METRO Cash & Carry

Organization Behavior-Group 2 (mon-wed 12-1:15)

Salman Zia Rana 17110024

Talha Arshad 17110003

Shaan Ali Shah 18110023

Manal Zahid Mahmood 18110006

Abdullah Khan 17110179

Rida Ahmed 17110227

Contents
Introduction .................................................................................................................................................. 2
METRO Cash & Carry in Pakistan .................................................................................................................. 2
Organizational Structure ............................................................................................................................... 2
Organizational Culture .................................................................................................................................. 3
Leadership philosophy .................................................................................................................................. 4
Analysis: .................................................................................................................................................... 5
Employee Motivation.................................................................................................................................... 6
Recommendations ........................................................................................................................................ 7
Appendix ....................................................................................................................................................... 8

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Introduction
Organization is defined as a consciously coordinated social unit, composed of two or more people that
function on a relatively continuous basis to achieve a common goal or set of goals.

METRO cash & carry, similarly, is an organization. It is an international self-service wholesaler that
operates across Europe and in some countries of Asia and Northern Africa. It is the largest sales division
of the German trade and retail giant METRO AG.

METRO Cash & Carry in Pakistan

METRO opened its first cash & carry wholesale center in Pakistan in 2007 & expanded to 5 wholesale
centers in a short span of 18 months. In July 2012 METRO and Makro-Habib combined their wholesale
business in Pakistan marking the beginning of a long-term partnership to the mutual benefit of both
companies. The merger allowed METRO and Makro-Habib to combine resources and gain the financial
strength to lead and grow in a challenging environment and to gain synergies targeted to generate value
for our customers and suppliers alike. Today the company is operating 9 wholesale centers in Lahore,
Karachi, Islamabad & Faisalabad.
METRO-Habib Cash & Carry Pakistan is part of METRO GROUP’s sales division METRO Cash & Carry, the
international leader in self-service wholesale.

It is not a super- or hypermarket chain for private consumption, but a modern form of wholesale
exclusively tailored to the needs of businesses and companies. The core customers are small and
medium-sized retailers as well as hotels, restaurants and caterers. The company offers business
customers a comprehensive product range both in food and non-food and efficient business solutions to
enhance the customer’s competitiveness in their own markets.

Head count of employees: 2300 approximately

Wholesale centers: 09
Market Entry: 2007

Organizational Structure
An organizational structure defines how the various jobs are formally set up, which essentially dictate
the level and power of decision making, authority and communication flow within the organization as a
whole. For a multinational brand as METRO, the existence of an organizational structure is essential in
directing the workings of the organization towards its aims.

METRO’s organizational structure has a long chain of command with a narrow span of control afforded
to each position. The operations are headed by a Managing Director, followed by the various Directors
of Divisions. Within these divisions operate the Head of Departments under whom, Senior Managers
followed by the Managers function. Interestingly, Specialists, Executives and Associates are also
incorporated formally into the organizational structure. With the well-defined structure, every

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employee knows whom they have to report to, thus avoiding any duplication of efforts. For managers,
they can be certain of which organizational goals they are responsible for.

What makes METRO stand out from its competitors with this regard is that an effective two-way
communication channel exists: top-down as well as bottom-up. Significant autonomy is afforded to all
managers and employees with their inputs directed towards the top officials. This in turn helps establish
future plans as well as strategies best suited to a specific geographical area.

However, one apparent drawback of such an organizational structure is the possibility of a breakdown in
communication, following the “Chinese Whispers effect.” A long chain of command has this inherent
limitation. In turn, with activities as duplication of efforts and inability to achieve goals, this will have a
negative effect on the motivation of all employees involved.

On the contrary, METRO has not encountered any such problems till date. Moreover, by allowing
employees to have a say in decision making, as per the self-determination theory, recognizing individual
efforts for their intrinsic motivation and making employees feel like they have control over their actions
is bound to have a positive effect within the work environment. Managers are likely to reap the benefits
of a two-way communication channel as well, as employee efforts will be linked with their personal
goals of recognition and success.1

Organizational Culture
Organizational culture is defined by the shared principles, traditions and values in the organization. The
presence of culture in an organization gives the entity its own unique attitude and personality. The
culture can be defined in three things.

Firstly, Culture is a perception. It does not contain physical form but it can only be perceived by the
employees with their experience in the organization. Secondly, it’s descriptive. The members perceiving
the culture should be able to describe it. It does not concern with whether the employees like it or not.
Lastly, the culture is shared. No matter how far the employees are on the hierarchy level with each
other or have different background levels, the description of the organization’s culture remains the
same in all corners of the organization.

