5/5/2010 | Plymouth MBA| a case study on JOHN LEWIS| Identify and evaluate how a knowledge of human resource management can improve a manager’s efficiency and effectiveness in managing cultural change Contributors: Ayisat abiola Akande Chris Harper Justina Brown-Biney Phuti Tebogo Manyathe Introduction Though an examination of human resource management theories, the authors of this document intend to demonstrate how a practical application of this knowledge can assist in effectively managing the process of cultural change in an organization. This will be done through a case study of the company John Lewis.
It will outline their current organizational model, examine the impact of and their reaction to, the economic recession since September 2008. Recommendations will also be made to address the necessary actions and changes to their organizational structure in order to increase their chances of survival in the economy of the future. Background on John Lewis The company John Lewis was founded in 1864 and since that time has been operating on the basis of profit sharing. Its founder John Lewis later turned over the business to his son John Spedan Lewis in 1920, who continued to build on the philosophies of his father.
He went on to formalize the profit sharing concept into what we recognize in business today as a partnership. Organizational Culture Since the move from pre-industrialized society, to the division of labour at the turn of the 20th century, there has been an emergence of specific methods of organizing the ways in which these new large groups of workers were managed. Although times have changed and the work force has shifted from the mechanized infantries of the industrial revolution, to the more flexible and contractual workforces of modern times, many things still stand true today as they did back then.
Organisations will, over a period of time develop a culture, whether by choice, or by evolution. Culture has been defined simple terms as “How things are done around here” (Jordan, cited by Martin, 2006). It has also been analysed by academics such as Charles Handy in his description of The Shamrock Organization (Handy, 1989a). This is divided into a Professional Core, Contractual Fringe and a Flexible Labour Force. He also dissects organizational culture into four distinct types of cultures, identified as Power, Role, Task and Person (Handy, 1993b). The culture adopted is intended to best serve the needs of the organization.
The company John Lewis was build on a culture and guiding philosophy of a partnership where all the workers were also the owners. It would therefore appear that John Lewis’s approach to organizational culture aligns with some psychological theories on employment relationships. This psychological contract is defined as “individual beliefs, shaped by the organization, regarding the terms of an exchange agreement between individuals and their organization” (Rousseau, 1995, Cited by Bratton ; Gold, 2003, p. 13). Having a workforce made up entirely of partners who share the profits of the company’s success, has several benefits.
These include a “buy in” from most of the partners, job security and satisfaction, high motivation, and lower stress and absenteeism. Others support this belief and stated “We simply do not believe our employees have an interest in coming in late, leaving early and doing as little as possible…. They are adults. At Semco we treat them as adults. ”(Semler, 1999, p. 256). This would seem to suggest that with ownership comes responsibility. However, Hofstede would view this quite differently in his analysis of organizational culture across international boundaries.
Hofstede noticed that there were clear cultural differences between the nationalities, concluding that they were significant enough to be taken into serious consideration by companies conducting business globally. He categorized them into four groups which he identified as Power Distance, Uncertainty Avoidance, Individualism and Masculinity ( Hofstede 1980, Cited by Handy 1993, p. 196). Hofstede’s model has been criticized as having a limited theoretical framework because the surveys he used were not designed with his work in mind, but rather, were for IBM’s internal purposes (McSweeney, 2002, cited by Magnusson et al 2008, p. 86). Its vaidity has also been questioned in the absence of a feminine perspective, largely because his surveys were mainly of white middle class men from one company ( Moulettes, 2007, p. 443-445). Until the beginning of the world economic recession in September 2008, John Lewis’s model could have been considered a very successful one. However, given the current economic climate, John Lewis has been forced to review their organizational structure with a view to the company’s survival in the future. For the first time in John Lewis’s history, partners have had concerns about their job security.
Two events signalled a change in the outlook. Firstly, the company’s decision to close the Stevenage distribution plant which had become obsolete with the introduction of the new automated Milton Keynes plant. 200 partners were made redundant by the closure of the Stevenage plant. Secondly, as a result of the overall decline in the company’s performance in 2009, it was decided to make another 40 partners from the head office redundant. This has changed the overall mood of the partners, creating feelings of insecurity and questioning the model and their relationship to it.
