Organizational Theory and Practices

This study material provides an in-depth analysis of organizational theory and practices, focusing on the case of Marks and Spencer. It covers topics such as management aspects and issues, leadership styles, motivation theories, and more. Gain valuable insights into the strategies and challenges faced by M&S in enhancing its organizational structure and performance.

Running Head: MARKS AND SPENCER 0
Organizational Theory and Practices
Student Details
4/11/2019

Marks and Spencer 1
Contents
Introduction................................................................................................................................2
Management Aspects and Issues................................................................................................3
Leadership..................................................................................................................................4
Motivation..................................................................................................................................7
Rewards and Benefits...........................................................................................................11
Conclusion................................................................................................................................12
References................................................................................................................................14

Marks and Spencer 2
Introduction
Marks and Spencer which is also known as M&S is a British multinational retail
organization. Headquarter of M&S is located in Westminster, London. M&S sells variety of
products of various categories such as clothing, food products, and home products. M&S was
founded by Michael Marks and Thomas Spencer in 1884. In 2008, it also started selling of
some branded goods such as Kellogg’s Corn Flakes.There are around 979 stores of M&S
located in U.K and 615 of them sells only food products (M&S, 2019). The company started
its expansion in international market in the year 1960 by opening its first store in Kabul,
Afghanistan of Asia. It also expanded its business in Canada in 1973 and managed to develop
47 stores there. Despite of several efforts made by M&S to enhance its image, it was never
able to come out of its reputation of stodgy retailer in Canada. Therefore, company started
closing of unprofitable stores there and by 1999 remaining 38 shops were also being closed
(Koumparoulis & Solomos, 2012). However, its expansion in other countries like France
made huge profits.
Profits of M&S were on peak in 1997/1998, but it is considered that during the tenure of Sir
Richard Greenbury, company profits declined to untenable levels as well as customer’s
loyalty was battered seriously. There were several other issues which caused declination in its
profits like more cost by British suppliers and company did not accept any credit card except
chargecard of its own (Bassous, 2015). These combined factors dropped M&S into a sudden
decline.
This report discusses about various management actions taken by M&S in order to improve
its profits and organizational structure and behaviour. There is also a discussion about role of
leadership and motivational theories to enhance the company’s performance.

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Management Aspects and Issues
Every issue within an organization whether it is related to family, politics, or societal, affects
the performance of the organization and the way employees behave and work. Human
resource management is a strategic function which is responsible for long term implications
on the organizations due to its practices. Issues of HR are being planned while considering
the future outcomes. Planning for the organization’s activity is the crucial role for managers.
Presently the huge economic pressure on M&S making its management to rethink about its
priorities and they are cutting costs and firing many employees (Yusoff et al., 2013). This has
created a sense of insecurity among employees and they are forced to work for extra hours in
fear of being made terminated. It has created several issues related to
management/organizational behavior such as leading to dissatisfied and demotivated
employees.
Organizational culture followed by M&S is customer driven which means that all the
processes of the organization are customer centric and performed to deliver the best services
to the customers. Customer driven culture at M&S suggests that organization makes real
efforts in its business processes to enhance customer service, recruitment of people and their
training, and market research (Spillane, 2012).
Another issue that M&S is facing is due to increasing immigration into Britain which is
allowing inclusion of various racial and ethnic groups in its culture. Employees that belong to
the ethnic minority groups have to face race and gender discrimination despite of having
several governmental laws and regulations against discrimination. This is one another issue at
M&S which its management has to consider and should take steps to stop racism and sexism
(Antonakis & Day, 2017). An organization’s most important asset is its employees because it
is the commitment, well-being, and development of employees which ensures its success and

