1.0 INTRODUCTION
In today’s competitive ever-changing business environment; organizations need to
focus more on developing their human resources. Human resources can be defined as
the pool of human capital under the firm's control in a direct employment relationship
(Wright & McWilliams, 1994). If managed properly these human resources can lead
to a competitive advantage. Ricardo (1817), Schumpter (1934) and Penrose (1989)
argued that internal resources of the firm are the major determinant of competitive
success (Wright & McWilliams, 1994).
Tesco is one of the world’s largest retailers with operations in over 14 countries
around the globe, employing over 492,000 people and serving millions of customers
(Tesco 2011). Its main operations are in the UK, however, it also has stores in the rest
of Europe, Asia, and has recently expanded into North America. It also provides
online services through its subsidiary, Tesco.com.
Tesco sells approximately 40,000 food products in its superstores, as well as clothing
and other non-food lines. Tesco’s own brand accounts for approximately 50% of its
sales.
The Strategic Human Resource Management (SHRM) tool will be applied to Tesco
and relevant recommendations that surround the issue of workforce diversity and the
implementation of policies and practices will be given. Research will be conducted in
order to identify the internal and external forces affecting the organization Pressures
from the internal environment include the globalisation and the impacts it brings
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along with it. Externally Tesco is directly affected by the diversity of its workforce
and how issues such as discrimination and communication affect employee
performance. Cultural tension within communities, economic, legal, and political
factors all affect Tesco.
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2.0 SHRM
Organizations must undertake human resource practices, which are organizational
activities directed at managing the human capital at the organization’s disposal and
ensuring that the capital is employed towards the fulfillment of organizational goals
and objectives(Becker & Huselid, 2006). Strategic human resource management is the
process of human resource management which involves linking human resources with
strategic organizational objectives to improve performance (Hartel et al., 2007).
SHRM focuses on organizational performance rather than individual performance
(Becker & Huselid, 2006).
The role of HR management systems as solutions to business problems rather than
individual HR management practices in isolation (Budhwar & Aryee,) . Strategy is
about building a sustainable competitive advantage that in would in turn lead to
performance gains. HR strategies are essentially plans and policies that address and
solve strategic issues related to the managing human resources of an organization
(Massey, 1994). An organisation’s HR practices, policies and programmes should be
aligned with corporate and strategic business unit plans (Hartel et al, 2007). Strategic
HRM thus links corporate strategy and HRM, and emphasises the integration of HR
with the business and its environment.
Earlier human resources management models, have shown that organizational
effectiveness depended on a tight 'fit' between organizational strategy and HRM
policies and practices ( H i l t r o p , 1 9 9 6 ) . SIHRM approaches and policies are
influenced by the overall corporate international strategy or internal fit. Hartel and
Fujimoto, (2007) highlight the importance of fitting HR policies with local legal,
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political, economic, and cultural factors. Nevertheless, a firm must maintain flexibility
in its SIHRM system to respond to various demands from a complex competitive
environment (Wright & Snell, 1997).
2.1 Motivation Theory
Research has shown that a motivated workforce will work harder and achieve greater
output more efficiently. Motivated employees require less supervision and
demonstrate pride and zeal in doing their work, making a greater impact on the
customer (Hartel et al, 2007). Motivation of employees leads to greater levels of
concentration, thus reducing the likelihood of on-job accidents and conflicts.
Motivation may stem from personal interest such as keeping safe
or from external factors such as intrinstic and extrinsic rewards . Taylor’s motivation
theory has suggests that employees are purely motivated by money. However, this not
true as monetary reward is not the only way to effectively motivate employees. People
are not only motivated by material rewards but by a desire to increase their power
position in the corporate hierarchy ( McNerney, 1996). Employee motivation levels
change with time, promting HR managers to continually monitor the workplace to
determine the reasons for such drops in the level of motivation. The HR manager
faces a task of formulating new employee motivation strategies that are in line with
the organisation’s overall corporate strategy. For example offers various awards such
as : free shares in the company after a year, a save as you earn shares scheme,
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employee discount cards, gym membership, holiday discounts, and contract free
phones (Tesco, 2011).
2.2 Environment
Organizations are constantly faced with environmental contsraints that need to be
overcome. Organizations constantly monitor and analyze their operating environment
which includes both the internal and external factors . Tesco will need to analyse
these factors and identify them as potential threats or opportunities. Organizations
wishing to develop effective SHRM systems must make an assessment of their current
position and compare it with a vision of the future (Hartel et al., 2007). It is suggested
that environmental scanning of both the external and internal environments is a
necessary prerequisite stage to strategic formulation.(edit)
2.2.1 Internal Environment
The organization’s assessment of its environment must involve an analysis of its
internal environment or its organizational strategy, structure, and culture.
