Eataly Business Structure Analysis

Eataly Business Structure Analysis

Eataly started with Oscat Farinetti, an Italian business man from Piemonte region of Italy, northwest near the border with France. For years Oscar operated a chain of electronic stores called UniEuro. He travelled around Italy during his time opening stores and, of course, ate! In each of the regions, he experienced very different Italian food. For example, he was used to eating polenta in his hometown, but when he went down south, he did not find polenta. Instead he found delicious pizza and fried seafood dishes. Oscar was amazed at all the different and tasty regional foods his country had to offer. He dreamed of creating a place where people could access Italian foods from all regions under one roof.

Oscar was inspired by the Slow Food movement’s principles and truly believed in his idea to create a place where all Italian cuisine was represented. He sold UniEuro in 2003 and dedicated himself fully to the project of what would become Eataly. For the next few years, Oscar spent a lot of time traveling around the country and forming direct relationships with producers, in order to create the supply chain necessary to transport products from different regions all around the country. Oscar developed the concept of Eat Shop Learn. He wanted to create a place where guest could do all three of these things.

The first Eataly opened on 2007 in Torino. It was a huge success. This Eataly opened in a renovated Carpano Vermouth factory. Using historical building and repurposing them while still respecting their origins remains a common practice in the opening of Eataly’s. After opening the initial Eataly and seeing the great response it got, Oscar began thinking about opening another Eataly. And then it tuned into another and another. Today there is nearly 35 locations and counting.

The first Eataly in the United States open January 2010 in New York City. Eataly NYC Flatiron. As this is the first store in the US, the Flatiron store is considered the Flagship store. In 2016, Eataly Boston was initially the only location scheduled to be open that year, however, the Mayor requested that Eataly Downtown would be part of the rebuilding of the World Trade Center. Each Eataly consist of 4-6 full-service restaurant, often monothematic, about 8 quick service counters, and the retail section. With such a large operation, employing about 500 individuals, the labor organization can sometimes get confusing. Every organization should have organizational structure because it illustrates the level of hierarchy and outlines who is responsible for whom and also shows the position of a person.

It is important for the structure of an organization to decide how task are managed or organized, specifically by upper management. An organization like Eataly that expands very frequently across the globe is a factor that has an impact on organizational structure. The purpose of this SMAC is to examine the impact organizational structures have on the performances and retention of employees. Factors such as employee performances, decision making styles, leadership, culture and of course organizational structure all are correlated. Employees attitudes and performance has an impact on how the organization performs, and if every employee’s work is done correctly and if employees enjoy their working conditions (Meyers, 1991).

Methodology Overview

As stated earlier, the purpose of this paper is to discuss the impact of organizational structures have on the performances and retention of employees. In order to acquire meaningful information on this topic, informal conversations with a few representatives of Eataly occurred.

Background

Each store has a Store Director who is the main figure overseeing operations. Underneath the Store Director, there is a general manager corresponding to the three pillars of the business as addressed previously, Restaurant, Quick Service and Retail. In addition, there is a separate pillar for the Executive Chef. Under each general manager and Executive Chef, there are assistant managers who are responsible for the different restaurants, retail departments (such as the grocery and houseware manager) and multiple stations of QSR. The Chef de Cuisines oversee the different restaurants from a culinary perspective. As each department within itself is complex, there are also other levels of managers. Within each store, there is a HR, Marketing and Facilities departments supporting all of these people and their teams. See the figure below for a visual demonstration. Even though an organization has the best structure it is not something the organization should leave and not manage, some of the best structures have failed because of a lack of management and it is not the best suitable structure for the environment the organization does business in (Carpenter, Bauer & Erdogan 2009).

From the demonstration above, it is illustrated that the store director is the maker of all decision. As there may be some truth to it, the organizational structure for Eataly does extend to C level individuals, VPs and Directors who work out of the corporate office. Therefore, there is another level of approval that is above the Store Director. The store Director reports to the VP of operation and the chain of command continues up to the CEO. See chart below.

