Assignment

Chamatha Kundil Sabna Sathyan

STU21629

Human Resource Management

University Of Wales MBA

Word Count- 2000(excluding content list, reference list)

ANALYSIS OF DILEMMA ASOCIATED WITH THE CONTAINER STORE’S FLAT

STRUCTURE ON THE FOCUS OF LEADERSHIP DEVELOPMENT AND
MANAGEMENT OF EMPLOYEE PEROFRMANCE
CONTENTS

I. Introduction 2
II. Analysis of Performance 2
III. Hierarchical Structure: Leadership Development 3
a) Training 3
b) Organisational Relationship 3
c) Level of Recognition 4
IV. Hierarchical Structure: Management of Employee 4
a) Satisfaction of Basic Needs 4
b) Role Ambiguity 4
c) Motivational Factors 4
d) Recognition on the Basis of Pay-scale 4
e) Recruitment Strategy 4
f) Legal Secrecy for the Company Policies and Plan 5
V. Conclusion 5
VI. Reference List 6

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 I. INTRODUCTION:
This treatise is mainly tinted with the case study about the container store’s customer
service related with their recruitment and training which is published by ICFAI
Business School Case Development Centre (Reference No. 406-036-1).The
Container Store, which is the originator of retailer segment has been established in
U.S by Garrett Boone and Kip Tindell on 1978.It enclosed several types of products
in the house ware section. The Container Store had a rapid growth in the sales from
1985 to 2006 ($260-$500 million). The Container Store has a high growth on its
sales since 1978 with lesser employee turnover rate while comparing with the
average industrial rate.
According to the niceties in the case study, the Container Store has a flat
hierarchical structure and a well diverged niche. Leonard Berry (1999,p197)
comments about the Container stores recruitment system “One of their (The
Container Store’s) keys to success is that they hire very well, it’s such a generous
place, such a high-trust place, that employees love it. They hire people with the
same values as the leaders. That’s the cornerstone”. The Container Stores has been
utilising 18% of their sales for the training and development of their employees by
deeming that the customer satisfaction is directly relied on the employee satisfaction
and thus the benefit for the company. Barabara Anderson (Director of Container
Store) comments “If we expect our employees to astonish customer .We have to first
take care of them, because they’re going to treat customers the way treat them.
Someone needs to role-model how we treat each others”. An analysis of the
Container Store’s flat structure on behalf of the leadership development and the
management of employee performance are primed here.
II. ANALYSIS OF PERFORMANCE:
The SWOT analysis is considered as best model for analysing the performance of an
organization; it can advance the learning and development of managers and also the
organisation Dealtry (1992, pp. 4-7). The strength of container stores is relied in
deferent areas. . “Thus the most effective way to build trust in the workplace is to
work together. There are no magic gimmicks or other simple solutions as like
training” as cited by Talwar (2006, p88). The Container store’s have different type of
training, rewarding system, insurance programs, skill analysis, loan reduction,
wellness programs to increase their dedication towards the store. The Container
Store is able to provide high level of employee benefits rather than any other
company, thus reduced employee turnover rate.
The weaknesses are considered as the crucial part of an organisational strategy. In
the Container Store 18% of sales are used for training, it has a credit system based
on the review of employees and skill, to decides the pay scale (sales clerk having
higher pay than the manager) and also the manager’s recommendation for the
promotion of employees. The Container Store makes awareness for their future
plans to employees without any cover on their face through the regular meetings.
The opportunities of Container Store are relied on employee performance. The
Container store’s has a very low employee turnover rate which increased their sales
and also the belief of the customers, which made them a well known acceptable
store among others. The threats related with the Container Stores are the
competition, merchandise with same products, leaking of company plans.

