This report discusses about one of the most important topics related to human resource management. The report discusses about the cross cultural management and the focus of the report has been on cultural shock. The report analyses one of the leading retailers of UK, Tesco and how this retailer has been managing diverse workforce. The report analyses the human resource practices that Tesco has used and applied in order to manage the cultural differences of its employees.
Cross cultural management is one of the major ingredients for success for organizations in this challenging environment (Yamazaki & Kayes, 2004). As cross cultural management aims to focus on cultural difference, it has become essential for organizations to understand and manage diversity that exists within organization as people from different culture may have their own way to interpret things which may be perceived to be good for some but bad for others in the organization (Takeuchi, Yun, & Tesluk, 2002).
The purpose of this study is to understand and evaluate the approaches used by TESCO in the international market in terms of cross cultural human resource management. This study would provide information regarding the policies implemented by the organization to provide the employees with a suitable working environment. In addition, the policies regarding diversity management would also be provided to enhance the knowledge regarding cross cultural HRM at TESCO.
International Business Organization: TESCO
Tesco is one of the organizations that are ranked in world’s leading businesses on Forbes list. Tesco is the largest retail organization in UK and operates in 14 countries with more than 460,000 employees worldwide. Operating from UK provides the organization with several opportunities and benefits. One of such benefits includes 86 percent of sales in the UK’s market. As the retail market has observed cut-throat and stiff competition, Tesco started its operations in the international retail market. China, Japan and Turkey are some of the countries it operates in. According to the annual report published in 2009, the sales of TESCO were estimated to be 59.4 billion euro and in 2011, the reported revenues were 67.6 billion euro. With almost 30 percent of the market share in UK, TESCO is the largest retail store in UK (Tesco, 2012).
TESCO’s business is divided into 5 categories in UK i.e. shops and supermarkets, online shopping service (groceries), financial services (insurance, credit cards and saving accounts), online shopping (electrical appliances and home ware) and telecommunication services (Tesco, 2010).
Cross Cultural Human Resource Management at TESCO
Tesco operates in 14 countries and has around 460,000 employees worldwide due to which it is essential for the organization to manage and understand the needs of its employees to enhance its performance and productivity. It has been indicated that the human resource management of Tesco revolves around training and development of employees, communication and consultation to reduce cultural shocks and benefits linked to performance and accomplishments of targets.
Some of the overall human resource strategies implemented at Tesco are as follows;
Training and development
Training and development of employees is the core human resource strategy at TESCO. Every year, the organization selects a large number of potential employees from colleges and universities. As these potential employees are unaware of the work and culture of the organization, they are provided with an opportunity to learn regarding the work and the culture of the organization. As Tesco focuses highly on equal employment opportunity, each individual is provided with same opportunity to develop essential skills required for the work. In addition, these employees are constantly provided with an opportunity to gain further knowledge regarding the organization’s culture (Anonymous, 2003).
In the year 2008, Tesco implemented its training and development plan in which 97.4 percent of shop-floor and 99.9 percent of DC employees were trained and provided with new skills and knowledge i.e. bronze level. In the same year, 94.2 percent of shop-floor employees were trained to silver level i.e. expert or experienced (Haerifar, 2012).
Communication and consultation
The second part is communication and consultation. Tesco encourages its employees to provide the management with feedback regarding the work and problems that the employees face during their work. Due to such encouragement, the organization keeps itself updated regarding the problems that could harm the performance of the organization. In order to communication with the employees, the managers at Tesco use different types of communication techniques which include staff question time, face-to-face interviews and annual surveys. Such communication techniques helps the organization to identify the problems that the employees are facing and accordingly devise strategies to resolves employee’s problems (Wilton, 2010).
The aim of such communication is to reduce the difficulties that employees face during their work hours and to enhance the satisfaction level of employees. In order to do so, the management tries to understand the roots of the problems and tries to eliminate such problems by taking strategic actions.
Rewards and benefits
The third part is regarding the rewards and benefits. Being one of the leading retail organizations in UK, the organization provide its employees with basic wage as high as possible. Such high basic wage encourages more and more people to work for Tesco. In addition, the employees are provided with additional benefits and rewards upon the completion of targets. Tesco also has a long-term reward plan that particularly focuses on sharing bonuses with the employees. The benefits that the employees are provided with are special discounts and offers in the retail store (Tesco, 2009).
Analysis of HR practices at TESCO
In order to revamp its sales and to eliminate competition from the market, the organization has integrated HR into their overall plan. In order to be successful, managers at Tesco are focusing on human resource to make their decisions. Diversity management and equal employment opportunity are at the root of Tesco’s HR practices.
Diversity management refers to the concept of working with individuals from different background and hold different perspectives and views in an organization. According to Kandola Baruch, & Altman (2002), diversity includes both visible and invisible factors including age, gender, background, race, personality and lifestyle.
