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Walgreens Pharmacy

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Heidi Ebert

on 8 December 2013

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Transcript of Walgreens Pharmacy

Developing Employment Opportunities for Developmentally Disabled Individuals

Walgreens’ second human capital innovation is an organizational focus on tapping into disabled members of the workforce. The program goal entailed creating equitable work environments that integrated individuals with and without disabilities.









(Kaletta, Binks, & Robinson, 2012, p. 63)

Kaletta and colleagues (Kaletta, Binks, & Robinson, 2012) note, “Thanks to the vision of a senior Walgreens distribution executive who has an adult son with a disability, the planned construction of a new distribution center (DC) in Anderson, SC, became an ideal opportunity to hire large numbers of qualified new employees with a broad range of disabilities,” (p. 62).

Developing Employment Opportunities for Developmentally Disabled Individuals

Of approximately 600 employees, 35% to 40% self-report disability status. Further, the organization’s average turnover rate is significantly lower among employees with disabilities (Kaletta et al., 2012).

This trend provides a specific financial benefit to Walgreens.

A Global Brand Power

As a global brand power, Walgreens is leading by example as it integrates corporate sustainability within its business model (Dauvergne & Lister, 2012). Specifically, the organization plans to “build what the company believes will be the nation’s first net zero energy retail store in Evanston, Ill, according to a company news release,” (Walgreens goes greener, 2013), and they aim “to achieve LEED Platinum status for the building, which is the most stringent green designation by the U. S. Green Building Council,” (p. 7).

Anticipated benefit is self-generation of electricity and a 40% reduction in usage (p. 7). Walgreens is also lauded for their recent construction of “solar energy panels on rooftops at 136 stores,” (Sweeney, 2012, p. 35).

Integration of Green Technology and Product Offerings

Walgreens’ green movement is consistent with Dauvergne and Lister’s (2012) observation that “Brand companies are not just embracing sustainability to reduce costs. They are also integrating it as a core business strategy to achieve growth – that is, attract new customers, increase sales, and access emerging markets,” (p. 4).

Specifically, Walgreens is aggressively aligning their consumer convenience principle with green technological innovation. As Fried (2012) notes, “Walgreen is taking the biggest leap, installing 800 [vehicle] charging stations at stores across the United States by the end of 2011.

This move will position Walgreens as providing approximately 40% of public charging stations, capitalizing on their organizational principle of convenient locations.

Walgreens Pharmacy
Where it all Began
Charles R. Walgreen, SR.
Located in Chicago’s south side
Four Frames
Lean Manufcturing
Connecting The Past With The Present
Web of inclusion
Mission Statement:

“We believe in the goods we merchandise, in ourselves and in our ability to render satisfaction.

We believe that honest goods can be sold to honest people by honest methods.

We believe in working, not waiting; in laughing, not weeping; in boosting, not knocking; and in the pleasure of selling our products.

We believe that we can get what we go after, and that we are not down and out until we have lost faith in ourselves.

We believe in today and the work we are doing, in tomorrow and the work we hope to do, and in the sure reward the future holds.

We believe in courtesy, in kindness, in generosity, in cheer, in friendship, and in honest competition.

Walgreens is still working to do things this way even in the Internet age”

(www.walgreens.com)

http://goodnightraleigh.com/2013/05/walgreens-drug-store-raleigh-north-carolina/
http://www.lib.niu.edu/2002/ih090213.html

Structural Frame
The chart might be shaped roughly like a pyramid, with a small number of authorities at the top and a much larger number of grunts at the bottom (Bolman & Deal, 2008, p. 43). Walgreens has this structure in their leadership chain, both at the corporate level as well as the store level with store manager, department supervisors, and then employees. The frame is rooted in traditional rational images but goes much deeper to develop versatile and powerful ways to understand social architecture and its consequences (Bolman & Deal, 2008, p. 43). This can be seen in Walgreens history, from the beginning, when Chicago's leading pharmacists - Samuel Rosenfeld, Max Grieben, William G. Valentine and, most importantly, Isaac W. Blood - Walgreen grew increasingly knowledgeable - and increasingly dissatisfied - with what he saw as old-fashioned, complacent methods of running a drugstore (Walgreens, 2013). Isaac W. Blood – Walgreen understood that they needed to be versatile and adapt to what people wanted, so in 1901 he opened his own drugstore. He didn’t just stop there, he added new, bright lights to make the place cheerful as well as greeted each customer personally. However, with the innovations internet age, Walgreens understands that they still have work to do. The Walgreens Creed even states, “Walgreens is still working to do things this way even in the Internet age” (Walgreens, 2013).










