MCD2040: Management People & Organisations Trimester 1, 2017 Assignment: Case Study Status: Individual Hurdle: N/A Weighting: 30% Word limit: 2000 Words Due date: Monday 23:55 - Week 9 – Submit on-line through Moodle - Turnitin The Natural Beauty Shop began in 2013 when Australian entrepreneur Maggie Jackson decided to turn her home-made natural beauty products into a local business. Starting off making products in her kitchen, Maggie would give her inventions (including candles, soap, moisturisers and perfume) to friends. She soon realized others loved the beauty products so she started selling them at the local market. It wasn’t long until Maggie had so many requests that she decided to open the first Natural Body Shop store in Bondi, Sydney. The Natural Beauty Shop is founded on principles surrounding no animal testing, natural organic products and ingredients being supplied by poor developing communities from places such as Africa and South America. Considering the origin of the ingredients, the products are not cheap and are of an extremely high quality, with recyclable and minimal packaging. In addition, $3 from every product is donated towards a community initiative. The company’s internal culture is driven by Maggie’s personal values with her encouraging managers to have a family-like work environment with everyone knowing everyone and understanding each others’ roles. The company has three departments which are the Store division (includes all the stores and is known as the “Retail Team”), Operations department (including Finance and Human Resources teams) and the Supply chain/buyers division (who handle the relationships with the suppliers and buy the ingredients from the global communities). All non-retail managers and employees (no matter their department) must spend at least 2 days in a store every month to ensure they understand the technical skills needed in the stores, but also maintain product knowledge, understanding of the customers’ needs, and build relationships with the Retail Team. Doing so helps transparency with information, but also effective communication and understanding amongst the entireorganisation. With such passion and strong values, the Natural Beauty Shop attracts workers who also are motivated by the company’s mission and follow an organic, animal-friendly lifestyle. Many of these people admitted in their hiring interviews that the reason why they wanted to work for the company was because they wanted to work for Maggie and help give back to poorer communities while preserving the world’s environment. Another element that many employees love about the organisation is the focus on learning and developing with regular training provided to staff in areas such as customer service and leadership skills, as well as offering career development pathways and a strong emphasis on internal hiring via succession planning. Often the company is called a ‘learning organisation’ by HR as it focuses on developing knowledge and skills of all staff. Growth has been so intense over the past three years for the Natural Beauty Shop that it has expanded to selling 300 products, opened 15 stores around Australia, hired 200 permanent staff, sells products in major department stores, and has a popular website where many overseas customers shop online. Even with such growth, Maggie as the owner and CEO has always being in charge of her company and never has let go of her vision of helping the environment and poor developing communities. The company has experienced almost no turnover of staff and won several awards including Employer of the Year 2016. Considering this and the employees’ commitment to its values, it is no wonder that Maggie has become famous worldwide, regularly speaking at events, on TV shows and holding seminars on setting up one’s own business. Quite often she is compared to the Body Shop founder: Dame Anita Roddick. Such growth and fame has led to Maggie making the decision to set up stores in the UK. She recognises that in order to keep her Australian stores full of energy while she is overseas with other senior management for the next 12 months expanding the company, she needs to hire a Managing Director (MD) to oversee Australian operations. A leading Sydney recruiting company is therefore engaged to find the new MD. They reviewed many applications and finally settled on Tony Smith. Although he has never worked in retail or beauty before, he came highly recommended to the Recruiters as an excellent accountant firm director who has demonstrated a strong ability in decision making and sales growth in previous roles. Maggie was at first hesitant to hire him but she had faith in the recruiters who she has worked with many times to recruit her senior management team. Because of this, she employed Tony. Tony had only been with the company for a week when things started to change. He announced that he would focus on ‘streamlining’ the business and reduce wastage and redundancy across the organisation, to ensure the maximum amount of funding could be allocated to the overseas expansion. Over the next couple of months he removed the Retailstores’ staff’s bonuses for reaching their goals and also stopped sales competitions designed to drive teams’ performance. He believed that the retail store teams were ‘paid to sell therefore they don’t deserve to be rewarded for doing their job’. He also enforced Store Managers to reduce money spent on staff hours. This meant the company started externally hiring inexperienced high school and young uni students as casuals as they were cheaper than adult full time employees. As a result of