Read a case study “Leadership Styles at Tesco”
Actions and answer shortly to three questions:
- Explain the difference between an ‘I consult’ approach and an ‘I share’ approach to leadership.
- Is a laissez-faire style good for American companies?
- Analyse why some managers may be happy to adopt a laissez-faire style of management.
Please, be concise!
You can pretend that you, as a business consultant, is writing these papers for your curious client.
Please, do not forget to make references to your sources using APA format for references (only for references). Around 2 pages
Introduction
Tesco is a customer-orientated business. It aims to offer products
that provide value for money for its customers and to deliver high-
quality service. Tesco wants to attract new customers, but it also
wants to keep its existing customers happy. Building customer
loyalty is a cost-effective strategy to grow the business. This is
because satisfied customers are a good advert for the business.
Tesco has more than a 30% market share of the UK grocery
market, nearly double that of its nearest rival. In its 2009/2010
financial year, Tesco earned revenues of £38.6 billion in the UK
and employed more than 280,000 people. To keep at the top of
its game and to maintain its number one spot in the market, the
company needs skilled staff at all levels and in all roles.
Roles in Tesco range from business development, supply chain
management and marketing to finance, store operations and
personnel management. Each area of expertise requires leadership
and management skills. Tesco aims to develop the leadership
qualities of its people throughout the organisation, from
administrators and customer assistants to the board of directors. It
adopts a similar approach to leadership development for staff at all
levels. This is in line with Tesco’s employment philosophy: ‘We
believe in treating each other with respect, with everyone having an
equal opportunity to get on, ensuring Tesco is a great place to work.’
This case study will show how Tesco’s leadership framework is
fundamental to developing the qualities of leadership needed at
every level in the business.
Management and leadership
There is a difference between management and leadership.
Management is about getting things done. Managers organise
human and physical resources to achieve business aims and
objectives. Leadership is about influencing, motivating and
inspiring people. It is about coaching and developing people,
treating them with respect but challenging them. Leaders seek to
create strong teams, with people committed to the organisation’s
overall goals.
Curriculum Topics
• Management and
leadership
• Leadership styles
• Leadership styles in action
• Factors influencing
leadership style
G L
O S
S A
R Ycustomer-orientated: An approach
that starts with customers’ needs and wants and which then drives every business process.
Market share: The percentage of sales within a market that is held by one brand or company.
Tesco | Developing appropriate leadership styles
Developing appropriate leadership styles
The function of management (Henri Fayol)
Plan
Command
Control
Co-ordinate
Organise
Delegate
39639_TESCO 2/9/11 10:49 Page 1
The process of managing starts with the target or objective to be
achieved. A manager must decide on the appropriate approach for
reaching that target. The manager then needs to communicate this
approach clearly to his or her team and to allocate tasks to each
team member. Task allocation and delegation of responsibility is
part of the management function. However, other factors will also
have an influence on whether the target is achieved, including the
task in hand, the skills of the team and the style of leadership.
The style of leadership can vary depending on the task. Some
managers allow teams to take charge of their own decision-making
for many tasks. Team leaders will set the objectives but empower
team members to decide how these objectives are achieved. This
has several advantages. It helps to motivate individuals in the team
and it draws on the expertise of the members of the team.
Berian manages a team of 17 in a Tesco in-store bakery. One of
the key challenges of Berian’s job is to ensure his team produces
the right products to meet demand at key times. His usual
management approach is to allow the team to take responsibility
for achieving the desired result. In this way, the team not only buys
into the activity, but also develops new skills. For example, when
the bakery expanded its product range and Berian needed to
ensure that all the products would be on the shelves by 8.00 am,
rather than enforce a solution, he turned to the team for ideas.
The team solved the problem by agreeing to split break times so
that productivity could be maintained. Berian’s approach
produced a positive outcome and increased team motivation.
Tesco’s leadership framework sets out not just the skills and
competencies but also the personal characteristics and
behaviours it expects of its leaders.
