Human resource management: Tesco

The aim of the assignment is to evaluate strategic human resource management of Tesco Plc with reference to theory and practical approach, to study their Human Resource Management functions and evaluate the contribution of approaches and organisational structure.

Human resource management is the process of acquiring, appraising, training, and compensating employees and of attending to their health and safety, and fairness concerns. HRM functions include a wide range of activities, and key among them is the responsibility of human resources. This includes deciding what staffing needs the company has and whether to hire employees or use independent contractors, recruiting and training of the employees, ensuring they always give high performance and ensuring personnel management practices to confirm laws and regulations. HRM activities also include managing employee benefits and compensation, personnel policies and employee records.

TRADITIONAL DEFINITION

Human resource management is the moulding of the human resources in such a fashion that the goals of the organisation are met and at the same time the need satisfaction of all the employees at all levels is attained to the highest possible degree.

MODERN DEFINITION

“Human Resource (Personnel) Management is the planning, organizing, directing and controlling of the procurement, development, compensation, integration, maintenance, and separation of human resources to the end that individual, organizational and societal objectives are accomplished.”- Edwin B. Flippo

CONTEMPOPARY DEFINITION

“Human resource management (HRM) is the effective management of people at work. HRM examines what can or should be done to make working people more productive and satisfied.”- John M. Ivancevic

NATURE OF HRM

Human resource management is a process of bringing organizations and people together in order to meet each other’s goals.

Some of its features are as following:

Pervasive force-

Human resource management is pervasive in nature.

Action oriented-

Human resource management focuses on performance rather than written rules and procedures. Employees’ problems are solved through rational policies.

Individual oriented-

It helps employees in developing their potential full. It allows them to give their best efforts to the organization. It motivates them through systematic process of recruitment, selection, training and development with fair wage policies.

People oriented-

HRM is about people at work, as individuals as well as groups. It puts people on their assigned jobs to produce good results.

Future oriented-

HRM does help an organization to meet its goal in the future by preparing motivated and competent employees.

Development oriented-

HRM helps in developing full potential of the employees.

Integrating mechanism-

HRM helps in building and maintaining strong relations between people working at different levels in an organization.

Comprehensive function-

HRM is concerned a decision which can have an impact on the staff.

Auxiliary-

The purpose of the HR department is to advise and assist the operating managers to do work related to personnel more efficiently and effectively.

NATURE OF HRM

IMPORTANCE OF HRM

People have always been the center of the organizations, and their importance is increasing in today’s knowledge based industries. Success of an organization depends on knowledge, skills and abilities of the employees, especially as it helps to establish core competencies over its competitors.

HRM helps an organization and its people to reach their goals at following level:

Enterprise Level:

Organizations can attract and retain best of the people in the organization if it has good human resource practices. Planning in advance helps the company to know what type of people it requires in short, medium and long term.

It helps in training the employees for challenging roles, developing right attitude towards the company, promoting a spirit of team among employees and developing commitment and loyalty through reward schemes.

Individual Level

It helps in building teams and promotes team spirit among employees.

It allows growth opportunities to people who have capabilities and potential to rise.

It generates compassion and commitment in people towards their jobs.

Society Level:

Society as a whole is good beneficiary of human resource practices.

It helps in generating employment opportunities.

It puts talents to the best use. Companies that have good HRM policies stay ahead of their competitors and produce excellent results.

National Level:

Effective use of human resource results in better exploitation of physical, natural and financial resources. People with proper attitude and values and right skills help the nation to get ahead and compete with the best of countries.

TESCO- COMPANY BACKGROUND

Tesco was founded in 1919 by Jack Cohen. He started his new business venture by selling surplus groceries from a stall in the east end of London. On the first day, he made £1 profit from £4 of sales. Tesco has come a long way since then and is the fourth largest food retailers in the world after Wal-Mart of the USA, Carrefour of France and Home Depot of the USA. Tesco PLC is listed on the LSE, with the symbol TSCO. It is listed on NASDAQ and Irish Stock Exchange as well. Today it is operating 5,008 stores worldwide of which 2,545 stores are in the UK, and employing over 472,000 people worldwide of which 287,669 are in the UK. Not only Tesco has managed to monopolise the food sector, it has also diversified into a number of other sectors, some of which are insurance, mobile networks, clothing and electronics.

However this assignment will focus on the retail sector in the United Kingdom.

Albeit that Tesco has 2,545 stores locally, it is considered as operating in global environment. Apart from the United Kingdom, Tesco has stores in six other European countries; Poland, Hungary, Czech Republic, Slovakia, Republic of Ireland and Turkey. Furthermore, it also operates in Asia, and has stores in Malaysia, China, Korea, Thailand, Japan and Taiwan.

Tesco requires people across a wide range of both store-based and non-store based jobs:-

In store, checkout staffs, stock handlers, supervisors and many specialists such as bakers and pharmacists are needed.

