Business Issues and the Contexts of Human Resources - Assignment Example

Business Issues and the Contexts of Human Resources Contents Introduction 3 1.Organization and its functions 3 1.1.Organizational Information 3 1.2.Organizational Structure 3 1.3.Organizational Culture 4 1.4.Delivery of HR function 4 1.5.HR’s contribution 5 2. Business Performance & the dealing with the changing environment  5 2.1. Contemporary issues faced by the industry 5 2.2. Monitoring and measurement of business performance 6 2.3. Organization managing change 7 3. The positioning of your organization 8 3.1. Organization’s market position 8 3.2. Key demographic, social and technological trends 9 3.3. Nature of globalization 9 3.4. Government policies, EU regulations and other legislative factors 10 4. The role of HR in your organization 11 4.1. Role of the HR function in business planning 11 4.2. Sources of data used by HR 12 5. Moving Forward 13 5.1. Recommendations 13 5.2. Potential cost implications 14 5.3. Communication of recommendations 14 Conclusion 15 References 17 Appendices 18 Appendix1: 18 Introduction 1. Organization and its functions The organization chosen for this particular analysis on human resources is Tesco Plc. Tesco is a public limited company and was founded in 1919. It is one of the major players in retail industry. Tesco is the third largest organization in terms of profit margins being earned (Ryle, 2013). The company is a British multinational general merchandise and grocery retailer. 1.1. Organizational Information The company I am working for belongs to public limited sector. Tesco’s major business purpose is to provide wide array of general merchandise and groceries. The company has its retail outlets located across 12 countries. In UK market the company acquires approximately 30% of market share and is a grocery market leader. The total revenue gained by the firm as per financial year 2014 is £70.894 billion and it encompasses an employee base of 597,784 (Ryle, 2013). 1.2. Organizational Structure The organizational structure of Tesco has been outlined in figure1. Figure 1: Tesco's organizational structure Tesco’s management functions are associated with improving functionality of every department and maintaining long term relationships with employees. Democratic management style is followed by the company. 1.3. Organizational Culture Charles Handy stated that there are four cultures followed by any organization such as power, task culture, person culture and role culture (Boxall and Purcell, 2003). Role culture has been implemented in Tesco Plc where employees are allocated responsibilities and roles as per their specialization. They also possess ownership towards assigned tasks or duties. 1.4. Delivery of HR function The HR function fits well within the organizational structure since it is more inclined towards process and operation. HR functions are delivered through a centralized format where HR heads are administrative expert as per Ulrich model. The Ulrich model comprises of four dimensions like people, strategic or future focus, processes and day-to-day operations. On basis of these dimensions there are different aspects associated with leaders like employee champion, change agent, strategic partner and administrative expert. 1.5. HR’s contribution HR effectively contributes towards workplace through managing people and increasing efficiency of human resources. There are even strategies formulated by HR department in order to increase employee productivity. The job of HR department is not only to recruit talented individuals but even to retain them within the system. 2. Business Performance & the dealing with the changing environment  2.1. Contemporary issues faced by the industry There are global political factors influencing operations of Tesco Plc. Political stability, tax rates and legislation are the major factors that affect this retail chain’s functions. Government keeps on encouraging retail companies so as to create opportunities for many unemployed people. Employment initiates more disposable income which can be transformed into revenue margins for the company. Apart from creating employment, Tesco’s product has high demand that contributes GDP growth of a country. Economic changes in the form of tax rates, interest rates, etc., affect availability of finance and hence cause negative impact on company’s financial performance (Hiatt and Creasey, 2003). Less disposable income and declining household income tends to affect profit margins of Tesco and the company needs to balance on their product range. There is cultural change across the globe where more customers are inclined towards shopping at own convenience and purchasing healthy products. It is an advantage for the company and has also facilitated home delivery network. The competitors of Tesco are classified on basis of sales percentage. Their competitors are Asda, Sainsbury, Morrisons, Co-operative, Waitrose, Marks and Spencer, Aldi, Lidl and Iceland. Technological advancements have enhanced efficiency level of Tesco since they can utilize option of online shopping and self-service checkout points available at its retail stores. Environmental concern is relatively high for firms operating in this segment. Tesco made a commitment of becoming a zero-carbon business in the coming years (Hayes, 2010). It has incorporated strategies to reduce wastage at its every store locations. Legal issues are mainly to be aligned with UK legislation in context of executing business operations or maintaining healthy employee relations. The upcoming UK legislation shall increase employee empowerment thereby influencing Tesco’s management to adopt democratic leadership approach. On the other hand, high tax rates or corporate tax margins will reduce profit margins of the company. If UK legislation outlines increase in tax rate in out-of-town shopping areas then Tesco would witness problem to expand their business operations. 