Evaluating an International Human Resource Strategy - Essay Example

Evaluating an international human resource strategy Contents Contents 2 Executive Summary 3 Introduction 3 Vision and Strategy 4 Balanced Scorecard 6Financial Perspective 6 Customer Perspective 9 Internal Business Perspective 11 Learning and Growth Perspective 14 Balance of Balanced Score Card 18 Strategy map 20 Recommendations to the Board 21 Evaluation 23 Conclusion 23 References 25 Executive Summary Tesco plc is a general merchandise and multinational grocery retailer based in England, United Kingdom. The balanced scorecard of Tesco, the Steering Wheel, is used as a simple performance measurement framework to a full management system and strategic planning. The Vision of Tesco is centred on colleagues and customers and through effective implementation of the strategies Tesco has been able to achieve its objectives. The balanced score card of Tesco indicates that it has given equal weightage on all the four perspectives in a balanced scorecard and has developed an effective strategy map which communicates with each factors in the perspectives leading to effective strategy implementation. The balanced score card of Tesco indicates areas like customer perspective, motivation and community service which needs to be stressed even more to enhance customer shopping experience. Tesco should look at improving customer experience through proper innovation, reducing carbon emission and improved training and development. Each of the above factors presents an opportunity for Tesco at improving their customer service. The strategy map of Tesco indicates areas where it can improve the communication lines between the factors for effective implementation of strategy. For Tesco to continue to be the leader in UK retail and grocery segment, it needs to invest in the above areas and proper up gradation of all their objectives with change in time. Introduction Tesco plc is a general merchandise and multinational grocery retailer based in England, United Kingdom. Presently it is the second largest retailer in the world in terms of profits after Walmart and third largest in the world with respect to revenues after Walmart and Carrefour. The core purpose of Tesco is that they make what matters better together. Tesco has a team of over 5, 30,000 people in 12 markets which are dedicated in bringing the best choice, value and service to their millions of customer each week. Despite being in a highly competitive market they have established strategies which reflect their priorities as the business grows and the needs of the customers change. Tesco uses their balanced scorecard, the Steering Wheel, to manage and measure their business performance. This report will discuss about the balanced scorecard and Strategy map of Tesco. Vision and Strategy Tesco has clearly defined Vision which helps them to guide their business direction. Their business guides their direction and the decisions they take as an organisation. The company is centred on colleagues and customers and have high-quality assets around the globe with multiple opportunities for growth and these features are central to the vision of the company. The management want Tesco to be a high valued business in terms of consumers they serve, the society in which they operate their committed and loyal colleagues and their shareholders. Hence the vision of Tesco has five elements which describe what the company wants to aspire for. These are Needed and Wanted around the World: This element of Tesco is quite essential and they want their organisation to be the preferred choice for customers to shop. At the same time they want to make it a preferred organisation for people to work there and become a business so that the communities welcome them and become a retailer where the shareholder wants to invest in (Tesco, 2014a, p. 1). A Growing company which is full of opportunities: Tesco aims at making their food and general merchandise, banking or eating out, digital entertainment or books full of opportunities for both their customers and colleagues. They look to offer something new every time. Be an innovative, modern and full of ideas: The success of Tesco is based on trying to understand their customer’s need better than anyone else. They have thus entered into online grocery shopping, finest Everyday Value, extended shopping hours with a range of formats from Extra to Express. Wining locally and applying their skills globally: Tesco has applied their local skills worldwide and achieved success. Tesco learned their grocery skills in UK and have utilised it across eight international markets across the group. Earning trust and loyalty from customers: Tesco aims at earning not just respect but trust as well through every operations they are engaged with whether it is their Price Promise, in-store shopping trip, etc. Tesco looks at building a business where colleagues, customers and communities and trusts upon and be loyal to. The Strategy of Tesco is reflected through the consistent and established seven-part strategy for growth. Tesco has developed their ‘Building a Better Tesco’ plan to restore their growth in their business by making continuous improvements for customers. Tesco have developed effective strategy aimed at making their business profitable across major European and Asian markets. They have made special focus on food and thus they have grown their business and diversified over the recent years. Tesco have grown their retail services in all their markets. Tesco have built strong and successful new businesses and have taken their experience to all their markets. Tesco is a creator of highly valued brands. Balanced Scorecard Financial Perspective Goal KPI Target Performance Measure Action Plan To grow the UK core. Tesco is looking for improving the sales, obtaining and maintaining profit and improving the Return on Capital Employed Profit, Return on Capital employed and Revenue Tesco have achieved healthy growth rate of revenue and looks to achieve a growth rate of 5 % - 8% from 2014 – 2015. Tesco wants to improve their profitability and arrest the decline in profitability. Tesco aims at improving the return on