Change within modern organizations is considered to be inevitable in respect to the aspects of performance and healthy operations. In essence, entities should involve changes in order to match the ever-changing demands brought forth by new environments. Nwagbara (2010) ascertains that change is the only aspect that remains constant in the course of operations. Therefore, it is safe to assume that inevitability of alterations within organizations is permanent especially as it prepares organizations for newer operational environments, immediate challenges, aspects of innovations and business approaches (Mullins, 2010). Alterations amongst organizations develop further into newer perspectives and other strategic elements that are formed through experiences and modified feedbacks. Tesco is likely to undergo such aforementioned process especially with the resignation of its long-serving chief Executive Officer Terry Leahy.
Speaking further, it should be mentioned that elements of change affect the operations of any given business both structurally and strategically. As a company, Tesco is undergoing immense organizational changes given the transfer of leadership from Terry Leahy to Phillip Clarke.
It has been a smooth transition for Phillip Clarke as he managed to gain high level of confidence from customers, stakeholders and employees. This is largely brought by his adoption of transformational way of leadership.
Tesco Company Profile
Tesco is an internationally recognized grocery and retail chain that is based in Chestnut, Hertfordshire. The company was established by Jack Cohen in 1889. The first store for the company was opened in 1929 in London and later it was transformed into numerous stores that offered American-based lifestyle services. According to the Tesco Annual Report (2009), it is solely the largest private employer within the United Kingdom with about 32,000 staff and 2,320 stores across the globe.
Having enjoyed home-base support, the company embarked on the penetration into the international markets. The first market to be penetrated was Asia. Therefore, the company opened stores in China, Taiwan and Malaysia. The second penetration was focused on other EU countries such as Turkey and Czech Republic. In the course of 1950’s, Tesco overturned the market percentage share by overtaking Sainsbury superstore (Nwagbara, 2010).
About the same time, the company managed to acquire P&L plc 900 stores across the United Kingdom. With the recruitment of Terry Leahy as the company’s CEO in 1990’s, the image of the company catapulted as newer strategies were put in place in order to promote and guarantee customers’ satisfaction.
Having assumed the full control of the company as its CEO, Terry Leahy is accredited with the tremendous level of growth and expansions. This positive change of the once underperforming company is depicted by Leahy’s way of applying transformational types of leadership. It is important to realize that effective leadership models should encourage employees within an organization to undertake matter positively. This involves the act of sharing of both visions and missions as a primary focus. It also involves the leader making a great impact on the employees in order to feel appreciated in the course of their operations. Thus, this presumption leads to the postulation that Leahy’s way of leadership is greatly important for turning the company into a successful one (Nwagbara, 2010).
Useem (2001) expounds that Leahy’s perception indicates that he valued the transformation of Tesco as the only viable way to maintain his leadership. In this regard, his model of operation was more oriented on his leadership skills as opposed to management capabilities. His perception put both customers and employees at the frontrunners needed in the operation of the company.
Valentine (2005) argues that managers are transactional in nature while leaders are transformational and thus they embark on performing the right things. The latter description befitted Leahy given that he was participative in nature and promoted corollary type of leadership. Leahy is perceived as the one who has been engaged in searching for leadership functionalities from both the employees and customers at large.
Accordingly, transactional leadership is based on the management of the current organizational strategic goals in an efficient manner while transformational leadership structures are committed to transform immense self-interests into possible goals and objectives of a functioning group. According to Rosener (1991), transformational model of leadership is placed on motivating employees’ individual self-interest objectives into team-based goals. In essence, this form is the fundamental philosophy that Terry Leahy places at heart in order to steer the organization into heights of success. The fundamental platform that the entity has undertaken to attract and maintain customers is based on the statement that exemplifies creation of value for customers. The customers are also respected and the value of their money is guaranteed at all times.
By the adoption of a transformational-based leadership structure Leahy drove Tesco into admirable for any production heights. He altered the focus of the company from the production-oriented entity to involve people-oriented aspect. This is associated with the assumption that he needed to put his past working-class leadership skills into use (Nwagbara, 2010).
As a transformational leader Terry Leahy exhibits the following traits that help propel the company to the heights of success that might be missing now. First, his leadership roles were completely oriented on the promotion of value, customer satisfaction and formulation of partnership amongst customers and employees. Potential customers were perceived as an immediate extension to the corporate perception of the company (Nwagbara, 2010).