Culture in METRO plays a vital role among employees throughout the organization. It determines how
the organization functions, and dictates the treatment of co-workers with one another as well as
subordinates and superiors. As mentioned in the definition, METRO also follows a culture which is based
on shared principles, traditions and values.

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Figure1, Appendix

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Starting with the principles, METRO holds six guiding principles which apply for all the members of the
organization.2

1. Customer Centric
All the major decisions of METRO are based on this very principle. Being a wholesaler, METRO
places customer value at top while making all the strategic decisions.
2. Global Entrepreneurship
METRO gives incentives to all the employees in forms of assignments which encourage
entrepreneurial behavior and uses its global status to enhance the value of the company.
3. Success through excellence
With immense competition in place, METRO ensures sustainability and always makes decisions
aiming at excellence.
4. Trust in our people
By encouraging participation, teamwork, active listening and accepting diversity of opinions,
METRO not only helps the employees in their development but also gives everyone a sense of
trust in the organization.
5. Sustainability
Make decisions that are sustainable and environment friendly.
6. Authentic Leadership
METRO believe in leading by example. It applies the three standards:
 integrity,
 transparency
 authenticity

Apart from these laid down principles, METRO also emphasizes on the values and traditions within their
employees. To ensure that employees are happy and satisfied in the organization, Managers give
monetary rewards based on performance along with recognition certificates even on minor
achievements. Provision of free meal vouchers to the employees and celebrating birthdays of their
employees increase mutual respect and regard for co-workers. The culture thus in essence, encapsulates
the spirit of motivation and encouragement as well.

Every person is treated the same to avoid the sense of unfairness from taking place. METRO maintains a
positive working environment by guaranteeing safe and healthy environment and by allowing
employees to take risk and encourage maximum team engagement. A recent survey conducted by
METRO show a very positive 91% score on employee engagement which show the positive affect of the
culture at METRO.

Leadership philosophy
Leadership is the ability of a person to inspire others to perform well and achieve a certain goal,
however challenging it may be. Taking it from an organization’s perspective, it is the general methods

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Figure 2, Appendix

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employed by the company in order to inspire its employees to work towards achieving the mission and
vision which it sets out.

The leadership philosophy of METRO includes an open door policy. They encourage everyone to come
up with plans and ideas to implement within their organization, given that these plans are aligned with
the company strategy.

METRO uses leadership for growth philosophy. This policy has been popularly researched by Harvard
Business School and employed by large organizations worldwide. This philosophy encourages leaders of
the organization or managers to motivate their subordinates to learn and to grow. This room for
personal growth acts as a fundamental motivator and an incentive for employees to contribute fully to
the organization.

This policy further helps METRO’s employees grow with METRO. Every year a review is carried out for
each employee and areas where they lack are pointed out for example communication skills or
presentation skills. Then in order to help develop the employee, Developmental trainings are then
carried out with respect to these specific areas. In such trainings the employees are taught hard as well
as soft skills. Metro believes that an organization can only grow if its employees grow with it, helping
them attain their personal goals simultaneously.

Metro believes that leadership is something which is not just inherent and thus can be taught. For this
specific reason, Metro has these Developmental trainings as it can help its employees turn into the
leaders of tomorrow.

Thus looking at this strategy as a whole, we can safely say that METRO employees a transformational
leadership style as it first forms its own vision (however short sighted it may be) and then encourages its
workers to follow that vision and come up with their own little projects to supplement that vision. The
directors thus lead the company using that vision while also incorporating what the employees have to
say. It also has its own rituals for example celebrating birthdays of employees every month thus
motivating them to work hard.

Analysis:
The philosophy being employed by METRO has worked wonders as most employees are happy and
satisfied with the company. The employees are also encouraged to share their own vision and are thus
given promotions which are more aligned with their own vision. This helps the employees to grow with
the company in a way which they want. Thus METRO is keeping its employees happy and motivated
through its general leadership styles even though it has lower monetary benefits as compared to other
companies.

We believe that when talking about leadership styles, METRO is currently employing one of the best
leadership styles suggested by the experts. Since it incorporates the individual vision of all its
employees, it keeps them motivated and inspired to work hard and achieve the aims of the company.

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However, having said that, we believe that METRO may be able to improve what it is currently doing by
introducing more rituals. These help the employees to identify with the company and motivates them to
work hard even further. Current they do have a few rituals such as Ramadan cricket tournaments and
monthly birthday celebrations; however, these are being employed by specific stores only. METRO could
improve by taking these rituals and making them a standard in all stores.

