Organizational Behaviour and Analysis - Essay Example

Case Study- Organisational Behaviour and Analysis Question Case history with a brief summary of the organisation presented in the case on whichthe case revolves. Introduction: This paper is concerned about the organisational behaviour pattern of global coffee provider chain, Starbucks, and the issues that have arisen to this company during the course of its global beverage business. Established way back in 1982, by its present CEO, Howard Schultz, the company commenced coffee brewing operations with just four stores, operating under name of II Giornale. During 1987 the existing coffee brewing business of Baldwin, Bowker and Siegl were merged. Currently, the company provide employment to more than 60,000 partners worldwide catering to “20 million unique customers and 5000 stores around the globe,” (Starbucks: Maintaining Principles as We Grow, p.3). This is a testimony of the company’s positive organisational behaviour strategies, designed to retain employees and customers on a long term basis. Individual characteristics: The founder and present CEO, Howard Schultz has been pivotal in steering the company’s organisational behavioural systems over several years. Having nurtured and guided the company’s fortunes in its formative years, his return as CEO marks a new era in organisational success of the company. Initially, he was keen on opening new stores all over the country for which funds were required. He arranged for floating a $25 Million Initial Public Offering (IPO) during 1992, which provided necessary funds for his expansion plans to make Starbucks coffee drinking a part of a world wide accepted culture. Organisational challenges and restructuring: However, over the years, impact of market forces led to downward trends in the business fortunes of Starbucks, and with receding markets and lowered profits, organisational remodelling, especially at the top level, was needed to solve the vexing issues that confronted the company and also provide sound and substantive leadership. It was also to provide organisational and managerial decision making processes, based on experiences to face competitive incursions into its business. Schultz provided organisational restructure when he decided to close down 100 underperforming stores and reduce opening of new stores to just 1,175 during the year, lower by 34% as compared to earlier figures. (Starbucks: Maintaining Principles as We Grow, p.16). Further, the company embarked on employee benefit schemes by laying plans and programmes for taking excellent care of, and providing best compensation to employees, whether in part-time or full time employment, since the company believed that good employees pave the way for providing excellent customers. The company ensured provision of generous health insurance policies to staff members, and gave stock options to part-time employees, since such participation was believed to raise level of organisational sense of commitment and corporate loyalty. How quality and service underpins organisational behaviour: The Company’s concern for quality was ubiquitous and special arrangements were made for training of baristas, (coffee tenders) in order to make them highly professionalised in their area of work. The company believed that best performance could only be gained through right attitudes and genuine interest in the work each partner performed, irrespective of status, or position in the organisation. All issues were freely discussed among the work force and hierarchy was dispensed with, and 60,000 partners worldwide, as employees were called, which included mostly “baristas” who were paid on hourly basis. (Starbucks: Maintaining Principles as We Grow, p.4). The main areas that organisational behaviour laid stress were in terms of maintaining quality, caring for clients and staff ( whether full time or part-time workers), making coffee drinking not merely a habit, but a whole new cultural experience, providing the right kind of setting an environment where customers could enjoy service and coffee and thus ensuring their continued patronage over years of useful service, and most importantly, treating clients with care and respect, by adding a personal touch. Integrating individual and group level processes: Regarding work force who worked for Starbucks, it is believed that employee satisfaction and motivation were placed high in priority list of organisational behaviour, and the Company initiated many policies, processes and procedures by which “Starbucks designed a work-life balance program that took into consideration the physical, mental and spiritual well being of its employees.” (Starbucks: Maintaining principles as we grow, p.5). As a company that practised good management principles, which largely accounted for its success, it is seen that besides good pay, the Company also provided “comprehensive health benefits, stock options and several other perks to its employees.” (Starbucks: Maintaining principles as we grow: P.5: Organizational Behaviour and Analysis –An Integrated Approach: Starbucks partners) Strategies for organisational change and betterment- clientele focus: While on the one hand, promoting and encouraging performance and dedication to the company, the management also came down heavily on low performance and lack of commitments; as a direct result of which the company decided to provide extensive training to employees including baristas, on the fine art of coffee making and the various rules and etiquette governing it. The new management made the business of Starbucks reach new heights of quality, service and coffee drinking satisfaction; indeed an experience which the clients wished to experience regularly. The idea is to make Starbuck a trusted name among discerning coffee drinkers all over the globe. Apart from imbibing coffee, the client also need to value Starbucks experience which sets it apart from drinking coffee in any other setting or locale. Again, the aspects of create value consciousness among drinkers and enjoying the soothing settings of the coffee drinking ambience is also important. Starbucks offers a scintillating décor and atmosphere that could be unrivalled by other coffee