Improving Organisational Performance - Assignment Example

?Improving Organisational Performance Table of Contents Introduction 3 Business Case for Tesco 4 Business Case for Sainsbury’s 6 Difficulties, Challenges and Implications of Performance Management in Tesco 7 Difficulties, Challenges and Implications of Performance Management in Sainsbury’s 8 Proposals for Mitigating the Challenges in Tesco 10 Proposals for Mitigating the Challenges in Sainsbury’s 11 Limitations to the Proposals 12 Conclusion 14 References 15 15 Bibliography 18 Introduction ‘Performance management’ is a term which is used to assess the acts of an individual employee and to certify if his/her performances are suitable for the job. It is a modern approach used by the management of an organisation for continuously improving the employees’ performances. It is an ongoing process, where a supervisor should communicate the job responsibilities to an employee, make him/her aware of the expectations from him/her by the management and ensure that mutual understanding prevails between them. Performance management regularly monitors the position of the organisation and implements any skill development tools or training modules for the employees. The principle objective of performance management is to make optimum use of the resources that the employee is capable of to deliver (Parmenter, 2011). In the paper, the different performance management systems used by two large organisations in the UK i.e. Tesco PLC and Sainsbury’s in the retail segment will be discussed. The implications and challenges faced by the two organisations while implementing the performance management system will be observed in the paper and certain proposals will provided to the organisations to overcome those challenges. One of the largest British multinational grocery and general merchandise, Tesco, has spread its operations over 14 countries, employing over 492,000 people. The group after its incorporation in 1920 has extended over different sectors and formats. It has approximately 5,380 stores throughout 14 markets in Asia, Europe and the United States (Tesco PLC, 2012). United Kingdom’s oldest retailer, Sainsbury’s was originated in London in the year 1869. At present, it is the third biggest chain of supermarkets in the UK. It opened its first store in Drury Lane which sold eggs, milk and butter products. Later, the group has transformed itself from being a retail outlet with diversity in different sectors like Finance, Entertainment, Toys and Nursery (Sainsbury’s, 2012). Business Case for Tesco Tesco has introduced performance management in their organisation to analyze and to evaluate the performances of their employees. Therefore, performances in Tesco can be measured by tracking the results of a few of the factors, namely, Key Performance Indicators (KPI), productivity, quality and safety. An employee’s productivity is measured by the quantity of work performed by the amount taken to do the work. Simultaneously, the quality factor falls in place when measuring productivity. Therefore, Tesco measures performance of the employees by measuring the KPIs. To measure the KPIs, Tesco introduced a management tool called “Steering Wheel”. It consists of four quadrants–‘Customer, Operations, People and Finance’ (TESCO an ADVENT Company, 2011). These quadrants are separated into small segments which focus on measuring the KPIs of each segment which are based on the targets achieved. The performances of an employee are communicated daily by their supervisors on the basis of their daily improvements, average performance in the group and within the organisation. This helps the employee to know where he/she stands in the group and what measures he/she should take to improve the average performance in the group (TESCO an ADVENT Company, 2011). Customer Operations Earn the reliability of the customers for lifetime All kinds of products are available Value for the prices Admirable staff and fast services Pleasurable shopping for the customers Work is clearly defined and it becomes simpler for the staff Operational cost at Tesco is cheap Safe and logical operations Finance People Growing sales of the company Maximisation of profits Manage investments Value and trust among the employee Supportive supervisors for doing good jobs Opportunities towards growth Four Quadrants of Steering Wheel Source: (TESCO, 2005). Business Case for Sainsbury’s Sainsbury’s performance management system is analysed in their organisation to identify the impacts that it has on the psychological contract. Psychological contract is one of the key tools for motivating their staff. It can be described as a silent communication between the employee and the manager. The manager expects certain outputs from the employees and in return the employee wants certain benefits and guidance from the manager which plays a psychological effect on both of them. The managers in Sainsbury’s believe that the performance management system is implemented to drive their business where it should be. It helps to include the correct behaviours and exclude the poor performances to give opportunities for the desiring people to move forward. They measure the performances not only in terms of sales but also through personality, communication with members and overall role in the organisation. The managers in Sainsbury’s practice to responsible to evaluate the day-to-day improvements, review performance at regular intervals and provide trainings when the opportunity arises. The record of these performance measurements are kept with the employer and is discussed during the evaluation meeting of the employee (Newaz, 2012). The management in Sainsbury’s believe that job satisfaction of an employee is not only about additional income but the motivational feeling of the employees that they could contribute in the success of the company. They also believe that sharing the success leads to a motivational factor within the workforce and ensures long-term loyalty with the organisation. Sainsbury’s performance management system includes rewarding of employees who have been able to fulfil the overall expectations of the manager, by giving them a real stake in their business. This rewarding style not only benefits the employees but also their families and contributes in developing a strong workforce (Newaz, 2012). Difficulties, Challenges and Implications of Performance Management in Tesco Tesco has been measuring the performance of the employees by ascertaining different functional areas that