Unit 3 OB Assignment ASDA Organizational Structure

Introduction

ASDA is one of the biggest supermarket chains in UK. It is deals with all type of products starting from food clothing, lifestyle, kids section, general merchandise, etc. It is one of the four big supermarkets in UK along with Tesco, Sainsbury and Morrison. The company was started in 1949 and has grown a lot in the last 65 years of business. With an employee count of 175,000, ASDA is third largest retail chain in UK. ASDA underwent a major change in its structure when it was acquired by Wal-Mart in the year 1999. However, the success of the company is because of the good employer-employee relationship and the various practices adopted by the human resource team in ASDA. This report will focus on the organizational structure and culture adopted by ASDA and a comparison will be done with British Airways to differentiate between the two companies. The report will also highlight the difference in leadership style between the two companies. The report will then focus on the various organizational and motivational theories that are used by the management in ASDA for their practices. IN the last section, the report will bring out the importance of team and teamwork and how ASDA has been benefitted with teamwork. The importance of technology and how it has become an essential component in the day to day functionality of ASDA will also be highlighted in this report.

Task 1

P1.1- Compare and contrast the organisation structure and culture of ASDA PLC to that of British airlines.

One of the key differences between ASDA and British Airways is the difference in their organizational structure and culture. ASDA follows hierarchical organizational structure (Hirschhorn, 2002) whereas British Airways follows relatively flat organizational structure.

Hierarchical Structure (ASDA) Flat Structure (British Airways)
Hierarchical structure is one where there are more levels and organization is well structured. Flat organizational structure has relatively less number of layers and is flat in nature.
Managing Communications between different layers is difficult Managing Communication is much easier people are at the same level
Decisions are taken by the senior members who sits at the top of the hierarchy Decision making involve all the employees who are responsible for company’s decision
Manager plays an important role in understanding and motivating the employees Motivation comes from the recognition and responsibilities given by the company.
Decision making is quick as most of the decisions are taken by the skilled and experienced people at the top of the hierarchy Involvement of all the employees can delay decision making process.
Promotions are timely based and can be demotivation for the employees Promotions are performance based and keeps that internal environment competitive

P1.2- Explain how the relationship between ASDA’s structure and culture impacts on its performance.

The culture adopted in ASDA is highly complementing the hierarchical structure followed in ASDA. Some of the key values of ASDA are:

  • Firstly, the company focuses on to provide excellent customer service to all its customers.
  • Secondly, the company believes in respecting each other’s values, beliefs, culture, etc.
  • Thirdly, the company aims to excel in all the fields of operations.
  • Lastly, the company believes in working with integrity.

Archie Norman the then CEO of ASDA used to invest 75 percent of his time to change the culture of the organization to improve the performance of the company. Though most of the company used to aim at maximizing their profits to compete with Wal-Mart, the leaders at ASDA make sure that the employees are handled with care and respect so that they feel secure and confident working in ASDA. The company undergone many painful changes in its structure, one of which was when the company was acquired by Wal-Mart, but the culture of the company i.e. transparency and egalitarianism made sure that the employees remain loyal to the company and kept their belief on the leaders of the company (Bolino, 2003). The culture helped ASDA to undergo a smooth change during their merger with Wal-Mart. The leaders and managers played an important role in making sure that the hierarchical structure of the company is overcome by the transparent actions taken by the managers which were visible to the employees.

The employees at ASDA feel that the managers follow four important values which is one of the key reasons for high performing workforce and delivering high quality service on consistent basis. These are:

  • Firstly, the managers at ASDA treat each employee equally and give them equal opportunities without any discrimination.
  • Secondly, the managers are fair in their approach and do not differentiate between employee while evaluating their performance.
  • Thirdly, the managers are very respectful towards their employees and are always polite in nature.
  • Lastly, the employee and managers are proud of the culture that is followed in ASDA. The feeling of pride also generates a sense of importance and increases the efficiency of the employees.

Task 2

P2.1 Compare the effectiveness of the leadership styles used by the CEO in ASDA to that used by British airways CEO.

The difference in the leadership style of the two companies i.e. ASDA and British Airways is mostly because of the difference in the structure of the company. Since ASDA is hierarchical in nature, it follows Autocratic style of leadership where the decision making is done by the senior and experienced members of the company who are specially trained for it. On the other hand, British Airways follows participative style of leadership where employees are engaged in  the decision making process and employee’s ideas and solutions are given good weightage while taking important decisions related to their company.

Another major difference between the leadership styles of the two companies is that the leaders at ASDA are transformational in nature. The experience and highly competitive environment demands transformational leaders who can drive the changes and act quickly. However, there are lot of risks involved with transformational leadership style and requires that the employees should completely trust their leaders and managers. This has been successful in ASDA because of their highly transparent nature. The employees are aware of the decisions taken by the company and hence the changes are implemented smoothly (Beer, 2000).

On the other hand, British Airways had suffered from lot of losses in the last few years. The CEO Willie Walsh had to follow transactional leadership during that time. The rules and regulations imposed by him were rigid and the employees were asked to follow them strongly. Any deviation or violation of rules was punishable. The working of the company was organized and no new changes were done. The hard and rigid ways of Willie Walsh helped the company to come out of the economic crisis and is one of the main reasons that the company is performing well these days (Harrington, 2005).

