Human Resource Policy and Actions - Essay Example

Human Resource Management Principles and its Application at Tesco Plc. In today’s intensely competitive market place, organisations can no longer rely on product quality, speed of supply, production costs or even innovation as leverages of competitive advantage. These factors have become prerequisites to stay in business and no longer offer a platform for competitive advantage. Organisations are increasingly looking in to new and innovative means of organisation management as a key competitive advantage and the focus is specifically on effective management of the human capital (Lawler 2000). Therefore, it is of crucial importance that companies identify the gaps in their Human Resource Management (HRM) practices by critically analysing the existing HRM practices vs. the established principles of HRM, which have evolved to reflect the importance of the modern day human capital. This essay aims to analyse the existing HRM practices of Tesco Plc. the largest retailer in UK with over 240,000 employees as its human capital. Any gaps between the existing practices and Human Resource principles will be identified to assess the degree to which the organisation has put principles in to actual practice. Organisational Background Founded in 1924, Tesco is the largest retailer in the UK market as well as the largest UK based international supermarket chain with 1,780 stores in the UK and 586 outlets internationally. The company which originally focused on food retailing has now expanded in to retailing of clothing, household electronics, fincial services, internet and telecommunications. With over 1780 stores spread across UK and a strong presence in Ireland and a host of other countries, with its 586 international outlets, Tesco employes 367,000 employees in its global operations with 250,000 of them based in the UK. With annual sales revenue of more than £37bn, and a pre-tax profit report of £2bn, the Tesco is the market leader accounting for 30% of the total UK retail market (Paton 2005). Gap Analysis of Human Resource Practices at Tesco Plc In a massive scale business operation as Tesco, the management of human resource becomes a very challenging task. Key functions of HRM which includes the HR Forecasting, Job Analysis and Specifications, Recruitment and Selection, Training and Development, Performance appraisal, Reward systems, Termination procedures and management of Employee Relations need to be updated and modified to suit the changing business environmental conditions (Bratten & Gold 1999). Organisations, which adopt a dynamic approach to its managerial process, will relaise the need for assessing existing practices and identifying the gap areas, which needs to be addressed through implementation of effective HRM principles. HR Forecasting is the process of “ascertaining the net requirement of personnel by determining the demand for and supply of human resource now and for the future” (Belcourt & McBey 2000, p. 102). HR forecasting falls in to three main categories as transactional based, event based or processed based forecasting (Atwater 1995). Tesco recruits over 11,000 personnel on annual basis and also enroll approximately 150 graduates in to its two training programs covering office and stores operations. It also recruits over 12,000 temporary staff for high sales seasons. Current HR forecasting practices of Tesco is transactional based where the focus is on responding to the changes made by internal environment. For example, Tesco’s plan for human resource requirements is mostly based on the stores expansion plans and new outlet openings. Company’s staff turnover rate of close to 32% is incorporated in to its forecasting and the internal supply through promotions, job rotations and cross over opportunities are also ascertained. While the forecasting practices at Tesco remains at a high standard, gaps can be identified in the process where little focus is placed on the environmental conditions. Event based forecasting can be coupled to the existing transactional based planning for further improvements in the process. Operating in a global scenario, the company needs to focus on the various global labour market conditions. Further, it should be noted that the labour markets differ drastically across the world and a uniform approach cannot be applied in HR forecasting for different international operations. Tesco is currently operating with a centralised planning approach. For example, Tesco Ireland may be able to operate with its own local supply of management cadre but for a location as Slovakia or South Korea, the company may wish to place expatriate management cadre. At the same time, these countries too may have well develop high caliber supply of management cadres with a better understanding of local settings and therefore such supply conditions should be incorporated in to the HR planning process. Job Analysis resulting in Job Descriptions and Person Specifications cover another crucial area of HR management, which facilitates the recruitment and selection process as well as training and performance appraisal functions. For selecting a suitable candidate, it is important that the selector has a clear idea of what is needed and who can effectively fulfill what is needed. Britain’s normal organisational practices in this area have been marked with inefficiencies, compared to more systematic practices adopted by countries such as USA (Cook 1998). Job Analysis involves the systematic gathering of information about jobs and analysing this information using subjective, rational or statistical analysis methods. While a host of techniques are available for job analysis, they fall in to three main categories of Job-oriented, Content- oriented and Attribute- based techniques. For analysing different type of work, a mixture of these analysis techniques may be needed. Currently Tesco’s current job analysis