Leadership context facing the Tesco Chief Executive
Tesco is the leading retailer in UK with around 460000 employees and millions of customers are served per week including its online business. As per Tesco (2017), the business has huge history which begins from the Mr Jack Cohen in East London and then the business never saw back. The business grew year by year facing complexities of the market but it is still the leading supermarket in UK expanding business in many other countries like India, China, Malaysia and many more. The brand also has its impression in other businesses like Bank, petrol, software business, telecom and internet services and many more. The company offer popular range of services and tries to satisfy its customers in the best possible way it can (Tesco, 2014).
The report focuses on the leadership contexts, theories and models which the present or future leader in Tesco has to follow and on the assessment of the leadership styles of different personalities who worked for Tesco. The leadership styles of Philip Clarke and Dave Lewis will be discussed in the report to get knowledge about the backgrounds and leadership styles of different leaders. Also, the motivation model will be discussed which could be act as a recommendation to the management and leader of Tesco so that the stakeholder engagement can be enhanced. There are some potential risks with these recommendations which will also be discussed in the report.
The present Chief Executive Officer of Tesco is Dave Lewis who joined Tesco in 2014 and worked for Unilever prior to this. Dave Lewis is the first outsider who worked for Tesco at this position. Dave Lewis replaced Chris Bush who was suspended due to the scandal of accounting for £264 and the case went to the Serious Fraud Office. Dave Lewis also restructured the team to improve the grocery business and the stores so that the performance of the business could be improved as compared to its rivals (Fernie, Fernie and Moore, 2015). The chief executive of Tesco Mr Dave Lewis had to face certain complexities as the stakeholders of the company protested against his decision of taking over the food wholesaler Booker. They also called other stakeholders to join the rebellion. It is because the stakeholders were not in the support of the deal of acquiring Booker. Lewis on the other hand, was favourable towards the decision. As per Vandevelde (2017), Lewis was in the impression that the decision taken by him is the best for the company while it was not accepted by the stakeholders.
From many years the researchers have found that different leadership models which creates successful leaders for the organisation. There are many theories like Trait theory, behavioural theory, contingency theory and other theories which support the modern leadership and management in the organisations of today. Dave Lewis is the present chief executive and in future he might have to follow the leadership styles which will bring coordination in his ideas and in the stakeholder’s views. As per the theories leadership is taken as the process or the combination of traits which influence a group of people so that they can achieve their goals with the common goal of the organisation. Leadership is a process which is dynamic an complex which is simplified by a leader who understands and make the people understand what is to be done to achieve the individual as well as personal goals. Various theories are discussed as under to understand the various sides of leadership which could be adopted by the Tesco’s Chief executive in future (Nwagbara, 2010).
Transformational and Transactional theory
Transformational leadership theories state that leadership is the procedure in which a person establishes a good connection with others and there is high trust on each other which enhances motivation in the team and in the leader as well (Edwards and Gill, 2012). It is believed that in this case, Dave Lewis has charismatic personality and confidence which helps in motivating the followers. He takes care of the needs and requirements of the team members and uses his own potential to make his place among them (McCleskey, 2014).
Transactional theory is explained in contrast with the transformational theory and it is a kind of exchange between the leaders and the followers. There is a positive relationship between the leader and the follower (Ahmed, Nawaz & Khan, 2016). The leaders try to lead the followers which help in bringing the sync between the personal and organisational goals. Here the rewards are given for the works done by the followers and they are also punished when the expected is not performed. The structures are made in the organisation and it is made clear that what is expected of the followers (Ahmed, Nawaz & Khan, 2016).
In the case of Tesco, in context of its chief executive in 2017, it is suggested that Dave Lewis is facing opposition from the stakeholders of the company as he took some decisions which were not supported by them. Dave should focus on the transformational form of leadership where he should take the stakeholders in confidence and ask for their opinion. The final decisions should be made after the favour of maximum stakeholders. Democratic style of leadership can help in these situations. The Booker deal can be completed without issues once the support of stakeholders is gained. Transformational leadership let Dave Lewis to focus on his mission and strategies and also helps him to identify and develop new talent. It makes the change meaningful and challenging which also helps the leader in understanding the systems and reinforcing the values and goals of the change which is required in the company.
