Coles Group Management - Case Study Example

Management Student’s Name Course: Tutor’s Name: Date: Introduction Coles Group was acquired by Wesfarmers at a time when its performance was inadequately low. In 2008, a new managing director Ian McLeod was invited to Coles and with him came a new team that has effectively turned the retail outlet’s fortune for the better three years later if the article appearing in the Financial Review Boss is anything to go by. This essay identifies different concepts in management theory and applies them to the case of Coles Supermarket. Management concepts The first concept evident in this exercise is the role of management in coordinating the work activities of a company’s resources in a manner that ensures that activities therein are handled in an efficient and effective manner. This concept summarizes the management’s role in steering organizations towards their objectives. Its significance in management is captured by Mukherjee (2005), who observes that management has four basic functions: planning; organizing; leading; and controlling. In other words, to be effective, management has to be effective in coordinating all its four basic functions in a manner that improves the effectiveness and efficiency of how things are done in the organization. At Coles, the concept is evident in that the organization’s decline was perceived to have resulted from a deficiency in its management, and the coming together of a new ‘dream’ management team led by Ian Macleod turned the company’s fortunes around. As evident from the Coles’ narrative as written by Sue Mitchell, McLeod stated that before taking up the management position at the retail chain, “there was a strong feeling that the company had been misled. There was frustration around the level of politics and bureaucracy that existed within the organization. They felt it was very difficult to get anything done and that the strategic direction of the company was confused”. That having been the case at Coles, the new management had a coordinating role to ensure that the negative feelings, the lack of confidence, and the apprehension that employees, shareholders, suppliers and even customers had towards the retail outlet were changed. Notably, Coles seems to have earned its bad reputation through its suboptimal performance; as such, the new management had a demanding coordinating role of ensuring that all resources in the company were working in a manner that would enhance efficiency and effectiveness. For such to happen, different stakeholders of the company had to be enjoined in the new strategy. Value creation is another concept that has been identified as being critical to good organizational performance. According to Schermerhorn et al. (2012), operations need to add value “to the original cost of resource inputs” for a business to earn profits. The significance of value creation in management is that the performance of an organization is usually gauged based on the profits or losses the company is making. Increased profitability is seen as an indication that the management is performing as it should, while loss-making is often perceived as an indication of management failure. At Coles, value creation is not only amounting to increased profitability for the shareholders, but is also working on the morale of employees, who according to the article by Mitchell (2011), are now proud to be associated with the retail outlet. At the height of Coles’ loss-making, shareholders, employees and customers were ashamed to be associated with the retail store. However, reading through Mitchell’s narrative about the developments at Coles, it is quite evident that the management’s decision to prioritize the customer indirectly created value for the other stakeholders because after all, customers buy and hence generate profits for the company. The concept of total quality management (TQM) is defined as “an integrated effort designed to improve quality performance at every level of the organization” (Reid & Sanders, 2011, p. 137). According to Schermerhorn et al. (2012) TQM refers to a management concept where managers are committed to continuously improve on the processes, the quality of the products or services, and the levels of customer satisfaction. The significance of TQM in management theory is that improvements are adopted as a competitive strategy, in that no one organization can confidently lay claim to having the best, un-improvable product or service; often always, there is room for improvement. Additionally, management has the responsibility of ensuring that the customers’ description of quality is met because as Reid and Sanders (2011) note, TQM is concerned with meeting the quality expectations of the customers. At Coles, TQM is evident in the management’s continued zest to improve the different areas that need improvement in the retail chain. For example, the promise for fresh products has seen the management put in systems and processes that ensure that the customers do indeed get fresh products. An automated ordering system was put in place as one of the ideal ways of ensuring that fresh products are always available, and that the store reduces the incidence of running out of stocks, even as it juggles between availing ideal amounts of products and ensuring that they are fresh. On a different front, Coles improved its procurement processes, thus improving the quality of its products. The latter initiative seemed to work from two fronts in that customers not only receive goods whose quality is optimal, but they also pay less for the same products because the new procurement approach saves cost thus enabling the retail store to push the cost benefits to the customers. From Mitchell’s (2011) narrative, it seems that Coles has utilized TQM by providing support services to its customers; providing value for money; ensuring that products are fit for use; and conformance to quality and pricing specifications. The loose-tight organizational design concept has on the other hand been used to describe how management structures affect the organization’s performance. A loose organizational design structure has been recommended for use in “young” organizations, since it is less formal and is bound with fewer rules as compared to the “mature” organizations (Group Works, 2004). A tight organizational design structure is on the other hand recommended for use in organizations that have matured in their lifecycle since it is more formal and more rule-bound (Group Works, 2004). The significance of the loose-tight organizational design concept in management is that some organizations are forced to adopt simultaneous organization designs in order to avoid the bureaucratic trap that befalls them as they expand in size and mature in their respective markets (Lalouette & Pavard, 2010). At Coles, the loose-tight organizational design concept is evident in the past structure of the organization and in the current reformed state of the company. In the past, the management was seen to foster bureaucracy, something that has been known to cause decision-making delays and has even been described as the modern “hierarchical system of inefficiency” (Juenke, 2005, p. 113). In the reformed Coles, bureaucracy seems to have been wiped off the system with the likes of Ian McLeod, who sits at the management helm visiting individual stores to witness the changes therein. In other words, there is more networking and support at Coles than controlling; and management’s interaction with employees is evidently resulting in better outcomes for the store. The turnaround at Coles also confirms the assertion by Juenke (2005) that managers affect the performance of people working under