Discuss about the Corporate Responsibility for Woolworths Group.
By referring the above diagram, it needs to be mentioned that the organizational structure of Woolworths falls under the Line and Staff Organizational Structure. It needs to be mentioned that most of the large business organizations belong to this type of organizational structure. The main advantage of this organizational structure is that it establishes direct and vertical relationships between the managers and directors of different levels. There is no exception of these factors in case of Woolworths. The organizations having this structure have both line and staff departments. It can be seen that the members of staff departments provide the line employees with advice and assistance for achieving the organizational targets and objected.
In Woolworths, there are some aspects that indicates towards the degree of decentralization. It can be seen that Woolworths is a large origination with large number of departments and results. This particular aspect reduces the burden from the management of the company and they deal with the crucial matter of the company. It shows that there is a large degree of decentralization in the company. From the organizational structure, it can be observed that the company has many managers dealing with different aspects of the company (Chien 2013). For this reason, there is not any restriction in the decision making process of the company; and this aspect shows the large extent of decentralization of power. It needs to be mentioned that the board of directors of Woolworths has board vision that has lasting effect on the organizational structure. From this aspect, it can be observed that there is a large extent of decentralization of power in the company (Brady 2017).
From the above figure, it can be observed that there are different types of responsibilities among the directors of Woolworths. It implies that the board of directors of Woolworths has expertise in different fields (Grayson and Hodges 2017). One director is reasonable for the human resource management of the company. The responsibility of the finance and accounts part of Woolworths lies on another director. There is another director reasonable for dealing with the maters of marketing. Apart from this, other responsibilities in the organizational structure are customer transformation, technology, loyalty, responsibility of supermarket as well as small stores, FoodCo and others (Blowfield and Murray 2014).
In today’s business organizations, Social Responsibility is considered as one of the major factors for organizational success. Social Responsibility of business refers to the management of the companies of the business organizations to protect the interest of the societies in which they operate (Schwartz 2017). According to the principles of social responsibility, the managements of the business organizations need to take business decisions not for the purpose of maximizing profit or shareholder’s value, but also serving and protecting the interests of the members of the society like workers, community members, consumers and the community as a whole (Tai and Chuang 2014). It needs to be mentioned that there are some major objectives of social responsibilities. Under this process, the business organizations need to operate in the mindset of protecting and promoting the interests and welfare of the society. Thus, profit must not be the highest priority of the companies as the progress of society needs to be provided with utmost priority. For this reason, it is the responsibly of the business organizations to fulfil their social responsibilities as the resources and infrastructures of societies help the companies in earning high profit. Thus, the companies must not neglect their social responsibilities (Carroll 2015).
It needs to be mentioned that social responsibility has become a major aspect for the retail industry of Australia. In this context, the name of Woolworths and Wesfarmers need to mentioned as both of these companies are well ahead of the other companies in adopting the strategies of social responsibilities. Apart from these two companies, the overall progress in adopting social responsibilities in the Australian retail industry is not encouraging (Crane, Matten and Spence 2013). It needs to be mentioned that the companies in this industry is slow in adopting the opportunities of social responsibilities as compared to the global companies. The Green Shopping Survey of the Australian Food and Grocery Council in 2010 discovered that 84% of the Australian is concerned about the environmental impact, but only 13% f them buy the environmental credentials products. Thus, it needs to be mentioned that both the companies and the customers of Australian retail industry need to make step by step changes in their attitudes towards social responsibilities (Cheng Ioannou and Serafeim 2014).
Social responsibility has major impacts on the business operations of Woolworths. For this reason, the company has developed many strategies as a part of their social responsibilities for the people, customers, communities and supplies. In case of people, the main aim of Woolworths is to create a safe and inclusive environment for their employees so that they can get opportunities to excel (woolworthsgroup.com.au 2018). In case of customers and community, the aim of Woolworths is to develop trusts with their customers and reward them. In case of suppliers and partners, the main aim of Woolworths is to develop strategies to create string and long-term partnerships with them. Thus, based on the above discussion, it can be seen that social responsibly is doing the right thing to Woolworths. For this reason, the company is always ready to develop strategies related to social responsibilities for the betterment of the society and people of the society (woolworthsgroup.com.au 2018).