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not the technological and structural advancement and sophisticated culture. Organizational
culture of M&S is the most important factor which will make the company most preferred
place for working among employees. In order to successfully manage the organizational
culture of M&S, managers have to develop a structure and workforce for it (Kopelman et al.,
2008). Although it might be possible that organizational culture cannot be managed but
managing diversity and equality is possible. M&S needs leaders and leadership style to
increase the trust, commitment, and motivation of employees (Weiner, 2012). Hence, the
current management aspects and issues that M&S is facing include corporate culture and
employee dissatisfaction.
M&S is one of the biggest retail and food supply chains in UK. There are around 700 stores
of M&S in UK and thus there are various job positions are vacant at M&S ranging from HR,
retail, and head office roles. Job applications at M&S are being taken through online websites
or phone (Aithal & Kumar, 2016). Performance management at M&S provides required
information regarding employees. This information is used by management to develop
employees’ skills. It helps the organization in developing services for the employees so that
they work with their full potential and thus enhance relationship between the company and
employees (Sorensen & Minahan, 2011).
Leadership
The above mentioned management aspects and issues that M&S is facing recently can be
resolved if company has effective leadership who are capable of handling any kind of
situation and challenges and has the ability to overcome those challenges. Leadership is
defined as the process of influencing the activities of employees or the organization in order
to achieve the set goals and objectives of the company (Dartey-Baah & Amoako, 2011). A
leader is one who seeks opportunities in change and does not consider it as a problem. He/she

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provides guidance to the employees to achieve goals of their own and organization.
Leadership is considered as a critical factor that decides effectiveness of an organization.
Initially leadership of M&S is associated with its family members but with time and
increasing issues in the organization made it to realise the need of change of leadership (Petri
& govern, 2012). When current issues of the company are considered then it suggests need of
distributive form of leadership at M&S. Distributive form of leadership has the ability of
creating a future vision for the company which will allow the employees and leader himself
to know about the steps which need to be taken in order to enhance their strengths and
capacities. A leader is in management role and the pattern of his or her behavior shows
management style of the organization (PA, 2009). Before discuss about the leadership style
that is used by M&S, it is important to get knowledge about some of the most popular
leadership styles. The three most common management styles that are used in most of the
organizations are:
1. Autocratic Leadership:An autocratic leader gives instructions to the employees
instead of asking their suggestions or options. In this leadership style, the manager is
the only person who involves in the decision making process. These kinds of
managers keep the entire power up-to themselves and do not believe in empowering
others which leads to dissatisfaction among employees towards their leader (Schein,
2010).Also this kind of leadership results in little cohesion and decreased level of
motivation among employees and thus leading an organization towards poor
organizational culture.
2. Consultative Leadership:These kinds of leaders seek consultation from their
employees or staff members before making any kind of decision which is directly or
somehow related to them. These leaders have good listening skills and an
organization having this kind of culture develops mechanism for getting employees

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feedback such as team briefing, newsletter, suggestion boxes, and many
others(Odumeru & Ogbonna, 2013). This type of culture provides employees with
feel of concerned and it boosts their morale and motivates them to work with their full
potential for the company.
3. Democratic Leadership: This kind of leadership involves empowerment. It provides
employees the responsibility of making decisions within provided framework. This
style of management provides empowerment to the employees by allowing them their
own decisions and work in the way they are comfortable to achieve the goal
(Sorensen & Minahan, 2011). A democratic leader just asks for feedbacks on frequent
intervals and ensures that the responsibility given to individual or team is performed
in right direction.
M&S uses consultative leadership style which means that before making any decision,
leaders consult with others. Hence, the entire group is involved in the decision even it is made
by leader but implemented only when all or the maximum number of people agreed on that
decision (Pinder, 2014). Sometimes M&S uses mixed leadership style also depending on the
situation. Along with consultative leadership, it sometimes uses democratic leadership too.
Now the above mentioned two management aspects and issues can be resolved by using
effective leadership. The leadership theory adopted by M&S is ‘Transactional Leadership
Theory’. This theory is mostly used by managers for the basic management processes such as
organizing, controlling, and short-term planning (Lunenburg, 2011). Transactional leaders
motivate and direct employees through their self-example. Employees just have to follow the
style of their leaders. One issue that M&S is facing: economic pressure and due to that they
have to cut down costs and firing of employees. It is causing dissatisfaction among
employees. A transactional leader enhances motivation of employees through rewards and

