organizations are bureaucracies as they rely heavily on division of labor, hierarchical control and promotion by merit etc. such organizations are either mechanistic type or organic structured. The mechanistic type of organization stresses on rules, policies and procedures and they emphasize vertical specialization and control. They have well-documentation system. In contrary, the Organic form of organization is one that emphasizes on horizontal specialization and control. This organization relies on others’ judgments and thus things are not well formalized (Schermerhorn, Hunt and Osborn, p. 400). Whole Foods’ pay restriction to executives to motivate employees, Kroger’s emphasis on retention of 300 key skilled employees and Kroger’s incentive plan for healthier employees (Johnsen, 8) illustrate that these companies are more mechanistic type rather than being organic type. Conclusion This research paper has highlighted various organizational behavior theories and practices with respect to Whole Foods Market in comparison and contrast with Safeway and The Kroger Co. The study of organizational practices of these three top listed grocers in the US give an overview of how different organizational practices bring positive outcomes and high performing work environment. Different methods of motivation, but ultimately bring a similar positive outcome- High Performance Working and successful business contexts. This paper also has presented brief overview and theoretical analysis on various topics like conflict management, mechanistic and organic structures, formal and informal powers, ethics in management and motivation theories. . References Abrahams ,J, Three hundred and one corporate mission statements from America's top companies, Revised second edition, Ten Speed Press, 1999 Bateman, T. S and Snell, S. 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