Organizational Culture of a Moving Business - Case Study Example

Case analysis Problem ment The idea of operating moving business came to Mary Ellen when her sons wanted to earn college tuition money. After their leaving, she bought a new truck and hired two men that would help with the business. Running business on her own, she made $1000 of profit at the end of her first full year in business, at the same time distributing $100 checks to charitable organizations. The first changes that touched organizational structure of one of the franchisees was the changes in the way Lansing franchise was running. It referred stopping donating everyone, instead Mary Ellen’s son proposed shaping the company in order to help to pay for one foundation only and the rest money work for profit. Whereas Mary Ellen didn’t see that donating was a disadvantage for the new company to, it needed to expand the profit. While the company experienced a tremendous growth, Mary Ellen could not do everything by herself and when TMT grow to 35 franchisees, Mary Ellen asked her daughter, Melanie, for assistance. Bringing her own experience to the business, Melanie saw a need in introducing formal control into the franchise system. While Mary Ellen was lenient in running a business, franchisees were allowed to pay the royalty payments at a convenient time. However, Melanie felt that TMT brand needed protection of its values and that the royalty rate was low. The decision to raise the royalty rate from 4% to 6% caused conflicts between franchisee, because they were taking advantage of the loopholes in the agreement made by Mary Ellen. Besides, some franchisees threatened to use the name of TMT and its logo without paying for it. They were litigated in the court by Melanie’s request, which resulted Melanie herself serious problem of spending legal costs in excess of $600,000. Despite the complications, the court upheld the TMT franchise agreement, returning two out of six franchisees. The issue with the court gave business owners understanding of the need in better assessing and choosing of franchisees. Besides, the new level of discernment was brought for the review of prospective franchisees. From being painfully shy, Mary Ellen became the primary PR machine of the business, appearing on CNN and writing articles for the newsletters as for franchisees and employees of the company. Being deeply devoted to the business, she still prefers doing things for the kids, recognizing future customers in them. She also manages to exceed its customers’ expectations value and high standard of satisfaction by arranging meetings on the weekly basis, where staff discusses what they are working on. To keep employees’ engagement, the company designs reward programs such as Earned Sabbatical Program and Stick Man University that enables the employees to pass the on-going training for franchisee employees. However, there is a big problem of employee retention within the franchisees. For that purpose, the company encourages them with raise wages, benefits and other incentives that help keep good people. Besides, there is also a great challenge for franchisees to provide growth opportunities to employees to move beyond the initial job, which will also help to retain enough movers for business growth. As a part of Melanie’s job, it is to communicate franchisees to improve customers’ satisfaction and operating and financial performance as well. Analysis of the problems and the discussion using OB concepts The first issue that the company faced was an inappropriate running of business in terms of profit. Mary Ellen did not cared much about earning money and pay taxes on the income, instead she gave for donations everything she earned in the first year. However, as the business grew, there appeared a need to care customers, thus more people should be engaged into business and the role of team grew as well. Thus, Mary Ellen’s son can be considered the first responsible team member, who have implemented new strategy in the work of one of the franchise. According to McShane and Steen (2012), the effectiveness of a team depends on more than technical skills that its members should perform. Rather it is a willing and ability to perform one’s actions with regard to the company’s vision and goals. Utilizing the team development model, there is a clear understanding of Mary Ellen’s son about what should be done to agree the respective roles and discover the appropriate behaviors regarding external business environment. The way Mary Ellen’s son coordinated the work of franchise enabled all its employees understand the effective performance routines that are needed to compete the work. Under the development of team model, Mary Ellen’s son has also agreed the team objectives by means of high cooperation and commitment toward the common business. The new team member of the business team became Mary Ellen’s daughter, Melanie, who by her innovative vision and experience brought introduced team norms and make changes in the team development model. While franchisees are the part of the entire team of a business directed by Mary Ellen, the effective work of all of them is also an important stage in developing good team. Thus, according to the model, Melanie established new norms to franchisees by increasing royalty rate and introducing the formal control into the system. With the assignment of Melanie, there appeared certain changes in the way she saw the business should run. This touched the cooperation with the franchisees, which have “grown up” with Melanie’s mother and did not know how to perceive the new leader. However, with obtaining of power, Melanie was not acting to change someone’s attitudes or behaviors. Moreover, she saw her involvement as the potential to make these changes using her power. According to McShane and Steen (2012), power is given for better achieving of organizational goals, which leaders use to convince others that they manage to control the value of the organizational objectives. However, power is believed to exist if others find the powerholder controls resources that will help. Melanie used its power as a capacity to influence others in her striving to make necessary changes in the way organization was performing its activities. One can say that her involvement into the work of franchisees can be associated with the assertive influence tactic by which she actively applied her power, however, due to the further comments about the changes in the royalty rates and franchise agreement, it is possible to assume that Melanie used her power for information control. The new leader was assessing the work and cooperation with franchisees, that is why she was so involved into the process of protecting the agreement and further the brand of the company. It is also the level of partners’ commitment or resistance that influence whether the leader will use hard or soft influences tactics. Franchisees resisted Melanie’s initiative regarding royalty rate and a need to apply franchise agreement fairly across all the franchisees to protect the value of brand. It caused the need of a new leader to utilize assertive influence tactics. Melanie’s mother, however, displayed legitimate power by means of an agreement among organizational members, thus, allowing franchisees to make royalty payments when they could. The control over franchise agreement was also not controlled as much as Melanie considered it should be. Mary Ellen influences the behavior of employees and stakeholders through legitimate power using the silent authority influence tactic. As the business grew to more than thirty franchisees, there appeared a need to Mary Ellen to involve her daughter as a leader of the company. It is for sure a complicated thing to run the day-to-day operations without being engaged fully into its activities. Melanie brought her vision in the organization, evoking challenges of the organizational change that usually perceived by stakeholders and partners as something new and unknown. Besides, organization should adjust its activities to the changeable external environments, such as customers’ needs, competition, and innovations in technology and community expectations (McShane & Steen, 2012). It is also the predisposition for every successful organization to monitor their business environments and take necessary steps that would maintain a compatible position in the business world. That is also the necessary condition for the successful organizations so their employees were ready and could embrace change as the integral part of organizational life. If to take the business of Mary Ellen and her children, the changes they brought with them were more likely to happen in the newest future even without their involvement. In the changeable time, Mary Ellen would have to adjust its business to the external environment, at least in terms of its franchisees. The Model of Force Field Analysis enables to see the forces that would drive and restrain the proposed changes within organization. Beside the revision of the way franchisees were cooperating with the Home Office of the company, Melanie has also implemented the greater picture of franchise recruiting, by which the partners would be chosen taking into account different factors and not only their financial possibility. Besides, the other initiative concerned the positive strategic partnership with each of the new franchisees through using if over-communication of the on-going basis of newsletter and use of Franchise Business Consultants. Thus, there were assigned twenty-to twenty-five Franchise Business Consultants to be responsible for visiting two times each year for the advice and on-going communication. While the biggest problem was the retention of employees, such initiatives as tracking customer comment cards and feeding back information were implemented. Besides, the Stick Man University was another effort of the company in providing the on-going training for the franchise employees. The concept of conflict within the organization refers to the inability of employees and other stakeholders to agree completely with the new direction that the new leadership has chosen (McShane & Steen, 2012). Usually, these differences in goals and viewpoints lead to the conflict situations. Organizational behavior conducts debates about the good or bad impact of conflict over organizational well-being. There are statements that conflict is a dysfunctional notion, however, some researches consider it promotes organizational effectiveness. The most vivid conflict situation within the business of Mary Ellen and Melanie is the situation with franchising, the royalty rate of which was changed with the coming of new boss. The other concern arised when Melanie saw a need in changing the cooperation between the Home Office and all the franchisees. The conflict situation was not solved by means negotiating and Melanie protected the right for company brand in the court. Despite the positive result toward Melanie’s business, some franchisees were lost. The given conflict was a dysfunctional, however, it have also helped to make a decision about further selection and cooperation with new franchisees. The company became more responsive for changing its business environment and stronger in the team cohesion. McShane and Steen (2012) consider that such type of conflict can be called the relationship conflict or the socioemotional that is associated with more personal prejudice of Melanie as the new leader with new rules of cooperation. While the former leader was less demanding, the franchisees felt sort of freer relationship with the company owner. It is obvious that great changes toward them were perceived in the negative light. If to use the model of the conflict process, it becomes much easier to assess the perceptions and emotions of conflict situation. Thus, the source of the conflict regarding the situation between Melanie and franchisees is the incompatible goals and ambiguous rules of the new leader. They lead to the conflict situation, which is manifested in the way of overt behavior that rejects new rules. In the given situation, the conflict outcomes are positive toward the new leader, while both parties felt stress during the court process. Such conflict at the same time enabled the company to make better decisions and be more responsive. When the business was started, two sons of Mary Ellen and Mary herself used local paper as the means of communicating about their company and what services it offers. Through years, effective communication has remained the important way of the company to tell the world about its services and to its people to better understand the values of the company. Despite the fact that Mary Ellen did not leave any contact information to its customers in case the employees could damage something, times has changed and customers were now more valued and fully informed. Moreover, communication became an integral part of coordination of employees and organizational learning. It is the means of knowledge provision to company staff and stakeholders as well. Mary Ellen has changed in the way she runs her business. She performs duties of PR machine for her company, engaging herself with the writing newsletter for the franchisees and employees as well. This is the way she cares about the community and effective communication is her main tool. The social acceptance here refers to the ways leadership communicates with its staff. It is the weekly staff meeting in the company, during which leaders meet their employees face-to-face and conversations-discussions are held to understand and