Marks and Spencer 7
punishment system (Avolio et al., 2009). They monitor the work actively and take necessary
actions if task is deviating from the set standards and rules.
However, consultative style is not the only style used in M&S. For example, consultative
style is effective while making decisions related to operating strategy at top level of
management. Large organizations like M&S, uses different approaches for managing staff
such as at production line of M&S, autocratic management is used to increase the efficiency
of production as the staff working on the operation machinery does not have sufficient
knowledge on the field (PA, 2009).
Motivation
To motivate the employees, Marks and Spencer uses different motivational theories. Below is
the discussion on motivational theories used by M&S:
1. Maslow and the Hierarchy of Needs: This theory of motivation was developed by
Abraham Maslow which suggests that all motivation comes from hierarchy of needs
of a person. Need of a person motivates him/her the most. Needs of the person are
defined by Maslow in a pyramid form as he assumed that fulfilling of one level of
needs will motivate the person to work hard for the next level (Kaur, 2013).
According to Maslow, basic needs are common for everyone and therefore they could
be fulfilled in a specific order described by the diagram:

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Source: (Rudani, 2013)
2. Douglas Macgregor- Theory X and Theory Y: Concept used by Macgregor here is
that managers generalized the employees and also the work for them. According to
that generalization they put all employees into two categories of either theory X
category or the theory Y category and then make use of appropriate management style
to manage the organization (Sorensen & Minahan, 2011).

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Source: (Yusoff et al., 2013)
3. Frederick Herzberg- Two Factor theory: According to Herzberg, there are two
factors which effect the motivation of employees. He said that there are certain
elements in a job which motivate an employee to perform better (Weisbord, 2011). He
named those elements as ‘Satisfiers’ which include:
Source: (Herzberg, 2017)

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4. Frederic Taylor-Scientific Management: He worked in a locomotive factory on the
position of superintendent. From the studies he carried out in the company, he made
several conclusions which are given below:
 Employees get a job because of their interaction with managers before and not
because they are good at the job (Pearsall et al., 2010);
 Employees having fear of losing their friend’s jobs make them not to work
hard;
 Employers try to pay as low as possible to the employees;
 Employees are not provided with enough instructions to complete their job
which results in poor amount and quality of produced products (Baeten &
Verwaeren, 2012).
Taylor argued that he has ideas to improve the matter which are as follows:
 Money is the biggest source of inspiration for the employees to work hard. If
employees are paid enough for their hard work, they will be motivated for
working even harder to make more money (Naylor et al., 2013);
 Trained managers should be appointed for functioning of organization and
supervising employees with disciplined procedure;
 Proper training should be provided to the employees to complete their job;
 There should be proper procedure for hiring new employees, hence right
person is selected for the job (Bassous, 2015).
Motivational theory used by M&S is Maslow’s theory. M&S helps its staff by setting goals
and motivate them to reach their goals. To encourage their staff’s enthusiasm, M&S praise its
employees when they perform well and pay them rewards for their hard and good work.
M&S also uses Herzberg’s two factor theory to treat its employees in a good way by