Tesco looks for managers who are positive, confident and
genuine, with the capacity to inspire and encourage their teams. A
key part of Tesco’s programme for building leaders is encouraging
self-review and reflection. This allows staff to assess their
strengths and find ways of demonstrating the characteristics that
are vital to the long-term development of the business.
Leadership styles
The business writers Tannenbaum and Schmidt categorised
different leadership styles. They suggested that leadership styles
could be explained on a scale ranging from ‘autocratic’ through
‘democratic’ to ‘laissez-faire’.
The autocratic or authoritarian style is characterised by an ‘I tell’
philosophy. Autocratic leaders tell their staff what to do. This can
give a business clear direction but it may also lead managers to
undervalue or ignore input from their teams. However, an
autocratic approach is appropriate in some situations. It is
valuable when the business faces a crisis or when an urgent
problem arises that requires an immediate response.
G L
O S
S A
R Y
Delegation: Passing authority down an organisational hierarchy while final responsibility remains at the top.
Empowered: Given sufficient authority to exercise control and responsibility in the work environment.
Productivity: Level of output relative to level of input; labour productivity typically measures output per person/hour.
Tesco | Developing appropriate leadership styles
Autocratic Laissez-faireDemocratic
I tell- you
will do as I say
I test- I allow
subordinates to participate in decisions but reserve the power
to take back control
I share- decisions are made equally, usually as part
of a team
‘Hands-off’- team
trusted to make
decisions
I sell- I will
persuade you to do as I say
I consult- I seek the
opinions of subordinates
before making a decision
Use of authority by manager
Area of freedom for subordinates
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Stephen is the manager of a medium-sized Tesco store. He has
been with the company for over 10 years and his first job was
filling shelves in the dairy section. He is currently working towards
the Tesco foundation degree. Stephen directly manages a team
of around 20 departmental managers, who between them are
responsible for almost 300 people. Stephen’s leadership style is
usually to allow his managers to make most operational decisions.
However, if, for example, an accident occurs in the store, Stephen
may take control to ensure a prompt and co-ordinated response.
There are some leadership approaches that sit between autocratic
and democratic. These styles allow team participation up to a point.
However, the manager reserves the right to make the final decision.
• Managers adopting an ‘I sell’ philosophy will try to persuade
their teams to accept their viewpoint.
• Managers adopting an ‘I consult’ approach will seek the
opinions of subordinates before taking a decision. This is
moving closer to a democratic style of management.
The best managers adopt leadership styles appropriate to the
situation. Stephen’s preferred leadership style is to take a
democratic approach. He consults widely as he feels that staff
respond better to this approach. For example, when planning a
major stock reduction programme, he encourages his managers to
put forward ideas and develop plans. This increases team
motivation and encourages creativity. Some mistakes may be
made, but they are used as a learning experience. However, as a
store manager, Stephen deals with many different situations. Some
may be business-critical and it is important that he responds to
these in the most appropriate way. In such situations, Stephen may
need to adapt his leadership approach and exert more authority.
The democratic approach is characterised by an ‘I share’
philosophy. Decisions are made within teams, with each member
having equal input. Martin is Tesco’s Programme Manager for
Education and Skills in the UK. He has a range of responsibilities
associated with people, processes and standards. Martin may use a
democratic approach when setting training budgets. Managers can
suggest ideas to make cost savings and they can jointly discuss
their proposals with Martin. By empowering his managers, he gets
them to take ownership of the final agreed budget.
Laissez-faire is at the other end of the spectrum from autocratic.
A laissez-faire manager takes a ‘hands-off’ approach and trusts
teams to take appropriate decisions or actions with broad agreed
boundaries. For example, Martin might leave an experienced
departmental manager to develop a budget. This could be
because he trusts that the manager has a good knowledge of the
needs of the department and of the business.
Leadership styles in action
Although each person will have their own preferred leadership style,
the most effective leaders adopt a style appropriate for the situation.
They will consider several factors in deciding which style to use:
• The task – Is it business-critical? Must a decision be made
immediately? What will be the potential impact on the business?
• The team – Does it have the right skills and resources? Is it
used to making decisions?
• Tradition – What has been the norm in the past?
