MANAGEMENT OF HUMAN AND ORGANISATIONAL RESEARCH

23 May 2011 VINAY RAMAMURTHY [P120536]

MHOR- TESCO

INDEX
INDEX.......................................................................................................................... 2 1. Introduction............................................................................................................. 4 2. Strategic human resource management..................................................................5 2.1 HRM Strategies.................................................................................................. 6 2.2 Policies and Procedures......................................................................................6 2.3 Objectives of Organization.................................................................................7 3. Organization culture and structure..........................................................................7 4. Leadership and Management..................................................................................8 4.1 Styles of Leadership...........................................................................................8 4.2 Leaders and Managers.......................................................................................9 4.3 Relation between HR and Line Manager.............................................................9 5. HRM Planning and roles.........................................................................................10 5.1 Work force Planning, Recruitment and Selection..............................................11 5.2 Skills and Behaviors.........................................................................................12 6. Employee engagement and motivation.................................................................12 6.1 Psychological Contracts....................................................................................12 6.2 Motivation Theories..........................................................................................13 6.2.1 Maslows hierarchy of needs......................................................................13 6.2.2 Herzbergs two factor theory......................................................................14 7. Performance Management (PM).............................................................................14 7.1 Equality and opportunity..................................................................................15 7.2 Link between HRM and PM...............................................................................15 7.3 Appraisal and Rewards ....................................................................................16 8. Training and Development....................................................................................17 8.1 Effective management of training and development........................................18 9. Evaluation/Tools for HRM.......................................................................................18 Page 2 RAMAMURTHY, SMU VINAY

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9.1 Total Quality Management (TQM).....................................................................19 9.2 Investors in People Indicator (IIP).....................................................................19 9.3 EFQM Excellence model...................................................................................19 10. Conclusions and Recommendations.....................................................................20 11. Appendix............................................................................................................. 21 11.1. Appendix-1 [SWOT Analysis of TESCO]..........................................................21 11.2. Appendix-2 [PESTEL Analysis of TESCO]........................................................22

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1. Introduction
This report provides few basic principles that have been followed to create an effective strategic management of human and organizational resources. These principles and strategies can be applied to an organization to help maximize employee and organization potential. In order to achieve this we discuss on concepts To develop high performance culture Policies and Procedures (people management) Performance management Recruitment and selection processes Employee engagement and relations Work force planning

To gain competitive advantage Training and Development Talent management Management performance and Evaluation Appraisal interviews Rewards

To achieve sustainability Employee engagement Motivation and Leadership Psychological contract

To measure effectiveness Total Quality Management (TQM) Investors in people indicators(IIP) EFQM Excellence model

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It follows a typical structure of its own covering all the above concepts according to a flow which shows interrelation and dependencies between each of the strategies and techniques which can have a major impact on the organizations future. The report considers TESCO plc which opened its first store way back in 1929 and now which has grown to be the biggest supermarket chain in Brittan and has also expanded into other foreign markets worldwide covering 13 countries, 366000 employees and having a mission statement Creating value for customers, to earn their lifetime loyalty. It is also on the look out for further expansion into other markets which are available for business and hence the concepts of strategic human resource management and techniques may be a very important area of consideration for the organization at the moment to stabilize its operations and expand further on a larger scale. In compendious it analyses the above theoretical concepts and applies it to an organization such as TESCO and compares the particular organizations strategies with others which may have better techniques that can be implemented for a positive result on the management of the organization.

2. Strategic human resource management

Theorists state that Human resource management is resource-centered, directed mainly at management needs for human resources to be provided and deployed (Mullins, 2002). The concept of Strategic human resource management was designed to assist the organizations to meet the actual need of its employees in a professional manner and at the same time promote and imply the goals of the company effectively. Determination of basic long term goals and objectives of an organization and adoption of course of action and allocation of resources in order to carry out these goals in short is strategic management.

