GROWING PAINS AT VALUE & QUALITY FOODS LTD." INTRODUCTION This case examines the growth and organizational culture of Value & Quality Foods Ltd. (commonly known as V & Q Foods), a Canadian supermarket chain that began in Calgary, Alberta, and expanded throughout Western and Central Canada. The case considers important questions such as: 'How can V & Q Foods maintain its corporate culture as it continues to grow and open new stores? How can such a growing organization promote and preserve its image as a local store where the customer is all-important?' Part of the answer lies in some of the company's established rituals and other organizational features. MONDAY MEETINGS The Monday Meeting was started in 1984 by the company's founder, Tony May, two years after the opening of the company's first store in Calgary, Alberta. Tony would go to his office on Sunday evenings to examine the previous week's sales records to determine which products were selling well and which were not, as well as how the overall sales were generally progressing. The next morning (Monday), when his store's 'partners' (the word he used to refer to his employees) arrived at work, he would hold a short meeting with them to share the store's information. He would also ask for their opinions on such matters as what items he should put on special sale or promotion, and how he should display certain products. Such meetings served not only to benefit from the employees' knowledge and experience in various ways, but also to convey to them that they were valued assets and that Tony wanted them to continue learning about the business. Even as V & Q Foods grew into a multi-million dollar business, the Monday (Morning) Meetings continued, but were now held at the company's purpose-built head office located on the edge of the city. As the meetings became longer, they began to be held early on Monday evenings instead of in the mornings, so as not to interfere too much with the running of the business. Nowadays, the meetings are held exclusively for the company's managers from around the provinces of Alberta, British Columbia, Saskatchewan, and Manitoba, using video conferencing technology to involve those managers located too far away to travel to the meetings in person. Also, every meeting begins with the singing of the company song: 'V & Q Has the Best For You', led by the company's current Chief Executive Officer (CEO) Peter Evans. Topics discussed at these Monday (Evening) Meetings typically include sales and financial performance, merchandising, and possible areas for improvement. However, the meetings are also a way of keeping the company and its managers as closely-knit as possible, just like a well-functioning family or team. Such cohesiveness is important to V & Q's strategy of responding to the market quickly. When new ideas or problems arise, managers are then comfortable in sharing them, not only with other managers but also, in the case of Store Managers, with their employee 'partners' when they get back to their individual stores. Decisions can thus be made quickly, and suitable action taken with minimum delay. - 1 - Contd./.................... ..................../contd. For example, while discussing merchandising mistakes during a meeting, Susan Chow, Regional Manager for Southern Alberta, was concerned about a particular product that was neither displayed on V & Q's shelves nor stored in any of its warehouses. Mary saw the product on display in a competitor's store, took it to a Monday evening meeting, and announced to everyone: 'We really should have this product in our stores. I think it would sell very well." Several other Regional Managers, as well as Merchandising and Store Managers, agreed and supported Mary's view. Immediately the next morning, Peter Evans, the current CEO, authorized the 'fast-track' purchase of supplies of the product from its manufacturer, and they were on the shelves in the company's stores by the end of the week. Examples such as this illustrate the trust the founder and his successors have placed in their staff to recommend and make decisions. Instead of having to work through several levels of bureaucracy, V & Q's managers can have their good ideas implemented quickly. Over time, the vast majority of such decisions have been seen to benefit the company significantly. COMPETITIVE ADVANTAGE Such quick responses and quick action, as illustrated above, are very difficult for other large companies to execute. As one of V & Q's former directors explains: "The Monday Meeting was always a decision-making meeting to enable corrective action to be taken as quickly as possible. Since the meeting was moved to the evening, the rule has always been that, by 11.00 the next morning, all corrections have to be made within all the company's stores." Since none of V &Q's direct competitors can match the speed with which the company implements strategy and change, V & Q has developed, and continues to sustain, a significant competitive advantage. V & Q's well-developed distribution network and purchasing power, based on its size, allow it to move products efficiently and to sell them at relatively low prices. For example, following a major snow and ice storm during one of the recent severe winters in Northern Alberta, V & Q was one of the first organizations to distribute food and other products to residents who had been cut off from the rest of the world for several days. The Monday Meeting serves other purposes as well. Perhaps due to the company's retail passion and desire for continuous improvement, V & Q's culture has been described as 'highly dynamic.' Today's managers often explain that organizational mechanisms such as the Monday Meeting help to keep that 'dynamic tension' alive throughout the company, even though it is now operating on a much larger scale than before. Another mechanism that contributes to the company's culture is the Friday Merchandising Meeting, where Regional Managers connect with each other and discuss what products are selling well, and why, on a regional rather than a local basis. Not all meetings are exclusively for managers. Consistent with the founder's philosophy of employee (or 'partner') involvement, every V & Q store has a 10-minute shift-change meeting three times a day. During these meetings, Store Managers update employees on the store's performance statistics, and ask the 'partners' whether they have any specific ideas for improving