Organizational strategy involves taking action to meet the basic long-term objectives
of the organization in question. An assessment of organizational strategy can reveal
an organisations ability to maintain its current strategy. Strategic decision making has
far reaching implications on HRM practices or strategies (Hartel et al. 2007). Other
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factors that may affect the organization’s direction is organizational culture and
structure .
Tesco places the customer at the heart of its values. Providing customers with value
and service overrides all other objectives (Tesco, 2011). The seven part strategy that
Tesco implements aims to broaden the scope of the business to enable strong
sustainable long-term growth. As a part of its growth strategy Tesco has embarked in
internationalization to gain a larger market share. By expanding overseas Tesco now
faces a variety of human resource issues. This type of strategy may have an impact on
ISHRM policies such as hiring and staffing, renumeration, and localization.
Tesco had to combine deep local knowledge of culture with global experience, this in
turn lead them create international management teams that comprise of a mixture of
host country nationals and people from the UK business (Tesco, 2011).
2.2.2 External Environment
Jackson and Schuler (1995) state that a number of macro-environmental
characteristics may have an influence on the adoption of particular HRM practices
and policies. Organizations need to analyze and interpret external factors in its
operating environment that are beyond its control in order to be proactive rather than
reactive. Various factors such social and cultural, diversity, economic, political, and
technological - that take place in the organization’s operating environment are likely
to be of
critical importance for the organization (Barry, 1983).
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Tesco has operations in 12 countries outside the UK, including China, South Korea,
and Malaysia and has recently opened stores in the United States. This international
expansion is part of Tesco’s strategy to diversify and grow the business (Tesco 2011).
Tesco’s global expansion increases its exposure to the external environmental threats.
For instance Tesco operates in areas with varying demographics and cultures. This is
also reflected in its diverse workforce, which is composed of different individuals
with different gender, race, age, personalities, and work ethics (Hartel et al., 2007).
Workforce diversity is an important issue that Tesco has to manage carefully through
SHRM policies and practices. Managers managing a culturally diverse workforce
need to understand that these individuals have differing needs, wants, and
expectations; that may affect their work ethic, view of co-workers, and the way they
are motivated (Hartel et al., 2007).
Through the implementation of key human resource functions of recruitment and
selection, training and development, performance appraisal and remuneration,
organizations can successfully manage workforce diversity (D’Netto & Sohal, 1999).
Tesco has initiated diversity training programs that aim to The organization has,
invested in the Tesco Academy as a part of its ongoing commitment to building
capability. The academy supports the development of employees through training
courses, networking opportunities and mentoring (Tesco, 2011). To make sure it has
the people it needs to help it meet its business objectives, Tesco has developed a
structured recruitment programme. It is also using workforce planning to plan ahead(
www.thetimes100.co.uk/studies/)
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3.0 Recommendations
Yang and Konrad (2011) , argue that the best practices for diversity
management focus on selecting for diversity, reducing workplace
discrimination, and generating financial effectiveness.
By improving its employer brand proposition, Tesco can improve its ability to
attract the right kind of talent( Mosley & Kunerth, 2011),
Cross training of employees to give them a wider array of skills and insure that
they remain interested in their job.
Inclusion of employees in decision-making process in issues that directly
affect them.
3.1 Evaluation of Plan
After the implementation of new policies and initiatives, it is vital to evaluate and
review whether the new plan has met what it set out to achieve (Hartel et al., 2007).
Ultimately, it is measuring the effectiveness or inefficiency of the plan. Evaluations
and surveys should be handed out to employees of Tesco at all levels for better
evaluation.
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4.0 Conclusion
By creating workplace diversity and embracing it, Tesco’s organisational culture can
be improved. Employees will have a better understanding of differing cultures and
beliefs, therefore enhancing their performance due to the organisation better reflecting
diversity in the community. To effectively manage diversity managers at Tesco need
to recruit and staff employees who are culturally aware and not just diverse. The
implementation of a training and development program may also aid in improving
performance and overcoming environmental threats. By effectively managing
diversity, a firm can obtain human capital that is valuable, rare, inimitable and
non-substitutable (Hartel et al., 2007).
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