Woolworths group plc operations in terms of management and leadership - Essay Example

Table of Contents Terms of Reference 2 Summary 2 Introduction 2 About Woolworths 3 Leadership 3 Management 5 Production management 7 Financial management 7 Personnel management 7 Failure of Woolworths 8 Leadership role for Woolworths 9 The Dark Side of Leadership 10 Management and Leadership Styles 11 Implementation Plan 11 Woolworth Culture 12 How Woolworth Can Move On 13 Change of Business Strategy 13 Change of Business Leadership 14 Woolworths Training method 14 Recommendations 15 Conclusion 15 Terms of Reference This report will be aimed at the chief executive officer (CEO) of Woolworths. The report aims to evaluate the operations of Woolworth’s group plc, its leadership and management styles to understand where the Company failed. The purpose of the report is to deliver a suggested plan in order to move the company forward. The report will use theory as well as practical examples and analyse practical areas of improvement. Summary The report provides an analysis of Woolworth’s group plc operations in terms of management and leadership to understand the reasons behind its failure. The report discusses management, leadership, and their application in evaluating the operations of Woolworths Group. The report also gives recommendations on what the company should have done to ensure its success and finally the conclusion of the entire report Introduction The need for developing leaders and managers evolved long time ago. Since then, an increasing range of approaches with different interventions has developed some focusing on education of managers, others on training and development skills, behavioural elements of roles and others on holistic approaches to personal development within the workplace. The array of methods and interventions are still growing along with different types of developers ranging from in-house generalists, educational institutions and to externally outsourced experts. However, the intervention used must be appropriate to the environment and individuals willing to learn. Leadership and management development is still growing immensely within organizations and often-in isolation from the HRM and other personnel. While there may be reasons for the isolation, it is important that there exist a link between major human resource management and development areas. In addition, the functions should be able to contribute to and be part of business strategic planning to secure the company’s future senior leaders and managers. Leadership and management development involves the development of individuals and of company’s capacity in respects of operational, goal achievement, trust/direction dimensions. The report looks at the operations of Woolworths Group plc, to examine its leadership and management strategies to give us an understanding of where it failed and how it can revive itself again. About Woolworths Woolworths is an organisation that was formed by the split of Kingfisher and it started trading as a listed company in August 2001. The company specialised in the sale of goods like children clothing, stationery, toys electric goods and confectionery. The company did well in its first four years of its establishment but in year 2005, it faced a decline in its business operations and finally it went into administration on 27th January 2009 (ICMRINDIA, 2015, p.1). The company made story lines being one of the biggest victims of the recession. The mission statement of the company read ‘was directed towards becoming the best and most valued vender for family, home, and kids leisure’. The vision statement of the company was ‘to provide quality products and services to customer all the time through price strategies.’ Leadership According to Armstrong 2012, leadership is the ability to convince others to behave differently willingly. It is a process that influences people and making them do their best to achieve a desired outcome. Leadership has also been defined by Northhouse (2010, p.3) as a practice in which an individual affects a crowd to complete a common objective. From these definitions, it is evident that leadership is a process, influence, arises in the setting of a group, and aims at achieving a specific goal and those leaders and their followers share these goals. Armstrong (2012, p.4) noted that leadership involves growth and communication of a vision for the future while motivating people and securing their commitment. This shows clearly that leadership plays an imperative function in leading a company like Woolworths. Failure of leadership can lead to declined achievement of a company, and this may be the reason behind the collapse of Woolworth’s. Leadership is more concerned with the internal affair of the companies such as motivating employees, influencing them to be more productive thus very crucial to have an efficient leader (Fairholm, 2011, p.132). Developing leaders and increasing the internal leadership capacity is one of the key issues that Woolworths faced. In defining management and leadership, it is important to differentiate between the two. The growing need for strong leadership is evident in collapsing of large organizations like Woolworths. The increasing ambiguity and uncertainty in businesses, today and the tumultuous business and regulatory environment call for the need to identify and develop internal leaders. According to Kotter (1999.p.1), leadership is not the same as management. Leadership