Leadership and Organization Behavior

Executive Summary

Within the organizational settings, leaders address a wide range of issues as well as propose solutions to problems threatening organization efficiency and productivity. Leaders are also exposed to complex modern-day organizational challenges demanding their skills and knowledge to devise solutions for continued organization success. Consistent with the role of leadership and organizational behavior, this study explores Macy’s Inc. one of the world leading retailers in the apparel industry. Virtually, the company has been struggling to sustain organization growth without much success. As a result, the company has closed several stores all over the country as a way of leveraging operation costs. Faced with a global market that is constantly changing, the retailer is finding it hard to maintain its competitive advantage. However, a close analysis of the current events reveals several issues related to corporate culture, leading teamwork, and motivational strategies affecting organization efficiency and productivity. The challenges identified include a shift in the market trend where consumers now prefer online buying as compared to the company’s current structure of in-line stores. The other issue affecting the retailer is a mediocre customer service, which is closely linked with the organization’s workforce. The third issue, which involves motivational strategies lies in the increased use of promotional sales by the company, which has affected inline store traffic. Alongside identifying problems troubling the organization, we also further develop solutions aimed at helping the retailer improve efficiency and productivity. The solutions include things such as shifting with the market trend to maximize on an online store. The report gives a comprehensive overview of ways in which customers can leverage their online store to achieve maximum benefits. Other solutions include proper training and motivating workers to cultivate a culture of delivering outstanding customer services for improved customer experience. Lastly, the study also points that relying on promotion sales is not a remedy for the retailer’s dwindling sales. Instead, the company should come up with other strategies to increase sales.

Leadership and Organization Behavior

Macy’s Inc.

Macy’s Inc. is one of leading premier retailers in the apparel industry with more than 700 stores under the trademark Macy’s and Bloomingdale. In June 2016, Macy’s announced that longtime executive Jeff Gennette would take over from Terry Lundgren, who has been CEO of the store for more than a decade. The move was critical at a time when Macy’s sales have been sliding down with statistics showing that in 2015, sales dropped to 27.1 billion from the previous year’s 28.1 billion and 2016 declining even further to a record 25.778 billion (“Sales data,” n.d). The new CEO was appointed to help solve some of the problems with which Macy’s were dealing with at the time (Schlossberg, 2016). Ideally, the company has been experiencing traffic problems with the number of transactions having declined with 7 percent in the first quarter. Although the company blamed the decline in spending on apparel, it might also be that the company is not giving people a reason to visit the store. In a majority of the shops around the country, shops are below par, with poor merchandise, lack of inspiration, and a mediocre customer service. Alongside traffic problems, Macy’s is on the verge of losing their premier positioning. Virtually, everything at the store is in disarray and haphazardly placed, displaying a careless workforce. Consequently, in a bid to boost traffic, the company seems to be undercutting its efforts with excessive discounts and off-price business. In light of these problems, Macy’s has been making adjustments to increase efficiency and productivity in their operations. To address the issues, the company proposed changes such as consolidating Macy’s stores to tailor the business according to local customer preferences. The company also projected to increase the workforce in profitable outlets to match current sales volumes in a bid to improve efficiency and productivity. Recently, the retailer has been closing stores projected to have saved the company an estimated $550 million beginning of 2017 (Gustafson, 2017). However, despite efforts to initiate strategic initiatives to increase efficiency and productivity, the company is yet to resolve the problems facing the giant retailer. Critics point that although apparel retailer stores were popular a decade ago, there has been a shift in trend from in-store to an online store. As a result, retailers such as Macy’s have been losing to e-commerce giants such as Amazon.com and other fashion purveyors such as H&M. Similarly, the dwindling productivity at Macy’s could also be linked with lack of an actual product. Companies such as Michael Kors and Kelvin Klein have an advantage as their brand value is directly connected to their products and not just stores. Thus, the ultimate question remains what the retailer must do to salvage their dwindling sales to increase efficiency and productivity of the company.

Corporate culture

Macy’s Inc is a premier retailer dealing with iconic brands serving customers through outstanding in-line stores, dynamic online sites, and mobile-based application services (“Corporate Vision and Financial Objectives,” n.d). The company prides itself with unique brand identity and a customer focus that widely recognizes that the customer is king and all its actions and strategies must be directed towards a personalized buying experience. Macy’s inc. believes in the implementation of aggressive customer-centric strategy with a talented and experienced workforce to provide the company a competitive edge over their competitors in the apparel industry. Their greatest strength is based on the judgments, talent, and expertise of their employees with a priority in attracting and retaining the most talented workforce in the retail industry. The company is also committed to open and honest communication between shareholders, associates, vendors, and their clients. The financial objectives of the retailer are to ensure and maintain profitability, improve return on invested capital, and maximize shareholder return on investment.

