Who works for Goldcrust in December?: Goldcrust plc runs 400 bakeries. On a Saturday in December about 6,000 people bake, sell, deliver and design for it. So who actually works for Goldcrust?
Who the 6,000 are
- Only 900 of them are its permanent, full-time staff.
- The vans outside belong to a delivery firm.
- The Christmas cake designs came from two freelance designers.
- Half the people behind the counters were hired for six weeks.
Charles Handy, an Irish-born writer on management, described this kind of business in his 1989 book The Age of Unreason. He called it the shamrock organization, after the Irish clover with three leaves on one stem. One business, three groups of people, each tied to it in a different way.
The three leaves at Goldcrust
The professional core
The managers, professionals and skilled technicians the business cannot run without. At Goldcrust: the directors, the 400 bakery managers, the food scientists who develop recipes and the factory engineers.
Permanent and full time, well paid, with benefits and a career. In return they are expected to be committed, take responsibility and work long hours. They hold what the business knows.
The contractual fringe
Outside firms and self-employed specialists who do a job for a fee. At Goldcrust: the delivery firm that runs the vans, the cleaning company, the IT firm and the two freelance designers.
They are paid for the result, a fee for the job, not a wage for their time. The work is contracted out.
The flexible labour force
Part-time, temporary and seasonal workers, hired when demand rises and let go when it falls. At Goldcrust: the part-time counter staff, and 1,000 extra staff for the six weeks before Christmas.
Paid by the hour, with few benefits and little security.
A leaf is a contract, not a job: A baker can sit in any of the three leaves. To place someone, ask how they are tied to the business, not what they do all day.
One job, three leaves
- Core: Goldcrust's master baker, on a permanent contract.
- Flexible labour force: a baker hired for the Christmas weeks.
- Contractual fringe: a self-employed baker paid per wedding cake.
| Professional core | Contractual fringe | Flexible labour force | |
|---|---|---|---|
| Who | Managers, professionals, key technicians | Outside firms, freelance specialists | Part-time, temporary and seasonal staff |
| How they are tied | Permanent employment contract | A contract for one job or service | A short or part-time employment contract |
| How they are paid | High salary and benefits | A fee for the result | An hourly wage, few benefits |
| What Goldcrust expects | Commitment, long hours, responsibility | The job done to the agreed standard | Cover when demand is high |
Handy's argument was that businesses were shrinking the core to a small group of essential people and buying everything else in, from the fringe or the flexible labour force, only when they needed it. A smaller core means fewer managers, which is the same move as removing layers of the hierarchy (delayering) from earlier in this topic.
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Ten years ago almost everyone in a Goldcrust apron was a full-time Goldcrust employee, and the company ran its own vans. Nothing inside the bakeries forced the change. Pressures from outside the business did, and that is why structures change.
Why Goldcrust became a shamrock
Demand rises and falls
December sales are almost double a normal month. Staff hired only for the busy weeks match the wage bill to the sales.
Competition on price
Supermarkets sell cheap bread. Every permanent job carries holiday pay, sick pay and a pension; a fee or an hourly wage costs less.
Specialist skills, now and then
A new app, a Christmas range, a legal check. Buying each one for the job is cheaper than employing the specialist all year.
Faster change
Tastes and technology move quickly, and online platforms make contractors and temporary staff easy to find (the gig economy, 2.1.7). Fewer fixed commitments mean less to undo.
The Christmas sum: 1,000 seasonal staff, 30 hours a week at $15 an hour, for six weeks: 1,000 × 30 × $15 × 6 = $2.7 million.
The same 1,000 people employed all year: 1,000 × 30 × $15 × 52 = $23.4 million.
The flexible labour force saves Goldcrust about $20.7 million a year on the Christmas rush alone.
What the business gains
- Lower fixed costs: the fringe and the flexible staff are paid only when there is work
- Can grow or shrink quickly as demand changes
- Expert skills bought in for the job, without a permanent salary
- Managers can focus on the core business: baking and selling bread
- Fewer people to manage, so a smaller, flatter core
What the business risks
- Less loyalty and commitment from people who may be gone next month
- Quality is harder to control when outsiders do the work
- Know-how leaves with every contractor and seasonal worker
- Time and money spent on contracts, recruiting and training new temporary staff each year
- Low morale in the core if full-time jobs are replaced by temporary ones
| Leaf | What the workers gain | What the workers lose |
|---|---|---|
| Professional core | A secure job, high pay, benefits, training and promotion | Long hours and heavy responsibility; as the core shrinks, more work falls on fewer people |
| Contractual fringe | Independence, a choice of clients, good fees for a scarce skill | No sick pay or holiday pay; income stops when the contract ends |
| Flexible labour force | Hours that fit around study or family; an easy way into work | Low pay, little security, few benefits or training; the first to go when sales fall |
Cheaper is not the same as better: Handy himself pointed out that the flexible labour force will not be as committed as the core. The saving is real; so is the cost in service and morale.
What it cost Goldcrust last December
- The customer survey fell.
- Seasonal staff did not know the products.
- The delivery firm, paid per drop, missed early deliveries to rural bakeries.
