The Effect of Leadership Theories in Restructuring Plan of Asda and Tesco - Case Study Example

Asda and Tesco - Restructuring to reflect the multichannel markets Table of Contents Introduction 4 Discussion 4 Theoretical analysis 4 Effect of leadership theories in restructuring plan of Tesco 6 Effect of leadership theories in restructuring plan of Asda 7 Key recommendation for Tesco restructuring plan 8 Key recommendation for Asda restructuring plan 8 Conclusion 8 Reference List 10 Bibliography 12 Executive Summary The report is based on the study of different leadership theories and their importance in the 21st century business environment. It has described different aspects and factors influencing three leadership theories such as trait, behavioural and contingency theory. The report focused on the current multichannel restructuring plans of Tesco and Asda, the two retail giants of the UK. The study of the restructuring plans of these organisations has projected the mass changes in leadership roles and responsibilities of their managerial levels. These new leadership roles are more emphasised towards the needs of their online and store customers and the new advancement of technologies. Therefore, the study has utilized different leadership theories to explain the required traits and skills for the new managerial positions. Introduction The report is based on the study of the current restructuring plans of Asda and Tesco, the two retail giants of the UK. This report has also emphasised on different theories of leadership practices in any business environment, to understand the relevance of these theories in the restructuring plans of Asda and Tesco. Tesco Plc. is one of the leading supermarket chains in the UK. Tesco has its stores in 12 countries worldwide and it generally deals with food, books, clothes, electronic gadgets and furniture. The company is successfully restructuring its multichannel market operations over a period of time. In this process, they are redeploying near about 100 staffs to new job roles. They are also creating several vacancies across the organisation. Their initiative called “Building tomorrow’s Tesco” is focused on achieving the global multichannel leadership (Channel management, 2014). Asda stores Ltd. is a renowned name in the retail industry of the UK. The organisation deals in grocery items, general merchandise, clothes and toys. Following the trend of Tesco, Asda is also focusing on a massive restructuring of its multichannel business operations. They are creating near about 5670 new roles for various departments of its multichannel operations (Harrison, 2014). These restructuring plans are massively changing leadership roles and responsibilities of several employees in these organisations. The importance of different leadership theories on the success of the restructuring plans of these organisations have been described in this report. Discussion Theoretical analysis Leadership in an organisation describes the role where leaders utilize the available resource and capabilities of a team to attain a common goal. The responsibility of a leader is to set vision and create direction to achieve new goals (Northouse, 2012). The successful role of leadership can be described by three major theories such as trait theory, behavioural theory and contingency theory. The leadership trait theory is based on different characteristics of leaders (Yukl and Van Fleet, 1992). Different scholars have utilized the leadership traits to identify physiological, intellective, task related and social characteristics of any emerging leader (Foster and Roche, 2014). A number of researches have been conducted to recognise different traits for successful leadership. These core leadership traits are self-confidence, leadership motivation, business knowledge, emotional maturity, strong analytical and judgemental ability, reliability and acceptability to challenges (Kirkpatick and Locke, 1991). A number of researches have explained three major traits of 21st century leadership such as the comprehension trait, the personality trait and the people trait. The comprehension trait includes global business sense, quick acquisition of knowledge and analytical skills of any potential leader. The personality trait of any effective leadership is a combination of self-confidence, determination, time and stress management and creativity. The people trait of a 21st century leader includes their emotional intelligence, communication skill and employee potential identifier skill (Judge, Bono, Ilies and Gerhardt, 2002). Different studies over a period of time have explained that trait theory serves as the benchmark to identify suitable leaders in any business environment. Trait theory provides very constructive information about the useful characteristics of a successful leader and it is applicable for employees from all levels in all kind of organisations (Colbert, Judge, Choi and Wang, 2012). The behavioural theory of leadership emphasises on roles and responsibilities of a leader rather than their inborn traits and capabilities. This theory suggests that any leader need to possess strong personality with well-developed self-confidence (Littrell, 2013). Few Michigan researches have shown leadership as a behavioural act of any person rather than their traits (Conger and Kanungo, 1987). Different theories