Understanding Organisations
Utilising Cadbury as the primary case study students will demonstrate their understanding of some of the dynamics and influences at play within the organisation
Contents
Introduction Pg 3
Background of Cadbury linked to helping its workforce and society Pg 3
The internal environment and relating this to Cadbury Pg 4
Leadership by management and relating this to Cadbury Pg 6
Conclusion Pg 10
Bibliography Pg 12
Introduction
Within any organisation, people are key and underpin everything within it and its untimely its success or failure. This happens through many different dynamics with two of them discussed in this report being the internal environment and leadership from management. These are two of the most important dynamics which affect Cadburys. This report will look at both Cadbury currently and in the past.
These two dynamics interlink well as creating a positive internal environment stems from how the management deals with its employees. If both mangers and employees work together then it builds the foundation for a long lasting, successful and most importantly profitable firm who employees are fully invested and dedicated to the firm.
Treating the workforce well is backed up by theory of viewing an organisation as an iceberg. What sinks ships isn’t always what sailors can see, but what they can’t see (Hellriegel et al 1998). Covert accepts (which are aspects which can’t be seen) include attitudes and commutation patterns important in leadership. If these accepts are not dealt with then this can lead to inefficiencies in productivity hindering the performance of a firm. Internal environment and leadership are often forgotten about being covert in nature with mangers underestimating the impact these can have on performance in both the short and long run.
Background of Cadbury linked to helping its workforce and society
At Cadbury’s they have always played an important focus on its people and the convert accepts. This was shown right from the very start when John Cadbury opened his first shop in 1824 selling Coco as a healthy alternative to alcohol which Quakers thought was bad for people. Also illustrated clearly by the move to Bournville by Richard and George Cadbury in 1879. They wanted to expand their business but did it in a way never seen before by moving it four and half miles away from the centre of Birmingham. George was driven by a passion for social reform and wanted to provide good quality low cost homes for his workers in a healthy environment- giving an alternative to grimy city life. So he set out building a village where his works could live (Ella 2009). This was clever by George Cadbury as a healthy and more motivated workforce would boost performance of his employees allowing him to more competitive against Fry and Rowntree.
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Also employees both past and present will feel integrated into Cadbury with them being surrounded by Cadburys 24/7 by living in Bournville and generations of their families working in the factory. One employee on the programme ‘Inside Cadbury- (2018)’ is quoted as saying ‘I loved working every minute at Cadbury, they were like a second family to me’. This positive attitude generates a motivated workforce who are willing to give their all in their role boosting overall performance of Cadbury as a whole. This working hard approach links the positive psychological contract employees have to Cadbury.
In relation to Cadbury, the workforce was certainly driven to perform for many reasons. The Cadbury brothers had initiated a great many schemes targeted at the health and well-being of their staff… The men’s sports grounds now extended to twelve races and in the summer months, the outdoor pool for men was popular (Deborah Cadbury 2011). Also little benefits like half days on Saturdays and possible promotion for hard work all played a part in getting the best out the employees. The effects are clear to see with Cadbury overtook Fry as the biggest UK manufacturer in 1910 with sales of £1,670,221 compared with Fry’s £1,642,715 and Rowntree’s £1,200,598 (Chrystal 2012). A major reason for this was having Bournville village with is strategic positioning next to canal and ability of mass production from a fit and healthy workforce. Cadbury performance was now being maximised.
The internal environment and relating this to Cadbury
One major aspect that plays a major role in the performance of a firm is the internal environment. Internal environment relates to the culture and climates of an organisation and to the prevailing atmosphere surrounding the organisation (Mullins 2016). This means it is the factors an organisation can directly influence.
The internal environment is critical as sets the tone for the healthy organisational climate. Organisational climate is a relatively enduring quality of the internal environment of an organization that is experienced by its members, influences their behaviour and can be described in terms of the values of a particular set of characteristics of the organisation (Macleod and Clarke 2017). Similarly, Organisational climate plays an essential role in shaping employees behaviours and influencing their perception of knowledge management. One of the keys to remain competitive advantage for organisations is to foster the continuously innovative atmosphere to set in motion in its internal processes, procedures, and capabilities (Tagiuri and Litwin 1968)
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When the climate is healthy then it should improve an organisations effectiveness by clear interactions leading to everyone working to the same common goal. However, it is important that all employees are on board. One negative employee can have a chain reaction among a team. It is the job of a manger to see if this is happening and deal with the root cause as quickly as possible to stop the chain reaction from starting.