this, internal hiring and promotion diminished and more experienced workers all of sudden found they had a lot less hours per week. Other changes Tony made included the removal of the “Career Development Pathways” program and official warnings were given for ‘underperforming’ to several staff who were not reaching sales goals, even though they had excellent customer feedback reviews and team engagement. All non-product and non-software related training was stopped to reduce costs and head office team members were told that they would no longer work in stores monthly as it was impacting their work performance and efficiency. The focus of the Australian business also shifted to eBusiness. This was to reduce the face-to-face time customers spent with sales staff, therefore reducing costs for the Natural Beauty Shop. Perhaps though, the biggest change Tony implemented was creating a new position of: Director of Supply Chain Management. This position oversaw the Supply chain/buyers division. The new Director hired was Wallace Kindle, a longtime friend of Tony’s. Like Tony, Wallace had no experience in Beauty or Retail and had a background related to accounting. He did not go through a formal interview and hiring process, but rather was suddenly appointed by Tony. Staff believe the main reason for his appointment was his connection to many suppliers – some he had previously worked with but most were family members and friends. Soon after Wallace started, he instructed his Division to reduce supplies from overseas and in third world communities by almost a half and start using his contacts. He explained to his team that would help reduce costs and mean they could still claim their product came from such communities since 51% would come from them. Naturally, some of the Supply staff were not happy about this move, discussing it amongst themselves as ‘sneaky’ and ‘unethical’. The new suppliers’ ingredients were also of a lower quality, sometimes ‘watered-down’ and had more chemicals in them. Whenever the team mentioned to Wallace their concerns he would tell them to do their job and there was nothing wrong with the new suppliers. One of the lead managers in the Supply chain/buyers division called Jack even went to Tony to explain they were not happy with the new process or new suppliers with many of their overseas suppliers’ relationships were permanently damaged. Furthermore, the newly produced products overall had a lower quality than previous batches. This had led to increased customer complaints both in stores and on social media such as Twitter and Facebook with sales quickly going down. Despite the serious concern Jack expressed, Tony told Jack that quality issues were not his business and that the decision had been made by himself as the MD to help with cost reduction initiatives, therefore nothing would be returned to the way it was.All of these changes to cut costs were developed based on Tony reviewing statistics and figures. Using his accounting background, he examined the organisation’s sales performance and spending to determined strategies and areas were costs could be lowered. In doing this, no Senior Managers or Store Managers were consulted for feedback or input in the possibility of such changes. Additionally, the impact on the organisation culture was not considered by Tony. There was also the issue of how the staff perceived Tony. Many were angry that the values they were pursuing when they started working for the company were being forgotten very quickly over the four months since Maggie went to the UK. Others were annoyed that input was not included from front line teams or even those in more senior roles. The teams at the head office often commented how rude Tony was and he spent all of his time either in his office supposedly “crunching numbers” or out for lunch or drinks with Wallace. He never went to the stores except for if he was performance managing a store manager, and he never talked to staff unless he had to. It didn’t take long for the staff’s anger to erupt to external resources. Several TV current affair programs reported the “lying” and “fraud” behavior of the Natural Beauty Shop trying to sell products as “sourced from developing communities and from high quality ingredients” when in fact they were cheap imported ingredients from Asia or from Australian suppliers. As a result of this, the Australian Competition and Consumer Commission (ACCC) initiated an investigation into The Natural Beauty Shop. Maggie very quickly heard about this as the TV stories made the BBC news she was watching in London. Soon after hearing about it for the first time on TV she received a call from the head of the HR team in Australia telling her “You need to come home, over the past 4 months we have had a 60% turnover of staff, we don’t have enough staff to operate our stores!” Alarmed by this, Maggie decided to head to Australia straight away. As she was on the way to the airport she looked at Australian social media sites to see what was being commented about her beloved company. She was upset to see comments such as “Disgusting product, it is mainly water!” and “The store had only one person working who was too tired to even bother talking to me! Never going back!” Before Maggie hopped on the plane back to Australia, she called your Consulting Company as she has heard how thorough you are. She would like you to straight away start an investigation into the Natural Beauty Shop. She wants you to report back to her in a business report highlighting 3 to 5 key problems and focus on solving 2 with solutions, recommendations and an implementation plan.