Several years ago, I had a summer job at a small bakery owned and run by my uncle. The bakery sold freshly made bread and pastry and had a small café that served tea, coffee and soft drinks alongside baked products. The total number of employees was eleven, and the corporate culture was very relaxed and family-like. Although there was some formal structure (my uncle was the President and the CEO and his friend and co-founder was Vice-President), decision-making was always informal. All the important decisions were arrived at by consensus. Employees were encouraged to share their ideas as to new products or ways to improve efficiency with each other and the management outside of the framework of any formal procedures. Conflicts were very rare, and the general atmosphere was non-competitive. Such atmosphere can be explained by the fact that the motivation of most employees for working at the bakery was not career growth but pleasant working environment.
All the employees of the bakery could be classified into two categories: college students working part-time or during the summer to earn extra money and senior people nearing the retirement or past retirement age who were looking for a job that is not stressful yet fulfilling. Despite such significant differences, there were very few disagreements between different age groups. Younger employees were treating older workers with respect and reverence, and senior employees were always eager to offer help and advice to novices. Therefore, there was no need in formal training programs: all learning was done on-the-job. The company did not have a person responsible for human resources management, since all human resource activities were carried out by the President and Vice-President.
There were no specific recruitment criteria. It was understandable some degree of employee turnover was inevitable as college students were frequently quitting after summer or following graduation. However, retention was a serious issue with older employees. They were valued by the management because most of them worked at the bakery for the last three years or more. There was a strong team spirit and ownership of decisions arrived at collectively. The company also focused on acting in an ethical fashion: community relations sometimes took precedence over profitability. The bakery was located in a small community where everyone knew each other, therefore strong community ties immediately translated into good relations with customers and vendors.
There were no formal incentive programs or employee bonus programs. All stimuli were non-material in the form of praise from the management and respect from colleagues. Also, there were no performance measurement mechanisms, as my uncle was trying to supervise each employee informally and help or correct them if there were problems. My uncle was not particularly found of an “over-scientific” approach to management, marketing and human resources and believed that the core principles that guided him in his personal life – such as honesty, integrity and empathy – were perfectly applicable to running a business. By the time I started working for him, he has over twenty years of entrepreneurial experience, and therefore his employees were confident of his leadership abilities. His personal approach to each employee gave us a considerable freedom in choosing our work duties and setting working hours. He knew that routine and monotonous tasks can undermine productivity. For example, I was serving at the café for one week and then standing at the counter in the bakery for another week. This variety of work duties attracted many students because it offered them an opportunity to gain work experience in different spheres.
However, several weeks after I started working there, the company run into financial troubles. The new chain supermarket that opened nearby offered baked products at a much lower price. In order to save the company from bankruptcy, my uncle had to sell it to a bigger company with headquarters in Chicago. He was worried not so much about loosing money but rather keeping his workforce employed. He knew that there were few jobs for college students in town, and those employee who passed retirement age would have had troubles finding a job as well. Therefore, his main condition he announced to the new owners was that they will keep the entire workforce intact and he will remain in charge of the company. The new owners agreed to this condition yet insisted in the appointment of a human resource manager to which my uncle did not object. From the first days of his work, it was obvious that arrogant, Harvard-educated human resource manager will not fit into our collective. However, we tried to welcome him as much as we could, yet he was regarding himself as superior to everybody else, demanded a separate room for work and instituted office hours. Very soon he invited a team of high-ranking managers from the central office to assess the company’s effectiveness. This review made everybody fell uncomfortable. The team left without sharing the results of the review with bakery’s employees. Then the human resource manager said there was a need for downsizing and fired two employees who were working there for more than six years. Following that, he insisted that there was a need to formalize the decision-making process. In reality, it translated into him making all the decisions in consultation with the central office. Both my uncle and employees were very disappointed by such a turn of events. The new management did not try to build on the existing strengths of the company and wanted to introduce a completely new way of running it. Such behavior further deepened the gap between colleagues from the central office and the bakery.
In turn, it led to low employee motivation. It can be explained by low levels of commitment and psychological alignment with the goals of the company. Workers felt they were uninformed of key business decisions and senior management at the central office was out of touch with the practical issues and often suggested flawed policies. Competition started to arise as some employees were tying to appease the human resources manager in order to get more privileged status than other workers.