In Cadbury, their internal environment is very strong and positive with them working hard for each other. A great example of team spirt was shown during WW1 when the factory came together. The remaining staff contributed to the war effort long after the Bournville bell signalled the end of the working day. Women of the Bournville nursing division often worked in local military hospitals at night…. Bournville Volunteers set up stalls at the station and greeted returning solders with hot food and drink (Deborah Cadbury, 2011). This type of activity illustrates the strong believe within the firm and creates a great brand image for Cadburys which still holds on strong today
A further aspect of creating a beneficial internal environment comes from the effect of external factors encroaching into a firm. This will always happen as no firm acts in isolation so is going to be affected in some way. A way organisations can minimise the impact of this is through environmental scanning. This is a systematic method of monitoring changes in an organisations business environment (Palmer and Hartley 2017). Likewise the importance of scanning is explicitly recognised both as a starting point for strategic planning and as one of the principal mechanisms that initiate the organisational adaption process (Ghoshal 1988). The aim is to understand the current and potential position of a firm so they can be proactive in its actions rather then reactive. They will gather all kinds of information which can be illustrated by PESTLE which includes all factors in the external environment from economic factors such as competitor behaviour to social factors such as demographic trends. The extent of each factor should lead to change in an organisations structures processes and behaviours.
For Cadbury, being a multi-national and large organisation they are undoubtably affected by the external environment. An example of this currently is Brexit. Reports say Cadbury are committed to staying in the UK… There are obviously challenges and there are three things that we really care about in context of Brexit negotiations. First of all is making sure we have a stable and thriving UK economy. The second is ensuring that there is free movement of goods and minimal barriers to trade. The third area is skills. We have 50-odd different nationalities so want them to have security to continuing to live and work in the UK (Wood 2017). If Theresa May fails to get the right deal for UK, firms like Cadbury may decide to relocate to an area within the EU such as Germany where Kraft already have factories. This will be damage the UK economy through loss of jobs and corporation tax.
Also Cadbury has been relatively responsive to social factors. One of these is the changing consumer demands. It has undertaken partnerships with Fairtrade in products such as Dairy Milk to support communities in which Cadbury relies on for their coco. Cadburys have also responded to growing health concerns and the rise of obesity. This has led to Cadbury’s to produce smaller bars and to also try and reduce the level of sugar in their products. By undertaking this proactive activity to the threat of future legislation, Cadbury not only responds to its customers, but may also be able to cut the potential costs that this action may entail (Butler 2015). By responding effectively to these current external issues then the internal environment is kept happy and willing to work hard for Cadbury.
Leadership by management and relating this to Cadbury
To be the best leaders, mangers should lead by example and have regard for the need to motivate the people under their charge. As a result, employees will have a greater willingness to be more productive and work harder for their manger which will consequently boost output and performance of the whole firm.
The type of leadership style can vary massively. At one end of the spectrum, a manger can be autocratic where the focus is total power with the manger. Traits of this type of manger include dominance, boldness and self-assurance. He is the only one who is making decisions and who has authority. At the other end, a manger can have a laissez-faire style where the manger just observes members of the group as they work well on their own. The key is that the manger purposely gives up control so that freedom of action occurs and he can get on with his own job (Crawford 2012). More commonly in today’s businesses, firms are in the middle known as a democratic style where leadership is shared among the group including the manager who has the final say. The manger will always listen to his employees in order to make the correct decision for the team. Leadership traits include charismatic, inspiring and high energy. An example could be Obama in contrast to Trump dominant style.
For leadership to be affective and boost the performance of a firm there needs to be both the willingness of the manger to help and support his team and also for his team to ask for the help. It works both ways. This will in turn be motivational for the whole team and removes any obstacles that could hinder meeting goals such as misconceptions or miscommunications. Furthermore mangers need to be both transactional (focused on day to day running) and transformational
(focused on problem solving and the future). Whereas transactional leaders promote stability, transformational leaders energise others with visions and strategies of how to refocus and revitalise organisations (Park 2016). Both type of leadership behaviour are necessary in different proportions depending on context.
Over the decades, Cadbury leadership from management was very democratic and both transactional and transformational which the best leaders do. This suited the context of the time. This is shown from the very start by Cadburys by the Cadbury family directly running the firm and upholding their Quaker beliefs of looking out for the community and seeing everyone as being equal. Their approach was very ethical looking out for all stakeholders. It is important mangers of today act as a leader and keep employees in mind and less focused on statistics and making as much profit as possible.
