The Organisational Culture of Marks & Spencer - Case Study Example

Managing Organisational Change Contents The Organisational Culture of Marks & Spencer 3 Types of Organisational Cultures 3 Importance of Organisational Culture 4 The Impact of Organisational Culture 6 Case Study: Marks and Spencer 6 Analysis 9 Conclusions 12 Recommendation 13 References 15 The Organisational Culture of Marks & Spencer Culture is a defined set or pattern of values, beliefs, behaviours and customs shared by a group (Spencer-Oatey, 2012). It is also defined as the way in which people view, interpret, understand and explain things around them (Alvesson, 2012). Culture exists everywhere even in organisations; an organisation is a collection of departments or groups where everyone works collectively to achieve a common goal usually by following a set of procedures and policies. People working in an organisation come from different backgrounds, have different qualifications and work experiences and perform different duties. The organisational culture shapes the values and beliefs of the members of an organisation and binds them together (Cameron, 2008). As the organisational culture determines how they will function, all organisations and businesses whether big or small adhere to their culture. Simply stated organisational culture is “the way we do things here” whereas a more formal definition is that it is the shared beliefs, behaviours, assumptions and symbols in an organisation. It influences the behaviour of the members of an organisation, strategies an organisation adopts to achieve its goals and its approaches to solve problems (Martin, 2006). Types of Organisational Cultures The four types of culture that may prevail in an organisation are clan, adhocracy, hierarchy and market culture (OCAI, 2010). Organisations can either follow one culture religiously or can switch from one culture to another depending on the management style. Clan culture promotes a family like environment whereby the focus is on teamwork and shared goals and values. Adhocracy culture is most responsive to the increasingly rapid changes in the markets which is a dominant feature of today’s industry (Cameron, 2008). The focus of this culture is mainly on risk-taking and innovations. Hierarchy culture follows hard and fast rules which lead to a uniform and stable procedure of carrying out tasks. Unlike Adhocracy culture there is no innovation here rather focus is on ‘doing things right’. Lastly market culture is one where the organisation is goal oriented and its focus lies on achievement and gaining competitive advantage with the main objective being securing the largest market share (Übius & Alas, 2009). Clan culture also popularly known as people culture promotes a friendly working environment. Cooperation and employee involvement are key factors along with corporate dedication to the workforce. The leaders play the role of both mentors as well as father figures. The bond between workers and the top management is one of tradition and loyalty. When organisations follow clan culture they give emphasis to Human Resource development and two-way communication as part of strategy to improve quality (OCAI, 2010). In hierarchy culture it is the formal policies and rules that facilitate the operation of the organisation. In order to fulfill the long-term goals of the organisation, which include organisational stability along with smooth flow of tasks, companies follow structured environment set by the managers (Übius & Alas, 2009). Leadership style is autocratic and leaders act as administrators with interaction between managers and employees happening over policies and procedures. Consistency and uniformity in the procedures carried on in the organisation are most prominent features of this culture. In order to improve quality of the work being done emphasis is laid on error detection, systematic solution of problems and process control (Cameron, 2008) Importance of Organisational Culture Organisational culture is extremely important as it gives the employees a common identity. Through shared norms, perceptions and beliefs, a sense of togetherness is developed which in turn promotes feelings of common purpose. It creates collective commitment and shapes the attitude and behaviour of the employees (Kondalkar, 2009). The culture in an organisation ensures that a healthy competition is created in the work place and it brings all employees who come from diverse backgrounds on a common platform. It also minimises the possibilities of conflicts and an early and quick solution in case a conflict arises (Kondalkar, 2009). It creates useful channels of communication which links employees and facilitates easy flow of information and instructions (Lowe, 2014). A positive organisational culture motivates employees and brings out the best in them. The employees are able to understand their roles and responsibilities better which improves the quality of work and contributes towards the prosperity of the organisation (Lowe, 2014). Whereas positive culture nudges the organisation towards success, negative organisational culture can potentially harm the organisation. In an organisation with negative culture there is a vast difference between words and