This fundamental platform was made viable through the promotion of such facet as accessible communication. However, easier communication channels were availed for customers to raise their distinct issues and concerns that were later reintroduced into production processes of Tesco, establishment of efficient conflict resolution centers between employees and customers, showcast of genuine interest in meeting the welfare concerns of customers and allowance of the flexible ways of working-out complaints raised by customers (Nwagbara, 2010).
Second, Leahy ensured that his staff were developed in order to assume distinctive leadership positions of the company in the future (Nwagbara, 2010). This corresponds to the fact that Leahy embraced the capacity to empower all employees depending on their abilities to serve. His leadership model disregarded vertical leadership that was autocratic in nature. Instead, he believed in the flat management for every situational context (Nwagbara, 2010).
Third, Leahy put in place a localized form of leadership that developed and maintained a close cordial relationship with the customers. Thus, customers were put in a position to contribute to the manner of availing services (Nwagbara, 2010). Fourth, he was focused on possibility to embrace the effective level of commitment that was down-to earth and fairer in nature. The implementation of this leadership structure made it possible for Tesco in a long-term vision to employ and attain at the same time (Nwagbara, 2010). Fifth, Leahy’s leadership model allowed a participatory objective. This style ensured that relevant predictions were made concerning the acts of leaders in bring positive leadership achievements about. Sixth, Leahy ensured that the company gave the products to potential consumers at a competitive price. This business strategy was advocated for lowly-priced products to be of a high caliber (Nwagbara, 2010).
In essence, Leahy Terry proposed an effective model of a paradigm shift that pursued its success story across Europe. The following are the altered business environments that Tesco managed to establish under the leadership of Terry Leahy. First, the entity assumed the development of a Fresh & Easy platform for doing businesses in the United States. This facet played a significant role in penetrating newer market grounds especially in the western section of the United States. The retail subsidiary controls over 150 retail stores across the United Section (Nwagbara, 2010).
Second, under Leahy’s leadership Tesco customer-member card was introduced. This card, which was the first of its kind in the UK business environment, allowed customers to score points for every purchase made. This, in turn, ensured that they were compensated for being loyal to the operations of the entity (Nwagbara, 2010). Third, the company embraced technology and in 1995 embarked on creating an internet-based service store that helped increase the level of sales volume for its products. It is important to realize that the company was the first to introduce this form of service over the internet across the United Kingdom.
Fourth, under Leahy’s leadership, Tesco managed to fuse business operation with such petroleum-based companies as Shell and BP. For this case, the customers were saved from additional logistic costs irrespective of their points-of sale (Nwagbara, 2010).
Assessing the Implications Postulated by the Resignation of Terry Leahy
As it can be seen from the above discussion, the employees are the significant lot in the course of business operations. Thus, with change of leadership structures the most affected business stakeholders are employees. Consequently, the human resource is considered to be the core player of any given business. Profound absence of employees might cause irreparable redundancy of the organization’s operations (Nwagbara, 2010).
Employees are concerned with the provision of such activities as innovation, production and management. Given the imminent leadership style showcased by Phillip Clarke employees have been incentivized and their motivation placed fairly. It was noted that since he assumed into the leadership position, Phillip Clarke has been able to steer the operations of the company as far above as it was placed in the course of Leahy’s regime. This is largely attributed to his serving the company for a period of thirty years (Nwagbara, 2010).
Clarke has managed to withhold the commitment that was put into place by his immediate predecessor thus allowing employees ownership of the functionalities of the business. This model is similar to one deployed by Leahy hence an indication of successful and smooth transition of power. Effective communication platforms have been put in place in order to ensure that the company manages a smooth transition process (Nwagbara, 2010).
The company has continued with the process of reengineering customer issues and concerns that facilitated the sustenance of Leahy’s transformation-based leadership model. Additionally, under the leadership of Phillip Clarke, the company devised and adopted newer strategies of conducting business operations (Nwagbara, 2010). This is reflected in the embracement of the idea of a learning organization. It ensures that production limits are set and profit yields measured against workers performance.
However, the company has faced negative reactions from the stock exchange markets, which is obvious from the drop of the company’s share prices. Subsequently, this phenomenon indicates that the company is placed at an unfair position to maintain trust of the potential investors (Nwagbara, 2010).
As it can be seen from the discussion above, the company has managed to conduct a smooth leadership transformation. This is depicted by the ability of the company to sustain a loyal-customer base and employee turn-over rate. Given that Phillip Clarke was working for the company for a period exceeding thirty years, it is an indication that the company is still operating under experienced leadership. Notably, the willingness of Clarke to steer Leahy’s dreams of operating the company managed to maintain trust across all divides. Therefore, Tesco management change is a success story since distinctive checks and balances were put in place to oversee the entire transition process.