Employee Relations in Terms of Structural Changes in BCL - Essay Example

? Introduction: The following is an integrative report on employee relations in terms of structural changes introduced in BCL, a large chain of newsagents, booksellers, and stationers operating across the nation. With 92 stores spread across four regions, each region having its own manager, and four distribution depots, the organisation employs 16 district managers where each region is divided into four districts. Each district manager answers to their respective regional manager, whilst each store manager answers to their respective district manager. There is one head office above all of these levels to which the regional managers report. All the main traditional functions like Human Resources, Sales and Marketing, Operations, and Finance are managed by a dedicated management team. BCL has been operating since its origins with this structure with little or no changes made, the new managing director, however, is young and highly educated, and having worked his way through the business, wants to implement changes to the structure and make the business more modern in its approach to all the major functions mentioned above. The writer of this report has been appointed as the new HR Director, whilst a new operations manager, who also happens to be the new managing director’s colleague in university, has been appointed to replace the outgoing manager. Through a consensus, the three senior managers have come to an agreement that major structural changes need to made, by reducing the management hierarchy, and by forming a strategic partnership with a leading high street grocery retailer, Cost-Savers, in a bid to see the business streamlined and cost effective. The new partnership is expected to cut costs down in terms of premises rentals, as BCL will have their shops within Cost-Savers shops. Another key factor is that Cost-Saver and BCL will share a distribution depot while one of the smaller of BCL’s depots will be shut, and where Cost-Savers and BCL are in the same location, the BCL shop will be closed whilst core and flexible staff of that BCL shop will be offered positions at the Cost-Savers shop, and the rest made redundant. Also certain low profit stores of BCL will be shut altogether. The main changes in the management structure include: Reduction of the number of districts from 16 to 12 District managers will be given expanded responsibilities for product placement, identifying new opportunities and increasing sales within their district Each regional manager will be given the added responsibility of providing development opportunities for store and district managers Each store manager will be given autonomy to recruit staff, promote products, stock products on own discretion, and have more direct contact with head office. All managers will be coached to become leaders and not merely managers for their sectors. Staff would be given the added incentive of a profit based six monthly bonus to boost their sense of belonging to the organisation. The main task given to the writer as HR Director is to come up with a plan to make sure the above changes have a positive effect on staff, and that an employment relationship culture of teamwork is brought about through the changes. This would mean engaging the staff in matters related to key decision making, and change the existing non-directional management of individual stores to align with corporate directions. Key Literature Review: From the above introduction, it can be inferred that BCL has decided to go from a hierarchical, and centralised organisational structure to a horizontal and decentralised structure. It is therefore important to understand these terms before delving any deeper. Organisational Structure: The term ‘organisational structure’ simply refers to the way in which job tasks are formally divided, grouped, and coordinated. It involves the processes of work specialisation, where tasks in the organisation are subdivided into separate jobs; departmentalisation, where the subdivided jobs are grouped together; chain of command, which outlines the line of authority that extends from the top of the organisation to the lowest level, specifying who reports to whom. This is where authority is established; and span of control, where each manager is given a manageable number of subordinates (Robbins, 2001). The degree to which decision making is concentrated at a single point in an organisation is referred to as centralisation. Organisations where top managers make most of the decisions and pass them down to lower managers to merely be followed are more centralised in their structure. This is where management in the operational level has limited freedom to make key decisions even though they operate closer to the end users. Disadvantages of having a centralised structure would be slow flow of information from top levels to the bottom ones, especially in long structures; extenuating amounts of bureaucracy within the flow of information from either end, which may ultimately result in the information being tampered with or lost in the process; loss of motivation for lower level personnel as they do not feel involved in key decision making and consequently do not feel empowered with higher responsibilities. Advantages include a clear division of authority, where the chain of command is clearly defined; clear communication of the values and objectives of the organisation, which results in creating a unified direction for all employees; a strong culture that defines clearly how the organisation behaves and how things are done within (Schein, 2004; Robbins, 2001). In contrast, organisations where lower level personnel are given more discretion and authority to make key strategic decisions are said to be decentralised. Top managers in such an organisation value the involvement of all levels of the structure in coming up with strategies as they realise the importance of the operational level as the key determinant for information on how the market behaves. The obvious advantages of a decentralised structure are a flexible culture that allows change with changing environments; more input from lower level management adding to the value of inputs already present; less feeling of alienation for lower level personnel due to empowerment through decision