For distribution depots it requires people skilled in stock management and logistics.

Head office provides the infrastructure that helps to run Tesco efficiently. In the head office, main roles include human resources, legal services, marketing, information technology, property management and accounting.

FUNCTIONS OF HRM IN TESCO PLC

RECRUITMENT AND SELECTION

Recruitment involves attracting the suitable applicant to apply for the vacancies. Tesco advertises for the jobs in different ways. The process varies upon the type of job available.

Tesco, first of all, looks at its internal Talent Plan to fill a vacancy. In this process, its current employees who are looking for a move, either at the same level or on promotion, are listed. If it can not find suitable people in this Talent Plan, Tesco advertises the post internally over its intranet for two weeks.

For recruitments from outside the organisation, Tesco advertises vacancies through its website www.tesco-careers.com or through display boards in stores. Applications for the managerial positions are made online. Applicants who are chosen, have an interview followed by attendance at an assessment centre for the final stages of the selection process. People who are looking for store based jobs with Tesco can submit their CV at the store or can register through Jobcentre Plus. The store prepares a waiting list of people applying and calls them as jobs become available.

For jobs that are hard to fill or are specialised in nature, such as pharmacists and bakers, Tesco goes for external advertising through following mediums:

Through radio and television

Through website and offline media

By placing advertisements on Google or in magazines.

Tesco seeks the most cost effective way of attracting right applicants. Tough it is expensive to advertise on radio and television, it is necessary to ensure that right people get to know about the vacancies. Tesco makes it easy for the applicants to find out about the available jobs and has a simple application process. An applicant can find about management jobs, head office jobs and local jobs, through Tesco’s website. There is an online application form for applicants to submit directly.

Skills required

There are six work levels within the organisation and each level requires particular skills and behaviours.

Level 1

These are frontline jobs and include working directly with customers, various in-store tasks such as filling the shelves with stock. Candidate should have the ability to work accurately with enthusiasm and should be able to work in a team.

Level 2

This includes leading a team of employees who are involved in dealing directly with the customers. Candidate should have the ability to manage resources, set targets and constantly work manages and motivates others.

Level 3

This includes running an operating unit. It requires management skills that include planning, setting targets and reporting.

Level 4

These are supporting operating units and requires good knowledge of the business, ability to lead others and skills to analyse and make decisions.

Level 5

People working at this level are responsible for working of Tesco as a whole and should have ability to take major decisions and to lead others.

Level 6

This includes the top level management of Tesco PLC which is responsible for Tesco’s performance. This level requires from candidates an excellent overview of retailing and ability to lead the whole organisation.

This framework of Tesco describes the skills and behaviours required at each job and every level of in the company. This helps the candidates to understand whether they possess the right skills and knowledge to carry out their roles.

SELECTION

Selection involves choosing the most suitable people from those who have applied for a particular job. Screening candidates is an important part of the selection process. This process makes sure that people selected for the interview are best fit with the job requirements.

In the first stage of screening, selectors will carefully look at each applicant’s CV. A well written and positive CV helps Tesco assess whether an applicant matches the specifications required for a particular job. The company also provides a tool called ‘job type match’ on its webpage. It helps people to let them know where they might fit within the organisation.

Candidates who pass screening have to attend an assessment centre. The assessment centres are held in stores and are run by managers. They help to provide consistency in the process of selection. Applicants are given various tasks, this includes working in teams or problem solving exercises. These involve examples of the problems they might have to face at work.

Candidates who get approved by the internal assessment centres then have an interview. Line managers take part in the interview to make sure that the candidate fits job requirements.

TRAINING

Training means acquisition of skills and knowledge by a person for carrying out particular jobs and tasks.

The benefits of training employees in an organisation are as follows:

It motivates them by increasing their sense of ownership in the organisation.

Training makes the employees more productive, organised and flexible.

They are able to meet the needs of external and internal customers.

Training makes them more effective by imparting new skills and abilities in areas such as decision making.

Tesco’s business image helps Tesco grow. This is because customers are more confident in the competence and knowledge of staff.

Tesco’s training and development module is flexible and structured, which caters to each individual employee needs. This allows the company to identify the potential customers and who have desire to do a bigger and different role to take part in training and develop their skills and leadership capabilities.

Tesco follows two types of training methods for the training purpose of its employees. These methods are on the job training and off the job training.

On the job training methods include:

Shadowing:

In this method, a new employee is shown how to do a particular work by an employee who is already working there for a long time and has got good knowledge and skills for that work.

Coaching:

In this method a designated colleague helps trainees and inspires them to find solutions for the problems they face.

Mentoring:

In this method, an experienced member of staff acts as an advisor for the new entrants.

Job rotation:

In this method the trainee is given full responsibilities on a temporary basis.