Employee Motivation
When interviewed, one of the employees shared it with us; he was relating back to an intrinsically
vacant work experience at one of his previous places of employment – a local bakery franchise.
Although it paid better than METRO, for him the compensation package came second on the list of
priorities. The employee preferred to be dealt with respect. METRO Cash and Carry offered him exactly
that.

This is an example of interactional justice the wholesale chain has integrated into its organizational
culture. In accordance with internationally administered guidelines, METRO Cash and Carry not only
upholds the self-esteem of its employees but also nurtures an intrinsically satisfying atmosphere. It is
evident from this attitude that METRO is committed to encourage motivation amongst its workforce. A
question arises here however; exactly how effective are these activities in persistently directing
individuals towards attaining specific goals?

The organizational development manager shared several dimensions of the company’s motivational
strategy. The insights we gathered can be arranged within Herzberg’s motivation-hygiene factor theory.
According to the theory job satisfaction and dissatisfaction are linked to intrinsic and extrinsic factors
respectively. In METRO’s case activities like Inter-departmental (and inter-store) cricket matches and
FIFA console gaming tournaments fall under the category of satisfaction-inducing intrinsic activities.
Promoting values like self-respect, recognizing and subsequently rewarding employees of the month
and employee-manager meetings (twice a year) all fall under this category. The demanding nature (in
terms of time, patience and physical requirements) of retail sector jobs is infamous. This is one of the
few intrinsic factors that do not induce satisfaction.

On the flipside an extrinsic factor that produces job dissatisfaction is a less than competitive
compensation package. To be fair however, a much longer list of extrinsic factors do not contribute
towards dissatisfaction. This includes health benefits for the family, employee discounts (8% for all
permanent employees with a monthly limit of PKR 40,000), annual leaves alongside sick leaves and
various bonuses over the year.

Herzberg suggests that it is the intrinsic factors that contribute towards motivation; extrinsic factors are
simply instruments to improve hygiene. This is particularly true for collectivist countries like Pakistan
where a conducive work environment acts as a bigger motivator than salary packages.

Intrinsic factors also lead towards a higher degree of job engagement (which in itself is an aspect of
motivation). Another crucial factor is the match between an employee’s values and those of the
organization; METRO has taken several leaps in this regard. The top management ensures this by

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installing posters across hallways with integral company values printed on them. Employees are directed
to ‘Engage’, ‘Speak up!’ and uphold values like ‘Integrity’ and ‘Responsibility’. All of this is reinstated
with a ‘Compliance is not negotiable’ heading on the top (figure 3,4,5,6).

There is however a ‘dark side’ to job engagement. METRO needs to be sensitive about an over-engaging
work routine. It needs to ensure that the nature of the work is not so demanding that an employee is
forced to sacrifice engagement in other areas (like family). This (and several other) tendencies need to
be gauged through an engagement questionnaire which assesses motivation and absorption in a task.
Added to this METRO should also invest more resources into encouraging self-concordance amongst its
employees. An employee needs to have a sense of control over where he stands within the organization.
Currently, only two Semi-Annual meetings with the job manager take place within a year which formally
caters to this aspect. When asked about the existence of a mentorship program deployed to integrate
new recruits, the manager assured us that there was one, but it existed mainly in the books. METRO still
needs to work on that amongst other things.

Recommendations
In the insightful visit to METRO, we were able to observe and analyze organizational behavior in its true
form. It is however essential to understand that for every organization, the policies are contingent upon
multiple factors and therefore each organization employs different techniques for the purposes of
efficient and optimal utilization of resources accordingly.

As highlighted above, the policies adopted for METRO are uniform and applied organization wide,
although, do allow for room for individualistic approaches in dealing with situations. This acts as an
encouraging factor for the department heads and managers.

The methodology for leadership as seen has proven to be productive for employees. This fares positively
when compared to the unorganized structure of most organizations in Pakistan. Therefore, LFG, along
with a pick and mix of other styles of leadership can be employed to help provide a rejuvenated work
environment employees enjoy working for.

As for motivational approaches, it can be safely concluded that METRO has the added positive notion of
respectability and security provision in the work place. Thus, for future, preserving the current policies
while improving personalization between different levels of organization is recommended.

All in all, METRO, by way of trial and error has altered and fashioned its policies for a better and happier
work environment for all of its employees. Preserving the status quo while occasional introduction of
innovative ways to improve motivation and productivity in the work place, can keep the current success
alive and fresh.

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Appendix
Figure 1

Figure 2

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Figure 3

Figure 4

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 Figure 5

Figure 6

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