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Responsible Management Challenge at Arcadia Group
Order Instructions
Identify one major responsible management challenge your case company (Arcadia Group) faces and then choose which one of the following corporate functions studied on the course you consider most relevant to addressing the challenge and why:- marketing,- HRM,- accounting/controlling, or- business information systems.
Analyse this one major responsible management challenge (in light of the company’s strategic business context) and make recommendations for how the company should address the responsible management challenge through the corporate function you have chosen.
Your recommendations should explicitly take into account the company’s strategic aspirations and the resource constraints it faces. You should clearly indicate and justify how these recommendations are practicable and realistic in the context of the company’s existing systems for addressing social, environmental and/or ethical issues, and how these systems could be further developed and changed to fully implement your recommendations.
*The case company is Arcadia Group.*
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Responsible Management Challenge at Arcadia Group
Introduction
Responsible management is imperative for organizations that seek to enhance sustainability and maintain a positive brand image. Challenges however exist in organizational settings, which make it difficult for companies to maintain the required level of management efficiency. Responsible management challenges could be detrimental to an organization’s performance and hence the need to address them through the use of corporate functions available to the organization. These may include marketing, Human Resource Management, accounting and control, and business information among others.
Arcadia Group faces the responsible management challenge of effectively managing the pension scheme of the organization, thus compromising the welfare of its employees. The company is currently dealing with a pension deficit that has been growing steadily over the years, thus impacting its performance and reputation (Tugby, 2017). It is also a threat for the employees at Arcadia, who are uncertain about the payment of their pension dues, such that it could influence its staff retention capability and diminish its corporate image.
The pension deficit is not only an ethical issue but it could easily escalate into legal battles for the organisation (The Guardian, 2017). This is an indication of poor management of the company’s pension scheme, which needs to be addressed urgently to promote a positive company image and avoid such a scenario in the future. In this regard, the corporate function that can effectively address the challenge is ‘business information systems.’ A well-designed business information system can effectively manage the company’s pension scheme data and thus ensure that the fund is well utilised to avoid deficits. This paper discusses how business information systems can be influential in dealing with Arcadia’s responsible management challenge.
Discussion
In a business world that is highly competitive and where stakeholder expectations on businesses have grown considerably, maintaining responsible management is a paramount issue for organizations. According to Grant (2016) companies are more vigilant than ever when it comes to management practices, in order to ensure that they maintain high levels of professionalism and promote satisfaction of their key stakeholders. This means that when management practices are deemed irresponsible, a business risks losing both its reputation and trust from stakeholders. Arcadia Group is in such a situation, having been faced by a challenge in managing their pension. This has led to panic among employees and created legal issues for which the company is being investigated.
Arcadia Group’s Responsible Management Challenge
Arcadia Group has successfully grown to become one of the most influential companies in the fashion sector in the United Kingdom. Such a strong brand image calls for increased responsible management in a bid to enhance a company’s reputation. Arcadia Group however faces a major responsible management challenge emanating from the pension deficit that it is currently servicing. The pension deficit rose by £108m from 2013 to 2016 nearing £1 billion in 2017 (Pension Right, 2017; Tugby, 2017).
The Group has been making contributions into the fund in a bid to pay up the deficit. In March 2017, the Group doubled its contribution to £50 million per year so as to cover the deficit by 2026 (Bury, 2017). The pension deficit is an indication of irresponsible management of funds that resulted in the pension fund being utilised for other operational or personal expenses (Saville, 2016). It is a challenge which, if not addressed would lead to management problems in the future as the company fails to effectively pay up its employees’ pension when it falls due.
The company could either be forced to pay pension from its operational kitty or employees may not be adequately compensated. Sir Phillip Green who owns the largest stake at Arcadia faced a pension deficit case when his BHS chain collapsed, with retirement benefits among workers being slashed significantly in the midst of the crisis. Such scandals portray Arcadia in a negative perspective and could easily ruin the market influence that the company has built over the years.
Arcadia Group strives to maintain high level professional standards by engaging in activities that are in compliance with social, environmental and ethical issues. The Company also portrays its commitment towards employee welfare, ethical and legal responsibility through its Transparency Statement (Arcadia Group, 2017). The Statement which is based on the Modern Slavery Act provides that the company is highly committed towards maintaining high legal and ethical standards pertaining the production process, suppliers and employees.
However, based on this management challenge, the Group faces an ethical issue because it appears that they are not managing the fund effectively, which could be detrimental for the employees. As noted by Chance (2013), responsible organizations are expected to be highly concerned about the welfare of their employees and ensure that their needs are protected. Therefore, the pension deficit portrays the organisation negatively and could cost the company its reputation.
To address this responsible management challenge, Arcadia Group must develop a strategy to avoid such an occurrence in the future. More efficient management of the fund can be achieved through the use of business information systems as discussed in the next section.
Recommendations on Corporate Function to Address the Challenge
The challenge at Arcadia can be identified as a systems issue, where the company did not effectively manage the funds as expected. This resulted in a deficit as funds which should have been dedicated to pension ended up being utilised for other company functions. Accordingly, there is need for a system that monitors the pension fund to ensure that it is utilised for the intended purpose and that funds dedicated to pension are deposited into the relevant account (Davidson, 2017).
There is also need for additional control in the management of the pension fund, such that guidelines are provided on how the fund should be accessed, when and by who (RSM, 2015). The guidelines should then be followed strictly to ensure that future cases of fund misappropriation are avoided. The use of business information systems (BIS) is considered an effective remedy for the challenge facing Arcadia as this will ensure that the fund is managed more effectively. Through the use of BIS, the organisation can track the status of the pension fund at any time and thus ensure that it is being managed based on the set guidelines and controls…..
Responsible Management Challenge at Arcadia Group
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