Organizational Culture Analysis Of Zara

Background of Zara

Discuss about the Culture and Organization for Flagship Brand of Inditex Group.
 

Zara is a Spanish brand of clothes and accessories. It is a go-to fashion brand for all and the flagship brand of Inditex group. It is the world’s largest international fashion companies. The company was established in 1974 by Amancio Ortega Gaona and it’s the first store was opened in A Coruns in 1975. It is one of the most sustainable companies and uses solar panels and a wind turbine at it’s headquarter in La Coruna. The company produces 100% toxic-free clothing. Zara has stores in more than 88 countries with over 7000 outlets. The company sells men’s, women’s and children’s clothes. Zara also sells shoes, cosmetics, and accessories. It also sells it’s products online through it’s own website. Zara supports the ecological development of society and the environment in which it interacts. The obligation towards the environment is part of the Inditex group corporate social responsibility (CSR) policy. Zara is developing eco-efficient management tools in order to make it’s stores eco-efficient. The company manages waste by transforming hangers and tags into other plastic items. The employees are trained by using sustainable practices such as trimming energy consumption and modifying behavioral habits. The company uses paper or biodegradable plastic bags. The company supports organic agriculture and organic cotton in it’s cloth production. Zara has also introduced biodiesel fuel in transport vehicles over 200 million items of clothing. The company has zero advertisement policy. It’s worth was $9.4 billion as of May 2015. 

The Hofstede’s Dimension is used to analyze the organizational culture of Zara which includes various theoretical frameworks such as power distance, uncertainty avoidance, individualism versus collectivism, masculine versus feminity and long-term orientation. The Hofstede’s dimension is used instead of Edgar Schein’s organization culture model. The issue is undertaken such as discrimination against black employees. The organization culture of Zara comprises teamwork, open communication, freedom of decision making, growth opportunities and the highest number of capable and young employees. In spite of the large expansion, the company is able to covert ideas into products which facilitate not only faster communication but also faster delivery (Schein, 2015).

Budgen has developed an organizational culture of independence for it’s retailers in order to encourage participative management and growth motivations. However, the brand owner inspires the participative management and democratic style of leadership. The organization culture of Zara seems to be a franchise based model as the individual dealers do not appear to have a desire for risk-taking (Saleem & Larimo, 2017). On the other side, the company has open communication between the managers, designers, sellers and the functional supervisors. The ultimate aim of the organizational structure of Zara is to focus on innovation which enables quick turnout of new designs.

Sustainability Initiatives by Zara

The organizational structure and culture have a mutual effect on the performance of Zara. It contributes to the norms, values, and assumptions. The performance of the company mainly owns to the culture of the organization (Putnam & Gartstein, 2017). The objective of this report is to discover possible differences and the similarities between the culture in the understanding and implementation of the company’s values.  

Hofstede’s dimension is centred on a decade of research. It is a universally recognized standard for understanding cultural differences. The framework was advanced by Geert Hofstede. This framework defines the impacts of society’s culture on the value of Zara’s employees and how it relates to the behavior. Hofstede’s cultural dimension is used to analyze the culture of Zara. It represents the different cultural dimensions. It makes easy to compare the cultural differences between countries. The framework deals with the aspects of societies such as hierarchies and distribution of power among members. The Edgar Schein model of organization culture denotes to the values and beliefs of an organization. It describes the culture of a workplace which defines the way of interacting with each other and outside company. It undertakes artefacts, values and beliefs and the basic assumptions (Karel, 2017). It adapts the changes occurred in the external environment which do not take place on the daily basis. In the first level of the theoretical framework that is artifacts, the visible part of an organization is noticed by an outsider in the form of technology, tradition, physical artifacts and the language. The values reflect the options shared by the members that how things should be. The basic assumptions evolve the members of the social group and core of culture.

The Hofstede’s dimension framework is chosen over the Edgar Schein’s Organization Culture Model as the former one is more suitable for analyzing the organization culture of Zara. The theoretical framework of Hofstede’s dimension helps the company to get over the issues faced by it such as inequality and discrimination (Mazanec, Crotts, Gursoy & Lu, 2015). The uncertainty avoidance helps the company to face and tackle uncertain situations. The individualism and collectivism spread equality and employees focuses on working together (France, Cridge & Fogg-Rogers, 2017). The employees not only focus on themselves individually but works together for the benefit of the organization. The masculinity versus feminity defines the role of men and women. 

