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Jack Cohen founded Tesco in 1919 when he began to sell surplus groceries from a stall in the East End of London. The Tesco brand first appeared in 1924. The name came about after Jack Cohen bought a shipment of tea from T.E. Stockwell. He made new labels using the first three letters of the supplier's name (TES), and the first two letters of his surname (CO), forming the word TESCO (TESCO plc, Our History).
Tesco is the Great Britain's biggest supermarket chain, dominating in British retail sector with both global sales and domestic market share. Tesco started by selling food but now expanded it scope of service to clothing, consumer electronics, financial services, telecommunications and insurance (www.tesco.com).
The supermarket chain is Britain's biggest private employer with nearly 260,000 staff and more than 1500 stores (Poulter, S. 2005).
Tesco under the leadership of Sir Terry Leahy the CEO adopt radical marketing strategy, human resources management strategies to achieve the success. In this work we will look at:
The human resources management policies and strategies at Tesco. Analyze and critically evaluate the role of Human resources at Tesco.
The relationship marketing techniques and loyalty schemes being used by Tesco to develop and maintain existing relationships with the different customer segments.
The integration of information technology to the success of Tesco
TESCO Human Resources
TESCO Human Resources policies
The human-resource strategy at Tesco's revolves around work simplification, challenging unwritten rules, rolling out core skills to all head-office employees and performance management linked to achieving steering-wheel targets. This highlights the way in which Tesco's business measures are closely linked to performance management (Anonymous 2003).
Tesco ensures that each and every employee has the opportunity to understand his or her individual role in contributing to the Tesco core purpose and values. This requires an innovative induction programme that caters for different cultures, styles of learning and varying commitments to the job. The frontline employees are considered the ultimate reflection of Tesco to its customers, but all employees have a very important role to play in turning core values and customer commitment into reality on a daily basis (Whitelock, N. 2003).
A major Tesco challenge is to ensure that all of its employees, wherever they work, are aware of the role they play and that they can clearly see how their actions affect the "big picture" of the overall business. The training creates a graphical journey through the history of Tesco, its core purpose, values, business goals, financial aims, operations and marketing strategy and its commitment to customers. All employees are receiving more training than before (Whitelock, N. 2003).
A human-resource-led business strategy has helped Tesco to take the lead over its rivals in the fiercely-competitive UK supermarket sector. The strategic policy (Future) started in the company's supermarkets, where its aim was to free up stores employees so they could do more and improve customer service (Anonymous 2003).
Future concentrates on providing a clear way of defining roles, responsibilities and activities. The system guarantees that all employees are responsible, accountable, consulted and informed. A group of 13 key management techniques is used to improve the core skills of the workforce. The techniques include root cause analysis, problem solving, plan-do-review, situational leadership and coaching for high performance (Anonymous 2003).
For the first time, people have been made a core element of strategy. The importance of this strand of the project has been recognised by putting a senior director in charge. Quarterly board meetings always review human resource issues. Tesco now tracks human-resource information as closely as financial results (Anonymous 2003).
Looking ahead, Tesco intends to continue its emphasis on increasing the skills of its workforce. The firm aims to make learning into a truly integrated part of its culture, as an important way of developing organisational flexibility and remaining one step ahead of its rivals (Anonymous 2003).
Tesco with it human resources management policy wants to train and involves his entire workforce in the company development and success.
1.2 Human Resources strategy at Tesco
According to Lamb R.B (1984) strategic management is an ongoing process that evaluates and controls the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment., or a new social, financial, or political environment.
Recognition of the importance of HR in the UK has increased in recent years; this is a result of competition from overseas economies. Tesco to gain the competitive advantage over its competitors has used human resources management as a strategic advantage.
Tesco has strategically integrated Human Resources into their overall plans. Managers have been to utilise aspects of HR in their decision making. This has shown high commitment to HR, attempting to gain acceptance from all employees, and offering to all employees basic and extended training (Beardwell I 2004). The big picture of Tesco's strategic direction is discussed with all employees. This helps the individual employee to understand their role and importance within the organisation. Therefore, they place a high value on their human resource.
There has been an increase in training within the organisation; all employees now receive more training than before. This is a result of the HR department taking a strategic role. HR is not an administrative department within Tesco; they are proactive and are on the strategic level of the organisation. This increase in training priority has been supported by a rise in Human Resource Management. This practice emphasises that increased growth can only be maintained in the long run; by equipping the work force with the skills they need to complete their tasks (Mullins, L. 2005).
Strategic HRM has gained both credibility and popularity over the past decade, specifically with respect to its impact on organisational performance (Paauwe, J &Boselie P. 2003). Each employee is considered a part of the overall strategy; therefore they are instructed on the importance of their role. This training is delivered in a way that encompasses all learning skills and allows for cultural difference.
Depending of the area Tesco shop are more locals people working for the shop. For example in Ealing or Rainham you will more locals representative working in their local Tesco. In Ealing (West London) more ethnics minorities staffs (Indian, Black...), in Rainham (Essex) more white staffs.
Being involved in the strategic direction the workforce off Tesco feels part of the company; work hard to achieve the success. Tesco also reward it staff with more training to help them understand the value of Tesco and their relationship with customers. Tesco takes this responsibility seriously; this is demonstrated through their training and development policy.
When the employees are trained and demonstrating a higher commitment to the organisation they feel part of the overall strategy. This leads to employees feeling valued and therefore a more committed work force. This is then felt by the consumer, with a higher level of service, which gives the organisation added value.
With all the training and personal developments Tesco also rewards its staffs with company share at the end of each financial year. Tesco shares a proportion of it profit amongst the staff, based on salaries. These Tesco shares are held in trust for 5 years, and after that can be taken tax-free (www.tesco.com, careers).
Tesco's Human resources management strategy is one of the key of its success. But without good marketing strategy Tesco won't be leader of the retail market. So let analyzes Tesco marketing strategy.
TESCO marketing strategy.
Marketing strategy is a method of focusing an organization's energies and resources on a course of action which can lead to increased sales and dominance of a targeted market. A marketing strategy combines product development, promotion, distribution, pricing, relationship management and other elements; identifies the firm's marketing goals, and explains how they will be achieved, ideally within a stated timeframe (http://en.wikipedia.org/wiki/Marketing_strategy).
Tesco launched in 1990 Tesco clubcard that rewarded all the customers. After two slight amendments to the design of cards in the 1990s, the scheme had a major relaunch in 2005 with all members being sent personalised cards and key fobs which could be scanned at the checkout, rather than swiped. The scheme was again relaunched in 2008 with all seven million members once again being sent new design cards and key fobs. Tesco introduced clubcard to all Tesco shops in UK and overseas but not the UK extension scheme. It is not possible to use your UK clubcard in Poland or Malaysia (wiki, Tesco_Clubcard).
Clubcard is Tesco's membership scheme which allows customers to save money on shopping by providing them price-off vouchers. Customers get a point on every pound they spend shopping at any stores of Tesco group of companies as well as at stores of their partner companies. Once a customer accumulates 150 points, these are then converted into Clubcard vouchers which enable the customer to save money on shopping (Tesco plc Clubcard).
Tesco clubcard scheme works well due to the structure behind it and its simplicities. Other bid retailers like ASDA, SAINSBURY failed or not so successful like the Tesco clubcard. That can be due to its complexity or not user friendly (Tesco send two card one card and a key fob that can be carried anything and everywhere).