is the primary source of any successful change in a Company. Poor leadership leads to increased mistakes within a company, and this result into failure in the end. According to Malewska, and Sajdak, (2014, p.2), the ability to transfer visionary leadership to operational management determines the success of an organization in the market. Looking at Woolworths Company the company did not manage to transfer this leadership, a move that led to its failure in its operations. In the business environment, the market is changing rapidly, and many products and services that once satisfied customers become obsolete very fast. Therefore, Woolworth’s leadership would have been more powerful and proactive in order to monitor the environmental changes especially the customers buying habits and motives and offer the force needed to organize resources in the right direction. Adewale, (2010, pp.19-20) noted that effective management must follow efficient leadership because no management achievement can compensate for disappointment in leadership. An aspect of thought suggests that leaders are born rather more than they are made. However, it is also possible to support the development of leadership skills and behaviour in individuals and to seek to develop a continuing legion of potential future leaders within a company (Carmichael, 2011.p.3). This ensures that the company is not affected by sudden happenings that may result in the absence of the current leader. Management Rudani, (2013, p.5) defines management in two different ways. First, he defines management as a knowledge comprising of concepts, principles, functions and processes. The knowledge is fundamental in achieving organizational goals through the effective utilization of resources and coordinated human efforts. Secondly, he defined management as a process of planning, organizing leading and controlling human efforts to meet the objectives of a company. Management according to Stuhlman ( 2015, p. 1) is the organizational process that involves strategic planning, managing resources, setting goals, deploying personnel and financial assets to meet set objectives. The managerial functions include forecasting and planning, organizing the overall organization operations, commanding the workforce, coordinating the flow of operations and controlling the operations (Bose, 2012, p. 4). Examination of these definitions and functions presents clarity that management plays a key role in a company like Woolworths. The role of Woolworth’s managers from the above QWDQS definitions involves the managerial function of planning and forecasting which involves establishing goals and determining how to achieve those objectives. Planning involves forecasting, identifying the strengths and weaknesses of the internal environment and external opportunities and threats (Gupta, 2009, p3).The success of planning lies in the manager’s ability to forecast future situations appropriately and accurately. It is clear that the manager at Woolworth Company failed to forecast for the dynamic changes in business environment. Tastes and preferences of customers vary from time to time and so does a new competitor emerge to meet the varying needs of buyers. It takes an aggressive manager to plan ahead and make prompt and accurate strategic decisions regarding an emerging scenario changing the operations was key to enable Woolworths increase its effectiveness and efficiency. To minimise costs, Woolworth’s managers could have employed measures such as downsizing and restructuring operations, and the manager may have opted to outsource some activities in a bid to increase the efficiency and effectiveness. In addition, Woolworth managers could have used self-managed teams and empower their staff to motivate them for them to be more productive. Change in operations is only possible through the presence of an efficient manager. Use of IT is a key strategy that is enabling managers to achieve these goals of efficiency, effectiveness, and cost reduction. (George, 2009, p.31). Efficient management of workers and work is one of the key roles of a manager that makes work more productive. To achieve this productivity, Woolworth’s managers must first identify the work that needs to be done and organize it accordingly. The next step that the managers should take is to organize work and workers into functional departments and positions, the step ensure effective delivery of services. Upon accomplishing this task, the next step is achieving productivity by building a cooperative spirit among the workers through leadership and motivation. Failure to that, the organization is left behind in term of new developments that in turn leads to loss of customers and, in the long run, the business fail. Besides the marketing function, Management has three other functional areas that are production management, marketing management, financial management and personnel management. Their contribution to effectiveness is determined by skills, aptitude, attitude, ability, and knowledge. However, top managers have crucial responsibility in improving the effectiveness of a company. The efficacy of a manager can be weighed in terms of the resulting outcomes. These outcomes can be profits, customer satisfaction, employees’ morale, market fame or even market leadership Production management Production is a key activity in business the role of this function is to manufacture products that will meet the prospects of the customer in terms of quality, features