Leadership Failure at Primark - Case Study Example

Abstract

Many organizations are attending to education and training that extends skills, perceptions, and competencies of their leaders. This report evaluates the effectiveness of managerial leadership development in large organizations. Often top management lack adequate leadership skills and competencies. This report evaluates the demonstration of leadership skills in managing the child labor scandal of Primark. This report determines the extent of relationship between leadership development and organizational performance in the light of existing literature and approaches. It also outlines the implementation problems for the intervention programs and provides implications for practical purposes. Thus, this report aims to establish a general knowledge base about managerial leadership development.

Keywords: Leadership, management,

Introduction

Management and leadership development programs are gaining recognition. Global competition has resulted in increased demand in such interventions. The business structure has changed drastically with enhanced communication among sectors and sharing of responsibilities across organization functions (Friedman, 2000). It’s now employee skills that sell products, make decisions and implement development of human resources. There is a need to train the top management to drive organizational outcomes. Human resources practitioners, therefore, are focusing on managerial leadership development interventions to improve the management and leadership skills of employees. An effective leadership provides competitive advantage to the organization (Krohn, 2000).

Human resources (HR) or Human Resource Management (HRM) is an asset for an organization. HR refers to the employees. Accordingly, HRM is the management of an organization’s employees to make them a valuable asset for the organization. Several functions fall under this one single term. It enables an organization to deliver value through its employees. The primary function that it performs involves establishing employee value proposition which help determine the financial numerations and the non-financial numerations an organization can offer. It attracts new employees that can benefit organization’s goal through a rigorous selection process. The primary function or role changes after a particular employee is selected. In the new role HR ensures that an employee complies with the policies and procedures lay down by the organization. In case of poor performances HR devises plans to improve the performance. It observes the progress and makes decision regarding the survival of that employee.

HRM can also be people management. People management is important as it contributes to organizational performance. The organization that deals its employees in fair and ethical manner is likely to undergo lower levels of turnover than the organization treating its employees unethically. Hiring new employees, training them can be both costly and tedious. Organization benefits not only from cost reduction but also from increased efficiency. The fair treatment leads to value creation and provides an organization a competitive edge to its competitor. To increase the performance and efficiency organization goals must involve people management practices by creating a good working environment. Communicating the organizational goals to its employees can ensure better performance delivery. Observing ethical practices, organization can demonstrate corporate social responsibility towards its employees. Moreover, changing work environment has made de-layering, privatization, outsourcing and downsizing a common practice within the organization. The organization structure is become more flat to improve staff communication by reducing levels of management. This means that an organization needs to develop better employee skills to manage its workforce for optimal performance (Yukl, 1989).

This report aims to study the approaches related to Managerial leadership development as it exists at different levels within large organizations. This report also evaluates the role of leadership and management in enhancing and developing organisational aptitude and change capacity.

Leadership and Management Development

In globalised economy, the organizational structure, strategies and culture is rapidly changing. To be successful, an organization not only needs to be effective, profitable and efficient but, it also needs to excel at leadership and management development. Each day managers and employees have to face new challenges and tasks. They need to respond efficiently and strategically. Leadership and management are two different yet same qualities necessary to be adopted by the employees for better performance. Leaders or managers may or may not be the same thing. A critical comparison suggests that there is a clear contrast between the two terms. Leadership is a continuous transforming process where leader need to learn and apply the learning to obtain maximum benefit (Krohn, 2000). Leaders, thus, seek opportunities to challenge and improve the organizational goals. They lead the organization by inspiring and energizing people. Effective leaders develop a vision and motivate other employees to believe in it (Krohn, 2000). Managers or management on the other hand is associated with managing things efficiently. Mangers are required to draft the solutions for the existing circumstances and challenges rather than dealing with implementation of new improved situations. They excel at following instructions by coordinating resources across all processes of the organization (Krohn, 2000). They ensure efficient delivery of the service by solving problems at each level and motivating people to move them in the right direction. For an organization’s employee both skills matter, therefore, an organization shall focus on leadership and management development (Yukl, 1989). The development interventions create managerial values that last long. The programs ensure development of a sustainable and high performing workforce that benefits organization in the long-run. Such programs and interventions polish the core competencies of the employees. Employees manage conflict and delegate tasks and situations appropriately.