houses. In very simple terms, Starbucks aims at providing the No.1 Coffee drinking experience to all patrons. This is in sharp contrast to the fact that, detractors and critics once raised doubts as to how a $1 per cup Starbucks coffee could compete with 0.50 cents coffee available in the corner store. Apparently, the management proved them wrong and worked to place the company in No, 1 position in the global coffee map through sheer dedication, commitment and obsession for quality and service, at no extra costs. Question 2: A clear statement of the questions the case raises from an organisational behaviour study point of view, the major issues that could justifiably be raised in case of Starbucks could be seen in terms of: Whether the generous organisational compensation and benefits are sustainable for the company in the long run? Does hard-driving store expansion programmes undertaken by management, lower quality of service and performance of staff, especially in high demand locations? Organisational activities could be seen in the context of whether research and development needs to be actively pursued in the light of competitive markets and the fact that future competition would need to focus on giant organizational competitors, like McDonald’s, etc? Organisational behaviour could be seen in the context of Starbucks placing a lot of importance on personal relations with clients and customers. Would this be sustainable in future years, given the fact that business has growth exponentially over the years and, in world wide terms, market shares assume more importance than client rapport building and relationships across the counter? How could the company manage to retain their No.1 status in competitive markets and potential entrants, big and small in the coffee brewing markets? Does participative management style with little hierarchy augur well, organisationally speaking, when compared to conventional and rigorous hierarchies, with employee commitments in terms of performance, demanded by rival firms and producers? In the context of organisational supply chain management (SCM), it is seen that Starbucks places maximum rigour on SCM, insisting that only the best quality whole Arabica beans and other coffee raw materials be used and are very choosy about quality and vendor performance. Only the best go into the making of Starbucks coffee and that has been the unflinching principle over years of its regime. In the context of organisational conduct, could this be sustained in the years to come, given the fact that competitors often seek volume business and high off takes as more important, than perhaps, product quality? Does it make business sense to service unproductive or underperforming stores, given the fact that investments are regularly meted out to keep them in running order? What are the benchmarks for successful and productive stores, in the Starbucks organisational context? The top management has accused Starbucks of being “bureaucratic “and lacking focus on customers. How does the company, presently, plan to restore this with motivated, dynamic and flexible performance in the Starbucks context? Whether the founder’s tendency of focusing on the past (when Starbucks was struggling to keep itself afloat) could be a productive strategy for the future, without seeking recourse to objective organisational behaviour models? The management does not place the blame for the downslide purely on the industry or competitors. By internalising the problem, it feels that massive expansion without proper market assessment could be unproductive in future, especially when the system is working in a restrained and rigid way. How does the management propose a turnabout for Starbucks which accommodates high profitability and growth in future years, given the fact that most markets are saturated and elite coffee brewers service only selective, niche markets, which may not grow substantially in future? Again, organisational behaviourists need to think about threats in form of future changes in coffee drinking preferences, and arrival of strong, potential competitors for Starbucks, which could reduce its market share and proposed growth plans. Question 3: The analysis itself, which clearly addresses each of the questions, highlights the appropriate theoretical framework for looking at the problems and identifying the relevant factors, with specific examples from the case. High pay scales, benefits and stock option benefits, even to part-time workers: One of the major areas that need immediate attention is that of compensation packages and benefits to work force; it is seen that wage rate is the highest in the industry, and year 2005 statistics reveal that total yearly wage bill of co-ordinators ( hourly rate) averaged $ 35,294 and the salary of store manager grossed $44, 790. (Starbucks: Maintaining Principles as We Grow, p.5). A cut in such wage levels could affect morale and productivity and this would not be sustainable in future. Moreover, in future years, wage rates would only rise with more stores being opened all over the globe. Does hard-driving store expansion compromise on organisational behaviour to staff? In the Starbucks context, it is seen that over the years the expansion of stores has taken its toll on organisational behaviour, and by end of 20th century, the company has to accept complaints that it has stopped being concerned about its employees. It is believed that the company’s staff was not being paid “compensation for work related injuries”, for chronic strain and was even denied treatment costs, in case of scald caused by hot coffee mishaps during the course of employment. (Starbucks: Maintaining principles as we grow: P.14: Organizational Behaviour and Analysis –An Integrated Approach: Trouble brewing?) All these have a debilitating effect on morale and motivation of the employees and could lead to lower productivity over a period of time. Need for research and development and innovation in the field of coffee brewing Coffee brewing is as much a science an art of customer satiation. Being a science it is dynamic, ever changing and has evolved over the years, and conventional coffee has made way for many sophisticated, state-of-the-art and modern