The paper would discuss about a case study of a departmental store called, Macy’s, where the problem statement would be elaborated, comprehensive analysis would be done regarding the problems and circumstances, and finally recommendations would be given as a solution which would be followed by a conclusion. So let’s have a quick overview of what the case study talks about. Macy’s, which is a departmental store organization, has recently decided to reshape the organizational structure where more emphasis would be laid on the local districts and stores as compared to the central stores.
Moreover, they would be given more autonomy and authority to operate, conduct research, order merchandise, and market those products in a suitable manner depending on the type of the target market, social norms, and customers’ needs. This strategy is designed in order to keep the customers close to the business, understand what actually they want, how they want, and at what prices they want; therefore, doing every such thing in order to fulfill their needs and wants and keeping them satisfied.
Macy’s has around 20 districts that operate in different regions, and the managers or staff working there would now be handling with less stores than previously. This would be done to make them focused on the areas where they are working, penetrate in there, grab the market share, and bring in more profits. Not only this, Macy’s several retail outlets were named differently, which all are rebranded and named as Macy’s. This is all done because previous mergers and expansion of the business did not provide lucrative results due to the improper formulation and implementation of the strategies.
Problem Statement The problem in reshaping the organizational structure is that many of the employees, around 2000, would be laid off in just a blink of an eye, which would of course create some retaliation on part of the employees and unions. Another problem would be the decision-making, as in, who should be appointed as a manager or supervisor of a given district so that he enjoys his autonomy and own decisions. It would create conflicts among the employees because everyone would be willing to be a manager or supervisor.
Furthermore, the restructuring would take time and most importantly, the costs of operating separately would increase because each store in a different district would be ordering different types of products with different features and variants. Not only this, marketers would have to conduct research extensively to find out the consumer’s needs, wants, preferences, and purchasing power. Case Study Analysis Now let’s highlight each problem and analyze it in great detail.
Starting from the first problem where 2000 thousand employees would be laid off, it would not be pointless to say that the employees would retaliate over the uncertainty of their jobs as in, whom the company would be layoff and why. This would instigate a sense of demotivation, dejection, and a feeling among the employees where they would no longer see them as part of the organization; therefore, the performance would drastically decline before the implementation of the new plan – reshaping the organizational structure.
Instead of moving on forward and implement the plan, the company would entangle itself in another problem and hence would waste the time in dealing with it. Talking about the second problem, of course the employees would be glad that finally they would get a chance to think, plan, and implement their own ideas and strategies since they would be held responsible for their separate stores and given autonomy. But on the other hand, the big question mark that would be lying in the minds of the employees would be to whom the autonomy would be given be given and why, because almost every one of them would love to have such autonomy.
Conflicts after conflicts would occur because once the employees are given their charge and autonomy, each of them would face confrontations from those who were neglected and not selected as a manger. This would create a ripple effect in the whole process and would eventually undermine the organizational performance. Not only this, the demands of each of those managers or supervisors regarding the resources and funds would be different, since each of them would want to spend as much money and resources as required in order to get fruitful results.
This of course, would lead to the lavish spending and waste of resources that might lead to the incurring of loss for the company due to the increase of unnecessary costs. The reshaping of any organization’s structure is not an easy task; in fact, it takes time and resources to take it to the next level. Currently Macy’s has a tall or mechanistic structure, where there lies several hierarchies and the power or autonomy is central; and the new strategy is designed to eliminate some hierarchical levels and distribute the powers to separate districts in order to have an organic or flat structure (Robbins & Judge, 2007).
The problem related to this restructuring would be manifold because the company would have to be ready to face the ever-increasing costs of operating separately and customizing the product lines. First of all, the costs related to the payrolls would increase as the responsibility of the employees would increase. Not only this, the managers would have to be trained for acquiring the skills to handle the whole district and the stores, so this would require considerable amount of investment too.
When it comes to gathering the information about the locality to know the market trends, customers’ needs and wants, in order to sell customized products; therefore, the managers would have to be provided with sufficient funds and resources to conduct market research surveys through several tools including questionnaires, focus groups, in-depth interviews, and informal interviews (Zikmund, 2006). Increased costs would not stop here, in fact the tailoring of products with respect to their types, sizes, colors, and features would require the manufacturer and supplier costs to increase.
In addition to these problems, there is no surety that the new strategies would work the way they are expected to and give favorable outcomes. If they get flop, the result would be quite disastrous for the company and all of its district stores. Till now we discussed the problems that are there and might arise when the new plan would be implemented; now let’s shed some light over the recommendations for overcoming these problems. Recommendations
Macy’s departmental store management team should consider the dark sides of its plan and prepare contingency plans that can be implemented to overcome the loss. First of all, in order to deal with the retaliation problem from the side of employees due to layoff, Macy’s should introduce a plan where those employees who are to be laid off, would be informed well before the time and would be offered three month salaries in advance so that they do no face any problem until they stay unemployed. This would somewhat cool them down and would not force them to retaliate.
As far as the second problem is concerned, Macy’s should consider appointing the senior employees as managers of separate district and local stores, who are there at Macy’s for many years and have considerable experience. Not only this, another strategy that should be introduced and implemented throughout the Macy’s stores chain is the compensation plan called Performance-based compensation, where the employees who perform well and have better productivity level are rewarded by monetary rewards or promotion to be a manager or supervisor.
This will create the need and sense of responsibility among the employees to reduce unnecessary costs, improve productivity in terms of sales, and gain overall efficiency; therefore, the issue of wastage of resources would automatically diminish. Furthermore, the conflicts would be eliminated since all the employees would be working diligently so that he or she can be promoted and rewarded more. Since Macy’s departmental organization has an extensive chain of stores, so implementing such a big change of organizational restructuring would not be easy and would require the services of specialists and consultants.
Therefore, Macy’s must hire some change agents and consultants who would then study each and every aspect of the organization, the needs and requirements, and would form an effective plan for bringing on the change. They usually adopt the method including three major steps – freezing, changing, and refreezing (Daft, 1997). The whole process of change would go systematically and the chances of occurring of blunders would be very minimal, since these change agents are master in their jobs. Conclusion
After analyzing the whole case study, we found out several problems that the company might face when the new plan of organizational restructuring takes place. Those problems include retaliation from the side of employees due to layoff, conflicts among the employees over getting more autonomy and job status, and swelling costs due to the separate demands and needs of the stores operating under distinct cultural and social settings. Then we highlighted some of the recommendations that if implemented, can overcome these issues effectively.
Employees must be told in advance about their being layoff and granted with three months of advance salaries. Secondly, Macy’s should appoint experienced and senior employees as the mangers and supervisors of the chain stores; moreover, performance-based compensation plan must be implemented. And finally, the services of change agents and consultants should be taken for implementing the new plan of restructuring, who would implement it in a systematic way by first freezing the company, changing it, and then refreezing it.
Consequently, the task of restructuring is a hectic and difficult one that requires ample amount of time, but it is not impossible and can be made to meet its end meet by devising effective strategies to carry on with it. References Daft. R. L. (1997). Management. Fourth Edition. U. S. A. The Dryden Press Robbins. S. P, and Judge. T. A. 2007. Organizational Behavior. India. Dorling Kindersley Pvt. Ltd. Zikmund. W. G. (2003). Business Research Methods. Seventh edition. Singapore. Thomson Asia pte. Ltd.