Assignment 1 strategic Planning, Assignments of Business Strategy

Download Assignment 1 strategic Planning and more Assignments Business Strategy in PDF only on Docsity! eis aed South Wales @ Prifysgol De Cymru % Final Assignment- Week 8 “Critical Evaluation of the Leadership and Management Theories within Proctor& Gamble” Name: Mahmoud Megahed Student ID: R1509D 1017343 Course name and code: Leadership & Management Theories - BS4S16 Tutor’s name: Dr. Ahmad Qammar Date: 21/10/2020 Table of Contents List of Table: List of Figures. 1. Introduction 1.1 The American Giant “Proctor and Gamble” 2. Critical Evaluation of Management and Leadership Theories. 2.1. Classical Management.... 2.1.1. Bureaucratic Approach 2.1.2. Scientific Approach 2.1.3. Administrative Approach. 2.2. Contemporary Management Theories. 2.3. Behavioral Management: Theories, Examples and Criticism 2.4. Culture in Management and Organizations 2.5. Leadership Theories... 2.5.1. Transactional Theory. 2.5.2. Transformational Leadership... 3. Critical Discussion of Management Practices in Proctor and Gamble... 3.1. Diversity and Inclusion 3.2. Leadership Development Opportunitie: 3.3. Compensation and Rewards 3.4. Safety and Well Being in Time of COVID 19 3.5. Leadership Lessons from Alan Georges Lafley. 4. Fit between P&G Practices and Management Theorie: 4.1. P&G Practice and Bureaucratic Management Approach 4.2. Supply chain in P&G and the Scientific Management Approach..... 4.3. P&G and Administrative Management Approach.... 4.4, P&G and Contemporary Management Theories. 4.5. P&G and Behavioral Management... 5. Conclusion. 6. References P&G achieved this success by its 97,000 employees working around the world and focusing on a portfolio of 10 categories comprised of daily-use products (Baby Care, Fabric Care, Family Care, Feminine Care, Grooming, Hair Care, Home Care, Oral Care, Personal Health Care, and Skin and Personal Care.) (P&G, 2020). P&G’s Organizational Structure: P&G runs its business through six industry-based Sector Business Units or SBUs: Fabric and Home Care, Baby and Feminine Care, Family Care and P&G Ventures, Beauty, Grooming, and Health Care. SECTOR BUSINESS UNI BABY and FAMILY CARE PSS ETM 1c) CARE A) FABRIC and Lite) | atoy Nt FOCUS MARKETS / MARKET OPERATIONS GBS and CORPORATE RESOURCES Figure 1: P&G Organizational Structure (P&G, 2020) P&G shaped its organization structure based on the type of the market the company is operating in. Focus Markets are mature market of operations where the company achieve high sales and profit targets. Focus markets account for about 80% of Company sales and 90% of after-tax profit. Market Operations in each focus market, works across the six Sector Business Units on scaled market services and capabilities, including customer teams, transportation, warehousing, logistics and representing P&G externally (P&G, 2020). Markets in development or in premature phase (are classified as Enterprise Markets) and managed through a separate business unit. This separate unit together with the six Sector Business Units agree on business goals, set innovation plans, supply plans and operating frameworks to benefit from the attractive and high growth rate potential in those markets. P&G’s Global Business Services (GBS) and other dedicated functions are key corporate resources that provide scaled services, governance, stewardship and areas requiring high mastery. The structure described above provides P&G with a more empowered and agile business operation that enables growth and value creation. P&G's Mission Statement: “We will provide branded products and services of superior quality and value that improve the lives of the world’s consumers, now and for generations to come. As a result, consumers will reward us with leadership sales, profit and value creation, allowing our people, our shareholders and the communities in which we live and work to prosper” (P&G, 2020). The statement conveys three meaningful and strategic goals for operation; Distinguished quality, Improve lives, Improve communities are the pillars of P&G business operation. The company would never compromise superior quality and keen on bringing and ensuring maximum benefits to consumers. P&G is a company that has social responsibility too; from earned profit P&G actively contributes to environmental protection and community empowerment programs (Academy, 2020). CORE VALUES: P&G has five unique and powerful values “integrity, leadership, ownership, passion for winning, trust.” (P&G, 2020), that always helped to place the company in a winning position and overcome several business challenges in different markets. 