The brand Tim Hortons is a household name to Canadians across the country. Many may even argue that it is a symbol of Canada’s national identity joining the likes of hockey, and the beaver to earn this distinction. Originally, Tim Horton’s business consisted of the specialization in coffee and donuts. As the business expanded their popularity soared, and as the result, Tim Horton’s decided to appeal to a larger portion of the market segment as they introduced items such as soup, sandwiches, and the ever popular timbit. (Tim Hortons story, 2012) The design of Tim Horton’s is through franchising. This allows a party with the assets available to own a Tim Horton’s restaurant, and continue to implement the successful business model already set in place. The rise in popularity allowed the franchise to expand to over 3200 stores across Canada and even into the United States. (Tim Hortons Corporate Profile, 2012) It has also allowed the company to be publicly traded on the Toronto Stock Exchange and is managed by the Chief Executive Officer, Paul House. He oversees and manages the entire organization and is on top of the organizational structure. As of April 2012, the company’s stock is worth 53.35 on the TSX which gives is a market capitalization of 8.3 billion dollars. (Globe and Mail, 2012) In comparison, Research in Motion Limited, a smartphone-developing giant has a market capitalization of 6.6 billion dollars. (Globe and Mail, 2012) In 2010, Canadian Business Magazine gave Tim Horton’s the distinctive award with the best corporate reputation. (Tim Hortons Awards, 2012) Two of the biggest factors on why the Tim Hortons won this award is due to their organizational structure, their socialization, and their business culture.
Organizational Structure
Tim Horton’s divides its labor into different functions of business, including specialists in marketing and purchasing, operations, finance, human resource, research and development, training and real estate. (Tim Hortons Web) There are many levels in the hierarchy. Different areas have their own vice presidents, middle managers, supervisors and workers. (Appendix) The span of control is tall. A manager supervises fewer workers. Employees perform the work role according to their specialties and the certain rules set by the company. The decisions are made by the shared ideas of specialists and managers in different areas. (Interview with Jian Chen, 2012) As the result, the organization is decentralized.
Tim Hortons franchises the stores in different geographic areas. The control in the head office and the local areas are different. For Tim Horton franchisees, in the working team, storefront employees are the first contact with the customers and have the responsibility to service them friendly and professionally. Production employees are responsible for baking all the items sold at the store. In the store, there are some designated trainers which have the job to train and coach new and existing employees. In the management team, we have the lower level manager which is assistant manager who must support the store manager and the store owner for the day-to-day operations. For higher level management, we have the store manager who controls the workers in their own stores. The manager must be an expert at recruiting, training and coaching. Workers have more opportunities to interact with managers directly. All important decisions are made according to managers (Tim Horton’s interview). So the control is decentralized and the span of control is flat with fewer levels. Tim Horton’s divides its’ labor horizontally by different functions and geographic areas, so it has hybrid departmentation.(Appendix) The level of control, autonomy, formalization for different departments and in different geographic areas varies. The vertical levels are high. Overall, Tim Horton’s organizational structure is very complex.
Since Tim Horton’s is a big organization, many levels in the hierarchy decrease the domain of the authority, which means that the employees own the higher level of autonomy. Managers in different departmental areas can have different goals and rules. Within each department, specialists work on their particular areas and have the authority to make the plan and development. Workers within the same departments communicate better with each other by sharing the skills. However, the increased differentiation (such as different departmental goals) leads to the poor coordination or even the conflicts between departments. Workers in different departments communicate less. (Peter Marsdea, Cynthia Cook, and Arne Kalleberg, 1994)
Many levels of hierarchy in the organization also imply that the span of control is tall. Fewer workers are controlled by a manager. Employees are less supervised so that they have the space to work on their own and make the decisions. The decision depends on the shared ideas of specialists and managers in various areas. So the organization is decentralized. According to Draft, Decentralization is usually accompanied by the increase in formalization. Since the company sets the standard rules, decisions can be set by lower levels without the loss of control. (Draft, 1986)
For the Tim hortons franchisees, they allocate their staffs by horizontal division of labour. This kind of division type assigns different employees to perform different tasks according to their skills. This increases efficiency and the production. In the departmentation area, franchisees use product departmentation to group their jobs. Departments are assigned by the basis of the particular product, product line. We can see production employees and frontline employees are responsible for baking and servicing customers. It has advantages for increasing the efficiency of the organization as different activities are grouped together, this also lead to the better coordination and communication among different functional specialists .The disadvantage is that it takes more time for sharing resources because of lesser communication between the product divisions. On the other hand, economies of scale might be threatened and suffered and become inefficient because product-oriented departments are not coordinated. Span of control is determined by the number of employees that directly report to a single manager. In the local Tim Hortons, they have the narrow span of control which results in the hierarchal organization. Because their tasks such as baking are inherently complicated, loosely defined and require frequent decision making. Furthermore, it has the flat organizations which there are fewer layers of management and workers, workers interact more directly with their superiors. One of the major benefits of flat organization is there are typically more communication between workers and management. Another big benefit is that flat structure lead to rapid decision making, because there are fewer layers in the chain of command. The local Tim Hortons are really small, so they are run by the centralization. This will result into uniformity of activities and ensuring uniform decision and uniform process. Centralization also results in quick decision and greater flexibility. Since top management makes decision, centralization may result delay in work for lower level workers, it takes much more time for workers to know the decisions.