Structural Frame
The chart might be shaped roughly like a pyramid, with a small number of authorities at the top and a much larger number of emoyees at the bottom (Bolman & Deal, 2008, p. 43). Walgreens has this structure in their leadership chain, both at the corporate level as well as the store level with store manager, department supervisors, and then employees. The frame is rooted in traditional rational images but goes much deeper to develop versatile and powerful ways to understand social architecture and its consequences (Bolman & Deal, 2008, p. 43). This can be seen in Walgreens history, from the beginning, when Chicago's leading pharmacists - Samuel Rosenfeld, Max Grieben, William G. Valentine and, most importantly, Isaac W. Blood - Walgreen grew increasingly knowledgeable - and increasingly dissatisfied - with what he saw as old-fashioned, complacent methods of running a drugstore (Walgreens, 2013). Isaac W. Blood – Walgreen understood that they needed to be versatile and adapt to what people wanted, so in 1901 he opened his own drugstore. He didn’t just stop there, he added new, bright lights to make the place cheerful as well as greeted each customer personally. However, with the innovations internet age, Walgreens understands that they still have work to do. The Walgreens Creed even states, “Walgreens is still working to do things this way even in the Internet age” (Walgreens, 2013).

When a current employee was asked about the organizational structure of Walgreens, his response was, "Walgreens is a top down company. (The) Organizational chart is Board of Directors, CEP, Preseident, VP, etc… Decisions are made at a corporate level and the responsibility at local level is to execute and support company initiatives and directives. " (G. Castro, personal communication, November 30, 2013)

Walgreen’s owed its early success to flexibility and ingenuity in distinguishing itself from competitors. Instead of following a generic model of a drugstore, Walgreen created a niche for his store by expanding the merchandising aspect of his stores (Our Past, p.2). This diversified his business, but was expertly managed by his flexible management style. Walgreen also utilized webs by identifying and promoting experienced, motivated and ingenious managers that were “smarter than (he) was” to maintain consistency over his growing business (Our Story, p.3). In Web of Inclusion (1995) Sally Helgesen discusses the importance of flexible, innovative models (p.23). The story of Walgreens also echoes the trials of Intel while developing the 386 chip. While Intel had to develop new ways to market to customers to generate a customer base (1995, p.63), Walgreen organized his business around this concept by offering relevant merchandise and high-quality customer service right off the bat. (Our Story, p.2).
The second store: in 1910 Walgreens had 2 stores, with the second store he was challenged to create new products and bring in even more customers. He brought in some of Chicago’s most beautiful soda fountains which brought in a high profit for the warm months but sales would die out in the cold months, so he successfully started adding sandwiches, soups, and desserts homemade by his wife Myrtle Walgreen, increasing his customer loyalty even more by offering good food for good prices.

More stores: in 1913 Walgreen had 4 stores all on Chicago’s south side. 1915 he had 5 stores, 1916 he opened 4 more stores, and by 1919 there were 20. He boasted that he had one of his greatest talents was his ability to “recognize, hire, and promote people that he considered smarter than he was.” (Walgreens.com) in 1929 he had 525 stores in Chicago, New York City Florida and other major markets
The instant classic: in 1922 Coulson improved upon the Malted Milk drink by adding Ice-cream, creating the first malted milkshake. It was so popular that people would wait in long lines, to try one.

Political Frame
View from the political frame, politics is the realistic process of making decisions and allocating resources in a context of scarcity and divergent interests (Bolman & Deal, 2008, p. 189-190). Decisions are constantly made at Walgreens, most of those impacting shareholders, employees and customers so politics are always going to play a role. Shareholders and employees want decisions that are best for them or benefit them the most. Customers always want lower prices or better goods, but they have the choice to shop somewhere else even if Walgreens is the most convenient. Another decision that shaped the culture at Walgreens is their advancement in the Internet Age. They have added value for customers by using the internet to automate the prescription filling process among other things. This new feature is in hopes of adding more customers which in turn help the stakeholders get what they want.

