HRM Human Resource Management in TESCO Organization
1- Identifying the organization's business strategy, mission and goals:
Tesco, the largest retailer in UK as well as the third biggest in the world in terms of revenue, was founded in 1919 by Jack Cohen. In 1924 the brand Tesco was first started its journey and in 1932 it became a private limited company. Now Tesco is operating in 14 countries all over the world. There are 4,331 Tesco stores and almost 470,000 people working in the company across the world. According to the recent annual report published by the company, its group sales in 2009 are found to be 59.4 billion euro (Tesco, n.d.).
Tesco’s well established and consistent business strategy has enabled it to strengthen the core UK business and expand into new markets successfully. Tesco’s business strategies are mainly focusing on huge domestic market of financial services, telecoms and non-food. One of the main objectives of Tesco’s business strategy is to create sustainable long term growth and according to the company this could be achieved by expanding into global market. The company initially focused on Asia and central Europe. Most recently it has made its entry into the US market. In 1997 Tesco first decided to diversify and according to the company itself this was the basis of its recent success. As a result of this strategy several new businesses have been created by Tesco for the last 12 years and most of these businesses are profitable and competitive (Tesco plc, n.d.).
Tesco has developed its strategies which are primarily focusing on five important factors, 1) its core UK business, 2) community, 3) non-food, 4) retailing services and 5) international market. The company has separate strategies on each of these aspects. Major objectives of Tesco’s business strategy include being a successful retailer internationally, growth of the core UK business, being strong in non-food market, development of various retailing services like telecoms, Tesco personal finance and Tesco.com and finally giving enough importance to community.
Tesco’s core UK business is a major part of its entire business as 70% of the group sales and profits of the company are coming from its core UK business. There are almost 2,200 Tesco stores employing around 285,000 people in UK only. There are four different types of Tesco stores in the country. These are 1) express, 2) metro, 3) superstore and 4) extra. In UK there are almost 960 express stores, 170 metro stores, 450 superstores and over 175 extra stores. Apart from these four there are ‘Homeplus’ where non food products, including clothing, are available. Tesco has learned an important lesson from current global recession as it has found out that although in tough time people want more value for their money but they do not want to make any compromise with product quality. Based on its past experiences Tesco has designed its future strategies. Tesco has a world leading customer loyalty program called ‘Clubcard’ which actually has helped the company to understand its customer in a better way (Tesco plc, n.d.).
According to Tesco, fulfilling corporate responsibility and creating values for community are crucial for achieving growth. Tesco believes that each and every strategy that they design has impact on the community. Tesco’s strategies regarding corporate responsibility or community include providing active support to local community, providing good jobs to the locals, taking care of the environment etc (Tesco plc, n.d.). Tesco take special care for environment and as a part of this they have launched an environmental store in Manchester on January 12, 2009. The company is aiming to create zero carbon stores in future (Tesco, 2009)
Main objective of Tesco’s non food strategy is to become as strong as it is in the food category. Tesco’s ‘Homeplus’ and ‘extra stores’ are the two stores where non food products are available. In 2006 ‘Tesco direct’, an online program where 125,000 products are available, was launched. The company has 25 distribution centres out of which 6 deal with clothing and non-food products (Tesco plc, n.d.).
Tesco’s various retailing services include Tesco personal finance (TPF), Tesco.com and Tesco telecoms. In UK, TPF is the most successful supermarket bank. Initially TPF was a joint venture between Tesco and RBS, but in 2008 Tesco decided to buy the fifty percent share of RBS in TPF. All the financial products of TPF are available online. Developing Tesco.com was a strategy of keeping pace with the modern trend. Almost one million people are today using Tesco.com for online shopping. Tesco mobile is a joint venture between Tesco and O2. Currently it is country’s one of the leading telecom service providers (Tesco plc, n.d.).
Tesco’s success in international market is based on six major strategies. These are 1) being flexible, 2) acting as local, 3) maintaining focus, 4) using multi formats, 5) developing capabilities and 6) building brands (Tesco plc, n.d.).
According to Tesco itself its mission is creating value for the customers for earning their lifetime loyalty. Tesco believe that people who are shopping with the company and who are working with the company are the key for its success. If customers like Tesco’s offerings they will come back to it as a reward.
Tesco’s goal is to earn customer loyalty by providing best possible services to them. But apart from this Tesco has several business goals. Major goals of Tesco include being successful retailer in the global market, being a strong brand in the non-food market, strengthening its retailing services, growing its core UK business, giving proper importance to community and fulfil community responsibilities.