practices are done on a Content Oriented technique, which is more concerned of what the employee does to accomplish the work. This is further highlighted in their compulsory training programs concentrating on the content related to the jobs. Gap in Job analysis at Tesco lies in the use of a single methodology than using a combination of techniques to suit the assessment needs of different jobs. For example, if a Physical Ability Analysis (PAA) technique which is particularly useful when women and disabled are appointed for physically arduous jobs is applied by Tesco, the litigation cases such as Mima Rae’s which claimed of suffering back injuries due to handling of Express Check out counter work which is known to be physically taxing may not have resulted (Metcalf 2004). A gap can also be identified in the lack of clear job descriptions and person specifications being provided in the Tesco.com/careers web site. The profiles, which are provided under each operations department, tend to be more of personal background profiles of individuals. It would be more effective if competency and personality profiles were provided to portray each job’s person specification. Recruitment & selection procedures of a company would decide the caliber and suitability of the company’s workforce. While organisations can adopt various forms of recruitment, which can either be formal or informal, the effectiveness of these recruitment methods will depend on whether it reaches out to the correct target group and attracts the prospective candidates to apply for employment. Common recruitment methods adopted by Tesco include in-store advertising, recruitment events in local areas and referrals from in-house employees. Last year, Tesco requested its checkout staff to help identify and recruit 12,000 temporary Christmas staff (Paton 2005). The company uses its career website to attract a pool of prospective applicants in both graduate and school leaver categories. Its Debu.com section is reserved for students who are currently working with Tesco and who can benefit from continued career prospects with the company once their studies have been completed. Selection is mainly through the traditional mode of application letter and resume coupled with two or three interviews (Recruitment Campaign). Gaps which can be identified in the recruitment and selection process are pertaining to reported incidents of non-compliance with Employment Equality legislature in recruitment and the over reliance on interviews as the sole technique of personnel selection. In adhering to Employment Equality legislature selection procedures should be systematic and consistent in providing equal opportunity for selection. The case of Tesco Ireland vs. 65 employees in Tesco Jannel store where a newly created “Charge hand” position for the frozen and chilled meat section was filled with a internal person without providing other employees with an opportunity to apply for the post is an example of incorrect recruitment and selection practices which deviates from not only established HRM principles but also from legislature (Rogerson 2001). The sole reliance on interviews as a means of personnel selection can also be deficiency in the Tesco HRM policy. Research has indicated that interviews are inaccurate selection method based on reliability and validity. Interviews may not be reliable in the sense that it may not provide a consistent account of the person being assessed and validity depends upon the correlation between the predictor and criterion being applied in the selection. For example, if Tesco apply a correlation analysis on the degree to which above average performance in interview which is the criterion result in productiveness in work which is the predictor, the results may match the current research findings of 0.10 which is a positive but small correlation factor (Cook 1998). Tesco should consider the use of other options such as work sample tests, Psychological tests and group exercises and assessment centre techniques which can suit their large number of selections being made at one given time. Performance appraisal techniques are in abundance for companies to choose from but the chosen methods should suit the type of work being assessed as well as support the organisational background and its structure (Swan 1991). While methods such as Global Essay and Rating, Trait Rating, Peer Ranking, Critical Incident Assessment, Behaviorally Based Scales and Behaviorally Anchored rating Scales or Objectives and Goal setting procedures (as Management By Objective MBO) and 360 degree feedback can be used in performance appraisal, a combination of these methods can be developed to suit the organisational needs. At Tesco, the appraisals are done on MBO basis and staff has an annual performance review where they work towards a personal development plan, with objectives set at the beginning of the year. Career discussion with line managers facilitates development and promotional decisions. Tesco’s Talent Spotting process facilitates the development of staff and providing growth opportunities to staff (Paton 2005). While the appraisal systems at Tesco is at a high standard, gaps can still be identified as MBO as most other appraisal techniques, is susceptible to assessment bias of line superiors and also carry less value for repetitive and routine tasks. Implementation of a 360-degree assessment practice for management and executive cadre may benefit the organisation by giving a wider perspective of the employee’s performance. Reward system of an organisation involves financial and non-financial benefits, which an organisation is able to and willing to offer to its employees in exchange of for employee contribution (Cascio 1998). Some of the key objectives of a Remuneration system will include acquiring and retaining quality personnel, ensuring equity, rewarding desired behavior in compliance with company culture and goal