Human Resource Management Strategies: Tesco Case Study

As Tesco has grown, so has the importance of Every Little Helps. Over time, they’ve gone from simply selling groceries to providing anything from loans to mobile phones. By setting out in all these new directions they ran the risk of losing our way. So, they have relied on ‘Every Little Helps’ more and more over the years, to act as a common philosophy to ‘bind us all together’.

Mission statement:

Tesco’s mission statement is “Creating value for customers to earn their lifetime loyalty”.

The Organisation Structure and culture:

Structure:

The structure of Tesco is simple one apart from the fact that it has huge labour force under its belt.

1. The company have found more efficient ways of completing a task or business activity.
2. Tesco has advancement in technology to minimize human error e.g. stock ordering, delivery schedules, etc.
3. The company is giving general staff more responsibility when helping or serving a customer.

The managers within each store have now been given a much broader span of control with their workforce. This means that each manager will have more employees to communicate with, but each employee has been trained to a set standard, which allows the manager to trust them to get on with the job with little guidance from him or her. All of the key decisions are made by the board of directors based in Chesnutt, which makes the company centralized in its diction making.

Culture is made up of the values, beliefs, underlying assumptions, attitudes, and behaviour shared by a group of people. Culture is the behaviour that results when a group arrives at a set of – generally unspoken and unwritten – rules for working together (humanresource.about.com).

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Organizational culture is the workplace environment formulated from the interaction of the employees in the workplace (portal.brint.com). It can be analysed through the observations of the company’s behaves, including routines, rituals, stories, structures and systems. Tesco has a very friendly and supporting approach in the routine ways that staff at Tesco behaves towards each other, and towards those outside the company. The control systems and measurements are constantly under the management review to monitor the efficiency of the staff and managers’ decisions. The rituals of the company’s life are the special events, corporate gatherings, which Tesco emphasizes are very important.

Leadership styles:

Previously, Tesco was following John Adair’s ‘Action Centred Leadership’ (ACL) model of leadership. The ACL model is represented by three interlocking circles encompassing the following:

1. Achieving the task
2. Building and maintaining the team
3. Developing the individual (Thomas 2005).

Action-Centred Leadership tends to focus on the hierarchical structure of the organization. It is applicable in organizations that are highly authoritarian.

But later, with the appointment of Terry Leahy as the Chief Executive Officer, Tesco led into a series of organizational changes. Leahy is considered as a visionary leader who aimed for the company to become more customer-focused and to develop its workforce. According to him, there are four things that a leader must provide to his workers and followers to satisfy and motivate them. These are:

• A job that is interesting to do
• A chance to get on in life
• To be treated with respect
• A boss who is some help and not their biggest problem

Leahy adapted a participative style of leadership wherein the employees are given voice in the decision-making process. The organizational structure became more flat where the roles and responsibilities of everyone are clearly stated. Leahy delegates leadership roles to individuals in the organization in order to ensure that the company, with more than 300,000 employees, operates effectively. The leadership style that is manifested by Terry Leahy and is imitated by the leaders in the company has changed the structure of the company. The company has adapted an organic, a simpler and flatter organizational structure.

Corporate Social responsibility:

CSR is defined as the commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life.

Approach to CSR in Tesco:

Environment:

Tesco promote environmental issues through training package in order to create enough awareness on the issue of environment and to allow the company to maximize its operational effectiveness initiatives e.g. recyclable bags

Community:

In several attempt to give back to the society Tesco create special support for children, community based projects and education programmes in order to create a peaceful environment to operate e.g. Tesco Charity Trust.

Suppliers ethical trading:

In order to maintain high ethical standard in business practices, Tesco is encouraging long term trade relationship with supplier with a centralized distribution system with transparency and accountability to promote good quality of rang products and services at competitive pricing.

Customer’s choice and health:

It promotes the health of the customers through the management of customer’s choices. This can be confirmed by the statement that Tesco will continue to appeal to a broad range of customers and that the company will offer something for everyone through an extensive product range, offering price and product choice, in food and non-food products.

People/workers:

Employees are given opportunities of carrier development through Training and development programme with effective communication to facilitate staff feedback. Rewards and benefits are used to motivate workers, based on performances on the job, pension scheme, save as you earn and family friendly working through flexible hours of work to accommodate mother education.