This kind of dissent in the ranks could have serious implications for the future of the company’s current organizational culture (JL TV doc. 03/2010). Team Management and Individual Behaviour Team Management has been described as: “A group whose role is formalized and legitimized and whose purpose is problem solving or decision making”(Duvall ; Erickson, 1981). “Nobody is an island on his or her own and projects are easier to execute where there is more than one collaborators, especially with mutual understanding and team spirit. ”(Gilbert, G. N. 1996) John Lewis’s success depends greatly on team management.
The Team takes care of both internal and external affairs of the business. Managing director Andy Street, believes that in leading teams it is important to understand the different approaches. He meets his Team once a month, or sometimes every two weeks to plan project, discuss commercial activities and also talk about any other challenging issues pertaining to the day to day activities of the business. According to Katzenbach and Smith(1998), directors and senior management are turning to team working for one reason only, because when it works, it works very well.
Any company that has its team management under control, will notice that people work more efficiently, contributed more and are less stressed. Every good Team Management requires sound leadership, good working agreement between the board and its administration, an organizational model suitable for the company and also the strategies used. It is therefore no surprise that John Lewis is a good example. Effective Team Management is a powerful and dynamic force in any organization. For this to be possible some key features, such as those listed below need to be explored by John Lewis’s management team. The methodologies associated with individual teams. * Addressing the welfare of partners. * Communicating , encouraging and supporting team members who are experiencing difficulties. * Equality among team members and information sharing are critical. Teams must have unrestricted access to all relevant information. * High levels of sales and profit monitoring encouraged by, the bonus scheme. For a business to succeed or fail, depends greatly on having the right individuals to do the right job. John Lewis believes individual behaviour is important to their success; they therefore train and judge their Partners on their 6 Principles.
PBOP ‘Powered by our Principle’. (JL TV doc. 03/2010) This defines John Lewis’s culture and the behaviour they expect from every Partner. They are expected to be honest, give respect, recognise others, show enterprise, achieve more and work together. Even though partners have confirmed that John Lewis is a good place to work, following the recent announcement of about 200 job cuts from Managing Director Andy Street, individuals have expressed their disappointment that JL is no longer living to its reputation of being a job for life. Partners now feel apprehensive about how deep the cuts have to go they believe that John Lewis s not a caring partnership anymore and view it as a business. It is clear from the above that for any Team Management to succeed or work effectively, it is vital that the aims and targets are made clear and also to be able to share responsibilities and benefits of its achievements. Such an approach is a good opportunity for the team to recognise each other’s strength and weaknesses. This is a very good tool to use for all future projects, in order to make sure goals are met. It has been said, “this avoids the problems caused when Everybody, Somebody, Anybody and Nobody do not work as a team” (Michael Nieto 2006).
Change management As regulatory pressures increases customer demands and competitive forces impact industries worldwide, change is becoming the norm rather than the exception. It is becoming increasingly important for managers to act not only in their traditional roles as managers, but also as transitional leaders. A role that focuses on guiding people through these changes is inherent in different industries today. The most obvious definition of “change management” refers to the task of managing change. Managing change has been referred to in two ways.
Firstly, making changes in a planned and managed or systematic fashion. Secondly, is the response to change in which the organization has little or no control over, such as legislation, social and political upheaval, the actions of competitors, shifting economic conditions (Ricky, 1990). Everyone in an organization is generally concerned and involved with change, irrespective of the size of organizations. However, Colin Carnall (2007) defines change management as the process to plan, initiate, realize, control, and stabilize processes on both a corporate and personal level .
He believes change is the continuous adoption of corporate strategies and structures to changing external conditions. Change management comprises both, revolutionary one-off projects and evolutionary transformations. John p cotter (1995) believes change management entails thoughtful planning and sensitive implementation, and above all, consultation with, and involvement of the people affected by these changes. Change must be realistic, achievable and measurable. According to W. Hettinger and V. Grover (2000), when leaders or managers are planning to manage change, there are five key principles that need to be ept in mind: * Different people react differently to change. * Everyone has fundamental needs that have to be met. * Change often involves a loss, and people go through the “loss curve”. * Expectations need to be managed realistically. * Fears have to be dealt with. The impact of the 2009 recession was difficult for John Lewis, forcing profits down by 50% from ? 40million in 2008 to ? 20million in 2009. The tumbling profits revealed strains on the structure of the organisation prompting Andy Street, the head of John Lewis, to make two significant changes.