capital employed by 14% by 2014/15. Tesco aims at improving continuously like-for-like sales in the future through their ‘Building a Better Tesco’ plan. To be an outstanding performer in retail stores internationally and online Revenue and Profit Tesco wants to achieve revenue of £ 30 billion in the international markets. The company also wants to achieve a growth of 5% in profit in future. Boost the sales level and reduce the time to market. Improve the overall shopping experience in Central European markets. Growth in online sales across eight of their international markets. To grow the retail services in their markets. Return on investment, Revenue and margin Increase the Return on Investment by at least 10% and achieve 5% growth in revenue. Maintain leading position amongst their supermarket peers through the strengths of their online platform, Tesco Direct (Tesco, 2014c, p. 1). Increase the proportion of UK customers buying general merchandise, electrical and clothing. To be in the first position for their general merchandise range image in all the nine markets they are present To be a creator of highly valued brands Earnings per Share Maintaining greater than 2% earnings per share. Build customer loyalty to strengthen Tesco brand. The brand should look at delivering great shopping experience fort their customers. Improve the range and quality of their own-label products (Tesco. 2014d, p. 1). Through the financial perspective it is clear that Tesco is looking for improving the revenue and profit of the company. The company is looking for improving the overall shopping experience across Central European markets where the company is experiencing decline in customer satisfaction. Tesco has entered into online domain and thus looks at improving their online sales. The company is looking for decreasing the investment they made into their UK business and focus on improving shopping trip for customers. Tesco also aims at improving the earnings per share of the shareholders through their investments in new projects and expansion into online domain (Tesco, 2014b, p. 1). Customer Perspective Goal KPI Target Performance Measure Action Plan Better service and more staff Investment of Tesco to improve the customer experience. Increasing the investment made in training. Increasing the investment made in training programmes so that there can be increase in the number of colleagues which are to be trained for their next role through their dedicated Options programmes. Creating more jobs and careers Number of jobs created and opportunity for improved careers Creating good jobs and long term careers with excellent benefits and career development opportunities. Focus on creating good jobs and long term careers with excellent benefits and career development opportunities. Big price Drop Everyday low pricing and Competitive pricing. Improving the pricing of the products by 30% from 2014-2015. Invest to reduce the prices of everyday products with their main aim at getting a right blend on promotions, price, loyalty and couponing. Innovation and quality Number of new products launched by Tesco Come out with new 10 products every year. Refresh and review the entire range of Tesco brand products and increase the pace of innovation with new exclusive products Form the customer perspective, the managers identifies the market and customer segments and will measure the performance of the business unit in this segment. Tesco has a strategy built on seven aspects. Tesco aims at providing their customers will the best shopping experience and sets a high standard in UK. Tesco focus on food and makes £ 1 billion investment into the UK business to improve the shopping trip for customers. Internal Business Perspective Goal KPI Target Performance Measure Action Plan Innovation Innovating the offerings for their consumers Try to add some innovative business models and achieve growth in online shopping by 40%. Try to improve their business through innovation and introduce a new way of shopping patterns like Scan as you shop which allows consumers to scan products as they put them in trolley so that they can reduce their waiting time at checkouts. Operation management Processes Stocks and Supply Chain To develop and maintain a healthy relationship with the suppliers. Maintaining a strong relationship with their suppliers and launching new Commercial Food Support Office and simplify their systems to make it easier for their suppliers to deal with them. Product safety Detailed and established procedures to ensure product integrity. Increasing the safety of the product and promoting healthier products. Focusing on new business opportunities and emerging markets. Trying to develop health and wellbeing site and apps for their android and iPhone which helps in motivating the customers in their health journey. Community development Corporate Social responsibility. Try to reduce their carbon dioxide emission by more than 6% from 2014 – 2015. Tesco should focus on reducing the refrigerant gas leakage which will reduce their CO2 emission. They should focus this across all their operating regions. The business model of Tesco is centred on Customer. They develop business processes to increase the customer perspective of the products served by them at a fair price and try to win the loyalty of the customers. Tesco has achieved this by focusing on a range of products and services at low process and making their shops available at convenient locations as well as through online stores. Any increase in sales will bring mutual benefit to the company, customers and suppliers thus making room for investments. Tesco has reduced their carbon emission from their stores and hence have contributed to environment. For Tesco the concept of innovation is embedded in their customer service and convenience. The company believes that through innovation they can become an outstanding international retailer. Tesco has developed a concept called “Shopping list” which indicates the key strategic goals of the company and makes the employees of the stores updates with their role in customer service. It keeps the staff at the stores engaged. Learning and Growth Perspective Goal KPI Target