and also comply with the legal regulations. Reward policies will outline whether the pay is Job or Person Based, whether and to what degree performance is linked to rewards and organisation’s position in the labor market (i.e. Pay Master or Low Payer), importance of internal and external equity, importance of hierarchy in pay, flexibility of reward mix and significance of seniority and job security (Lawler 2000). Tesco’s reward practices include a wide variety of financial and non financial options such as salary, various share option schemes, pension scheme, Life Insurance cover and various other discount schemes. Tesco’s share option schemes are a successful reward tools and more than 75% of employees have chosen to retain their shares. Save As Your Earn (SAYE) plan makes annual profit of up to £3,929 – 7,000 per each employee. The latest round of payoffs will allow employees to benefit from their share of the £106m latest round of payouts from the share option scheme (Thomas 2005). However widely criticised gaps can be identified in Tesco’s executive remuneration practices, overly benefiting the top executives with over £26 million each in bonus payouts from the £ 2 billion annual profits while the supermarket staff are paid barely above the legal minimum wages for their hard and physically draining work (Blythman 2004). Pay cuts for first three days of sick leave is also another widely criticized issue, which the company is testing out in an attempt to curb unplanned absenteeism. Such pay cuts may act detrimentally on the workforce moral. There is also no incentive based pay systems and bonus payments for non executive staff and such differentiated reward systems may lead to a rift in work force attitudes. Termination policies of organisations outline the procedures adopted in severing employment and this is an area, which needs to be managed with a high level of diplomacy, unbiased judgment and in adherence with legislature. Termination practices should be with reasonable notice and with a just cause or otherwise the employer will be deemed to have carried out a wrongful dismissal. Although Tesco has its termination policies, which complies with legislative requirements and Human Rights laws, there have been several cases where the actual practices are deviating from the ideal principles of HR management. A report in the Socialist Worker reported how Tesco places its sick employees on “sickness procedure” and dismissed on grounds, which the management refers to as a contractual dismissal (Niel 2004). The strike carried out by Tesco’s polish temporary workers who were protesting against summery dismissal for two of the workers who has raised questions against the unreasonable demands for increased productivity is another example of occasions where Tesco has failed in practicing the HRM principles applicable to termination procedures. In conclusion it can be noted that while organisations as Tesco are managing a vast human resource and depending on them for the impressive success the company has achieved in reaching the top of the UK retail industry, the Human Resource Management policies and procedures in practice are far from being ideal. While giving due credit for maintaining a high standard of HRM practices across its global operations, there still remains gaps which can be improved upon with the implementation of established HRM techniques and systems related to critical aspects of HR Forecasting, Job Analysis, Recruitment and selection, Appraisals, Rewarding as well as Terminations. These improvements in HRM practices will no doubt increase work force moral, motivation levels and drive the organisation in to greater heights through a committed workforce. Reference List Amstrong, M. & Murlis, H. (1988) Reward Management: A Handbook of Remuneration Strategy & Practice. 3rd ed. London: Kogan Page Limited. Alwater, D. M. (1995) Workforce Forecasting. Human Resource Planning, vol. 18, no. 4, p. 50-53. Belcourt, M. & McBey, K. (2000) Strategic Human Resource Planning. Ontario: Thomson Learning. p. 102 – 122. Blythman, J. 2004, “The Great Supermarket Rip Off”, Socialist Worker Online, Oct 9. Available from: http://www.socialistworker.co.uk/article.php?article_id=2728 [29.11.2005] Bratten, J. & Gold, J. (1999) Human Resource Management: Theory & Practice, 2nd ed. New York: McGraw-Hill Publishing Company Ltd. p. 237-261. Cook, M. (1998) Personnel Selection: Adding Value Though People. 3rd ed. Chichester: John Wiley & Sons. pp 1-41. Cascio, W. F. (1998) Managing Human Resources: Productivity, Quality of Work Life, Profits. 5th ed. New York: McGraw-Hill Companies. De Cieri, H., Kramer, R., Noe, R., Hollenbeck, J., Gerhart, B, & Wright, P. (2003) Human Resource Management In Australia: strategy-people-performance, Upper Saddleriver: McGraw-Hill. Kohn, A. (1993) Why incentive Plans cannot work. 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[online] Available from http://tesco-stores.jobs.cz/en/centraleuroit.html[29.11.2005] Rogerson, M. (2001). Eiline Jonson & Sixty Five others vs. Tesco Ireland. Equality Officer Recommendation report. [online] Available from: http://www.equalitytribunal.ie/uploadedfiles/Decisions/DEC-E2001-024.PDF [29.11.2005] Swan, W. S. (1991) How To Do A Superior Performance Appraisal. New York: John Wiley & Sons. p.15-30. Stroh, L. K., Brett, J. M., Baumann, J. P. & Reilly, A. H. (1996) Agency Theory and variable pay compensation strategies. Academy of Management Journal, 39, p. 751-767. Thomas, D. (2005) Tesco staff to take their cut of £106m shares scheme. Personneltoday.com. [online] Available from : http://www.personneltoday.com/Articles/2005/02/22/28129/Tesco+staff+to+take+their+cut+of+%C2%A3106m+shares+scheme.htm. [29.11.2005] Tesco Careers (2005) [online] Available from: http://www.tesco.com/careers/ [29.11.2005] Weiss, J.W. (2001) Organisational Behavior & Change. 2nd ed. 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