Perception, Leadership and Culture: An Analysis of Marks and Spencer PLC

Within a year and a half of Vandevelde’s appointment “profits began rising, but although at the time Vandevelde was credited with a revival, it proved to be short-lived”, because by 2004 sales had fallen again and the brand had lost some of its credibility. In light of this it was felt drastic changes were needed and in May 2004 Stuart Rose, formerly head of Arcadia, was named CEO. Since his appointment Rose has instituted change programmes within the organisation and given it new strategic direction.  The effects of these changes are already beginning to be seen and M&S is showing clear signs of recovery. However it is too early to say whether this improvement is sustainable.

M&S was set up and run by a family for a long part of its history, its values and culture derived from that. For many years it was viewed as being very patriarchal and inward looking. The perception people had of the company up until the 1980’s was of quality, affordability and reliability, embodied in the St Michael brand. During this time leadership of the business was very strong but inward focused. However, recent changes in the market place have presented a great challenge to the company which it is still addressing.  

PERCEPTION

According to Huczynski and Buchanan “it is our perception of reality that shapes and directs our behaviour, not some objective understanding of it”.

We shall therefore look at the perception of M&S from the point of view of its major stakeholders- customers, employees, shareholders and more generally the market.

Customer Perception

Once established, from the customers’ point of view, M&S was considered the epitome of quality, affordability and reliability which reached its apogee in the 50’s and 60’s when customers used to scramble to acquire M&S’s reproductions of catwalk fashion. M&S’s clothes lines became so popular that in the 50’s “limits were set on production as everyone wanted the affordable stylish Paris inspired 1950’s glamour”.  This perception changed during the 90’s. As ever increasing choice was available on the high street and a growing number of competitors emerged as rivals in M&S’s core markets. Retailers such as Top Shop, Warehouse and Gap offered more fashionable designs and labels, whereas others such as Next and Debenhams offered better value. Even food chains such as Tesco, Waitrose and Sainsbury’s began to encroach on M&S’s market share in the prepared food markets. In light of this people began to view the company as out-dated and old fashioned. This negative perception of the company is just now beginning to be counteracted for reasons which I will detail later in discussing leadership.

Employee Perception

From the stand point of employees M&S was viewed as an employer of choice in the mid-20th century. People felt secure in their employment and viewed a career in M&S as highly desirable. In the post-war period the company imposed a more explicit human relations policy. As Marcus Sieff, the incumbent chairman at the time, put it “the chief executive has a duty to treat his employees as he would like to be treated himself, to do as he would be done by”. This image was reinforced by the way M&S treated its staff, “stores were furnished with good staff canteens, rest rooms, medical and dental care, hairdressers, chiropodists, clean toilets and good training facilities”. By the 1980’s and 90’s it had stopped being viewed as a viable career path and became characterised as ‘dead-end job’. This was reflected in the pay, management and promotional structures in place at the time. This is something subsequent CEO’s have had to address.

Shareholders

Shareholders have long been an integral part of M&S’s stakeholders, since the company went public in 1926. In the subsequent years the company’s popularity with investors grew as it was considered a ‘gold standard’ among investments and represented an almost ‘risk free’ venture. In spite of this poor performance of the company in the late 80’s and throughout the 90’s, which culminated in the company’s stock falling 34% in 1998 and market share declining “for the first time in years by almost 1%”, led to shareholders abandoning the company in droves.

The Market

A company’s branding and marketing strategies are important tools in shaping the perception of it in the marketplace. Here, M&S has never conformed to the norm s and actually created a virtue out of not advertising. Instead, M&S relied until the 90’s on word-of-mouth to promote the company’s brand and image. This strategy is very cost-effective and renowned for being extremely powerful in influencing customer behaviour. As a recent study shows “word-of-mouth is now the number one most-trusted source of product information on a global scale, with advertising a distant second”. “Seventy per cent of consumers across the globe trust friends, family, or other people first when searching for information or ideas on products to buy”.  M&S’s decision not to enter into mainstream advertising has reinforced its image of being a “household name” so famous, that like Rolls Royce it did not need to advertise since the quality of its goods and services were undisputed.

The St Michael’s brand was also very powerful with its connotations of religion which brings to mind values such as honesty, loyalty and devotion.