and performance in the precise capacity and at the accurate time. Woolworths Company would have taken advantage of this function to come with unique products to differentiate its products from those of the competitors. Financial management This function defines the lifeblood of an organization. It is crucial for better business performance. The functions include roles such as planning, raising and utilizing funds effectively. Examination of Woolworth’s scenario, it is clear that the financial management function failed its part such that the company struggled to function under the debt. The issue of finances grew over months such that the suppliers demanded cash on delivery upon making a supply. Personnel management This function refers to human resource management. It is an important function as the achievement of an organization is reliant upon the type of personnel in the organization. Woolworth’s human resource department did not play its role effectively by recognizing employees as the great assets of the organization. The function has the role of ensuring employee welfare which is measurable by their productivity which impacts the entire company positively which was not the case with Woolworths. The overall effectiveness of a company depends on the contributions of employees, groups, and the entire company. Managers at all ranks have a vital part in ensuring overall effectiveness of a company. Failure of Woolworths Woolworths had failed as it became bankrupt according to (The telegraph 2015) Woolworths was a high street retailer since 1909 when the company was founded. The high street was forced into administration and closed its doors in 2009. The failure of Woolworths has many different reasons. The first reason that we can attribute to this failure is poor management. Every organization is comprised of departments that have distinct roles to play. Looking at the scenario in Woolworths, one can conclude that the marketing function deals with selling of the product did not play its role effectively in ensuring that the goods on the shelves have remained sold. In the world, today consumer awareness is in the frontline making marketing management a difficult, challenging and dynamic, but again it is the role of the marketing manager to be proactive to deal with the changes. Marketing management has the highest status amongst all other business fields. It is a crucial function in every company especially now that competition is very high. It has the role of preparing strategies to respond to competitors, a responsibility that the Woolworth marketing department did not play effectively. According to BBC, (2015, p.1) the worsening situation at Woolworths company lasted for some time and the company was so weak such that the UK government could not intervene to salvage the company. The failure was down to the fact that the company was unable to sell stock that was sitting on its shelves and the fact that they had borrowed credit in order to fund their entire operations. Woolworths collapse shows us how the controversial and complex insolvency process in the UK takes place. The other key element is the decisions and the roles the company’s executives had to play; that could remain based on what their advisers may have advised them. According to BBC (2015, p. 1), Woolworths was left in a three hundred and eighty five million pound debt. The company struggled to function under the debt, and the problems only got worse over months when it was forced to pay for goods with cash because the trade credit insurers were not prepared to insure suppliers to the company, which eventually led to them declaring themselves bankrupt. The accountancy firm that had advised Woolworth’s banks before the collapse and then acted as the administrated after the collapse, gaining huge fees in the process, left some questions to think about. The leadership and management of Woolworths have an imperative part to play in regards to this failure, and the question remains; if the executives at the time took different, decisions this could have led the outcome have been different. Leadership role for Woolworths According to Manion, (2011, p.13) management and leadership differ, and their roles are equally important to a company. The executive board at the time made decisions that led to the failings of the organisation. Armstrong (2012, p.4) describes the meaning of leadership as a method used in order to lead people by inspiring, influencing and guiding them. Armstrong (2012, p.4) also described leadership as the ability to persuade others to behave differently. The case of Woolworths remained partly blamed on leadership decisions and a lack of vision from the executive board. Visionary leaders are inspired by knowing what is coming in ahead of them in the future, and the leaders inspire the followers by facilitating them with support in order to get there. Leader must have established a psychological image of the end goal; this image must be realistic even if it is vague (Armstrong 2012, p.5) The vision statement of the company was ‘to provide quality products and services to the customer all the time through price strategies. It manifests that they could not achieve their vision due to the fact they fell into bankruptcy. The role of creating a vision statement lies into top management, the creation of a vision statement that compels and makes a distinction between leaders and managers. However, a successful leader is the one that who has