Areas of Weakness

It is undoubtedly true Macy’s retailer is having a rough time. Comparable sales indicate that total sales at the department stores have been dropping without a sign of rising. In response, the company has initiated several strategies such as store close and redirecting their focus on real estate among others as a way of leveraging their balance sheet. Unfortunately, despite these efforts, the company seems to lose focus on the most important areas where they should be focusing their efforts to save the retailer. Ordinarily, the company has a wide span of weaknesses directly linked to their corporate culture, teamwork, and motivational strategies. For instance, apart from the giant e-commerce retailers, there has been an influx of online retailers posing a major threat to companies such as Macy’s and their peers. Unfortunately, despite efforts, the company is yet to catch up with the trend, which may include focusing on increasing investment in their online stores and leveraging technology in their retail locations. In essence, Macy’s is still lagging behind compared to e-commerce market giant, Amazon. Another weakness is visible in the way Macy’s handles its customers. Recently, customers have been complaining of a mediocre customer care, shop stores have also been in disarray and haphazardly arranged implying a careless workforce. Consequently, the company has launched sales promotions with big headlines and coupons as a motivational strategy to consumers. However, although the Federal Trade Commission is categorical about price promotions, Vrey (2006) points that; it is usually hard to convince customers of the veracity of promotions. In return, this could have a negative effect on the purchasing power of the clients and lead to decreased productivity at the organization.

Possible Solutions

Within the organization settings, leaders address a wide range of issues as well as propose solutions to problems hindering organization growth. They must be able to proactively create and implement solutions to complex modern organizational challenges such as the ones affecting Macy’s Inc. Thus, in the context of the issues affecting the company, we identify solutions to help the company achieve its organizational goals and objectives. Firstly, the company corporate culture of the in-line store is outdated, prompting the need to shift with the trend to an online store. Unfortunately, despite efforts by the company management, they have not been able to catch up with the current trends. Online businesses experience several crucial problems such as shopping cart abandonment, lack of customer satisfaction, accommodating shoppers at the last minute among others. Ideally, although Macy’s has put a lot of efforts in modifying the checking out process, there are still a few things that can be enhanced. For example, Macy’s should show the customers where they are in the checkout process. According to Eisenberg, Davis, & Eisenberg (2006), this eliminates the potential worry that purchasing will take more time than the prospect client is willing to spend. Similarly, Macy’s should have a guest checkout option instead of forcing clients to create an account to complete the purchase. Typically, failure to offer a guest checkout is one of the major causes of shopping cart abandonment. Consequently, and consistent with the challenge at the in-line store, Macy’s should aim at improving customer experience through excellent customer services. Customers at both the physical retail shops and online stores have constantly complained of bad customer experience from Macy’s employees. The most appropriate solution to this problem is coming up with strategies to properly train and motivate workers to cultivate a culture of delivering outstanding customer services. Cassidy, Kreitner, & VanHuss (2015) note that nurturing the right corporate culture is likely to create a workforce that understands the value of their company brand and makes them feel motivated to ensure organizational success. In addition to the above, although sales promotion is a powerful and effective tool to increase immediate sales increase, it is not a cure for a bad product. When extended for longer periods, customers are most likely to perceive the products as bad and purchasing it altogether. As Mullin (2010) notes, sales promotions should be tactical to increase a company’s competitive advantages and build strong relationships with clients. Thus, on the issue of motivational strategies, the company should reconsider not running their promotional sales all year round and instead come up with other approaches to motivate customers. 

Within the business world, establishing a successful and sustainable organization demands more than the management of day-to-day activities. It requires leaders who can guide teams to the highest level of collaboration, innovation, and efficiency. Leaders play several important roles in ensuring and enhancing employee productivity, which is a reality that cannot be ignored. It is also the responsibility of organization leaders to come up with strategic initiatives to offer solutions to the organization for continued organizational success.

References

“Corporate Vision and Financial Objectives.”(n.d). Macy’s Inc. Retrieved from: http://www.macysinc.com/about-us/corporate-vision-philosophy-financial-objectives/default.aspx

“Sales data.” (n.d). Macy’s Inc. Retrieved from: http://investors.macysinc.com/phoenix.zhtml?c=84477&p=irol-sales

Cassidy, C., Kreitner, R., & VanHuss, S. H. (2015). Administrative management: Setting people up for success. Stamford, CT : Cengage Learning.

Eisenberg, B., Davis, L., Eisenberg, J., & Recorded Books, Inc. (2006). Call To Action: Secret Formulas To Improve Online Results. Nashville, Tennessee: Thomas Nelson.

Gustafson, K. (2017). Macy’s posts disappointing holiday sales, likely to cut 10,000 workers and move forward with store closures. CNBC. Retrieved from: https://www.cnbc.com/2017/01/04/here-are-68-of-the-100-stores-that-macys-will-close.html

Mullin, R. (2010). Sales promotion: How to create, implement & integrate campaigns that really work. Philadelphia: Kogan Page Limited.

Schlossberg, M. (2016). Macy’s new CEO has 3 major problems to solve. Business Insider. Retrieved from: http://www.businessinsider.com/macys-new-ceo-has-major-problems-to-fix-2016-6?IR=T

Vrey, R. W. (2006). Towards a European unfair competition law: A clash between legal families : a comparative study of English, German and Dutch law in light of existing European and international legal instruments. Leiden: Martinus Nijhoff.