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Task 3

P3.1- What types of changes could ASDA engage in? Discuss the impact that different leadership styles may have on motivation of ASDA’s staff in periods of changes.

ASDA underwent an organizational change in the year 1999 when it was acquired by Wal-Mart. Though the process of acquisition went smoothly, there were some issues after that. The main difference was in the cultural difference between UK and USA. Wal-Mart, which is US based company firmly believes in secrecy and does not support trade or employee union (Katie, 2013). However, employees in UK used to have employee union as informal groups. The differences between the mind-set of the two lead to less productivity and more turnover rates in ASDA which also made it loose the number one position in the list of retail chain of supermarket.

Therefore, it becomes important for the company to make sure that their actions should not impact like organisations behaviour to the employees. The classical approach of the company needs to be changed. The companies these days realize that using Taylor’s scientific approach will not result in motivation among the employees. The company has to engage the employees in decision making so that employees feel responsible towards the company and are motivated for the betterment of the company.

Therefore, the company needs to change its leadership style from autocratic in nature to consultative democratic leadership style. Under this style, the company can take feedback from its employees or create employee forums to know their opinion. This method will be beneficial as it will provide the company with more options to choose from and will also motivate the employees to work harder. The company can even use it to evaluate the performance of the employees in case it is difficult to differentiate among employees based on their performance. Thus, these can both the employee to develop his or her employability skills and the organization’s productivity.

P3.2- Compare the application of different motivational theories with special reference to ASDA’s employees as Maslow’s hierarchy of needs, Vroom expectancy theories and McGregor’s theory X and y -----.  Which theory is most applicable and why?

The management at ASDA follows the following organizational theories in their approach:

Maslow’s theory of hierarchy of needs: According to the theory, an individual aims to achieve the basic necessities of life. Once he is able to achieve them, the standard of living of that individual is increased and he aims to achieve safety needs in life. Thus, with each need satisfied, another need generates which is higher than the previous one and requires more effort and money to fulfil it. Maslow gave a pyramid model for his theory (Gawel, 1997). The model is shown below:

Maslow theory for OB Assignment ASDA Organizational Structure Figure 1: Maslow theory of hierarchy of needs Pyramid model

It can be seen from the below model that the physiological needs or the basic needs are kept at the bottom and the self-actualization needs are kept at the top. The progress of an employee means that the employee is climbing up the pyramid.

ASDA uses Maslow’s theory of hierarchy as it has hierarchical organizational structure. The lower levels employees at ASDA are the one with the lower salary grade as they are expected to fulfil the basic needs first. As the employee grow in the company, the employees is promoted to higher levels and the distribution of salary is such that the employee can aim to achieve other needs mentioned in the model.

Vroom’s expectancy model: The transparent nature and simple performance evaluation process at ASDA is based on Vroom’ expectancy model. According to the model, an employee can completely trust a performance evaluation process when he or she is able to get direct benefits based on the effort. This means that the effort put in by an employee will give direct benefits to the company and will yield direct benefits to the employee. ASDA follows the same approach during its performance evaluation system where the employee is judged based on the targets set for him or her before the start of the cycle and the rewards are given based on the rating which is calculated based on the performance (Gill, 2001).

Vroom’s Expectancy theory Figure 2: Vroom’s Expectancy theory

Maslow’s theory of hierarchy of needs is the best theory which is applicable to ASDA. The distributed system of pay structure and other rewards based on the job role helps the company to be more organized and transparent in their approach. This type of system is easily acceptable and results in smooth functioning of the company.

P3.3- Evaluate the usefulness of a motivational theory for managers. How could a theory like Hertzberg’s motivation theory be useful and relevant to the managers of ASDA?

Hertzberg’s theory is one of the modern approaches which is being implemented by most of the company. Most of the organizations behaviour have stopped following classical approach and understands the importance of other factors which are required to motivate the employees.

According to Hertzberg’s motivational theory, an employee is motivated to work because of responsibilities, sharing of power, sharing recognition, etc. which is known as motivating factors. On the other hand, an employee is de-motivated if the person is deprived of salary, bonuses and other rewards. These factors are known as hygiene factors. The hygiene factors are those factors which whose presence does not motivate the employees but their absence can demotivated the employees (Omar, 2005).

The company used to work on the principles of the classical models and approach; however it realized that the performance of most of the employees was depreciating. After the merger, many experienced and senior employees also left the company. Thus, it becomes more and more essential that ASDA should bring changes in its management practices so that employees can be given equal respect and power to take decisions for business activities. Though the company has skilled managers, who regularly interact with the employees and often help them at stores, but it is also essential if the managers should take feedback from the employees or suggestions about how changes related to their stores can be done. These kinds of changes will strengthen the relationship of employee with the manager and the organization and will yield better results.

Task 4

P4.1   Explain the nature of the various groups that may exist among ASDA’s staff and how they may influence the group behaviour.

There are two type of groups at prevail in ASDA: Formal Groups and Informal Group.