the practicality to change the vision into a reality. The conversion process is only possible through the strategic planning process (Bertocci, 2009, p.16). The presence of highly efficient employees who focus on the vision of the company is necessary for an organization as it can help reduce the number of formal managers. The decrease in number of official managers calls for an increase in the number of leaders to ensure efficiency in the company. The Dark Side of Leadership According to Dong, Hui, and Loi, (2012, p.1), there exist incomplete knowledge on the role of leadership in employee creativity as it is clear if the dark side of leadership may affect creative performance of the workers. However, looking at the psychology aspect of humans, adverse behaviours tend to have a stronger influence on individual attitudes and habits as compared to positive reactions. . In most extreme cases, poor management and leadership can result in failing of a company (BIS, 2012, p.14) and according to Telegraph (2015, p.1) the case is evident in Woolworths company. Weak leadership is associated with individuals who built teams to achieve bad results or are just not capable of producing results; incompetent management is done with those are can’t get their followers to achieve results. Woolworths has its fair share about bad leadership and managerial incompetence as their seniors failed to accomplish their results. Some empirical research links bad leadership with dysfunctional performance within a company. The impact of inadequate leadership tends to be felt in long-term through the devastating impact on morale and motivation of subordinates. This destroys the ability of people to work together productively in the company. The effects of inadequate leadership are evident through damage of corporate culture that leads to long term performance decline, damaged internal relations, loss of business opportunities, and loss of corporate reputations, reduced ethical standards among others (Todnem & Burnes, 2012, p.181). According to Kotter (1999.p.1), leadership is the primary source of any successful change in a Company. Poor leadership leads to increased mistakes within a company and decreased success. Management and Leadership Styles According to Cardinal (2013, p.1) there are a number of significant leadership or management styles which are the directive style which has the principal objective of immediate compliance by the employee. This style is effective whenever there is a crisis and deviations seem risky. Authoritative style or the visionary style has the objective of providing long term directing and vision to the employee. The style is useful where the leader is credible, and there is need for clear standards and directions, the affiliative and participative styles has the objective of creating consensus and building commitment in employee.it is active in a steady working environment. It is upon the managers to choose the right style depending on the situation of the company and the growth of the company (Research Insight, 2014, p.8) Implementation Plan In establishing Woolworths Company and maintaining its success, an implementation plan is essential. The implementation plan would focus on effective leadership and management practices aimed at rejuvenating the company to its initial state of success both locally and internationally. The foremost implementation strategy would entail focussing on training of existing employers on the most effective ways of managing a growing organization and building its reputations to international status. Woolworths needs transformational leadership that focus on international policies, transformational and innovative management. Besides, conducting international training on effective management strategies the contemporary leadership would help rejuvenate the company. Establishing effective leadership and management strategies for the company would help in attainment of desired goals and objectives. Analysis of the study indicates that poor management and leadership largely contributed to the company’s demise during recession. The implementation plan relating to leadership and management training of existing and incoming employees would be periodical though an initial schedule remain accomplished. Initial training and induction schedule plan would largely rely on urgency of rejuvenation but it must be periodical. The process of implementing developed plan would remain a responsibility of the executive management. The executive management including Woolworths CEO would have a fundamental responsibility of sourcing excellent and successful trainers including motivational speakers within corporate companies. However, the management must establish an effective financial framework that would not derail Woolworth’s financial stability. It is the obligation of Woolworth’s financial controller to evaluate the company’s stance on the most approachable implementation plan management. According to BBC (2008, p. 1) reports, the company also needs a competitive business strategy especially in its entertainment stores to enable them maximize profits accruable within such investments. Such accomplishments remains attainable through transformational and focussed leadership and management system as aforementioned. Woolworth Culture Before its closure and subsequent demise, Woolworth had established its reputable and distinctive culture mainly in relation to how it accomplished its business and availed quality