the history of Tesco is the shift in the company’s values and cultures


Chapter 1


Human Resource management and practices have gained utmost importance in the productivity, efficiency and innovation levels of any organization. Unlike previous times where employees were considered merely a factor of production in the whole equation of corporations, today they are much more than that. They serve the company as its biggest assets, and if managed properly, can contribute to transformation and long term development of an organization. Successful Human Resource management practices empower employees and help unleash their innovative potential. Hence, in the growing era, Human Resource management is one of the core areas where any organization needs to focus if it is determined to achieve more.

This dissertation seeks to study the human resource practices at Tesco PLC, which is a famous retail brand in the UK. Through this study, ways to improve working conditions of the company by bringing shifts in the organization culture are proposed. The relevance of altering organization's cultural change to set new working standards has been highlighted.

1.0 Research background:

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Tesco is one of the major retail companies of the UK. Originally beginning in 1919 as a small grocery store, it has expanded itself across various product lines and countries into a large retail corporation, in fact the largest food retailing business of the United Kingdom (Clark, 2008). In order to sustain its position, it needs to carefully monitor its performance and the key variables it is linked with. This research on the organization shall focus on management of human resource strategy dealing with employee development and assessing working environment as a factor of the company's productivity. There is a strong need to evaluate the Human Resource conditions as a performance variable. With respect to Tesco, a retail organization, such insights may be of critical value, and may lead to an improvement in the overall management of the company, translating into greater customer satisfaction and performance (Lokshin, Gills and Bauer, 2009). In Tesco, the success of all business operations is incumbent upon the commitment of work force for achieving desired aims. Staff at all hierarchical levels is encouraged to contribute to their full extent. Employees have the duty to provide "First Class Service" to the clients, for which, training programmes are arranged for personnel development so that workers remain up to date about the company's ongoing activities. Recruitment criteria of Tesco PLC, encourage candidates to be employed on the basis of merit (Tesco PLC, Director's report, 1997).

Retailing is a concept that is gaining more and more importance in the context of modern marketing and consumer culture. As societies grow consumer-centered, retail industry is growing, and competition amongst retail outlets is also increasing likewise. There is a trend towards longer store-hours, bigger outlets and more complex retail outlet layout designs. All these demand more productivity from the human resource hence employees are influenced by the growth of retailing itself (Price, 2007). Tesco has launched the "Employee Profit Sharing Scheme" so that workers feel more integrated in the organization structure by appreciating the financial performance of the company (Tesco PLC, 2005).

In fact, retail employees tend to rate their work places lower than employees in the other industry. However, contradictory to this negative statement, retail employees are also more satisfied with their job design as most of them can see the direct link between their own efforts and the company's performance (Price, 2007). Retailing staff needs also tend to be overlooked by companies because at the lowest level of store hierarchy, employees can be treated more as a 'mathematical function'. Organizations focus on cost control and lay off methods. For informing workers about the company strategies, internal communication is designed by Tesco through staff briefings, video sessions, store visits and monthly magazines. To know the job aptitude of employees, management of Tesco carries surveys on annual and quarterly basis so that employee needs can be properly met (Tesco PLC, 2005).

Changing work schedules of the staff seems a much less costly solution than laying off managerial staff. Whilst employees at Tesco are managed with better standards, there is always an inclination to keep the frontline at barely over the minimum wage with minimum training. But since this is the level that comes in direct contact with the consumer in market situations, it has serious implications on sales and satisfaction level of consumers (Clark, 2008).

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Therefore, once it is established that employees need to be motivated and trained at the retail staff level, the next step is to identify how to do that. In this research, organizational culture is regarded as a factor that can influence the working conditions and performance levels of employees. We shall be focusing on the element of motivation that is influenced tremendously by the working conditions. According to Sheridan (1992), employee retention is directly a function of cultural values. Strong performing employees tend to remain in an organization, which emphasizes task values in its culture, thirteen months longer than employees whose performance is weak. An individual personality fit has to be developed with the organization's culture, and certain types of employees are suited better to one type of organization more than the other depending on the culture (Robbins, Judge and Sanghi, 2010). Hence, it becomes important for a retail company to focus on those values and traditions in the workplace which attract the kind of personnel it should possess for strategic accomplishments.

Organization culture is "a set of values, norms and standards that control how employees work to achieve an organization's missions and goals" (Hill and Jones, 2001). It has been directly linked with a company's working conditions as the culture explicitly tends to be reflected in the way things are carried out at an organization. Even more so, a company's culture defines the motivation levels of employees. If the employees' value systems and beliefs are properly aligned with a company's behavioral expectations, they tend to be more intrinsically motivated towards working for the organization, and hence provide more successful outcomes. Culture arises from the vision and mission of the company, and the goals of its founders (Jackson, Schuler and Werner, 2008). Core values of a culture unless expressed in the form of workplace ethics and expectations cannot be transferred into employees. Hence it becomes important that a company's working conditions and standards are maintained according to the culture and values it seeks to induce in its employees.