have proposed that certain behaviours help any organisation to differentiate a leader from the non-leader. They have also claimed that difference in the pattern of actions of the employees helps the organisation to determine their leadership potential (Podsakoff, MacKenzie, Lee and Podsakoff, 2003). Ohio State studies and University of Michigan studies have provided a broad view about the behavioural leadership in any organisation. Ohio State study of leadership was focused on the observable behaviour of any leader rather than identifying personal traits. This study has highlighted some behavioural factors those are important for any successful leadership. Those factors are treating group members equally, being accessible to group members, maintaining standard of performance and looking beyond the personal welfare (Schriesheim and Kerr, 1974). On the other hand, University of Michigan studies of leadership behaviour helps to identify two major behavioural characteristic such as relationship oriented behaviour and task-oriented behaviour. This study has concluded that a successful leader must focus on the interpersonal relationship and should take interest in the requirement of their employees (Yukl, 1971). Various researchers have shown that behaviour focused approach of leadership provide actual marketing potential to the 21st century organisations (Higgs, 2003). Trait and behavioural theories help any organisation to understand the importance of various factors that influences organisational leadership. On the other hand, contingency theory helps any business entity to understand the effect of different situation which influences the effectiveness of leadership (Seters and Field, 1990). Contingency leadership theory is highly used leadership theory in business world of 21st century. Fiedler model of contingency theory explains that leaders need to be placed in a situation which is best suitable to their characteristics or they must be trained to alter the current situation as per their leadership approach (Lorz, 2014). Fiedler model has three basic steps in the leadership analysis such as identifying the style, defining the appropriate situation and matching leaders with the situation. Fiedler believes that every leader has their own unique leadership style and he has explained that it is very essential to understand their leadership style before positioning them. Leader and employee relationship, assignment structure and the influence of the leader over the power variables such as promotion, hiring or firing help any organisation to identify the suitability of the situation for the leadership style (Zeithaml, Varadarajan and Zeithaml, 1988). Various empirical researchers have proved that the contingency theory is the most reliable approach to recognise the effective leadership. As per them, this theory has widened the horizon of leadership approach from a fixed trait of leadership to different leadership style as per demand of situations (Yukl, 2001). Effect of leadership theories in restructuring plan of Tesco The multichannel restructuring plan of Tesco has transferred the leadership role for a number of employees. The restructuring plan is focused on different structural changes of the marketing, IT and commercial departments. Due to these changes they are opening various new operations while they are closing few unimportant operations. Their new multichannel model has created opening for hundreds of new positions. They are moving the leaders of different departments to new job roles. Tesco does not believe in redundancies. Therefore, they are transferring the employees from closed operations to new job roles (Quinn, 2014). Due to the change in job roles the requirement of the skill sets are also changing for the leaders. Tesco has closed near about 100 bakery stores and they have created new centralized kitchen. They have announced that at least 450 job openings will be created in that centralized kitchen and they prefer the employees from bakery section for these positions (Quinn, 2014). Tesco needs to evaluate the leadership style of existing leaders as per changes in the work situation. The organisation needs to analyse the leadership style as per contingency theory to understand the adaptability of different leaders in various organisational situation. Their new business structures will provide more focus on their customer requirements rather than the product portfolio (Creevy, 2014). Therefore, the leaders need to have customer focused leadership traits such as strong analytical and judgemental skills to understand customer needs and emotional intelligence. They also need to possess some behavioural traits such as clarity in their communication about the roles and responsibility of an entire team and creating a workplace culture that values employee customer relationship. The management must analyse the leadership traits and behaviours of every potential leaders to match the skills as per new requirements. Their restructuring program is introducing various technological developments such as online shopping facilities and E-commerce. They also require technological expertise to integrate all the multichannel operations of the organisation (Creevy, 2014). Therefore, they are looking for technological expertise in the leadership traits of their employees. Effect of leadership