Human Resource Frame
The human resource frame centers on what organizations and people do to and for one another (Bolman & Deal, 2008, p. 117). In April 2009, AARP and Walgreens teamed up with the launch of a national free health screening tour in over 3,000 communities (Walgreens, 2013). Walgreens also has the Flu Shot Program, Walgreens Charity Choice Program, and the Walgreens and the Midtown Educational Foundation (Walgreens, 2013). All of these programs show what Walgreens does for the communities they are in either through donations or their employees volunteering. However, it’s not just the community that Walgreens cares about, it always takes care of their employees with programs like Disability Inclusion Raises Productivity, Diversity Donation to Pharmacy Schools and Walgreens Benefit Fund (Walgreens, 2013). Walgreens also has many eco-friendly programs so they can take care of the environment.

Symbolic Frame
Symbols carry powerful intellectual and emotional messages; they speak to both the mind and the heart (Bolman & Deal, 2008, p. 247). A subtle symbol that Walgreens uses is that most of their stores are on the corner. This is either part of their business plan to attract the optimal number of customers or ease of location. It easily plays into their logo: “at the corner of Happy and Healthy”. The symbolic frame focuses on how humans make sense of the chaotic, ambiguous world in which they live (Bolman & Deal, 2008, p. 247). Walgreens uses their logo for customers to easily associate with the store. They display it everywhere, from magazine ads to television commercials. This placement constantly puts their company in front of the consumer.

Reason: After an accident at a shoe factor, Walgreen was unable to compete in sports, so he started working at a drugstore and felt that the conditions at the store and of the medicine were sub-par for the price that was being paid.

Education: In 1893 Walgreen moved to Chicago determined not to use any of his family money; he was penniless as he started working and learning from several leading pharmacists: Samuel Rosenfeld, Max Grieben, William C. Valentine and Isaac W. Blood. He became a registered pharmacist in 1897.

First Store: In 1901 he bought his first store with a loan for $6,000, located is Barrett’s Hotel at Cottage Grove and Bowen on Chicago’s south side.

Making Changes: He changed out the dim lighting for brighter more welcoming lights, as well as widening the isles. Each customer was greeted personally or by his associate Arthur C Thorsen, and he added more merchandise like pots and pans. He made sure all of his items were of the highest quality for the lowest price possible.

Walgreens was publicly traded in 1927, before The Great Depression hit. By1930 with well over 500 stores, they persevered during the great depression, employing thousands during the hard economic times.
Promoting the company: 1931 Walgreen spent $75,000 to promote it’s company in the newspapers as well as entering into broadcast advertising.
Corporate missions, Major philanthropy; donated $550,000 to establish Charles R. Walgreen Foundation for the Study of American institutions. With eh University of Chicago

After spending a life time grooming his son and the management team, Charles R Walgreen died in 1939.

As of November, 2013

Number of drugstores- 8,131 in 50 states, the District of Columbia and Puerto Rico
Number of health and Wellness centers- 700 different work sites
Full time employees- 173,000

End of fiscal Year Aug 31, 2013
Revenue 72.22 B
Revenue per share 76.34
Profit Margin 3.39%
Gross Profit 21.12 B



http://www.walgreens.com/marketing/about/default.jsp
http://finance.yahoo.com/q/pr?s=WAG+Profile
http://finance.yahoo.com/q/ks?s=MW+Key+Statistics
http://finance.yahoo.com/q/is?s=WAG+Income+Statement&annual

There is a very large gap between the experience of Walgreens transformation by leadership and store employees. As executive leadership speaks of freeing their staff with less control, front line workers are complaining that their customer interactions are scripted and they are less free to operate outside strict parameters of engagement. While shareholder meetings are filled with projections of a bright future, many long term store employees fear they may have no future. Understanding why this gap exists and how to close it could be instrumental in securing Walgreens’ future.
In his book Images of Organization (2006), Gareth Morgan illustrates how using metaphor as a means of expanding our perspective of an organization allows organizations to gain insights into how they are structured and how that structure functions. Using a variety of metaphors they can develop a series of perspectives, or “storylines” as Morgan calls them, just as a kaleidoscope reorganizes one’s visual perception of the same materials with each turn of the tube. As they analyze what they observe through these metaphoric lenses they will often find that a few will resonate more deeply than others, prompting further investigation (p. 351).
Collins (2001) notes Walgreens illustrates the epitome of his hedgehog concept. In a 25 year span (1975-2000), Walgreens consistently produced stock returns “exceeding the market by over 15 times” (p. 92). Walgreens’ success strategy is brilliant in its sheer simplicity – “…the best, most convenient drugstores, with high profit per customer visit,” (p. 92).