Analyzing the communication problem that has arisen, it is possible to observe that the company’s management believed that flexibility was its main asset, therefore they did not employ most of conventional management tools and techniques. Their management style was based on the principles of participative management, trust of workers, and respect for each individual. This approach has proven to be successful, despite widespread fears: while participatory management can be perceived to diminish the role of strong leadership, in reality it is visa-versa. All employees are expected to balance their group vs. individual behavior in a responsible manner. While this might be perceived as an advantage, too much flexibility and employee freedom are unlikely to contribute to the company’s long-term growth, since lack of direction usually turns out to be a costly mistake. If the new owners of the bakery were putting so much emphasis on profitability, the owner should have made a better use of existing management models and techniques and differentiated between operational management (management of all routine tasks) and strategic management (elaboration of a company’s mission and vision). Strategic management is an essential avenue to thriving operations. Essentially, a company’s strategic management should follow the nine steps mentioned below: 1) Formulate the company’s mission; 2) Conduct an analysis that reflects the company’s internal conditions and capabilities; 3) Assess the company’s external environment; 4) Analyze the company’s options by matching its resources with the external environment; 5) Identify the most desirable options by evaluating each option in light of the company’s mission; 6) Select a set of long-term objectives and grand strategies that will achieve the most desirable options; 7) Develop annual objectives and short-term strategies that are compatible with the selected set of long-term objectives and grand strategies; 8) Implement strategic choices by means of budgeted resource allocations; 9) Evaluate the success of the strategic process as an input for future decision making (Pearce & Robinson, 2004).
Starting with the first point, the bakery has not formulated its company’s mission. This was not in the best interests of its internal and external stakeholders. Internally, there was a lack of information about the company’s corporate culture and future plans. Externally, there was no information on the company’s corporate responsibility stance. While all members of the community knew that the company was trying to act ethically in every situation, it became a part of a bigger chain, therefore its corporate social responsibility stance should have been expressed formally and monitored carefully. Ethical values, such as honesty, responsibility, fairness, respect, openness, and citizenship, should have been integrated into the company’s mission statement.
However, having a clear-cut vision rarely changes anything for a sizeable bulk of organizations. To motivate workers to work towards organization’s goals, vision should be seen as more than just a formality. Management has to support the vision through their actions and via communications with staff members.
Together with elaborating a pronounced corporate identity, the management should have communicated change to all employees. In a situation like this, “the leader should meet with all managers and staff to explain reasons for the change, how it generally will be carried out and where others can go for additional information” (McNamara, 1999, “How Is Organization-Wide Change Best Carried Out?”, para. 2). In fact, “communicating with employees during times of change–and recognizing them as primary stakeholders–is critical to an organization’s success and survival” (Gillis, 2004, p. 30). As for the effective communication strategies in the times of change, it is important to know that after any merger or acquisition, there is no guarantee that all the employees would get along well. However, if the high ranking managers from the central office communicated the results of their assessment to all employees and tried to engage in meaningful cooperation with them, a lot of communication problems might have been avoided. Mere attention to the employees increases their satisfaction and commitment. In fact, it is very important to communicate the new perspective to employees in order to reach a common ground. Lisa Haneberg (2007), one of the leading experts in the areas of management, leadership, and personal and organizational success, suggests that in order to be successful, a manager should “share [his or her] perspective and be open” (p. 2). Acknowledging the successes of employees and advising them in times of stress and confusion can boost employee productivity (Gandy, 2001).
Furthermore, if the new owners of the bakery indeed were superior in terms of management expertise, they could have sent several of their workers to train local managers. They could have been paired with local colleagues in a tandem system in order to transfer knowledge and experience. This would be an effective informal way of communication the demands the new owners had concerning their subsidiary. Group decision making that was fairly effective when the bakery was run by my uncle. It should not have been abolished altogether, but new owners and the human resource managers should have been included in the process. It would have helped to increase the motivation of the employees, gave them a better sense of responsibility for the company’s decisions, and alleviated the communication problem. It can also offset the negative effects of competitiveness, since the input and ideas of all participants are gathered and synthesized to arrive at a final decision acceptable to all. Group decision means not only working to achieve better solutions, but also to promote the growth of community and trust. Group decision making ensures much higher level of member satisfaction. Despite the fact that group decisions take more time, they are more resourceful and generate commitment to the decision – which facilitates its implementation.
Therefore, it is possible to conclude that the communication problem that has arisen could have been solved by elaborating a stronger corporate identity and communicating change to all employees while building on existing strengths (such as group decision making) of the company rather than implementing a brand-new approach.
- Gandy, D.B (2001). 30 Days to a Happy Employee: How a Simple Program of Acknowledgment Can Build Trust and Loyalty at Work. New York: Fireside.
- Gillis, T.L. (2004). “In Times of Change, Employee Communication is Vital to Successful Organizations.” Communication World, 12(2), pp. 29-33.
- Haneberg, L. (2007). “Inspiration and Influence.” A Technical Manager’s Perspective. Retrieved May 17, 2009 from http://www.kmmm.net/blog/2007/01/inspiration_and.html
- McNamara, C. (1999). “Basic Context for Organizational Change.” Retrieved May 17, 2009, from http://www.managementhelp.org/mgmnt/orgchnge.htm
- Pearce, J., & Robinson, R. (2004). Strategic Management, 9th ed. New York: McGraw-Hill.