making, involvement in strategies etc, which improve overall motivational and performance levels. It would also be easier to conduct performance reviews on more staff for senior management, thus providing measures to improve the quality of employee performance, and consequently improving employees’ career prospects. There are however some disadvantages like a weak culture and lack of clear authority that may cause confusion, and also too much discretion to lower level management may result in personnel doing their own thing rather than having a sense of unity in achieving organisational goals (Schein, 2004; Mullins, 2003; Robbins, 2001). Centralised structures, especially in large organisations, tend to have a hierarchical design of levels of operation, where each level is subordinate to another, except for the top, which is the executive level. Most decisions are made at this level, and all authority and control is centralised here. Information tends to flow vertically, from top to bottom in the form of corporate objectives, core values and overall organisational culture, whilst not much information travels upwards creating a gap between top and lower level management, and staff (Robbins, 2001; Mullins, 2003). This becomes a hindrance for communicating key changes at the operational level, and creates a culture that is rigid and defiant to change. Decentralised structures on the other hand operate on a horizontal level, where there less divisions of power and more participation from all divisions. Active communication of feedback from lower levels is encouraged, creating a flexible and changeable culture. This brings us to the concept of organisational culture (Schein, 2004; Robbins, 2001). Organisational Culture: The type of leadership and organisational structure in an organisation determine the kind of culture the company exuberates (Fritz, 1996). An authoritative leadership forms a centralised structure that in turn creates a strong and rigid organisational culture, whilst a democratic leadership forms a decentralised structure, which creates a weak but flexible culture. Culture is a shared activity of overcoming external and internal factors through methods that have been taught down to the group as acceptable and functional (Schein, 2004). It then becomes the responsibility of the leadership of the organisation to introduce a culture and/or change its existing core culture to accommodate the internal strengths to contend with external factors (Drucker, 1994). Hence an organisation’s culture is required to be flexible enough to adapt to change whilst strong enough to sustain its core values and objectives. This calls for a balance between centralisation and decentralisation of structure where the leadership has enough authority over major strategic implementations and can communicate key values and objectives clearly, and at the same time democratic enough to consider the views of lower level subordinates on changing circumstances hence creating a culture that is strong in its application of values and flexible in its approach to change (Schein, 2004; Robbins, 2001; Drucker, 1994). The question that may arise, however, is whether changing the existing culture means changing the entire organisation. Culture is such an intrinsic quality of a human being at the individual level, and of a group at the societal level, that even though it may take time to change, it may end up changing more than just a few characteristics (Bate, 1995; Hofstede, 1997). This means that changing an organisation’s culture implies changing the very behaviour in which it expresses itself. Types of organisations: Brooks (2003) says classifies organisations into prospectors and defenders. Prospectors, he explains, see their environment as ever changing and seek continual strategic and structural adjustments to cope with those changes. These organisations are continually searching for new opportunities and in the process they may create change and uncertainty for others in their competitive environment. The opposite of prospectors, known as 'defenders', are more 'reactive' in nature, as they act only when environmental changes force them to do so. This kind always sees stability and continuity all around (2003; Miles and Snow, 1978). Research shows that reactors are more prone to misperceptions of their environment than are prospectors. According to Morgan (1998), this is because different environments favour different 'species' of organisations based on different methods of organising and that congruence with the environment is the key to success. Leadership: In terms of leadership, defenders tend to adopt what is called transactional leadership, where the leadership takes on more of a management context, and where a subordinate, once agreed to perform a task, gives all authority to the manager. Authority is clearly defined and vested in the hands of the manager whilst subordinates have no input in decision making and are only required to do as they are instructed. Management is concerned with establishing clear chains of command, centralised structures, and the only motivational factors for subordinates are rewards if the task is carried out to expectation or better, and punishment if task is not accomplished. Subordinates are to take full responsibilities for any mishaps during performing tasks (Drucker, 1994; Robbins, 2001; Mullins, 2003). Prospectors on the other hand tend to adopt transformational leadership, where leadership inspires followers or subordinates to work toward achieving goals. Key features are to create a vision, inject passion and energy into this vision and communicate this vision to potential followers or subordinates so as to convert them into working towards the vision. Such leaders have the ability to create change and are often regarded as exciting and inspiring to work with due to their passion and energy (Drucker 1994; Robbins, 2003). Resistance to Change: When a group seeks change in the way they do things, as with culture and structure, there is the inevitability of resistance to this change. Researchers have identified a few reasons for such resistance: fear of the unknown, referring to people’s natural tendency to keep away from uncertainty that creates anxiety. Resisting change is one way to reduce the anxiety; fear of failure, referring to people’s