brewing and flavouring techniques for heightened customer experiences. It is necessary that R & D needs to focus on quality improvements, innovation, better ways of handling coffee-making processes and reducing waiting time for busy customers standing in queues. With the installation of “Verismo expresso machines”, it is possible to serve customers quicker, faster, with greater degree of efficiency and efficacy. Personal relationships are as critical as efficient delivery systems? Starbucks places a lot of importance on personal relations since this underpins business growth and future development. The Company believes that if employees were satisfied this would also reflect on store goodwill and bring more business. It is seen that most customers are finicky about particular blends and customised coffee and this needs to be afforded to them. Thus, it is seen that their “most loyal customers visit us 18 times a month” so the coffee tender is aware of the exact requirements of clients and thus provides it to them. (Starbucks: Maintaining Principles as We Grow, p.4). How organisational behaviour with Participative management style works in Starbucks: There are no formal hierarchy structures, job titles and all members of the work force are known as partners. It emphasizes the strong culture value that Starbucks places on human bondings and the fact that each individual member of the work force has a role to play in the actualisation of business goals and objectives. “From day one, Howard Schultz has made it clear his belief that partner satisfaction leads to customer satisfaction.” (Starbucks: Maintaining Principles as We Grow. p.5). It is believed that participative management augurs well since a great deal of camaraderie, friendship and good co-operation is forthcoming that guides the business in the future. Underperforming stores: At Starbucks, every opportunity is provided to stores to perform to the expectations of the management. However, it is often seen that due to certain reasons, it is not possible for certain stores to perform. While management considered the unique advantages and disadvantages of each store, it would not be able to sustain underperformance over a long period of time, considering the fact that unproductive stores would also affect the performance of productive ones. Therefore, it becomes essential that by not setting a role model for inefficiency and inept discipline to others, underperforming ones are quietly closed down. This would not only save selling costs but would also allow investments to be made in more productive ways, beneficial to the overall business interests of Starbucks. How Bureaucratic methods impinges upon organisation behaviour: It is been seen that management has accused Starbuck of pursuing bureaucratic methods, in that, there are rigidity in operations and the customers are not the main line of focus of the sellers. All this has to change and ways and means have to be devised by which it is possible to make the systems more reliable, efficient, less queue prone and faster. A greater deal of flexibility has to be inculcated and the system should work in sync with the management’s perspective and customer needs. Starbucks believes that internalisation is important: It is seen that the major part of Starbucks problems stem from high growth rates and concomitant need for business to keep pace with it. Over the years, Starbucks has carved a niche for itself in coffee brewing business and this has withstood the test of time, technology and rival business intrusions, since the Starbuck quality, service and ambience are unparalleled in specialty coffee markets. Added to this, the strength, depth and professionalism of its organisational behaviour systems and processes which view each challenge as an opportunity and values staff contribution all add up to its success story, which few firms in consumer business possess. It could also be seen that Starbucks performs as a total team, interested in the welfare of the company and the growth of each and every committed partner of the 60,000 strong family. (Starbucks: Maintaining Principles as We Grow, p.4). Question 4: Recommendations for solving the problem, with reference to appropriate theory, and if possible, different options. The main problems would be in terms of reducing the benefits and stock options given to part time and full time partners. While cost control needs to be practiced in these areas, it also needs to be seen that morale and motivation of the staff are maintained since any punitive or professed disciplinary steps may have widespread repercussions throughout the organisation. Taylor’s theory of scientific management: If one were to apply scientific management principles and precepts advocated by Taylor, it is seen that workers, especially in the coffee retail business, having standardised work processes and skills and remuneration would tend to equate their work with the slowest worker. However, this undesired situation could be overcome, if the most efficient process for each type of work process could be found out, and implemented. In this way, productivity would be enhanced, and there would be all round benefits for both management and work force. In the context of Starbucks, Taylor’s scientific management principles could be effective and could provide higher levels of performance for all. “The development of a spirit of hearty co-operation between workers and management do ensure that work is carried out in accordance with scientifically devised procedures.” (Herrick 2003, p.85). Thus, by applying scientific management techniques it is possible for management to lower costs, improve individual and group performance and attain overall efficiencies. Again, it is also necessary to consider the Mintzberg Model which defines and details the roles that managers need to play. The first idea could be in terms of a figure head or mascot, who takes care of the societal and legal functions that need to be executed. It could also be in terms of gaining accountability through authority. The second could be in terms of providing leadership to peers and subordinates, integrating several discrete functions and providing inspiration and motivation to