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III. HIERARCHICAL STRUCTURE: LEADERSHIP DEVELOPMENT
a) Training
The McGergor’s (1960,cited in Torrington et al,2005) model suggest as to treat the
people as responsible and self motivated to expect the responsible and motivated
manner from them. Thus the Container Store has several training programs to make
them self motivated and also responsible. Each of the stores in Container Store has
one full time trainer; this well planed training system advances the quality of
leadership styles through teamwork (Lefton, 2004, p1-4). The over trained people
may have a tendency to withdrawn from the company and to start their own
business, group, or else have a tendency to try new ideas by approaching any other
company. The above sentence are supported by the work of Thomas et al (1995,
p469-476).
b) Organisational relationship 
Leadership development is mainly described as a process of leadership. This is
related with interpersonal relationships, team dynamics, social influence process,
and also the relative factor like the perception of the organizational climate and also
the social network relation between the team and other organisational groups.
Influencing of an organization's safety culture is the best way to improve the
leadership development Burman et al(2008).The container store has a open
communication with employees about their profit, sales, future plan. They have
feedback sessions and discussions about their plans with employees, to increase the
leadership qualities. The container store had unique training programs which ensure
the quality according to the employee interest supported by Baldwin et al (1988, p63-
105).
c) Level of recognition
Level of recognition of employee having leadership skills and other specific skills are
recognised in terms of increment of pay scale, incentives and other appraisal in the
Container Store. The recognition in terms of promotion is lesser in the Container
Store due to their flat structure. Thus the fewer amount of recognition in terms of
higher level of potential may reduce the leadership development (Torrington, 2005, p
313). The promotion of the employee is based on the reviews and by the
recommendation of the manager; this may create discrimination issues which may
affect the leadership development (Berg et al, 2003).
IV. MANAGEMENT OF EMPLOYEE PERFORMANCE
a) Satisfaction of basic needs
The employee performance in an organization is primarily allied with the
organizational structure, which is an organizational perception of human basic
needs. According to Maslow (1954) human have different types of needs
(physiological needs, safety needs, love needs, esteem needs, and the need for self-
actualization).Maslow's theory ensures that whenever a certain need of human
became satisfied, it’s no longer perhaps exist as motivation, whereas it became a
motivator for the next higher level of achievement (need).Thus the container store,
with flat structure fails to create a high level of motivation for the employees thus
may leads to reduce the dedication, commitments of employee. “If you are unhappy
with your work, you have lost one of the most important means of self-fulfilment” ,