For example, Martin uses a more authoritarian style if something
needs achieving in a particular way or in a very quick timeframe.
Sometimes budgets need to be reduced quickly in order to make
cost savings. Martin will tell managers what needs to be done and
by when, so that they can then resubmit their budgets in line with
expectations.
Stephen regards inspiring, guiding and influencing his staff as an
important part of his role. Sometimes he may need to inform his
teams about a new in-store innovation or corporate initiative. Even
though this is a ‘tell’ situation, Stephen aims to ‘sell’ the idea. He
tries to ensure that staff understand why it is necessary. If his
people are able to give their opinions, it is more likely that they will
readily support the initiative.
Tesco | Developing appropriate leadership styles
G L
O S
S A
R YMotivation: Attracting a person to do
something because he or she wants to do it.
Budgets: Financial plans showing month-by-month projections for costs, sales and cash flow.
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Managers have to be aware of the possible consequences of
using the wrong style in a particular situation. For example, Berian
would not adopt a laissez-faire approach with a new member of
the bakery team. If the employee were not given proper instruction
before operating the baking equipment, the bread might be over-
cooked. Employees might also injure themselves if they don’t use
the equipment properly. In this situation, it is essential to adopt a
‘tell’ approach.
Factors influencing leadership style
People at each level of responsibility in Tesco, from administrators
and customer assistants to directors, face different types of
decisions. Each comes with its own responsibilities and timescales.
These will influence the most appropriate leadership style for a
particular piece of work or for a given project or audience.
Tesco managers have responsibilities for ‘front of house’
(customer-facing) staff as well as ‘behind the scenes’ employees,
such as office staff. Before making a decision, the manager will
consider the task in hand, the people involved and those who will
be affected (such as customers). Various internal and external
factors may also affect the choice of leadership style used.
Internal factors include the levels of skill that employees have.
Large teams may have members with varying levels of skill. This
may require the manager to adopt a more directive style, providing
clear communication so that everyone knows what to do to
achieve goals and tasks. On the other hand, team leaders may
take a more consultative approach with other managers of equal
standing in order to get their co-operation for a project. External
factors may arise when dealing with customers. For example,
Berian may need to use a persuasive style to convince a
customer to accept a replacement product for an item that is
temporarily out of stock.
In order to build a sustainable and robust business, Tesco has set
out critical success factors (CSFs). These are linked at all levels to
its business goals. Some CSFs apply to all employees. These are:
• customer focus – to ensure delivery of ‘Every little helps’
• personal integrity – to build trust and respect
• drive –to achieve results, even when the going gets tough
• team working – to ensure positive relationships in and
across teams
• developing self/others – to motivate and inspire others.
Others are specific to the level of responsibility the person or role
has and covers:
• analysing and decision making
• managing performance
• managing change
• gaining commitment.
By meeting the requirements of these CSFs, Tesco managers can
build their leadership skills & contribute to the growth of the business.
Conclusion
Tesco leaders need to be inspirational, creative and innovative,
ready to embrace change and with a long-term vision for
achievement. Effective leaders manage by example and in doing
so, develop their teams. Tesco encourages all its managers to
lead by example. It requires leaders who can motivate, problem-
solve and build great teams. Tesco employs people in a wide
range of roles and provides a career structure which allows
employees to progress through the organisation. Tesco’s process
of 360-degree feedback allows its employees to reflect on their
own progress and improve. Even if someone starts by working in
store filling shelves– as did Stephen – they can progress through
the organisation into positions of authority and responsibility
G L
O S
S A
R Y
360-degree feedback: Assessment coming from all directions. This includes feedback from managers, colleagues, subordinates and even external parties such as suppliers.
Tesco | Developing appropriate leadership styles
Q U
E S
T IO
N S
1. Describe how Henri Fayol explained the management function.
2. Explain the differences (and similarities) between leadership and management.
3. Compare examples of management styles to analyse the differences (and similarities) between leadership and management.
4. Suggest other situations or decisions when different leadership styles could be used. Evaluate which style would be appropriate in each case.
www.tesco.com
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