Performance Measure Action Plan Strengthening the business model Market share Improve the market share by 5 % - 10% by 2015. Improve the business model and competitiveness. Improving the skills of their employees Employee performance and appraisals Increase of monthly training sessions for the employees. Increasing investment for training and development facilities. Retention of employees Retention rate. Percentage of Colleague in the development programme Improve the retention rate to 95% in 2015. Focus on long term careers and increasing the employee loyalty by providing good career development and excellent benefits to them. The company should carry out anonymous and confidentiality colleague engagement survey across the group. This measures the motivation of the employees for working in Tesco. Tesco should focus on training and development. This will measure the percentage of colleagues on the development programme like their Options Programme which combines the leadership, operational and general skills training through on and off the job experiences. Improve the company culture Motivation and Overall Business performance. Diversity among the leadership Boosting cultural diversity and creating 50% more motivated employees in the business. Equal Treatment for the employees and supportive management (Kaplan & Norton, 2000, pp. 41-42). Tesco should focus on increasing women percentage in the senior management positions. Tesco should find, develop and keep a diverse set of workforce at all levels within their business and should be committed at increasing the percentage of the female leaders. Intense global competition forces companies to improve their products and processes and try to realize their core competencies and introduce new products on the market. Learning and Growth perspectives measure the growth and experience gained by the company through their innovative business processes and products. Tesco laid more stress on training (Atkinson, 2006, pp. 1441-1448). Balance of Balanced Score Card Perspective Number of metrics Weight age Financial 4 25% Customer 4 25% Internal Business 4 25% Learning and growth 4 25% Total 16 100% The Steering wheel strategy of Tesco has helped the company in accomplishing major objectives by breaking them down into smaller achievable goals. The strategy of Tesco has been well supported financially. The financial performance of Tesco has been muted this year with decline in trading profit due to investment in UK and regulatory changes in South Korea and economic downturn in Europe. The return on capital employed is 12.7% in 2013 which is a 2% decline on returns from last year reflecting loss of trading profit performance. But the actions which Tesco have taken over the last two years have removed a number of significant barriers to progress. The retail operations of Tesco are done locally with the help of local people and businesses. Tesco does this for maintaining high quality products. The suppliers of Tesco are checked regularly to maintain high quality of products. Tesco has achieved customer loyalty and customer satisfaction through the process of customer loyalty programmes and customer feedback and they continue to stress on innovation in their business operations. Tesco at the same time puts focus on product safety and community development. Tesco tries to secure jobs for their employees (Ittner & Larcker, 1998, pp. 205-206). Thus Tesco has distributed equal effective balance in all their perspectives which indicates robust strategic approach of Tesco in implementing their business operations. Strategy map Figure 1: Strategy Map of Tesco A strategy map communicates everything a company strives to achieve on a single page. The strategy map of Tesco is based on their every little helps slogan and their company principles which states that they should treat customers in the way they like to be treated themselves and no one tries harder for the customers than their company. Tesco has the resources of not only spending time for developing their strategy but also in developing an innovative presentation method. Developing an innovative presentation is something which not all businesses can afford. The strategy map of Tesco is derived from the balanced score card (Norreklit, 2000, pp. 65-67). It is viewed that at the lowest level Tesco has put stress on increasing the employee productivity. This forms the basis of successful company. As can be seen from the map, there are three factors which improves the employee productivity. These strengthen the business model, Improving employee skills and Effective retention strategy of the employees. The learning perspective forms the basis of internal perspective. The innovation and Operations management processes leads to better customer service and more staff (Niven, 2010, p. 121). Good operations management processes will act as enabler for high quality and Big Price drop. Tesco looks at product safety and Community development which leads to better customer service, Innovation. Further the customer perspective helps in presentation of financial perspective. All the three factors of customer perspective help in increasing the UK and global sales, increasing the revenue from online stores and improving the operating efficiency. All these factors combine to improve the overall returns of Tesco (Kaplan & Norton, 1996, pp. 53-56). Recommendations to the Board The board of directors of Tesco needs to pay attention to three areas of operations. These are environmental sustainability, customer service and development of the employees. Tesco has consistently achieved on an average 7% reduction of carbon emissions. But in 2013 it has reduced the carbon emissions by 4.9% which though has exceeded their target was lower than average they have achieved. Tesco has aimed to be a zero carbon business by 2050 and to use scare resources in a responsible way including their supply chain (Tesco, 2014e, p. 1). Tesco must know the source of their emission and try to reduce their emission which comes from distribution fuels, electricity usage and refrigerant gases. Tesco should try to open more LED only store to reduce energy use in the stores by more than 