sales. Store Managers forward what they think are good ideas up to the Regional Managers, who then propose the best of these ideas at the Monday (Evening) Meetings. The company's well- known circular fruit and vegetable display areas, each with an employee standing within the circle acting as a product adviser, represent one such idea suggested by one of the company's 'partners.' The product adviser puts a helpful face on what might otherwise be regarded as a large and somewhat impersonal organization. - 2 - Contd./.................... ..................../contd. Such structures and mechanisms as those described above help to ensure that V & Q's directors and other senior managers, some of whom may be responsible for as many as fifty stores, keep in touch with the daily events taking place within the business. OTHER CULTURAL CHARACTERISTICS Another important aspect of V & Q's culture is its cost-consciousness, a characteristic introduced by the founder, Tony May, that has endured in spite of the company's significant growth and financial success. Tony began his strict focus on keeping costs low very early in the company's history, in order to gain an advantage over competitors such as Sobeys, Kmart and Loblaws. More recently, this philosophy has become equally relevant, and possibly even more so, in relation to such competitors as Walmart and Whole Foods - companies that have aggressively expanded within, or entered into, Canada from the U.S.A. May himself was known to drive an old pick-up truck and to share his hotel room with colleagues when travelling on business. These characteristics have become part of V & Q's established culture, with Peter Evans, the current CEO, driving a Honda Civic and also sharing hotel rooms with colleagues to reduce costs. Maintaining V & Q's culture has not always been easy. During the late 1990's and early 2000's, attendance at the Monday Meetings grew enormously, making it impossible for everyone to speak. Consequently, some of those attending started to complain of boredom. So, the company began to bring in entertainers, such as professional singers and comedians. However, the meetings then began to lose some of their focus. According to one former director: "You have to be careful how you organize that kind of thing, or the meetings come to be perceived as mainly 'fun' events rather than as a means of solving problems and maintaining continuous improvement." By the later 2000's, the company started to invite guests who had more educational value, such as Microsoft's Bill Gates and the Virgin Group's Richard Branson. These speakers were able to share their success stories with V & Q's managers and directors, giving them new ideas on how to conduct their business and run their organization. NEW CHALLENGES Possibly the biggest new challenge for V & Q is the increased media attention that comes with being one of Western and Central Canada's biggest companies. In the past, the company was more tolerant of employees' mistakes. It would discipline an employee who made a mistake such as offending a customer or a colleague, for example; but, if the employee improved their behavior, they were allowed to stay. Nowadays, however, V & Q adopts a stricter policy. As Peter Evans explains: "In today's ultra-competitive world, if someone behaves in an offensive manner, it's best to fire them and find someone else. You also have to carefully record and document the decision and why it was made. This is something of a culture change, as the company now has to operate in a different environment compared with when it first started. Management cannot afford to let negative incidents increase. Apart from growing the company's sales and expanding the number of stores, part of my role is to try to prevent or eliminate anything that could obstruct the company's progress." In recent times, V & Q has started to find itself in the news for the wrong kinds of reasons. For example, its current hiring and promotion practices (such as outsourcing some of its cleaning contracts to foreign-owned companies and making many of its own cleaning staff redundant), and accusations by employees of mistreatment by management (including claims of discrimination and under-payment), have been reported several times in both - 3 - Contd./.................... ..................../contd. local and national media. This makes it increasingly difficult for V & Q to maintain the image of a friendly, affordable, local retailer that Tony May had in mind when he founded the company. In this regard, Peter Evans says: "During the past couple of years, I've spent a lot of time talking about the negative publicity we've been getting. It's not that we hate the media, but we need to discuss, and to try to understand, what we are doing that encourages people to develop these negative perceptions about the company. If V & Q is to enjoy continued success and to keep growing, it will have to find solutions to the above problems and the negative publicity they are generating. Perhaps the company should try to go back to its original roots, and be more like the company that Tony May created? Or maybe it should change its culture to fit in more with its substantial growth and with the increasingly competitive and challenging business environment that it now finds itself operating in? For a company that currently has more than 400 stores and over 100,000 employees, and sells around 50,000 different products, either sustaining or changing its corporate culture is going to be a huge challenge. However, as part of the development of its strategy for the future, it will have to decide which of these options to pursue and how best to implement it. Question 1. Using at least one of the models of organizational culture included in your textbook, analyze and describe the organizational culture of V & Q Foods, and explain how its culture has contributed to the company's success. 2. How might the recent negative publicity about the company affect employee motivation, job satisfaction, and organizational commitment. 3. Draw an outline organization chart to represent V & Q Foods' organizational structure, and comment on the structure in relation to the key principles of structure included in your textbook. 4. Should the company try to sustain its original culture or change its culture? Whichever recommendation you choose, give reasons and explain any necessary actions you think the company should take to achieve this