theories in restructuring plan of Asda Asda is also following the path of Tesco in their approach to the multichannel restructuring of their organisation. In this practise, they have recorded 1,360 employee redundancies and 5,670 newly created job roles (Cooper, 2014). Asda is placing 4100 managerial jobs in consultation and creating near about a similar number of section leaders, trading manager and deputy manager roles. This restructuring program will provide the responsibility of the shop floor to large number of employees who were handing totally different kind of responsibilities (Hobbs and Yeomans, 2014). These leaders need to develop totally new sets of skills to successfully execute the responsibilities. The section leaders must develop different behavioural skills such as in-depth knowledge about their own sections, developing good reputation and friendly terms with all the members of that section, providing timely and adequate help to the team mates and customers, and focus on the overall achievement of the section (Cooper, 2014). Before placing the employees to different leadership roles, the organisation needs to organise some tests to evaluate the accrued behavioural leadership skills of those employees. Therefore, they need to provide training facilities to match those behavioural factors as per requirements of the job role. Proper understanding of the behavioural leadership theory and proper analysis of the contingency theory will help the organisation to assess the right skilled employee for the managerial position. Asda is also creating a totally new managerial role for their E-commerce division (Sillitoe, 2014). The leaders in E-commerce section must be selected by considering specific leadership skills. The leaders must have the capabilities to cope up with the rapidly changing technological atmosphere. They must be enthusiastic and focused. The E-commerce manager should possess good communication skill to effectively convey the organisational mission and vision to the employees. The management of Asda must analyse these qualities by using leadership trait theory and behavioural theory. Key recommendation for Tesco restructuring plan From the analysis of the restructuring plan of Tesco, it can be recommended that the management of the organisation needs to focus on developing different leadership quality of their employees. The current leadership roles of the organisation are demanding multi tasking approaches from the senior management (Quinn, 2014). The organisation needs to sharpen the contingency leadership skills of their management to ensure that they are easily adapting to the changing environment. Top management of Tesco needs to conduct different training procedures to develop different leadership skills within the employees of the organisation. They must conduct some tests to judge the core competencies of the prospective leaders. These tests will help them to allocate right skills to the right position. The top management of the organisation must create different panels to monitor the leadership activities of the employees of different departments. Key recommendation for Asda restructuring plan Asda is changing the roles and responsibilities of their leaders. In the current scenario, their roles will be more focused on the customers. Previously, a huge part of the management was not directly dealing with the customers (Sillitoe, 2014). Therefore, authorities of Asda need to design some training procedures which will help the current leaders to develop their customer handling skills. The organisation is introducing technologically advanced operations across different departments. Therefore, they need to arrange external trainers to sharpen the technological skills of the senior management. This will help them to efficiently handle the teams and monitor their works. Conclusion The report has discussed different theories of leadership management such as trait theory, behavioural theory and contingency theory and their significance in the organisation. This report has also emphasised on the relevance of these leadership theories in the multichannel restructuring program of Asda and Tesco. The restructuring plans of both the organisations are offering new leadership roles and responsibilities to their employees. These leadership roles involve more customers focused and technologically advanced approach. This study has conveyed that these new roles and responsibilities need to have a whole new set of leadership traits which cannot be explained by using any one specific leadership theory. The organisations need to analyze all the three major leadership theories to properly recognise the required leadership skills of the employees. By appointing the right skills in the right leadership role, the organisations can bring success to their new multichannel restructuring operations. Reference List Channel management, 2014. Tesco concluding major staff restructure to drive multichannel growth. [online] Available at [Accessed 8 January 2015]. Colbert, A. E., Judge, T. A., Choi, D. and Wang, G., 2012. Assessing the trait theory of leadership using self and observer ratings of personality: The mediating role of contributions to group success. The Leadership Quarterly, 23(4), pp. 670-685. Conger, J. A. and Kanungo, R. N., 1987. 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