Critically review the situation at RestaurantCo Essay
Critically review the situation at RestaurantCo
This essay analyses the case of RestaurantCo, a large non-unionised restaurant company with over 300 branches across the UK, and more than 7000 employed staff members (Suter & Marchington 2011). According to Brad and Gold (2012, p.401) the term non-unionised is a ‘workplace, where managers have flexibility in designing work, selecting, promotion and training people, and determining rewards and other human resources (HR) practices.’ As briefly defined managers carry out many duties and responsibilities for the business. In order to have a better understanding of the role of line managers and employee relations at RestaurantCo it would be necessary to explore and outline the strengths and weaknesses of the company.
To be more specific, this essay will explore and outline the main strengths and weaknesses in the working style of branch managers and the structural centralisation within the organisation, the formal and informal employee involvement and participation (EIP) practices, the working relationships between front line managers and employees, and the competitive effectiveness of the organisational HRM system and capability framework for branch managers. This case study of RestaurantCo focuses on the organisational problems that stems from the centralisation of corporate decision making and monitoring. The company regarded itself as a high quality restaurant business with a strong focus on positive employee relations thus reflected in their history of informal employment relations approach (Suter & Marchington 2011).
However, since the change in ownership the company had to implement new business strategies and HR practices as well as make further enhancements to the restaurant environment. For instance, the changes in the restaurant environment included refurbishments, expanded food and drinks menus, and cost savings by integrating the supply chain with other restaurants owned by the group (Suter & Marchington 2011). Consequently, some of these changes were seen as quite extensive and problematic for restaurant managers. For instance, some of these organisational changes were somewhat inefficient and costly in terms of deliveries and that mistakes were frequently made in the order and supply of ingredients (Suter & Marchington 2011). Managers were no longer able to order directly from suppliers but instead were instructed to direct their orders through the supply chain department, whose understanding of the needs of individual branches were seen as limited (Suter & Marchington 2011).
There were also additional changes in improving customer service such as the introduction to the ‘Mystery Customer’ initiative (Suter & Marchington 2011, p.213). This program initiative was seen as a form of corporate centralised monitoring and control of service, which somewhat contradicts the supposed given autonomy to branch managers. This demonstrates senior management distrust in its branch managers’ abilities to meet or fulfil their duties and responsibilities. This form of control violates the ‘psychological contract’ between the branch managers and employers which is also known as a ‘two-way exchanged of perceived promises and obligations between employees and their employer’ (Bratton & Gold, 2012, p. 12). In this case, senior management had infringed on the trust between its branch managers by having a ‘centralised monitoring system’ in placed to gather customer information and business performance, thus in turn violating their psychological contract (Suter & Marchington 2011).
Consequently, creating a negative ‘low-trust and low-commitment’ relationship compared to a ‘high-trust and high-commitment’ participatory relationship between senior management and branch managers (Bratton & Gold, 2012, p. 160). Nevertheless, control is seen as somewhat necessary by senior management, but ‘too much control might be counterproductive’ (Dant & Nasr, 1998, p. 7). Hence, ‘excessive levels of control’ should be carefully considered as it will ‘impact on business performance levels’ (Dant & Nasr, 1998, p. 7). As stated in Dant and Nasr (1998, p.7) tight control is generally not perceived well by managers who are driven by a strong desire for ‘independence and autonomy’, they may withheld ‘authentic and helpful information’ from senior management or employers in order to preserve some indirect form of control as they might believe that their input would not be valued or validated. In this
particular case, tight control would lead to less cooperation between branch managers and senior management.
Furthermore, feedback from mystery customers to senior management may not be as useful or informative compared to the managers’ vast degree of knowledge and experience regarding its local business restaurant market environment and business performance levels. Rather than just rewarding ‘performance related bonus’ to managers who receive an overall satisfactory rating from mystery customers there should also be incentives or reward schemes in placed for managers who actually provide ‘authentic and helpful information’ to senior management (Michael, 2002, p. 329). This sort of privileged information could further enhance the organisation’s productivity and performance. For instance, the organisation would have a greater competitive advantage through new strategic opportunities and awareness of new threats as mentioned by its’ branch managers (Michael, 2002, p. 329).
This ‘upward’ flow of information decentralises the tight monitoring and control of senior management but more importantly strengthens the communication, commitment, trust and employee relations between senior management and its branch managers through reciprocal cooperation and reward schemes (Michael, 2002, p. 329). It is crucial in service industries that branch managers be given more autonomy to make operational decisions as their understanding of the business environment surrounding their individual branches is relatively more extensive compare to senior management and management support, who have limited understanding of the business environment. This process is referred to as ‘decentralisation’ (Dant & Nasr, 1998). According to Suter and Marchington (2011), each restaurant establishment was usually run by a branch manager and two assistants.