2- Identifying the organization's overall HR strategy and goals:
This section will discuss overall Human Resource strategy and goals of Tesco. Tesco is the world’s third largest grocery retailer. It own approximately 470,000 employees around world. (Neville-Rolfe, Babbs and North, et al, 2009) Therefore, managers would make a complete and feasible HRM plan and use different strategies to manage these employees. The Human Resource strategy at Tesco’s revolves around training and development of employees, communication and consultation, and rewards and benefits linked to achieving steering-wheel targets. This way is used to measure the performance management (Anonymous 2003). Following, this paper will mention these main parts of strategies of Tesco.
The biggest part of HR strategy of Tesco is training and development. Every year, Tesco will employ a large number of staff. Some of them just graduated from universities or colleges. They have no idea how they will work and the culture of the company. Thus, they will accept a period of training. Tesco promise their employee ‘an opportunity to get on’. (Neville-Rolfe, Babbs and North, et al, 2009) It means each employee has same opportunity to acquire essential skill about their work; they also have opportunity to develop themselves to learn new knowledge. In the UK, skilled specialist employees such as fishmongers and bakers can get recognized qualifications during their careers at Tesco. In 2008, 97.4% of shop-floor and 99.9% of DC employees in the UK were trained to bronze level (competent), which should take four weeks to complete, and 94.2% of shop-floor employees to silver level (expert or experienced), which should take 12 weeks to complete. Tesco exceeded their plan to train 97% of retail and DC staff to bronze level, and 85% of their retail staff to silver level. If the employees know they can grow with the company, it will help Tesco to keep a large number of skilled workers. When Tesco spends money in training, the firm will own enough number of labour forces.
In addition, Tesco has an Options development program. In this program, staff could select and learn some skills that they need to grasp for the next work level. One in 30 of all employees at Tesco in the UK participate this program. (Neville-Rolfe, Babbs and North, et al, 2009) Through this program, employees could choice some suitable skills which they like to learn. It has more autonomy to maximize their staff's enthusiasm. Therefore, Tesco plans to popularize this program in Central Europe and Asia in 2009.
Tesco also have a program which focus on employees who just graduate. This program tries to employ the high-potential graduate and to train them for into leadership positions in fast-tracks. Through this program, these high-potential graduates will be fully used as soon as possible. It will reduce the probability of these graduates leaving.
Second part is communication and consultation. Tesco want to know the views of employees on problems which affect or maybe affect them or company. Managers will use different types to communicate with them, such as staff question times, face-to-face interview, and Tesco’s internet. In addition, Tesco has annual staff survey and Viewpoint, which are anonymous and confidential. (Neville-Rolfe, Babbs and North, et al, 2009) Tesco uses these approaches to find the problems in working process as soon as possible. And check the plan whether results accord it. If not, the managers could change the plan to amend it.
All Employees of Tesco are free to join unions. The unions could represent workers to discuss with company to protect the rights of employees. Moreover, Tesco has a helpline called ‘Protector Line’. It is a 24-hour confidential telephone line and email address for employees to report grievances and ethical concerns. (Neville-Rolfe, Babbs and North, et al, 2009) All reports will be logged and investigated by a special deportment. This is a channel for employees to report grievances.
The third part is rewards and benefits. Tesco offers basic wage as high as possible. However, it will base on the work which employees do. In addition, Tesco has a long-term reward plans across its markets. Its management terms could share bonus from the market growing. However, it also will link with their steering-wheel targets. The staff would gain some discounts in the stores.
In the future, Tesco will keep extend its strategies to increase its market share. The company’s goal will make HR strategy into a real complete part of its culture, and keep a long time.
3- Analyzing the various components of HR, such as resourcing, HRD, employee relations, reward & performance management:
Every organization has a complicated duty of managing human as a resource. There is no machine that can be able to act in the position of a human being in the good use of available resources. In the current competitive market, Tesco has a human resource department which helps a lot in the achievement of its goals and objectives. The department does not work alone but works in conjunction with other human resource components. These components include employee relations, and reward and performance management among others.
:Human Resource Management of Tesco
The HR Management has various activities some of these are, recruitment talent analysis, provision of good working environment, strict observance of rules and regulations , retaining of employers who have good performance as well as equal treatment of employees (Anonymous 2003).