Leadership and Management Development Approaches

Literature reviews of development approaches suggest that leadership, management and organizational learning and development are part of the same process. Developing effective managers and leaders is critical in enhancing the competitiveness of an organization. However, Holman (2000) suggests educational aspects of management and leadership development rather than practical. According to Holman (2000), the need for development arises due to four factors. Firstly, management development is essential to create managers that are capable of analysis and can apply theoretical principles (Holman, 2000). Secondly, it helps create the insightful manager equipped with suitable practical skills and understanding and the ability to adapt to and learn from the situation (Holman, 2000). The development also aims at developing a competent manager that has the methodical and essential competencies (Holman, 2000). Lastly, development targets in creating analytical qualities in mangers and leaders so that they are able to confront and build up new modes of action (Holman, 2000). Gosling and Mintzberg (2004) suggests that management and leadership development must be built upon certain doctrine. Development programs and interventions should be focused on practicing managers and should integrated work and life experience. The learning process should be reflective and must result in organization development. It must be an interactive process. The approach focuses on the opportunity that can be created as a result of management and leadership development practices. It also reflects on the importance of integrating the learning process into all aspects of organizational functioning. Yukl (2006) suggests that there are certain characteristics that are necessary for successful management and leadership training. The learning objectives must be clearly laid out and must be clear in meaning and content. The learning objectives must align with organizational goals for practical purposes. The development interventions should provide timely feedback and follow-up activities. Interventions that involve these aspects yield positive results for organizational performance as well as positively impact management and leadership capacity. These approaches focus on individual as well as collective aspects of management and leadership development. Developing individual leaders will not benefit the organizational functionality. Development should be targeted to improve overall management and leadership of the organization. Managers need to possess necessary knowledge and skills to lead and exert an influence. Therefore, management and leadership development is more likely to be successful in organizations where management is already effective. Thus, organization needs to involve its employees in activities that ensure mutual strengthening of employees and organizational performance. Management and leadership development and other organizational processes demonstrate what organization values and rewards to external environment. It also ensures the desired outcomes. Thus, it appears that development programs and interventions, if aligned with strategic objectives are likely to produce positive results.

Adopting a particular approach to management and leadership development requires a clear understanding of theoretical assumptions. An organization needs to adopt the approach that enhances individual, group and organizational capability and also results in positive performance.

Case: Leadership Failure at Primark

Globalization has transformed the way an organization operates. Technological advancement has made transportation and communication easy. Global business operations have become much easy due to reduced distances and fluid communication. The business methods and procedures are much more efficient to gain maximum profit. Fashion Industry is not far behind. Many production chains have extended their operations worldwide due to increased consumer demand. The industry is driven by profit maximization and efficient supply chain. The major outsourcing is done in developing countries production costs lower. Availability of cheap labour and material inputs has made production a profitable opportunity. Developing countries who’s “Gross Domestic Product” is primarily driven by “Foreign Direct Investment” from the foreign businesses ensure that these businesses enjoy high profits by utilizing lower operating costs. Corporate Social Responsibility ensures that these global businesses follow business ethics strictly and practice their responsibility to the society in their operations (Reacting to Bad Publicity over Sweat Shop Issue: The Case of Primark, 2011).

Primark is a well-known and well established consumer retailer. It is involved in the retail of clothing, footwear, lingerie and home-ware accessories (Reacting to Bad Publicity over Sweat Shop Issue: The Case of Primark, 2011). One of its brands Associated British Foods is involved in retail of food ingredients. It has more than 200 stores all over Europe and is a major supplier in more than 16 countries globally (Reacting to Bad Publicity over Sweat Shop Issue: The Case of Primark, 2011). It differentiates itself from its competitors on the basis of its designs and fabrics. The success can be attributed to cheap sourcing and selling in stocks and bulks. Low Prices are maintained to benefit consumers. Primark also enjoy high sales and economies of scale. Primark efficient production and minimal advertising ensures the operating costs are low. All the products and brands are made specifically for the company (Reacting to Bad Publicity over Sweat Shop Issue: The Case of Primark, 2011).

Recently Primark has been facing problems related to child labour issues and unethical business practices. The problem started in 2005 when, Primark ranked lowest on the ethical index (Reacting to Bad Publicity over Sweat Shop Issue: The Case of Primark, 2011). Ethical Index is related to workers rights and ethical business behaviours. In 2008, BBC aired a documentary and exposed Primark for its poor working conditions in its Indian Factory. Child Labour was also exposed and Primark was boycotted by its consumers because child labour is the worst of unethical practice (Reacting to Bad Publicity over Sweat Shop Issue: The Case of Primark, 2011). However, Primark denied any knowledge of such practices. Consequently the management condemned all suppliers for such neglect and cancelled their orders from such suppliers. Such a move heightened the problem and Primark was criticized for making it difficult for the workforce rather than improving their working conditions and pay. Later another report added to the wounds, claiming worse working conditions in Bangladesh factory. The report further highlighted the issue of precarious work, low wages and over exhaustion due to ridiculous working hours(Reacting to Bad Publicity over Sweat Shop Issue: The Case of Primark, 2011).. Terrible working conditions and unethical conduct was also reported in UK factory. Further Investigation exposed the unethical and dishonest employment practices (Reacting to Bad Publicity over Sweat Shop Issue: The Case of Primark, 2011). Despite the heavy repercussions, Primark stepped up to protect its tarnished image. It proposed a new mission statement that targets sustainability (Reacting to Bad Publicity over Sweat Shop Issue: The Case of Primark, 2011). Primark implemented an ethical director to audit all the suppliers to maintain good working conditions and demonstrate corporate social responsibility. It also included transparency in its objectives to portray a positive image. This is certainly a big ask as Primark management shall have to work hard to implement the new strategies and a continuous and effective monitoring shall be required to avoid further damage.

