The purpose of this essay is to review, appraise and apply current leadership theories to the business case of retail magnet Arthur Ryan. Throughout this essay we will examine and evaluate the leadership style of Mr Ryan. For feasibility purpose the analysis will be limited to three central leadership theories, the Trait theory, Transactional and Transformation leadership. This essay will be presented in three main parts, short background review of the company and Mr Ryan, in-depth literature review of the mentioned leadership theory and finally critical analysis of the case study in respect to the Theory discussed. We will conclude by drawing lessons that can be applied within the current organisation.
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Arthur Ryan was born in Dublin on 1936; he started his career working for a London based fashion wholesaler and later on moved to work for Dunne’s stores where he acquired buying and merchandising skills. In 1969 he was poached by the Weston’s family to launch a budget clothing store in Dublin under the name of penny’s, in 1974, he took the model to the UK and open the first shop, rebranding the stores Primark to avoid legal challenge by the American retail store JC Penny’s.
In the following two decades Ryan expanded the business gradually and in 1995 the company was turning over just above 140m. Ryan, admirably Identified, that the growth in the clothing retail market will be in the budget clothing for the under 35’s. His competitive strategy can be described as cost leadership which is gain through optimising supply chain, bulk purchasing and running a very lean operation. He is known to be a shrewd negotiator who posse’s exceptional trading skills, as one of his former employees put it “Ryan has retailing flowing through his blood.” (Guardian, 2009).
Since the beginning of the decade Primark has seen enormous growth by bringing the concept of “Cheap Chic” and “Pradmak” to the UK high street, with 196 outlet and sales exceeding 2bn Primark has set its mark on the UK fashion industry. Some will argue that the phenomenal success of Primark in the last decade can be accredited to factors such as economic rescission or unethical behaviour (Drapers, 2008), never the less there is a wide consensus that Primark has the distinctive ability to bring the latest fashion trends at pocket friendly prices.
Mr Ryan has acted as the Chief Executive of the company for nearly 40 years, he does not own any shares in the company. He is known to be risk averse and was once quoted “I just like sliced ham and bread and butter, that’s where I am. No risk.”( www.moneyweek-profile-of-arthur-ryan-of-primark-45340.aspx). He is intensely private men and does not allow his picture to be taken, his schedule is kept secret apart from his closet colleagues and he surround himself by bodyguards from the fear of kidnapping. Most of his employees have never seen him and he has been described as a cross between the Invisible Man and television detective Colombo. He frequently makes unannounced visits to his shops leaving before his arrival has been announced. (http://archives.tcm.ie).
It appears that the organisation is run in an old fashion manner where senior management is still referred to as Mr or Mrs, marketing budget is set at the ludicrous amount of 15K, where most of it is used for traditional newspaper advertising. Mr Ryan have seems to adopt a very strong top down approach, where most of the decision are being made at the board level triumphed by Mr Ryan and his 3 closet directors dubbed the “gang of four”.
Literature review
Despite extensive interest in the area of leadership there has yet to be a clear definition of the term, the ambiguity is derived from the intuitive nature of the term, as the meaning can vary from one person to another. (Northouse, 2004).
This ambiguity can be partly addressed by the various leadership theories. In the early days in the study of leadership, the main emphasis was on the personal attributes of the leader, with theories such as the great men, trait and Behaviourist, while later research suggest a more wholesome approach, taking into account the followers and context, such as situational, contingency and transformational theories.
It would be sensible to mention that leadership theories are not replacing one another, but rather complimentary to the understanding of the multi faceted aspect of leadership. The latest school of thought suggest the idea of “dispersed” leadership, thus shifting the emphasis from developing a leader to developing a leadrful organisation (Bolden, R., Gosling, J., Marturano, A, 2003).
3.1 Trait approach
The trait approach was one of the first attempts to understand the study of leadership; this approach arose from the “great men” theory. In the centre of the theory lies the assumption that people are born with certain traits (Northouse, 2004), this assumption in itself has been challenged by many scholars. The research concentrated on identifying and isolating the key characteristics of successful leaders. It was believed that by doing so potential leaders who posses those traits and skills can be identified and recruited.