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2.1 HRM Strategies Strategic HRM has gained both credibility and popularity over the past decade, specifically with respect to its impact on organizational performance. Strategic human resource management can be defined as the linking of human resources with strategic goals and objectives in order to improve business performance and develop organizational culture that foster innovation, flexibility and competitive advantage. SHRM focuses on building a solid underlying structure to your business that will subsequently be fleshed out through the combined efforts of every individual you employ. (Paauwe, J & Boselie P.2003) Tescos have strategically integrated HR into their overall plans. Managers have been to utilize aspects of HR in their decision making. This has shown high commitment to HR, attempting to gain acceptance from all employees, and offering to all employees basic and extended training. (Beardwell I 2004) 2.2 Policies and Procedures Policies to an organization mean a set of rules and regulations laid out in order to achieve their desired goals within confined limits. Procedure on the other hand is the way an organization approaches to meet desired goals and achieve expected results in favor of the company. In short these terms put together they lead to People Management. Tesco being a large organization follows many different policies and procedures on various fields like Corporate, Code of Conduct, Business Ethics, Environmental Policies etc and many procedures to back these policies and lead to an effective and efficient work environment in favor of the employee, the customer and the organization as well. Policies have an impact on the Performance and Employee engagement whereas the procedures are linked to the HRM Planning and roles which are discussed in the coming sections of the report.

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2.3 Objectives of Organization The Objective of any organization reflects on the reason for its existence. According to Amitai Etzioni (1964) An organization goal or objective is a desired state of affairs which the organization attempts to realize. Objectives have a time scale and must be measurable, as objectives change over a period of time depending on various factors which may be related to the period of implementation of the plan. For example Tescos objectives changed over a period of time considering factors such as Competition Diversifying into non-food Internet Going Multi-national Hence objectives or goals must be set for a smaller duration to achieve better rate of success. (123helpme.com, 2011) Strategic human resource management has a major impact on the culture and structure of the organization which is discussed in the next section of the report.

3. Organization culture and structure

Culture may be usefully conceived as a distinctive pattern of values and beliefs which are characteristic of a particular society or sub-groups within that society (Mullins, 1999). Structure of an organization depends on the HRM policies, goals of the organization and nature of work the organization is involved in, which links back to the previous section.

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There are many ways in which we can analyze an organization, considering Tesco as an example we can analyze the organization with help of few handy techniques such as SWOT analysis (refer Appendix-1) and the PESTEL analysis (refer Appendix-2). Though many organizations have a proper structure they tend to fail sometimes due to the lack of proper Managers or Leaders. Our next section of the report speaks about the importance of leaders in order to support the structure of the organization and take it forward towards a positive outcome.

4. Leadership and Management

Leadership and management are key aspects for an organization. It is very important for managers and leaders to understand and fit into the culture and structure of organization.

4.1 Styles of Leadership

This can be broadly categories into two sections Autocratic Style o Leader is the sole decision maker.
o

Douglas McGregor (1960) used the terms Theory X and Theory Y to identify two very different forms of management style: A Theory X manager tells employees what to do and supervises their work. This involves using strict controls within the business and reflects an autocratic style. In contrast, a Theory Y manager believes employees want to do well. The manager provides individuals with the opportunity to take the control of their work. They can contribute towards solving a problem or issue. This helps motivate them to do better.

Democratic Style

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In this style of leadership everyone gets an opportunity to contribute towards decision making. This is categorized into two typeso Persuasive democratic management
o

Consultative democratic management

4.2 Leaders and Managers

LEADER

MANAGER

According to Alford and Beatty (1951) Leaders have ability to voluntarily obtain tangible actions and results, without coercion.

Managers are authorized to do the jobs. People who do the right things are Managers. He authorizes the organization. He influences people to do things right by changing.

People who do things right are Leaders. He leads the organization. He influences people to do the right thing by leading them to the right path.

4.3 Relation between HR and Line Manager

According to Peter Drucker (1988) the management of organizations by a hierarchy of objectives is one of his most influential ideas. He suggests these targets should fall into

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five key groups dealing with market standing, innovative, performance, productivity, liquidity, and profitability. The literature on the involvement of line managers in HRM identifies that the desired goals of their collaboration are not always realized, potentially as a result of differences "...across the line manager and HR manager groups" (Maxwell & Watson, 2006:1160).