deeds, unfairness, biasness and dishonesty is common and the level of comfort among employees is low (Van Fleet & Griffin, 2006). There is a lack of commitment and dedication which results in high turnover. The employees feel least motivated, trapped and controlled and this promotes unethical behaviour among employees thereby leading to a number of problems (Van Fleet & Griffin, 2006). Usually poor management is termed to be the reason of negative culture (Hall, 2013). Managers in such organisations take credit for the work of their subordinates. This behaviour inhibits the employees from sharing their work and the spirit of teamwork and collaboration is low which restricts the growth of an organisation. In a negative culture organisation employees are more concerned about personal performance than the betterment of the company and to gain promotions and rewards, they often overstep the boundaries. There is lack of respect, lack of trust and overall a lack of motivation among employees and certainly no room for creativity (Griffin & Moorhead, 2013). The Impact of Organisational Culture The organisational culture can result in the growth and expansion of an organisation or it can restrict its growth. Through extensive research and empirical findings academic scholars and researchers have been able to link the culture of an organisation with its performance (Ogbonna & Harris, 2000). Generally it is assumed that strong organisational culture will take the organisation far but in actual practice, even strong organisational culture can stand in the success of an organisation. Case Study: Marks and Spencer Marks and Spencer was started as a market stall in Leeds in 1884 by Michael Marks who was joined by Thomas Spencer in 1894. Together the two men transformed it into a public company where cloth, food and luxury goods were sold. In 1975, the store branched out and opened stores in Belgium and France. Today Marks and Spencer is a renowned high end store with 766 stores across UK and 418 stores operating all over the world and employs a total of 82,000 people. Marks and Spencer receives 20 million visitors every week (Marks and Spencer Plc, 2013). Marks and Spencer has been in and out of problems since 1999/2000; its sales are not as expected (Alon, 2000). There are various reasons for the plunging sales which has caused a dip in the market share as well. The problems began since 1998 with the sales dropping drastically. The clothing line which was the strength of Marks and Spencer was rejected by most customers for being out of fashion and unexciting. Since then the store is trying hard to recapture its image as the leading retailer of clothing in the UK. On the management front it has transformed its marketing mix, introduced and eliminated products, added services, downsized and reduced its staff, advertised and expanded but nothing seems to work for it and the organisation that was once on the top now occupies an insignificant position in the UK share market. Table I – Annual Financial Performance of M & S (Source: http://www.propertyweek.com/Journals/2013/06/13/s/j/s/Marks-and-Spencer-plc.pdf) Above is a table which shows a steady decline in the profits of Marks and Spencer. Figure I - Market Share Position of Marks and Spencer (Source: http://www.thisismoney.co.uk/money/markets/article-2601371/Marks-Spencer-womenswear-sales-start-recover.html) The above is the market share position of Marks and Spencer. As seen from the figure the market share is not stable and is fluctuating. Market share is the health indicator of an organisation; when viewed from this angle, Marks and Spencer is certainly not healthy. If the sales particularly the general merchandise that deals with clothing and footwear are to observed one will find a steady decline for more than two years. In 2013, the decline continued and in September it was reported to be 1.3 % (Felsted & Oakley, 2013). To counter the declining sale, Marks and Spencer offered a discount of thirty percent (30%) on all clothing but even this step failed to bring any significant result and sale of clothing remained poor. During the Christmas season the sale of clothing remained poor as well and dropped by 2.1 percent. This was quite a shock for the company as it had revamped its line of ladies clothing and launched a new range of autumn and winter wear. This was the third Christmas in which sales did not go as expected. The fashion market share showed no sign of recovery in February as well as it slipped further by 0.4 percentage points (MacDonald, 2014). The sales at Marks and Spencer have also gone down because of an incident in which a Muslim assistant refused to serve pork or alcohol to the customer. The store stood behind its employee stating that no one can be forced to go against their religion; however it outraged the customers and many customers have not set foot in the store since this incident became public. Although on the food department front the store has been performing well and has reported an increase even when the sales of its competitors including Tesco have declined, the incident reflected poorly on the store and can be a cause behind the falling market share. Analysis Marks and Spencer does not follow one organisational culture