- Inside the core, counter staff who saw colleagues replaced by temporary workers felt less secure and less loyal.
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Goldcrust goes to Marovia: Goldcrust's board has decided to build a factory in Seren and open 30 bakeries across Marovia, for $40 million (the plan from 1.6). No single department can do it.
What the job needs
- Property, HR, marketing, finance and the factory engineers.
- Two contract architects who know Marovia's building rules.
So Goldcrust sets up a team for it
- 14 people.
- One project manager.
- A budget.
- Two years.
A project is a piece of work with a clear goal, a budget and an end date. In a project-based organization, work is organized around projects rather than permanent departments. A team is put together for each project from whichever departments and outside specialists it needs, led by a project manager. When the project ends, the team breaks up and its people move on to the next one.
The life of the Marovia team
Formed
The goal (30 bakeries and a factory open), the budget ($40 million) and the deadline (two years) are set. People are chosen for their skills, not their department.
Led by a project manager
Aisha, the project manager, answers for the result. For the project's work, the HR officer, the marketer and the engineer report to her.
Works across departments
The team sits together and solves problems on the spot: the engineer and the architect agree the factory layout in a morning, not by memo.
Disbands
The bakeries open. The team breaks up; some go back to their departments, some join the next project, a gluten-free range, and the architects' contract ends.
| Organized by function | Organized by project | |
|---|---|---|
| The permanent unit | The department: marketing, HR, finance | The project team, for as long as the project lasts |
| Who you answer to | Your department's manager | The project manager, for the project's work |
| What holds the team together | A shared skill | A shared goal and deadline |
| When it ends | It does not | When the goal is reached |
Where you see it: Some businesses are built entirely around projects, because every job they do is one-off: a construction firm, a film studio, a consultancy, a software house, an events company.
Goldcrust mixes both: Goldcrust keeps its departments for the daily baking and runs its one-off work as projects. Where staff answer to both a department manager and a project manager, that is the matrix structure from earlier in this topic.
Why the move? Work is becoming less routine and more one-off, customers want things made for them, and markets change quickly. A team built for the job, then taken apart, fits that better than a department built to last.
Two years on, the Marovia bakeries have opened a month late and slightly over budget. The factory is running. Here is what working as a project gave Goldcrust and its people, and what it cost.
The business gains
- Flexibility: teams are formed and taken apart as the work changes
- The right mix of skills on one problem
- A clear goal, budget and deadline, and one person accountable
- Faster decisions inside the team; new ideas from mixing specialists
The business pays
- People and equipment duplicated across projects
- Projects compete for the best people
- More managers and more coordination
- What the team learned is lost when it breaks up
The workers gain
- Variety, new skills and specialists to learn from
- Ownership of a visible result, and recognition when it works
- A chance to lead a project
The workers lose
- Uncertainty about the next project, and for contractors, the next job
- Two bosses when the department and the project both need them
- Deadline pressure and no settled team
Know-how walks out: When the Marovia team broke up, what it had learned about Marovia's permits left with the two contract architects. Goldcrust's next project abroad will start from scratch unless someone wrote it down or a core member stays on.
The same weakness runs through the shamrock: whatever the fringe knows, the business rents and does not own.
| The pressure | The change that fits | Why |
|---|---|---|
| Demand that rises and falls with the seasons | Shamrock: a flexible labour force | Staff numbers can follow sales |
| Specialist work needed now and then | Shamrock: the contractual fringe | Pay for the result, not a salary |
| A one-off job that needs several departments | A project team | The skills meet around one goal and deadline |
| The same work every day, where quality and loyalty matter | A stable core in departments | Routine work gains from experience and commitment |
Weigh it for the business in front of you: No structure is best in general. It depends on how steady demand is, how scarce the skills are, and how much quality and loyalty matter to the customer.
Goldcrust uses all three at once: departments for the daily baking, a shamrock for its people, and projects for one-off change.
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How this comes up: Handy's ideas come up inside a case about a business that is changing.
One past case: One case described a business that began a lean restructuring into a shamrock organization, replaced loyal full-time workers with temporary contract workers, and contracted specialists as required. The question asked for a human resource challenge facing it.
A set shape: Questions on Handy take a set shape: with reference to his theory, explain one advantage and one disadvantage for the named business, for four marks, two and two.
The four-mark pattern
- Name the advantage, in Handy's words. A flexible labour force is hired only when demand is high, so wage costs follow sales.
- Show it in the case. Goldcrust hires 1,000 seasonal staff for six weeks, not all year, saving about $20.7 million.
- Name the disadvantage. The flexible labour force and the fringe are less committed and less skilled in the business's products than the core.
- Show it in the case. Goldcrust's Christmas customer survey fell, and full-time counter staff felt less secure.
Two traps: The wrong leaf. Freelancers and outside firms paid by the job are the contractual fringe. Part-time and seasonal staff are the flexible labour force. Swapping them shows the model has not been understood.
No case, no second mark. 'It lowers costs' is one mark. 'It pays 1,000 seasonal staff for six weeks instead of fifty-two' is two.
With reference to Charles Handy's shamrock organization, explain one advantage and one disadvantage for Goldcrust of its new structure.
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