2. Critical Evaluation of Management and Leadership Theories 2.1. Classical Management Classical management emerged as a reaction to the industrial revolution in the 19" century, trying to adapt an efficient managerial system to make a large number of workers working alongside machinery (Post, 2003). In the classical management, the work is divided into tasks and procedures that can be measured. Employees with relevant competencies get hired, trained and developed to accomplish the desired results. The work milestones and sequence is strictly followed to increase productivity and efficiency. Monetary and non-monetary incentives are provided to engage the employees to keep the efficient and standardized workflow. Classical management is still relevant today of course, especially in manufacturing companies (manufacturing process), warehouses, delivery services (i.e. Amazon), food service (farming, fast food and food production). Classical management consists of three primary theories: Bureaucratic, Scientific and Administrative management that complement each other. 2.1.1, Bureaucratic Approach Max Weber (1864-1920) took the big picture in his bureaucratic approach, in which the organization should look like an extension of government and the legal system where the responsibilities, influence and power of a person are tied to the job position in the organizational hierarchy, clear rules should govern performance and standardized guidelines should determine hiring and firing. On one hand, the bureaucratic approach brought good additions to management styles by 1) Structure: making a clear structure, defining roles and responsibility and identifying the reporting lines within the functions and the organization. Hierarchy helped employees to know both their power and limits and operate without friction; 2) Specialization: specialization helps employees not only in developing their skills but even master what they Fayol introduced 14 principles of management that focus on the five management functions of an organization. The five basic elements for managing an organization as the administrative management theory are planning, organizing, commanding, coordinating and controlling (KULLABS, 2020). aN CMI AU MO) MLCT SUL amar) Ze) problem solving Coordinating } Figure 2: Five functions of Administrative Management (KULLABS, 2020). 1. Planning: Planning is the base step in the management cycle. Identification of the organization future goals and objectives; and the structural plan and actions needed to be taken to meet them. 2. Organizing: After setting a plan, it is important to drive clarity on action and consolidation of resources either human or tangent ones to work with the most efficient performance. 3. Commanding: Commanding comes after organizing, where superiors give orders and directions to subordinates to ensure that work and actions are flowing in the right track. 4. Coordinating: Organization goals are met through group work and synergy between departments, therefore coordination between different divisions is important to build on each other work and move forward. 5. Controlling: Continuous monitoring of the performance and comparison of actual progress against the planned schedule helps in detecting any deviation from the base plan or schedule and take necessary corrective actions to get back on track. improve the performance. Faylor divided an industrial organization into six divisions 4- Technical Division: For activities related to production lines and manufacturing of goods. Commercial Division: Covers activities like sales, purchasing, and distribution of goods and services. Financial Division: Responsible of financial resources, provision of capital needed for investment, development and growth. Accounting Division: Takes care of documenting transactions and issuing financial statements. Managerial Division: Responsible of the five management elements: planning, organizing, commanding, coordinating and controlling. Security Division: Concerned about safety of employees and building and ensures compliance and implementation of organization policies. Fayol introduced 14 guiding principles to the five base elements. The principles are generic and shall suit or be applied to any organization based on the case and the need, in order to ensure effective and efficient management. 1. Initiative: Give a room and space to employees to create, independently develop and come up with new initiatives to satisfy human need for creativity and development. 2. Equity: All employees are equal, there is no first and second class employees. There is no preference or discrimination of any kind, based on gender, nationality, religion, etc... The working environment shall be dominated by justice, respect and kindness. 3. Scalar Chain: The communication shall flow from the top management to the bottom through a chain of interim managers. 4. 