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commented by Maslow (1971, p185). According to Dye et al (2005), only the lower
level needs satisfaction of employees will not shove the employees to the higher
potential. Thus the flat structure of Container store may not be able to full fill the
lower level of satisfaction, this may makes management of employee performance
as little bit intricate.
b) Role ambiguity
Ghiselli et al (1970, p569-576) point out that the flat structure of organizations like
Container Store can fulfil the greater levels of self-actualization and also better need
of satisfaction for employees. Where as at the same time Chonko, L. B. (1982, p452-
456) shows that there may be role-ambiguity among the employees due to the
supervising of one manager for a larger team. Due to the lower level of layers there
will be limited advancement of opportunities. Thus the analysis shows that flat
structure is the one which can satisfy the employees higher order needs (self
actualization),where as tall structure(well-established organisation) satisfies the
security needs. Thus the employees working in tall structure organisation feel better
sense of job security rather than in flat structure (Porter et al, 1964, p135-148).
c) Motivational factors
According to the Motivation-Hygiene factor theory; recognition, achievement,
advancement, work itself and the responsibility is treated as the ‘motivation factors’,
where as salary, policies of company, technical fitness and the working conditions as
‘hygiene factors’ (Brenner et al, 1971). There is an old saying that ‘you can take a
horse to drink water, but you can’t force it o drink’, the horse will drink the water only
at the time it need, as like people, we can’t force the employees in the organization
to do it, but can motivate to do it.
The Container store’s has a well motivate strategy; they have training programs
according to the employee skills, rewards and recognition for the best performance,
appraisal notice, direct appreciation from the higher authority, wellness programs,
yoga classes, equal value for all, incentive programs, flexible shifts.
d) Recognition on the basis of pay-scale
The differing pay scaling system for the employees at the same designation and also
the more payments for the employee at the lowest grade rather than the one in
higher grade system may create conflictions in the company among the employees,
which may be treated as discrimination based on the recommendation of higher
authority, which may affect the employee performance (Torrington et al, 2005).
e) Recruitment strategy
They had recruitment system based on the reference of the employees and the
customers who like to have job. The Container Store’s recruitment policy is highly
selective, and they are given more preference to recruit the employees’ relations,
friends or family members to create an enthusiastic environment for their employees.
Tindell (2003) says “Our director of recruiting realised that it’s not his job to recruit
great people, it’s the job of our 2500 employees. We want their friends, their family,
and their cousins”. And for every success job reference the employees are paid
$200.This system produces a well friendliest atmosphere for the employees and for
the customers. There are negative impacts for this too. The reference given by the
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employee may be fake, limits the new skilled people without having any relation with
employee, may create discrimination problems due to the reference, it may affect the
good will of company, it may create some type of group works inside the company,
may create political issues too (Torrington et al,2005).
f) Legal secrecy for the company policies and plans.
In the Container Store there is an open communication about the company future
plans, goals, profit, sales with the employees within the organization .But there is no
surety for the secrecy of the plans. It may lead to create competitors which may
affect the productivity. So there must be a cautious by the employer to monitor the
employees’ work to guard trade secrets. Employers must be act under the limitations
while doing this; there must be respect for employees’ privacy and also too much of
monitoring can be a threat for employee loyalty, and this may leads to an employee
as untrustworthy (Sheikh,2002).
V. Conclusion
The container Store has a relatively flat organisational structure, which is able to
satisfy high level of needs like a self actualisation rather than the basic needs like
security. According to the sales profit figure, the Container store has a high growth of
sale, lowest employee turnover rate, high customer satisfaction rather than industrial
average. Even though the discussion made on here flashes the lights on some of the
pros and cons of the container store’s operation.
The containers store’s flat structure ensures friendliest surroundings for their
employee and to improve the dedication of employees towards the organisation. But
the flat structure system limits the employee growth up to a limit. The employee
recruitment is done through the keen analysing of skills; they are preferred to recruit
the person who is having leadership qualities nevertheless the flat structure prevents
the company to designate the persons according to their leadership values which
notified as a de-motivation for the employees. Thus their flat structure creates
followers rather than leaders. This suggests the importance of valuing the growth of
employee according to their skills.
The container store has a wide range of plan for managing the employee
performance. Well employee satisfaction programs are conducted in the store.
Salary scale, appreciation by rewards, credit system, and friendly-family environment
are the motivational factors inside the container store. But due to the flat structure
behaviour the basic needs were not able to be satisfied. This may affect the
employee performance up to a level at the future. The salary paying scale; higher
payment for low level grade may treat as discrimination which may create problems.
Thus there must be critical analysing of the employee performance in the company
to eliminate the chances of issues every time.

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REFERENCE LIST
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Research. Personnel Psychology, 41(1), pp.63-105
Chonko, L. B. (1982). The relationship of span of control to sales representatives’
experienced role conflict and role ambiguity. Academy of Management Journal, 25,
pp452–456.
Ghiselli, E. E., & Johnson, D. A.,1970. Need satisfaction, managerial success, and
organizational structure. Personnel Psychology, 23, pp 569–576.

Hersey, P., Blanchard, K. H., 1977. Management of Organizational Behaviour:

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Herzberg, F., 1966. Work and the Nature of Man. 2nd. Cleveland: World.

Leonard L.Berry., 1999.Discovering the soul of service: The Nine Drivers of

Sustainable Business Success. New York: Free press.

Maslow, A.H., 1954. Motivation and Personality. New York: Harper & Row.

Prakash Talwar., 2006. Human resource management. Delhi: Isha books.

Porter, L. W., & Siegel, J., 2006. Relationships of tall and flat organization structures
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Robert Eugene Lefton, V. Ralph Buzzotta., 2004. Leadership through people skills.
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Talhiya Sheikh., 2002.Trade Secrets Are Gold Nuggets: Protect Them. Wipo

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2010