30%. Tesco should try to reduce the refrigerant emissions across the Group by adopting a natural refrigerant which is the right solution for them. Tesco should try to provide procurement support on green technologies using their knowledge hub. Tesco should strive at maintaining highest standards for corporate governance. Tesco should try to modernise small family owned shops and try to help renovate properties abandoned and open Regeneration Partnership Stores in areas of deprivation (Tesco, 2014e, p. 1). Tesco should also improve motivation among the employees. Tesco should promote inclusion in their teams and try to promote a work environment where all the employees are treated in a similar way. Tesco should try to develop collaborative, empathetic and innovative leaders so that they can build winning teams. Tesco should invest more in their training and development programmes and help them attract individuals from different backgrounds and provide them with the opportunity of realising their potential at all stage of their career. Thus Tesco should try to build relationships based on the shared values and create an environment for the employees where they can make a difference for themselves. Tesco should try to change the cultural view by including more female leaders in the workplace (Kaplan and Norton, 1996, p. 97). The company should launch more programmes like ‘Women in Leadership’ programme which will help the talented women in building strong strategic networks and taking control of their careers. They should look at promoting gender pay equality. Tesco should try to employ more number of employees and try to deliver improved levels of excellence in customer service across their stores. Tesco should try to refresh their existing stores by improving the layout and space and thus improve the overall customer shopping experience. Tesco should aim at opening smaller format stores which will be efficient for them. Tesco should maintain their customer ratings of service and staffs so that customers can rate them, which are in effect improve the employee productivity. Evaluation Tesco is presently the number one retail company in UK but like other retailers it also faces a lot of positive and negative aspects in its operation. Tesco has developed effective balanced scorecard and strategy map to reflect the strategies and objectives. The objectives of balanced scorecard and the strategy map are to measure the business performances which are mapped against the objectives and strategies. Tesco has strong financial and operational performance. The KPIs of Tesco shows the internal business perspectives and financial viability of the business. Tesco has strong internal business perspectives which indicate the importance of maintaining strong and healthy relationships with their suppliers as well as whole supply chain management cycle. The customer perspective focuses on improving the customer experience and making the shopping experience a treat to enjoy. Tesco invests into their training and development program to make their employees grow in their career. Tesco provides bright career opportunities for the employees and thus the retention rate is very high in UK. Thus on the whole the Steering Wheel concept is a major driver for helping Tesco implement their strategy and achieve its goals and objectives. Conclusion Tesco plc has clearly defined visions which guide them in their business direction. The balance score card and strategy map has emerged as a proven and effective tool for Tesco in their quest to capture, describe and translate the organization’s strategy into performance objectives, measures, targets, and initiates in four balanced perspectives. Tesco has given equal importance on all four perspectives namely Financial, Customer, Internal Process and Employee Learning and Growth. Similarly the strategy map indicates the strategy and objectives in one place. It establishes the links between all different factors of the four perspectives. Tesco has been successful in their strategy development and implementation but much focus still needs to be done to achieve more profitability and customer satisfaction. References Atkinson, H. 2006. Strategy implementation: a role for the balanced scorecard? Management Decision. Vol. 44(10), pp. 1441- 1448. Ittner, C. D. & Larcker, D. F.1998. Innovations in performance measurement: trends and research implications. Journal of Management Accounting Research. Vol. 10(1), pp.205–206. Kaplan, R. and Norton, D.P. 2013. 1996. The Balanced Scorecard: Translating Strategy Into Action. New York: Harvard Business Press. Kaplan, R. and Norton, D.P. 2013. The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment. New York. Kaplan, R. S. & Norton, D. P. 1996. Linking the balanced scorecard to strategy. California Management Review. Vol. 14(1), pp.53–56. Kaplan, R. S. & Norton, D. P. 2000. The strategy-focused organisation. Strategy and Leadership. Vol. 18(2), pp.41–42. Niven, P.R. 2005. Balanced Scorecard Diagnostics: Maintaining Maximum Performance. New Jersey: John Wiley & Sons. Niven, P.R. 2010. Balanced Scorecard Step-by-Step: Maximizing Performance and Maintaining Results. New Jersey: John Wiley and Sons. Norreklit, H. 2000.The balance on the balanced scorecard – a critical analysis of some of its assumptions. Management Accounting Research. Vol. 11(1), pp.65–67. Tesco. 2014a. Vision and Strategy. Available at: http://www.tescoplc.com/index.asp?pageid=12. [Accessed on: 24 March. 2014]. Tesco. 2014b. Performance 2008-2013. Available at: http://www.tescoplc.com/index.asp?pageid=87. [Accessed on: 24 March. 2014]. Tesco. 2014c. Using our scale for good. Available at: http://www.tescoplc.com/index.asp?pageid=558. [Accessed on: 24 March. 2014]. Tesco. 2014d. Annual Report 2013. Available at: http://files.the-group.net/library/tesco/annualreport2013/pdfs/tesco_annual_report_2013.pdf. [Accessed on: 24 March. 2014]. Tesco. 2014e. Our carbon footprint. Available at: http://www.tescoplc.com/index.asp?pageid=89. [Accessed on: 24 March. 2014] Tesco. 2014e. Supporting local communities. Available at: http://www.tescoplc.com/index.asp?pageid=650#tabcontent. [Accessed on: 24 March. 2014]. Read More