10. Remuneration and Reward: Employees shall be compensated and remunerated for the efforts. Fayol focused more on non-monetary even more than monetary, believing that it builds a loyalty relationship and bonding between the two parties’ employee and the company. The remuneration must be linked to level performance and create a satisfactory and fairness feeling among employees. Unity of Direction: Each division must receive instruction from one head. All departments must deliver outputs that serve same company goals and objectives. Discipline: The policies, rules and regulations of the organization must be clear and followed by all employees. An employee will be subject to punishment, by intentionally ignoring or breaking the rules. Division of Work: Dividing work into tasks and milestones makes the operation inside the organization smoother and drive more efficiency and effectiveness on both technical and managerial levels. Authority and Responsibility: Authority is the power of giving orders, commands and taking decisions. Responsibility is the duty or tasks that an employee must perform and get accounted for in front of his manager. There should be a balance between authority and responsibility, in other words an employee must be granted adequate level of authority necessary to meet the assigned responsibility. Authority without responsibility leads to bad utilization of power and responsibility without power is mismanagement of human resources Unity of Command: Uniting the flow of command and simplifying to one direct manager, eliminates a lot of confusion. An employee must get orders from and be accountable to only one supervisor. This set up clears confusion and makes the employee loyal to the activity. Subordination of Individual Interest to General Interest: There should be a harmony and balance between individual interest and organizational interest, if this equation is materialized it will be optimally rewarding At the end, all theories are valid and complementary to each other, however their success and suitability mainly depend on the application and the nature of business and workplace. Contemporary theories approaches with focus on human resources, competition, organization and planning are more suitable for information-based companies like Google and Facebook. The more commanding and controlling are dominant, the more it suits food industry and delivery services like Macdonald’s and Amazon. The contemporary theories did not invent nor introduce a new managerial theory, but more an extension of the administrative approach of the classical management theories. each theorist focused on one of the functions or the principles of Administrative management approach and made more investigations and presented it in more explicit and richer view. 2.3. Behavioral Management: Theories, Examples and Criticism Employers are continuously looking for ways to incentivize employees on producing higher quality and quantity of deliverables. Monetary incentive generally comes on top of the list while discussing workers and employees’ incentives and even sometimes appears as the only magical solution for achieving targets. Bonuses, profit share, commission and pension schemes are all sorts of financial incentives that motivate employee and change behaviours. They are easy to implement by employers and anyone would welcome to be more paid. A fair compensation scheme from wages, benefits and compensation are often effective to achieve business goals and increase productivity and efficiency. Profit share can improve employee attitudes and improve the working atmosphere by making them feel co- ownership and partnership. Pension schemes tend to build a long term relation of mutual trust and loyalty with the employees (dk/asz, 2019); and correspond to Maslow Hierarchy of needs (CENTRE, 2013), where financial security and stability needs are covered. Despite all the advantages of financial incentives, money does not present the only solution for incentivizing employees nor leading for productivity increase. It can even have negative effects like frustration if there are perceptions of unequal contribution among group members and make workers self-oriented rather than team-oriented (Miller, 2015). A fair financial reward mechanism can partially incentivize workers and employees but can neither be the absolute nor the ultimate solution. In 1943, Abraham Maslow published a paper “A Theory of Human Motivation”, where he proposed his pyramid or hierarchy of human needs in the journal phycological review (Maslow, 1943). Maslow’s pyramid or theory of human needs breaks down the different needs of an employee or human being into three main needs: Basic needs, Psychological needs and Self-fulfilment needs. The three main categories are then further broke down into five single needs: Physiological needs, Safety needs, Social, Esteem needs and Self-actualization. Self-fulfillment needs Esteem needs: prestige and feeling of accomplishment Psychological needs security, safety Basic Physiological need pee ds: food, water, warmth, rest Figure 3: Maslow's Hierarchy of needs (McLeod, 2020) The base needs or also known as Physiological needs, are mainly concerned about the security of basic life needs (from food, water, rest, warmth and shelter) and linked to physical and physiological wellness. In other words, it is the financial security necessary or needed to achieve wellbeing and cover basic life needs. Still in the category of basic needs, but one step further to safety needs, where job security and safe working environment