but instead switches from one culture to another. This has not proven to be a beneficial strategy for them because since the past decade they have been facing a downfall when it comes to the management and relations with the customers. Two strongly prevailing cultures here are Clan and Hierarchal with the latter being more dominant. Another reason for the declining sales and the dwindling market share is the organisational culture of Marks and Spencer. It is more task oriented then people oriented and that is why decision making is limited to the upper hierarchy of managers and the lower hierarchy is simply told what to do. The store management cannot question the policies set by the head office and more than often customers are not happy with the way products especially clothes are displayed. Customers often bump into the numerous mannequins and find such obstacle quite irritating. Instead of a tasteful and stylish display, the customer is bombarded with a plethora of products making it difficult for customers to select the key styles and trends (Saunders, 2013). The shortage of assistants makes things worse for customers who then turn to other stores where clothes are trendy, reasonably priced, tastefully displayed and where the staff is more than willing to help the customers out. Even online stores are difficult to browse and the information is not updated; many irate customers reported that after spending considerable time selecting an item they were told it was not available in any size (Saunders, 2013). There seems to be a clear lack of communication among the head office, the senior managers and the front line desk because of which the comments and feedback from customers is largely ignored. In fact, communication gap exists between customers and the organisation as well. Customers discuss what they want with the sales assistants but it seems that whatever discussion takes place either does not reach the design team or is not considered important enough. Also Marks and Spencer has undergone changes in leadership rather quickly in the past decade or so. From 2002 onwards it has seen three CEOs; although the aim of all three CEOs was the same to boost the sales but the approach has been different. All three CEOs introduced a change in culture; although every new culture is based on the old one, the employees need time to adapt and adjust. Quick changes in leadership mean learning and unlearning the new rules and procedures; frequent change in leadership also makes the employees unsure and unstable. They are hesitant to adopt new policies and culture because they are not sure how long the new leadership would last. In other words the employees are demoralised; demoralisation leads to poor performance and thus a drop in the sales. Over the years the strategies put forward by Marks and Spencer seem to conflict with each other. On one hand Marks and Spencer targets the young consumers while on the other hand its line of clothing is sober and more suitable for older age group. It also uses celebrities to endorse its product but the customers find nothing glamorous about the clothes other than the celebrities promoting them. Another negative impact of dysfunctional organisational culture is the inability to handle conflicts. The incident of a Muslim woman refusing to serve alcohol to a customer was not sensitively handled by Marks and Spencer. Although it is commendable that Marks and Spencer stands behind its employees but instead of justifying the till worker’s action, the store should have immediately moved her to another department such as clothing. The inability to do so gave rise to a strong backlash from a wide customer base. Many customers have announced their boycott of the store on social media sites and have vowed never to shop here again (Salked, 2013). There seems to no sense of direction when it comes to general merchandise such as clothes and shoes and this only happens when the culture of the organisation is not defined. Marks and Spencer invests a lot but in things not really required. Marks and Spencer not only introduces new designs but also spends a considerable sum of money on advertising. In the last fiscal year, it launched a multimillion pound advertising campaign to promote its women’s wear and even hired celebrities in the promotional campaign; however all its efforts failed. This is because when buying clothes a customer whether male or female looks for style, fitting, modernity and quality and use all these qualities to balance against the price. Although till 1998 Marks and Spencer was the leading store in fashion and clothing but it failed to keep up with the changing trends. The market has changed fundamentally but Marks and Spencer has not been able to shed its “middle market clothing retailer” image (Saunders, 2013). From the continuous failure of its range of clothing and the steady decline of its sales it is obvious that Marks and Spencer either has failed to comprehend the demands of the customer or has chosen to ignore it; the store also falls short of targeting its customers. Because of these shortcomings Marks and Spencer has lost its customers to its competitors and its sales and thus its market share is falling. Organisational culture has