From the annual report of Woolworths, it can be observed that the senior management team of Woolworths get remuneration based on three aspects; they are Fixed Remuneration, Short-term Incentives (STI) and Long-term Incentives (LTI) (woolworthsgroup.com.au 2018). STI and LTI s also regarded as risk remuneration as the payment of these depends on the performance on the members of senior management. Thus, it can be said that the remuneration of the senior management team is based on the performance of them. In case of Woolworths, it can be observed that the company has determined certain parameters for measuring the performance of senior management (woolworthsgroup.com.au 2018). In case of fixed remuneration, it is provided to them based on the scope, nature and role of the directors. In case of STI, the performance of the directors is measured on the achieving the financial Key Result Areas (KRA). The major parameters of KRA are sales, Earnings Before Interest and Tax (EBIT), Return on Funds Employed (ROFE) and Cost of Doing Business (CODB) (woolworthsgroup.com.au 2018). It can be observed from the below figure:
In case of the payment of LTI, it is paid with the help of Executive Option Plan (EOP). Apart from this, there are other four factors based on which the LTI s provided; they are Options, Performance Rights, Performance Shares and Cash Awards (woolworthsgroup.com.au 2018). The share right movement can be seen from the following table:
In this context, it needs to be mentioned that the performance measurement system of Woolworths is related with the key strategies of the company. The main strategy of the company is to increase the profitability of the company by satisfying the needs of the customers. From the above discussion, it can be observed that the performance of the senior management is measured with the achievement of the financial results like EBIT, sales, ROFE, CODB and others (woolworthsgroup.com.au 2018). Apart from this, it can also be seen that the performance of senior management is also measured based on the satisfaction of the customers. Another major strategy of Woolworths is to reduce costs to increase the effectiveness of the company. It can be seen that the performance of the senior management is also measured on the basis of increasing the effectiveness of the company by reducing the cost. Thus, based on the above discussion, it can be said that the performance measurement strategy is consistent with the overall strategy of the company (woolworthsgroup.com.au 2018).
There is a connection between the performance measurement strategy of Woolworths with their social responsibly of the company. It needs to be mentioned that the senior management of Woolworths receives remuneration based on the achievement of the social responsibilities of the company like the achievement of strategies related to the development of people of the communities, development of the society, achievement of safe workplace and many others (woolworthsgroup.com.au 2018). Thus, it can be seen that there is a relation between the performance measurement and social responsibly of Woolworths.
Conclusion
From the above discussion, it can be seen that that organizational structure of Woolworths falls under the line and staffs organizational structure and it is a perfect structure for the large corporations. The large structure of Woolworths provides decentralized power in the company. The major responsibilities in the organizational structure are human resource management, finance, marketing and others. The above discussion shows that Woolworths is very much efficient towards the achievement of their social responsibilities. Woolworths develops their social responsibility strategies for people, customers, society and supplies. It can be seen that the retail industry of Australia needs to adopt the opportunities of social responsibilities. The above discussion also shows that Woolworths provides remuneration to their senior management team based on performance measurement. The main parameters to measure performance are sales, EBIT, RPFE, CODP, achievements of social responsibilities and others. It can be observed that there is a relation between the performance measurement and major strategies of the company.
Based on the whole discussion, some recommendations are provided below:
References
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Brady, R., 2017. Business as a System of Power. Routledge.
Business Insider Australia. (2017). Hot competition is back in Australian supermarkets. [online] Available at: https://www.businessinsider.com.au/hot-competition-is-back-in-australian-supermarkets-2017-10 [Accessed 6 Apr. 2018].
Carroll, A.B., 2015. Corporate social responsibility. Organizational dynamics, 44(2), pp.87-96.
Cheng, B., Ioannou, I. and Serafeim, G., 2014. Corporate social responsibility and access to finance. Strategic Management Journal, 35(1), pp.1-23.
Chien, S.S., 2013. New local state power through administrative restructuring–A case study of post-Mao China county-level urban entrepreneurialism in Kunshan. Geoforum, 46, pp.103-112.
Crane, A., Matten, D. and Spence, L., 2013. Corporate social responsibility in a global context.
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Grayson, D. and Hodges, A., 2017. Corporate social opportunity!: Seven steps to make corporate social responsibility work for your business. Routledge.
Schwartz, M.S., 2017. Corporate social responsibility. Routledge.
Tai, F.M. and Chuang, S.H., 2014. Corporate social responsibility. Ibusiness, 6(03), p.117.
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