Table 1 -summery of the traits and skills identified throughout the past century.
(1948)
(1959)
(1974)
(1986)
(1991)
Responsibility
Insight
Persistence
Self- confidence
Sociability
Intelligence
Alertness
Initiative
Masculinity
Extraversion
Adjustment
Dominance
Intelligence
Conservatism
Responsibility
Cooperativeness
Achievement
Sociability
Tolerance
Influence
Persistence
Insight
Initiative
Self-confidence
Dominance
Masculinity
Intelligence
Cognitive Ability
Motivation
Integrity
Task Knowledge
Drive
Confidence
Source (Northouse, 2004).
Despite the trait theory being research for nearly half a century, researcher where unable to identify a consist set of leadership treats. Instead we got an extended list of subjective traits that would be managers should aspire to. (Andrzej, Huczynski, Bucahnan, 2007).
The theory main strengths lie in its simplicity, extensive research foundation and it can be used as an evaluation and development tool for managers. While it’s main weakness lies in its central assumption that have yet to be proven. Furthermore in taking into account just the leader, the theory neglects two of the other components, situation and followers (Northouse, 2004). As organisation change overtime there is not one set of traits that can be applied to all circumstances. Perhaps the most famous example would be Winston Churchill, the renowned second war world British prime minister, which was considered a great leader at time of war and a poor one at the time of peace.
3.2 Transactional and transformational leadership
The concept of transactional and transformational leadership theory was developed from the work of James McGregor Burns’ (1978) who studies political leaders. Burns distinguished between two contrasting types of leadership styles transactional and transformational.
Transactional leadership is based on exchange relationship between leaders and followers, the idea is that followers are rewarded in exchange to their performance; rewards can vary from tangible assets to recognition and status. Transactional leadership is often compared to management as it seeks to maintain stability rather than to promote change (Lussier & Achua, 2004, p. 358). Transactional leadership is based on three main components as set in the below table:
Table 2- components of transactional leadership
Contingent rewards
Management by exception (active)
Management by exception (passive)
exchange of rewards for effort contracted.
rewards for achieving goals promised.
accomplishments recognized.
clear goals and recognition once they are reached is held to result in individuals and groups achieving expected levels of performance.
standards specified by leader
deviations from rules and standards looked out for
corrective action taken quickly if necessary. May involve follower punishment.
leader awaits emergence of problems before acting.
Source: (Hay, 2007)
In effectiveness terms transactional leadership is considered to be less successful than transformational one (Hay, 2005). Firstly, transactional leadership is considered to be short term as there is no basis for the relationship once the transaction has been completed. Moreover, the relationship lasts as long as the benefits outweigh the costs (Sanders, Geroy, 2003) Secondly, followers are not motivated to out perform their pre defined or expected outcome (Bryant, 2003).
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In contrast to transactional leadership, transformational leadership tends to be linked with a more enduring leader-follower relationship. It is based on respect, trust and commitment rather than contractual agreements (Jung & Avolio, 1999). Transformational leaders inspire followers to set aside personal interests, to some extent, in favour of the collective or team purpose. Furthermore Transformational leaders motivate and empower followers to achieve performance beyond expectations by transforming there attitudes, beliefs and values (Bass, 1985).
Transformational leaders are admired and trusted by followers, they, in some respect, role models to there followers (Bass, Jung, 2003). The focus is on the leader as a person, rather than her/his contextual authority. Bass (2003) has identified four interdependent components of transformational leadership, which, when combined, should yields performance beyond expectations (Gellis, 2001).These include idealized influence (Chrisma), inspirational motivation, intellectual stimulation, and individualized consideration.
There is sizeable evidence to back up the effectiveness of transformational leadership. Research has found that Subordinate satisfaction, motivation, and performance can all be positively correlated to transformational leadership (Bass, 1998). The transformational leaders attempts to optimize development, not just performance, through the development of their associates, they optimize the development of the organization as well, as high performing associates results in high performing organizations (Bolden, Gosling, Marturano, 2003).