Firstly, to cut cost behind the scenes and secondly, to boost sales in shop floor. In order to do this, Andy Street had to embark on a project that would drive cost down and more importantly boost sales over the long term. (JL TV documentary 03/2010) He implemented three big ideas to achieve his aims: 1. To cut cost, by making some “partners” redundant 2. To change the public’s perception of John Lewis’s fashion department (introducing a contemporary approach) by targeting younger customers, but without eliminating the “ladies” of a certain age.
Initially JL had a reputation of a place where women between the ages of 40-50 years bought clothes and they were not generally known as a fashion retailer. 3. To transform empty retail units across the country into mini JL stores. These stores would be focusing on the sale of electronics and home ware and will be built in cities and towns around the country. Andy Street was able to demonstrate the following principles during implementation of the change. He gave people information and he was open and honest about the facts.
He produced a communication strategy that ensured information was disseminated efficiently and comprehensively to partners. He gave people time, to express their views, whist providing coaching, counselling or information where appropriate, to help them through the change. He created an opened door policy, so partners could air views. He made contingency plans to compensate for losses. Finally where he embarked on this large change programme, he treated it as a project, applying all the rigours of project management to the change process. LEADERSHIP AND MANAGEMENT
Leadership is a matter of making a difference. It entails changing an organisation and making active choices among plausible alternatives. It also depends on the development of others and mobilising them to get the job done. Today, leadership is increasingly not associated with command and control, but with the concept of inspiration. This can be achieved by correlating with colleagues while creating a vision which others can identify with. Management is usually viewed as getting things done through other people in order to achieve stated organisational objectives.
Management is regarded as relating to people working within a structured organisation and with prescribed roles. “The manager establishes plans budgets, designs and staffs the organisation structure, monitors and control performance and delivers order and predictability” (Mullins, 1996). “Despite the differences, there is a close relationship between leadership and management style in work organisation, and is not easy to separate them as distinct activities” (Adair, 2007).? LEADERSHIP AND MANAGEMENT STYLE IN JOHN LEWIS
Buchanan and Huczynski (2004) states that “the most effective leadership and management style depends on the context of organisational structures, management skills, employee characteristics and the nature of the task”. No particular style of management is universally the best. However, (Lewin, 1939) argues that there is sufficient research to indicate that a considerate, participate or democratic style of leadership would tend to be more effective and the choice of most organisations. Lewin and Lippitt have presented what has become the classic formulation of democratic leadership ( Lewin;Lippitt, 1939) .
They distinguished democratic leadership from autocratic and laissez-faire styles, arguing that democratic leaders relied upon group decision making, active member involvement, honest praise and criticism. By contrast, they state that leaders using Autocratic or Laissez-faire style are either domineering or uninvolved with the employees. John Lewis is a democratic organisation where all employers from lower skilled to upper skilled are called partners. The Company has instituted a system that attempts to control how managers perform. This is one through anonymous letters that are published internally in a magazine published by the Company. Employees are able to register any problems or complaints that they may encounter and can therefore effect change in the Company. Each Manager in John Lewis is required to respond to these anonymous letters in a manner that is truthful. They are also required to treat each member with respect, regardless of their status in the Company. Such an attitude contributes towards employee satisfaction and ensures that all staff members feel like they are part of the team, irrespective of their salary scale or the skills they possess. Maund, 2001). The leadership functions are shared with members of the group and the manager is more part of the team. All the partners have a greater say in decision-making, determination of policy, implementation of systems and procedures. An important element of effective management is to inspire staff and to motivate them towards working well, promotion team spirit. A good manager welcomes constructive criticism, no matter where it comes from. However, most managers’ dislike being criticised and this is a characteristic failing of democratic management in organisations.
John Lewis’s democratic way of working seems to be effective for the company due to its success. However, according to the Guardian Newspaper, not all managers like to be criticised and been given instructions by their junior staff and as a result, a company like John Lewis can have a number of management staff leaving the company which is very expensive for the company in terms of constantly training new management. Additionally, democratic ways of working might include too much responsibility for some employees who cannot handle decision making and pressure.
Some employees can also abuse the increased power given to them, taking decisions that reduce their personal workload. (Guardian, 2008). Conclusion The fast moving pace of the recession forced John Lewis to make swift and radical changes to their models in order to survive. These changes can be considered negative or positive, depending on the perspective you choose to view them from. However, it is now clear from the evidence presented above, that there has been a change in the general collective atmosphere at John Lewis. The sudden changes have divided the ranks and forced partners to dopt more of an individual view. This caused the partners to express concerns for their personal futures and question their commitment to the company. With a knowledge and clear understanding of the HRM theories demonstrated in this document, John Lewis will be able to plan for future changes and effectively manage the change process with success. The authors of this document therefore recommend that John Lewis, over the period of ten years, change its organizational structure. We propose that they do this by staggering the process in phases.
