Case study: Warbings Office Systems Plc

Background Warbings Office Systems is small but rapidly growing company, focusing on delivering and supplying office based products to a target market of small businesses in the U.K. and, increasingly, Europe. As the trend for homeworking continues much of their new business is in supplying office materials to individuals working from home. Currently offering some 18,000 different product lines in store and 39,000 via catalogue ordering, it intends to double its product turnover in the next three years by increasing its web-based ordering capabilities. With the marketing strapline ‘you need it we’ve got it’, Warbings aims to make office supply shopping as easy as possible for customers. Priding itself on being a ‘thoroughly modern company with old traditions,’ Warbings has used technology to evolve into a customer-focused business, striving to give each customer a ‘personal service second to none,’ with a variety of different, but easily accessible, ways of ordering and receiving products tailored to their individual needs. The more cynical of their staff occasionally reflect that the customers even dictate the lavatory breaks and bedtimes of the Warbings’ employees. Graffiti on one of the depot walls, that intriguingly reappears every time it is removed, says ‘you need it we bleed it’ and occasionally ‘Wosp stings’.

The Warbings CEO is passionate about delivery and customer care and he is convinced that the way in which customers are treated is the key to repeat business. The Warbings mission statement reflects this philosophy, stating that:

‘Our mission is to cost-effectively supply both the professional and home office with a complete range of supplies, including stationery, filing equipment, office equipment, computer consumables and cleaning materials. To do this we are committed to meeting the needs of each and every customer by delivering quality products, with innovative functionality and modern design. Our daily objective is to ensure that our customers, wherever they are, whoever they are, whether they purchase in one of our shops, through our direct sales department or over the internet, receive the same level of care, courtesy, service and respect to which they are entitled. It is this service that makes the essential difference.’

(The company sees no need for a values statement insisting that everything necessary is contained within the mission one.)

Evolving from an 19th century printing shop in the East End, Warbings has been formed over the years by acquisition and merger. (At one stage it considered further growth by expanding to supply goods to office supplies distributors, but decided against this and, for the short term anyway, is now intent on consolidating rather than expanding its present base.) Based in East London, it has a warehouse and driver depot in Basildon and an additional two warehouses in Leeds and Manchester. As well as its delivery service it has three out-of-town retail superstores (Farnham, Marchington and Lewis) a European office in Ulm (West Germany), together with a call-centre and a small copying and printing service attached to its head office in Bow, East London. Around 600 employees work in the company, of whom 210 are part-time and based in the three superstores. (See chart at the end of the case study.)

Business and personnel climate

As the business has grown and become geographically diverse, the company faces a growing challenge of cohesion. Communicating between the divisions is becoming more and more difficult as the company tries to achieve uniformity in vision, performance and delivery of information to all employees in a timely and efficient way. The IT department has become crucial in this, and is in the process of organizing and replacing the business PCs – which are reaching the end of their life cycle – with a system that supports Warbings’ expanding product and customer base, while still delivering an intranet interface which is efficient, user-friendly and less prone to break down under the pressure of use.

The Directors at the head office are delighted with the way in which the new system is becoming embedded and enthuse about the ways in which they can access performance data at the drop of a hat, spot buying trends in the market and yet still use the same system to communicate new targets and schemes instantly to the workforce. There are plans to introduce a monthly electronic newsletter for all staff, discussing the virtues of new product lines, showing which divisions are exceeding targets, explaining any changes to the company, and perhaps highlighting the top salesman for that month. “E-updating by unobtrusive drip feeding” is part of the thinking behind this. A monthly competition to ‘guess the quickest route’ is likely to be incorporated, as the CEO says he knows that this will ‘keep the drivers on their toes’; he has suggested that lunch with him will be a suitable prize. The HR manager who has been told that he will have to coordinate and produce this experimental missive was reputed to have been overheard muttering something along the lines of ‘I’ll have a guess the weight of the CEO competition.’