Despite the popularity of the transformational theory there are number of concerns that have been raised. Firstly, situational variables are not accounted for and may increase or moderate the effect on followers (Pawar, Eastman, 1997). Secondly, D’Intino and Victor (1995) suggests that like other theories that emphasize the role of leadership in increasing motivation and performance, transformational leadership is favouring management, customers and owners at the expense of other stakeholders. Thirdly, followers might be transformed to such a high level of emotional involvement that they become demotivated by the stress level (Harrison 1987). Finally, transformational leadership might cause some negative effect in the form of excessive competition. (Porter, Bigley 1997).
In 1985 Bernard Bass extended Burns theory further, his main contribution derives from the view that transformational leadership enhances or augments the effects of transactional leadership and that all leaders display both leadership styles though to different degrees (Bryant, 2003). Furthermore transactional leaders use contingent reward behaviour which includes providing recognition to subordinates, this type of behaviour is usually a more personal and may involve transformational leadership as well as transactional one. (Yukl, 1998).
Critical analysis
The success of Primark has been predominately attributed to Mr Ryan, as described by AB Foods’ chief executive, George Weston, “Ryan is the creator, driving force and inspiration behind the business”. (moneyweek-profile-of-arthur-ryan-of-primark). Although it is difficult to characterize Mr Ryan leadership style as in compliance to one particular theory, an attempt is made to assess his style by using the trait, transactional and transformational theories.
4.1 Arthur Ryan traits approach
One of the major shortcomings of the traits theory lies in its wide scope. For feasibility and focus purposes it would be constructive to limit the traits scope to intelligence, confidence, determination, integrity, and sociability, all of which have been identified by Northouse (2004) as primary to those in his composite table (see table 1).
Perhaps the most visible positive trait of Mr Ryan lies in his determination, proven by 40 years of persistent development of the company from a single high street shop to a 2bn turnover company. As one of his employees put it “”He works incredibly hard and he demands a lot,” ( http://business.timesonline.co.uk/tol/business)
It also appears to be that Mr Ryan is intelligent and confident; this can be implied by his rigours negotiating and unconventional vision of “cheap-chic” (Guardian, 2009), on the other hand, when Primark was experiencing securitisation from the press, due to unethical behaviour, he took a back role and let ABF executive handles the crises, conceivably avoiding leadership responsibility.
There are no explicit indication of lack of integrity in Mr. Ryan behaviour, however, in 2007 following a BBC Panorama investigation into child labour, Primark had to change its ethical stance and review its supply chain, this left the impression that Ryan and Primark management where turning a blind eye to in-humane working condition among its suppliers network, leading to Primark scoring the lowest of all leading clothing chains in the UK ethical index. (business.timesonline.co.uk, 2007). It is hard to determine if Mr Ryan had known about the poor working condition, or if he is lacking the integrity implied by the poor results in the UK ethical index. Furthermore, aligned with the overall criticism presented in the literature review integrity is hard to define as it’s intuitive in nature.
One of the major contradictions in Mr Ryan personality lies in his sociability; on the one hand he is known to be intensively private, his daily schedule is kept secret, and he frequently changes it at the last moment to avoid complacency. It seems that My Ryan is happiest in the shadows; in fact most of his employees have never seen him. However, Ryan may be obsessive about his privacy, but he is not a recluse. He is described by friends as gregarious and great company. (http://archives.tcm.ie/businesspost). It appears that Mr Ryan does possess high social skills however he chooses his associates very carefully and has a very clear distinction between social and working life.
4.2 Arthur Ryan transformation & transactional leader
As presented in the literature review transformational leaders based their relationship on an enduring leader-follower relationship. It appears that Mr Ryan has a very limited contact with his subordinates; in fact, most of them wouldn’t recognise him, despite, in some cases, working for him for over a decade (http://business.timesonline.co.uk), this indicates that a leader follower relationship is very unlikely.