There are many types of organizational structures. The structure with narrow span of control, high centralization, and high formalization is more mechanic. The structure with opposite characteristic is more organic. When an organization has a stable environment and routine technology, mechanical structure is preferred. When an organization has an unstable environment and technology, organic structure is preferred. But one organization can have more than one structure. For Tim Horton’s, they are using the mixed structure at present time. The mixed structure works better. Since Tim Hortons is a big organization with complex departments and many geographic operating areas. For departments such as marketing and financing, the working environments are uncertain. There should be fewer levels of control. Employees’ work role depends on different situations. They should be allowed to have the power to make the decision. So they should have organic structure. For departments such as accounting and human resource, the working environment is more stable. Mechanic structure should be better. In area such as Toronto or Ottawa, the technology is more advanced. The company should use mechanic structure. And for areas in rural areas with less technology, organic structure should be used. Therefore, structures can change overtime. Tim Horton’s should look out for the change in the environment and the technology and continuously adjust its structure to adapt the change.
If the company decides to expand, how will it affect the structural characteristics? As the size increases, the vertical and the horizontal division of labor increase, so does the formalization. (Peter Marsdea, Cynthia Cook, and Arne Kalleberg, 1994) So Tim Horton’s should set up more managerial levels horizontally and increase its functional and geographical departments. The standard of rules should be set so that employees can work by their own according to the rules. More autonomy should be given to reduce the unnecessary reports to upper managers, which waste the time and incur more cost. The negative side of expansion can be the poor coordination and the conflicts between departments which have the different goals. The company should use strategies to coordinate divided labors, such as liaison role, task force, integrators, or other activities that can help with the relationship between departments.
Socialization and Culture Organizational culture is the shared beliefs, values and assumptions within the organization. Tim Hortons is one of the ten most admired corporate cultures. (Workspan, 2006) The admired cultures are main factors associated with its success and effectiveness. Tim Hortons provides high product quality, value, and cleanliness such as it provides everyday fresh food and no leftover food for future sale. It provides extraordinary autonomous for the franchisee and store supervisors boost the passionate to satisfy customers with more flexibility methods. It constantly innovates and changes through products and system, such as menu change from only two products-coffee and doughnuts to nowadays menu which contains much more products such as cookies, Danish, bagels, sandwiches, rolls and so on. (The Story of Tim Hortons) The service system also keeps innovation to satisfy customers such as the drive through system innovation. It provides passionate commitment to society through give back to society activities such as leftover donation, children foundation, national sponsorships, and environmental events. (Tim Hortons webpage)
Socialization is the process that how people learn the attitudes, knowledge, and behaviors that are necessary to function in a group or organization. Tim Hortons uses different socialization methods for different positions to better pass on their culture. For franchisee, first it provides the information about how to become a franchisee and the responsibility of a franchisee on its web homepage. Second, it provides seven week training program in Tim Hortons University. During the training program, the university provides: hands-on experience in all Tim Hortons products, food handling and hygiene procedures, team member relations, and equipment maintenance and in-restaurant security systems. Third, after the training program Tim Hortons also provides all equipment, furniture, signage, restaurant opening crew to assist the opening. At last the district managers provide the experienced and knowledgeable feedback and guidance to ensure that the standards of product quality, value, cleanliness and guest service are consistently met in all locations within their district. (Tim Hortons webpage) For Employees, Tim Hortons use the other socialization process. Anyone who is interested in working with Tim Hortons has several of opportunities to join the team. First step, they can fill out an application form obtained through local stores or web site. Second step, managers will give a phone call to the applicators before the face to face interview. After the applicator being accepted by the manager, the company will offer special training programs to new employees. This training program help new employees to learn the culture of company while combine with skills and knowledge to produce standard products and better serve the