held back Marks and Spencer in many aspects. Firstly the hierarchal culture acts as a barrier to change as well as improvement. The company relies too much on its traditional designs which were quite popular a decade ago and is not incorporating new styles and current trends in the market unlike its competitors Zara. This resistance to change has often been criticised by the customers however the top level management is not taking any acting against it. The current organisational structure has also led to a communication gap between the customers and the management. In order to prove itself as a tech savvy organisation Marks and Spencer has introduced many new techniques of displaying its products for instance in their stores instead of sales assistants they have laptops and tablets which present a virtual display of the products in the store. However not everyone can operate these gadgets. Moreover when purchasing, customers prefer to discuss the products with sales assistants who can guide them rather with machines so basically it is an investment gone wrong. Conclusions Culture is an essential part of human society and is reflected in every belief, value, system and vision of the society. It is present wherever human associations and interactions occur and this includes workplaces and organisations. Rules, beliefs and procedures constitute the culture of a company and define the way a company organises itself (Mtetesha, n.d.). Organisational culture serves many purposes for instance it brings stability to the organisation and it defines the code of conduct of the employees by shaping their behaviour. It brings the employees together and creates collective commitment. It also forms channels of communication which connect employees and enables the flow of information. Organisational culture reduces chances of conflicts and helps to solve problems that may arise both internally and externally (Nakae, 2005). The organisational culture that generally contributes towards the growth and development of the organisation is known as positive culture, a weak or negative organisational culture is that which harms the organisation and restricts its growth. In this type of culture the employees are expected to follow instructions and there is little room for innovation and creativity (Mtetesha, n.d.). There is a lack of communication among various departments and employees are more concerned about personal achievements than the growth of the organisation. Change is also resisted in an organisation with negative culture. This happens because often organisational culture is so deeply embedded that it is difficult to bring about any change (Mtetesha, n.d.). The organisation Marks and Spencer is a good example of how negative organisational culture can harm an organisation. Marks and Spencer is a leading retailer in the UK and has branches all over the world. It was established in 188 and initially sold high quality stylish clothes and home furniture and later ventured into food (Marks and Spencer Plc, 2013). Till 1998 Marks and Spencer had been doing considerably well and captured a large market share but from 1999 onwards, its performance and popularity especially in the general merchandise (clothing and shoes) department has dwindled. There are various factors that have contributed towards the declining popularity, sales and market share of the organisation and negative organisational culture is one of them. From the above analysis it is clear that the organisational culture in Marks and Spencer is dysfunctional and lacks direction. For this reason there is lack of communication among all levels of employees, creativity is not stifled but is also not in the right direction. The organisation is making every effort to recover but it so far its efforts have been fruitless. Recommendation The analysis shows that Marks and Spencer is doing quite well in the food department but its clothing department needs special attention. First of all the management needs to change its mind-set about clothing. The clothing line is often described as dull and drab; Marks and Spencer should do a market survey of popular stores and brands and hire a team that designs such clothes that would attract consumers. Secondly the organisation must end its “do as you are told” culture and empower its employees. The employees must be given a free hand to arrange display windows and the clothing department. The sales assistants who get to hear the comments and queries of the consumers should be included in the meetings so that the feedback from the customers is known. The organisation should also be careful in how they place their employees to avoid unpleasant and embarrassing incidents. References Alon, I. (2000). Marks & Spencer: A Case Study in International Retailing. Available at: [Accessed on 10 April, 2014]. Alvesson, M. (2012). Understanding Organisational Culture. London: SAGE. Cameron, K. (2008). A Process for Changing Organisational Culture." In: Cummings, T. G. (ed.). Handbook of Organisation Development, pp. 429-445. Los Angeles: Sage Publications, Inc. Felsted, A., & Oakley, D. (2013). M&S Clothing Sales Continue to Fall. Financial Times. [Online]. Nov 05, 2013. 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