has been stated in the “Steering Wheel” of the company (Morgan, 2007). The company considers its employees as the most precious asset. Thus, the company attracts, retains and develops the precise abilities at all operational levels. Tesco is committed to invest in the training facilities for the employees. Tesco has introduced a process called “Talent Planning” which helps the employees attain their optimum prospective. The employee needs are ascertained and to understand and to respond to them a People Management Group has been set up. Other factors like staff surveys, regular performance reviews, trade unions involvement and communications for development of the business are also being considered while measuring the KPIs (Morgan, 2007). Tesco has underlined a statement that states ‘I Find My Work Interesting’ (TESCO PLC, 2011). This statement is justified by the employees after they complete the annual survey done by the management and agrees to the statement. Thus, the management and the customers enjoy the benefits of highly trained and experienced staffs. It has been proved by the survey conducted with the customers in the financial year 2011. The annual statement shows that 69% has been rated to be the experienced staffs by the customers (TESCO PLC, 2011). Tesco has experienced lots of challenges for implementing KPIs in measuring the performance of the employees. Initially, the company was not being capable of attracting right talents that have been cited in the ethics of the organisation. Moreover, the company was not being capable to retain the existing talents in the organisation because of the better opportunities that were available in the market. Therefore, the company decided on the aspects that could be an attractive package that could retain their existing talented employees and also could attract new talents from the market. Thus, according to the management of Tesco, the company decided to pay pension and share plan arrangements with the employees. Being a private organisation, the decision of paying pensions to the employees was an attractive package to retain and hire new talents for different levels of the organisation (TESCO PLC, 2011). One of the difficulties that the company can face in implementing pension plans for the employees will be the additional cost being incurred by the organisation. Therefore, the company has to keep aside a huge fund for investing on their large number of employees employed worldwide, without getting any output from that investment towards the employee. Difficulties, Challenges and Implications of Performance Management in Sainsbury’s Sainsbury’s performance management system is alienated into three steps that are followed by the managers. These steps are: Step–1: Objective Setting: This step is performed in the beginning of a performance year where the managers discuss with the employees the target to be set. The managers of the organisation have said they call them SMART target setting that means, targets should be “Specific, Measurable, Achievable, Rounded and Time bounded” (Newaz, 2012). The managers have also included that they set business targets for the employees. It signifies the aspects that the business is achieving and their expecting targets from the employee as an individual and as a store are also described (Newaz, 2012). Step–2: Reviewing What and How: After the first step is over the managers keep a close observation of what the colleagues are doing in order to meet the targets. If they are not at par with what they are supposed to do, the managers convey the feedback on a daily basis or weekly meetings, though the formal performance review is done each six months (Newaz, 2012). Step–3: Overall Performance Rating: Finally, the overall performances of the employees are evaluated at the conclusion of six months. The managers gauge the performances by Colleague Performance Review (CPR), where they rate their subordinates in three different categories, namely ‘Top, Strong, Achieved and Under-achieved’. Along with manager’s review, Mystery Customer Measure (MCM) is the other tool to measure the performances of the employees (Newaz, 2012). A few of the challenges the managers can face while giving feedbacks to the employees is that they can consider it negatively at times. The managers of Sainsbury’s have said that if they are under performing then the feedbacks are bound to be negative which in turn can be harsh to the employees. A negative feedback questions the employee’s capacity to perform and their behaviour towards the organisation (Newaz, 2012). Adapting to situations quickly can be a motivational factor for the employees. However, there are few employees who lack the ability to learn quickly. In these cases, the manager might get frustrated and their feedbacks can be de-motivating to the employees. This could quickly lead to retrenchment from the organisation by that slow performer. Proposals for Mitigating the Challenges in Tesco Tesco’s announcement for pension has been attractive for retaining and attracting new employees. However, the company may face certain challenges in terms of fund that had to be incurred by the organisation. Therefore, the following proposal can be valuable to the organisation in short-term and long-term. In the short-term this attractive pension plan will help to retain employees for a longer period. Thus, the cost incurred for employing a new employee will be saved. In this regard, the company every year plans a fund for the various activities designed to hire new employees. After the employee’s are appointed in the company initially it does not get the desired output from that employee, because of the training period. The company provides lots of on-the-job training to make the employee familiar with the resources that they would be utilising while perform their tasks. Certain companies even design a vestibule training atmosphere to provide an employee practical experience while performing the job (Tesco PLC, 2012). In order to ensure employee retention, certain amount of funds need to be saved which will not be required if retention of employees can be achieved, and it can be utilised for contributing to the employee’s pension fund. Rather than completely incurring huge funds by the organisation, the employer can subtract certain percentage of their wages and add the same amount to the employee’s pension fund. This could lead to a huge savings of fund in the long run. Apart from this, the employees would not get de-motivated that their wages are