Figure1: Line Manager- HR relationship

Relationship between the two in few cases is termed Business Partners and turns out to be vital as it makes sure the employees are working in the right direction in achieving the goals of the organization.

5. HRM Planning and roles

According to source (hrmadvice.com) HRM function is focused on tracking and implementing new trends in the industry helping the line management to implement improvements operational excellence developing the Human Capital potential in the organization

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5.1 Work force Planning, Recruitment and Selection

Work force planning plays a vital role in strategic human resource management. Planning for a firms human resource is as important as planning for its capital and financial resources (Cherrington, 1995). Selection is a process of hiring the correct individual for the organization who can do the expected job effectively and efficiently. Selection involves short-listing of applicants, collecting information about applicants, design and preparation of the selection process (Mullins, 2002). The selection decision has always been important as the vehicle for obtaining, at least in principle, the appropriate person job fit which will, when aggregated, contribution in turn towards organizational effectiveness (Beaumont, 1998) Tesco follows Recruitment processes such as Screening The basic aim of selection process is to try and minimize both false positive and false negative errors (Beaumont, 1998). Recruiters screen applicants curriculum vitae and figure out the possibilities of the applicant as to whether he/she is eligible for the position applied for. Successful candidates are invited for interview and candidates selected form here goes to the assessment centers. On clearing the process successfully they are invited for the second round of interviews and later sent the offer letter and contract if selected. Assessment centers Assessment centers help to provide consistency in the selection process, which are mostly run by managers. Candidates are tested with a series of problem solving exercise and team or group activities. The main skill tested will be on prioritizing on the jobs when multiple jobs are assigned. The exercise might be guided or led by a member of the selectors or by a nominated candidate, or it

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may be leaderless allowing the group to establish their own patterns of interaction (Mullins, 2002).

5.2 Skills and Behaviors

Each level requires particular skills and behaviors. The importance lies in maintaining a sufficient supply of employees, in the right place and right time, and at the right cost (Beardwell and Holden, 2001).The skills can be developed during the training and development process. The behavior of employee is dependant on the culture, policy and environment of the organization. Tesco has a seven-part framework that describes the key skills and behaviors for each job at every level in the company. This helps employees understand whether they have the right knowledge, skills or resources to carry out their roles.

6. Employee engagement and motivation

.Mitchell (1982) defines motivation as degree to which an individual wants and chooses to engage in certain specified behaviors. He identifies four common characteristics Motivation is typified as an individual phenomenon. Motivation is described, usually as intentional. Motivation is multifaceted. The purpose of motivation theories is to predict behavior.

6.1 Psychological Contracts

A psychological contract is intangible as it is not a written agreement between the employer and the employee instead is a mutual understanding, perception and belief between the two. It is an important factor in the socialization of new members of the staff to an organization in forming perceptions and impressions of the management.
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According to Mullins (2010) a company should find new ways to increase loyalty and commitment of employees like: Skills for working in cross functional teams Training of managers in counselling, coaching and leadership. Recognition of contribution rather than status Systematic training and development Attention to reward strategies

6.2 Motivation Theories

Tesco follows two motivational theories in practice to drive their work force6.2.1 Maslows hierarchy of needs Abraham Maslow argued that humans are motivated by five essential needs. He formed a pyramid demonstrating these needs which he called the hierarchy of needs. According to sources (thetimes100.co.uk) the below figure shows the implementation of Maslows theory-

Figure2: Tescos implementation of Maslows hierarchy of needs (thetimes100.co.uk)

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6.2.2 Herzbergs two factor theory In 1959 Frederick Herzberg developed the Two-Factor theory of motivation. Tesco aims to motivate its employees both by paying attention to hygiene factors and by enabling satisfiers. According to sources (thetimes100.co.uk) the below figure shows the implementation of Herzbergs theory-

Figure3: Tescos implementation of Herzbergs hierarchy of needs (thetimes100.co.uk)

It is important for organizations to keep their employees engaged and motivated, if not it can have an impact on the performance as well which is discussed in the next section.

