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PROBLEM ANALYSIS AND IDENTIFICATION

A few problems are identified in Maggie Jacksons Nature Beauty Shop since she is away. The first

is the lack motivation from the employees. Motivation refers to the process by which a persons efforts

are energized, directed, and sustained toward attaining a goal (Robbins and Coultor, p.430). Motivation

has direct relationship with employees performance; the lack of it could lead to the declining

performance and eventually the failure to meet the corporate objectives. This lack of employee

motivation in Nature Beauty Shop is evidenced by the rapid increasing employee turnover, from almost

zero into 60%. This fact results from the decreasing job satisfaction from employees. Based on theory by

Abraham Maslow, human has five hierarchy of needs: physiological, safety, social, esteem, and self-

actualization needs (Robbins and Coultor, p.432). In the time when Maggie was managing the company,

employees need of esteem was fulfilled as Maggie gave sufficient financial and nonfinancial reward to

acknowledge and respect employees achievement. Under Tony management, he cut the sales bonuses

and reduce the salary as well as the working hours. He has also never taken into account the input from

his employees in his decision making, making employees feel further disrespected and unheard.

Furthermore, the need for self-actualization was also fulfilled as Maggie gave room for learning and

advancement through training and internal hiring. Tony on the other hand, loose the training as well as

internal hiring and promotion, leaving employees stuck with their current position and job as well as pay

level. The discontinuance of stores visiting also decreases employees social need. Combined that with

the decreased fulfillment of security needs resulting from the warning for employees who do not reach

sales goals even when they give excellent customer service, and further a decreased in fulfillment of basic

physiological need from the reduced in the salary; employees loose drivers to motivate them in working,

eventually lead to declining work performance.

The other significant problem is vast difference in management style. Management involves

coordinating and overseeing the work activities of others so that their activities are completed efficiently

and effectively (Robbins and Coultor, p.8). So a manager has to perform four functions of management:
planning, organizing, leading, controlling (Robbins and Coultor, p.9). In order to do the functions well, a

manager needs to have these skills: conceptual, human, and technical. Conceptual skills are the skills

managers use to think and to conceptualize about abstract and complex situations (Robbins and Coultor,

p.13). Tony has a good conceptual skill, but is his concept the most appropriate for the company right

now? His core concept from which he bases his decisions are cost cutting due to the expansion, which is

not considered the best strategy for the company, makes him fail in reading the company segmentation,

targeting, and positioning in local Australia market. Nature Beauty Shop has been a leading in socially and

environmentally friendly cosmetic and beauty practices; which does not exactly result in low production

cost, but their target market is willing to pay a higher price for the high quality products and the supported

causes behind it. Tony does not show a high human skill either as he does not communicate much with

his employees or receive any input from them. Furthermore, according to Henry Mintzberg there are

three managerial roles (specific actions or behaviors expected of and exhibited by a manager) a good

manager has to have, which are interpersonal, informational, and decisional roles (Robbins and Coultor,

p.11). Tony Smith does not show a good interpersonal role as he is not seen as a good leader by his

employees, they are angry with decisions Tony takes and how he behaves in the office. Tony also does

not take input from employees or even talk much with them, making him lack of informational role. He

shows some good quality of decisional role as he solves problem with cost, but he failed in taking the

problem into perspective of the whole company and adjust it with the situation. Another significant

problem concerning Tonys management is how he failed to embrace the existing corporate value and

culture; and failed to continue to apply it with his management and leadership style as well as his

decisions. Values represent basic convictions that a specific mode of conduct or end-state of existence is

personally or socially preferable to an opposite or converse mode of conduct or end-state of existence

(Robbins and Judge, p.144). Values lay the foundation of understanding, perception, behavior, and

decision throughout a company. Since it began in 2013, Nature Beauty Shop has determined its

positioning in the beauty market; it values social and environmentally friendly practices. It only uses

organic materials supplied by poor developing communities, and also has recyclable and minimal
packaging. The culture the company embraces is also aligned with the values. Organizational culture is

the shared values, principles, traditions, and ways of doing things that influence the way organizational

members act (Robbins and Coulter, p.52). Basically it is how things are done around here. Nature Beauty

Shop has a family-like work environment, good relationship and understanding between departments,

also learning and developing opportunities. These are also what drive people to want to work there. Tony

decides to ignore these values and culture, and choose the framework to cut costs everywhere. Just like

explained before, it has affected the employees work satisfaction, has decreased the quality of materials

used in production, hence decreased finished products quality and customers satisfaction, eventually

reduces sales and company reputation.