The role of supervisory responsibilities was shared between the branch manager and assistant manager due to the long operating hours and the shift system, hence, the manager on duty would take on the role of supervising employees (Suter & Marchington 2011). The manager on duty dealt primarily with problems and issues in regards to employees, and that wider issues were assigned to the branch manager. The branch managers in addition carried out a number of HR functions such as employment appraisals, pay reviews, and personal development plans (Suter & Marchington 2011). These branch managers had described their work as being more intensified and that the HR policies had become more sophisticated and formalised (Suter & Marchington 2011). Branch managers were supposedly allowed a fair degree of autonomy in how they could manage the restaurant.
A key element of the capability framework enabled branch managers to take charge of their own delivery and performance. However, managers experienced great difficulty in making operational decisions regarding their restaurant. Some of the reasons were due to the fact that the management support team were not always readily available to branch managers but also that company-wide operational decisions were being implemented at branch levels, in turn conflicting with branch managers’ operational decisions (Suter & Marchington 2011). Branch managers should be provided with support throughout the restaurant operational hours from the management support office except, the restaurant support team operates on a 9-5 office-based workplace arrangement (Suter & Marchington 2011). This would lead to significant problems when the restaurant requires assistance after the support office ends operation, therefore causing an inconvenience when decision and support is needed.
It might also affect the organisation’s reputation if issues are not promptly resolved. Without proper support and facilitation from the support management team, branch managers are unable to perform their role efficiently. Under the influence of senior management, branch managers were pressured into implementing formal relationship practices with their employees (Suter & Marchington 2011). However, one of the core components of a psychological contract is ‘workplace communication’ which will generally help to minimize the ‘false consensus effect,’ meaning that people assume that they share the same perceptions (Bratton & Gold, 2012, p. 433). For instance, branch managers perceived the restaurant and its employment relations as informal whereas head office had expressed the need for more professional management and more importantly had over-rated the formality of policy implementation at branch level (Suter & Marchington 2011).
Notably, communication is a significant component of a psychological contrast as it is quite evident that branch managers and senior management had conflicting views on how the restaurant business needed to be operated. Alternatively, It would be beneficial for senior management and branch managers to effectively communicate their views across to one another in order to minimize the ‘false consensus effect’ (Bratton & Gold, 2012, p. 433). Again, to ensure that this can actually happen, senior management would need to be more readily available to branch managers and vice versa in order to strengthen the psychological contract between them. According to the branch managers the organisational change brought about more job responsibilities, intensified workload and more expectations from senior management (Suter & Marchington 2011).
Whilst handling their ‘supervisory responsibilities’, the day–to-day HR functions and operational responsibilities such as ordering and control of stock/supplies, forecasting labour budgets and marketing initiatives were devolved into the roles of branch managers (Suter & Marchington 2011). This devolvement of HR functions into the role of branch managers goes beyond the parameters of what is required of branch managers. Despite this, senior management have not provided their branch manager with further additional training in their new responsibilities and duties neither has it been outlined in their legal binding contract. Even though the assistant managers and branch managers shared the same responsibilities of supervising the employees, employees still reported directly to the branch managers (Suter & Marchington 2011).
Instead of sharing this supervisory responsibility of employees, it would be more efficient and productive to delegate this responsibility to the assistant manager so that branch managers can focus more on the operational responsibilities and HR functions. Another obstacle branch managers had identified was their inability to make operational decisions regarding the day-to-day running of the branch due to the lack of coordination or collaboration in the senior management company-wide operational decision-making process (Suter & Marchington 2011). This in effect reinforces senior management distrust in its branch managers’ ability to fulfil their role and therefore, causing resentment and animosity towards senior management from its branch managers. According to Dant and Gundlach (1998, p.37) ‘excessive controls aimed at monitoring’ employees can be costly as it can generate ‘motivational and morale problems’ among employees.
It is important from a management perspective to ‘balance the forces of dependence and autonomy’ within the business in order to maintain ‘the long run viability’ of the business organisation (Dant & Gundlach, 1998, p. 37). In terms of achieving overall effectiveness senior management need to contribute to a more productive relationship between branch managers and employees in their organisation. Another important aspect to consider is that the company and branch units have ‘contrasting economic and managerial characteristics’ (Bradach, 1997, p. 276) whereby, the senior management of the company must meet two key management challenges: ‘maintaining uniformity and system-wide adaptability’ (Bradach, 1997, p. 277). With reference to RestaurantCo, units in a chain share a common identity by operating under the RestaurantCo trademark (Bradach, 1997, p. 277).