As per the Hofstede’s dimensions, five issues are undertaken that Zara needs to consider in order organizing itself in the society. These are known as dimensions of culture. These dimensions distinguish one culture from another and help to analyze the values. The categories are:

Organizational Culture of Zara

Power distance: The power distance states the degree up to which the less powerful members of society agree and except that power is dispersed unfairly.  This dimension deals with the way society handles inequality between people. It deals aspects of societies such as hierarchy and distribution of power among people. This dimension represents how the culture of an organization handles inequality in relation to money and power (Bakir, Blodgett, Vitell & Rose, 2015). The caste system is also an example of power distance which is ranked on the scale of 1-100. For instance, the companies face issue regarding discrimination of black employees. In this scenario, power distance framework is helpful in tackling issues (Degens, et. al. 2017).

Uncertainty avoidance: The uncertainty framework refers to the degree of anxiety which is faced with the uncertain situations. It states the degree up to which the members of an organization feel uncomfortable with the ambiguity and obscurity. These unknown situations are avoided through control such as rule and order (Phaopat & Mak, 2017). The uncertainty is not the same as escaping risk. Basically, this dimension covers ideas on how risks can happen and how to plan against those risks. It comprises how nervous a person feels at an organization and how long a person is going to work with that organization (Beugelsdijk, Kostova & Roth, 2017).

Individualism-Collectivism: This dimension refers to the strength of mutual connections between individuals within the particular community. It focuses on the unification of culture. In this dimension, there is “every man for himself” mentality. The members are expected to take care of themselves and immediate families first. They are likely to be loyal to the group to which they belong and the group protects their interest. This dimension is easy to observe in the culture of an organization. The individualism considers personal time, freedom and challenge. The personal time assists in sufficient time for personal and family life. The freedom considers ease to adopt approach towards the job. The challenges provide a personal sense of accomplishment to do work (Minkov, et. al. 2017).

The collectivism focuses on ‘We’ instead of ‘I’ within the members working together at an organization. The main focus is given to the whole group. This group supports each other whenever a conflict arises.

Masculinity versus feminity: This dimension refers to the dispersal of roles between men and women. It also denotes how much an organization complies with the values and the male and female roles. The emphasis is given to the performance and success for men. In the case of women, stress is given on the modesty, sensitivity, and quality of life. The males are masculine and the females are feminine. In some organizations, women are also given the opportunity to work in male-dominated professions. There is much cooperation and the women are admired for their contribution (Kim, 2017).

Hofstede’s Cultural Dimension Framework for Analyzing Zara’s Culture

Long-term orientation: The long-term orientation emphases on the future. This dimension denotes the traditions at the workplace. It can also be inferred as dealing with society’s search for virtue. The organizations focus on the traditions and customs under this dimension in order to score high in the long-term orientation. It views change as negative (Mladenovi?, Mladenovi?, Milovan?evi? & Deni?, 2017). This dimension stresses persistence, perseverance, saving and the ability to adapt. In the long term culture, short-term gains are avoided which leads to the long-term profits. 

Zara discriminated it’s black employees and customers at company’s stores in New York. According to a report which surveyed 252 Zara employees in different cities and found that:

• Black employees of Zara are more disappointed with their working hours than the white employees.
• Black employees notice 3 times more favoritism as the white employees.
• It was also noticed that the black employees are the least likely to be promoted.
• The black employees are reviewed with harsh inspection by management than the white American and European employees.
• There are 68% black employees in the lower esteem back of store roles (The Guardian, 2015).
• The black employees were treated harshly from managers.
• The lighter skin employees are treated better by Zara and there is the positive scope of being promoted.
• The employees experienced that the favoritism in Zara is based on race.
• There are unpredictable working hours and low wages for the black employees.

This way Zara was accused of creating a culture of customer discrimination. A survey was conducted which revealed that managers show favoritism and which is on race. This approach of favoritism has a direct impact on the promotions, working hours, management evaluation and treatment. Out of the survey made of 251 employees, 130 were recognized as Hispanic, 59 as black, 34 as white and 11 as diverse races (The Guardian, 2015). The employees were also acknowledged on the basis of skin color and scaled from one to four. Out of which, one indicates very light skin and rest four indicates the dark skin. The surveys revealed that dark skin employees are less expected to be promoted and obtain harsh treatment from their managers (Adedeji, Popoola & San Ong, 2017). The report was completely unreliable with the culture of the company and revealed true culture. The company followed the conventional methodology for the conduct of reliable objective on workplace practices. Zara claimed that the report was completely varying with the culture of the company (Uppal, 2016).

