Human Resource Management Practices of Tesco PLC

HR planning processes at Tesco

Human Resource planning refers to the search of people who will spearhead the realization of organizational goals and objectives of the organization in the current period and in the future. It entails demand and supply of labour and the problems associated with reconciling such factors. It can also be referred to as the analysis of the potential future needs of organization personnel in terms of numbers, locations and skills. It is necessary for Tesco to plan for its human resource requirements ahead of time. As the company grows, the HR department should recruit staff on regular basis. Positions in the organization arise due to opening of new stores in UK and international markets, current employees’ exit from the company or promotion to new positions, and enhancement of new job categories as the company grows and adopts its new technologies and processes to align with the changing business environment. The planning process of Tesco takes place annually beginning from end of February. Quarterly reviews are conducted in May, August and November.

Workforce planning process of Tesco entails having a job description and person specification. Job description contains the job title, the person who is responsible for the job, the person to whom the job holder reports and a simple outline of job holders’ duties and responsibilities. A person specification outlines or highlights the attributes, features and skills required for an individual to assume the responsibilities and duties of a given job. This workforce planning is shown in the diagram below. Person specifications and job descriptions determine the suitability of a person to Tesco business.

HR Planning process of TESCO

Fig 1: Tesco’s HR planning process (Slide Share, 2012)

HR planning process of Tesco helps the company to determine the number and locations of job positions available for the company now and the future. It also enables the company to recruit the right people for the available job positions now and in the future. Furthermore, HR planning processes enables the company to provide a benchmark for any job arising in future in terms of skills and responsibilities. It also helps the company’s management to determine if workforce is undertaking their duties according to the standards set by the HR planning. Human resource planning also ensures that the company identifies skills required for jobs and compares the current skills with future needs.

The current selection and recruitment processes of Tesco

From the Human Resource planning, a company may determine the need for new staff. In this case, the company seeks and effective and efficient approach to recruit and select appropriate personnel for the company. Recruitment entails matching of skills, knowledge and experience of a person to the specifications of a given job opportunity as provided by the HR planning process (Boxall, Purcell & Wright, 2007). Tesco’s methods of attracting and recruiting people are: Internal Talent plan and external recruitment methods. In the case of Internal Talent plan, candidates are recruited through internal E-recruitment method and/or advertising posts in Tesco’s intranet. External methods include: advertising through the company’s website; offline media such as television, radio and newspapers; online applications for managerial positions; and waiting lists for future employees needs.

Selection entails choice of most suitable people from applicants of the vacancy advertised through the various recruitment channels. Screening is a vital element of Tesco’s selection process to ensure that people selected for a job best fit the specifications of the job. Tesco’s HR selectors look carefully at applicant’s CVs in order to determine if the individual matches the person specification of the job.

Employee selection Process of TESCO

Fig 2: Selection process of Tesco

If a job applicant succeeds in the screening exercise, he/she is called to attend an assessment centre which is often conducted in store by the HR management department.  In this stage, candidates do various exercises such as problem solving and team-working exercises. Candidates who pass the assessment centers then attend an interview. Line managers for the offered job attend the interview to ensure that the candidates selected fit the person specifications.

N Brown plc can be used as a benchmark retail company in UK to illustrate the HR recruitment and selection process of other retailers. N Brown has an almost similar recruitment process with Tesco. The company advertises its jobs through various mechanisms including company websites. The company then reviews applications from various candidates and screens their CVs in order to determine the candidates whose profiles best fits the requirements of the job. Successful candidates then attend interviews which include aptitude tests (N Brown, 2013). Unlike Tesco, N Brown also develops close relationships with local universities in order to retain talents within its locations. The company also offers placements within its Buying and Merchandising function. Furthermore, 13% of the company’s recruitment in 2012/2013 was achieved through employee referral program whereby existing employees recommend friends and relatives to fill vacancies.

There are various improvements that are available for the recruitment process of Tesco. First, the company should adopt placement options for its recruitment processes and develop close relationships with universities in order to attract the best talents and skilled persons. Secondly, the company should use referrals, especially in the social media; whereby individuals within the company can recommend vacancies for their friends and relatives through oral communication, emails and social media. Thirdly, the company should use aptitude tests, especially in its managerial positions to determine their managerial skills that best suit the requirements of the company’s managerial positions.

