An Approach by Ali Raza Sahni 1

Organisational Management

Direction at TESCO

Introduction

This assignment is actually to explore the Tesco in the following four dimensions to discuss its

further aspects in different ways. The four learning methods are as follows:

: First of all Sets Tesco performance targets to meet the strategic objectives and aims.

: Secondly the agreement on the team performance targets and contribution to meet the

objectives.

: Thirdly how to monitor and process to achieve the goals.

: Fourthly the politics of interaction of Sir Leahy. A clean discussion on his leadership,

commitment , persuasion and internal skills.

To achieve the learning objectives, we have to do some practical work experience together with

the various resources and researches. The division would be between Performance Management

and Performance Measurement. Performance is defined as the potential for future successful

implementation of actions in order to reach the objectives and targets. This practical work takes

the view of the performance constructed by the management of Tesco and their managers from

his own experience of working at Tesco local store and taking a more macro view the

organisation.

Identify the current strategic aims and objectives:

Tesco is purely a UK-based supermarket multinational company with the revenue of £47 billion

(about £33 billion in the UK) (Tesco, 2008a). Tesco is founded in 1919 by Jack Cohen in East

London. Tesco is a mixture of different performance management tools. The assignment we are

discussing the methodology that Tesco has modified and also the ‘Steering Wheel’. Tesco’s

steering wheel is the extension of Kaplan and Norton (1996) such that it has been extended and

the element of community lies at the heart of it. (Talking Tesco , 2009). That is not the strategic

scorecard based upon a corporate-level strategic vision. Tesco’s ‘Steering Wheel’ is used by

corporate executives to achieve Tesco’s actual purpose which is summarised in steering wheel.

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The actual and pure aim of the steering wheel is to create link with every employee’s personal

objectives to corporate with the values and to help the staff balance these values effectively in

the daily management of work.

Undertake an evaluation of the component parts of a strategic plan:

If the performance of the team on the steering wheel is green then the strategic objectives would

be attained on the other side if it is red then it won’t. The greener side of the steering wheel close

that Store is to achieve its core objectives. The same plan is used at the level of strategic aims.

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Organisation’s strategic objectives

Tesco is one of the England’s leading food retailers, with 519 stores throughout the England, Scotland and Wales. There are 105 stores in France which are operated by Catteau, and 44 in Hungary operated by Global. Tesco is committed to provide quality assistance to their customers , some of which are as follows:

Company offer customers the best value for the money and the most competitive prices of quality products.

Company is meeting the needs of customers by constant seeking and their opinions regarding innovation, product quality, choice, store facilities and service also.

Company providing shareholders with progressive returns on their investment to improve the profitability through investment in the efficient stores and distribution depots, in productivity improvements and in the new technology .

Company developing the talents of its people through effective management and training practices and also rewarding them on their best performance.

Company is working closely with suppliers for building long term business relationships based on strict quality and price criteria.

Company participating in different formulation of national food industry policies on the key issues such as health, nutrition and hygiene .

supporting the well-being of the community and the protection of the

environment.

Workforce requirements for organisation’s objectives:

Tesco is actually using the classical hierarchical management to fulfil the organisation’s objectives.

Due to the size of store, it divided in to six sections. All sections have operational staffs that are

organize by a team leader. The team leader has to report back to sectional manager and sectional

manager in return to report the store managers, who are answerable in front of area managers.

Operational level staff does not require any type of skill but training starts from there onwards.

There are 380,000 employees in Tesco worldwide. As Tesco is venturing out into more markets

such as financials or property market, the need for expertise is ever more increasing day by day to

fulfil the company’s requirement.

Tesco’s most important purpose is to create value for customers to earn their lifetime loyalty:

The success of Tesco is actually depends on the people.The people shopping with them and the

people who work with company. If customers like what they offer, they are more likely to come

back and shop with them again and again Tesco team find what Tesco was rewarding, they

actually more likely to go extra mile to help their customers for any kind of problem.

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Shopping trip:

Customers told Tesco what they actually want — clear aisles, to be able to get what they actually

want at a reasonable price, no queues and great customer care staff. Tesco calls this their ‘Every

Little Helps Shopping Trip’ for customers and uses it every day to ensure them that they are

always working hard to make Tesco a better place to shop, at home and also at abroad.

A great place to work:

Tesco learn from their staff what is important for them to work there — to be treated with

respect, having a manager who is friendly and help them, having an interesting job and an

opportunity to get on and on with their talent and hard work. Tesco recognises that it helps to

achieve what is important to staff will help Tesco to deliver an Every Little Helps Shopping Trip for

the customers.

The way Tesco is working:

Tesco is working to delivers Every Little Help to make Tesco a better place to shop and work. They

actually use simple processes so that shopping is better for the customers, easier for staff and

cheaper for the Tesco.