In doing this, they will move John Lewis more towards a shareholder company, starting with cancelling the partnership model as well as the profit sharing scheme. All new staff should become employees and existing partners will have the option to redeem their partnership value for shares in the new organizational arrangement. This will allow John Lewis to perform with more efficiency and encourage investment from external sources, like the sale of shares on the open stock market. This new investment and freedom will give the company the flexibility to become more competitive.
Taking all of this into consideration, what is needed now is to evaluate and manage the changes that are necessary for the company to exist in the economy of the future. It is also imperative that during process, John Lewis effectively communicates these ongoing developments to their partners, should they continue view them as such. ————————————————- ————————————————- References * Adair, J. , 2007. Develop your Leadership skills. 2nd ed. London: Kogan Page Limited * Armitage, J. 2008: Lush to adopt John Lewis set up; London: Retrieved from http://www. urdian. co. uk/ accessed on 1st January 2008 * BBC Broadcast on John Lewis Mar 2010, 21:00 on BBC Two: Narrator: Julian Rhind-Tutt; Producer: Liz Allen; Producer: Kimberley Littlemore Executive Producer Julian Mercer. * BRE Group: Building Research Establishment. http:/[email protected] co. uk [accessed April30th 2010] * Brooks, I. , 2003. Organisational Behaviour: Individuals, Groups and Organisation. 2nd ed. London: Pearson Education Limited. * Buchanan, D & Huczynski, A. , 2004. Organisational Behaviour an Introductory Text. 5th ed. Essex, England: Pearson Education Limited * Carnall, C. (2007) managing change in organisation, ft Prentice Hall London * Gilbert N (1996) Holism, individualism and emergent properties. An approach from the perspective of simulation. In: Hegselmann R, Mueller U, Troitzsch KG (eds) Modelling and simulation in the social sciences from the philosophy of sciences point of view. Kluwer Academic, Dordrecht, pp 1-27. http://www. portal. acm. org/citation. cfm? id=1355945 [Accessed April 20th 2010] * Handy, C. , 1989a: The Age of Unreason, England: Arrow, p. 72-75 * Handy, C. , 1993b: Understanding Organizations, England: Penguin Books, p. 83-190 * Hofstede, G. , 1980: Cultural consequences. In: Handy, C. , 1993: Understanding Organizations, fourth edition, England, Penguin, p. 196. * John Kotter (1995) ‘Leading Change’ Harvard business school press USA * Jordan, A. , 2003 In: Martin, M. , 2006, “That’s the way we do things around here” An Overview of Organizational Culture, volume 7 issue 1, p. 1 http://southernlibrarianship. icaap. org/content/v07n01/martin_m01. htm [Accessed April 27th 2010] * Katzenbach, J. R. and Smith, 1993 ‘The Wisdom of Teams: Creating the High-Peformance Organization’. nd ed. Boston MA, Harvard business school press. * Kettinger, W. , & Grover, V. , (2000), process think: winning perspectives for business change in the information age , idea group publishing USA * Maund, L. , 1999. Understanding People and Organisations: An Introduction to Organisational Behaviour, 2nd ed. Cheltenham, England: Stanley Thornes * McSweeney, B. , 2002: “Hofstede’s model of national cultural differences and their consequences: a triumph of faith and a failure of analysis”: In: Magnusson, p. , Wilson, R. T. , Zdravkovic, S. , Zhou, J. X. , Westjohn,S. A. Breaking through the cultural clutter, A comparative assessment of multiple cultural and institutional frameworks, volume 25, Issue 2, p. 185. http://www. emeraldinsight. com/Insight/viewPDF. jsp? contentType=Article&Filename=html/Output/Published/EmeraldFullTextArticle/Pdf/0360250203. pdf [Accessed 26th April 2010] * Michael beitler 2nd edition , strategic organisational change Greensborough NC USA * Moulettes, A. , 2007: The absence of women’s voices in Hofstede’s cultural consequences, a postcolonial reading, p. 443-445. http://www. emeraldinsight. com/Insight/viewPDF. jsp? contentType=Article&