Reward and Motivation

Job evaluation

Job evaluation refers to the assessment of a job’s value in relation to another, without assessing the current holders of the jobs. It ensures that the company offers rewards to employees fairly in accordance to their jobs. It ensures that the company does not end up paying different amounts of compensations or rewards to different people doing the same job. Job evaluation also ensures that organizations differentiate jobs in terms of pay or salary. The result of this exercise is that the organization delivers a pay range for each job and job groups. In order to design an effective job evaluation, an employer should consider certain factors such as: job complexity, skills and qualifications required for the job, the ease of getting the right people to take up the job, performance expectations of various jobs, levels of accountability and responsibility required for the job, and the labor market rates offered for such positions in competing firms within the industry.

In Tesco, the use of analytical job evaluation was discontinued in 1998. This paved way for a new non-analytical technique that entails matching of jobs. In January 2000, a broad-banded pay system was developed. If Tesco was to use Job evaluation approach, various mechanisms would be involved in execution of the analytical tool to mach jobs with their rewards. The first step in job evaluation process is to gain acceptance from the relevant stakeholders. The company’s management should explain the aims and purpose of job evaluation to employees and unions. The second step is to develop a job evaluation committee in order to evaluate key jobs in the organizations. The third stage is to find determine the jobs to be evaluated. The next step then involves analyzing and preparing job description; then an appropriate method of evaluation is selected. Jobs are then classified according to their job groups and relative worth. This involves ranking jobs depending on the various factors explained earlier in this section. Appropriate reward system is then designed for each job group.

Methods used to monitor the performance of employees

Tesco uses appropriate mechanisms to monitor the performance of its employees in order to ensure that each individual in the organization makes an effective contribution to the overall performance of the company. This involves assessment of employee’s performance against the expectations of the company. One way of measuring the performance of employees is the use of performance appraisal. Performance appraisal refers to the process of valuing the worth of an employee or his/her value-contribution levels in the organization. Performance appraisal methods include: use of appraisal forms, personality based methods, appraisal based on job behaviour, results-oriented appraisal systems, and use of rating scales in appraisals. It involves a few steps such as completion of an appraisal form, conducting an appraisal interview, agreeing on an action, and development of a job improvement plan, promotion or salary review based on the findings of the appraisal process. This can be illustrated in the figure below.

Performance Appraisal Process of TESCO

Fig 3: Performance appraisal process

Benchmarking is also another method of monitoring the performance of employees in an organization like Tesco. This process entails comparing performance to relevant and achievable standards in order to help organizations secure continuous improvement in the organization (Jung & Sosik, 2006). Continuous improvements also help in monitoring the performance of employees. This aspect requires organizations to set demanding, but achievable objectives and provide feedback of achievements against such objectives.

Reward system

Tesco has a non-analytical broad-banding reward system which groups jobs into several a single grading systems with six clearly defined levels of work. This enables flexibility and simplicity. Pays are determined in form of broad bands. Maximum of each band is at least 100% above the minimum in order to provide flexibility to manage pay around individual performance – performance-based pay. Through the broadband system, the company also uses market data to provide pay reference points and offers fair and transparent methods through: continuity payments, stretch payments, and consistent guidelines for promotion and development increases. The reward system of the company also comprises benefits of increased choice and value for staff and the ability of employees to convert benefits into cash (monetization). The reward system also involves better use of scale to stretch rewards. The reward system is also made up of performance based annual bonus and performance share plan. This is aimed at rewarding Tesco’s executive directors for achieving the company’s long term goals and creating sustainable shareholders’ value.

Employee Exit

An employee’s work with a company can be terminated for various reasons and in various ways. One of the reasons of terminating an employee’s relationship with his employer is due to failure to meet the expectations of the organizations. If the employee does not live up to the competence and performance level desired by the employer as contained in the employment contract, then the employee may dismissed from the company. This is lack of capability or qualification. Furthermore, abuse of authority at work and serious misconduct can also lead to the termination of an employment contract (Wilkinson and Marchington, 2008). Statutory prohibitions and other substantial reasons may also form basis for the dismissal of employees.

One of the ways through which Tesco Company terminates an employment contract with an employee is through dismissal on the account of employment policies within the company, and when there are fair reasons to back the dismissal. Other methods terminating an employee’s work in Tesco include: resignation, retirement, termination of contract and redundancies. In case any of these methods is used to terminate an employee, there are certain exit procedures that are followed by Tesco to ensure that employees leave the company fairly.