2.2. Monitoring and measurement of business performance The business performance needs to be measured appropriately since it highlights competitive position of an organization in relation to its rivals. There are specific tools that are utilized by Tesco Plc in order to measure their business performance. Key performance indicators are set by the management at the beginning of a financial year. These indicators mainly represent operational efficiency, growth in revenue margins, team performance, individual performance, accomplishment of set goals, market share percentage, success of any new product launch, etc. In the recent years, Kaplan and Norton’s balance scorecard has also been introduced by the firm so as to focus on all possible areas. Both financial and non-financial data are analyzed through these tools. Skills audit and employee engagement surveys are conducted on specific time interval by HR department. This reveals performance of every employee along with areas that needs further improvement. Employee engagement surveys also highlight level of team member’s engagement in various business strategy formulation and execution. 2.3. Organization managing change The business performance data is used to outline areas which require change. For instance, Tesco reviews employee performance data to determine best performers and weak performers. The change factor is then established in terms of incorporating training and development session, or structuring employee motivation schemes. Kotter’s eight stop model can be closely related to such change in context of creating urgency for acquiring skills, creating a coalition, developing strategy and vision, communicating new vision to all team members, empowering widespread action, focusing more on short-term wins, producing further change and consolidating gains and incorporating all possible new approaches within the workplace culture of Tesco. Lewin’s change model also can be used to analyze change management process at Tesco. The company firstly focuses on area of organizational change and then unfreezes the situation. Transformation is encouraged within the firm and final change is established or implementation is guided or refreezed. Kotter’s eight step model is incorporated within many retail companies where the change is remaining competitive through providing value added services, it is then transmitted to all team members, short term wins is acquiring more customers in least time, and finally focusing on gains for further change. 3. The positioning of your organization 3.1. Organization’s market position As per Porter’s five forces model, there exist five forces which determine market position of an organization as stated in Appendix 1. There is intense rivalry in UK market in supermarket sector and has been further illustrated in figure2. Figure 2: Market Share (Source: Harris and Watson, 2014) According to figure2, topmost competitors of the company are Asda, Sainsbury’s and Morrisons. All these players along with Tesco Plc serves similar target market segment. Threat of new entrants is high in this sector. UK supermarket segment possesses fierce competition but Aldi and Lidl as new entrants have occupied desirable market share. This threat from new entrants needs to be taken into consideration by Tesco in order to sustain their competitive advantage. In current scenario Tesco is enjoying economies of scale. This is because the company can effectively engage into negotiations with suppliers. Tesco’s market dominance results into low bargaining power of suppliers. Bargaining power of buyers is relatively high since there are large number of retail companies offering similar products. There are no such switching costs involved and it enhances bargaining power of customers (Leopold, Harris and Watson, 2005). The company maximizes its base of loyal customers through pleasant shopping experience. Threat of substitute products is low for the company due to its innovative strategies in the form of Clubcard scheme, cheap car insurance and cheap petrol promotions. 3.2. Key demographic, social and technological trends The social factor has facilitated business growth of the firm in UK market and even across the globe. Culture or society has transformed where individuals are more focused on convenient shopping experience. Tesco has been able to address such hidden demand of customers. The company offers wide array of products through its retail store outlets. On the other hand technological advancements has enabled the firm to implement automatic checkout position and online shopping portal. This factor will support Tesco to acquire maximum percentage of consumer market segment through providing superior service quality in future years. Demographic factor represents changing age groups and income class segments (Wintzer, 2007). More customers now belong to middle age group who prefers to shop at supermarket stores. Stable economic conditions has proved to be an advantage for the firm and in coming years Tesco should continue focusing on offering products at competitive prices 3.3. Nature of globalization Globalization can be defined as international integration formed from interchange of ideas, products, world views and culture (Lasserre, 2012). This process is all about acquiring different aspects from around the globe. However in real world scenario globalization has enabled companies to operate beyond borders of their home country. To certain extent globalization has increased efficiency level of many companies but simultaneously cross-border exchange has enhanced operational costs of many firms. International factors have supported Tesco in terms of expanding their operations globally. There is supply chain risks involved in global operations since the power needs to be decentralized. On the contrary, workforce diversity resulted due to globalization as it facilitates developing a wide base of talents. Cross-cultural diversity within the workplace helps to analyze different cultures and formulate business strategies accordingly. Tesco’s interest can be in areas which are highly disrupted due to terrorism and this factor restricts its global expansion (Peng, 2013). 