On the job training is directly relevant to the work of the employees and they get to know the people in their area and feel part of a team.

The advantages of on the job training methods are as follows-

It is costs much less than the off the job training methods.

Managers can keep a check on the progress of employees and can help if a problem arises.

The employee works during training. Hence, this method of training is more productive.

The employee can apply what he/she has learned while working. This results in a better learning.

In areas such as team building, organisation and planning or communications, off the job training methods are more appropriate. It involves attending qualified Tesco training staff or external courses run by professional training organisations.

At the A Level Options programme detailed induction training is provided from day one. It helps in developing new recruits into managers. This makes new employees meet other trainees and learn about the company and the business objectives extensively. With this kind of elaborate training schedule, they are able to develop the first level management position while working as a Team Leader

DEVELOPMENT

Development focuses on the growth of the person and extending his/her abilities. Tesco takes the responsibility for training and development of its staff. Primarily, the trainee is responsible for his/her development. The trainee and the manager, both contribute to the programme. The contribution is shown in the following table:

TRAINEE

LINE MANAGER

Identifies and agrees development needs

Helps to put together the personal developmental plan

Attends workshop and development days

Coaching and guiding the trainee as per the developmental plan.

Collects evidence of achievements

Reviews performance regularly. This he does to ensure that the trainee gets the best from the training

Uses the feedback he receives to improve performance and review his development plans

Provides feedback

Employees of Tesco are encouraged to ask certain strategic questions about themselves in order to assess their ability and skills regarding progress. These questions are:-

Do I know how?

Can I do it now?

What are my current skills?

What do I need to achieve a higher position?

Options programme

Options programme of Tesco provides a long term strategy for development. The employee’s PERSONAL DEVLOPMENT PLAN includes:

Activity plans

A learning log

A “plan, do, review” checklist.

This is done to monitor when plans are completed. This enables trainees analyse their own progress.

Long lasting competencies are produced with the help of personal development. Employees become more productive, positive and valuable to the organisation in the

long term. It is a known fact that recruiting new staff costs more than retaining existing staff, therefore for an organisation like Tesco, retaining staff is of prime importance.

Development also helps to increase the level of motivation amongst the employees. According to motivation theorists, if employees are given the support to grow their abilities, skills to perform their jobs well and greater responsibility, they become more effective. Tesco needs to ensure that it has the right calibre of staff to build its management team of the future. It requires a staff who can be flexible and who can adapt to change.

THE BENEFITS OF TRAINING AND DEVELOPMENT

All businesses, for financial and non-financial reasons, have to monitor and evaluate the costs and benefits of their training and development activities. The business needs to be aware if the investment of its time and money in selection and training of the employees producing any improvements. An employee needs to be given positive and structured feedback on their progress. This gives them a direction and much of confidence. This is reflected in their behaviour while dealing with customers and inspires higher customer confidence in Tesco.

The tools of Tesco for monitoring and evaluation of training and development includes:

Scheduled tasks

Timetables

Measures

Checklists

Employees are able to assess themselves by setting aims in Activity Plans, Recording Outcomes, Personal Development Plans and in Learning Logs.

Activity plans need to have SMART objectives:

Specific- This describes exactly what needs to be done

Measurable- It has a target that can be measured against.

Achievable- This is possible within the trainees’ current skills, role and experience.

Realistic- It is achievable within the time and resources available.

Time framed- it has a clear deadline.

360 DEGREE APPRAISALS

Tesco also uses 360 degree method of performance appraisal. It involves taking feedback from all the people concerned with the employee in the organisation. In other words, all the stakeholders of the organisation who are in contact with the employee assess the person’s performance and give feedback for the same.

Apart from 360 degree appraisal, Tesco uses a more informal approach to development. In this approach, employees are asked to write down three that according to them they are good at and three things that they believe they could do better. The employee can make out the actions that he/she should continue to do and the bring improvement to the areas they could do better.

Managers and trainees hold a weekly informal session and more formal four weekly sessions in order to track progress against their personal development plans. The feedback is carefully recorded and scored. Trainees are given a colour coded development rating:

REWARDS AND BENEFITS

It is important for an organisation that its people feel rewarded for the work they do. Tesco offers a wage rate that is higher than minimum salaries across all its businesses internationally. Tesco focused on its core rates and even in tough financial year, its pay competitiveness still improved in many markets.

In most developing countries, staffs give priority to good basic pay and being paid fairly for overtime. In Malaysia, where there is no legal minimum wage rate, a Tesco employee receives 30% more than the Poverty Line Index for households. Tesco also provide its employees a wide range of competitive benefits in line with local labour laws and regulations. Some of these benefits are from paying at least 75% of the medical expenses, prescription drugs, dental and vision coverage after 90 days’ employment in the US to providing tuition subsidies in South Korea.

