Contemporary Issues in Business: Management, Leadership and Boohoo PLC

CORP2165 – Contemporary Management

Contemporary Issues in Business

Andrew Hill – P17056400

Tutor: Minal Karia

Introduction

This essay explores the links and differences between management and leadership, considers Boohoo PLC and how their leadership values help Boohoo to reach objectives and their leadership principles supports values.

Links and Differences Between Leadership and Management

Leadership and management are the backbone of organisational success but choosing what leadership principles to adopt and what management styles are most appropriate can define the success or failure of organisations (McDermot, 2017). Managers have people work for them, leaders have people follow them (go2HR, n.d.).

Management is the coordination and organisation of people and resources within an organisation to enable organisations to reach objectives (BusinessDictionary, n.d.); Classical management (pre-1960) theory (Appendix 1.0) focuses on efficiency and increasing production, revenues and profit (Villanova University, 2015) whilst modern management theory takes a more people-centric approach (Robinson and Kashira, 2006) and managerial success is achieved by using different management styles (Olum, 2004); like organisations, managers need to be able to adapt.

Leaders lead the organisation to their goals and is often broken down into three styles (Appendix 2.0); Autocratic (where leaders dictate to their followers), democratic (two-way approach, where leaders will take on board ideas from their followers and work to their needs and interests) and Laissez-faire (self-governance). Autocratic styles are typical of managers (Schaeffer, 2002) who dictate instructions to downlines. Democratic leadership is also typical amongst managers where employee feedback directing organisations towards goals (Prentice, 2004). Laissez-faire leadership (or delegative leadership) is a more hands-off approach allowing freedom so long as employees meet objectives (Cherry, 2018); it’s often attributed to poor outcomes, however, this is the case where there’s no leadership qualities (Tracey, 2017), in the correct setting, like creative industries, laissez-faire is most appropriate (Moulder, n.d.).

Leaders themselves don’t have management authority though managers can also be leaders (Monnappa, 2018). Good leadership drives performance (Sharma, 2016) and begets new leaders (Peters, 2005) whilst good management gets the job (McChrystal, Eggers and Mangone, 2018) but prevents free-thinking and independent employees. If managers want to enable more self-sufficient working environments, they need to allow their delegates to think for themselves (Marquet, 2014); in other words, managers need to manage less if they want to develop good leaders (Gino and Staats, 2019).

Employees who are given more liberty to make decisions with the inferred support of rather than instruction from their managers creates an ecosystem that promotes leadership (Maequet, 2014) and higher performance (Coleman, 2016) as employee motivation increases (DeMers, 2017). High-functioning teams accomplish more working together with a central point of leadership than working autonomously under the direction of one individual or a group of individual managers (van Dijk and van den Ende, 2002) but this approach might not be suitable for all work environments, including manufacturing where a more autocratic leadership style is required (Adam Smith Institute, n.d.).

Another difference between management and leadership is that managers must be obeyed whereas individuals choose to follow leaders (Me96, 1997) meaning a poor leader may not be realised as a leader if nobody takes them seriously (Fenton, 1999. Harris, 2005)

Overall, management and leadership are similar; they aim to reach certain goals, managers stick to what the organisation knows and replicates past results whilst leaders are more abstract-thinkers (Pascale, 1991).

However, where leaders aren’t managers, they may find themselves at a disadvantage. They will often have their own workload to manage as well as ensuring their team is well-led and adhering to the direction of upper-management (Hamel, 2018). This creates a large degree of stress for individual leaders whereas managers can just follow set protocols enabling them to delegate any work that’s required (Bruce, 2016).

Introduction to Boohoo

Boohoo is a fashion retailer focusing on the fast-fashion niche targeting young adults, with more than 350 employees in the UK and annual revenues of $222.3million and reaches an audience of more than 3million across social platforms (Owler, 2019).

Boohoo benefits from a fast-paced culture (Boohoo Careers, n.d.) that’s suitable in the is forever-changing fashion industry (Tsolova, 2017) due to the industry being trend-led (Omotoso, 2017).

Leadership Principles

Boohoo’s values are based on their PACT model (Boohoo Careers, n.d.); Passion (committed to delivering what the customer wants), Agile (embracing change and adapting to the changing fashion industry), Creative (committed to creating trends, not following them), Team (building success through employee and customer demands).