fear of whether or not they are up to the challenges being brought in by the change; disagreement with the need for change, where people genuinely believe that change is not necessary; losing something of value, where people fear either losing their dominant positions and/or jobs as a result of the change; leaving a comfort zone, in that people are happy where they are and would not want unnecessary disruption of current state; false beliefs, where people unrealistically believe change is not needed and everything will turn out fine; misunderstanding and lack of trust, where people do not understand the changes being made and/or do not trust the person(s) initiating the changes; and the fact that change may require more time and energy from individuals (Robbins, 2001; Mullins, 2003). Many ways to overcome resistance have been suggested, which include: effective communication and education including training programmes for staff to make them understand the need for change, and its implications; getting people to get involved in implementing the change process, where they can not oppose it later as they were partly responsible for it; negotiating with people certain requirements they may have to get the change underway; and in many cases imposing the change by force whether the people like it or not, as resistance may mean loss of positions/ jobs etc (Robbins, 2001; Mullins, 2003). Application to BCL and Employee Relations: Applying the above literature to the case of BCL, it is evident that the company is implementing a decentralisation process from its hierarchical structure and transactional leadership in a bid to improve cost effectiveness, as removing some unwanted senior levels means savings in terms of the high salaries being paid to the personnel at these levels (Johnson et al, 2008), and to improve the role of management. The changes reflect the more contemporary views on running a business by the new, young and highly educated senior management team, where the original organisational objectives may be the same, but the approach to achieving them is changed according to changes in the environment (Morgan, 1998; Johnson et al, 2008). As explained earlier, the HR Director of BCL is now faced with the challenge of ensuring a smooth implementation of the proposed changes, especially where staff is concerned. This includes firstly changing the thought process of regional and district level managers from a manager’s mindset to a leader’s mindset. From the literature studied above, it is evident that BCL’s approach is that of a prospector organisation that needs a transformational leadership (Miles and Snow, 1978; Drucker, 1994). Hence instilling this philosophy through strong employee relations will require firstly for management to believe that the changes being brought about are a necessity for overall productivity and profitability, and then communicating this belief to staff with conviction, which may inspire staff to embrace the changes rather than just accepting them as inevitable. As discussed earlier, one of the main barriers to change is staff resistance due to fear of uncertainty, and fear of losing their positions. It would then be beneficial for the HR Director to directly interact with key members of staff by organising discussions and debates pertaining to the changes and getting staff feedback regarding the same. This may also boost staff morale, as they may feel important as they have never had such direct contact with senior management before. The impending redundancies that some of the staffs face are sure to discourage and de-motivate other members, as this may seem that its only a matter of time before their terms may come to an end, but again, it is the HR Director’s and management’s responsibility to ensure the key staff members of the sustenance of their positions, and that the changes are a necessity to facilitate the staff’s own career objectives through easier procedures for performance reviews that lead to promotions. Conclusions: The new horizontal structure at BCL means clearer communication between senior management and operational staff that deal directly with the end users, and are closest to the changes taking place in the market environment. This communication will thus improve the organisation’s information base when conducting environmental analyses for product placement, new product or market entry etc. This is especially beneficial for the district managers as such analysis is now their job. However, such engagement of staff and lower level management is bound to boost their motivational levels through perceived empowerment, and according to literature discussed earlier, gives them a sense of belonging to the organisation (Robbins, 2001). The added incentive of the six monthly bonuses is also sure to motivate staff to take ownership of their immediate stores to work towards corporate objectives, and such involvement at the individual level may facilitate collective efforts to perform tasks to best standards, hence creating a culture of cooperation and teamwork, which is one of the HR Director’s objectives. This may result ultimately in the organisation achieving a strategic fit with its competitive market environment (Johnson et al, 2008), which is a strategic objective. Recommendations: For management to engage in genuine consultation with members of staff in matters regarding strategic objectives (Willey, 2003) For each level of staff to be performance reviewed by a senior member at regular periods to provide constant feedback on the level of performance and to propose improvements For senior management to have direct contact with lower level management and staff, where possible, through personal visits or meetings to review periodic performances and gain feedback on operational level changes and developments To bring about a degree of standardisation to store operations, in terms of uniforms, store and stock layouts, which would help staff and store managers stay in tune with the organisation’s identity (Johnson et al, 2008; Robbins, 2001) To actively communicate changes and proposals with all staff to gain feedback To train regional and district level managers to take up leadership of their subordinates to inspire and motivate them to achieve strategic objectives. 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