Eataly’s organization structure can be classified as a functional structure. What this mean is the structure is separated by departments and employees are grouped together based on their specializations, for example, HR, Marketing, Store Ops. The functional structure fits best for organizations that provides products or services. This structure allows for employees to become specialized in their specific function and can be scalable for a growing organization such as Eataly. With a structure as such, the decision making is a centralization process. The decision making is assigned to the different levels of the structure. Centralization has a broad span of control in top levels and more tiers in the structure of the organization, which explains the Eataly process in decision making. An organizational structure does not reveal all challenges within an organization, for example, communication between employees of different levels, departmental conflicts (internal and external), culture and leadership styles. Although Eataly Flatiron and Eataly Downtown have the same organizational structure as appeared on the organizational chart, each store has their own personality based on the different factors previously mentioned.

Culture & Leadership

An organizations structural culture has a great deal of influence on the effectiveness of the employees. Culture in an organization illustrates the behavior patterns of employees along with the standards of the company. Therefore, it aids in the shaping of employees and their loyalty to the organization. On the contrary, there are cultural influences that can have a negative impact on employees. In an article written by Dan Pontofract, he wanted to demonstrate having culture first will then result in performance of revenue and employees. He discovered a research based on the longitudinal study of casual priority with automobile dealerships that supported his concept. The results did confirm that if culture comes first, then performance levels will follow. These results were based on the following elements, service departments and sales departments. While each Eataly is the same each store has their own theme, Flatiron is themed ‘Doubt’ and Downtown is themed ‘Bread”. It can be implied that each theme has a direct correlation to the overall culture. One of Eataly’s many quotes is “We are not a chain, we are a family” demonstrate that the mission is the same despite some differences. This is what makes each store unique individually but the same as one company. In the article it states “Overall, department culture was found to consistently predict higher subsequent levels of customer satisfaction ratings….” (Pontofrast, 2017).  This can be applied to Eataly based on customer interaction and loyalty. In addition, employee satisfaction and turnover rates can be leading factors.

There’s a chain reaction that involves the structure of the organization, culture and leadership style. It is established that both stores of Eataly are structured the same. However, each store director has their own style of leadership which has an impact on the culture of the store and employees. what helps build an organizations culture, is having people of different background and areas together under one roof. This results in people with different workstyle and leadership style as well. Employees in an organization work as a team and bring changes to the organizations. Every employee has their own special characteristic and behavior which makes up for a good team with diversity of thought throughout.

Eataly’s structure can be described as Organic, whereas the goal is customer satisfaction and employee satisfaction. In order to achieve both goals, the process must start with the leaders. For example, one of the store directors has a more charismatic style in managing. This style brings on creativity and allows bringing new and innovative ideas in practice. He has an influence on the majority of the employees in the store. On the other hand, the other store director has a more bureaucratic style of which it relies mostly on making policies and bringing out objectives and strategies as described in the policy that has been made. Essentially, it’s a direct message to the other members that they need to follow what has been told to them with no input. Bureaucratic work environments, which entail high centralization and formalization structures, have been argued to increase participation in irregular acts due to the organizational structures’ hindrance of employees’ action and loss of power (Raelin, 1994). Can it be said that one store has a high rate of an employee engaging in irregular activities? Due to confidentiality, this information was not provided.

Employee Satisfaction

There was a study done to examine employee satisfaction and turnover. The discoveries were that employee satisfaction is closely related to predictors of turnover (Bassett-Jones and Lloyd, 2005). The loss of employees is a disruptive event. Organizations often pursue innovative ways to reduce employee turnover, often with limited success (Bassett-Jones and Lloyd, 2005). Turnover is evitable, especially in certain industries. However, employees may fail at finding ways to reduce the rate because they do not have time or make time to understand an employee’s perspective until it is too late. For example, during an exit interview, it is very important to receive as much honest feedback as possible. Then use the feedback to improve processes. Aspects relating to the nature of work itself, such as organizational commitment, compensation, overall job satisfaction, and job involvement, could also affect employee turnover. (Bassett-Jones and Lloyd, 2005). According to an article in the journal of managerial issues, there are several reasons why an organization’s structure is expected to influence workplace unconventionality. Employees noted in prior studies if they were given more control over their job, they would be less prone to participate in irregular acts (Browning, 2008). Collecting data from current and former employees help build or rebuild structure around employee satisfaction. All the factors discovered within the studies are linked together, similar to a domino effect.

