management consulting project – business report
MCD2040:Managing People& Organisations
Trimester 2, 2019
MCP: Business Report
Sunday 23:55 Week 8, Submission online through Turnitin (Moodle)
Luxe Mart – The only marketplace you’ll ever need.
The Australian retail industry employs almost two million people and is worth more than $570 billion. However, Australian retailers have experienced some challenging trends in recent years as a result of increased global competition from ecommerce, particularly with the likes of Amazon entering the market. The traditional retail business model involved shoppers coming to the store to buy in person, with price comparisons having to be done by individually visiting different brands’ stores. Now the shopper can sit in the comfort of their own home and search online for whatever their heart desires. Once they have found the item they want – they can search for online discounts, sales and even purchasing directly from the manufacturer or a wholesaler. This has led to an aggressive price war among retail stores increasing the importance of the customer experience in stores as often it is the only thing differentiating buying the same product from competing retailers besides the price.
Not one company in the Australian retail industry is exempt from the online shopping threat, not even the large retail chain: Luxe Mart. The well-known Australian company is loved by customers for the low cost but expensive looking homewares, clothing and toys. Recently, they have started stocking food such as chocolates, chips & soft drinks. Previously known as having Australia’s best customer service, Luxe Mart staff are well experienced in retail and diverse with people from various ethnicities, part time-workers, full time workers and casuals, as well as people with minimal education, students, mothers, and even grandparents. The company is well known for donating profits to charities for poor families and animal shelters. Furthermore, Luxe Mart has various programs with high schools for internships, as well as hiring homeless and disadvantaged people to help improve their personal economic situation through
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employment. This is in addition to an extensive refugee and indigenous Australian jobs program winning the retail chain several national and international awards.
Despite all these initiatives and popularity, Luxe Mart’s impressive growth and dominance of the market has stalled with store sales decreasing by 5% over the past two years after a long period of growth. Luxe Mart’s employees are understandably concerned about losing their jobs particularly because the retailer’s largest competitor has closed down 100 stores across Australia recently due to the trend of online sales increasing and in-store purchases decreasing. Furthermore, Luxe Mart’s latest employee engagement survey has highlighted some concerning issues. This is in addition to increased safety incidents occurring as well as disappointing online customer reviews.
Occupational Health & Safety (OH&S)
OH&S has been a key focus of Luxe Mart store managers over the past five years with very high volumes of stock being unloaded from trucks, moved and restocked across stores 24 hours a day. The focus is to keep workers safe but also protect customers. Luxe Mart’s safety motto for staff is “Stay Alert, Don’t Get Hurt!” Despite having lots of safety signs throughout staff areas and special safety orientation training for new staff, OH&S incidents have increased by 30% since Christmas 2018. Several cases have even been escalated to the Fair Work Ombudsman which has ruled that Luxe Mart must review their safety record, policies and processes in the next two months or legal action will be taken to close stores.
A common issue raised by line managers is that often when staff are observed restocking shelves they seem to lack focus or are daydreaming. Some managers argue that this is due to boredom. Best practice is therefore not always followed resulting in dangerous behaviour such as lifting excessively heavy boxes, not bending down correctly and dropping heavy items on feet. Reports furthermore highlight that staff are not picking up on potential hazards such as tripping hazards (i.e. a dropped toy on the floor) or walking by spilt drinks in the store and not reporting it or cleaning it up straight away. Shelves are often stocked too high with incidents occurring where items have fallen on customers and employees. There are also concerns about staff not using ladders appropriately and therefore falling and injuring themselves.
LUXE MART: ORGANISATION STRUCTURE
• 500+ stores across Australia
• More than 250,000 employees
• Head Office in Sydney with HR team, Finance team, Logistics Group + more.
• Levels of Management are:
o General manager (GM)
o Regional Managers (15)
o Area managers (5 per region)
o Store Managers (500+)
o Department Managers (10 per Store)
o Team Leaders (3-5 per Department)
o Supervisors (1-2 per Team)
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The observation of ‘bored staff’ is also one made by customers. “I went into Luxe Mart on Saturday morning, it was busy with customers everywhere but staff were just standing around talking and laughing. They even completely ignored an old woman who was trying to get their attention for a price check at the self-service counter,” wrote one Luxe Mart customer on Australia’s leading product review website. “I understand it was 10pm at night and the store needs to restock, but when I was at Luxe Mart on Sunday night – staff were so busy talking to each other when pushing the trolley with boxes in it, they didn’t see me and hit my leg! I may have broken my foot! I am going to sue them!” wrote another.
Customers have furthermore made complaints about rats in store. “They are huge! It scared me so much! I pulled a box of potato chips off the shelves and this rat jumped on me and ran down the aisle! I told the night-duty supervisor who simply said ‘Sorry’ and walked away. Didn’t even try to find the rat! It was disgusting!” one customer said in an email to Luxe Mart head office. Another wrote online: “I saw a rat drinking from a spilt coke puddle. The spilt drink was there for the entire hour I was in the store. Not once did any of the many staff who walked by do anything to clean up. They didn’t even shoo away the rat when it appeared.”
Customers have also raised that stores are not very clean with mud on the floors, dust on stock and shelves, and clothes and shoes everywhere rather than being organised. Additionally, complaints have been made about items having the wrong pricing on them. When the price is cheaper than it should be, Luxe mart has had to follow the legal requirement and honour the lower price. This has led to more than $1 million being lost in the last financial year.