were addressed. It simply addresses the need for stability and security by having a job and feeling safe while doing it. The second stage of the pyramid addresses the psychological needs. First, by fulfilling social needs of belonging and being part of a team and building networks and friendships. Second, by fulfilling self-esteem needs of feeling accomplishment and respected. The top stage of the pyramid, addresses the intellectual need for a free space for creativity, provide input, deliver his full potential, achieve targets and feel self-actualized. A multidimensional solution that consider the different needs of an individual, perfectly as described in Maslow’s theory of human needs, from career advancement, self-fulfilment and esteem, creativity and freedom appears more reasonable and comprehensive. On the other hand, Maslow’s pyramid has received a lot of criticism, as people are simply different, some look after their security for (Self-esteem) status, others who sacrifice safety and risk their own health for self-realization (e.g. starving for a slim figure or risky cosmetic operations for a certain appearance) and in extreme cases there are also people who can endanger self (security) for loved ones (social needs). All of these are examples of the reverse order than the theory predicts. Social motives can also be markedly different across cultures - for example, belonging to social groups is more important in China than in Germany (Becker, 2015). Furthermore, the results of empirical tests of Maslow's theory done by (Diether Gebert, 2002) are correspondingly negative and shows that the motive classes or categories assumed by Maslow could not be scientifically confirmed. The motives are formulated in such an abstract way that almost every behaviour or need can be contradicting with motives. For example, someone focuses fully on work and neglects the family for self-actualization, and someone with the opposite behaviour, full focus on the family and neglect of work - also looking self-actualization. Both can of course also be a need for social contact: the first seeks contact with colleagues, the second with his family, or security: one seeks protection in belonging to colleagues, the other to the family. This leads to the fact that one can apparently explain every behaviour with the theory but cannot predict anything and hardly derive any practical measures. Transactional leadership works well in organizations where the structure is essential (projects with linear and specific processes); and is not the right fit for organizations where initiative is encouraged. This model suits and works well for big corporations, think tanks and policing agencies known for their extensive use of management (iEduNote, 2019). Many high-level members of the military, CEOs of large international companies, and sport coaches are known to be transactional leaders. Jack Ma and his story of success as co-founder and executive chairman of Alibaba Group, presents a great example for transactional leadership. The company business nature is making the linkage between sellers and buyers, so there is no much to do in terms of R&D, innovation or change of strategies (Kabeyiv, 2018). 2.5.2. Transformational Leadership As a term, transformational leadership was first mentioned in James Downton's sociological study in 1973 (Srdan Nikezié, 2012). In many organizations, both transactional and transformational leadership are needed. The transactional leadership ensures that routine work is done smoothly and reliably, while the transformational leadership goes beyond managing day-to-day operations and focus on strategies, initiatives and value added to the company, department or work team to reach the next level of performance and success. Transformational leaders focus on team-building, motivation, and collaboration with employees at different levels of an organization to accomplish change for the better. They also set goals and incentives to push their subordinates to higher performance levels while providing opportunities for personal and professional growth for each employee (iEduNote, 2019). 3. Critical Discussion of Management Practices in Proctor and Gamble P&G, the American giant company in consumer goods applies in practice a mix of the above explained theories. 