For any company, it is very important to identify the problems that it is facing, and design such strategies that can help the company to overcome those issues and achieve its goal. This report aims to analyse such issues of the company and identify different steps to tackle it. Being one of the leading employers within the UK retail industry, the management of Tesco Plc. is facing wage distribution problems. The company has to pay almost £10 million to its employees due to minimum wage bungle. The UK government has initiated a national living wage plan for the workers of all the organisations across the UK, who are 25 years of age and above. However, the company has underpaid the employees according to the national wage distribution policy, which created a legal problem for the company based on the complaint made by the company.
Tesco Plc is a popular multinational general merchandise and grocery chain, which is based in Britain. The company was established in the year 1919. It is one of the largest employers within the UK retail chain industry. Almost 4, 75,000 employees are employed by the company. The company has become one of the leading and profitable companies within the UK retail chain industry due to it’s adopted low-cost, product differentiation and business diversification strategy.
According to the National wage Distribution Policy developed by the UK government, the employees of the UK companies need to pay at least £7.20 every employee on an hourly basis in case of additional working hours. Now, the rate has been revised from £7.20 to £7.50. However, it has been identified that the company has underpaid its employees in case of additional shifts. This problem has created a rift between the management and employees of Tesco Plc, which has caused legal problems in the year 2017. Now, the company has been agreed to pay £10 million minimum wage bungle to its employees after the resolution.
This particular problem has affected the company in a negative way as several important stakeholders including shareholders changed their perception regarding the corporate image of the company. The employees are the major sufferers. Indirectly, it also has hit the quality of the workplace practices and effectiveness of the business output.
The problem discussed above has certain impacts on the process of the organisation. These impacts are related to the company’s finance, operations as well as to the society that surrounds the company. As a result of the social impact, the company lost support from the shareholders, community members, legal agencies and other important stakeholders, such as employees. The negative perception about the image of the company among such important shareholders can be regarded as the negative social impact of the problem. Along with this, within its operations, the employees are not satisfied and motivated at all due to this particular unethical stance of the management of Tesco Plc. Lack of standard wages caused poor job satisfaction among the employees. This specific issue already has affected the quality of the workplace practices of the employees. Obviously, this lack of motivation and lack of job satisfaction is affecting the customer services and other operation management activities, such as workplace communication activities, supply chain, and distribution activities, inventory management activities, and turn-around timing activities.
According to Jack et al., (2018), this issue is the major reason behind the growing supply chain lead time. Hence, it is considered to be the negative operation management impact of the wage distribution-related problem.
The poor job satisfaction of employees due to underpayment has affected the performance of the staff, which, in turn, has affected the company’s finances. The example of the Cardiff Branch of Tesco can be considered. According to Griffiths and Lucas (2016), the financial performance of this organisation of Cardiff Branch has been affected due to poor employee job satisfaction regarding this underpayment. The branch is facing huge losses for the last 18 months despite the adoption of different strategic approaches. Hence, this is considered to be one of the critical financial impacts of this specific problem.
The analysis of the employee underpayment problem of Tesco Plc will be analysed through the implication of two strategic as well as theoretical models, such as SWOT analysis and Fishbone analysis.
SWOT is an imperative strategic analytical tool, which will assist the researchers to understand the effects of the internal strengths as well as weaknesses. Moreover, this analytical approach will also assist the management to develop new strategic approaches to determining the external threat factors and opportunities.
The strong brand image and popular brand name of Tesco Plc is one of the important strengths. The company is operating with a large number of skilled employees, who are taking care of the needs, demands and satisfaction levels of all the target customers across the UK. Effective adoption of product differentiation and business diversification approach is another important strength of the company. The management has adopted the cost leadership strategic approach, which is considered to be an important strength of Tesco Plc. These aspects have helped Tesco Plc to offer several high quality and differentiated products at a competitive price level to the target customers even during the financial crisis situation. According to Josiah et al., (2014), the offering of customer loyalty cards to the customers has helped the company to gain huge support from its customers, which is also considered to be an important strength of the company.
Underpayment of employees by the human resource management professionals can be considered as the major weakness of the company. Every employee wants to give their full efforts and potential to achieve individual and professional goals. According to Albuoul (2017), Tesco Plc has failed to pay standard wages to its employees in case of additional working hours, which has created employee motivation and workplace conflict-related issues. This is the biggest weakness of Tesco Plc in this recent era.
There are several opportunities for the management of Tesco Plc to overcome the above-mentioned weakness. First of all, employee engagement can be considered as beneficial to listen to their problems and act accordingly as employees are the major stakeholders of the company. Secondly, the management of Tesco Plc needs to follow all the developed policies in the UK, such as wage distribution policy, employment policies, company act and other legal regulations to overcome the possibilities of any kind of threats. Lastly, the company management also needs to engage all the important stakeholders in the complex problem resolution activities to ensure sustainability and loyalty for a long-term period.
Intense industry competition within the UK retail industry is considered to be the real threat for Tesco Plc. The BREXIT and European Union problem can also be regarded as a critical threat to the profitability and financial sustainability of Tesco Plc. The above-mentioned underpayment related issues have created several legal challenges for the company. This issue has affected the corporate governance, social sustainability, economic sustainability and legal sustainability of the company. These are considered to be the major threats for Tesco Plc.
Fishbone diagram has been applied in this part of the assessment in order to determine the major causes and effects of the particular employee underpayment problem.
The management of Tesco Plc is always comfortable with the following autocratic leadership approaches as well as top-down communication approaches. Most importantly, the company is strongly focusing on the authoritative decision making processes in which the employees are not allowed to participate. Therefore, authoritative strategy development activities are causing poor job satisfaction among employees. In addition, the decision making orientation of the company does not allow the employees and other common stakeholders in the decision making processes. Only the higher authorities and top-level management are concerned for decision-making processes. Therefore, the lack of employee engagement and stakeholder participation are also considered to be major causes behind these employee underpayment problems.
These four causes are important to consider by the management of Tesco Plc as these have allowed developing the underpayment strategy, which has backfired. There are several effects of this employee underpayment problem, such as financial effects, operational effects, and social effects. Low profitability is the financial effect, poor co-operation between the management and employees is operational effects, and poor customer services and negative customer relationship are social effects of this employee underpayment problem of Tesco Plc.
Below are a few alternative solutions that the company can imply:
Despite the application of different cost leadership pricing approaches, product differentiation approaches and advanced technological application management approaches, Tesco Plc is suffering from poor wage distribution issues. It is causing several issues for the company, such as financial downfall, lack of operational sustainability, affected social image, and poor customer service. Finally, the company has been agreed to pay £10 Million to its staff after the legal resolution and thoroughly apologised to all the concerned staff. The company needs to employ employee engagement, changes in leadership, and changes in communication network-related strategic approaches to ensure sustainable employee management aspect.
Albuoul, B.Z., 2017. Management Practice. International Journal of Contemporary Research and Review, 8(10), pp. 11-19.
Griffiths, M.R. and Lucas, J.R., 2016. Relating Economic Value to Executive Compensation. In Value Economics (pp. 175-187). Palgrave Macmillan, London.
Jack, L., Florez-Lopez, R. and Ramon-Jeronimo, J.M., 2018. Accounting, performance measurement and fairness in UK fresh produce supply networks. Accounting, Organizations and Society, 64, pp.17-30.
Josiah, J., Gough, O., Haslam, J. and Shah, N., 2014, March. Corporate reporting implication in migrating from defined benefit to defined contribution pension schemes: A focus on the UK. In Accounting Forum (Vol. 38, No. 1, pp. 18-37). Elsevier.Order Now