subordinates through delegation and accountability to individual workers. In the context of Starbucks, it could be said that leadership needs to be provided to employees who perform more or less similar jobs, in terms of balancing “subordinate and organisational needs for efficient operations.” (Jarvis 2005). The third aspect could be in terms of supervisors who oversee coffee brewing operations and control material usage, inputs and output. The managerial roles are designed to conduct smooth operations, correct malfunctioning and production snags, and ensures that plans and programmes are adhered to. The following Chart shall clarify the position with regard to Mintzberg Model: Managerial activities Associated roles Inter-personal roles - arising from formal authority and status and supporting the information and decision activities. figurehead liaison leader information processing roles monitor disseminator spokesman decision roles: making significant decisions improver/changer disturbance handler resource allocator negotiator (Jarvis 2005). However, if one were to consider the Starbucks model, it is seen that the operational behaviour systems are extremely flexible and there may also be constant job rotation and work reallocation, in order to optimise output and performance. The aspect of leading teams, which is advocated in the Mintzberg model, is ideal for this company. Over the years, job promotions and reallocations reinforce organisational behaviour models so that both organisational and individual goals and objectives are harmoniously blended and achieved through individual and group performances. There are possibilities that stock options need to be given only to partners who have completed mandatory months of service. It could also be seen in terms of replacing manual processes with modern machines that could churn out coffee by the minute and lessen queues before the shop. Work related behavioural motivation and group processes: From the organisational behaviour point of view, bonuses and performance incentives for staff who attain proficiency in catering and those who work extra need to be provided. Trainees need to be segregated and placed with trainers who need to equip them fully for the jobs; otherwise this could detrimentally affect the output of other workers. The next aspect would be in terms of SCM which connotes better vendor management and efficiencies. This could be seen in terms of setting production targets based on past graphs and performance charts. Projections of future demands could be quantified and targeted. Purchase orders need to be synchronised with production targets and JIT needs to be used as far as possible and convenient. Economies in large scale production could be forthcoming due to better SCM and vendor relations. Scientific methods of coffee brewing need to be adopted and also efficiencies in selling need to be done through optimum use of personnel and machines. 5. Conclusions, emphasising lessons of case: Starbucks had been a case of unbridled growth and progress in a niche and untapped market, thanks to the entrepreneurship and courage of its promoters. Coffee business could be competitive since there are a plethora of players and has essentially low investments costs. However, sustenance is important, since most stores need to attract and retain customers on a long term basis; most coffee drinkers prefer to stay with one store if they find it reasonably good and catering to their tastes and budgets. What Starbucks needs to do at this stage, is to consolidate existing business, streamline production, marketing and servicing and most importantly, invest significantly in internet selling. As it stands, the present challenges posed to Starbucks are of temporary nature and could be solved in the short run with a better organisational approach and better SCM techniques. For long term organisational planning a complete assessment of future projects need to be assessed and implemented. The basic coffee drinking habits of the population have to be changed and all the baristas need to be made aware of the correct roasting, blending and brewing techniques. For this extensive training and on the job apprenticeship needs to be offered to make them professionally competent to take up a large number of orders simultaneously for a large number of clients and patrons. Finally, it could be said that Starbucks success has mainly stemmed from the fact that a sound and marketable business proposition has been converted into a business, and a very successful business enterprise. By following good, equitable and harmonious relations with its workers and supply chain management vendors, government officials and its patrons it is believed that Starbucks would attain even greater heights in future. In an industry that could be overwhelmed by competitive forces, it is necessary that Starbucks provides realistic and prudent organisational behavioural strategies that could address both current and potential challenges with aplomb and conviction. Bibliography HERRICK, Dennis. F. (2003). Motivation of the Work Force. [online]. Media Management in the Age of Giants. Last accessed 22 January 2009 at: http://books.google.co.in/books?id=59rxoe1IkNEC&pg=PA85&lpg=PA85&dq=The+development+of+a+spirit+of+hearty+co-operation+between+workers+and+management+do+ensure+that+work+is+carried+out+in+accordance+with+scientifically+devised+procedures&source=web&ots=UDWHvsNeCk&sig=GwJzXsmS_a8icxvrEiD6pJjX2ko&hl=en&sa=X&oi=book_result&resnum=2&ct=result Starbucks: Maintaining Principles as We Grow: Company Background: Organizational Behaviour and Analysis –An Integrated Approach, P. 3. JARVIS, Chris. (2005). The Leader Role. [online]. Business Open Learning Archive. Last accessed 22 January 2009 at: http://www.bola.biz/mintzberg/mintzberg2.html Starbucks: Maintaining Principles as We Grow: Organizational Behaviour and Analysis –An Integrated Approach: Starbucks partners, P. 4. Starbucks: Maintaining Principles as We Grow: Organizational Behaviour and Analysis –An Integrated Approach: Starbucks partners, P. 5. Starbucks: Maintaining principles as we grow: Organizational Behaviour and Analysis –An Integrated Approach: Uncle Howie returns, P. 16. Read More