customer. There also have the consistent training program to existing old employees to reinforce the organization culture. (Phone interview from Tim Hortons employee) A designated trainer is responsible for guiding, training, and coaching them. Employees can also learn skills and knowledge, and exceptional guest experience through orientation or some electronic devise. For example, videos about the company's history, stories, and mission statement are widely used to deliver the culture forming process. What is more, 83 % of the employees completed the on-line Standards of business practices training in 2010. (Annual Report 2010) The company also provides rewards and promotion system for permanent employees. Managers will review employees’ annual performance and give them feedback. An Individual Developing Plan is designed for employees to meet their career goals. (Annual Report 2010) According to the Tim Hortons Inc. 2010 Annual Report, an employee’s opinion survey said that 95% of the employee’s respondents feel proud to work for the company. This statistic number tells that most of employees have high job satisfaction. It shows that Tim Hortons' effectiveness of socializing corporate employees. The competitive advantage of Tim Hortons is that it earns profits from each individual companies at the same time benefit from the large economic scale such as efficient operations innovation, effective marketing planning, supportive knowledge and technology, and large scale purchasing. According to its culture, Tim Hortons boost sales by offering superior food and service. The higher quality of food and service results in a consistent increase of market share and revenues.( Shycon, 1992)The extraordinary autonomous of franchisee and store manager to respond the local market condition will give more accurate and flexible decisions to smooth the coordination conflicts, such as resolve conflict between employees and customers, save money from the sales estimation. The constant innovation and change expand the market and increase the market share. Tim Hortons’ give back to society culture builds strong positive public relationship. This positive public relationship reinforces the financial success of Tim Hortons such as it can cut the high cost of advertising; extend the reach of advertising; add credibility to a company's claims; measure public interest in products; generate leads; and build a company's image.( Marken,1988) The downsides to these cultures are eroding the profitability. The individual store autonomy paradoxically made the company as whole less flexibility, such as the marketing plan implementation. The promotion of Tim Card with Shopper Drug Mark is not useful for all Tim Hortons. According to my own experience, when the Tim Card from Shopper Drug Mark gets reject from Tim Hortons, because the franchisee do not implement the Tim Card promotion from head office. The rejection made me feel embraced unsatisfied and decide not to show up the store in the next few days. The improper implement of promotion erode the sales and profit. The retail layout is not innovated as fast as the operation or system innovation. According to interview from the Tim Horton employee, she reflects the restaurant employee layout is not profession to serve all customers from both in store and drive through during the peak time. The line up customers makes employees stressful while decreasing the customer satisfaction at the same time. The improper planned give back to society activities also lower the job satisfaction to certain employees. According to interview, the employee reflects the children camp does not allow the employee’s children to join in, which make her feel unfair and less job satisfaction. Overall the cultures held by Tim Hortons are the main factors to its financial success, but at the same time improper information pass though head office to individual stores, not innovated employee layout and unsatisfied employees eroded profitability.
All in all, the cultural characteristics that had served 3750 restaurants give a great success. (Tim Horton annual report, 2010) The culture does not need to change but improve. Since Tim Hortons has the strong culture built from its foundation period, it’s critical to change the culture. The force to change the culture may cause the much bigger disaster to erode the profitability such as the employee confusion and resistance to change; the customer confusion and lose confidence to brand; and even lose confidence to shareholders. Therefore, Tim Hortons can enhance the culture with improved socialization process. Tim Hortons can select employees who are able to adapt to existing culture and give feedback to existing employees makes sure the employee’s job satisfaction is high. The increase employee satisfaction leads to increased customer satisfaction and ultimately increases profit. (Homburg, 2004) Tim Hortons can reward and promote the employees according to their performance. The reward and promotion system is positive reinforcement to increase productivity. Tim Hortons can link individual stores more closely when the head office pass through new strategy make sure each store adopt and implies at the same time to make the consistency way to reach organizational goal.