Formal Groups: These are teams which are formed by the managers of the company with people which share same skill set required to perform certain task. These teams are well organized and managed by a proper manager. The developing manager is the most important member of the team as he is responsible for the interactions, setting up of goals, channelizing proper communication among employees, motivating them to work hard, making sure that there are no conflicts in the team and also evaluate the performance of each employee in the team. The team also performs well and works to attain synergy which is highly beneficial for the organization.

Informal Groups: These groups are informally formed by the employees for personal benefits. In UK, most of the employees form trade unions. These groups make the employees a stronger entity and thus can act as governing body. Sometimes, the view of the company and employees may be different. These unions help the employees by making sure that the company takes necessary action which is beneficial for both the company as well as the employees. However, after the acquisition, with Wal-Mart, the scenario changed a lot because Wal-Mart did not supported trade unions and tried to be secretive in its approach. The information was rarely shared by the employees. This increases conflicts among the employer and employees. Employees felt insecure and therefore the turnover rate increases after the acquisition (Givan, 2007).

P4.2 Discuss the factors that may promote or inhibit the development of effective teamwork among the employees of ASDA PLC.

Some of the important factors which effect the effective functioning of formal teams formed at ASDA PLC are discussed below:

Leadership: Leadership is one of the most important roles in ASDA. As mentioned in the previous section, the role of a manager in ASDA is not limited to assigning task to the team. The leader has to make sure effective functioning of the team. The manager defines the goals of each member and also teaches them the common interest of the team. The manager is also responsible to initiate communication among team members, and resolve conflicts among them. One of the main reasons for the success of teams in ASDA is the close relationship of managers with the staff members. The manager knows each one personally, which bring a feeling of harmony and results in better performance (Shackleton, 1998).

Diversity: Being the largest chain of supermarket, ASDA has stores in all parts of the UK. Therefore, the company has diverse people coming from different parts of UK. The team members differ in age, gender, region, caste, etc. However, diversity helps the team with new and innovative ideas. The diverse nature also helps the company to deal with customers easily. One of the biggest advantages is that the young and new employee tends to gain practical knowledge from the senior and experienced players of the team. Thus, a well-managed team at ASDA yields high results (Jones, 1981). On the other hand, any lack of management over diversified team can inhibit the performance as the interest of different people differ which will results in more conflicts in the team.

Transparency: Transparency is another important factor which promotes the team behaviour at ASDA. The work done by an individual is equally appreciated and credited by the manager. This boosts the confidence of the employee and also increases competition level in the team. The regular team meetings and status reports helps the manager to know what all tasks are performed by whom and thus helps the manager as well as the employee to maintain transparency. The employee is aware that his efforts will yield desired rewards and will put more effort. The other employees in the team will also try to compete to achieve more rewards and thus the performance of the team will increase.

P4.3 Evaluate the impact of technology on team functioning within ASDA PLC.

The emerging technology has become one of the necessities for the company in this modern world. Most of the retail stores including ASDA have gone online to hold competitive advantage over their competitors to serve their customers better. The use of RFID technology is also one of the common features at the stores (Sellitto, 2007). ASDA has also stopped accepting checks and the payment is mostly done by credit or debit cards. The e-commerce business for ASDA has been a real success as the customers can order goods from anywhere and can also get free home delivery (Ellis-Chadwick, 2006). The diversified and expanded chain of supermarkets can work together because of the effective communication system that has developed over the years. The company uses emails, messengers and other means to share information from one store to another. There are virtual rooms where managers can hold their meetings without physically gathering at one place. This helps save lot of time and effort.

Conclusion

Thus it can be concluded that the two companies ASDA and British Airways have been highly successful because of the human resource management team of the two companies has been proactive in their decision making and maintaining good employee relationship. The companies have different culture and structure and therefore the two companies follow completely different approaches but still have been able to be a success over a long period. ASDA’s transparent nature and highly qualified leaders have resulted in smooth functioning of the company even during structural changes in the company. The company also uses latest technology for better performance of the company.

References

Beer, M., & Nohria, N. 2000. Cracking the code of change. HBR’s 10 must Reads on Change, 88. Bigley, G. A., & Steers, R. M. 2003. Motivation and work behaviour. New York: McGraw-Hill/Irwin. Bolino, M. C., & Turnley, W. H. 2003. Going the extra mile: Cultivating and managing employee citizenship behaviour. The Academy of Management Executive, 17(3), 60-71. Du Gay, P. 2000. In praise of bureaucracy: Weber-organization-ethics. Sage. Ellis-Chadwick, F., Doherty, N., & Anastasakis, L. 2006. E-strategy in the UK retail grocery sector. Gawel, J. E. 1997. Herzberg's Theory of Motivation and Maslow's Hierarchy of Needs. ERIC/AE Digest. Gill, V. 2001. Employee Retention in Small to Medium Enterprises in the Retail Sector (Doctoral dissertation, Dublin, National College of Ireland). Givan, R. K. 2007. Side by side we battle onward? Representing workers in contemporary America. British Journal of Industrial Relations, 45(4), 829-855. BTEC HND Assignment Experts

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