The HR department carries out recruitment which involves steps that are followed (Armstrong, 2005). For instance, there is a call for application after which a criteria is utilized to shortlist those to be interviewed. After the interview, there is a negotiation of salary to be given and finally job allocation for the qualified. After recruitment, the candidates are taken through a series of training especially by use of available resources so as to end up coming up with quality employees. The company uses two kinds of training one is process training in which the employee is made aware of his or her duties as well as the all process of the work. The second category is the on the job training. In this category an employee is given after the first criteria of process training. The new employee is then inducted into the job by the most experienced in the job. Tesco understands the relationship between good quality products as well as affordable prices; it therefore trains its employees perfectly. The components of Tesco’s training procedure involve:
1- Core skill program- this is a basic training meant to equip the employees on knowledge of handling customers.
2- Winning in Europe- this is training in Tesco Company that aims at reaching out to other countries outside the United Kingdom.
3- Excel program- this category of training addresses all the kinds of training given from basic to the managerial training program.
The training given at Tesco is accompanied with pay especially to those who perform well and this leads to effective performance at the end of the training.
For good employee relations the company also encourages its workers to work near their homes thus cut down on time wastage due to transit. The company also gives their employees freedom of transfer thus encouraging employee retention than frequent recruits of new employees (Anonymous 2003). There is use of shift to promote unity in the company as well as exchange of ideas. As a result of a multicultural society, the HR department also works towards creation of a healthy work environment. Tesco works towards this by ensuring that every employee knows his or her rights in the organization. To promote healthy environment both for the customers as well as the employees, Tesco prohibits alcohol and other products in the same category. It also trains its employees on disaster management so as to improve safety in the premises. Such disaster management includes control of fire outbreak or in case of burglary.
Human as a resource is looked into through models in order to achieve the business goals of Tesco. There are no people who are identical in behavior or personality and therefore it calls for approaches to be able to bring harmony in the company. Tesco has committed itself to use commitment based model which does not force employees to meet frameworks. Achievement of goals is looked at as possible through respect, coordination as well as self-control. In this model still, psychological approach to employees is emphasized. This calls for motivation and reinforcement in order to achieve the objectives of Tesco management. Employee opinions are taken into consideration and are normally used even during problem solving process. This model taken by Tesco puts the employee on the fore front so as to ensure that they are satisfied and can be motivated to work. The complains that are normally raised by the employees are taken into consideration as well as their suggestions thus promotion of healthy working environment.
Payment procedure is the task of the HR department in Tesco Company. It pays its employees as per the national minimum wage act requirement. It also motivates its employees through pay increment after a thorough procedural evaluation has been done in the work place. Promotion is also another aspect of motivation in the company. (123helpme.com 2009).
The Human Resource role at any given organization with a well defined framework is very important. It is a very important requirement as a prerequisite of goal achievement in an organization. It has a vital role in decision making since it deals with the most important sector of an organization (Human Resource Management). Tesco’s success is highly attributed to the role of HR department and its components. This has assisted the organization to be in its effective position in the market.
4- Examining to what extent these various components of HR support and contribute towards achieving the organization's strategy, mission and goals (vertical integration):
1- Contribution of various components of HR towards:
1- 1 Business strategy:
According to Welcome to Tesco plc: our strategy (Tesco plc, 2009), Tesco has adopted a comprehensive business strategy which entails attaining consistent growth and increasing the scale of operation in the international market. The business strategy also involves attaining a competitive edge in terms of its human resource. This strategy has enabled the firm to strengthen its core business in its UK domestic market.
1-2 Mission statement:
The management of Tesco is committed to ensuring that it develops sustainable customer loyalty. To attain this, the management of the firm ensures that all operations of the firm are focused on satisfying the customer. This enables the firm to deliver value to its customers by understanding them in a better manner. The management is also committed to integrating the concept of innovation and ensuring that it has a wide range of human resources, and creating a good working environment for its employees (Our values, 2009, Para. 1).
1-3 Tesco overall human resource strategy:
The management of Tesco has formulated a comprehensive human resource strategy. The firm’s overall human resource strategy entails integrating employee training as part of the organization culture. The objective is to attain a competitive edge in its operation. The firm’s human resource strategy revolves around challenging rules that are not in the firm’s human resource policy – work simplification, performance management and ensuring that all the firm’s employees in all its head offices have the necessary core skills. In addition, the human resource training also considers employees at the lower level (Human Resources Magazine, 2009, para. 7).
