Organisational Theory Common Practices In Organisations Business Essay


As one of Britain's leading food retailers and has 586 stores throughout Great Britain and various store outside U.K. Tesco has grown greatly and increase its market share from 10.4% to 15.2%. This increase in costumers has also given Tesco a large amount of profit. Tesco has 164,500 shareholders, it's profit is about 505 million pound after the tax has been deducted; about 50% of this is then distributed to the shareholders. The rest is then set aside for investment in stores and improving services for the costumers.

Tesco is a very large firm with several positions of responsibility. Being such a large organisation, it provides a lot of power as well as responsibility, Tesco has chosen the 'Hierarchical Structure' for its level of responsibility. This structure is in shape of a pyramid. It begins at the top with the chairman where the ultimate power lies and broadens out towards the base with the lowest amount of responsibility being given to the workers.

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Tesco's objective of product promotion is to give a large and relevant range of product promotion in their entire store. This then should be both the customers and the product.

They aim to differentiate their market and they try to make the promotion strategy to the market they are aiming at.

Within the organisation there are different functions areas each, which control different section of the business. It is up to the managers of each department to ensure that each member of staff within their department carries out the correct tasks to ensure that the business is run successfully.

1.2 Types of Organisational Structures

There are three different kinds of organisational structures they are (Mullins, L. J. 2005):

1.     Flat structure

2.     Hierarchical structure or pyramid structure

3.     Matrix structure

Flat structure does not have more than three levels and the organisational chart is overall flat.

A business with a flat structure is likely to be relatively small and in a flat structure everyone knows everyone else, they have good communications techniques because few people are working in flat structure. They will be good at responding quickly to new ideas or specific customer requests.

The advantages of flat organisational structure are:

Fewer tiers that means easier communication

A short chain of command making the decisions to be implemented quickly

Employees may be motivated to being able to make decisions.

The disadvantages of flat organisational structure are:

The organisations may lack direction if too many people in the organisation have a say in running the business

Decisions may take time to be made if many people may wish to comment

There may be confusion over responsibilities and things may not get done


A hierarchical organisation is taller than a flat structure and it has many levels. The word hierarchy means systems whereby grades or classes are ranked one above the other. Sometimes hierarchical structures are called pyramid structures because they have more employees in the lower levels. In a hierarchical or pyramid structure each functional area has many staff to do a particular task and the staff that work here have specific skills and talents in their own job. In a hierarchical or pyramid structure communication can become distorted as messages pass from one level to another so staff at the bottom level receive a slightly different message than the one they should have received from the manager.

The advantages of hierarchy structure are:

A leader or leadership team can give the business a direction

A leader or team could make quick appropriate decisions on behalf of the organisation.

Employees are clear about their position and Span of control within the organisation.

Employees know who to report to in events of problems instead of going to the owner directly for irrelevant issues.

Employees become motivated because they get a chance to become promoted to a higher tier.

Communication within the organisation can smoothly follow the chain of command up and down the structure.

The disadvantages of hierarchy structure are:

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Decisions can often take time to follow the chain of command

Employees can be demotivated if there are considered as at the bottom of the hierarchy.

Decisions may be made by a few that are not in the interest of everyone on the organisation.


Matrix is a different type of organisation structure it can be neither flat nor hierarchical. It is often found in organisations where they deal with different kind of special projects. In a matrix structure all the members need to communicate because they are from different kinds of functional areas and their input is needed to make a decision for a special project. In matrix everyone has special individual talents and skills in their specific department, this ensures the best possible outcome for their project. However there is a disadvantage because the people who work in the matrix structure only have specialised skills in one area so they cannot get wider experience. Finally, it is difficult in matrix structure to communicate effectively and respond to any changes in the organisation.

Advantages of matrix structure

Project managers are directly responsible for completing a project

High level of motivation

Easier Communications were specialist can contribute to new ideas

Disadvantages of matrix structure

There can be conflict between line managers and project managers over the allocation of resources.

With manager having more authority it would be difficult to control them.

It can increase staff costs as more mangers are created.

1.3 Tesco Organisational Culture


There are four types of organisational culture that can take place within a business, the 'term culture', describes the typical approach within a business, culture is the personality, share beliefs and the procedures that a business uses to solve any problems. The four types of organisation culture are

Power culture- this type of organisational culture will be found in a business that emphasises on making individuals rather than decision-making, which enables decision to be making a lot quicker.

Role culture- this is usually found in big companies where all staff have a defined job role, this culture is split into two functions that are organised in a hierarchical way, this culture works

Task culture- in this type of culture, the company selects a team to work towards a specific project, there is no formal hierarchy involve in this culture.

Person culture- in this type of organisation the administrative back-up for an individual to perform his or her own things, there is no formal structure at all and this are mostly practice in a professionals, e.g. architect and entertainment 'stars'.

Tesco's employees practise the 'Role' business culture, since all employees are provided with appropriate job skills training, so they follow the job description scheme. This encourages the employee to work harder, since they are giving the chance to express themselves.