Boohoo are a very people-oriented company, allowing their staff to define the direction the company moves in by creating a dynamic working environment with lots of employee perks to increase employee-motivation (appendix 4.0), this supports their values because improving motivation will encourage employees to operate to their full potential, especially in creative areas of the company where Boohoo implements a laissez-faire approach which is evident in their lack of formal hierarchical organisational structure (Boohoo Careers, n.d.)

Boohoo clearly believes in maximising human potential by offering competitive benefits package which is largely unseen in the fashion industry where low-wages and poor working conditions are common (Kaur, 2016).

Teamwork is one of Boohoo’s most important core values (Appendix 3.1) and this isn’t surprising, manufacturing be central to the company; teamwork in these activities are paramount due to the fast-paced environment and skilled-work involved (Just-style.com, 2000), where teamwork doesn’t exist, production lines will become dysfunctional and orders will fail to be fulfilled, especially for lines which are limited-supply, however, this may not have too much of a detrimental impact resulting from Boohoo’s well-stocked global distribution centre (Heward, 2018) meaning it’s unlikely that disruptions in manufacturing will impact order-fulfilment. However, in a world of fast-fashion, even a small delay has detrimental impacts on consumer trust (Green, 2017).

Boohoo operates on a horizontal organisational structure (Quain, 2019), where one employee will be tasked with their own individual roles that they’ll specialise in. Designers for example will have little input in the modelling aspect of the products and photographers will have little input in the photo editing (Appendix 6.0) which fits into Adam Smith’s theory of specialisation (1776) as noted in ‘A Wealth of Nations’ whereas traditionally, division of labour is largely unheard of in creative industries (Barnes, 2016); this supports Boohoo’s values, allowing employees to truly flourish in their role (Troolin, 2018).

Boohoo maintain the value of providing affordable fashion to consumers (Smith, 2013) fitting in with their target market who are more likely to purchase disposable, wear-once items. This doesn’t really fit into Boohoo’s values of sustainability though other sustainability principles do support this value; managers encourage recycling where possible, including having in-house recycling centres for paper and plastic waste and using motion-activated lighting (Boohoo PLC, n.d.), Boohoo also demand suppliers use sustainably sourced materials to minimise the impact on the environment (Cocozza, 2015); this also benefits the perception consumers have of them with millennials being the driving force of corporate sustainability (Fisher, 2018. Sabrina, 2018). Millennials care less about loyalty and more about sustainability (Cadet, 2017), more so in retail environments where choice isn’t in short supply.

Boohoo’s values are supported through the employee forums hosted by Boohoo which give employees an opportunity to provide feedback, driving decisions made by Boohoo to enable better working environments (Boohoo PLC, n.d.) for employees, Boohoo also provide employees with on-site gyms, leisure facilities, canteen with freshly prepared meals, all of which promote a good working culture (Kohll, 2018).

Boohoo have high customer service values which are supported via their 24-hour customer support channels (Boohoo PLC, n.d.) which includes live chat and phone and fits into their ethos of providing 24/7 fashion. This attention paid to customers has dividends which is evident in their customer acquisition profiles (which are also bolstered by purchasing of other brands including NastyGal and Pretty Little Thing), although number of customers increased, average basket sizes have dropped by 4% (Rigby, 2018) but it’s doubtful Boohoo are worrying much with a customer base of more than 30million customers aged 16-30 years old (Singh, 2015).

Due to levels of autonomy within their distribution centres (Rigby, 2018), Boohoo can focus more on developing their employees and ensuring work is carried out efficiently. This leads to more efficient working practices allowing for cost-savings (Munro et al., 2014) which then lead to Boohoo being able to pay their staff more than the national minimum wage and those under the age of 25 are paid “significantly more” (Boohoo PLC, n.d.) leading to higher motivation for employees and increases employee loyalty (Sakas and Konstantopoulos, 2010); it’s been found that the higher an employee’s wages are, especially in comparison to the wages paid by competitors, the higher the motivation and loyalty the employee will have towards their employer.

Leadership Styles

Boohoo’s objectives include growing their customer base, increasing loyalty of customers and staff, promoting good working environments, being the fastest to bring new products to market and leading trends (Boohoo PLC, n.d.), hoping to make them a global superstar in the worldwide fashion industry catering to 16-30 year olds (Boohoo PLC, n.d.).

Boohoo adopt a largely laissez-faire style of leadership (Geddes, 2015) with elements of autocracy resulting from a need to maintain compliance (De Cremer, 2006) that’s important for Boohoo who are publicly traded on the LSE. However, there is little structure or hierarchy within the corporation as they “strive to keep the family sentiment running through the business which creates an exciting, ambitious and supportive work ethic” (Boohoo Careers, n.d.).