Walgreens tenaciously enacted their plan.

The strategic plan provided a clear framework that provided the parameters for significant innovation and market adaptability. For example, Walgreens tailored the convenient locations construct to urban areas through location saturation. This geographical clustering supported and extended the convenient locations mantra. Another interpretation and convenience enactment is the introduction of drive-thru pharmacy service (Collins, 2001).

Continued organizational innovation is evidenced across two categories:

• Human Capital Development

• Leveraging Global Environmental Issues for Business Success

Walgreens: Continued innovation propelled through simplicity
Human Capital Development

Walgreens demonstrates human capital development innovation in two ways:

• Employee Performance Process and Metric Refinement

• Developing Employment Opportunities for Developmentally Disabled Individuals

Leveraging Global Environmental Issues
Walgreens is leveraging global environmental issues to achieve business goals while remaining consistent with their hedgehog philosophy. Dauvergne and Lister (2012) suggest, “The business model of mass retail based on global outsourcing and hyper-consumerism is viewed as simply unsustainable,” (p. 9). Walgreens appears to recognize this future shift and is adapting its consumer connection as a (1) global brand power; and (2) integration of green technology and product offerings.
As a global brand power, Walgreens is leading by example as it integrates corporate sustainability within its business model (Dauvergne & Lister, 2012). Specifically, the organization plans to “build what the company believes will be the nation’s first net zero energy retail store in Evanston, Ill, according to a company news release,” (Walgreens goes greener, 2013), and they aim “to achieve LEED Platinum status for the building, which is the most stringent green designation by the U. S. Green Building Council,” (p. 7). Anticipated benefit is self-generation of electricity and a 40% reduction in usage (p. 7). Walgreens is also lauded for their recent construction of “solar energy panels on rooftops at 136 stores,” (Sweeney, 2012, p. 35).
Walgreens’ green movement is consistent with Dauvergne and Lister’s (2012) observation that “Brand companies are not just embracing sustainability to reduce costs. They are also integrating it as a core business strategy to achieve growth – that is, attract new customers, increase sales, and access emerging markets,” (p. 4). Specifically, Walgreens is aggressively aligning their consumer convenience principle with green technological innovation. As Fried (2012) notes, “Walgreen is taking the biggest leap, installing 800 [vehicle] charging stations at stores across the United States by the end of 2011. This move will position Walgreens as providing approximately 40% of public charging stations, capitalizing on their organizational principle of convenient locations.

Summary
Walgreens continues to tenaciously pursue its hedgehog business principle of convenient locations, best drugstore, and increased profit per customer visit. The organizational innovation is evidenced in market adaptive strategies that facilitate mission consistency while expanding market share. Innovation is further evidenced in their fierce exploration of new organizational territory, challenging the status quo of organizational employee practices through continuous process and performance improvement in managerial performance reviews, and creating integrated work environments for disabled individuals. This innovative precedent forges new paths for other organizations to follow.

Walgreens has been taking radical steps to re-brand themselves from a drugstore chain to a wellness services provider and center of community. In the course of that process they have alienated a large portion of their workforce, creating a work environment that for some is highly toxic. At the same time, the statements of their executive leadership indicate that they believe they are doing just the opposite. If their leadership team doesn’t alter their perspective of their organization, they risk facing a severe drop in employee performance and customer satisfaction as a result.

One way that Walgreens’ leadership might gain a better understanding of their potential labor problems is by applying Morgan’s concepts of organizational metaphor. If they are able to perceive the ways in which they function more like a manufacturer than a retailer then they might understand ways in which they have dehumanized their workforce, intentionally or not. By aligning their treatment of workers with their overall identity as a retailer, or even as a service provider, they would give themselves the opportunity to learn from other organizations such as Zappos or Google who have gained top employee performance and efficiency through a more personal approach (Bolman & Deal, 2013, pp. 59-60).


References

Collins, J. (2001). Good to Great. New York, NY: Harper Collins Publishers.

Dauvergne, P., & Lister, J. (2012). Big brand sustainability: Governance prospects and environmental limits. Global Environmental Change, 22(1), 36-45.

Fried, R. (2012, January/February). Stars align for advanced vehicle infrastructure. Solar Today, 36-37.

King, J. F. (2008). How managers think: Why the mediated model makes sense. Industrial and Organizational Psychology, 1, 180-182.