This leadership helps Lewis to transform people and the organisation and to change the mind and heart of people for adjusting to the change. It enlarges vision and enhances the understanding and thinking of people. It brings changes which are permanent and builds up momentum. This leadership style helps in inspiring others and generates new possibilities for the organisation’s growth and development in future.
Philip Clarke became the chief executive in the year 2011 and he was a kind of leader who believed in taking everyone along to gain success. Philip Clarke brought a new dimension to the steering wheel of its management that is Community. This period was challenging for the company but the leader Philip Clarke revise the pricing and promotional techniques so that the company could fight the changes of the modern age business (Cushman and Burke, 2014).
As per Wood & Wearden (2010), Terry Leahy, the chief executive prior to Philip Clarke has shown remarkable performance but some problems emerged in the retail empire during his leadership. Philip Clarke replaced Leahy and as per the CV of Clarke, there were many similarities between Leahy and Clarke. Both were almost same in terms of professional life and personal life. Clarke grew up in Liverpool and started to work in the Co-op when rejected by Tesco at first. He got married and lived in Hertfordshire (Wood & Wearden, 2010). Clarke has good experience in Tesco as he has worked as a store manager, buyer and as a marketer. He was talented and dedicated who initiated the acquisition of around 38 hypermarkets in South Korea in 2008. Philip Clarke was the one who brought innovations in the company. He refined the use of data analytics and used social media and mobile applications for improving the shopping experience of the customers. To improve the profit margins of the company, Clarke also initiated the sale of some international ventures. Philip Clarke believed in gaining loyalty from the employees and customers. This shows that Philip Clarke was a democratic leader who always thought about its employees and their welfare was considered. According to Wood & Rankin (2014), Sir Richard Broadbent, the chairman of the organisation commented that Clarke is a successful leader and he tried his best to realign the business of Tesco. Philip Clarke proved that he is a participative leader who gets involve in many activities and aimed at bringing the transformational change in the business (Ryle, 2013).
The contrasting backgrounds and leadership styles of Philip Clarke and Dave Lewis
However, he is criticised on the fall of Tesco’s business in different counters during his leadership which can be made clear by the below given graph. Tesco being the biggest retailer of Britain is losing its share in the market but still Philip Clarke claims that the company is making progress despite this slump in the market and worldwide sales of the company (Ismail, 2017).
Dave Lewis is the first outsider to work in Tesco at the position of Chief executive officer. Prior to this, he worked in Unilever since 1987 as a graduate trainee and is responsible for the launch of the brand Dove in 1992 (Mason and Evans, 2015). He then gained attention of Tesco’s management and was seen as an alternative to Philip Clarke who was struggling to keep the share of Tesco in those days (Haddock-Millar and Rigby, 2015).
Dave Lewis has a good marketing background which helps him in improving the focus of the supermarket on the customers and in improving the sales. The marketing expert has good command on the advertising campaigns and knows how to keep customers engaged (Mollah, 2014). Dave Lewis believed that the Tesco’s leadership style till now was of command and control but now it has to involve and energise the employees by creating a role model for them. He believes in providing new direction to the employees and reducing the internal conflicts which would overall create positive results for the company. Lewis has already faced rebellious actions by the stakeholders on his decisions but he has to reinvent and bring confidence in the stakeholders so that they can understand his management strategy (Ibrahim, Alkhawlani and Al-shaghdari, 2017).
Dave Lewis has faced many problems and issues right from day 1 in Tesco. He had to face the accounting scandal done in the organisation which brought downturn in the sales and profits of the company. He repaired the brand and cut down the extra costs but the accounting scandal hampered his efforts. Lewis is a leader who knows how to keep customers loyal with the brand (Martínez-Ruiz, et. al., 2016). He is good with marketing and promotional campaigns which helped Tesco in improving its performance. Dave is a leader who knows how to innovate and take such steps which can bring out the company from the tough times. He gave a marketing boost to the company. He is a kind of autocratic leader who takes his decisions by taking care of the stakeholders but applying his own ideas and knowledge for the betterment of the company. However, Lewis gradually took decisions which show that Tesco is coming back on track covering the challenges it faced in last few years (Daft, 2014).