Tesco considers the management of diversity as its core responsibility. With diversity in the workplace, the organization has enabled itself to reduce cultural shock to great extent. As the organization focuses on diversity management, the organization is provided with an opportunity to understand the culture and basic needs of individuals. Some of the benefits that Tesco enjoys due to diversity in its workforce are as follows (Global Union, 2009):
- As there are different people from different background, Tesco is provided with an opportunity to increase its creativity. Due to the unique skills and talents in the workforce, the organization is capable of gaining many ideas and solutions for the problems.
- As the organization focuses on diversity management, the employees are more satisfied with their working environment. In addition, it has also been observed that the performance of Tesco is constantly increasing due to its diversity management policies.
The integration of diversity management policy in HR practices has provided the organization with success and increased performance over the years. It has also been observed that the employees working at Tesco have reduced their cultural shock to great extent as the culture and the working environment provided is filled with different people. Due to such practice, Tesco has remained on its track for years.
Equal employment opportunity
Equal employment opportunity reflects the idea the each employee working for the organization would be provided with equal opportunities to enhance their knowledge and skills. It has been observed that due to equal employment opportunities employees are treated fairly at work which eventually helps the organization to enhance its performance and productivity. At Tesco, each individual is provided with equal opportunities to develop their skills and knowledge regarding the work and the culture. Due to such practice, the employees are satisfied with their work. In addition, it has also been observed that Tesco ensures that each employee would be trained in order to understand the individual role in the organization. The implementation of such practice has helped the organization to remain a step ahead of its competitors in the fiercely competitive supermarket sector. Tesco was the first organization in the supermarket sector to make the employees a core element of strategy. Being treated equally and fairly was the major reason for the loyalty of employees towards the organization. It has also been observed that the morale of the employees is high along with motivation and satisfaction level (Emerald Group Publishing Limited, 2002).
TESCO’s failure in America and Japan
Tesco is one of the leading organizations in the retail sector but due to lack of cross cultural communication, the organization had to shut down its entire operation from the markets of United States of America and Japan. The failure of Tesco in both the country would be separately elaborated.
In earlier years, Tesco opened its chain of supermarket by the name of “Fresh and Easy”. The aim of the company was to sell its product in the states of California, Nevada and Arizona. But the organization failed to understand the culture which led to the decline of the supermarket chains.
The core reasons for the failure of the organization in such states are as follows (Kwint Essential, 2012):
- The US shoppers are familiar and satisfied with the purchase of products in bulk in order to save their money whereas, Tesco’s Fresh and Easy offered its customers with products in small packs. Due to lack of understanding regarding the purchasing behaviour of the customers, the chain of supermarket failed to enhance its sales.
- The offering of stocked British-style ready meals and self-service tills were another reason for the failure of the organization. Due to the unfamiliarity of the customers, the organization was unable to attract the customers in the shops.
Although Tesco was able to enhance its sales in developing countries but the company failed drastically to enhance its sales in developed country i.e. Japan.
Some of the core reasons which led to the failure of organization in Japan are as follows (Peak Performer, 2012);
- Culture was one of the major barriers that led to the failure of the organization. The organization had difficulties in understanding the language of the local people. This created confusion and the organization was unable to enhance its sales in Japan.
- Resistance to change was another barrier in Japan. As the local people were unaware of the organization and its product, the people resisted to change their purchasing decisions.
- The organization failed to understand the needs of the local people. This was the major reason which led the organization to its failure. The lack of understanding of the needs and wants of the customers led to decline in Tesco’s sales and revenues.
Both these countries are example for other organizations worldwide that does not consider cross cultural communication an important aspect. It has been observed that due to lack of cultural understanding, Tesco was unable to enhance its sales. In addition, Tesco lost its reputation due to such poor performance in these countries.
Tesco is one of the leading retail organizations in the world with more than 460,000 employees. For an organization with such enormous number of employees, it is essential to manage them. In order to manage its employees, the organization highly focuses on the use of training and development programmes. With the help of such programmes, the organization not only enhances the skills and knowledge of the employees but also influence the employees to change their attitude and behaviour towards the work and the organization. By continuously providing the employees with training and development, the organization has reduced the cultural shock to great extent. Communication and consultation has also helped the organization in the reduction of cultural shock. As the organization encourages its employees to report problems associated with work and environment, the organization has enabled itself to understand the root of such problems and constantly implements strategies to reduce such problems.
Diversity management and equal employment opportunity are some of the HR practices of Tesco. These practices has allowed to organization to flourish in the competitive market for over years. Being provided with fair and equitable environment has encouraged the employees to work together regardless of difference in cultures and personality. Due to such practice, the organization is provided with several opportunities in the market which includes increase in sales, motivated and satisfied workforce and low employees turnover rate.
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