Ethical Practices:

All employees contribute to TESCO’s reputation; therefore, it is important that all employees adhere to ethical guidelines. Always follow these principles:

Compliance with Laws:

TESCO business, whether domestic or international, must be conducted in compliance with all applicable laws and regulations.

Honesty and Integrity:

All employees must be honest and honourable in all dealings with other employees, the public, the business community, shareholders, customers, suppliers, competitors, and government authorities.

Entertainment and Gifts:

Any gift, entertainment, or benefit you provide to a business associate must be modest in scope and value. Never provide a gift, entertainment or benefit that contravenes any applicable law.

Consultant Fees, Commissions and Other Payments:

Never give or receive any payment that falls outside the normal conduct of business. If staff is found engaged in giving or accepting kickbacks, bribes, payoffs or other illegal or similar transactions, will be subject to immediate discipline, up to and including dismissal in accordance with TESCO’s policy on employee discipline.

Political Contributions:

TESCO does not wish to discourage the participation of employees in political and related activities. Employees cannot do on behalf of Tesco’s either directly or indirectly, without the prior written approval of TESCO’s Executive Management.

Compliance with Accounting Controls and Procedures:

Employees must always comply with the Company’s accounting procedures and controls, and all applicable laws. They should properly record all financial data and transactions.

Leadership styles:

Tesco PLC is one of the leading retailers in the United Kingdom and one of the largest food retailers in the world. The management and leadership styles analysed below, are approaches which are likely to be implemented by Tesco.

McGregor’s Theory X and Y:

According to Douglas McGregor (1960) in developing theories X and Y, managers took two different views of their subordinates and conducted practices that would best suit their assumption of the workers.

Theory X managers, think that people dislike work, which is a necessity for survival. They perceive workers to be lazy who avoid responsibility, who lack ambition and prefer to be directed, rather than use initiative to take roles of responsibility. These managers use directive approach to leadership and are very strict and controlling with their subordinates. Organisational goals already established and workers are pushed in a certain direction so that these goals can be fully achieved.

Theory Y managers believe that if workers are in the right conditions, they will work hard their own will, helping the organization achieve the set out goals, and in return, being rewarded for this hard work and effort. In this scenario, managers will work together with subordinates, deciding work objectives and by developing strategies designed to achieve these goals. They will encourage team working and also delegate decision making when and where possible.

In relation to Tesco, the management are likely to take a theory X approach in running their organisation. Due to the enormity of the number of subordinates a manager is likely to be in supervision of, it would be almost impossible to use the latter approach.

Blake and Mouton’s Management Grid:

‘The management grid identifies a range of management behaviours based on various ways that task-oriented and employee-orientated styles can interact with each other.’

In relation to Tesco, the management would identify themselves mostly to an Authoritarian management style (also known as produce or perish style), which has a high concern for production and efficiency and concentrates less on people. They take a task oriented approach which takes in hand the needs of the task rather than the wants of subordinates. This is again, similar again to the Theory X approach stated approach, and is effective to Tesco where there is a larger amount of lower-skilled employees.

Herzberg Two Factor Theory:

Fincham and Rhodes (2005) stated that Herzberg’s two factor theory involved, firstly the ‘motivators’ and secondly the ‘hygiene factors’.

Hygiene factors involved supervision, salary, work environment, company policies and relationship with colleagues. The absences of these were seen as dissatisfying aspects of a job which can affect the morale of workers.

Motivators stated by Herzberg include; responsibility, achievement, promotion and recognition.

In relation to Tesco, subordinates of the managers such as shop floor employees are unlikely to achieve the motivators stated by Herzberg. This can be very negative for a firm like Tesco because a de-motivated workforce is obviously more unproductive then a motivated workforce. Taking this into thought, it is vital for managers to tackle motivational issues of the workforce and see that the hygiene factors of employees are met, making it an effective approach to adopt.

Development of workforce:

Workforce development links staff learning and development to other human resource and business activities. It includes strategic planning, workforce planning, performance management and career development.

Strategic planning:

Tesco has a systematic planning process involving a number of steps that identify the current status of the association, including its mission, vision for the future, operating values, needs (strengths, weaknesses, opportunities, and threats), goals, prioritized actions and strategies, action plans, and monitoring plans.