Kaletta, J. P., Binks, D. J., & Robinson, R. (2012). Creating an inclusive workplace: Integrating employees with disabilities into a distribution center environment. Professional Safety, 62-71.

Sweeney, P. (2012, April). Dramatic changes spur green activities. Financial Executive, 32-36.

Walgreens goes greener. (2013). Journal of Property Management, 78(5), 7.

Lean Enterprise Institute, 2009 – Retrieved from http://www.lean.org/whatslean/history.cfm

Morgan, G. (2006). Images of Organization
Thousand Oaks; Sage Publications.

Bloomberg Businessweek. (2012, December 6). Financial Statements For Walgreen Co (WAG). Retrieved from Bloomberg Businessweek
Web site: http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=WAG

Bolman, L. G., & Deal, T. E. (2013). Reframing Organizations. San Francisco: Jossey-Bass.

Business Wire. (2012, January 11). Shareholders Hear Strategy For Growth And Value Creation During Walgreens 2012 Annual Meeting.
Retrieved from The Street Web site: http://www.thestreet.com/story/11373497/5/shareholders-hear-strategy-for-growth-and-value-creation-during-walgreens-2012-annual-meeting.html

Walgreens Reviews. Retrieved December 6, 2013 from glassdoor Web site: http://www.glassdoor.com/Reviews
Walgreens-Reviews-E716.htm

Retrieved December 1, 2013 from http://www.walgreens.com/marketing/about/default.jsp

Retrieved December 1, 2013 from: http://finance.yahoo.com/q/pr?s=WAG+Profile

Retrieved December 1, 2013 from http://finance.yahoo.com/q/ks?s=MW+Key+Statistics

Retrieved December 1, 2013 from http://finance.yahoo.com/q/is?s=WAG+Income+Statement&annual

Employee Performance Process and Metric Refinement

Walgreens’ approach to refining human resource (HR) processes. Specific HR goals include:

• develop the Walgreens talent pool
• ensure performance feedback
• administer merit pay
• bolster the defensibility of our HR transactions
(King, 2008, p. 180)

As a retail outlet, specific objective performance measures are routinely collected for store locations and referenced by managerial and executive leadership (e.g., sales; inventory; customer feedback). One drawback cited is the perceived disconnect between strong ratings on specific objective performance indicators and individual managers’ performance appraisals markedly lower.


Employee Performance Process and Metric Refinement

Walgreens HR dichotomized performance evaluation to encompass “hard job specific performance goals and soft development-focused competencies,” (p. 181). Individual performance raters may tailor performance assessment reporting tailored to specific performance related goals for the individual store managers.

This approach reflects Walgreens’ skill development focus through an organizational continuous process and performance improvement approach.

Leveraging Global Environmental Issues for Business Success

Dauvergne and Lister (2012) suggest, “The business model of mass retail based on global outsourcing and hyper-consumerism is viewed as simply unsustainable,” (p. 9). Walgreens appears to recognize this future shift and is adapting its consumer connection as:

• A Global Brand Power

• Integration of Green Technology and Product Offerings

Perpetually Innovating to Great
Walgreens continues to tenaciously pursue its hedgehog business principle of convenient locations, best drugstore, and increased profit per customer visit (Collins, 2001). The organizational innovation is evidenced in market adaptive strategies that facilitate mission consistency while expanding marketshare.

Innovation is further evidenced in:

• their fierce exploration of new organizational territory

• challenging the status quo of organizational employee practices through continuous process and performance improvement in managerial performance reviews

• creating integrated work environments for disabled individuals

This innovative precedent forges new paths for other organizations to follow.

Perpetually Innovating to Great
Walgreens continues to tenaciously pursue its hedgehog business principle of convenient locations, best drugstore, and increased profit per customer visit (Collins, 2001). The organizational innovation is evidenced in market adaptive strategies that facilitate mission consistency while expanding market share.

Innovation is further evidenced in:

• their fierce exploration of new organizational territory

• challenging the status quo of organizational employee practices through continuous process and performance improvement in managerial performance reviews

• creating integrated work environments for disabled individuals

This innovative precedent forges new paths for other organizations to follow.

