Organizational Design and Culture at the Aldi Stores

Introduction

Organizational design can be defined as the way an organization is structured to run. It involves the distribution of power, decision making capabilities and even specified roles and responsibilities within the organization. The culture of an organization, on the other hand, constitutes the existing organizational behavior including issues like employee empowerment, motivation, satisfaction and communication among other things. Aldi is fundamentally a learning organization that spends considerable funds on capturing, creating, transferring and mobilizing knowledge. This facilitates adaptation of the company to the constantly changing grocery retailing environment. One of the primary goals of Aldi is enhancing its capacity which will result in improved relationships between employees (good team spirit), effective decision making, efficient communication systems (sharing of knowledge), and more practical or suitable styles of leadership. The organization builds a challenging and exciting working environment where there is a prospect of promotion for every worker depending on their career development and commitment. Aldi takes notice of and values the needs of its personnel; thus, competitive pay packages offered by the company are the best in the industry for the time being. Furthermore, it provides exceptional opportunities for experience and career development in various fields within the company ranging from financial planning and logistics at the local offices to store operations and management.

This paper discusses the Aldi Stores with regard to its organizational design and culture, considering such aspects as: which of the five tools of organizational design are used by this organization to maintain and improve productivity while achieving cost savings, how work groups are utilized in the organization to accomplish the set goals and objectives, the motivational practices used by this organization to promote better strategy execution, how the reward system in the organization ties incentives directly to achieving higher productivity and performance targets, the evaluation and feedback process used in the company to assess employee performance, the elements in the organization that affect how cultural change is implemented. The paper concludes by discussing whether the company’s strategy execution effort is delivering the expected results, and what specific actions have been taken to delegate authority to middle and junior managers and to create a sense of empowerment among employees.

Aldi Store’s Organizational Design

Out of the five tools used in organizational design, Aldi Stores aggressively uses three of them. The company continues to empower its management team as well as the workforce by coming up with decision support systems that encourage the workers to be innovative and creative when formulating solutions for the problems that they may encounter (Rath & Conchie, 2009). This gives them a sense of ownership and thus responsibility towards their work, bringing about the possibility of job satisfaction and thus higher productivity with no extra costs.

The company also implements self-directed work teams in which the members know their roles and responsibilities and thus work together as a team to fulfill their obligations to the company (Rath & Conchie, 2009). This reduces the time taken by the management to micromanage each unit or department, as the component units of the organization run smoothly without the need for external supervision.

Just like many other organizations currently, Aldi Stores is also embracing IT as a way to run its business effectively. The company has a knowledge management system in which it uses a knowledge pool to ensure that information gained and shared within the organization can be easily accessed at a later date without having to repeat the whole process again. This is a rapid incorporation of Internet technology applications.

How Work Groups Are Utilized In the Organization to Accomplish the Set Goals and Objectives

Upon recruitment, the successful candidates are taken to a training program that is aimed to induct them into the Aldi Stores family. This program enables the new recruits to easily fit in with the other associates as well as to know what the company expects from them and what they should expect in return. After recruitment and training, the workers are integrated into the company through mentorship. The mentorship program is where the new and inexperienced are paired with the experienced ones in order to watch and learn while on the job (Huselid, 1995). This way, the company not only gets enough hands to handle the workload, but also offers a practical and thus more efficient learning environment for the new staff without incurring any extra costs. Other than these, the organization ends up creating work groups in which the taskforce has both the new hands and the seasoned hands (Huselid, 1995). This combination not only promotes effectiveness with regard to cost saving, as the intense training programs for new recruits are actually foregone, but it also enables the employees to bond and form better working relationships while also widening the pool of expertise within the organization.

Wal-Mart’s set goals and objectives greatly revolve around customer satisfaction, as well as cost efficiency. These work groups are hubs of knowledge sharing, thus reducing the company’s expenses with regard to training the new recruits (Robbins & Hunsaker, 2003). Other than the mandatory orientation that is often done by the management, the recruits are not subjected to any other training as they are expected to learn from their experienced mentors and colleagues. Concerning customer satisfaction, the workgroups comprise of individuals with varying expertise and thus they are able to deliver within the organization’s standards.