3.4. Government policies, EU regulations and other legislative factors Tesco’s operations are spread across the globe and it is greatly affected by government regulations of other countries. For instance in some Asian countries there are strict norms followed in context of export regulations. A foreign company can only trade with these countries when they transfer trading power to domestic players. It can also be stated that foreign players are not encouraged in these countries since more importance is given to domestic companies. On the other hand, tax regulations set by European Union are favourable for many players operating in this location (Henry, 2011). This indicates that Tesco Plc is able to generate high profit margins through slightly low tax rates. However current changes to be made by EU in context of its rules and regulations would negatively impact business operations of Tesco. Export duties are high in United States and this reduces revenue margins of the company. For instance, UK legislation is centred towards regulating their tax rates and focusing more on domestic players. 4. The role of HR in your organization 4.1. Role of the HR function in business planning The role of HR department is highly significant in operations performed by Tesco Plc. HR’s main role in overall process is to recruit and retain best talents within the organizational system. In Tesco management has allocated specific tasks to HR department. They need to organize superior recruitment programs whereby individuals possessing great of skills and knowledge and hired on board. Training and development session is next important task performed by HR. This particular function incorporates necessary skills within team members which would be required while performing daily operations (Reiss, 2012). Workforce planning is a major area of concern for HR department. This plays a vital role in midst of business decision making. It is HR’s responsibility to design strategies regarding employees reward schemes, talent management, performance appraisal, and workforce development. Tesco’s high level of business performance is totally dependent on its productive workforce. HR department is solely responsible for acquiring such talented workforce. Their level of involvement is not only restricted to implementing strategies but they play an important role in strategy formulation. Tesco’s HR department are not involved in strategic decision making regarding business operations but all strategies related to human capital are taken by this particular department (Boxall and Purcell, 2003). The management has recruited skilled personnel as heads of HR department. These individuals had even proposed strategy of cross-cultural diversity. Workplace rotation also has been implemented by HR department in order to eradicate comfort zone of employees and make them develop efficiency level in any kind of tasks. HR department works in collaboration with all employees so as to identify their problems and provide appropriate solutions. Ulrich model can be well applied to Tesco’s HR model where HR managers act as a change agent. In this organization new technologies and customer centric functions are included to create long-term impact on the customer market segment. 4.2. Sources of data used by HR The business performance planning can be enhanced through analyzing wide set of data. Talent management program is essential in order to increase performance of business operations. This particular aspect can be managed properly through skills audit by HR personnel. Skills or abilities of employees form the basis of business performance. The HR team needs to constantly review employee skills and this data shall be accessed for designing recruitment programs. Talent management program is dependent on this skills audit data since it reveals those areas of skill deficiency that needs to be substituted by the company. This would help HR personnel to recruit best talent in the system and convert their skills into operational efficiency. The entire future recruitment program can be transformed on basis of this skill audit data. HR department of Tesco Plc also accesses national data sources such as ONS so as to analyze market trend of business operations. This form of analysis helps the HR department to design targeted recruitment program whereby specific talented individuals are hired. The company even is actively involved in outsourcing talent from different regions (Bamberger and Meshoulam, 2000). Monitoring trends of business operations not only initiates outsourcing but even gives rise to benchmarking and well defined benefit packages. The data obtained through UK Census and Labour Outlook proves to be more beneficial for the company. This is simply because current trends can easily be incorporated within the system that helps to increase productivity level. It can be stated that HR practices at Tesco are mainly associated with employee satisfaction or effective talent management. The included sources of data help the department to review current information and design any possible future human resource strategies. 5. Moving Forward 5.1. Recommendations Recommendations shall be based on increasing operational efficiency and human resource development. The HR department is recommended to focus on incentive schemes and appraisal systems. It has been witnessed that the organization is more inclined towards knowledge and skill development rather than appraising employees for their performance. This factor shall facilitate the company to retain talented individuals. UK supermarket sector is intensely competitive and many firms are offering job opportunities. Tesco needs to provide additional advantages to all its employees in order to increase their level of satisfaction. Performance appraisal system shall be based on two factors such as customer ratings and efficient accomplishment of tasks. Customer ratings would basically indicate customer service quality. This element is closely knitted with performance of team members. On the other hand, Tesco should focus on hiring employees from underdeveloped countries in order to reduce the level of employment. Operational efficiency can be improved by the firm by entering into unexplored market segments and implementing technology based operations. This form of strategy helps to reduce the level of human capital and eliminate any loopholes caused by human error. Multi-tasking approach can also be facilitated within workplace as it helps to gain competitive advantage. 