Processes which deliver outcomes based on organisational goals and aims:

Tesco is using balanced score card methodology throughout its organisational operations. Every

department has tweaked the balance score card according to its needs. These performances are

actually measuring the team meetings at store level and waste is discussed at strategic level.

Effective strategies that take in to account the external influences on an organisation from

national and global prospective . Examine the policy issues and strategic planning with long term

perspective leading to a compelling organisational vision. Determine objectives, set priorities and

build upon strengthens. Anticipate potential threats opportunities.

Review capacity and capability of workforce currently available:

Current work force of Tesco has been the largest retailer and employer in UK private sector.

Despite the tough construction laws are imposed, Tesco is still growing and expanding by leaps

and bounds. The market has number of labour to cater for the recruitment at UK level. The

current workforce of 280,000 people in UK; Tesco is more capable to sustain itself against any

future expansion plans.

Planning and implementations:

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Strategic goals and priorities translate in to a realistic and flexible plans and programs and also

monitor the implementation of plans to ensure the key results are achieved.

Prepare plans and budgets and also maximizes resources to address strategic issues and problems

faced by company.

Establish and implement methods for tracking progress to ensure that targets are achieved

successfully.

Anticipate immediate and future obstacles and opportunities and also develop plans to address

them or work around them.

Work smartly by simplifying and improving processes and also emphasizing activities which add

value and eliminating inefficiencies and tasks that add little value.

Achieve results that are clear and show positive impact.

Tesco plans to move into the property markets within coming years, build a unique mp3 store by

next year, plans to create 11000 new jobs within the next 5 years, Tesco plans to train its staff in

Macro 4 to deliver ongoing benefits, including fewer CPU upgrades and reduced systems

software, Tesco also plans to centralise IT applications across…..strategy which began five years

ago, Tesco plans to centralise its Oracle Financials……reduce staff travel costs, Tesco plans to roll

out fixed-mobile technology within next 5 years, Tesco plans to extend its use of XML later next

year to give each customer a tailored Web site that reflect their specific needs, and within the

next 2 years it plans to operate its own online business as a separate entity (Tesco, 2009).Tesco is

committed to meet these objectives criteria and are in alignment with the growth.

Communication workforce plans:

Tesco is communicating above mentioned plans through its staff briefings, pamphlets, staff

benefits periodical, staff’s own website, intranet, films and advertising. The use of flexi hours is

very popular in organisation at Tesco due to the nature of people doing part time jobs at

operational end so therefore each department has to maintain a rota and extra hours available,

through which employees can communicated and leave message for each other along with the

using staff message boards.

Improvements made in line with the organisation’s vision and objectives:

The following figures show the improvements made by a company, which are in line with the

organisations set goals and objectives and they are as follows:

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£46.6bn Tesco sales last year are more than the GDP of Egypt.

£6,912m Profit earned by Tesco every day from last year .

£4,800 Profit earned by Tesco every minute in last year.

6 The number of Tesco stores in Bicester, Oxon (pop 29,000)

£1 Opening day's profit at the first Tesco store in London in 1919

2,700 Number of Tesco stores available worldwide.

£1 in 3 Tesco's share of Britain's grocery marketplace .

1,500 Number of Tesco stores is in UK.

380,000 Number of Tesco employees worldwide, equivalent to the population of Bristol.

260,000 Number of employees in UK, making Tesco the biggest private sector employee.

24m sqft Total sales area in UK stores.

17m Number of goods sold each week in the UK.

17p The price of Tesco value baked beans.

£3,299 the price of Sony 46inch TV in Tesco .

Improvements to reduce gap between what customers and stakeholders want:

Success of Tesco means that all stakeholders at these levels are very happy with the Tesco

performance and working. Tesco’s share is considered to be the most reliable and effective in the

market. Tesco rolls out the cheap brands and lines monitor which actually keeps track and

competes with the competitors on prices.So keeping customers happy. The gap between

customers and the stakeholders is substantially reduced by keeping the community and different

stakeholders at the heart of scorecard where the progress is to be checked on recurrent basis.

Performance targets within teams against the current performance:

It is to be required by local stores to engage with the community and find out about their local

shopping preferences. Teams are usually to be polite, helpful and cordial. Every store has to be

Seasonal (Christmas, Easter etc.) and weekly targets. These targets are compared with the year on

year, season on seaon and like for like weekly targets. All the section managers and staff have the

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access to the relevant information and these targets are going through an internal communication

channel which is called ‘Team 5’. Every single staff who is working with Tesco has to sign Team 5

once every week, ultimately agreeing or not agreeing on the targets set.