Workforce planning:

Workforce planning is the process of analysing an organisation includes:

• Identifying current and future numbers of employees required to deliver new and improved services.
• Analysing the present workforce in relation to these needs.
• Comparing the present workforce and the desired future workforce to highlight shortages, surpluses and competency gaps.
• Analysing the diversity profile at all levels against that of the local population.
• Recruitment and selection process.
• Risk of deployment.

Performance management:

An important element in workforce development is to have clear job descriptions and person specifications. A job description sets out:

• the title of the job
• to whom the job holder is responsible
• for whom the job holder is responsible
• a simple description of roles and responsibilities

If employees will know their job well, their performance will automatically be beneficial for organisation.

Career development:

Tesco seeks to fill many vacancies from within the company. It recognises the importance of motivating its staff to progress their careers with the company. Tesco practises what it calls ‘talent planning’. This encourages people to work their way through and up the organisation. Through an annual appraisal scheme, individuals can apply for ‘bigger’ jobs. Employees identify roles in which they would like to develop their careers with Tesco. Their manager sets out the technical skills, competencies and behaviours necessary for these roles, what training this will require and how long it will take the person to be ready to do the job.

Report:

Organisational structure and its impact on people in Tesco:

Tesco is a company that has also delayered the amount of employees used throughout the company. Reasons for Tesco delayering are:

• The company have found more efficient ways of completing a task or business activity.
• The advancement in technology has allowed the company to take some of the more demanding tasks away from employees to minimise human error E.G stock ordering, delivery schedules etc.
• The company giving general staff more responsibility within stores and allowing them to use their own initiative when helping or serving a customer.

The managers within each store have now been given a much broader span of control with their workforce. This means that each manager will have more employees to communicate with, but each employee has been trained to a set standard, which allows the manager to trust them to get on with the job with little guidance from him or her.

Looking at the Tesco Company the report can see that all of the key decisions for each region of the country are made by the board of directors based in Cheshunt, which makes the company centralised in its diction making.

As the company is run centrally it allows Tesco to minimise the cost of having big finance, general office departments in each of its stores as well as minimise the amount of work each store has and allows them to concentrate on selling the businesses products to the customers.

Organisational culture and its impact on workforce:

In Tesco today the company is still recognised by the motto of ‘pile it high and sell it cheap’, but the company has introduced quality into its products by offering three different key areas of products.

The first area consists of very high quality products such as organic and these products are usually the most expensive. The middle group of products are usually a collection of Tesco and company branded products and covers a wide price bracket. The third group of products are Tesco’s value range, which consists of the cheapest products such as toilet rolls, bin liners and ready meals. These types of products are all about value for money and are not priced by the level of quality.

As well as offer their customers more choice, in the way of groceries, Tesco now offer their customers the opportunity to purchase clothes, electrical goods, DVD’s CD’s etc.

By offering their customers these other products Tesco are changing their culture into becoming a ‘one stop shop’, which offers customers the chance to purchase almost anything they need at the same time.

A danger for Tesco is the threat of ASDA overtaking them in affordability along with viability and becoming the new store that ‘piles it high and sells it cheap’.

Leadership styles:

A manager’s leadership style creates the climate within which employees work and influences the attitude and performance of his team. A manager will have a preferred style, but this will not be appropriate in every situation. To be effective, managers must learn to adapt their leadership style to the circumstances and in response to the employees they manage. This is known as situational or contingency leadership.

In an article published in the “Harvard Business Review” in 2000, Daniel Goleman identified six leadership styles: coercive, authoritative, affiliative, democratic, pacesetting and coaching. Goleman linked these six leadership styles to managers able to choose the style best suited to the situation.

Coercive and Authoritative:

Managers with a coercive leadership style exert tight control over employees and rely on the threat of negative consequences to ensure compliance. This style of management can be successful in crisis situations. However, coercive leadership is not effective in the long term because it can create a negative atmosphere by demotivating capable employees and damaging morale. This style engages employees and results in the most positive work environment.