them based on how tight or loose they relate with the workforce; the trust they build; and their ability to “maneuver between network contacts in order to exploit resources” (p. 114). The strategic management concept has been defined as the “process that defines the organization’s mission, scans the environment to ascertain opportunities, then merges this assessment with an evaluation of the organization’s strengths and weaknesses to identify an exploitable niche in which the organization will have a competitive advantage” (Papulova & Papulova, 2006, p. 2). Strategic management has significance in management theory in that an organization cannot effectively compete with others if it does not have qualities that make it better than others in specific fronts, hence giving it a competitive edge (Papulova & Papulova, 2006). At Coles, strategic management is evident in how the new management led by McLeod prioritized customers right from the beginning by developing a plan dubbed the “circle of success” (Mitchell, 2011, p. 29). Even more relevant to strategic management is that Coles used programs that were meant to ensure that the plans were actualized. As Papulova and Papulova (2006) argue, strategic management would be incomplete if the identified strategies are not implemented. To effect change, Coles evidently used strategic management concepts, which include identifying the changes that needed to take place, identifying the ways and means of attaining those changes, and implementing the identified strategies in order to attain the desired effects. Notably, strategic management theory indicates that such form of management is not without risks (Papulova & Papulova, 2006); however, organizations can anticipate such risks by appreciating the potential threats and/or opportunities. At Coles, Mitchell (2011) observes that “McLeod and the team had to make adjustments after hitting speed bumps along the road” (p. 28). In other words, strategic management is not cast in stone; rather, it is flexible and has room for adjustments. The concept of strategic human resource management has been defined as the “process of linking human resource function with the strategic objectives of the organization in order to improve performance” (Bratton, 2007, p. 37). Borrowing from strategic management above, one could therefore argue that SHRM seeks to use people who form the human resource as a means of attaining competitive advantage. The significance of the SHRM concept in management is that modern organizations are more aware of the strategic role that human resources play in the successful attainment or lack thereof of identified objectives. At Coles, SHRM is evident right from Wesfarmers’ identification of Ian McLeod as the person to steer Coles from its dwindling fortunes. In other words, it appears as if Wesfarmers knew the kind of talent needed to change the tide for Coles. The team that McLeod put together is also an example of strategic SHRM, and evidently, most of the top management working under him were sourced outside Coles. As talent matures at Coles however, Mitchell (2011) observes the management’s intention of recruiting future managers from within the organization. According to Ulrich, (1997), SHRM links “HR practices to business strategy” (p. 89, cited by Bratton, 2007). Ulrich’s observations are applicable at Coles, where the business strategy of the retail chain having been recognized by Wesfarmers, was given another chance to succeed by getting the right talent for the job. Once McLeod and the team were installed as managers, a different form of SHRM can be seen to have taken place – i.e. that of handling employees. At first, McLeod and his management team admits to having failed to acknowledge the worthwhile work that employees were doing. As a result, the team encountered low acceptance of new intervention measures by the employees. In the shop floor, Coles now offers job security to its employees, casual workers are guaranteed specific work hours each month, development programs are back in place as a means of boosting staff development, and performance measurement have been put in place. Reviewed, the SHRM approach in Coles fits into the resource-based model explained by Bratton (2007) where the management perceives the human resource as an asset. To enhance the HR competencies, the managers provide workplace learning where the workers’ values, beliefs and behaviors are shaped in a manner that enhances their skills, competencies, and commitment with the aim of attaining sustainable organizational competitiveness (Bratton, 2007). Tied to the SHRM concept is McGregor’s theory X and theory Y. In theory X, McGregor argued that people generally “dislike work, lack ambition are irresponsible and prefer to be led”. In theory X, McGregor further argued that “people are willing to work and accept responsibility, and are self-directed and creative” (NetMBA, 2012, n.pag.). The significance of McGregor’s theories in management is that organizations need to observe each employee in order to determine whether they fall in either theory X or theory Y, following which the right motivation would be provided. At Coles, McLeod and his management fall into the latter category. In deed, they seem to have joined Coles at a time when its fortunes was on a downhill trend, but their dedication, self-direction and creativity turned the retail outlet performance around. The same cannot however be said about the entire workforce at Coles; as has been noted by Mitchell (2011), absenteeism has reduced significantly since the new management assumed office in 2008. Such happenings can only be interpreted as a validation of McGregor’s theory X that some people prefer to be led. In other words, without leadership, they do not have the motivation to work, or even follow through with their ambitions. Conclusion In conclusion, it is worth noting that for effective and efficient coordination to occur, management needs to foster unity of purpose amongst different stakeholders since that is the main way through which plans for achieving identified goals can be attained. Unity of purpose is only attainable if the management and the other stakeholders understand each other; hence the concept of communication. According to Kumar (1997), although the concept of communication is diverse, its major components include the transmission of information or ideas from one entity to another. Additionally, it is the process through which people understand others and seek to be understood by them. Although the concept of communication is not articulated by Mitchell (2011) in the article about Coles, a keen reader will tell that it was at the centre of all the changes that took place. For example, it is indicated that “regular employee engagement studies and listening surveys are held so staff can rate leadership and progress on policies and strategies (Mitchell, 2011, p. 30). Additionally, it appears that communication with the suppliers and the customers has been improved. References Bratton, J. (2004). Strategic human resource management, In J. Bratton, & J. Gold (Eds.). Human resource management. Basingstoke: Palgrave Macmillan. Group Works (2004). Organizational structure: What’s right for your group? The University of Maine Cooperative Extension, Bulletin, #6108, 1-6. Juenke, E. G. (2005). Management tenure and network time: How experience affects bureaucratic dynamics. Journal of Public Administration Research and Theory, 15, (1): 113-131. Kumar, N. (1997). 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R., Davidson, P., Poole, D., Simon, A., Woods P. & Chau, S. L. (2012). Management: Foundations and applications. London: John Wiley & Sons. Read More