Furthermore Ryan likes to be able to drop into stores unannounced to observe the business incognito (http://archives.tcm.ie), this give the impression that the trust element of the relationship is fragile as employees might feel as they are “being watched” and hence not trusted by management to perform their job.
Furthermore Mr Ryan seems to be controlling most of the aspect of the business as put by one of his former employees” He knows every inch of every store. He tries to visit each store every fortnight. He knows what everything costs, what is selling and where it is coming from. He knows all this because he makes those decisions himself” (http://archives.tcm.ie). It is apparent that Mr Ryan does not delegate or empower any of his employees, apart from the “gang of four”, he expect his subordinates to execute his decision rather than to make there own.
Never the less based on the four components of transformational leadership offered by Bass (2003). Mr Ryan does posses, to some extent, idealized influence (Chrisma), predominately derived from his professional competences, as suggested by one of his associate “He’s a one-off. You could never plan to replace him; he used to amaze us with his eye for detail. He would walk into a meeting and look at new products and say, ‘what about those cuffs on those new shirts at Oasis, maybe we should look at doing that” (http://archives.tcm.ie).
He is also consider, by some, as an inspirational figure as put by one of his former employees” The company is led with such passion that it is hard not to be inspired by Ryan.” (http://business.timesonline.co.uk), Furthermore, he might be described by some as a role model as described by one of his subordinates. “He would never ask you to do anything that he wouldn’t be prepared to do himself, but he wouldn’t pull any punches if you didn’t perform.”
Despite Mr Ryan possessing a few elements associated with transformational leadership he is short on many of the aspect that play a central role in the theory, primarily mentoring and coaching. Furthermore the inspiration of employees mentioned can be attributed to Mr Ryan passion for the company rather than a clear visionary goal for the entire company, this is a critical element in transformational leadership.
As argued above it appears that Mr Ryan leadership style is based on exchange, hence transactional, a good example would be his bonus scheme which include given valued employees flowers at Christmas, books or short breaks to reward good performance (business.timesonline.co.uk). Furthermore it appears that Mr Ryan is in favour of stability rather then promoting change, this can be displayed by maintaining the original “gang of four” management team for the past 40 years, another good example would be the reluctance of Mr Ryan to utilise online platforms as communication channel, which he was eventually forced to by ABF, in respond to the ethical behaviour crises. As put by the telegraph “Observers believes that stability at the top is one of the reasons that Primark has been so successful”.
4.3 Conclusion
There is no doubt that Mr Ryan is a shrewd business men that understood the market and have lead Primark to a great success, however there are strong reservations of the sustainability and further growth of the company success.
Firstly, there is no evident succession plan in place as Mr Ryan was involved in every aspect of the business, when he is gone he will be very hard to replace. Furthermore, in the view of expansion, the company will need to bring in a new management team with a wider set of skills, it is also unlikely that one person will be able to make all the decisions once the company grows, in fact, it is astonishing Mr Ryan have managed to grow the company to such a size with holding so much managerial power.
Secondly the external environment has changed; economic recovery is on the way, which means that customers will be able to afford better quality products that are offered by Primark, in addition ethical behaviour is high on the consumer agenda, which means that Primark will have to increase production cost in order to comply.
To sum up Mr Ryan does seem to posses some of the so called “harder” traits such as determnation and confidence however he is short of the more “soft” ones usually referred to as people skills. On the whole, his leadership appears to be highly transactional, concentrating on the task at hand with no or little attention to the process and the person performing it. If we look at his leadership from stakeholders perspective, employees have been neglected and are viewed as a tool rather than a resources that needs to be developed, thus in the view of sustainability and expansion, Ryan and Primark has a lot of scope to improve its leadership style to unlock the potential of his human capital.
There are a number of limitations to the above analysis. Firstly as describe in the introduction Mr Ryan is a very secretive men and therefore the majority of the information is based on third party sources rather than directly from Mr Ryan. Secondly, for feasibility purpose a narrow analysis of the theories has been conducted, for example only five traits have been used to evaluate Mr Ryan.
4.4 Self Reflection
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