being deducted and repaid to them in the form of pension. However, the employees will be motivated to grow and earn more so that the percentage of amount gets increased and the same would be contributed by the organisation (Tesco PLC, 2012). Proposals for Mitigating the Challenges in Sainsbury’s Colleague Performance Review (CPR) which is done by the managers in Sainsbury’s has a positive and negative impact to the employees. The positive feedbacks are the motivational or positive impacts and the negative responses are the de-motivational or negative impacts. Repeated negative feedbacks can lead to retrenchment of the employees from the organisation (J Sainsbury plc, 2012). Regular retrenchments can lead to incurring cost for hiring of employee’s in the short run. The company has to wait till the end of the training of the employee, before his/her performances can be reviewed by the managers. This way the company has to incur cost for the training of the employees and also pay wages to that employee. Valuable time is being spent repeatedly for the new employees hired by the organisation. Therefore, the company can set a guideline for the managers to review the employees who have just completed the training. Optionally, the company can organise lecture sessions to be held by the management gurus. The task of the management guru’s is to deliver speeches that will help to motivate the employees. Though the management guru’s would charge a fee for the lecture sessions, it is comparatively lower than hiring of new employees cost. Thus, in the short-term the company will be benefitted by low operational cost. Retrenchment of employees is questionable to the abilities of the top level management. Therefore, a company uses all kinds of tactics to hold their employees in the organisation. Retention of workers lays a positive impact to the shareholders. The stability of a company such as Sainsbury’s is seen through the satisfaction levels that the employees enjoy. Thus, lower the retrenchment, higher the investments by the shareholders. The company’s share in the market rises and the trust among the shareholders prevail. Ultimately, it’s the firm who benefits in the long run, in terms of capital and share prices of the company. Limitations to the Proposals The proposed plans for Tesco might have few limitations. A certain section of the employee force that might not be advantageous to the organisation may tend to stick to the organisation, occupying available space for new employees and talents. The refreshment of ideas that are required from time to time to prevail in the competitive market might not be available for Tesco. New innovations or techniques will not flow in the organisation. This might lead to a prototype line of products being sold by the company. The retail giant’s reputation might be at stake when customers will not get the products that they expected to be available in Tesco. Therefore, the ethics of the organisation in terms of deliverables to the customers may not be up to the mark. This will provide an edge to its competitors when trust in quality and availability is concerned. To cope up with the challenges that the proposal comes with, the company might see the whole scenario before deciding to invest in the new plan. A lot of focus might go to the management gurus’ when Sainsbury’s motivational factor is concerned. Sainsbury’s values the psychological contract of the employees while evaluating performance management system. Therefore, the proposed plan for having guidelines may differ from employees to employees when their psychology is concerned. Certain guidelines could be provided related to specifically to the weaknesses of the employee. Thus, an employee might feel that his/her weakness is specifically being considered while drawing the guidelines. The employee can get personal at times and this could de-motivate the employee. Apart from these, the cost for hiring a management guru can be quite high at times. Moreover, the sudden unavailability of the management guru can also be a cost incurring factor. The company might incur the cost for organising the lecture session where as the management guru might not be available at that point of time. This way the company might waste precious time along with the expenses. It might also be a time consuming factor as individual employee’s weakness might not be considered. Conclusion Tesco and Sainsbury’s are among the leading brands in the world, in their respective segments. The two different business cases that have been discussed in the paper are unique in their nature. Therefore, it can be said that performance management is a related tool upon the growth of the organisation. Both the organisations have developed new ideas to measure the performances of the employees and implemented techniques to improve them. The paper discussed the different approaches of performance management by the two organisations. The practical challenges and difficulties that both the organisations may face, are anticipated and discussed. The paper also suggested different proposals that can lead to reduction of the challenges faced by both the organisations. The practical challenges have been evaluated and proposed plan is designed to implement those changes with small differences. The individual plan focuses the advantages and limitations of the organisation and those limitations are being ascertained individually. The limitations that could arise from the proposed plan are also discussed above. The forecast of limitations will help both the organisations to implement the changes and carefully look through the whole picture behind the proposed plan. References J Sainsbury plc, 2012. Sharing Success with Our Colleagues. Sainsbury’s View. [Online] Available at: http://www.tescoplc.com/corporate-responsibility/our-community-promises/buying-and-selling-products-responsibly/trading-fairly/improvement/ [Accessed April 07, 2012]. Morgan, J. P., 2007. Operational Threats and Performance Risk in the Business. Risks Relating to Our Business. [Online] Available at: http://www.tescoplc.com/media/166108/usd_2017_850m_at_5_50_.pdf [Accessed April 07, 2012]. Newaz, M. T., 2012. The Role of Performance Management System in Shaping Psychological Contract: A Case Study Approach. International Journal of Business and Management Tomorrow. Vol. 2 No. 3, pp. 1-10. Parmenter, D., 2011. Key Performance Indicators: Developing, Implementing, and Using Winning KPIs. John Wiley & Sons. 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