The skills required for knowledge, understanding and experience to takeover the current and

planned organisational activities:

At the operational level, there is no need of high skills required but along with the increment in

the hierarchy of the management, the relevant skills are also increased. For example, sectional

managers have to be versed in time keeping and management of rota, store managers are more

project oriented and have to be more financially awared. Tesco’s PDP help to identify the training

needs of its staff. Tesco is becoming the more technologically oriented; Tesco is also investing a

lot in the training of XML, Macros and other systems such as self help desk, monitoring the online

reporting. Tesco employees can manage their own profile these days online and have their

personnel data related matters sorted through this channel. All this needs to be communicated

and people are trained through Tesco Academy.

System that collecting and assessing information on overall performance of the organisation to

identify the opportunities for improvement:

Tesco rely heavily on digital ways of collecting and assessing information. Although it engage with

community through local leaflets and local surveys but on the strategic level it engages through

CSR (corporate social responsibly) initiative work . It has find out that it needs to invest in greener

and more fair trade products. Every transaction on Tesco front end is stored for 5 years, this hige

amount of data helps analyse and compare the sales data on the overall performance of store.

Tesco loyalty club card helps to understand the particular individual buying, shopping patterns

allowing Tesco to do the targeted marketing.

Encouraging the individual commitment to team performance in achieving the organisational

objectives:

Every little help lies at the core of gaining some commitment from staff. Staffs are encouraging

through motivational techniques such as staff value awards competition, employee of the month

and encouragement for every staff to become team members. These kinds of techniques help to

rise the staff morale ultimate resulting in getting individual’s commitment.

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Context of delegation, mentoring and coaching for the achievement in organisational

objectives:

Actually the concept of mentoring is used at graduate level training where graduate recruits get

their mentor for a year or any period. Operational staff tends to get more coaching and any

limitations in their skills are catered for locally in the staff training room. At grass root level there

is not much of delegation involved so more or less the operational teams do the jobs that they are

asked to do with a little chance of job circulation.

Monitor the activities to improve the performance of team:

A strategically implementation to improve the team performance process has to be at the top to

bottom approach. Communication is lies at the heart of strategically implementation. If the top

management doesn’t have the required motivation coupled with strong communication channels

then it is hard to monitor any strategic systems and processes. Therefore, for this purpose Tesco

has been adopted various channels for the smooth flow of information and also introduced the

various checks and balances so that the balance scores card is only measured according to the

objectives planned. For example, at the store level, a document called ‘plan and review’ it is used

by every member of staff which enables them to think and measure their performance against the

five segments of the ‘steering wheel’. This whole process is in command of supervisors, team

leaders and other managers during staff appraisals which are conducted twice a year. Employees

are encouraged to take part in Tesco’s development programme which is labelled as personal

development planning (PDP). Every employee is developing his own objectives and how he will

carry these out in ways that are consistent with the needs of the steering wheel. The progress is

monitored through the PDP folder and staff appraisals. Identified work objectives, key dates and

supporting materials are provided by the management and also at their daily and weekly staff

meetings are held so that the staff can measure their contribution to the steering wheel. The

steering wheel is considered to be used for the organisational fitness for the purpose and it is to

be classified as the in-out approach to controlling strategic performance. Steering wheel helps

strengthen the actual competencies of the organisation and enables the workforce to sustain the

competitive advantage in the market.

Monitor the team performance:

A resource based review of the adopted balance score card methodology at the Tesco; it is

devised a strategic performance model specifically for the Tesco. It encapsulates the daily,

monthly, quarterly and annual strategic control and steps through which it can be controlled and

monitored easily.

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Tesco score card is focusing on alignment and integration of the human activity factor with the operations. It conditions how people are working instead of directly trying to influence people what they should achieve. The steering wheel helps review the objectives and progress through all the structures of management and at all levels. The figure above uses a classical principal PDCA (Plan Do Check Act) proposed by Deming (1986) which is further put an emphasis on review at all levels. Tesco recurring operational issues are only discussed weekly or monthly basis on the other hand, the strategic issues come up more often at the managers meetings on quarterly basis.

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Evaluating the team performance against agreed objectives:

Team performance is evaluated through 360 feedbacks, team briefings and by adopting Deming’s

PDC approach respectively. The areas of improvement are colour coded and they are

communicated only for one time through Team 5 exercise. Mystery shopper finds some of real

importance as this is the ultimate test of the customer satisfaction and the helpfulness of the

staff.

Contribution of influence and persuasion to team dynamics:

Since from the evolution of the different management theories, the modern business world uses a

mixture of all these. Employee motivate through monetary means it is still a bigger factor behind

better labour output. The contribution of such these motivational techniques to influence the

team dynamics is to be measured in this section.

