Summary of the Case
The case displays various consequences of poor management styles in organizations. The poor management style of organizations is evident in Red Hook store under the leadership of Gerald Mahoney. Gerald Mahoney was appointed to be the manager of the store by John Timmson the owner of the store. John delegated all the managerial duties of the store to Gerald and rarely did he supervise John in his daily responsibilities as the store manager. Gerald was therefore accorded with independency in running all the management affairs of the store on behalf of his boss John. However Gerald was never satisfied with the decision of John to delegate all the duties to him. According to Gerald, he wanted John to equally participate in some of the management issues of the stores such as cleaning, repair work and restocking among others.
Instead of applying appropriate management skills in running the business, Gerald took the advantage of John’s absence from the store to engage in poor management style that eventually lead to customer’s complaints, low productivity and poor customer service. This eventually led to low profitability of the store. John realized that his store was destined to failure hence decided to take some action that will ensure that his store did not collapse. The store was poorly kept, customers were ever complaining, the display and sales service was poor. It was therefore important for some of the critical decision to be made so as to ensure that the store did not collapse. Some of critical decision could be taken by John includes firing Gerald, actively participating in the business and hiring of a new employee.
The Causes and Effects of the Problems
Red Hook store is faced with a number of problems that affects its business negatively. The problems at Red Hook store are caused by a number of factors that can be attributed to the poor leadership style employed by the sales manager. The effects of the problems are evident through a number of signs that are clearly visible in the store.
The Cause of the Problems
The main cause of the problems at the store can be attributed to the poor management style of the sales manager. The sales manager was lacking effective management style capable of driving the sales and profitability of the company as well as ensures that new customers are attracted while retaining the existing customers. Some of the causes of the problems at the store include poor customer service, low quality service, lack of proper leadership, low productivity and lack of appropriate communication.
Poor Customer Service
Red Hook store was having poor customer service. The sales manager was reluctant to engage customer so as to attract them to purchase the goods. The display of the store was not attractive and this was perceived by the customer as a sign of low quality. In most cases Gerald was at the back office watching TV or sleeping instead of being at the front office to serve customers. Customers are sensitive and will only be attracted to purchase the products if they are offered by high quality customer service (Van Der Aalst 9). This can include elements such as making the display of the store appear attractive, sales managers being attractive, ensuring that goods are repaired and delivered on time, and communicating with customers in a polite manner. Customers should be highly valued in organizations. The management of organizations should ensure that their customers are satisfied with the products and services that they offer. This can help increase sales and customer loyalty hence improve the profitability of the organization.
Lack of Proper Leadership
It was evident that Red Hook store lacked appropriate leadership. John was not able to demonstrate appropriate leadership style to his sales manager as in most cases he was out of the store. He rarely participates in the activity of the business and this was an illustration of lack of his commitment to the business. This was the main cause that made Gerald to become reluctant towards effective management of the store. Successful organizations have leaders who are capable of demonstrating to their employees their commitments to the organization. Good leaders should be able to lead by example and give direction to their employees on a regular basis. This can act as a motivation of the employees hence enhances their performance. The effective leadership skills was therefore lacking in Red Hook store making the sole employee to become reluctant in running the affairs of the organization effectively.
Lack of Effective Communication and Cooperation
There was lack of appropriate communication between John and Gerald. The two individuals rarely meet to discuss the affairs of the organization. Communication is one of the effective ways through which management could be able to identify and address the problems faced by organizations. Through communication there was likelihood that the differences that existed between John and Gerald could have been solved adequately. John rarely had a chance to identify and address the problems that Gerald faced in running the store. Customer complaints were also not addressed adequately either by John or Gerald. This resulted to lack of understanding between the customers, John and Gerald. This resulted to lack of corporation in the store hence compromising the spirit of teamwork which is essential towards improving the performance of organizations.
Effects of the Problem
The problems that were faced at Red Hook store affected the business of the store in a number of ways. Some of the effects of the problems experienced at the store include complaint from customers, reduced productivity and low profitability. As a result of poor customer service, majority of the customers were dissatisfied with the products of the store. This led to increase in the number of complaints from the customers. Complaints from customer can imply that organizations are not able to meet the demand and needs of the customers (Bhatt 71). This makes customers to become dissatisfied hence shift their loyalty in favor of other organizations. In case of Red Hook store the unsatisfied customers decided to leave the store in favor of other stores. This led to low sales of the company’s products and reduced profitability. It can therefore be argued that a reduction in the profitability of the store was also another major effect of the problem.
Another effect of the problem was the low production output. The time that was taken to repair the machines increased significantly from duration of two weeks to over one month. This was evident by the increasing number of machines to be repaired. The store was overcrowded by the increasing number of machines that were to be repaired due to low production output. Low production output was mainly attributed to poor time management skills and lack of motivation. Gerald was not motivated to work harder so as to improve the productivity of the organization.