Affiliative and Democratic:

An affiliative style emphasizes harmonious interactions and can be useful if a manager needs to encourage a group to work together or heal rifts in a dysfunctional team. However, it is not effective if a manager needs to deal with inadequate performance or crisis situations that require clear direction and control. Democratic managers involve their employees in decision-making and encourage them to collaborate. This motivates capable employees because it encourages them to apply their skills and expertise. A democratic style is unlikely to be effective with employees who lack competence or require close supervision.

Pacesetting and Coaching:

Managers who lead by example have a pacesetting style, which can work well when an organization has to adapt and move quickly. Pacesetters set high standards and are apprehensive about delegating. A pacesetter can overwhelm his team with demands for unachievable excellence, resulting in a drop in morale. A manager adopting a coaching style of leadership helps employees identify their strengths and weaknesses. He encourages employees to set and attain goals, providing regular feedback to assist them to improve their performance.

Benefits of flexible working practices to individuals:

• Ability to balance work and home commitments more readily.
• Increased quality of life.
• Reduced stress.
• Greater levels of job satisfaction.
• Ability to continue to work.
• Ability to maintain career development and personal growth during a period of temporary increased family commitments.

Benefits of flexible working practices to organisation:

• Retention of trained and valuable staff.
• Increased productivity.
• Decreased absence.
• Individuals who have jobs tailored to meet their individual needs may be more motivated.
• The company is seen to support its diversity values.
• Access to a talent pool which might otherwise be unavailable thus improving recruitment.
• Ability to allow employees to continue to develop and grow in their career and to match the natural cycle of family commitments that everyone experiences.

http://www.hirescores.com/flexible-working-corner.php

Impact of ethical practices on motivation level of staff:

The ethical climate of an organization can have both positive and negative impacts on employee job satisfaction. Unethical workplace behaviours create chaos and impact the organization in a variety of ways.

Motivation level impacts the organization on many levels. Low levels of job satisfaction lead to low motivation, decreased productivity and increased turnover. Dishonest management practices lead workers to be suspicious of their leaders. The most successful organizations include high ethical standards at all levels of the organization.

Cognitive Dissonance Theory

Cognitive dissonance theory is often used to explain the loss of motivation and job satisfaction that generally results from unethical organizational practices. This psychological theory, first developed by social psychologist Leon Festinger in 1956, holds that, “there is a tendency for individuals to seek consistency among their cognitions (i.e., beliefs, opinions). When there is an inconsistency between attitudes or behaviours (dissonance,) something must change to eliminate the dissonance.” As this dissonance continues in the workplace, the worker feels increasingly dissatisfied with their positions when they there is no support or rewards for exhibiting ethical behaviours.

http://www.ehow.com/info_7753033_job-satisfaction-organizational-ethics.html

Use of CSR to motivate employees:

Employees are motivated by corporate social responsibility (CSR). The integration of social, environmental, and economic improvement through CSR makes workplaces sounder. Below are the top 10 ways to motivate the workforce through CSR.

1. Let employees participate in all the social activities done outside the company.
2. Let employees’ lead volunteer and charity efforts in the local areas.
3. Recognize attitude of the employees towards their job to raise the commitment and motivation level
4. Encourage employee referrals to help retain and recruit talent.
5. Bring CSR inside the company to develop employees inside the company through training and tuition
6. Convert sick days to rewards by creating a rewards program for unused sick days.
7. Make executive team visible by handshake and personal thanks.
8. Encourage initiative taken by employees to increase employee engagement.
9. Create a competitive advantage by true and defining differentiation from competitors which can be felt by employees, suppliers, partners, and customers.
10. Be loud when you have done a great job with CSR, share it through social media, newsletters, media coverage, and face-to-face interactions to increase the energy, excitement, and enthusiasm of employees.

Management styles to deal with difference in behaviour:

Theory X and Theory Y have to do with the perceptions managers hold on their employees, not the way they generally behave. It is attitude not attributes.

Theory X:

In this theory, management assumes employees are inherently lazy and will avoid work if they can and that they inherently dislike work. As a result of this, management believes that workers need to be closely supervised and comprehensive systems of controls developed. A hierarchical structure is needed with narrow span of control at each and every level. Theory X managers rely heavily on threat and coercion to gain their employees’ compliance. Beliefs of this theory lead to mistrust, highly restrictive supervision, and a punitive atmosphere.

