The Body Shop had been successfully introduced into a new market and established itself as a differentiated cosmetics supplier with a conscious. What started off as a humble entrepreneurial venture in Brighton, England grew into a dominant player in a very saturated industry. After the franchising of the English stores and their subsequent implementation in Canada, The Body Shop gained renown success and began growing at an unprecedented rate. Unfortunately the company’s operational goals have become diluted and Margot and Betty-Anne Franssen no longer keep up with intense customer demand. Although the casual and informal business model had worked in the United Kingdom and to some extent in Canada, the Franssen sisters are faced with the tough task of formalizing and updating her business and franchises. In order to continue to succeed in Canada and examine the possibility of an additional expansion into the United States, Franssen must address two pressing issues that are inhibiting The Body Shop’s success: Mismanaged growth and a problematic organizational structure.

Mismanaged Growth
Many organizations strive to become successful as quickly as possible but there are times when well-run companies begin to fail because they grew to quickly. Preparing for growth is a crucial step in ensuring the sustainable development of a firm. There are a number of symptoms that clearly indicate the growth of a company is being mismanaged. In the case of The Body Shop, they include owner/employee fatigue, lack of coordination, and production inefficiencies. Since the Franssens have such a high personal stake in the company they like to be as involved in as many of the franchises and operations as possible. During the inception of the first few franchises this was feasible, but as more locations were opened they have devoted less and less time to each respective site. The Frenssens have left their day to day duties behind and assigned these duties to their executive team and their assistants. Instead of having two decision makers handle a set of activities, these responsibilities were passed down and diluted to a team of many executives and assistants making communication issues and problems of authority inevitable. It is understandable for the owners to begin shifting their focus to different operations but there needs to be a succession plan of sorts so that the company can continue to operate efficiently without their guidance. Different Employees have also begun to take on additional tasks and are having trouble keeping up with their work. What had worked in the past to gain growth and success unfortunately does not scale or apply currently due to the magnitude of the expansion. Employees are stating that the personality and culture of the organization has changed. This is in part due to the hiring of many outsiders in response to the expansion of both corporate and retail stores. Because the Franssens are no longer as involved in the hiring process many of these managers do not share the same vision or values that have been paramount in the historical success of The Body Shop. Since the new employees are in a managerial position, their lack of cultural fit affects the team they are working with. Coordination among the team members with regards to expectations and goals is skewed. The company has grown too big too quickly and there have been few attempts to realign the internal organization. Additionally, the company is famous a number of different operational inefficiencies most alarming or which is difficulty keeping up with orders. In an attempt to meet demand, the company has franchised over and over again without regarding the feasibility of this expansion. Although meeting customer demand with additional locations is normally a smart tactic, The Body shop does not have the resources nor the products to substantiate such an expansion. The result is a combination of disgruntled customers, stores with empty shelves, and a number of backorders that begins to multiply. Matters are made worse by the fact that there is no Management Information System set in place making forecasted numbers often inaccurate Additionally, Quig Manufacturing, which is the production and distribution house of The Body Shop Canada has a relatively inefficient value chain. They rely on U.K. suppliers for some of their products making the time it a product ends up in stores even longer.