2- Ways in which the firm’s human resource practices enable Tesco to attain vertical integration:
Tesco undertakes comprehensive recruitment in the process of increasing the size of its human resource. Both internal and external sources of human resource are considered during recruitment to ensure that the firm becomes competitive in relation to human capital. Internal recruitment is aimed at ensuring that the employees are motivated to move up in their career. Internal recruitment is based on the performance of the employees. This ensures the employees become more focused at delivering quality service to the customers. Internal resourcing enables Tesco to incorporate the concept of reward management in its operation. To ensure that internal recruitment is effective, the management has formulated a Talent Plan. The talent plan lists the firm’s employees who are seeking to move for a promotion. According to Recruitment and selection strategy at Tesco (The Times 100, 2009), if the talent plan does not have the necessary candidate, the vacancy is posted internally for a period of two weeks in the firm’s intranet. Internal recruitment enables the firm’s employees to be loyal to the organization since there are high chances of career development.
The firm also sources its human resource from the external market by posting the vacancy on the internet, offline mediums, radio and television. Comprehensive recruitment and selection enables the firm to deliver services effective to the customers and also to undertake product and service innovation (The Times 100, 2009, p.3).
2-2 Human resource development:
The management of Tesco has formulated an effective employee training program for all its employees. According to Recruitment and selection strategy at Tesco (The Times 100, 2009), the training program has resulted in effective human resource development and a good working environment. This is due to the fact that employees decide their training needs which enable them to be in control of their individual career paths. According to Career: our structure (Tesco plc, para. 4), this culminates in the employees being more committed to the organization, thus serving the customers more effectively. Employee training enables the firm to attain its business strategy.
2-3 Employee relations, rewards and performance:
To ensure that the employees are satisfied and productive within the organization, the management of Tesco has developed a good relationship with them both in the domestic and foreign market. According to Tesco (Tesco plc, para. 6), this is achieved by developing an employee relations team. The team is charged with the responsibility of developing policies that enable effective management of the firm’s employees. According to Armstrong and Tina (2005, p. 4) reward management should be fair. In addition, Tesco rewards its employees based on the value that they create to the organization.
5- Evaluating to what extent these components are consistent and support each other in achieving the overall HR strategy and goals (horizontal integration):
As be mentioned before, there are three part of the HR strategy, the biggest part of HR strategy in Tesco is training and developing. The second one is communication and consolation. The third one is reward and benefit. HR strategy is an important issue of HRM in a large organization. Especially as the international organization, Tesco is a good example. There are about 470,000 employees around the world. In addition, although there are different strategies, they work for the overall HR goal. In Tesco, the overall goal is for developing the culture of organization. The HR managers need to use the different HR strategies to support the same goals.
Training and developing
Tesco pay more attention on training and developing program. “Human resource developing is a key activity in today organization” (Beardwell, I., Holden, L. & Claydon, T 2004:266) The HR manager who work in Tesco recognized this point. Therefore, they focus on training and developing employees. And this program is for everyone who works in Tesco. There will be a huge number of new employees for Tesco every year, some of them have no the working experience. Tesco will train them before they start their work. In those training, they can get some skills which they need for the future work, and they will understand the culture of Tesco. After the training, they will feel their value been improved, that result in they will more committed work for Tesco. This is positive for Tesco to keep the useful employees, and that may help Tesco saving some money from recruitment, though recruitment cannot be ignore.
Except the training which be held by the organization, the employees can develop them skills which they prefer to improve. This will increase the employees’ interesting on work, therefore, that can develop their as much as they prefer, result in, the individual development will impact for the organization development which can improve the organization’s level.
However, those are benefit for Tesco; there are some negative impacts for Tesco. Firstly, although the training is for everyone, they cannot take the training in the same time. Therefore, there are some employees unsatisfied when they will take the training. There will be some negative competitive. Secondly, some employees will leave Tesco when they get the skills which they need. Actually, this is not good for Tesco. They pay the employees’ development program, which is in order to improve their level. If some of them leave Tesco that will be double worth for Tesco. They need to employ more employees, may pay for the interview fee, and they have to do the training again. That will increase the cost.
Communication and Consolation
This part is also important for HR goal. That can reduce the unsatisfied of the employees. Sometimes, communication is a part of the training and individual developing. Because after the training, the manager need to get some feedbacks for them to improve their next training. And when they arrange the training, there will make some conflict or unsatisfied. Therefore, the manager has to understand what the conflict is made by, and how to deal with them. They need to talk with the employees who unsatisfied for.