In case of willful resignation, the employee writes a resignation letter to the Human Resource Manager. The company then offers options of better pay or leave options to retain the employee. The next step is to conduct an exit interview to determine the views of the employee about the employment contract with the company. The next step is to check the work stress of the employee. The leaving employee is then given a reference letter and recommendations for his/her next job based on his/her levels of achievement in the current job. The next step is to make payment n lieu of notice. In this case, the company pays the dues owed to the exiting employee or gives share options if any. Properties held by the company that are rightfully owned by the employee are returned to him/her before he/she leaves the company. Finally, the employee is offered his/her retirement benefits if he/she is entitled to them.

In case of redundancies, the company exercises redeployment. This involves provision of alternative employment with Tesco. This is an effective exit procedure for redundancies because the employees do not lose their livelihoods. The company is the leading company in UK with a good profitability and revenue base. Therefore, it can be able to redeploy its employees in case of redundancies.

These exit procedures followed by Tesco are effective exit procedures that ensure that an employee’s dismissal or termination of employment contract is conducted in a legal and fair manner. ABC plc, a company in UK’s healthcare industry also follows almost similar exit procedures. However, ABC has other ways exiting procedures including training and outplacement of employees in case of redundancies. Unlike Tesco, the company does not check work stress among exiting employees.

Current legislation relating to redundancies

Human resource managers including HRM of Tesco need to be aware of four legislations that will enable them to establish correct procedures for redundancy. The first legislation is the Redundancy Payments Act 1965. This legislation requires that employees who lose their jobs in given ways are entitled to redundancy payment regardless of whether they have already secured a job elsewhere or not. The second and third legislations are amendments to the first legislation and include: the Employment Protection Act 1975 and Employment Protection (Consolidation) Act 1978. Currently, procedures for redundancy are incorporated in Employment Rights Act 1996. This act should be respected and appropriately obeyed by everyone engaged in implementation of redundancy programs (Bartunek, 2002).  This Act includes certain preconditions that need to be met in order for an employee to qualify for redundancy payments from his/her employer.

Following the legislation, Tesco has to determine follow certain redundancy procedures in order to comply with the law. First, it should consider the preconditions for one to qualify for redundancy payments as provided for by the Act including:

  • The person should be the company’s employee
  • The person should have been the company’s employee for a period of two years prior to the date of qualification for redundancy
  • Redundancy should be the primary reason for termination and not other reasons

Redundancy policies of Tesco also cover certain areas in order to comply with the legislations. These include: causes of redundancy, staff and/or unions consultation procedures, method involved in selection of redundancies, support and counseling methods for employees, employment protection mechanisms, and notice periods and level of redundancy payments to be made. Therefore, redundancy procedure in the company involves the following steps:

  • Defining the policy and determining reasons for redundancy
  • Consulting with trade unions and staff
  • Protecting jobs where possible
  • Provision of notice and payments
  • Closure – providing trial periods in case of redeployments

If these procedures are followed strictly, the company will be able to comply with the legislations of the Act. The company’s HRM will also be able to deal with issues of employment termination and redundancy prudently, considering the fact that there is need to understand human feelings attached to the decision. Therefore, apart from complying with the law, a company will be able to help individuals affected by redundancies through appropriate redundancy procedures including training, counseling and redundancy payments.

References list

Bartunek, J. M. (2002). How Can we in the Academy of Management Respond to Corporate Scandals? Academy of Management Executive, 16(3), 138.

Binmore, K. G. (2007). Playing for Real: A Text on Game Theory. London: Oxford University Press.

Boxall, P., Purcell, J. & Wright, P. (2007). The Oxford Handbook of Human Resource Management. Oxford: Oxford University Press.

Jung D. & Sosik J. (2006). Who are the spellbinders? Identifying personal attributes of charismatic leaders. Journal of Leadership & Organizational Studies, 12, 12–27.

Korczynski, M. (2002). Human Resource Management in Service Work: the Fragile

Social Order. Basingstoke: Palgrave.

Mumford, et al. (2007). The leadership skills Strataplex: Leadership skill requirements across organizational levels.  Leadership Quarterly, 18, 154–166.

N Brown (2013). 2013 Annual Report. Accessed August 7, 2013 from www.nbrown.co.uk.

SlideShare (2012). Recruitment and Selection process of Tesco. Accessed August 7, 2013 from http://www.slideshare.net/dkdmadhubhashini/recruitment-selection-process-in-tesco.

Wilkinson, A. and Marchington, M., (2008). Human Resource Management at Work: People Management and Development. London: CIPD.

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