Since 2007, Walgreens has undergone a strategic transformation from a growth strategy based almost exclusively on building new stores to increased emphasis on maximising store productivity. Based on a review of notes from Walgreens’ annual shareholders meetings since 2005, key aspects of this transformation include:
- Bringing in executives from other industries, “promoting a culture of new thinking, innovation and business momentum”
- Implementation of Customer Centric Retailing (CCR) – a product of retail CRM solutions provider Raymark
- Reinventing cost structure “through continuous improvement and innovation”
- Transforming the Walgreens traditional drug store to a “retail health and daily living store”
- Improving customer experience “through enhanced employee engagement”
(Business Wire, 2012) (Washington, 2010)

The financial results of this transformation are undeniable as Walgreens continues to grow and maintain a gross profit of over $20billion (over $2billion net earnings) each of the last three years – in the midst of a global recession.

(Bloomberg Businessweek, 2012)

Sasha, a group interviewee, whose mother and sister-in-law have worked at Walgreens for a combined 33 years
Sasha’s family aren’t the only employees who have a negative experience from the changes in corporate culture at Walgreens. According to employee reviews on glassdoor.com, while the company receives an almost 3 of 5 star rating, only 46% would recommend working there to a friend and only 41% give CEO Greg Wasson a favorable rating (glassdoor.com, 2012).

For an idea of some of their complaints, an anonymous Assistant Manager from Jacksonville, FL posted the following review:
“I have been working at Walgreens full-time for more than 8 years

Pros – The new paid time off system is good, the training is good, employee discount is good. I refuse to be one of the bitter jaded employees so i have decided to move on. I love my employees and wish them the best.

Cons – I was not fired or anything that dramatic. I disagree with new policy so i have left the company. No hard feelings. The changes they have made to this company have been devastating. They are getting rid of the assistant manager position and replacing it with an SFL (shift lead). This gives the company an opportunity to save money on MGT level. The down side is managers like me that had worked and clawed their way up to $19.00 an hour now make 14.50 and are not eligible for raise...ever. We are bumped down to the new capped pay, but all of the same duties apply.. Now if you are just starting out in this position ($11) it is great. Shift lead is much easier to get promoted to than the management was. If you are starting after the change it will be easier on you, no lengthy stressful applying and interviewing with the district office.
This reviewer’s comments are in stark contrast to the perspective that Walgreens’ executives have on their approach to changes in the working environment for their store staff:
“Change is never easy, and when you’re a 112-year-old enterprise like Walgreen Company (“Walgreens”), it’s even less so…As our strategy evolved and our focus changed from opening stores to delivering an exceptional customer experience, we recognized that not only was the command-and-control approach outdated, but it also prevented us from getting the best from our people. We were missing the richness of empowering them to come up with solutions on their own.”
- Mark Wagner (President of Operations and Community Management) and Wayne Orvis (Vice President of Customer and Employee Initiatives), August 27, 2013, (Wagner & Orvis, 2013)
Additional employee complaints include:
“Now we have fewer and fewer motivated and educated managers. For the salaried personnel that means more stress and longer work days” (glassdoor.com, 2012).
“The store managers…are gone the majority of the time leaving the SFL to do all the work and carry most of the responsibilities except, of course you don’t get paid for it. The stores are cut back to minimal personnel but you have to find a way to get everything done” (glassdoor.com, 2012).
“If focusing on extraordinary customer care, then upper management should be focusing on extraordinary employee care. Employees are not taken care of” (glassdoor.com, 2012).
“My mom has a short term memory disability. Once,she was sent home from work, without pay, because she wore gray pants to work instead of black by mistake - they wouldn’t let her change and come back to work, she just lost that money. Now she only owns black pants to make sure she doesn’t accidentally make that mistake again.
When she started she was excited because they hired her in spite of her disability and the ulcertive colitis that makes her uninsurable. Now, she can’t wait to leave as soon as she qualifies for Medicare.” – excerpt of the interview with Sasha

Walgreens 2005 annual report was titled “We take care of people” and it contained the following comments from their top executives:
“We are often asked how we achieve the consistent success reflected in results for 2005, our 31st consecutive year of record sales and earnings. Our answer never wavers. It’s the talent, tenaciousness and determination of our people, something that passes from generation to generation of Walgreen employees and something not easily replicated by competitors” (Walgreens, 2009).
In 2013, a new pharmacy technician made the following comment in their glassdoor.com review:
“Not sure if it's done the same way at every store but the training I received was very poor. Needs much improvement. I was basically just thrown in after completing the practice modules and expected to know how to do things at 100% proficiency [sic]. And when I obviously had to ask questions, I was made to feel bad as to why I don't know how to do things” (glassdoor.com, 2012).
It seems that there is more to the Walgreens transformation than just a change in business strategy.
Clearly, there is a very large gap between the experience of Walgreens’ transformation between leadership and store employees. As executive leadership speaks of freeing their staff with less control, front line workers are complaining that their customer interactions are scripted and they are less free to operate outside strict parameters of engagement. While shareholder meetings are filled with projections of a bright future, many long term store employees fear they may have no future. Understanding why this gap exists and how to close it could be instrumental in securing Walgreens’ future.