In other way, it is a independent part of HR strategy. That because it is not every conflict which is broke out by arrangement of training. Therefore, the manager has to understand every way of the employees’ needs.
Reward and Benefit
This is a basic and direct strategy of HRM. That can let the employees work hard, that because sometime this is link to their salary and their own portfolio. The discount for the employees is very kindly for them. In addition, training and individual developing can be seen a kind of the reward.
In other hand, some employees want to get more bonus, but the level of them cannot get more, they will unhappy, they may do not hard work as before. In addition, the discount is not for the employee, but also for his/her family and friends. That would be the potential threaten for Tesco.
Although those strategies are different, and those are influence the different target. All of them are work for HRM. There will be a link between those methods. The manager will mix them to manage the HR in Tesco as much value as they can. There are some different between each one. They have the different value for the employees. The manager will due to the different responsibility to operate the HR strategy.
6- Identifying any areas that could be improved:
Tesco knows that it has to keep its good strategy and this is the task of the human resources management to develop, identify and to strengthen the capacities of its staff. So it planned a long-term strategy to retain its staff. Here we will speak particularly about the role of training in the development of human resources management in Tesco.
Tesco has a lot of employees who have long experience, so it has to get benefit of them by training new employees in order to continue its success and meet all the circumstances in the future. In this way, Tesco should achieved self-sufficiency and reduce dependence on the foreign expert. Especially that Tesco has several levels of training as we have already mentioned. This does not mean not getting benefit from the experiences of foreign expert, but in a narrow scope in some training level that they are in need to outer experiences. Furthermore, it has to train employees with expertise and update some important information for them from time to time to provide its employees with new skills to fill the higher positions. It is essential that Tesco train its staff faster and in a high quality to meet any circumstances in the future. In the end, this is an investment in the most important resource of the organization which is the human element. All of these training courses make the organization get benefits from the competence of the trainee and make him loyal to it. Furthermore, it is essential to focus on the quality of the trainer and whether his potentials suitable for the current period and whether he is indeed what is required for developing Tesco staff.
According to Beardwell and Claydon (2007) in the definition of training, we can define it as a combination of many activities that are responsive to the needs of the current time, while learning and development are for the future.
On the other hand, for the rewards and wages as we have mentioned that Tesco is in line with laws and regulations to pay the salaries according to the minimum wage law .But it is necessary to connect not only between performance and reward, but also annual profits achieved. So when the annual profits increase, it is suppose to increase the average of rewards in the way which is consistent with its condition because when there is an increase in the company's profits, there should be an increase in the salary and rewards for the employee. And this will have a positive impact on the worker and the company.
In addition, the performance of Tesco management requires dealing with the performance of its employees efficiently. If it wants to remain in the united kingdom for controlling retailers. That means the management control system have to be effective by individual level or organizational level.
Sets of techniques are enhanced within every one of Tesco stores or at any Tesco's offices. Which will help employees to understand how good they are doing? As well as managers have to keep an eye on their subordinate perform. In some areas, if skills are not enough, it should be put into consideration as a threat to the efficiency of the workers. In this case, managers have to make some plans and identify their targets such as taking the necessary measures.
However, proponents of participatory management is argued that the technique provides an enhance in the stage of workers satisfaction, superior employer morale and enthusiasm, the company improved the performance and efficiency, and larger acceptance by the employee of organizational change.
By tradition, human resource management helps societies and institutions to achieve the aim of the organization by maintaining workers competence. According to the (2002), the following are part of human resources management: "training of the workforce to maintain the competitiveness of the institution. Communication and the development of industrial policies and procedures are in compliance with the legislation. Participate in grievance and disciplinary hearings". Negotiations lead when the termination procedures are implemented for recruitment and management of organizational environment and relations among workers. Make contact with the trade unions Information which is related to workers that will be used in making a decision and measuring the human resources management and contributing into the organization.
Indeed, Tesco imperfect plan of a helpful policy for human resources in achieving a competition. Improving of human resources, enhancement or total of all staff working within the institution as the strength of the company, the institutional performance of Tesco and thrive in an optimistic development.
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- Appendices (A): TESCO organization structure:
Organization structure of Tesco
Non Food Manager
(Deli, Curry Pot,
Bakery Team Leader
Non Food Assistants
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