Another major problem faced by Nature Beauty Shop is still related to management, but

considered as the biggest change Tony implemented: creating a new position of Director of Supply Chain

Management, pointing his friend Wallace for the position, and for Wallace to implement a whole different

supply chain scheme. Supply chain management (SCM) is the vital business function that coordinates and

manages all the activities of the supply chain linking suppliers, transporters, internal departments,

third-party companies, and information systems (Reid and Sanders, p.16). SCM manages the whole flow

starting from the purchase of raw materials, the inventory management, the distribution channel, and the

delivery of finished products to final customers. The objective is to have everyone in the chain work

together to reduce overall cost and improve quality and service delivery. In applying this SCM, a manager

has to put it into companys perspective, he must adjust with the companys value and positioning. Tony

ignores the culture of internal and appropriate hiring, he hired his friend instead who does not have any

beauty background, and was indicated to have been hired due to his connection to local supplier, mostly

his family and friends. This hiring method itself is surely considered as unethical and not in the best

interest of the company. Next, Wallace ignores the existing value and system where they use organic

materials from developing communities, and changes almost half of the materials into local lower-quality

and cheaper materials that mostly come from his connected suppliers. Tony ignored the employees
concern about this problem and quickly it results in customers complaints about products quality,

declining demand and company reputation, despite the lower production cost generated.

STATEMENTS OF MAJOR PROBLEMS

Maggie Jacksons Natural Beauty Shop is facing declining products quality, declining demand,

worse customer satisfaction and hence worse reputation, and also higher employee turnover over the

last four months, during which Maggie was away in UK and was replaced by Tony Smith as the Managing

Director. A few problems are leading to this result. The first is the lack of employees motivation leading

to declining performance. Next is a vast difference in management style from Tony compared to Maggies,

where Tony decides not to continue the existing values and culture of socially-environmentally friendly

practices, family-like working environment, and learning-developing opportunities; instead chases cost

cutting practices throughout the company. The other major problem would be the implementation of

new supply chain management with its new scheme that again, is more aligned with the new framework

of cost-cutting. This paper will further analyze the solutions for the first and last problems discussed

above.

SOLUTIONS

The first problem that is about to be addressed here is the lack of employees motivation. The

solutions will have to correspond with the factors causing the declining motivation as mentioned before,

basically fulfill the needs of employees to generate better working satisfaction that will lead to better

performance from them. Tony has to reapply the original compensation scheme: the sales staff bonuses

and the previous wages rate as it serves the basic physiological needs of employees. The other solution

would be to restore the previous corporate culture with the family-like working environment. The store

visiting practice also needs to be restored since it counts for the social needs of employees. Furthermore,
Tony needs to have a better role as leader, he needs to improve his interpersonal skill as well, talk more

with his subordinates, consider their inputs, basically work together with his employees instead of just

ordering around. This will greatly improve employees need of esteem, respect, and recognition. Last he

also needs to restore the learning and internal hiring opportunities as it will increase employees self-

actualization needs. However, restoring these practices will increase the companys budget that is already

wearing thin due to the international expansion plan. To make it less worse, Tony could still hire the

university students as temporary or internship workers and hire the fresh graduates to fill the technical

or start-up positions. They are more likely to receive lower rate of salary without compromising the

internal hiring practice for more senior staff.

The supply chain management problem needs to be addressed as well. The emphasis needs to be

on the improvement of the division, from just purchasing division which only takes care about purchasing

raw materials, into supply chain integration that manages from raw materials supply until distribution of

finished products to final customers. In doing so, they need to go back to their core social and

environmental value, by buying organic materials from developing communities and maintaining the

products quality. They also need to improve the customer service. Products and customers service quality

are what consumers complaint the most. However, the production cost will be higher just like it used to

be. I would suggest to diminish the Director of SCM position, and replace it with the usual Head of Division

just like the company used to have. More responsibility that the new division has will inevitably mean

higher salary, but not as high as the director position required. Wallace clearly needs to be replaced with

other person, who could be promoted from internal senior supply staff who understands the way the

company always works.