products. Due to long duration of accomplishing effective business, Woolworth had created a distinctive brand through its culture that valued customers (Hall, 2015, p.1). Some of the business culture established and distinctive about the company included the following, The foremost culture that Woolworth store accustomed to included daily busy transactions in all of its stores in UK. The company had established a high rate of stock turnover in its stores and recorded increased employee capacity. Besides, the high street store developed a culture of output-oriented strategy. It embraced high productivity mainly from its employees and overall sales turn over both in store chains and entertainment branches. Productive culture shows it rise to greater success within the 100years of its operation. However, Hall (2015, p.1) reports that the constant involvement in credits culture and the start of recession derailed Woolworth growth. The company had engaged in a culture of sourcing finances from banking sectors to fund its stores. Its entertainment industry required heavy financing for effective delivery and sale of DVDs and CDs. According to Hall (2015, p.1), the inherent culture of constant credit borrowing fostered the demise and subsequent closure of the high street retail store. How Woolworth Can Move On The success of Woolworth can be determined by the solution to the challenges that led to its down fall. Approaches to that can be applied include; Change of Business Strategy The foremost factor that led to the fall of Woolworth was loss of tender sby the company owned entertainment wholesale store. The entertainment store required heavy financing to sustain the inherent high competition in the industry especially from established companies. For instance, in 2006, the Entertainment UK wholesale, a major constituent of Woolworth lost majority of the profitable tender given by Tesco to other upcoming wholesalers to Asda, Mark and Spencer. To revive its business activity and competitiveness, there is need to reform its business strategy that led to its downfall. In securing a competitive edge over other companies in the entertainment industry, Woolworth must re-evaluate its marketing and production strategy to match competitiveness. For instance, the company can invest in production of unique and heavy entertainment materials besides conducting heavy campaigns. Moreover, the company should structure their supply chain to enable them pay suppliers after receiving payments relating to accomplished tenders. Such supplier chain structure would help them in restructuring their financial management and inherent system. Change of Business Leadership Besides the aforementioned restructuring plan, Woolworth can invest in transformative leadership. Business leadership can affect differently on the business performance. It takes a visionary and strategic leadership to achieve success in business. The change of business leadership in 2007 could have negatively affected the business performance (Hall, 2015, p.1). For revival of its business activity and profitability, there is need to engage a transformative leadership. Woolworth can hire competent and visionary leaders to induce the change. Besides, the company should conduct comprehensive and extensive corporate leadership and management skills for all its employees especially the top executives. Woolworths Training method According to.., Woolworth embraced a formal training exercise that enabled the company to explore its employees potential. The company embraced an on-the-job training system for all its incumbent employees to enable them acquaint themselves with company trading philosophy. The company had a recognized industry training and qualification aimed at reflecting their desired market standards (Dawe, 2003, p. 76). Mentoring of new staff, training of managers, and vocational learning also remained dominant within the company’s organization structure. However, the company must focus on transformational leadership and management training to enable it rejuvenate its operations. Recommendations The overall purpose of running a business is to make a profit. An organization can divide profits in to two categories namely development and management. This means that the company can realise profits through high-speed development and from scientific and strict management. Highlight–balance and balance-highlight refers to the two aspects of management and development of a business. Development has a role in balancing the aforementioned two aspects in making the business develop in healthy and steady manner (Wu, 2013, p.800). The most strong and positive style of leadership that Woolworths leaders would have employed is the visionary style. It motivates followers to pursue a vision by focusing on how their individual work contributes to the organizational goals and strategic path. Visionary leaders engage followers by focusing on their performance, communicating performance standards, clearly providing feedback and empowering members to decide how they will act (Hernon, 2010, p.30). Conclusion The importance of improving leadership and management skills in all organizations is essential especially in the current economic climate. Strong leadership and management are crucial to increasing the efficiency and effectiveness of a company and in exploiting new business opportunities. It is possible to develop leadership and management skills. 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