As per Zara, it is an equal prospect employer. If there are persons who are not pleased with any aspect of their employment then the issue can be raised by the company. It immediately investigates and addresses the issues. The issue of black employees was identified with the code words like special orders by Zara (O’Neill, Beauvais & Scholl, 2016). It further clarified that being a multicultural company does not tolerate any kind of discrimination. It serves across 88 countries. The term ‘special order’ was used to entitle a state in which comrades were wished to enforce customer service and zone attention on the floor. It does not entitle an individual or group of any category (Martinez, et. al. 2015).

Issues faced by Zara including Discrimination against Black Employees

The company provides clarification on the discrimination in promotions. Zara claimed that it promoted approximately half Hisapanic employees. On the other side, half of the hours are assigned to the Hisapanic employees. These actualities represented that multiplicity and equal opportunity are the core values of the company (Al Saifi, 2015). As per the records of the company, half of it’s employees are Hispanic.

The company faced a lawsuit of $40 million against the discrimination by Ian Miller in 2008 (The Guardian, 2015). According to this lawsuit, Miller who was an American and gay was debarred from all the meetings and exposed to discriminatory, homophobic and anti-Semitic remarks. It did not refer to the preferred profile of the company. He also complained that the harassers were threatened with punishment by the founder of the company (Arifin, 2014). The New York city laws prohibit wage discrimination, wrong release, reprisal and antagonistic work environment. The discernment infiltrated the whole company. The corporate culture is very challenging. The lawsuits exposed the discrimination which pervaded Zara USA. As per the revelations made by the lawsuits, it is significant to reflect that it occurs across all levels.

Various lawsuits were also filed against Zara on a number of events. The company was condemned for selling items with ethnically oblivious designs. Bags embellished with swastikas (symbol represents religion) were dragged from stores after a complaint filed in 2007. The company sold necklaces with porcelains in 2013. The company also faced criticism for the 2 different designs, one stripped and embellished with a gold star which look like outfits worn by Jewish victims. The second was white tee-shirt which displayed the words “White is the New Black”.

There were also recent disagreements over racism in the retail sector of New York. The department stores of New York, Macy’s and Barneys faced an inquiry from the state prosecutor general after several acquisitions from customers based on the discriminations (Oyewobi, Abiola Falemu & Ibironke, 2016). Macy’s and Barneys were settled for $650,000 and $525,000 in August 2014 (The Guardian, 2015).

The analysis of the practices of Zara can be made by using Global cultural dimensions. The theoretical framework such as power distance can be useful for Zara in dealing with the inequality between people such as the issue faced by the company regarding the discrimination of black employees. It can help the company to handle inequality by representing it’s culture. Zara’s discrimination against black employees was one of the uncertain situations for the company. In this scenario, uncertainty avoidance could be helpful in expressing the degree up to which employees feel uncomfortable with uncertainty and obscurity (Coghlan, 2017). This situation was resolved by the company by considering it as ‘special order’. The theoretical framework collectivism- in group can be helpful for the employees of the company to take care of themselves and the people around them. The future orientation enables the company to focus on the future. It stresses on the company to score high in the long-term. It avoids short-term gains and leads to the long-term margins (Pantouvakis & Nancy, 2017).

Conclusion and Recommendations

• Zara is recommended to focus more on the power distance framework. It deals better with the discrimination issues which keep on taking place in the environment. It deals with the way; the organisation handles inequality between people. It also considers the distribution of power among people. It better represents the culture of handling inequality in relation to money and power. It also ignores the caste system and gives equal priority to all the employees without any single thought. The employees should be given equal opportunity for the promotions. Zara should focus on the long-term orientation in order to stress for the future benefits. This dimension is helpful in concentrating on the traditions at the workplace. It is helpful in scoring high in the long term. 

• The company is required to follow strict guidelines regarding diversity and not to discriminate of any kind. The uncertainty avoidance should be given more importance so that the uncertain situations can be ignored and tackled wisely. The dimensions prevent the ideas to overcome and plan against these risks. The uncertainty avoidance can provide long-term profitability to Zara. The masculinity versus feminity is also helpful in avoiding discrimination on the basis of gender. It promotes equality within the organization. The focus is given on the success, modesty, and The men and women should cooperate for their contribution (Schein, et. al.2017).
• Zara should focus more on it’s guidelines in order to avoid any kind of discrimination taking place in the environment. It should have parameters ready if any circumstance arises. In order to focus on the values, the company can adopt the values theoretical framework of Edgar Schein’s Organization Culture Model. The values are the statements of identity. It can even be a projection for the future.  

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