In the reign of Dave Lewis, the volume of sales increased as compared to the volume in the leadership of Terry Leahy and Philip Clarke.
Motivation is used to describe the desire in the people to achieve something. Motivation in the workers can be created by the leader by prompting them to act in a particular way (Abbah, 2014). Motivation can be internal or external which is called intrinsic motivation or extrinsic motivation (Manzoor, 2012).
In the case of Tesco, the leadership of Dave Lewis has created a rebellious nature in the stakeholders as they were not in the support of the decisions taken by him. In the businesses of 21st century, it is very important to gain stakeholders engagement and it is done to enhance the value of the company and its functions (Kuranchie-Mensah & Amponsah-Tawiah, 2016).
Stakeholder’s engagement can be a competitive edge for the companies. This helps the companies in handling the pressures of the industry (Bal, et al., 2013). The stakeholders of the company should be motivated by the proper combination of control, coordination and management so that the internal and external stakeholders of the company can be engaged with the company. The powerful and engaged workforce has a direct link with the performance of the workforce (Padayachee, Naidu and Waspe, 2015). A happy workplace is a productive workplace. In the case of Tesco, if the stakeholders will be engaged, it will transform the productivity and performance of the employees at Tesco. As per the survey by Australian Institute of Management , thousands of people revealed that 40% of the employees are not positive about their employer and one in every three employee criticised the culture of its workplace which shows that there is a need to motivate them (Conchie, 2013).
Tesco could use motivational theories to encourage and rebuild the experiences of its teams so that it can create happy and satisfied stakeholders (Gerhart and Fang, 2015). Dave Lewis could use Vroom Expectancy theory of motivation model (Details in Appendices) for analysing the expectations of the key stakeholders and to fulfil them appropriately to maximise their satisfaction. Two recommendations which Dave Lewis should imply for raising the positive engagement of the stakeholders:
It is recommended to Dave Lewis that he should focus on the happy and committed team which provides high performance. This will also create trust in the stakeholders for the leader which will ultimately support the leader to take any decision and to communicate it to the key stakeholders to get their support. The efforts given by the team of stakeholders will also encourage the performance of the company and it will help in getting the positive reward to the stakeholders. This involves fulfilling the expectations of the stakeholders so that they could provide their loyalty to the business.
It is recommended to Dave Lewis to apply this theory so as to improve the individual decision making process in the team and to satisfy the key stakeholders. This would instigate knowledge and understanding in the key stakeholders which would help the leader in carrying on his decisions with the support of everyone. In this case, if the stallholders will be able to understand the ideas and decisions of Dave, there would be no rebellious activities which he had to face from the side of stakeholders of the company.
There are certain potential risks which are associated with the recommendations suggested above. These risks might include that the stakeholders might expect way more than the limits which could create problems for the management of fulfil and meet them. It is very difficult to analyse the need and requirement of each stakeholder and to take decisions which favours all. This would create protest from some of the stakeholders whose requirements are not fulfilled. The second recommendation of instigating the individual decision making could affect the effectiveness of the decision making processes of the management and it could also take much time to decide on the particular matter. This may be another risk that the management believes on the stakeholders but they do not desire to give their maximum potential to the employer. It may be possible that the management may discriminate among the stakeholders which results in low motivation of the stakeholders.
Conclusion
It can be concluded that leadership is key influencer of the performance of the organisation in the current global business world. The report discusses about the leadership context of the Chief executive officer of Tesco in future and the theories of leadership have been discussed to determine that what model of leadership have been adopted by the leaders of Tesco. Two leaders i.e. Philip Clarke and Dave Lewis and with their background history and leadership styles have been discussed and it has been found that Philip Clarke was the insider of Tesco and was working with the company from a long time whereas Dave Lewis was the first outsider who joined as Chief Executive officer in Tesco. At last, the motivational theory, i.e. Expectancy theory of motivation has been discussed which provides recommendations that Dave Lewis should try to engage the stakeholders and improve their decision making through this motivation model so that the decisions of the stallholders can also be considered as significant in taking the final decisions for the company. There is a potential risk of over expectations from the key stallholders which have to deal by the management. It is clear that Tesco has to engage its stakeholders to keep its position and competitive edge over the competitors in the industry.
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