The Motivational Practices Used by This Organization to Promote Better Strategy Execution

Soft sell motivational strategies recommend praising and advising individuals as per their performance, while the hard sell strategies prefer the use of incentives as a form of barter trade applying pressure and promoting individuals to higher ranks within the organization (Robbins & Hunsaker, 2003). Aldi Stores uses a combination of these two strategies by having regular performance appraisals as well as giving rewards, bonuses and promotion opportunities in exchange for a job well done. Also, the company challenges its employees to work hard by providing opportunities for career advancement. Succesful employees are often taken for further training and eventually promoted to manage the new locations.

How the Reward System in the Organization Ties Incentives Directly to Achieving Higher Productivity and Performance Targets

Merit pay models are usually in a form of bonuses or consistent salary increments that are directly proportional to individual performance within the specified period of time. The employees in this model are evaluated based on the tangible or intangible outcomes realized by the organization in their own specified assessment criterion (Robbins & Hunsaker, 2003). This system requires that all employees are assessed against the stipulated criterion, and gauged fairly by the outcomes of their work efforts. The Aldi Stores uses this model to reward its employees after conducting performance appraisals. In this sense, other than a basic salary based on the employee’s rank within the company, they are bound to receive bonuses based on the efforts they made towards the organization’s overall performance within a specified time frame. The employees are thus motivated to work harder in order to earn higher rewards.

The Evaluation and Feedback Process Used in the Company to Assess Employee Performance

Most of the work done by the Aldi Stores’ associates is physical and requires their presence at the stores; however, customer service is not necessarily a one off experience. One could easily create a great impact that will benefit the company even in his or her absence. The company thus uses the judgmental evaluation as well as the objective production method where relevant.

The store assistants are monitored individually to evaluate their attitude towards customers and colleagues, their innovativeness in tackling everyday problems at work, and their willingness to go an extra mile just to ensure that a customer is pleased with the company’s services. This is judgmental evaluation, and the criterion used is in accordance with the job description given to the store assistants upon their recruitment and induction training. The cashiers, on the other hand, are monitored for their speed and accuracy by the number of items they are able to check per hour on a busy day. This is objective production, and it is undertaken with consideration that the machines they use could sometimes stall.

The Elements in the Organization That Affect How Cultural Change Is Implemented

The Aldi Stores boast of a diverse composition with regard to the workforce and management teams. This means that communication may sometimes be a problem. The company, however, has heavily invested in team building to break the barriers among its workers. Cultural changes are thus easily implemented, as the teams are strong and willing to work together for the benefit of the organization as a whole.

Other than communication, job satisfaction as well as employee motivation and retention are key elements within this organization that affect cultural change (Kukenberger, Mathieu & Ruddy, 2012). The company recruits new members of the workforce on a regular basis to fill the junior positions as others get promoted or transferred to new locations. Satisfied workers are willing to embrace change if it is bound to benefit the organization. In addition, motivated employees are easier to convince when there is need for a change within the organization.

Aldi Stores is a very successful company in terms of internal marketing. The organizational design, structure, as well as culture, exude efficiency and practicality with regard to its overall performance. The workers herein are not only highly empowered but also motivated and well trained for their specific roles and responsibilities. The company’s strategy execution effort is thus delivering the expected results. The specific actions that have been taken to delegate authority to middle and junior managers and to create a sense of empowerment among employees include the use of unsupervised work groups and the emphasis on innovation, mentorship, performance appraisals as well as merit pay models.

Conclusion

Aldi Stores aggressively uses three organizational design tools and these are: empowerment of the management team as well as the workforce, implementation of self-directed work teams, and a rapid incorporation of Internet technology applications. The company uses self-directed work groups as hubs of knowledge sharing, thus reducing the company’s expenses for training the new recruits. With regard to customer satisfaction, the workgroups comprise of individuals with varying expertise and thus they are able to deliver within the organization’s standards. Aldi Stores motivates its employees by having regular performance appraisals as well as giving rewards, bonuses and promotion opportunities in exchange for a job well done. With regard to performance appraisals, the company uses both the judgmental evaluation as well as the objective production method where relevant. The company is therefore very successful in its strategy execution effort as its results are very impressive, especially in terms of organizational productivity and performance.

References

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