3.1. Diversity and Inclusion Starting by the hiring or selection of employees, P&G hires the person not the position, cares about diversifying backgrounds and then build their skills in P&G school. “Everyone valued. Everyone included. Everyone performing at their peak” (P&G, 2020). As company vision, P&G want to “be, and be recognized as the Global Leader in Diversity & Inclusion. Diversity & Inclusion is in our DNA—at the heart of our Purpose, Values and Principles—and critical to growth” (P&G, 2020). Diversity is a mirror for the diverse people and consumers around the world who daily buy P&G products every day are as diverse as our world. The more the similarity between employees and consumers increases, the better the company can understand the consumer needs and meet their expectations. The diversity extended to people with disabilities not only people coming from different cultures, P&G has a dedicated hiring program called “SHINE” to look for and hire bright talents with physical disability (P&G, 2020). Simply, the company values diversity and do not discriminate people against any basis, i.e. religion, colour, nationality, gender, sexual orientation, age, marital status or disability, etc. Inclusivity goes beyond diversity, where employees’ diverse traditions and uniqueness are welcomed to be brought to work every day, believing that a wide array of personal experiences and points of view, will bring out the best to the company and the working environment. 3.2. Leadership Development Opportunities The statement “Become a leader in your field” (P&G, 2020) mentioned on P&G website, perfectly summarizes and describes the career withing P&G. A new P&G hire either a student, graduate, or experienced professional, shall not expect a rotational onboarding program common in the majority of big companies, alternatively the new hire will make a deep dive from day 1 into meaningful and related work to the assigned job, category or business. P&G as a world class leader in consumers good industry committed itself to make an impact and an individual development plan for each employee, to enable continuous career growth and advancement for all its employees. P&G supports all its employees to learn and grow in their careers, in order to allow them to achieve their peak potential and take the lead in the success of the company. The onboarding training in P&G has a learning approach 70/20/10, that consists of 70% experience by learning by doing and exchange with your colleagues, 20% guidance and support from mentors and peers and 10% though training materials and courses. The 70% share focuses on assigning tasks that serve business needs, level of task difficulty is gradually increased, and performance is gradually monitored to identify when the candidate is capable of sailing and steer the wheel alone. Mentorship by senior leaders from the company presents 20% share of the onboarding program of new hires. Seniors provide all needed support, guidance and information to enlighten the career path to fresh entrants. The remaining 10% is P&G various and diverse range of educational courses, classes and trainings provided to new hires. The courses aim to cover the different business aspects and working cycle, communicate the company principles, values, purpose and performance indicators. There is also a tailored training program and learning materials for each job function and department. keen and dedicated courses on digitalization are structured to improve and upscale the employees skills in digitally performing their jobs. 3.3. Compensation and Rewards P&G offers competitive total rewards not just a good salary, as it is seen fair and motivating that each employee must be valued for his work. The salary is a market competitive one compared to top tier companies. The salary value shall not cover only life expenses but allow the employee to plan and travel for vacation. P&G offers a generous financial package full of benefits (ie. interest-free loans, a tax-advantageous share purchase plan, a contributory pension plan, and financial education on topics including purchasing the first home.) (P&G, 2020).Further perks, P&G has an internal online platform where it offers its products to the employees at discounted prices compared to market prices, this benefit its portfolio of brands from 10 to 23, 3) grew average annual organic sales by 5%, and 4) core earnings-per-share grew by 12%. (Hashemipour, 2016) Over and above, A.G. Lafely was asked to take back the role of the CEO after to support the company passing a difficult and critical time period. Upon his return, he did not hesitate to take courageous decisions to significantly cut costs and reshape marketing expenditures, the hero succeeded to overcome the challenging situation and sail the company/ship to safe shores and stepped down in 2016 (KHAMITOV, 2019). 4. Fit between P&G Practices and Management Theories Proctor and Gamble was selective in establishing its managerial style, almost took the fruit or the advantage of different theories to tailor the design of its managerial dress. It is managerial copes and fits more the contemporary management theories where the value of the human factor is considered. 4.1. P&G Practice and Bureaucratic Management Approach From the bureaucratic approach in the classical management, P&G picked the structure and hierarchy to drive clarity on the reporting lines and roles and responsibilities of each member in the organization. Merit is a core code for the company, deliverables and performance are essential requirements to guarantee a successful career internally. 