7. Performance Management (PM)

PM is an important aspect for an organization as it broadens the areas which need to be assessed by the organizations perspective which leads to the innovation and scope for training and development if necessary which is discussed in the later section. The IT directors of Tesco are working towards making performance a standard part of development cycle, and view is that in order to keep control of [mainframe processing power] utilization (cio.co.uk, 2011).

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7.1 Equality and opportunity

Equality and opportunity are very important factors which need to be considered as it not only reflects on the performance but also drives the employee working towards their goal in the way leading to the growth of organizations. If inequalities occur there is a risk to the reputation of an organization within the business community and beyond.

7.2 Link between HRM and PM

The diagram (Figure: 3) clearly explains the interdependency between HRM and PM. The HRMs strategies, practices and outcomes impact the Behavior of the employee which in turn reflects on the performance outcomes of an organization.

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Figure4: Linking HRM and Performance Management [source: Guest (1997)]

7.3 Appraisal and Rewards

An appraisal system provides information which allows the business to plan and develop its human resource provision. Meetings can take place on one to one basis. Appraisals can have an impact on employees motivational and performance. On the other, hand Rewards and recognition can motivate the employees and impact on the efficiency and quality of work.

360 degree Performance Appraisal System According to the source (humanresources.hrvinet.com, 2011) a 360 degree appraisal system is a system or process in which employees

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receive confidential, anonymous feedback from the people who work around them.

This appraisal system has four componentso Self appraisal o Subordinate appraisal o Peer appraisal o Superiors appraisal They help the organization in order too o o

Measure behaviors and competencies Addresses skills such as listening, planning, and goal-setting Focuses on subjective areas such as teamwork, character, and leadership effectiveness

Provide feedback on how others perceive an employee

Appraisal is a good motivational tool as it involves employee to communicate the personal goals to the organization. For organizations to improve its performance, they might have to consider the fact to train and develop skills of their employees which is discussed in our next section.

8. Training and Development

Tescos offer a huge range of very comprehensive training programmes to help you to develop regardless of your level, covering both Technical and Behavioural skills and run via a mixture of internal and external programmes. The course uses coaching, leadership seminars with business leaders, feedback, courses on managing teams and

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the expertise of outside trainers such as Myers Briggs to develop people's leadership Behaviours and skills - and help them feel confident to take on more responsibility (dotcom.tesco-careers.com, 2011). Training acts as a motivation factor and improves availability, quality and skills to staff. It can have a major impact on the performance of an organization.

8.1 Effective management of training and development

To have effective management of training one needs to design a policy for training, set objectives and methodologies, get people involved etc whereas development focuses on areas like Mentoring Commitment of organization and a good rapport between the mentor (A leader who offers advice) and the trainee is very essential for mentoring. Coaching It is a good mechanism to engage change and is a supportive relationship which focuses on creating a pathway, clear understanding and actions. A good training and development technique followed by an organization lead to improving quality of work and growth in performance; hence a tool is required to measure the factors which are followed up in the last section of our discussion.

9. Evaluation/Tools for HRM

Evaluation is a process to asses the effectiveness of HRM and its impact on the success of organizations. Three types of evaluation methods are discussed in brief.

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9.1 Total Quality Management (TQM)

TQM is an effective system for integrating the quality improvement efforts to various groups in the organization so as to enable products and services at those levels which allow for customer satisfaction.

9.2 Investors in People Indicator (IIP)

IIP is a standard for training and development of people within an organization. The IIP standard provides a framework for improving business performance and competitiveness through a planned approach to setting and communicating business objectives and developing people to meet the objectives. (Mullins, 1999) The three core principles include

Improving performance by developing new strategies. Taking necessary steps to improve performance. Use evaluation and enhance the performance.

9.3 EFQM Excellence model

According to sources (eqfm.org, 2011) EQFM is a non-prescriptive management framework used by over 30 000 organizations in Europe and beyond. Excellence model is a frame work which allows organizations to

Provide a basic structure to organizations management system Integrate existing and planned initiatives, removing duplication and identifying gaps.