There are five underlying categories of uniformity in an organisation and they are, ‘the line manager, organisational systems, learning culture, role and responsibility and HR department and professionalism’ (Harrison, 2011, p. 921). In order to ‘preserve the integrity and value’, the company must enforce uniformity across these five underlying categories through bureaucratic control and standardisation (Bradach, 1997, p. 277). Furthermore, in order to ensure the sustainability of the company, it must be able to adapt to the ‘opportunities and threats’ (Bradach, 1997, p. 282). In addition, senior managers must identify and implement system-wide adaptation processes and practices that will fit to some extent across all of the individual branches, except the main challenge of this is to ensure that all the branches move in the same direction. The ‘plural form’ model of management proposed by Bradach (1997) can be used to effectively address the uniformity and system-wide adaptability problems.
The ‘plural form’ consists of four processes which are as followed: ‘modelling process, ratcheting process, socialisation process and mutual learning process’ (Bradach, 1997, p. 283). Through these processes the company can pursue greater uniformity and improve system-wide adaptation across the restaurant chains (Bradach, 1997, p. 283). The modelling process is focused on the structural element of the management by increasing the use of common practices across the organisation and the restaurant chains (Bradach, 1997, p. 283). The ratcheting process is part of the control system of management which enables both branch managers and senior managers to influence each other as well as increase the level of uniformity and performance of the chain overall (Bradach, 1997, p. 283).
The socialisation process reflects the career path aspect of management, which essentially helps to create a shared understanding of what is required to operate a restaurant, thus will increase the uniformity across the chain (Bradach, 1997, p. 283). Lastly, the mutual learning process is also referred to as the strategy making process, which focuses on improving the system-wide adaptability by providing ‘performance data and demonstrating new ideas to help persuade branch managers to adopt the proposed system-wide adaptations’ (Bradach, 1997, p. 283). Overall the ‘plural form’ is used to overcome some of the control problems associated with managing restaurant branches and maintaining uniformity across the chain (Bradach, 1997).
Another important key issue highlighted from this case study is how formal and informal employee involvement and participation (EIP) practices are implemented by management. According to the RestaurantCo capability framework which consisted of eight capabilities, four related specifically to informal EIP (Suter & Marchington 2011). EIP is influenced or shaped by four dimensional factors which are, the two type of ‘forms of EIP’ (formal and informal EIP), ‘degree of involvement of the employees’ (ranged from very little to a considerable amount), ‘different levels of EIP within the organisation’ (head office to branch level) and ‘scope of subject matter’ (long term plans that are central to the organisation and short term issues regarding the restaurant) (Marchington & Kynighou, 2012, p. 3338). RestaurantCo depend heavily on their employees’ interaction with customers, for this reason it is noticeably best to implement informal EIP because their engagement with customers is instrumental to the organisational performance levels and profitability.
By using informal EIP branch managers are able to gain employees’ affective commitment to the organisation (Rodrigues, 1994). Although, branch managers must take into consideration the contextual circumstances in relation to the restaurant and the four contingencies outlined above to assist in determining the appropriate EIP to implement for their given work situation (Rodrigues, 1994). More specifically, formal EIP was utilised in the larger and busier restaurant branches as branch managers had less time to involve employees informally and formal EIP was the most effective way of bringing staff members up to date with important information and news (Suter & Marchington 2011). On the other hand, informal EIP was utilised or practised more predominately in the smaller branch restaurants (Suter & Marchington 2011). However, effective co-existence of formal and informal EIP is essential for the organisation’s long term sustainability (Denton, 1994).
Informality at RestaurantCo is an effective instrument of recognising and managing employee voice (Denton, 1994). The role of informality is to give employees an open channel for informal communications with managers, so that they can address their concerns and to give informative feedback on work related issues (Beattie, 2006). The constant changeability and flexibility of the workplace environment, illustrates the need for informal day-to-day communications in comparison to official formalised meetings with employees, which can be more costly and time consuming. Above all, the flexibility and diversity of organisational arrangements in the service industry reinforces the need for the implementation of informal EIP practices (Beattie, 2006). In summary, the RestaurantCo case study illustrated some important strengths and weaknesses in the HR management practices and organisational frameworks.
Overall, several weaknesses were identified such as the need for informal relations between line managers and employees, the importance of decentralisation to enable cooperation and collaboration between branch managers and senior management through the ‘plural form’ model. Furthermore, it was exemplified that there should be a co-existence and implementation of both formal and informal EIP in the workplace. Evidently, business performance levels can be improved by balancing the dependency and autonomy of branch managers, so that they can efficiently perform to their capabilities. In conclusion, this essay highlighted some positive and negative issues regarding operational responsibilities of senior management and branch managers.
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