4.2. Supply chain in P&G and the Scientific Management Approach P&G did not miss the advantages of scientific management approach. A multinational manufacturer guru for consumer goods cares for sure about efficiency, cost and time reduction. P&G made an innovation in its supply chain system and turned it to supply chain network and it is now a competitive edge for the company. With approximately 73,000 employees working in supply chain, over 130 manufacturing sites and more than 200 distribution centers; P&G decided to expand its consumer-centric model to actively include the customers’ needs. P&G took several initiatives and steps since 2015 to restructure its supply chain: = In north America, P&G built six mega-distribution centers in strategic locations across the country to facilitate, expedite the reception and delivery of products from all P&G business units. The company even put a premium on the responsiveness with a distribution goal of being within one day’s transit to 80 percent of retailers (Trebilcock, 2015). = On the supply side, P&G asked suppliers to build “supplier villages” next to P&G plants, like the just-in-time model applied by Toyota, so that suppliers can respond faster to P&G (Trebilcock, 2015). = Digitalization, the company applies digital technology and advanced analytics to accommodate the digital revolution happening in the world nowadays and meet consumer needs by providing electronic sales, drive better innovation, higher productivity, lower costs, and the promise of faster growth. Digitalization harmonizes the process and integrates all players of the supply chain, as if there no interfaces between the suppliers of raw materials, components, and parts, and the transporters of those supplies and finished goods, and finally to the consumers demanding fulfillment (Moonshot, 2017). P&G’s march towards changing product innovation to supply chain innovation allowed 50% reduction in cycle time and inventory, saved and minimized $300M cost of operations and to offer high service without compromising on quality Vain, 2017). 4.3. P&G and Administrative Management Approach P&G applies almost all functions, divisions and principles of administrative management theory. Starting from selecting people, P&G is unique in its hiring process. The qualifications written in the job description is generally generic, for example “Bachelor Engineering” without further specification, as at the end P&G hires the person not the job. The company set its own criteria in filtering and selecting candidates and future employees, preferably fresh graduates that are to firstly score in reasoning, IQ and behavioral tests. In case of satisfactory results, the candidate moves to the next hiring phase which is interviews. A candidate has to go through three interviews with different interviewers in order to give him a second and third chance in case he had a day off and also in order to rely on the judgement of one interviewer only, as if it is a panel evaluation. The interview consist of set if situational questions, to see how the candidate will react in different challenging situations (P&G, 2020). There is clarity in the company strategic goals, authority and responsibilities are cascading from the top management downwards in a balanced way, so that each employee can independently work and execute his tasks in light of the authority granted to him. The role of the manager is more facilitator, progress tracker and back stopper. From day one at P&G, employees are trained and educated to be follow, adhere and be obedient to the company Principles, Values and Purpose (PVPs), any breach to the company PVPs will strictly Employees are continuously rewarded either financially or psychologically, through bonuses, recognition awards and promotion (P&G, 2020). The supply chain in P&G explained in section 4.2, is also a good example to reflect the work division and coordination principles of Fayol in his administrative management approach. strategies, initiatives and value added to the company, department or work team to reach the next level of performance and success. Alan George Lafley a unique leader and one of the most remarkable CEOs in P&G history. His leadership combined both aspects transactional and transformational. He had an innovative business strategy, plan for execution and capability for implementation and realization on ground. An executive person with extensive experience in business success. He succeeded in penetrating the giant and challenging Chinese market, directing his teams to invest time and effort in understanding the Chinese Consumers needs and not to rush results but rather move on with gradual pace. He strongly believed in product innovation and research and development and saw it a competitive edge to be ahead of the market. the company cannot achieve its business goals and objectives without having the right competent calibers, therefore he was selective and keen to hire in the right persons to the jobs. Indeed, he achieved a lot in his nine years journey as P&G CEO, the company doubled sales and expanded its portfolio of brands from 10 to 23. 6. 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