Currently at Cadbury, the leadership has become more ruthless and profit driven especially now after the takeover of Cadbury by US based Kraft (now Mondelez) in 2010. Harry Wallop reports that in 2011 ‘200 job loses will be through voluntary redundancies and the company said the promise was fully in force. It comes after Kraft closed Cadbury’s Somerdale factory near Bristol after promising before the takeover that it would try to keep it open.’ This leadership style is a complete contrast to the employee first approach Cadbury had been known for and will cause employees at Cadbury to have low morale and no longer feeling part of the organisation. This can be highly destructive in a business as will have a huge impact on productivity and risk destroying the positive culture Cadbury have built. Employees will lose interest or be distracted by uncertainty with their job causing output to drop. Also cost will rise as absenteeism levels rise and more turnover of staff causing greater cost for Cadburys. With the external environment being very volatile, internal issues need to be dealt quickly so unrest from within does not occur.
More importantly, context is key. There are lots of variables which mean different leadership style will be best suited for different situations. Sometimes leadership (transformational) is needed compared in management style (transactional) is needed. The best leaders will employ the right style at the right time.
Variables of which style is best can include type and nature of the organisation such as size and if it is in the public or private sector, and also the nature of the tasks to be achieved. Different leadership styles are needed to cope with different situations: for example, the autocratic style makes sense when an organisation is in deep trouble and needs to achieve a rapid turn-around (Caputo 2018). That style would be counter-productive when the organisation is in a growth situation’. In addition, a manager who has a democratic style then by nature will be more transactional focused whereas if the manger has a lazzie-faire approach then by nature will be more transformational.
Even if the manger has adopted the correct style, when working in large firms like Cadbury, then conflict is bound to occur. This is because different employees working together will all have their own idea and thoughts on how to operate or do a job. It is important that a manger does not ignore this and deal with it effectively as possible to minimise the negative impact in can have on performance.
Conflict comes in three categories task, process and relationship (Jahn 2016). The task conflict surrounds issues that may arise in the discussion of objectives and business strategies. The process conflict arises in disagreements on how to do the work, along with internal processes and task allocation. Finally, relationship conflict is characterised by an important affective component.
In relation to Cadbury, the merger between Cadbury and Fry in 1919 caused conflict. This happened because there was a lack of members in the Fry family involved in the business. This now meant they were outnumbered by Cadbury and Fry family shareholders who played no part in the management of the combined enterprise (Sir Adrian Cadbury 2000). From this point on, it is understandable that there should have been differences of view between those in the family who were running the firm – whose aims were investment, growth and upstanding the Quaker beliefs – and those who were owners, but not managers, and primarily concerned with dividend income and the capital value of their holdings. If conflict persists then overtime, petty grievances can turn to long-standing problems and become the culture affecting the overall morale and even customer satisfaction (especially in a face to face industry).
A current example of this in relation to Cadburys is that they have a multi-national workforce who will have different work ethic. In UK, tradition has it, that the British person can be very upfront and say what they are thinking. However, in the far-east their approach is much different with them keeping their thoughts to themselves and just getting on with the job asked. These contrasting views could lead to conflict meaning the teamwork is hindered causing a decrease in productivity. To overcome any conflict, commutation is key so comprise can be made so that both parties can continue to work together and performance of the firm is unhindered.
However, conflict can be a benefit for a firm. Healthy conflict can help generate innovation and an agent for evolution, and for internal and external change as employee’s voice their thoughts can result in improvements on how the organisation works and enhance a positive culture.
Conclusion
In conclusion, the most important dynamic and influence on Cadbury is the way it treats its people so well. By keeping a healthy organisational climate, it boosts Cadburys reputation and performance and shows this approach works successfully by being a world leading brand for over 150 years now.
The internal environment of its employees plays a vital role in this by being positive and making their employees feel part of the organisation. Cadbury has historically done this well by they respect the worth of every individual as they are open to suggestions from the workforce and the Bournville Village engaged and empowered employees (Bradley 2008). This indirectly builds loyalty to the brand from both employees and customers. Employees work hard to maintain their standard of living and receive non-monetary rewards while being productive in return. Customers of Cadbury benefit also by receiving a top quality product and see the benefits that Cadbury bring to communities around the world with its numerous projects.
Furthermore, leadership plays a critical role in keeping the employees motivated and devoted to Cadbury by creating a positive culture. The takeover by Kraft highlighted that workers are quickly losing trust in the current management. To stop this happening a more return to a more balanced democratic leadership style is needed to maintain underling spirt Cadbury holds.
This positive and healthy spirt of Cadbury can be summed up by their current advertising campaign on TV. The story is of a young girl spending her money on a Dairy Milk bar for her mum as a present. In the future it is vital they keep up and build on the brand and keep to the values of which George Cadbury founded the firm. They need to make sure they do not prioritise profit over the brand as it only takes one bad headline to tarnish the brand name. They need to make sure both employees and customers kept happy so that Cadbury continue to be the nation’s favourite chocolate bar.
Bibliography
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