Several other companies have also been accused of unethical and inhumane practices. One such is example of Gap, Inc. Gap was blamed for child labour and misconduct of its employees in 2003 and its reputation was severely affected. Despite the trouble, Gap made a comeback with effective management practices.

Primark suffered due to leadership failure. Effective countermeasures and counter strategies needed to be implemented at the start of the problem to control the damage. Primark poor management of the crisis aggravated the problem. This suggests that there exist a relationship between effective leadership/management development and organizational performance. Effective leadership management development and organizational performance are all parts of the same process. An organization’s efficiency depends on an effective leadership management. An organization therefore needs to attract, develop and retain capable leaders/managers that understands what is required of them and are able to demonstrate commitment in the face of challenges and opportunities presented to them during the job.

Accordingly, the question arises what are the ways to ensure that leaders/managers behave responsibly? Evaluating effective managerial leadership development interventions that can be adopted by an organization shall answer the question.

Significance of Leadership and Management Development

Leadership and management development and training is adopted, as organizations are concerned about leadership competences and skills adequacies in their employees (Conger & Benjamin, 1999). Gibler, Carter, and Goldsmith (2000) asserted that organizations are recognizing the significance of leadership and management development programs as it is evident from budget increase. Kelnke (1993), leadership and management education is no longer focused on individual leaders rather evident across entire organizational process. Persistent focus has been on leadership development interventions but little is being done to evaluate the effectiveness of these development programs to improve the organization’s performance (Sogunro, 1997). Organizations assume that management and leadership development interventions will result in improved leadership skills and influence organizational performance. Brungardt (1996) defines leadership development as growth and development of a life cycle of individual to enhance leadership potential and ensuring extension of knowledge and technical know-how. Organizations do not pay much heed to evaluate the effectiveness of training programs as it is difficult to pinpoint the exact competencies required for an accomplished leader (Collins, Lowe, & Arnett, 2000). Organizational structure is complex itself and needs a different set of management and leadership skills in different situations (Sogunro, 1997).

Managerial leadership is a traditional term and according to Sourcie (1994) it is a mixture of skills, knowledge, information, courage and hard work. Individuals that gain leadership have to maintain a balance in demonstrating leadership and management (Holton & Naquin, 2000). It can be further explained in terms of high-performance leadership. According to Holton & Naquin (2000), it involves managing and leading people and organizational systems to achieve effective individual and organizational goals.

Conclusion

For organizational performance and for establishing a sustainable environment developing strong and inspiring leaders is essential. Effective managerial leadership development interventions focus on all levels of organization rather than developing skills on individual level. To ensure organizational development sharing of information and techniques is required. In large organizations teamwork is important and management goals are to be aligned with organizational strategic goals. Improving people quality management can be beneficial for an organization in monetary terms. A skilled workforce improves organizational performance. It provides gains not only for the industry but economy as a whole. Hence, organizations should implement development interventions at each level of organization.

Implications

Organizations sponsor leadership development interventions without evaluating their effectiveness. Literature indicates that organizations believe that interventions will produce timely results if the interventions are properly implemented (Holton & Naquin, 2000). Hence, some development interventions are successful and some are unsuccessful. Leadership development is a complex phenomenon as it has overlapping competencies. It may results in behaviors that are not suitable for organizational function. Training interventions along that not only develop skills but also impart knowledge to the participants are highly effective. Therefore, a careful selection of managerial leadership development intervention ensures organizational performance. In this regard human resource development has a key role to play. They should identify the right program for the organization that is aligned with the strategic goals of the organization.

In order for effective implementation of an intervention an organization should conduct a needs analysis that ensures that resources are targeted to achieve maximum impact for the participants (Conger & Benjamin, 1999). The organization should implement an intervention that focus on objectives to address the obstacles impacting the implementation of strategic goals. Organization should conduct surveys prior to development intervention to assist the program (Sogunro, 1997). The survey should cover information regarding planning and decision making and should evaluate analytical skills of the participants. This will enable the program to attend to fundamental leadership challenges faced by the organization (Kelnke, 1993). Most effective managerial leadership development programs are those that focus on increase employee understands of organization’s strategic goals. This enhances the employee’s capabilities and enables an organizational change best suited for the performance. There is also a need to organize managerial leadership development interventions for the top management. Focusing on senior management shall be effective as the top management share a vision and transform it across entire organization (Kelnke, 1993). This is critical with regards to multinational organizations where most of the functions are outsourced globally.

Managerial leadership development interventions should be focused on uniting individuals across all levels of organization (Sogunro, 1997). Organization structure has changed drastically with sharing of responsibilities among all levels of organizations. Interventions should, therefore, focus on integrating multiple leadership perspectives to ensure consistent understanding of strategic goals.