In his book Images of Organization (2006), Gareth Morgan illustrates how using metaphor as a means of expanding our perspective allows organizations to gain insights into how they are structured and how that structure functions. Using a variety of metaphors they can develop a series of perspectives, or “storylines” as Morgan calls them, just as a kaleidoscope reorganizes one’s visual perception of the same materials with each turn of the tube. As they analyze what they observe through these metaphoric lenses they will often find that a few will resonate more deeply than others, prompting further investigation (p. 351).
In reviewing the research accumulated on Walgreens the authors found that the gap between the worker and leadership experience of their transformation makes sense when the organization is viewed through Morgan’s mechanization metaphor. From this point of view, organizations are viewed as “rational systems that operate in as efficient a manner as possible” (2006, p.22). The end result is the development of “office factories” (p. 24) in which the most productive workers are those most able to perform highly prescribed duties consistently without wasting time thinking about what they are doing (p. 25).

If we approach Walgreens as a manufacturer, rather than a retailer, their transformation reveals the advancement of several principles of a concept that revolutionized the auto industry starting in the 1940’s - lean manufacturing (Lean Enterprise institute, 2009).
Lean manufacturing was developed by Toyota in the 1930’s and 40’s to improve on what they perceived as problems with the assembly line process created by Henry Ford. The problem was that while Ford’s system was able to produce vehicles with extreme efficiency it was unable to handle the growing demand for variety.
Walgreens spent decades mastering the process of manufacturing stores that were basically identical. Even through their process of change, the concept that the store is their product has remained consistent. You can obtain what the store provides in a wider variety of ways now, but the brick and mortar structures and everything they contain, including the people who work in them, are parts in the machines Walgreens has been making for over 100 years.
The Toyota team transformed their operation by creating methods to reduce waste and improve responsiveness to customer demand (Mindtools.com, 2013). Walgreens has taken a similar path in its transformation. Examples of Lean practices and how Walgreens has implemented similar philosophies and programs include:

• Just in Time – a manufacturing method which emphasizes purchasing materials and building stock only when needed for immediate delivery. Production batch sizes are reduced to maximize product flow and increase the capacity for quality assurance.
o The CCR program that Walgreens has implemented emphasizes simplification of stock choices, changing the way stores fill and maintain their shelves and reducing wasted stock
o According to employee reviews, stores are now staffed as leanly as possible with many people complaining of reduced shifts and lower pay as the result
o In August, Walgreens changed their health care benefits from a more traditional insurance plan to an allowance to spend on a private insurance exchange. The end result is more stable insurance costs while employees face either higher premiums, higher copays, or higher deductibles, depending on which provider they choose (Lubhy, 2013).

• Zero Defects – this QC system requires a corporate commitment to treating all mistakes as unacceptable and motivating workers to aim for perfection while fixing mistakes immediately (Mindtools.com, 2013).
o Walgreens employees are sent home without pay for uniform violations, straying from scripted customer interactions, and other departures from procedure (glassdoor.com, 2012)
o The message is clear – imperfection is not tolerated and “poor quality tools” will not be kept around

• Single Minute Exchange of Die (SMED) and 5S Philosophy – These systems relate to how rapidly tools can be changed to produce different parts (SMED), making Just In Time goals more feasible; and reducing clutter in the workspace, eliminating anything that is not absolutely essential (5S) to make tasks easier to perform and consistency easier to maintain (Mindtools.com, 2013).
o By eliminating the position of Assistant Manager, focusing their management hiring efforts on college graduates with no experience, and increasing store employee turnover, Walgreens has created a workforce designed to operate the retail system they have implemented – easy to replace, able to perform a wide variety of prescribed tasks, motivated to leave as they gain experience that would make them more costly to employ
o Walgreens has changed their dress policy to standard uniforms rather than their traditional vest over street clothes. New uniforms mean that workers will appear consistent from store to store and the heavily scripted customer interactions serve to standardize the customer experience, much like a McDonald’s hamburger is intended to taste the same in any location