Ethical and Social Responsibility

Presenting new opportunities to the internal employees before posting it to externals should be best practice as Eataly emphasize on internal growth opportunities throughout recruiting. Although posting internal vacancies is not required by any employment laws, Eataly’s policy for internal transfers is that current employees must be in their current role for at least six months. Employees want to believe that if they work hard and contribute, that they will be eligible for internal promotion and job transfers. According to an article on LinkedIn, the opportunity for career development is one of five employee must-haves at work. Employers must see employees obtaining these opportunities if they want to retain their best employees. By doing so, Eataly will create a company culture in which employees feel as if they have the opportunity for career growth. A culture as such is more likely to contribute to employee retention and engagement.

Carlo Petrini, a very close friend of Oscar Farinetti, started the slow food movement in 1989 to counteract the fast food epidemic across Italy. Slow food is the opposite of Fast Food. This movement was spurred by a large protest against the opening of McDonalds near the Spanish Steps in Rome. The movement is all about preserving local food cultures and traditions as well as protecting the environment through sustainable food choices. It is about understanding where food comes from and respecting the earth and health. The movement has grown globally, linking millions of people working to ensure everyone has access to food clean and fair food. Eataly’s relationship with Slow Food began in 2003 before the first store even opened. Oscar Farinetti began forming partnerships and relationships with producers in order to create the supply chain necessary. More than a decade later, Eataly continues to work with Slow Food.

Managerial Abilities

Attention to details: As a Human Resource profession it is crucial to be very attentive in all that is done, verbal and nonverbal communication. The form of attention to details can have a negative effect on an individual and their career. Paying attention to detail in the corrections environment is very important, especially if it has to do with a certain way of completing tasks inside the institutions. In regards writing the SMAC, it was important to make sure that I incorporated the necessary information. Using the learning contract was one way of being attentive and staying on track since it is an outline of the SMAC.

Self-confidence: By completing this SMAC, I gained the confidence in having the ability to represent the organization and understanding where they fall short. This paper has given me new views of ways I can develop new ideas and take more initiatives.

Conclusion

The effect of the organizational structure of a company does have an impact on the employee’s performance. However, it is not the structure alone that can solely have an influence on the behavior of individuals. An organization that wants to remain competitive and grow will need to form leaders that are ambitious about developing innovative employees and providing them with the necessary training to better themselves. However, employees do have a choice in adjusting their attitudes and behavior. Mary Nelson, the author of “it’s your job—love it, leverage it, lose it or leave it” highlighted an important theory, no one is a prisoner, if the job or the company do not align with your values and belief, everyone has the free will of the four choices she mentioned.

The attitude of employees towards the organization amounts to everything about the company. Employees that are motivated and encouraged will be more productive. For example, promoting from within will increase strong moral and standards. In addition, it will help in the building employee loyalty and motivate employees to work harder. Author Stringer stated “When giving employees the right to authority they become more positive and thus gives more attention towards their work and enjoys working for the company, they feel more wanted and more recognized by the organization and then contributes more, this is what productivity is about: every employee giving their best to make sure the organization performs” (Stringer 2007). In everything there has to be checks and balance, the employees look to their leaders for guidance, motivation, feedback and everything else that is a part of their achieved performance. Therefore in order employees to reach that level, there has to be a shift in the dynamics of an organizations structure, culture, and leadership.

Maslow theory of motivation states that deficiency needs arise due to deprivation and are said to motivate people when they are unmet. People get motivated according to their needs, therefore as a leader of an organization it would be beneficial to fulfill employee’s needs. By improving an organizational structure, it will result in positive attitude from employees. They would have more assurance in job security therefore work hard towards company goals. By implementing the right strategy, training and development, mentorship, and other motivation driven tactics will help the growth of an organization. It is highly suggested that both leaders and all who are employed at Eataly partake in training. The employee can be motivated and engaged more towards work if they will receive incentives and rewards.


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