There are various alternative solutions that can be used to save the fate of Red Hook store. However each solution can have various consequences that might affect the organization either positively or negatively. Some of the alternative solutions that can be used to solve the problem experienced at the store include recruiting of new employee, John active participation in the business operations, dismissing Gerald from employment and renegotiating terms and conditions of employment for Gerald. These alternative solutions can give various results to the store. It is therefore important for the owner of the store to evaluate various alternatives in terms of their effectiveness in improving the performance of the organization. This will enable John to come up with appropriate alternative that can help save the store from the problems that it currently faces.
Recruiting New Employee
Majority of customers of Red Hook store have lost confidence on the ability of Gerald as indicated by the ever increasing complaints from customers. Some customers have even warned John to fire and replace Gerald immediately so as gain their trust and loyalty. Due to this it is advisable for John to rebrand the company through recruiting of a new employee to work alongside or replace Gerald. Recruiting a new sales manager for the company will help change the image of the store and this will also influence customer perception. Since employees are the most important stakeholders that determine the image of organizations, bringing a new employee in the store will help build the image and reputation of the store. This can help attracts customer loyalty hence enhance it sales and profitability. This alternative however requires training of the new employees on different aspects of jobs in the store. This might be expensive in term of time and cost. In case the employee is recruited to work a alongside Gerald, then the company might run at a loss since the return of the company currently cannot maintain salary for two permanent employees.
Active Participation of John in the Business Operation
Another alternative that John could take towards providing the solution to the problem is to ensure that he participate fully in the daily operation of the business. John can decide to retain Gerald as the sales manager while he makes himself available to offer leadership direction in the store. He should become committed as boss and show an example of a good leadership through participation in the business activities (Yukl 1). This can help motivate Gerald hence improve his performance. This option can help reduce the problem of the store since the main problem experienced in the store is as a result of poor leadership style. John rarely participates in the business affairs of the store. This is a major source of discouragement for Gerald to work harder. John’s participation in the business activities will also reduce the complaints of Gerald hence promote understanding, cohesiveness and cooperation between John and Gerald. Maintaining Gerald in the business is also important since it will ensure that no time is wasted in training of new employees. Gerald has been in the industries for a long period of time hence possesses the required skills and experience in managing the operation of the store. This can be a significant asset to John since it will ensure the continuity of the business. The major limitation of maintaining Gerald in the business is that it will not be useful in building the image and reputation of the company since some of the customers have lost faith in Gerald.
Dismissing Gerald from the business
Dismissing Gerald from the business can also be another alternative that John can consider to ensure the survival of the business. Dismal of employees can however be costly to companies since it will require recruitment of new employees, training of new employees and the cost associated with recruitment and training of new employees (Howell and Dan 1). It can also in some instances lead to the loss of customers who might have developed close relationship with the affected employee. However in the case of Red Hook store, dismissing of Gerald can positively contribute to the improved image and reputation of the store. This is because majority of customers have complained negatively about Gerald hence replacing him can help to attract customers to the store.
The Best Alternatives
The best alternative course of action should help improve the performance of the store. It should be capable of winning back customers trust, ensure productivity of the organization and improve the profitability of the store. This requires some radical changes in the organization. Since the organization image has been severely affected by the poor management style, it is appropriate for the store to develop appropriate strategies that will ensure that its image is improved. One of the effective ways through which organization can help improve the image of organization is through a change in structure of the organization (Palmer et al 8). In case of the Red Hook stores, there should be a complete change in the management team. Since Gerald was the only employees of the store responsible for all the affairs and business of the store, it is advisable for John to dismiss him and recruit another employee to take up its position. This will help build customer reputation and attract employees to the business. The best option that should be considered is therefore relieving Gerald of his duty.
It is also necessary for John to participate in the operation of the business alongside new employees so as to avoid any future mistakes. He should be able to train the new employee appropriately so that he or she can be able to execute the daily duties effectively. Although this option will be expensive in terms of time and cost, it will play an important role towards building the reputation of the store.
This option can help the company to realize some benefits. One of the most important outcomes of the alternative is that it will help towards attracting customers to the business. Customers will trust the company and be loyal to its products. This will improve the sales and profitability of the company. The time taken to repair machines in the store will also reduce hence reduce the backlog of the machines to be repaired in the store. This will make the store to appear tidy.
The management style employed by an organization can be an important factor towards determination of the success of organization. Leaders should ensure that they develop and implement appropriate management style in their respective organization. Employees of organization should also not be left alone to conduct all the business operation of organization rather they should be assisted by the leaders of the organization. It is also important for leaders to ensure that there is effective communication and corporation in organizations. Communication and corporation can effectively help in identifying the potential problems of organization hence facilitate the development of appropriate strategies that can prevent the occurrence of the potential problems. It can also encourage teamwork which is an important element towards improving the performance of organizations. John should emphasize on the spirit of team work in his store. Teamwork is also essential elements that can enhance the performance of the store. It was evident that there was no teamwork sprit at Red Hook store contributing to poor performance of the organization.
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