Term Paper on "Organisational Culture of J. Sainsbury"

Term Paper 46 pages (12724 words) Sources: 1+

[EXCERPT] . . . .

Organisational Culture of J. Sainsbury

During the past two decades, the concept of organisational culture has gained broad acceptance as a way to understand human systems (Deal and Kennedy, 2000). From an "open-sytems" perspective, each aspect of organisational culture is perceived as an important environmental condition that affects the system and its subsystems. Nowadays, companies are defined by their organisational cultures, and for many, it is something that can make or break the company.

This perception of organisations is rooted in anthropology and sociology and uses many of these terms to define the building blocks of culture (Deal and Kennedy, 2000). Edgar Schein, a famous theorist of organisational culture, gave the following very general definition: "The culture of a group can now be defined as: A pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems (Schein 373-374)."

This implies that, as companies change, they meet two basic challenges: integrating individuals into a workable whole, and adapting to the external environment in order to survive in a competitive atmosphere (Deal and Kennedy, 2000). As companies find solutions to these problems over time, they develop a collective learning environment that creates the set of shared assumptions and beliefs known as culture.

According to Gareth Morgan, culture is "an active living phenomenon through which people jointly create and recreate the worlds in which they live (Deal and Kennedy, 2000)." Morgan holds that the three basic questions for cultural analysts are:

What are the shared frames of reference that make organisation possible?

Where do they come from?

How are they created, communicated, and sustained? (Morgan, p. 141)

Some elements of organisational culture are as follows (Deal and Kennedy, 2000):

Stated and unstated values.

Overt and implicit expectations for member behavior.

Customs and rituals.

Stories and myths about the history of the group.

Common language -- typical language used in and about the group.

Climate

Metaphors and symbols

This paper aims to examine the organisational culture of a United Kingdom company that has been forced to change its strategy many times over the past few years to stay afloat in the industry. J Sainsbury plc (Sainsbury's) is a leading United Kingdom (UK) food retailer with interests in financial services. J Sainsbury plc is the parent company of Sainsbury's Supermarkets, Bells Stores, Jackson's Stores and Sainsbury's Bank (J Sainsbury Web site, 2004). Its main goal is to "ensure that we get maximum benefit from our investments while concentrating on giving customers the best quality, service and price."

This paper aims to determine what its business environment is like, how its human resources department operates, and what its organisational culture is like. It will also provide a series of recommendations and tactics that will help the organisation's leaders improve the company.

Sainsbury's key business strategy is to ensure that it meets customers' needs by providing the best quality and choice to meet their shopping needs (J Sainsbury Web site, 2004). As a result, the company can provide shareholders with good, sustainable financial returns. The company focuses primarily on local (UK) business, building upon recent investments to reclaim the market position in the supermarket industry.

According to the corporate Web site, J Sainsbury's business priorities are threefold. To make its mission a success and restore profitable growth, corporate leaders are focusing on three core, interrelated areas:

Outstanding quality and choice;

Delivering great service; and Competitive costs

These factoids provide a general overview of the company. However, the primary goal of this paper is to dig deeper to uncover the true organisational culture of Sainsbury's.

Literature Review

Sainsbury's was established in 1869, when John James Sainsbury and his wife Mary Ann opened a store in Drury Lane in Holborn, London (Investors in People, 2004). Until 1973, the company was wholly owned by the Sainsbury family. In 1973, it was then floated on the London Stock Exchange. The Sainsbury family retained approximately 30% of the shares. In 1987, Sainsbury's took over Shaw's Supermarkets, an American supermarket chain, which it sold to Albertson's in 2004 for $2.5 billion.

For several decades, Sainsbury's was the premier supermarket in the United Kingdom, but it lost its leadership position in the 1990's to Tesco, which remains the largest British supermarket in the UK, with over 2,000 stores (Investors in People, 2004). By 2003, Sainsbury's slipped to No. 3, behind Walmart-backed Asda, another UK supermarket chain. Despite various efforts, including changes in organisational culture, the supermarket chain has yet to recover from this slip, with profits and sales growth consistently below that of its competitors.

In 2000, Sainsbury's appointed Sir Peter Davis as Chief Executive Officer (CEO) of Sainsbury's in an attempt to regain its former market position (Investors in People, 2004). During his term, Sainsbury's was demoted to third in the UK grocery market. However, it must be noted that, in his first two years, he increased profits above targets and oversaw a £2 billion upgrade of stores, distribution and technical equipment.

In 2003, Wm Morrison Supermarkets, another UK supermarket chain, made an offer for the Safeway supermarket group, starting a bidding war between the major supermarkets (Investors in People, 2004). At this time, Patricia Hewitt, the Trade and Industry Secretary, referred the bids to the Competition Commission, an independent organisation charged with investigating mergers, market shares and conditions of UK companies.

The Commission determined that all bids, with the exception of Morrison's, would "operate against the public interest" (Investors in People, 2004). In order to complete the approval process, Morrison's was ordered to dispose of 53 of the combined group's stores. In 2004 Sainsbury's acquired 14 of these stores -- 13 Safeway stores and 1 Morrison outlet. The first of these new stores opened in August 2004.

In March 2004, Sir Peter Davis was promoted to Chairman of Sainsbury's and Justin King was given the title of CEO (Investors in People, 2004). However, three months later, Davis was forced to quit when challenged with an impending shareholder revolt over his salary and bonus plan. Investors were infuriated by a bonus share award of over £2 million, despite poor company performance. Davis was replaced by Philip Hampton. All of these changes had a significant impact on the company's organisational culture.

Organisational culture is basically the personality of an organisation (McNamara, 1999). Culture is made up of the assumptions, values, norms and tangible signs of a company's employees and their behaviors. Employees soon come to sense the particular culture of an organisation. While organisational culture is difficult to explain distinctly, it is very much sensed by a company's employees. For example, the culture of a large, for-profit corporation is very different than that of a hospital. Culture can be sensed by looking at the arrangement of furniture, what employees are proud of, what people wear, and more.

Corporate culture can be examined as a system (McNamara, 1999). Inputs include feedback from society, professions, laws, stories, values on competition or service, and more. The process is based on human assumptions, values and norms. Outputs or effects of organisational culture are, for example, organisational behaviors, technologies, strategies, image, products, services, appearance, and more.

The idea of culture is of particular importance when attempting to manage company-wide change (McNamara, 1999). Practitioners are now realizing that, despite well-thought plans, organisational change must include not only changing structures and processes, but also changing the company culture.

There has been a lot of literature over the past decade about the concept of organisational culture -- especially when it comes to learning how to change organisational culture (McNamara, 1999). Organisational change efforts tend to fail the vast majority of the time. In most cases, this failure is credited to lack of understanding about the strong role of culture and the role it plays in organisations. That's one of the reasons that many strategic planners now place equal emphasis on identifying strategic values and defining mission and vision.

Some Types of Culture

There are various types of culture just like there are various types of personality. Researcher Jeffrey Sonnenfeld pinpointed the following four types of cultures (McNamara, 1999):

Academy Culture: Employees are highly skilled and tend to stay in the organisation, while working their way up the ranks. The organisation provides a stable environment in which employees can development and exercise their skills. Examples are universities, hospitals, large corporations, etc.

Baseball Team Culture: Employees are "free agents" who have highly prized skills. They are in high demand and can rather easily get jobs elsewhere. This type of culture exists in fast-paced, high-risk organisations, such as investment banking, advertising, etc.

Club Culture: The most important requirement for employees in this culture is to fit into the group. Usually employees start at the bottom and stay with the organisation. The organisation promotes from within and highly values seniority. Examples are the military, some… READ MORE

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