Methods to gain commitment to action:

Tesco management is using a combination of Taylorism and Maslow theory of need such that it

enriches the job satisfaction by involving its staff into decision making and allow them to become

a part of organization and by giving them incentives in the shape of bonuses and other

performance related pay increments. This is one of the proven methods to gain Tesco Staff’s

commitment in achieving the main targets. Employs in Tesco are over 260,000 and all of them

take part in Staff Question Sessions which enables the Tesco management to obtain a valuable

feedback about the work conditions. This is a 360 degree exercise such that it cannot only gives

feedback to employees but enables the staff to share their experience and opinions to help serve

customers in better way. Another best example of healthy inter department relationship is too

strengthened by a good communication channels exercised between Usdaw (union of Shop,

Distributive and Allied Workers) and Tesco. The Tesco and Usdaw partnership considered to be

the biggest trade union agreement which seems to be the biggest staff forums in the private

sector. The partnership meetings are held thrice or twice a year and provide huge important

direct feedback from both sides.

The training of the staff and the development is another successful tool that Tesco uses to engage

with its staff and to enrich their experience of working with the staff. A good CPT program is

available such as Tesco’s own PDP (Personal Development Programme) is highly effective in

experiencing the staff retention. Staff retention and loyalty is a trademark for every successful

organization. According to Tesco’s website (2009) it is to be invested in over 2,000 new

management and also 4,500 team Leader roles last year to continue to deliver their ‘Every Little

Helps’ message across the valuable customers.

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Tesco always motivate its staff through profit sharing and ownership sharing through subsidized

share schemes for the employees such as ‘Save as You Earn’ and ‘Buy as You Earn’. According to

the website tesco.com (2009), 65% of Tesco staff is owned shares in the company and in May

2006 £78 million worth of shares were given to the 180, 000 staff as part of their scheme. Along

with that Tesco’s three shares schemes Tesco also operates an award winning pension scheme.

Tesco pays the double amount that the staff contributes. Such schemes allow the employees to

regard highly of their employer and become a loyal and honest staff.

Impact of individual dynamic on securing the commitment to action:

Impact of chief executive on securing its staff‘s commitment to action is to be distilled at all levels

of Tesco organizational structure. Any of the strategic action has to be channeled through the

effective top level management. Tesco’s current boss has earned industry as well as its

employee’s respect by achieving the various awards and take Tesco to an unprecedented level of

success. Sir Terry Leahy joined the company in 1979 and the man behind the first giant success of

introducing and devising the club card (loyalty card) scheme. He starts as mere marketing

executives and rose to ranks. He also commands a great respect in the England Business industry.

He is selected as ‘Business Leader of the Year’ in 2003. Guardian newspaper is rated him as the

most influential non-elected person in Britain in year 2007. He is widely regarded as visionary

leader among his all colleagues and also shows in the performance management methods

incorporated in his organization (Tesco, 2009b)

So the most efficient decision ever made by a retail giant has been introducing the loyalty card

and loyalty schemes. Before this, the Tesco used to trail behind Sainsbury and Marks and Spencer

(Tesco, 2009). Introduction of a scheme which is never used before in Tesco organisation required

a lot of influencing and persuasion skills. It is not only that but also securing entire work force is

an uphill task altogether which Sir Terry Leahy performed wonderfully. These efforts are duly

recognized by CMI (Chartered Management Institute), which awarded gold medal for the

visionary and pragmatic leadership of Sir Terry Leahy.

Strategic option that meets the revised strategic position and leadership perspectives:

Whatever is the view of strategic planning /thinking, such activities is long been assumed to be in

functions and responsibilities of leadership. Each perspective on strategy presupposes certain

assumptions about the staff of leadership especially in terms of emphasis given to controlling,

guiding or shaping the organizational environment. One way then to grapple with the differences

between strategic thinking and the leadership is to uncover what certain perspectives of

leadership emphasize in strategic process.

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Links daily task with strategies or long term perspectives, Assesses and links short term, day to

day tasks in the context of long term tax administration strategies or long term perspectives,

consider whether short term goals will meet long term objectives.

Conclusion

In this assignment we have tried to explore Tesco within the four learning outcomes as specified

above and have found that due to the visionary leadership and innovative performance

management measures, Tesco has secured a top notch in the retail industry and continues to

grow day by day. The four learning outcomes are inspected through the performance targets, the

purpose and balance score card methodology adopted by Tesco. Tesco is further using a various

controlling and monitoring mechanism together with its ‘Steering Wheel’ to help implement its

objectives. Different motivational techniques are used to build up the morale and generate higher

labour output by the team member’s performance. These teams include enrichment of

employees experience through training and development, sharing of success through shares and

profit incentives. The most importantly strategic leadership has been discussed. It is to be stated

that without the visionary leadership of management Tesco would not enjoy the benefits that it is

enjoying today growing day by day. Despite being the leading supermarket, Tesco continuing to

expand it’s more diversified portfolio and feels confident that the trend would continue in the

foreseeable future.

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