A laissez-faire approach enables Boohoo to reach their objectives in creative departments, including marketing, because of the impacts this approach has on qualitative creativity (Herrmann and Felfe, 2012) whilst less transformative leadership styles stunt creativity decreasing productivity (Schmidt, 2011).

Autocratic leadership in corporate management settings enables organisations to adapt, retaining control over the workforce benefitting Boohoo in the changing environments PLCs are in (The Economic Times, n.d.), it enables rapid changes to be dictated to workforces governing individual employee decisions (Eisenhardt, 1989); this was reflected in the acquisition of NastyGal which wasn’t well-managed (Sherman, 2016), so when Boohoo acquired Nastygal and their assets, Boohoo had to revise the operational management of NastyGal who experienced exponential, unsustainable growth eventually forcing it to apply for Chapter 11 bankruptcy (O’Connor, 2016); lack of leadership meant Boohoo couldn’t absorb it due to liabilities caused by mismanagement. The brand is separate to Boohoo but gives strong entry the US fashion markets (Chaney, 2017) protecting Boohoo from the risk of legal action being taken against Boohoo for the mismanagement of NastyGal before Boohoo acquired the company. Such liabilities might arise from store-credit or giftcards not being honoured which Boohoo may not have access to data to verify orders placed before the acquisition (George-Parkin, 2017).

There is autonomy within distribution centres which begets autocratic leaders, because of how machine operators will carry out their roles (Senior, n.d.); dictating instructions to machines is inherently autocratic because machine code doesn’t change between operators. Autocracy enables Boohoo to reach objectives because there’s no training deviation (LeMarco, 2019) but it inevitably hinders machine operators becoming thought leaders within the company, but not for those who spend time developing their skills outside of the workplace (Daugherty and Williams, 1997).

Mentioned previously, Boohoo focus on a more laissez-faire approach to leadership helping them to achieve objectives too. Boohoo promotes fast-paced, inclusive working cultures (Boohoo, n.d.), by taking a laissez-faire approach, employees can focus on personal-development (Cleverism, 2017) which is unusual; only 47% of employees feel like their personal-development is taken seriously at work and 27% of employees never discussing personal-development or training with their employer (Breathe HR, n.d.); personal-development is important, it employees to improve skills (Corporate Alchemy, 2018), this supports their values of being, helping to support their objectives of being a leading brand as employees focus on developing their creative/leadership skills (Daugherty and Williams, 1997. Anderson, 1959).

Conclusion

Having looked at aspects of Boohoo’s operations, taking into consideration their objectives and values, it’s apparent Boohoo’s leadership styles and principles support these. Boohoo is a people-oriented brand, it’s important for Boohoo to place special emphasis on the freedoms their employees experience to develop their own skills and realise their own full potential. Similarly, this encourages the development of Boohoo as a lifestyle brand and not just a faceless company which has enabled Boohoo to expand out of the land of fashion and even providing lifestyle advice and cooking recipes (Appendix 5.0) on their blog. The autocratic leadership styles are used sparingly promoting compliance with the city’s rules for PLCs and within the acquisition activities Boohoo, growing their company into the market-dominating, multi-brand company they are today; in 2017, their values and principles paid off as Boohoo experienced a 97% increase in profits (Gilliland, 2017), which few companies experience in the space of one year with the exceptions of startups benefitting from rapid growth; Boohoo were founded in 2006 (Boohoo PLC, n.d.) and therefore aren’t young in terms of launch date and the growth they have benefited from in recent years can only be attributed to the management and leadership of the organisation as whole and the employees working within the company which is indicative of Boohoo’s people-centric approach being successful.

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Appendix

Appendix 1.0: Classical Management Theories and Their Differences

Max Weber (Appendix 1.1) believed organisations should act as an extension of government and be run as such, without favouritism or family leadership and with clear rules governing policy and organisational hierarchy (i Edu Note, 2019).

Frederick Taylor (Appendix 1.2) aimed to reduce the number of activities undertaken to meet a single objective by popularising ‘Time and Motion’ studies, which involved analysing systems and processes of organisations to improve their efficiency and popularised the idea of paying employees based on performance rather than time spent carrying out activities (Mind Tools, n.d.).

Henri Fayol believed in a systematised approach to management and that managers should be skilled in various management skills (appendix 1.3) which will inherently enable them to become good leaders (Henri Fayol Planning, Organisation, Command, Coordination, Control Thinker, 2012).