Tesco has formulated long term reward plans for all markets so that it has clear plans on how to invest in pay and develop benefits for its employees in each country. All management teams of Tesco share in the success of its business. They are growing through bonus schemes linked to profitability.

In the year 2009, Tesco’s employees received £98 million worth of free shares in its Shares in Success scheme. A pay out of £144 million was shared between fifty five thousand employees in Tesco’s Save as You Earn share option scheme. Tesco offers a wide range of staff discounts throughout the group. In Thailand, Tesco introduced staff discounts linked to its own Tesco clubcard in which staff received higher rewards than its customers.

Tesco UK won two awards for its pension schemes. At the 2009 financial Times Pension and Investment Scheme Management Awards, Tesco’s schemes were awarded ‘Defined Benefit Pension Scheme of the Year’ and ‘Trustee Excellence- Large schemes. These award recognise how the funds are invested, how it communicates with its staff, how well it carries out the administration of the scheme and strength of the governance. The scheme aims at providing people with an annual income after they retire. Tesco provides benefits on ill health and death, based on their pay and their service. This benefit is one of the ways to reward loyalty and also contribute in attracting and retaining its employees.

COMMUNICATION

Tesco wants employees to share their views on issues that affect and business, and communicate with them regularly through face to face briefing, store and depot forums, publications, intranet and staff question times.

Tesco’s annual staff survey, called Viewpoint, is kept confidential and anonymous. Results are fed into local plans at office, depot and store level.

All of Tesco’s employees are given right to join a trade union and it is important for both company and employees that they exercise their rights. Tesco has a leading partnership with Usdaw in the UK, and agreements with Katz in Hungary and Solidarity in Poland.

Head Office staff of Tesco gains shop floor experience through annual programme called TWIST (Tesco Week In Store Together). In the peak shopping periods such as Christmas and Easter, all head office provide support to their store colleagues through a programme called ‘Helping Hands’.

Whistle-blowing

Tesco’s whistle blowing policy and helpline number is there in all the countries. ‘Protector Line’ is a confidential telephone line and e-mail address for employees to report grievances and raise ethical issues. All the calls are invested properly and serious matters are reported to the CEO. The feedback is monitored by the compliance committee. The Group Audit committee reviews the numbers of call and the quality of investigation each year. It also reviews plans to ensure that the staff is well aware of the facility.

In 2009, there were around 1,700 employment related calls to the helpline. There was an increase from the last year showing that employees are gaining confidence in the service. Most of the calls are related to personnel issues, commercial issues and security and trading law. Personnel issues are resolved through grievance procedures.

In the autumn of the year 2009, Tesco launched a service called ‘Every Comment Helps’, in the UK. Customers can contact the company via free text messages, e-mails, free phone calls or a card commenting on the experience in store and stating whether it was good or bad. The messages are transferred to the manager who then decides whether a stock or display issue needs to be solved, or provides feedback to the member of the staff who has been commented on.

BUSINESS STRATEGY

Tesco with its well-established and consistent strategy for growth tends to solidify their core UK business and expand into new markets.

The objective for the strategy is to broaden the scope of its business so that it delivers strong sustainable long term growth and following the customers into large expanding markets in UK, such as telecoms, non-food and financial services, and new markets abroad, initially in Asia and Central Europe and recently in United States.

Tesco adopted the strategy of diversifying its business in 1997, and this strategy been the foundation of its success in recent years. The businesses in which Tesco entered over past twelve years now are competitive, have scales and in fact they are the market leaders in some of the markets outside UK.

The Tesco group has been making good progress with this strategy. It has five elements, reflecting Tesco’s four established areas of focus, and also Tesco’s long term commitments on environment and community. The momentum that this strategy has given the business has allowed the group to continue to grow despite economic downturn.

The objectives of the strategy are:

To be successful as an international retailer

To grow business in UK. The UK is Tesco’s biggest market and core of its business. Tesco’s aim is to provide its customers a wide range of choices with excellent value.

To develop its retailing services including Tesco Personal Finance, Telecoms and Tesco.com

To consider community before taking any decision.

CONCLUSION

Tesco is a large organisation with many job opportunities, including management, graduate, school leaver and apprentice posts. Tesco needs people with right skills and behaviour in order to support its growth and development.

Tesco has detailed job descriptions, person specifications and clear organisational structures. It provides friendly way of applying for jobs and a consistent approach to recruitment and selection. Hence, it can manage its changing demand for staff.

An essential element of Tesco’s continuing growth is an efficient and effective training and development of employees to compete in this increasingly commercial world. Tesco wants its employees to be flexible and committed in order to fulfil the needs of its expanding business.

Tesco’s expansion depends upon retaining existing customers and attracting new ones. Its structured methods of training and development of new and existing employees provides a strong base for its continuing growth.