Conclusion
All in all, Tim Hortons has developed into one of the best reputable organizations in the world vindicated by the numerous awards it has won. Through its organizational structure, it has created a company, which allows different franchises to have different goals yet still implementing the universal organizational culture. Through its socialization processes such as its extensive training programs it has paved the way for knowledgeable workers leading to respectable customer service. Given the findings in our research, it is clear why Canadian Business Magazine named Tim Hortons the organization with the best corporate reputation. In terms of organizational structure, one of the major reasons the company has been so successful is the autonomy it allows to its different franchises. The autonomy gives the organization a positive reputation because it let’s prospective franchisees known that they were not be entering into an entirely centralized organization. Our research has also led us to opinion surveys filled out by employees, which further reinforce Canadian Business Magazine’s award to Tim Hortons. 95% of positive responses is an overwhelming number that concludes that there is a high amount of job satisfaction thus leading to a highly reputable organization for employees as well as the general public.

Reference:
Homburg, C., & Stock, R. M. (2004). The link between sales people’s job satisfaction and customer satisfaction in a business-to-business context: A dyadic analysis. Academy of Marketing Science.Journal, 32(2), 144-158. http://search.proquest.com/docview/224894348?accountid=14771
Marken, G. A. (1988). Communications effectiveness: Public relations and sales...there must be a measurable relation. B to B, 73(4), 94-94. http://search.proquest.com/docview/209370043?accountid=14771
Shycon, H. N. (1992). Improved customer service: Measuring the payoff. The Journal of Business Strategy, 13(1), 13-13. http://search.proquest.com/docview/202716677?accountid=14771
Canadas most-admired corporate cultures named. (2006). Workspan, , 18-20. http://search.proquest.com/docview/194716627?accountid=14771
The story of Tim Hortons.http://www.timhortons.com/ca/en/about/index.html
Tim Hortons annual report. Annual report: http://www.timhortons.com/ca/pdf/Tim_Hortons_Inc_2010_Annual_Report_on_Form_10-K%281%29.pdf Corporate Profile http://www.timhortons.com/ca/en/about/profile.html
Franchisee training program. http://www.timhortons.com/ca/en/join/franchise_ca_program.html
Mission Statement mission statement.http://www.timhortons.com/ca/en/join/corporate.html
Stock Quote – Research in Motion. (2012). Globe and Mail . http://www.theglobeandmail.com/globe-investor/markets/stocks/summary/?q=RIM-T
Stock Quote – Tim Hortons. (2012). Globe and Mail . http://www.theglobeandmail.com/globe-investor/markets/stocks/summary/?q=THI-T
Peter Marsdea, Cynthia Cook, and Arne Kalleberg. ( 1994). Organizational Structure: Coordination and Control. American Behavioral scientist, ISSN 0002-7642
Daft, R.L. (1986). Organization Theory and Decision (2nd Edition) New York: West
Tim Horton’s (February 16th, 2012). Personal Communication with Jian Chen, Sales Department employee. Toronto, Ontario. Phone: 226-339-9432. Email: cjfcjm-48@hotmail.com

Appendix

Executive Chairman 1985
Donald B. Schroeder . . . . . . . President and Chief Executive Officer Cynthia
J. Devine . . . . . . . . . . . . . . . . Chief Financial Officer
David F. Clanachan . . . . . . . . Chief Operations Officer, United States and International
William A. Moir . . . . . . . . . . Chief Brand and Marketing Officer
Roland M. Walton . . . . . . . . . Chief Operations Officer, Canada
John M. Hemeon . . . . . . . . . . Executive Vice President, Supply Chain
R. Scott Toop . . . . . . . . . . . . . Executive Vice President and General Counsel
Stephen A. Johnston . . . . . . . Senior Vice President, Real Estate
Brigid V. Pelino . . . . . . . . . . Senior Vice President, Human Resources
Head Office
Head Office

President President
Chief executive officer
Chief executive officer
Operating
Operating
Human Resource
Human Resource Franchise Franchise Distribution Distribution Financing Financing
Marketing
Marketing

Franchise Store manager Store manager

Assistant Manager
Assistant Manager
Team Supervisor
Team Supervisor
Designated Trainer
Designated Trainer
Production Employee
Production Employee Storefront Employee Storefront Employee