RECOMMENDATIONS

Uddin et al., (2013) suggest that organizational culture have significant positive influence over the

performance of organization, and there is a vital relationship between culture and performance. They
further argue that cultural traits cannot be copied and therefore it could be source of organizational

sustainability. Only by restoring the original Nature Beauty Shops values and culture that it can improve

its performance. The value and culture of socially and environmentally friendly practices is what builds

the company since the very first time. It is also what differentiates it with tens of other firms in the same

beauty-cosmetics industry. So far, this foundation works as evidenced by low employees turnover and

high sales growth. Workers and customers are satisfied. Clearly the company needs to gain customers and

workers trust back by going back to their previous foundation and doing following recommendations.

They need to boost employees motivation. Priyono and Sukmaningrum (2016) research showed

that there is a positive and significant impact of employees compensation on their work satisfaction and

performance. Whereas Alderfer (1969) proposed a regression theory stating that when needs in a higher

category are not met then individuals redouble the efforts invested in a lower category need. The

employees of Nature Beauty Shop are not satisfied with their current social, esteem, and actualization

needs; therefore they expect a lot more from the physiological and safety needs coming from their salary.

These researches emphasize Tony Smiths need to restore the previous compensation scheme with sales

bonuses and higher wages per hour rate. On the other hand, motivation could also as importantly be

increased with nonfinancial reward such as the fulfilling higher needs by improving interpersonal

communication between manager and subordinates, and reapplying learning and internal hiring scheme.

The higher production cost resulting from the restoration could be lessened by hiring fresh graduates who

are willing to receive lower salary for technical positions.

The other recommendation is to improve the supply chain management, biggest change Tony

implemented. Beamon (1999) developed indicators to measure a supply chain performance. These were

flexibility, resources and output. Flexibility is the capacity to adapt to changes in terms of products,

delivery times, volume and mix. Resources is the efficiency in using the available resources in a supply

chain system, including the costs, inventory levels, and return on investments. Output measures include

customer satisfaction (in terms of on-time deliveries, order fill rates and response time), sales quantities

and profit. For Nature Beauty Shop, rather than just pursuing the efficiency and cost saving but sacrificing
products quality and service, they need to realize that customer satisfaction is also what determine a good

supply chain management. Furthermore, Muntake et al., (2017) suggests that supply chain integration

and flexibility would ultimately result in positive gains for any business that pursues them. This company

needs to integrate supply chain from supplies of materials to distribution to customers. This means going

back to using organic-higher quality material from developing communities, and improving customer

service. While they also need to replace Wallace to person who understands better about the application

of the companys values to its supply chain management.


REFERENCES

Alderfer, P. (1969). An empirical test of a new theory of human needs. Organizational Behavior and
Human Performance, 4(2), 142175. http://dx.doi.org/10.1016/0030-5073(69)90004-X.

Beamon, B. (1999). Measuring supply chain performance. International Journal of Operations and
Production Management, 19(3), 275-292.

Dessler, Gary. (2005). Human Resource Management. New Jersey: Prentice Hall.

Muntaka, A., Haruna, A., & Mensah, H. (2017). Supply chain integration and flexibility and its impact on
business performance. International Journal of Business and Management, 12(4), 130-143.
https://doi.org/10.5539/ijbm.v12n4p130

Priyono, S., & Sukmaningrum, D. (2016). Effect of compensation, motivation and organizational climate
on employee satisfaction: Study on PT. Sumber Alfaria Trijaya Tbk. in Gedangan-Sidoarjo.
International Journal of Business and Management, 11(2), 212-220.
http://dx.doi.org/10.5539/ijbm.v11n2p212

Reid, R. Dan, and Sanders, Nada R. (2011). Operations Management: An Integrated Approach. New Jersey:
John Wiley & Sons, Inc.

Robbins, Stephen P., and Coulter, Mary. (2012). Management. New Jersey: Prentice Hall.

Robbins, Stephen P., and Judge, Timothy A. (2013). Organizational Behavior. New Jersey: Prentice Hall.

Uddin, M., Luva, R., & Hossian, S. (2013). Impact of organizational culture on employee performance and
productivity: A case study of telecommunication sector in Bangladesh. International Journal of
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