Employee Engagement Survey Results
The increasing safety issues were a key theme in the recent annual Employee Engagement Survey. Staff of all levels anonymously completed the 50 question survey about working at Luxe Mart where they highlighted what they enjoy and do not, concerns they have and even their feelings about the team they work within. 60% of staff said they were worried about being injured at work with another 37% highlighting that they did not have the appropriate knowledge or skills to do what their manager asked when it came to safety. Additionally, 26% wrote answers stressing they felt pushed by managers to hurry therefore did not worry about OH&S rules. Interestingly, 43% of managers indicated that front line employees were not following regulations with several stating staff are ‘lazy’ when it comes to being proactive with safety. Managers also discussed the issue of staff seeming bored and not paying attention leading to accidents.
Boredom was additionally identified by workers. Many stated they “don’t feel challenged enough” and that “the goals are too easy.” One worker wrote: “I meet my job requirements within the first 50 minutes of my 8 hour shift then there is nothing else to do.” Another voiced “Working at Luxe Mart use to be exciting but now things seem so simplified it is boring. I would resign but I’m afraid with the current market I will not get a job elsewhere.”
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It seems workers feel their managers use threats but not enough rewards. Nearly every survey completed by a front line employee had a comment about this theme. “What is the point of doing more than you have to when I get paid the same as someone who just does the bare minimum?” said one employee in NSW. Another worker agreed writing: “The managers’ threats are empty. Punishments aren’t carried out for those who do not perform so workers learn very quickly that there are no consequences for misbehaving (as long as nothing illegal is carried out),”. Another commented: “We’re one of the best stores in the state, over exceeding our targets every month yet we get the same treatment from Regional Managers and Head Office as the weakest store. No congratulations or thanks, nothing.”
The theme also existed in other states. “I always work hard and get 200% of my targets. I get nothing. No bonus, no ‘well done’, nothing. But yet when I make one mistake such as breaking a box of plates – I get a written warning and punished by being taken away from serving customers and put out the back of the store. I am the best seller! This is so stupid. If I get two more warnings I get fired!” wrote one Queensland staff member. And in Tasmania, an employee commented: “I have been working in shops for 40 years. I know what I am doing yet the young 21 year old supervisor is constantly following me around saying I am too slow and need to sell more. How can I sell more? I do 150% of my target and I get no rewards, only yelled at. The younger staff who are the friends of that manager don’t even make 75% of their targets and they get to go home early, no one following them and no yelling. It is completely unfair!”
The management style of supervisors, team leaders, department managers and store managers was another theme constantly discussed in the survey responses. Many teams liked their manager/supervisor but felt they were too young therefore had no problem solving skills. “Our last boss was so experienced but left to work for a competitor. Our new team leader is friendly but spends all her time on her mobile phone or talking to the other managers she went out with on the weekend. It is really unprofessional,” said one worker. Another noted “Our new supervisor is passionate and friendly but simply does not have enough experience. A customer came in with a question about getting an out of stock product. Rather than telling them the procedure or offering to look into it, the supervisor just said ‘sorry we can’t do that, please go online’. No wonder sales and jobs are disappearing!”
Observations also highlighted concerns of new young supervisors and team leaders being put on night shifts where there is no one more senior on duty due to costs: “Nights are the most busiest times in the stores where we restock and clean yet Luxe Mart puts on the most inexperienced supervisors, to do what? Save money! Why do you think our stores are filthy and we have so many accidents,” wrote a senior team member in Victoria. Another Victorian worker remarked: “This new trend of saving costs by putting on the younger staff at night is dangerous. Both managers and workers are always on their phones. I am on the 4am shift and the night chores are never done! The store hasn’t been vacuumed or cleaned, shelves aren’t stocked… I then got to do my job and theirs in order to have everything ready for the 8am peak time!”
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For the first time ever, discrimination was frequently highlighted in the survey with more than 25% of staff admitting they had either been discriminated against or seen a manager/employee discriminate against others. Several responses outlined that managers often chose workers they liked for longer shifts. Concerns were also raised that certain workers were given shifts due to ethnicity such as coming from the same culture as the supervisor or not being given work due to a manager and a worker coming from two countries that are currently at war. “My boss always seemed to like me. I use to get given 12 hour shifts every weekend. One lunch time I was talking to my boss and I said something about my home country. He said “I thought you were from my country, aren’t you?” When I explained I wasn’t, and I was also a different religion to himself, he went quiet then got up and left. From then on I never got weekend shifts and now barely work 10 hours a week,” disclosed one NSW employee.
There were also comments about age discrimination. “Now we have a new batch of young trainee managers – all 22 years old, I never get night time shifts anymore. I know they are cheaper but I have been doing the night shifts for 10 years and can only work then due to looking after my grandchildren during the day. I get hardly any work anymore,” wrote one team member. “As soon as I became full wage at 23 years old, my shifts halved. Now there are all 17 years olds doing my shifts. I have worked for this company since I was 16. It isn’t fair!” commented another.
Finally, a huge threat is that 80% of staff (both managers and employees) ticked the response box that they would be looking elsewhere for a job in the next 1-2 years. More concerning is 62% ticked that they are currently looking and would leave Luxe Mart if the opportunity arose.
The Luxe Mart GM and Regional Managers have deemed that these concerns must be addressed before the peak Christmas period begins. This is to especially ensure there are enough workers to stock stores and operate pay stations, as well as preventing stores being shut down due to OH&S issues before their busiest time of year.
As a leading Management Consultant who specialises in business process improvement, you have been hired to provide expert advice to the client Luxe Mart by providing a 1,500 word report.
Your report must identify TWO Management problems and analyse them with relevant Management theory. This is due by Sunday Week 8 at 11.55pm to be submitted online.
NOTE: Simply firing or hiring new managers or closing down operations and moving to another country is NOT an option.