Organizations can benchmark themselves against others both within and outside the sector. We can assume that results are achieved through leader driven policy and strategy

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10. Conclusions and Recommendations

From the report we can conclude that each of the sections which are categorized under management of human and organizational resources is interdependent on each other. The outcome of one is dependant on the functionality or management of the other sections as categorized above. It shows the importance of relation between HRM and Line managers which reflect on performance, employee engagement and other management aspects. It shows how vital management theory is to an organization. A few aspects recommended on behalf of Tesco can be Tesco must set short term goals and get their policies and procedures right in order to meet the objectives and set the culture. It should recruit the right managers and recognize the leaders in the organization and give them more freedom to work while making decisions. They must try to keep employees more engaged and motivated henceforth reflecting on training and development of behavior and skills. Emphasis must be laid on Performance management and concentrate on equal opportunities to all and rewards for good work. Importance must be given to design right type of training schemes and get everyone more involved and motivated.

Tesco must follow a good evaluation scheme which suits the style of work and market, TQM or EFQM excellence model may work well.

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They must work towards positive growth of the organization and realize the importance of management to assist and achieve profits to the company in the future.

11. Appendix
11.1. Appendix-1 [SWOT Analysis of TESCO]
According to sources (businessteacher.org.uk, 2011) SWOT analysis of TESCO is as follows Strengths

TESCO have secured commercial standing within the global market place winning Retailer of the Year 2008 at the World Retail Awards. This can be used for marketing campaigns to drive advantage towards the demographic base for future growth and sustainability.

As a business looking for continued expansion TESCO have reserve funds of credit coupled with income derived from property portfolio development funds.

Weakness

TESCOs position as a price leader in UK markets can lead to reduced profit margins in order to retain the key price points on must have commercial items.

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TESCO Finance profit levels were impacted through bad debt, credit card arrears and household insurance claims.

Opportunities

Statistics suggest TESCO is the third largest global grocer which indicates a level of buying power to ensure mainstream economies of scale.

TESCO mobile have grown million customers in 2008 and moved into profitable status suggesting further growth and development within this technological area can be developed.

Threats

Rising raw material costs from both food and non food will impact profit margins overall.

Changes to consumer buying behaviors require further analysis - as technology develops consumer buying patterns change which will result in product areas requiring evaluation.

The SWOT analysis of Tesco indicates areas of concerns of the company in the near future which need to be dealt in course of time.

11.2. Appendix-2 [PESTEL Analysis of TESCO]

According to sources (ivoryresearch.com, 2011) PESTEL analysis of TESCO is as follows Political Factors

Tesco employs large numbers of students, disabled and elderly workers, often paying them lower rates.

Tesco understands that retailing has a great impact on jobs and people factors (new store developments are often seen as destroying other jobs

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in the retail sector as traditional stores go out of business or are forced to cut costs to compete), being an inherently local and labor-intensive sector. Economical Factors

Economic factors are of concern to Tesco, because they are likely to influence demand, costs, prices and profits.

Although international business is still growing and is expected to contribute greater amounts to Tesco's profits over the next few years, the company is still highly dependent on the UK market.

Social/Cultural Factors

Current trends indicate that British customers have moved towards onestop' and bulk' shopping, which is due to a variety of social changes. Tesco have, therefore, increased the amount of non-food items available for sale.

One example of Tesco adapting its product mix is to accommodate an increased demand for organic products

Technological Factors

The new technologies benefit both customers and the company: customer satisfaction rises because goods are readily available services can become more personalized and shopping more convenient.

o o o o

Tesco stores utilize the following technologies: Wireless devices Intelligent scale Electronic shelf labeling Self check-out machine

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Radio Frequency Identification (RFID).

Environmental Factors

The

major

societal

issue

threatening

food

retailers

has

been

environmental issues, a key area for companies to act in a socially responsible way.

The so-called fat tax' directly affected the Tesco product ranges that have subsequently been adapted, affecting relationships with both suppliers and customers

Legislative Factors

The Food Retailing Commission (FRC) suggested an enforceable Code of Practice should be set up banning many of the current practices, such as demanding payments from suppliers and changing agreed prices retrospectively or without notice (Mintel Report, 2004).

In order to implement politically correct pricing policies, Tesco offers consumers a price reduction on fuel purchases based on the amount spent on groceries at its stores.

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