Theory Y:

In this theory, management assumes employees may be ambitious and self-motivated and exercise self-control. It is believed that employees enjoy their mental and physical work duties. They possess the ability for creative problem solving, but their talents are underused in most organizations. Theory Y manager believes that, given the right conditions, most people will want to do well at work. They believe that the satisfaction of doing a good job is a strong motivation.

Motivation theories:

The most commonly held views or theories are discussed below and have been developed over the last 100 years or so.

Taylor:

Frederick Winslow Taylor (1856 – 1917) put forward the idea that workers are motivated mainly by pay. His Theory of Scientific Management argued the following:

Workers do not naturally enjoy work and so need close supervision and control. Therefore managers should break down production into a series of small tasks. Workers should then be given appropriate training and tools so they can work as efficiently as possible on one set task. Workers are then paid according to the number of items they produce in a set period of time- piece-rate pay. As a result workers are encouraged to work hard and maximise their productivity.

Mayo:

Elton Mayo (1880 – 1949) believed that workers are not just concerned with money but could be better motivated by having their social needs met whilst at work (something that Taylor ignored). He introduced the Human Relation School of thought, which focused on managers taking more of an interest in the workers, treating them as people who have worthwhile opinions and realising that workers enjoy interacting together.

Maslow:

Abraham Maslow (1908 – 1970) along with Frederick Herzberg (1923-) introduced the Neo-Human Relations School in the 1950’s, which focused on the psychological needs of employees. Maslow put forward a theory that there are five levels of human needs which employees need to have fulfilled at work.

All of the needs are structured into a hierarchy (see below) and only once a lower level of need has been fully met, would a worker be motivated by the opportunity of having the next need up in the hierarchy satisfied. For example a person who is dying of hunger will be motivated to achieve a basic wage in order to buy food before worrying about having a secure job contract or the respect of others.

Benefits of training and development to individuals and organisation:

Increased job satisfaction and morale among employees. This has an added benefit of making your company more attractive to prospective employees.

More motivated workers, which in turn tends to increase productivity and spur profits.

More effective and efficient use of workers’ time as a result of higher skill levels, combined with a better understanding of the job function.

Employees who know they are competent, and therefore feel more confident. Self-assured, well-trained employees are important in the debt collection function.

An increase from employees in the number of ideas, recommendations and suggestions for improving performance, or processes and procedures.

Lower overall employee turnover and less absenteeism.

Investing in employee training enhances the company image as:

• a good place to work
• a company that offers its employees the opportunity to grow and meet their individual goals and aspirations
• a company that values employees
• a company that nurtures its employees

Creating a pool of cross-trained employees can bridge gaps when someone unexpectedly leaves the company – or if they accept a transfer or a promotion.

Doing so tends to create more efficient employees that require less supervision and who need less detailed instructions. This frees management’s time for higher value added activities.

Employees that receive in houses training tend to be better equipped to adapt to changes and challenges facing the credit department in particular, and the company as a whole.

http://www.coveringcredit.com/business_credit_articles/Credit_Management/art204.shtml

People management strategies used in organisations:

Here are some key strategic factors on the management of people to reinforce the importance of them to businesses.

1. Understanding the competitive advantage they can gain from employing good people and including workforce planning in their business strategies.
2. Developing people management strategies, structures and practices that align with the overall business strategy and customer-driven business processes.
3. Attracting, training and retaining key people through effective recruitment processes, training and development, employee engagement and succession planning activities.
4. Active leadership from business owners and managers through clear organizational communication, development of a team culture and effective management of organizational change.
5. Effective recognition and reward systems, including performance reviews and feedback, rewards for good performance and support for individual development plans.
6. Essential human resource systems to meet legislative requirements regarding employing people to ensure the business will avoid expensive litigation and employment problems.

http://www.harris-management-solutions.com/managing-people.html

Conclusion:

In conclusion we can argue that the human resource aspect of any organisation can be seen as the greatest asset for an organisation. However neither the knowledge of this resource or knowledge about this resource should be seen as static, instead for organisational strategies to be effective they must be dynamic and adapt to be external changes in the environment as well as internal information concerning this human resource.