Organizational Structure
Although the franchise selection system has been successfully standardized, there are still numerous other organizational activities that must be structured if Canadian Body Shop retail locations desire to grow sustainably and healthily. At this point of the company’s life cycle, formalization is absolutely mandatory. The Franssens are running their company like a small entrepreneurial venture: with few rules and in-store regulations, a lack of standardization, and loose job descriptions. In an attempt to endorse creativity and the free-flow of communication, Margot and Betty-Anne are attempting to keep structure as casual as possible. Unfortunately, this does not help their employees at this point in the business, it greatly inhibits them. The Franssens attributes the growth of the company to a lack of hierarchy but this can also lead to the decline of the company as well.
Decision-making must take a more overarching approach; decisions must be looked at with respect to the network of franchises not just the individual stores. If there are no set decision making policies in place, mistakes are inevitable. The case of the silk flowers acts as a perfect example of how careless decision-making can result in a $100,000 mistake. There must be some form of mediation so that mistakes like these are avoided. There needs to be some level of due diligence to avoid costly ideas that not only hurt the bottom line, but in the case of the biodestructable bags, harm the public perception of the company. The Franssens also state that they wanted to avoid job titles because they turn people into employees instead of problem solvers; they limit the potential of each employee. Simply adding a title to staff members does not mean they cannot be versatile in their day-to-day activities. Flexibility is very important at the beginning stages of the Product Life Cycle but at this stage, continuity takes precedence.
Furthermore, The Body Shop has the problem of employee motivation, but not in the conventional sense. Their employees are too motivated and many prioritize their work over personal life. A committed staff is indisputably important but they are becoming overworked. Their inability to take time off will not only hinder performance at the work-place but more importantly lead to employee burnout. If they are in a position of seniority, burnout will not only effect them personally but those in which they manage and work with.

Recommendations The Body Shop is an unbelievable company that has the potential to change the landscape of cosmetic companies for a number of years but it must first begin to operate like a real business. The free-flowing managerial practices that worked for the company at first no longer apply and if Margot and Betty-Anne want to enjoy a fruitful and successful company, they must begin to run their business properly. The following are a set of recommendations to address growth and organizational issues.

Owner/Employee Fatigue Margot and Betty-Anne have already begun to take a less hands on approach to running the company which at this point in the company’s life cycle is advisable. The problem lies in the fact that they have delegated their tasks to a team of individuals that are already over encumbered with work. What the Franssens must do is begin finding a successor that shares the same managerial skills, values, and vision for the company as they do either through internal promotion or by bringing in someone new. This will not only lessen the workload of managers and negate burnout but additionally give The Body Shop the opportunity to operate on a more personal level as it previously had done. If Margot and Betty-Anne can begin to find replacements for the activities they used to do, the personal relations between upper executives and employees at the franchise level can return to being sound.

Lack of Coordination A big problem stifling The Body Shop’s development was coordination and communication. Employees were feeling distant and even whole franchises such as those in Western Canada were beginning to feel ostracized and abandoned. Although faxes, memos, and newsletters had helped slightly in connecting all employees in The Body Shop Canada, many had lost sight of the vision of the organization that the Franssen sisters championed and embodied. By implementing company wide retreats and development seminars employees can be updated on standard practices as well as gain valuable face time with Margot and Betty-Anne. This face time not only serves as a morale boost but additionally serves the purpose of reminding the employees of the core values and vision of the business.

Production Inefficiencies At this time Quig manufacturing and The Body Shop are battling to keep up with the high demand of their products. A thorough analysis of The Body Shop’s value chain should be conducted in an attempt to find any areas of weakness that are inhibiting getting products on the shelves. A particular area that needs investigating are the supplies coming from the United Kingdom. Although using these suppliers ensures that royalties do not have to be paid, backorders are compounding and the image of The Body Shop is becoming tarnished. An analysis should be conducted in an attempt to see whether or not it is more profitable to either procure these products locally so that demand can be met or continue to operate they way they are now and avoid paying royalties. Outsourcing value chain activities that The Body Shop and Quig do not specialize in can additionally decrease costs as well as open up operating capacity.

Organizational Restructuring Standardization is absolutely paramount for any company, especially one that is growing at the rate The Body Shop is. It is possible to implement job descriptions and a chain of command yet remain flexible. The employees can become “rotational” managers and be experienced and trained in a number of different facets of the business so that they can be used as necessary. A chain of command will also help in addressing the issue of communication and accountability so that the frequency of costly mistakes can be minimized. Decision makers will clearly be identified at each level so that there is no miscommunication or dispersion of misinformation. An additional benefit of having extensively trained managers is that they can help regulate the work environment. As it stands, employees are doing a variety of tasks and some may be underperforming in an area that they are not particularly strong in. Having a manager to delegate and enforce duties helps employees stay on the same page and in some cases lighten the load. These managers can help manage employee tasks so that they do not feel overburdened and don’t burnt out.