A number of the staff see the shift to electronic communication as a necessary evil, increasing the ease of communicating with customers but reducing telephone or face-to-face contact between employees. There is an additional degree of unrest because the information system is also used as a way of recording details about staff performance – sales staff and call centre employees in particular are now required to input data about their daily activities, expected calls and actual calls. Many regard this increasing level of surveillance as indicative of the impersonal way in which Warbings regards them as a means to a profitable end. Indeed the lack of consultation about the type of computers to install and their potential use so infuriated two of the sales team that they left, moaning about the ways in which their jobs had become unrecognizable, and the fact that they were supposed to adapt to the new ways without comment. Among the remaining staff comments such as ‘no one asked us, yet we are the people who have to use this system: it is such a waste of time’ and ‘when everything goes wrong, as it probably will, we will be the ones who have to work harder just to stand still’ are commonplace. Ironically the system that was supposed to make things easier may, in some instances, be making them worse.

The constant pressures to hit targets, increase sales, improve the portfolio of products and increase points of sale, while decreasing the time it takes to process goods through the system, has resulted in a rather frenetic culture where there is little time for reflection, where strategic decision making comes a poor second to reaction to the market-place, and where supervisors and managers feel obliged to push their teams to the limit. Absence levels have gone up by a third over the last quarter and half-a-dozen people have had their contracts terminated because they were taking extended sick leave due to stress. The Unite representatives have, on a number of occasions, brought up health and safety issues linked to increasing workloads and shorter delivery times. The company is therefore aware that the drivers in some of the divisions are members of Unite but it tries to have as little to do with the union as possible. (Indeed part of the determination to keep outside forces at bay is epitomized by its attitude to the employers association for the sector, the Road Haulage Association. It acknowledges that this sets national pay rates, but is unsure whether or not these apply to Warbings and does not want to ‘find out for sure’ in case the knowledge commits the company to delivering terms and conditions out of line with the regionally based ones it currently offers.) A number of lost tribunal cases, coupled with numerous lengthy and unsettling calls to the Advisory, Conciliation and Arbitration Service (ACAS) help-line, resulted in the CEO rather grudgingly, and some would say belatedly, appointing the new HR Manager and assistant. He is confident that these two can ‘tidy up’ the way in which the company operates, and has set them a target of six months to ‘iron out any controversy’ and phase in any procedures they feel appropriate.

Training in all sections is ad hoc, given when necessary and usually delivered in-house by an already proficient member of the team.

In terms of recruitment and selection, outline job descriptions are produced but recruitment and selection of staff is fairly informal and varies between the different sites. The most popular selection methods are an application form, interview (which often takes the form of an informal chat) and references. The main recruitment methods used are the local paper, word-of-mouth and specialist agencies

The CEO makes a point of delivering a ‘state of the nation’ pep talk to all divisions during the slacker summer period. The HR manager feels these talks are possibly counter-productive but has enough to do firefighting and coping with the additional paperwork generated by bi-monthly board meetings without jeopardizing his career by interfering and offering the CEO ‘helpful’ suggestions. Since it has become known that he is to rationalize the ways that each division works he has received at least thirty e mails a day from a range of individuals demanding changes to a variety of things and seeking clarification on others. Typically these missives cover such topics as: • The shift system, • Overnight allowances • On site chiropody • Flexible working • Different ways of complaining • Abolition of staff monitoring • Heavy handed line management • Health and safety • Holiday pay • Training • Quality of cleanliness, soap, and lavatory paper in the washrooms • The introduction of a faith room • Different ways of setting and communicating targets.

The state of the business and employee relations in each of the firm’s main units are as follows:

• Bow Based Sections: Head office, Call-Centre and Printing Division. In an effort to achieve greater integration of the total business, the directors have increased the role of head office in developing financial and administrative procedures (particularly those associated with IT) that can be applicable throughout the organisation. The HR function has been strengthened by the appointment of a full-time HR Manager and assistant, whose tasks will be to impose uniform procedures on the currently chaotic areas such as pay, disciplinary and grievance policies and resourcing returns. They are expected to produce a new staff handbook and ensure essential compliance with the law by the end of the year. This task is unenviable. Even where there are uniform procedures they are not always followed consistently, and some are capable of being interpreted in a variety of ways. The call-centre operators, admin/clerical staff are mostly local people, and turnover is very low. The new computer system has engendered a lot of muttered discontent (in the main because changes were imposed and not discussed). Sickness levels have risen by 12% since its introduction. The sales team are young, male, and rely on commission to maintain their income levels. The two members of the sales team who covered Wales and the South of England respectively left the organisation within the last six months, see above, and have not been replaced. The technical staff based on this site regard themselves as essential to maintaining Warbings’ market position, but the CEO regards them as an increasing cost to the company, even although some of their salaries are below the national average. Although morale seems high, there is nevertheless a relatively high level of turnover of sales representatives and technical support staff, most of whom are young, ambitious and highly marketable in a very competitive market.

• Basildon warehouse and driver depot. Because the business is expanding, and the company has increased its market share in the London/Europe area, this division is extremely busy. Drivers are now routinely expected to deliver in Europe as well as at home, and this means that they have, on occasions, to spend several days abroad at short notice. The CEO is aware that driving for long periods can be a health and safety risk , but it is one that he is prepared for his drivers to undertake, assuming that they will be extra careful when they think the additional overtime payments. Wages and salaries are higher than in the other divisions, but staff turnover is quite high too.

• Leeds warehouse and driver depot. Business here is rather static and the company is struggling to maintain market share. Wages and salaries are lower than in the other divisions, and staff morale is low but labour turnover over the last year has been unexpectedly static.

• The Manchester warehouse & driver depot. This is an extremely busy division with drivers and depot workers frequently expected to work overtime with little or no notice. Pay is below average for the region, turnover high and union membership increasing. The depots recruit drivers primarily through word-of-mouth; when vacancies occur the drivers are asked if they know of anyone who might be interested and would be suitable. Only if this doesn’t produce enough applicants are other recruitment methods used – primarily a specialist agency. So far this approach is sent to work reasonably well in filling vacancies.

• The three superstores are maintaining sales in the face of fierce competition from High Street franchise operations. The workforce is mostly female and part-time, and the employees are generally older than in other divisions. The rates of pay and holidays vary across the stores and reflect regional variations.

• Ulm is staffed mostly by local employees with the exception of the director and four expatriate (expat) sales staff. Pay is higher than average and the expat staff are paid an additional number of supplements including a ‘working abroad bonus’, housing allowance, any school fees, and health insurance. Turnover is low and staff recalled to the UK tend to resent their loss of supplementary benefits.

Current strategy Key strategic targets include: o Rationalization of staff processes o Increase the competitiveness of every decision in every division o Speed up the introduction of computerised systems o Reduce costs in relation to sales/output by necessary restructuring, even if this means compulsory redundancies o Increase the European market share

Part B Question

You are the new HR Manager recently appointed by Warbings Office Systems plc and, as outlined in the case, you and your assistant were initially given six months to “phase in any procedures that you felt appropriate”.

The CEO clearly expects you to introduce procedures that will reduce sickness absence and employee turnover and increase the commitment and motivation of the workforce. However, it is clear to you that this cannot be done by simply developing new procedures, and that you will only be able to address his concerns by demonstrating to the employees that their complaints have been heard and that Warbings regards them as more than just “a means to a profitable end”.

Looking through the list of emails that employees have sent you asking for changes in the way the company operates, you noticed that most of the concerns relate to three issues: heavy-handed line management, lack of training, and different ways of setting and communicating targets.

From your years of experience, you know that all of these problems are linked and could be addressed by a formal system of performance appraisal and training for all employees, but especially for those with line management responsibility. You also understand that addressing the employees’ concerns will help to achieve the CEO’s priorities of reducing sickness absence and employee turnover, and increasing the commitment and motivation of the workforce.

Drawing on your learning from this module, write an explanation for the CEO of how and why introducing performance appraisal and appropriate training for all levels of staff can address the employees’ complaints of heavy-handed line management, lack of training and requests for different ways of setting and communicating targets, and also support the CEO’s priorities of reducing sickness absence and employee turnover and improving employee commitment and motivation.

Support your explanation with references to your learning from your lectures and seminars and from your wider reading.