5.2. Potential cost implications The recommended strategies for Tesco Plc are centred towards productivity improvement. This approach would cause an impact on overall cost structure. Hiring and retaining talented individuals within the organization definitely requires increase in operational costs. This cost shall be associated with providing more rewards, incentives, and offering attractive pay scheme. In overall context, Tesco Plc has been able to acquire competitive position in the market place due to its skilled employee base. Human resource department shall encompass high costs linked with recruitment and appraisal. Outsourcing activities will even have cost implications since talents need to be acquired from different locations. Technological advancements also constitute major part of overall operational costs (Peng, 2013). Tesco needs to strengthen its technological base so as to ensure that it remains competitive in the market place. Online shopping has already been implemented by the company. This has increased level of customer satisfaction in terms of convenience shopping. Tesco Plc can upgrade its operational efficiency through investing more in RFID or Radio Frequency Identification technology. This in turn automates the entire business procedure which supports acquiring wide base of customers. Technological investments would result into increase in operational costs. Apart from this factor employee satisfaction is also an additional cost from company’s perspective. Environmental planning is done through becoming a carbon-free organization and utilizing all forms of environmental friendly approach. 5.3. Communication of recommendations The recommended ideas need to be communicated across top management and HR department. This is simply because the ideas are related to improving business operations and sustaining talent of human capital. The most appropriate way to communicate ideas is through video conferencing. This approach reduces the constraint of organizing an appointment and message can also be delivered across respective managerial heads. It is essential that recommended ideas should be well supported with evidence which might prove to be appealing for managerial body. HR department will be provided statistical evidence in context of impact of employee productivity on workplace conditions. This shall influence the department to be more concerned about human resource appraisal or retention of talented employees. Through video conferencing not only will ideas be communicated but also feedback can be gained (Lasserre, 2012). This feedback can then be substituted with proper internal analysis data. Firstly regional heads shall be contacted through video conferencing regarding technological up-gradation. This message can later be communicated to top management for approval. It shall be well outlined that technology is essential for remaining competitive in the industry. On the other hand, advantages will also be closely knitted with superior quality of customer service. Conclusion As per this study Tesco Plc is regarded as the third largest retailer across the globe. Over the years the company has been delivering exceptional quality of products and services. Its operations are not only confined to UK market but it expands across various locations around the world. The company has diversified its product range and engages more into enhancing base of loyal customers. In overall context, Tesco Plc had to continuously implement innovative strategies in order to outperform other players in the market place. Competitive rivalry is intense in UK market where major competitors of Tesco Plc are Sainsbury’s, Asda and Morrison. The company has developed its competitive advantage in terms of offering pleasant customer experience. Tesco’s management believes that word of mouth marketing technique is highly essential in order to survive in this industry. Hence it focuses more on customer service and product quality. The government regulation has supported the company to expand on its business operations since it creates wide number of employment opportunities. Economic stability has influenced the firm to offer wide set of products to its customers. The company’s revenue margins are dependent on disposable income which is relatively high in case of economically stable conditions. On the other hand, employment conditions created by the company facilitate high disposable income. Technological advancements within the industry has even supported the company to upgrade its technological base and maintain its performance standard. The major negative impact created on Tesco Plc is through competitive rivalry and changing legislative rules and regulations. It is advisable that the company should focus on employee productivity and acquire talented individuals. This in turn would increase operational efficiency of Tesco and generate high revenue margins for the company. References Bamberger, P., and Meshoulam, I., 2000. Human Resource Management Strategy. Thousand Oaks, CA: Sage. Boxall, P., and Purcell, J., 2003. Strategy and Human Resource Management. Basingstoke: Plagrave. Hayes, J., 2010. The Theory and Practice of Change Management. Denmark: Palgrave Macmillan. Henry, A., 2011. Understanding Strategic Management. New York: Oxford University Press. Hiatt, J., and Creasey, T. J., 2003. Change Management. USA: Prosci. Lasserre, P., 2012. Global Strategic Management. Singapore: Palgrave Macmillan. Harris, L., and Watson, T., 2014. The Strategic Managing of Human Resources. Harlow: Prentice-Hall. Peng, M., 2013. Global Strategy. USA: Cengage Learning. Reiss, M., 2012. Change Management: A Balanced and Blended Approach. Norderstedt: Books on Demand. Wintzer, E., 2007. Global Competition and Strategic Management. Germany: GRIN Verlag. Ryle, S., 2013. The making of Tesco: a story of British shopping. UK: Random House. Appendices Appendix1: There is intense competitive rivalry in retail sector of UK market with some of the biggest players like Asda, Sainsbury and Morrisons. Bargaining power of suppliers is moderate due to strong and long term relationship of Tesco with suppliers. Bargaining power of customers is high because wide array of retail companies are present with less switching costs. Threat of new entrants is less since lump sum investment is required to set up retail firms. On the other hand, threat of substitutes is low because these retail firms encompass different products. Read More