Furthermore Tesco treat all employees fairly and honestly regardless of where they work. All staff will have a written contract of employment, with agreed terms and conditions, including notice period s on both sides.

All staff are entitled to reasonable rest, break, access to toilets, rest facilities and potable water at their pace of work, and holiday leave in accordance with the legislation of the country where they work. Any employee who suspects infringement of policy has the right to inform the authority without fear of persecution and the allegation will be investigated, and take appropriate action as necessary. This applies to all Tesco employees whether they are in full time, part time, or temporary employment. Tesco aim is to ensure that their company is a satisfying place to work by giving their staff the opportunity to be themselves, actively encouraging their health and well- being and supporting their work/life balance needs. The staffs are entitled to various kinds of leaves such as; maternity leave, career breaks, parental leave etc.

Tesco use extrinsic reward for a vast majority of employees in order to motivate them and gain as high level of output possible. Extrinsic rewards include extra bonuses based upon quantity and quality depending o the employees' job.

1.4 Factors influencing individual behaviour at work

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There are many different factors that influence individual behaviour at work. These are:

1. Demographic Factors:

The demographic factors are socio economic background, education, nationality, race, age, sex, etc. Organisations prefer persons that belong to good socio-economic background, well educated, young etc as they are believed to be performing better than the others. The young and dynamic professionals that have good academic background and effective communication skills are always in great demand.

2. Abilities and Skills:

The physical capacity of an individual to do something can be termed as ability. Skill can be defined as the ability to act in a way that allows a person to perform well. The individual behaviour and performance is highly influenced by ability and skills.

A person can perform well in the organisation if his abilities and skills are matched with the job requirement.

3. Perception:

The cognitive process meant for interpreting the environmental stimuli in a meaningful way is referred to as perception. Every individual on the basis of his/he reference can organize and interpret environmental stimuli.

There are many factors that influence the perception of an individual. The study of perception plays important role for the managers. It is important for mangers to create the favourable work environment so that employees perceive them in most favourable way.

4. Attitude:

According to psychologists, attitude can be defined as a tendency to respond favourably or unfavourably to certain objects, persons or situations. The factors such as family, society, culture, peers and organisational factors influence the formation of attitude. The managers in an organisation need to study the variables related to job as to create the work environment in a favourable way that employees are tempted to form a positive attitude towards their respective jobs.

5. Personality:

Personality can be defined as the study of the characteristics and distinctive traits of an individual, the inter-relations between them and the way in which a person responds and adjusts to other people and situations. The several factors that influence the personality of an individual are heredity, family, society, culture and situation. It implies to the fact that individuals differ in their manner while responding to the organizational environment. Personality can be regarded as the most complex aspect of human beings that influences their behaviour in big way.


2.1 Different Approaches to management

The process of management has been useful in addressing management challenges for more than a century. Many of the challenges faced by managers during earlier periods were similar to those faced by managers today. For example, Taylor´s concern for the productivity of employees is shared by managers today. Indeed, the challenge of meeting international competition is often addressed as the challenge of declining worker productivity. Among the challenges that managers have faced in the past are: Increasing worker productivity, meeting the challenge of international competition, replacing old work methods and equipment with newer, more expensive equipment, developing new products, maintaining employee motivation and morale, integrating the changes in societal values.

2.2 Early perspectives of management

The first known management ideas were recorded as long as 3000-4000 B.C. One example is the building of the pyramids in Egypt. Archeologists and historians have discovered that the Sumerians in 3000 B.C. used form of recordkeeping for commerce that was a relatively sophisticated system of accounting. Throughout the history, management style was often autocratic and paternalistic. Servants, soldiers or workers who were "supervised" were all expected to do as they were told. The autocratic owner or manager was generous, as long as people stayed in line.

Classical theory is a grouping of similar ideas on the management of organisation that evolved in the late 1800s and early 1900s. This theory contains three general branches. The most important characteristic of all three is an emphasis on the economic rationality of the individual employee at work.

The rational economic assumption was an extension of the ideas developed by Adam Smith. Smith´s classical assumption was that people choose the course of action that maximises their economic reward. To get employees to work hard, managers should appeal to their monetary desires. The assumptions are generally based on pessimistic views of human nature. Although these views are true to some extent, they oversee more positive aspects. These theorists recognised that humans have emotions, but they felt that emotions could be controlled by a logical and rational structuring of jobs and work.

 2.3 The human relations approach

 Neoclassical theory is a group of management ideas that developed from the 1920´s through  the 1950´s. The predominant characteristic of these ideas is the emphasis on the social, needs, drives and attitudes of individuals. The neoclassical theorists felt that employees could not simply respond rationally to rules, authority and economic incentives. They believed that employees brought their social needs with them to the organisation and that effective management required a more-human oriented approach.