Morgan warns that those organizations which structure themselves according to this “office factory” perspective often engage in cycles of struggle and reengineering due to the simple fact that people are not machines (2006, p.22). Just two years before Walgreens changed their core strategy, their CEO wrote that the primary thing that set them apart from their competitors was the experience and dedication of their employees, now those employees are rarely mentioned as a group – only a few “stars” grace the pages of the annual report. Now those same workers are either gone or unhappy and those that remain could potentially demand that Walgreens reflect another part of the auto industry – unionized labor.
Corporates new mandatory wording is ridiculous...Be Well? Customers you have known for years will now be scripted. And, have you ever told a hypochondriac or a terminal patient to be well....they dont take it so great. This is what you MUST say at the end of every customer interaction, or you will eventually lose your job due to noncompliance. This is not what you will get fired for, We will find something else solid enough that you cannot collect unemployment. Or we will just force you to quit.

As with any retail there is copious amounts of double work and micro management, but this is just the job.

Just a side note...if you have a spouse with decent insurance benefits, use theirs. Walgreens does not offer a good prescription plan and the insurance is all but useless for hospital care.

Advice to Senior Management – Stop killing all of Charles Walgreen's core values. Building relationships with customers is important, don't script them. Give your Mangers more leeway with their stores, they know what sells better than you. Don't look down on your lower employees, you don't have a company without them. Don't waste money on different styles of ad tags and uniform ideas so often, customers like continuity and routine. You have a very extensive elderly clientele, they really don't like change. Your long term employees are evaporating...are you really satisfied replacing them with short term people that could care less?”
(glassdoor.com, 2012)
4. What do you perceive as the single most influential principle that drives actions from Walgreens leadership?
a. My opinion only – to drive value for shareholders and analysts. Although the company will publicly portray that our goal is to better serve the customer through convenient locations and expanded services, ultimately the drive is to meet stock valuation. This has become far more apparent since the stock market crumble of 2008. Stiffer controls and cutbacks have been done over the last few years to meet the demands of investors. Ultimately, this is was is creating long-term sustainability for the company.


4. What do you perceive as the single most influential principle that drives actions from Walgreens leadership?
a. My opinion only – to drive value for shareholders and analysts. Although the company will publicly portray that our goal is to better serve the customer through convenient locations and expanded services, ultimately the drive is to meet stock valuation. This has become far more apparent since the stock market crumble of 2008. Stiffer controls and cutbacks have been done over the last few years to meet the demands of investors. Ultimately, this is was is creating long-term sustainability for the company.

During an interview with a current associate of Walgreens, we asked 'what do you perceive as the single most influential principle that drives actions from Walgreens leadership? '

His answer was, "My opinion only – to drive value for shareholders and analysts. Although the company will publicly portray that our goal is to better serve the customer through convenient locations and expanded services, ultimately the drive is to meet stock valuation. This has become far more apparent since the stock market crumble of 2008. Stiffer controls and cutbacks have been done over the last few years to meet the demands of investors. Ultimately, this is was is creating long-term sustainability for the company. " (G. Castro, personal communication, November 30, 2013)

When Gary Castro, our current Walgreen associate interviewee, was asked 'How does leadership filter down through the organization?' He responded...

"There are multiple tools available for managers to use to cascade the information down to the necessary employees. The goal is to be able to streamline the communications process so the information moves through all necessary segments of the company in a timely manner. Conference call, emails, online videos, training tools etc… all are available depending on the needs of the task."
(G. Castro, personal communication, November 30, 2013)

The following exemplifies this philosophy:

http:/www.youtube.om/watch?v=7tW-dkBc95I
Mission statement:

“We believe in the goods we merchandise, in ourselves and in our ability to render satisfaction.
We believe that honest goods can be sold to honest people by honest methods.
We believe in working, not waiting; in laughing, not weeping; in boosting, not knocking; and in the pleasure of selling our products.
We believe that we can get what we go after, and that we are not down and out until we have lost faith in ourselves.
We believe in today and the work we are doing, in tomorrow and the work we hope to do, and in the sure reward the future holds.
We believe in courtesy, in kindness, in generosity, in cheer, in friendship, and in honest competition.
Walgreens is still working to do things this way even in the Internet age”

(Walgreens.com).
By
Christopher Ashcraft
Heidi Ebert
Kelli Fellows
Edward Keitt-Pride
Patrick Lawson
Charles Saunders
Full transcript