Therefore a big departure came for M&S around the turn of the century when they decided to launch one of the biggest advertising campaigns in retail with the slogan “Your M&S”, embodied by well known models and celebrities from different ages such as Twiggy, Jodie Kidd, Shirley Bassey. This has been hugely successful and has the effect of putting the company firmly back in the hands of the public, giving them a sense of ownership and a stake in its success.

CULTURE

According to Huczynski and Buchanan “an organization’s culture focuses on the values, beliefs and meanings used by its members to grasp how its uniqueness originates, evolves and operates”. Edgar Schein makes the distinction between three levels of culture within an organisation distinguished by their visibility to and accessibility by individuals, “surface manifestations of culture, organisational values and basic assumptions”.

Organisational culture and values: “The views of the original founder as modified by the company’s current senior management”

In the case of M&S we can see that the original culture derived from the founders and the founder’s family. In a sense you can say that they were family values, with an overtone of religion, let us not forget that St Michael is the “champion of the Jews” and that Michael Marks was a Jew.

Culture in the early days was based on quick turnover, honesty, hard work and no frills attached. These values evolved into the company’s culture which became paternalistic, an approach is commonly associated with family run businesses. The repercussions of this culture are such that if you are not in the family you cannot rise to the top. This has an effect all the way through the company right down to the employees on the shop floor.

From the mid-19th century family organisations had the strongest sense of culture, one based on loyalty, paternalism and community. However in the 1960’s, post war restructuring concentrated on capital mobility, acquisitions and mergers. The old forms of identification tended to break down and anyone who spoke of solidarity or loyalty was seen as archaic. With rapid organisational growth it became very difficult for firms to maintain the family touch. So by the turn of the 21st century Marks and Spencer had become vulnerable to hostile takeovers with its ever falling share prices and low profit margins. The inward looking culture of the company and the absence of strong leadership were blamed for its poor performance.

Stuart Rose’s vision after he was given the position of CEO was to revert back to old values and simplify a culture which had become too confused and confusing.

LEADERSHIP

According to Huczynski and Buchanan leadership is “the process of influencing the activities of an organized group in its efforts toward goal-setting and goal achievement”. They go on to mention that “leadership appears to be a critical determinant of organizational effectiveness”.

It is useful to distinguish between leadership and management. These two concepts are sometimes seen as synonymous as leadership is seen as one component of the management role. However, other commentators on the subject make clear distinctions between the two. Leaders are portrayed as “someone who develops drives new initiatives, [whereas] managers achieve stability”.

Warren Bennis and Burt Nanus make the point that “managers do things right, while leaders do the right thing”.

Due to the complex nature of this topic a great effort has been made to distinguish the qualities that make a successful leader. This line of research has been greatly influenced by the great man theory. This argued that “leaders reach positions of influence from which they dominate and direct the lives of others by force of personality”. In M&S’s history, men such as, Sir Marcus Sieff could be seen to fall into the “great man” category.

Leadership in the early years was very much in the hands of the family and based on traditional family values. It was strong but essentially inward looking. By the late 90’s when M&S was in trouble there was a need for a change of leadership.

Nowadays a more distributive form of leadership is required. One which creates “a vision of a possible future that allows [the leader] and others to see more clearly the steps to take, building on personal capacities and strengths”.  Examples of these types of leader would be Luc Vandevelde and Stuart Rose.

Under Vandevelde’s leadership a recovery plan was put in place based on getting the company closer to its customers and returning the company to its core strengths. Recovery was based around focusing on the UK, selling only their own brand and retaking command of their supply chain. His vision was to return Marks and Spencer’s to its reputation for quality, value, service and innovation.

Once articulated, the vision is shared through events designed to disseminate it. Thus we have Vandevelde’s address to the shareholders and Stuart Rose’s mass motivational training for all of M&S’s 56,000 staff in nine months from July 2005. They use “catch phrases” to describe and share what is already happening and to encourage others to “get on board”. In the advertising campaign “Your M&S” Rose is embodying the key values and beliefs on which the newly revived M&S is based. In differentiating the customer base and appealing to different sectors through sub-branding such as Per Una by Sir George Davis for the younger customer and Limited Edition for the more style conscious older customer, whilst maintaining the offering of high quality standard basics to everyone M&S is becoming more competitive with other high street retailers. Also the advent of the “Simply Food” stores accentuates one of M&S’s traditional and continuing strengths- its food offerings.

 

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