2.4 Modern management

 The ideas of classical and neoclassical theorists have many applications in the management of todays´ organisations. However, modern management theory highlights the complexity of modern organisations and integrates ideas from the other management theories. Since individuals are complex and people´s motives, needs, aspirations, potentials vary, there can be just a few static principles.  


3.1 Leadership styles

Leadership has three specific styles. These are known as autocratic, democratic, and laissez-faire (James A. Robinson, 1983).

Autocratic is when a person was to take control of the situation. The leader would decide what will be done and would make clear what the group's expectations are. This style is often used to suit dangerous situations where decisions need to be made quickly. It also seems to suit individuals who are confident (and are often task - orientated) as little notice is taken of individuals when decisions are made.

Democratic is when the task is person orientated. This means that the leader or captain would take advice from his/her team mates. They would listen and act on the opinions of the group. Democratic often goes as far as taking a vote with a major opinion.

Laissez-faire is when the group is encouraged to do whatever they want to do. The term laissez-faire is French for "let it be." There is little direction from a laissez-faire leader. Successful use of this style depends on the members of the group.

3.2 Motivation theories

Motivation is one of the most crucial skill that a manager needs to have it is the reason why it has to be studied it could be described as a leadership skill because a good leader has to be able to motivate their staff; firstly we need to know what motivation is. Motivation is "a set of processes that moves a person towards a goal, thus motivated behaviours are voluntary choices controlled by the individual employee."

There are two main overall categories of theories of motivation these are formal and informal theories of motivation informal theories are based on assumptions of managers these are the assumptions on what motivates staff. These are theory X and theory Y types of management the basis of these is that theory X managers believe staff are not motivated enough and dislike work and responsibility, theory Y managers believe the opposite that staff are motivated and seek responsibility.

The other assumption-based theory is the social assumptions. The Fredrick Taylor theory of motivation also falls under the assumption based theories it is assumed that by Taylor money is the only motivator and the last main assumption based theory was the hawthorn studies about the impact of social relations on motivation.

The formal theories of motivation

The formal theories of motivation fall under three main headings these are content theories, process theories and reinforcement theories.

Content theories consist of four major theories that are going to be evaluated to give a deeper understanding to what content theories are all about. These theories are Maslow's hierarchy of needs, Alderfer's modified need model Herzberg's two factor theory and McClelland's motivational theory.

Process theories being about expectations of the individual brings in the concept of the psychological contract this is described by Mullins (2005) as the unwritten codes of conduct or expectations that individuals feel their organisations or employers should meet, these are hard to meet fully but there has to be a balance a little give and take so as to satisfy both needs of the employee and the organisation.

The process theories are based on this ideology of "expectation is the main driving force for individuals" as long as they believe that they are working towards something that will meet their needs, and individuals are under that assumption their manager or organisation work on a similar policy of effective reward and recognition.


4.1 Groups / Team Effectiveness

With the increasing awareness of the paths to achieve organisational effectiveness, the role of effective work team becomes more and more important nowadays (Willis, S. 2001). "Work teams have long been considered an effective device for enhancing organisational efficiency and team work ranks near the top of the list of factors that lead to management success.(Bennett, 1999)" In order to build an effective work team, managers are playing a crucial role in effective team building. It is the premise of this essay that the effectiveness of a team depends heavily on the communication skills, which include self-awareness, assertion, listening and process management skills exercised by the team members and managers

Team-working is crucial in today's society due to such fierce competition from other firms within their market on factors such as productivity, quality, innovation and technology, which requires the collective inputs of individuals each with different abilities and skills to provide the desired product or development. 

According to Willis (2001) there are seven key elements that are essential to high-performance work teams which consist of:

Commitment, contribution, communication, co-operation, conflict management, change management and connections.

To compete effectively, managers/leaders must design a network to consist of these factors along with skilled employees who support each other in the achievement of corporate goals.  However, according to Mullins, (2005) as a group or team increases in size, problems start to arise regarding communications and co-ordination.  Large groups are difficult to maintain and often require a high level of supervision or a strong team leader (Tuckman, B. W. 1965). When a group is over-sized there is usually an increased level of absenteeism and the group may become split into smaller groups or sub-groups which may lead to competitiveness and friction within the company. 


Conclusion and Recommendations

Tesco's organisational structure is a hierarchical structure. In a hierarchical structure the communication can be distorted as messages pass from one level to another, this means that the staff at the bottom level receive a slightly a different message than the message they intent to receive it. Many people have to be consulted before a decision is made so the company is slow in responding to changes and challenges. This means they cannot provides quick services to their customers and it is going to affect in terms of sales and profit but there is an advantage that if everybody is consulted they will come out with the best results. In hierarchical structure there are specific functional areas and job roles. The employees can be easily identified and given training so they can provide good services to their customers.

Hierarchical structure has good delegations because they are many people with specialised skills are working here so they can easily assign their subordinates for a particular task. The span of control is less than the flat structures. In hierarchical structures they have good promotion prospectus so the staff are motivated and they provides good services to their customers.