ORGL 505 Group B: Walgreens Project

1. STAYING GREAT
Organizational Theory: Fall 2013 – Group B
Gonzaga University
ORGL 505 B2
December 6, 2013
Matthew Alexander
Gerald Black
Robert Gedeborg
Katherine Giles
Daniel Seydler
John Wilke
Karin Yonkoski

2. The Walgreens Mission
To be the most trusted, convenient multichannel provider and
advisor of innovative pharmacy, health and wellness solutions,
and consumer goods and services in communities across
America. A destination where health and happiness come
together to help people get well, stay well and live well (1)
(2)

3. The Walgreens Legends
Charles Walgreen Sr. – one of his greatest talents, the
ability to recognize, hire and promote people he
considered smarter than himself. His early
managers and executives would guide Walgreens
into national prominence for decades.(3)
In 1939, Charles Walgreen died, but always the
planner and visionary, he left his company in
superb condition and prepared for the future.
Alongside a strong management team, he
groomed his son, Charles Walgreen Jr., to lead into
the next decade and beyond.(4)

4. The
Culture – Corporate
• Be One – I know what Walgreens must deliver, and I align my daily actions with
others to make it happen.
• Be Real – I am open, honest and respectful in my words and actions every day.
• Be Bold – I demonstrate courage in everything I do to create the future of
Walgreens.
• Build Trust – I listen, seek to understand and always assume positive intent.
• Love Customers – I engage with customers and passionately innovate to
exceed their needs.
• Own It – I constantly ask, “What else can I do to achieve our results?” and
refuse
to blame others.
• Live It – I help people get, stay and live well. (5)

5. The
Culture – Customers
• Walgreens strives to make healthy living part of their
customer’s and employee’s lives. They emphasize customer
service and unity to their employees to help drive their
business.
• Convenience is also a big part of their culture. They build
stores in convenient locations to serve any at a moments
need.
– Walgreens developed the Intercom system which ties all Walgreens
across the country together. This ensures customer can pick up Rx’s no
matter where they are.
– After developing their internet services they pioneered drive-thru
pharmacies to make pick-ups easier and more convenient for their
customers.

6. The
Culture – Employees
• Employee engagement is highly valued—to drive revenue and
decrease attrition among employees.
– “To help drive employee engagement, Walgreens developed an
internal quantitative and qualitative program to help discover new
ways to drive greater engagement and better understand what is most
important to its associates” (Alexander, 2012, p.45).
• Associates have opportunities to grow and develop into store
or pharmacy managers.

7. The
Structure – 8,000 Stores
Executive
Vice
President
Responsible for overseeing the operations of all the Walgreens stores
Three Senior Vice Presidents who oversee stores in specific regions and
cover sales, profitability, salary, expense controls, investment, employee
morale and customer service, including service in the pharmacy
department.
Senior Vice
President
Operations
Vice
President
16 Operations Vice Presidents, each of whom oversees 200-250
individual stores and seven to nine district managers.
District
Manager
Each District Manager has responsibility for roughly 25 Stores
Store
Manager
Manages both the retail and pharmacy sides of an individual store.
Pharmacy
Manager
Reports to the Store Manager as well as a corresponding Pharmacy
District manager
(Tosh, 2000, p.153)

8. The
Structure – The Numbers
• At the the end of Fiscal Year 2013 (August 31), Walgreens had
the following figures:
–Sales & Earnings: $72.2 Billion with $2.45 Billion
in Earnings (15.2% increase)
– Earnings per Share: $2.56 (5.7% increase)
– Store Growth: 198 new stores, 152 Acquisitions
- totaling: 8,582 Locations
– Employee Count: 240,000
– Total Prescriptions Filled: 821 million
– Customers Served Daily : 6.3 million
• A Typical Store:
Total Size: 14,530 square feet
Sales Area: 11,261 square feet
Items for sale: 18,000
Employees: 20-25
Annual Sales: $8.5 million (6)
6.3 Million

9. The Walgreens Structure – Old vs. New
(Eder , 2012)

10. The
Structure – Old vs. New
Assumption: Organizations need restructuring to remediate
problems and performance gaps.
•
•
•
•
RESTRUCTURING ACTION
Free up leader’s time and give them
better support
Elevated decision rights so they
were made in the proper place
Change Motivations and rewards to
place actions on desired behaviors
Develop networks to drive change
PROBLEMS AND GAPS
• Problems and Performance gaps
• More competition from online retailers like
Amazon and Google
• More grocers offering Pharmaceuticals
• Mail delivered prescriptions
• Changes in healthcare (Affordable Care Act)
• Bad Economy
In their desire to be an “Experience Provider”, Walgreens changed from a command
and control structure of opening stores, to improving the customer experience. (7)

11. At the corner of:
Diversity and Results

12. The Walgreens Human Resources –
Social Responsibility
Community
• Supporting the community through services, resources and outreach
Diversity
• Valuing differences and serving a diverse America
Disability Inclusion
• Approaching technology, efficiency and opportunity in a new way
Environmental Sustainability
• Advancing Walgreens’ sustainability efforts through innovation, efficiency and technology
Supplier Diversity
• Reflecting neighborhood diversity through products found at Walgreens stores.