Companies have changed their corporate positions by bringing about change in the working conditions. An example is of Google which has been successful in innovating primarily by means of its working conditions (Hernandez, 2008). The company provides a casual democratic environment to its employees with little hierarchical bureaucracy. More importantly, it empowers its employees very rightfully by allowing them to work on their own innovation projects at least once a week. All these enormous investments have their payback for Google. Due to its trust in employees as an asset, Google is now one of the most creative organizations of the world, bringing about new technology, software and fun ways to invent every other day (Johansson, 2010).

Accompanied by innovation which cannot be brought about without employee empowerment, cultural shifts can also play a major role in the retail industry. Retailing is a business where positive employee attitude can greatly affect sales of the company. This is because retail point-of-sale and store employees come in direct contact with the customer itself. The sales vary directly with the consumer mood. Therefore, it becomes important that retail employees serve to keep up a positive demeanor, which will ultimately reflect into the consumer satisfaction. To motivate employees to do so, companies can offer various incentives. These include offering more flexible time, encouraging employee creativity and inducing more fun aspect into the business (Bent and Freathy, 1997). The recruitment, selection, development and training together with promotional offers help to guarantee equal opportunity benefits for all workers irrespective of gender, disability, age or ethnicity (Tesco PLC, Director's report, 1997).

Tesco has worked and invested enormously on its workforce in the past. One of the milestones in the history of Tesco is the shift in the company's values and cultures that occurred during early 1990's (Clark, 2008). During that time, the organization suffered a downfall in its sales, which led it to research its overall strategy and structure. Through this the company discovered that the downturn of sales was due to a lack of customer satisfaction, which in turn was being affected by the behavioral characteristics of the company's retail employees. These employees were generally non professional, and besides customer dissatisfaction were also contributing to lower productivity. Hence, the company gradually employed training and personality development for its workforce, thus transforming the company's culture by bringing in behavioral changes. The program was ultimately a success, and ended up boosting Tesco and its share in the market (Bedingham, 2000). Through this research, we shall further find out the gaps in Tesco's HR practices and provide insights into how they can be improved.

Rationale for the chosen topic:

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The topic has been chosen because of its relevance with change management. There are several ways to bring about an improvement in an organization's productivity levels. Creating change by means of changing culture has been implemented by several organizations such as Google, IBM and Harely-Davidson, but we wish to explore the prevalence of this principle specifically in the retail sector. Through this research we can discover ways to improve the company's strategic conditions; we can also explore the potential of this Human Resource philosophy and gain a deep insight into how closely organization culture can be linked with a company's performance in the field of retailing. Through this dissertation an understanding of organization culture, Human Resource hiring, training and motivating practice for retail organization can be made.

1.2 Statement of the problem:

The research problem can be stated as "A study to analyze the employee perceptions at Tesco regarding the working conditions, and employee policies".

The working environment and conditions refer to the environment available to managers and employees at the retail stores, and also the corporate environment in the Tesco's office. Thus the culture and strategic change studied in this research shall apply to all aspects and bodies of the retail organization. Key concepts in this research include employee behavior, motivation level, customer satisfaction with the service, organizational values, and the system of rewards and punishment.

1.3 Research questions:

Breaking down the research problem, we can divide it into several specific research questions. This research seeks to understand:

To what extent are the current working conditions fulfilling the basic and higher needs of its employees?

What are the key cultural values of the retail organization and how are they transmitted throughout the network of the organization's offices and stores?

What are the positive changes that can be brought about in the workforce culture?

What are the employee's perceptions about the current working conditions?

1.4 Research aims and objectives:

This research is being carried out to study ways for improvement in the company's culture and organization structure. The aims and objectives can be summarized as follows:

To review the current working conditions and organization culture at Tesco PLC.

To understand how employee motivation and productivity can be increased by improving the working conditions.

To propose changes that can be made with respect to the company's cultural and strategic policies that will aid to change the working conditions.

1.5 Limitations of the study:

The company has expanded its operations into several different countries, and therefore, needs to integrate the cultural diversity in its own culture, but the study is being conducted only in the Tesco stores located in London because of time constraints. Employees are selected by non-random sampling. However, despite this sample methodology, we shall not be able to take into consideration perceptions of employees regarding global extensions of the ethnic and personality diversity of Tesco workforce.

1.6 Structure of the dissertation:

The dissertation is divided into the following chapters:

Introduction: This chapter gives the basic overview of the research problem, the aims and objectives that are analyzed with a brief description of research limitations.

Literature Review: In the second chapter, relevant secondary data comprising of work done by prior researchers is incorporated to get a better understanding of the prevalent concepts of strategic and culture change within an organization.

Research Methodology: The third chapter of this dissertation highlights, the research method being employed, tools of data collection used, sampling method and ethical considerations.

Data analysis and interpretation: The research findings related to the data collected are assessed in this chapter along with graphical and tabular representations.

Conclusion and recommendations: This chapter provides insights based on primary research findings and elucidates what is the necessary course of action to be taken for working conditions improvement.