Marks and Spencer 11
providing them sound salary for the work they perform, safe and secure workplace, and sick
pay leaves and pension scheme (Naylor et al., 2013). Employees are motivated at M&S by
giving them responsibilities, as it makes them feel valued and important for the organization.
M&S use theory of McGregor by having leaders and managers who keeps their trust in
workers and also help them in their performance improvement. Managers provide bonuses to
the employees who perform good in order to motivate them (Weisbord, 2011). M&S also use
scientific Management theory of Taylor by providing good salary to the employees according
to their work and recruiting managers who are capable of controlling the staff.
Rewards and Benefits
M&S considers paying rewards to the employees is important. Rewards at M&S provides its
employees access to highly competitive reward package which is proved as an attractive,
motivating, and people retaining package (Baeten & Verwaeren, 2012). Rewards and benefits
for the employees at M&S include:
 M&S keeps watch on their salary range provided to the employees in comparison to
other organizations. This makes them sure that they are competitive and moving
according to the market conditions. A review on basic pay is performed every year
and organization recognizes achievements of individual by paying them extra offer in
form of rewards (Bassous, 2015).
 M&S provides additional 20% discount to its employees for all online and in-store
purchase items. However, some terms and conditions are applicable on it but
employees can purchase unlimited goods with discount.
 Company provides 28 days statutory holidays to its employees every year (M&S,
2019).

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 Company provides its employees extra benefits when company performs well
financially. It provides them various discretionary bonus schemes in order to make
them feel valued for their contribution in company’s success.
 Today it has become important for everyone to save some amount for after retirement
purpose. M&S helping its employees in this by providing them an excellent defined
Contribution pension plan in which company will contribute 6% for the 3%
contribution of employees (Sorensen & Minahan, 2011).
 M&S provides its employees a life assurance cover from their first day at job. Value
of this assurance cover is twice of annual pensionable salary of employees.
 M&S provides benefit of ‘Share save’ where employees can save and share in future
success of M&S. This scheme allows employees to save any amount between £5 and
£250 per month for three years. At the end of three years, an employee either can take
his/her money back or buy shares of the company at 20% discount (Pinder, 2014).
 One of its scheme naming ‘Salary Sacrifice’ allow employees to get childcare
vouchers, car leasing, holiday packages, cycle to work, and savings on national
insurance and tax.
 Apart from the discounts on in-store products, company provides discounts on several
other products and services such as leisure attractions, and holidays (Aithal & Kumar,
2016).
 Health of an employee is given highest priority at M&S and company provides its
employees several discounted healthcare products.
Conclusion
Therefore from the above discussion on the case study of Marks and Spencer, it is concluded
that Marks and Spencer is one of the biggest retail and food organizations of UK. Initially

Marks and Spencer 13
this report identified the management aspects, challenges and issues Marks and Spencer is
facing. These challenges are mostly related to managers and therefore have to develop and
make changes in its leadership style, organizational structure, and organizational culture. The
two biggest challenges associated with Marks and Spencer is employee dissatisfaction and
diversity in the organization. Also, it is the responsibility of HR managers to develop a sound
organizational culture within the organization by using their strong interpersonal skills. Issues
such as work force diversity, organizational effectiveness, leadership, and employee
dissatisfaction can be best managed by HR managers through implementation of various HR
practices. Therefore, these two issues of the M&S can be resolved using the effective
leadership style and motivational theories to strengthen the enthusiasm of employees. For
this, M&S uses consultative leadership style and sometimes the mixed leadership style,
depending on the situation. Transactional leadership theory is also used by M&S’s managers
in order to control, organize, plan, and motivating employees. M&S makes use of various
motivational theories to motivate the employees and to make them work with their full
potential. M&S uses four motivational theories that are: Maslow and the Hierarchy of Needs,
Douglas Macgregor- Theory X and Theory Y, Frederick Herzberg- Two Factor theory, and
Frederic Taylor-Scientific Management. All of these four motivational theories are
implemented at M&S in order to boost the potential of employees and to make them feel
valued and important so that they feel motivated to work hard. Apart from these motivational
theories, Marks and Spencer also makes use of Rewards and Benefits system for employees’
motivation.
Recommendations
Some recommendations for M&S to enhance its organizational culture and employee
satisfaction are:

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 Employees’ motivation can be further stimulated through efficient rewards and job
design, focusing on employees’ empowerment and participation, and through
motivating front-line staff without constant consultation from management;
 M&S can motivate employees through developing organizational structure and
culture;
 Scorecard can be implemented to align employees with organization’s strategy.

Marks and Spencer 15
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