13. The Walgreens Human Resources –
Diversity Inclusion
Kosik, 2011

14. The Walgreens Human Resources –
Diversity and Results
Human Resources Frame:
Walgreens Disability Inclusion
• Organizations exist to serve
human needs
• People and organizations need
each other.
• The individual and the system
need to complement each other
• Individuals find meaningful and
satisfying work, and organizations
get the talent and energy they
need to succeed. (Bolman & Deal,
2008, p. 122)
• 35-40% of staff at distribution
centers
• Workers with disabilities are
equally as productive as those
without disabilities.
• Workers with disabilities have
lower turnover rates
• Employees with disabilities
have fewer injuries at work
“A welcome surprise has been that the process of ensuring that the needs of
workers with dis- abilities are met has resulted in management, equipment
and work-culture improvements that benefit the entire workforce “ (8)

15. The
Politics – Allocating Resources
• Products allocated based on Local Store Community
– Size (Headley, L., personal interview, Nov 20, 2013)
• Item allocations based on size of customer base
– Customer Habits (Alexander, 2010, pp. 11 & 14)
• Puerto Rico has large beauty product selection
• A New York City store has more groceries because Walgreens is also the
local supermarket
• Another New York City store has fresh sushi and high end wine and spirits
because their customers are downtown professionals
– Local Merchandise (Alexander, 2010, p. 11)
• Northern California and Washington stores stock a larger selection of wine
from their region
• Products sometimes move between stores based on customer
needs

16. The Walgreens Politics – Power
• Pharmacy has more power than Retail (Retail Chain Pharmacy
Yearbook Walgreens, 2010, p. 18)
– Pharmacy responsible for 65% of revenue
– Retail responsible for 35% of revenue
• Retail employees are cross trained to help the Pharmacy
(Headley, L., personal interview, Nov 20, 2013)
– When the pharmacy needs assistance, retail employees leave their
jobs at the front of the store to help.
– The store manager is certified as a pharmacy technician
• Clear lines of authority with a hierarchy in each store, district,
region, and division (Headley, L., personal interview, Nov 20,
2013)

17. The
Politics – Conflict
• Employees are encouraged to address conflict with direct
supervisor.
– Going above an employee’s supervisor is a faux pas
• Conflicts exist between retail and pharmacy employees.
– Retail employees are expected to complete front end tasks, even after
time spent assisting in the pharmacy.
• Stores compete in the same geography.
• Competition exists between store manager and pharmacy
manager positions.
– Managers want to be in the top position, in their home store.
(Headley, L., personal interview, Nov 20, 2013)

18. Metaphor:
as a Brain

19. Like a brain,
makes strategic
decisions by filtering information
• Two recent examples of strategic
decisions offer a unique perspective
into Walgreens operating as a brain:
1) In 2010, Walgreens opened its
first Wellness Experience stores in
the Chicago suburbs.
2) In 2012, Walgreens merged
with Alliance Boots to create the
first global pharmacy-led health
and well-being enterprise. (9)
“Organizations are information systems. They are communication systems.
And they are decision-making systems. We can thus go a long way toward
understanding them as information processing brains!“ (Morgan, 2006, p.76)
19

20. The
Wellness Experience
Walgreens transforms the corner drugstore!
• In 2010, Walgreens began working with IDEO, a consulting firm, to help rethink,
reframe, and evolve the meaning of the 21st century community pharmacy.
• IDEO conducted interviews with consumers and discovered people looking for simple
ways to take better care of their health. IDEO also learned that Walgreens was often
thought as a convenience store, rather than a place to receive health advice.
• Walgreens and IDEO began working on a prototype to address this new information,
and led with a few significant changes: (10)
1) Pharmacists will be more accessible in the front of the pharmacy, to
answer more questions and offer more patient counseling.
2) Express refill stations will allow patients to pick up pre-ordered
prescriptions.
3) Stores will have a dedicated Health Guide, offering health tips and FAQ’s
for customers questions.

21. +
&
= Global Pharmacy
Walgreens becomes international!
• Walgreens started to consider buying Alliance Boots in
2012 in order to grow the organization to an
international level.
• Through extensive research, analyzing of Alliance
Boots, and considering the current market, Walgreens
chose to purchase half of the European company
Alliance Boots for $6.7 billion in 2012.
• Walgreens’ acquisition of Alliance Boots has multiple
implications for the pharmacy store moving forward:
1) The first global pharmacy-led health and wellbeing enterprise has been created, with over
11,000 drugstores under the Walgreens and
Alliance Boots banners.
2) Walgreens now has 45% ownership in Alliance
Boots, but will have the option to buy the entire
company before 2016.
3) Buy acquiring Alliance Boots, Walgreens gains
tremendous purchasing power with generic-drug
manufacturers, which should cause the company
to become the largest purchaser of generic drugs
in the world. (11)

22. References
•
Alexander, A. (2012, Sept). Transforming the hedgehog. Retrieved from:
http://drugstorenews.com/sites/drugstorenews.com/files/TransformingTheHedgehog_092412_lowrez.pdf
•
Bolman, L. & Deal, T. (2008). Reframing organizations: Artistry, choice , and leadership. San Francisco: Wiley & Sons
•
Eder, R. (2012, Sept 27). Executive Viewpoint Series: Greg Wasson on the evolution of Walgreens [Video file]. Retrieved
from http://www.youtube.com/watch?v=0mhulLmpiuc
•
Headley, L. (2013, Nov 20). Personal interview.
•
Kosik, A. (2011, Jul 12). Walgreens welcomes disabled workers [Video file]. Retrieved from
http://www.youtube.com/watch?v=8ZPcKmfe7lo
•
Morgan, G. (2006). Images of organizations. Thousand Oaks, CA: Sage Publications, Inc.
•
RETAIL CHAIN PHARMACY YEARBOOK WALGREENS. (2010). Drug Store News, 32(4A), 16-22.
•
Tosh, M. (2000). Aggressive growth tempered with experience. Drug Store News, 22(15), 153. Retrieved from
http://search.ebscohost.com.proxy.foley.gonzaga.edu/login.aspx?direct=true&db=bth&AN=3721503&site=bsi-live