discuss the status of work. The Home Office of the company tries to over-communicate with the franchisees on the on-going basis through newsletters and in person through Franchise Business Consultants. Utilizing media richness allows the company to conduct training videos for its employees at Stick Men University. Melanie communicates with the employees for on-going strategic planning, providing the franchisees with the advance memos about personal ideas and implementation of new initiatives. Once there is a vivid result of such two-way communication, the initiative is ready to be implemented. The important point in communication between Melanie and the franchisees is the provision of updated information that would be suitable for improving customer satisfaction, operating and financial performance. In the era of computers, much of the necessary information is computerized, therefore, emails are used as one of the communication channels for running a business. This is the example of how communication is used within the organization of Mary Ellen and her children. Speaking about such business as Mary Ellen’s and path it passed through years, there is a natural question about how can be such complicated organization be managed and ruled. Despite the great desire to help people with move, the founder of the company should also be a great leader, able to lead others to follow the same path with the same visions and striving to meet the same goals. Leadership is not only about the executive suite. Employees across any organization should have leadership responsibilities in different ways and at various situations. Such notion known as shared leadership suggests that leader operates out of one formally assigned position, one’s role is wider and one is capable to lead others. In the case of business of Mary Ellen, she runs her business in the way shared leadership does. She encouraged employees to take initiative and risks without fear of failure. The weekly meeting which Mary Ellen conducts, enables employees with the leadership skills to bring new ideas to life, while Mary Ellen is listening to their thoughts. As it is stated (McShane & Steen, 2012), the emerging work has revealed several leadership competencies, such as skills, knowledge, aptitudes and different personal characteristics that successful leaders possess. Thus, the main leadership competencies include self-concept, drive, leadership motivation, cognitive and tactical intelligence. If to consider Mary Ellen and her daughter Melanie in the way they perform their activities within the company, Mary Ellen is sociable and outgoing person, has positive self-evaluation about her leadership skills since she knows how to achieve goals. Her inner motivation is the main predisposition for pursuing organizational goals. Related to the drive in all activities she does, this drive inspires inquisitiveness and the action orientation. Melanie displays leadership motivation, because her desire to make business to run well speaks for her. Being engaged in the business for a long time, makes Melanie knowledgeable about how it should be performed. Having experience in running franchises in different states gave Melanie knowledge about how processes are developed and also inspire her with the new ideas. The organizational structure in Mary Ellen’s company includes work of the Home Office and franchisees located in twenty-five states. These are the divisions of labor and the coordination of that labor which are ruled by Mary Ellen’s son and daughter. These divisions include the truck drivers, people at service centers, employees of Home Office and the partners in franchisees. Coordination of employees depends on the qualified job of the company leaders which by means of reaching common goals and implementing of new initiatives manage others to create the most effective outcome. Since the company’s main goal is customers’ satisfaction, it requires the company to have strict and clear standards of how this goal will be achieved. It also involves creation of routines by which employees know what they are required to provide customers and what to achieve from the company. The quality of service within Mary Ellen’s organization can be improved by means of standardizing of work activities and specific job descriptions and procedures. Such coordinating mechanism will be feasible for the routine work and will be less effective if the work is performed without procedures and rules. From the very beginning of the business, customers’ satisfaction was the main goal for Mary Ellen. For that purpose, coordination of work requires standardized skills of all employees and franchisees that represent the company. If the company wants to achieve the best results in face of satisfied customers, it should have formalization as the degree to which it would standardize its rules, procedures and formal training. Despite the fact that by formalization companies rely on standardization of work processes, such enable the work to be performed in accordance and meet the needs of the customers and stakeholders. Not the last importance for Mary Ellen business is its organizational culture, which through years have captured values and assumptions of the valued and reliable company. The main key to success Mary Ellen feels in the wise selection of franchisees, finding optimistic and positive people to work for the well-being of others and the company. Melanie is also aware of that prospective franchisees are drawn to the company due to the simple name of brand and the thought that they would work with Mary Ellen. Once the franchise is well set, the company finds that word-of-mouth referrals assist in growing business. For that purpose, the shared values of the company are stated open and publicly, which enable future and potential franchisees to understand what the company follows and what is waiting from its partners. The company strives to improve its services strengthening its organizational culture. This is possible by attracting and selecting new employees. Despite the fact that there is a problem for the company of the retention of its employees, business of Mary Ellen seeks new ways for retaining talented people within the company. Thus, different benefits, rewards and possibility to professional development are offered to all employees. Mary Ellen’ business is successfully utilizes stages of organizational socialization, where potential employees are able to learn about the company, as newcomers to be valued, their expectations against the real conditions will be tested and those within the company will be able to obtain expertise in their role and obtain motivation and satisfaction from their work. References McShane, S. and Steen, S. (2012). Canadian Organizational Behavior, 8th Ed., McGraw-Hill Ryerson Ltd. Read More