Tesco, the supermarket retail organisation faces a very poor labour market position and legal action currently because about 1000 former and present female workers claim that they are less paid than male staffs working in the retailer’s distribution centres. Because of the discriminatory wage cut of the staff based on the grounds such as age and gender, they have a lawsuit against the company. The staff who have been serving the company before 1999 have also stated that the company has reduced the age the staffs used to get for their Sundays and bank holidays work to half. Hence, the labour market is the problem that has been selected in this particular essay.
Problem-solving: Problem-solving is the ability to think logically which includes comparing, contrasting, evaluating and selecting the right choice for organizational and stakeholders’ benefit. With the right problem-solving skills, the staff is able to determine the source of an issue by analysing the issue and thus finding an effective solution to the problem.
Outline of the problem: When an organization experiences an issue or a set of problems before developing a solution to those identified issues, the organization needs to develop an outline of the problem. Outline of the problem is the structure that is comprised of the problem statement, and method to solve the problem. In order to identify the sources of the problem and the nature of the problem, an outline of the problem is the first stage to develop by an organization. Followed by the outline of the problem the issues addressed by selecting the right and effective method. The problem that has been undertaken for the particular study is the claim of the staff of Tesco that it practices discriminatory wage policy based on staffs’ age and gender after the supermarket cut its pay rates for night and weekend shifts.
Background of the organization: Tesco started its business in 1919 when Jack Cohen started selling surplus groceries from a stall in the East End of London. However the brand appeared in the year 1924, five years later the business started its life. In the 1930s the brand started its development and growth when the headquarters and warehouse in North London were built by Mr. Cohen. Soon the company became a private limited company in the year 1932. During the 1960s, the supermarket started expanding at a very fast pace by selling more products in larger stores. In 1961, the company entered the Guinness Book of World Records as the largest store in Europe (The Telegraph, 2014).
The workforce is the most significant asset the companies in recent times have been treasuring as they realise the importance of staff in sustaining their business in the era of globalization and digitalisation. Tesco recently has been practising discrimination in this period of inclusion and diversification, based on staff’s age and gender as claimed by the female staff who were working and currently working in the company. The company further has diminished its remuneration rates for night shifts and weekends resulting in a poor labour reputation. The staff who have been working for the company since 1999 are affected by the new pay cut introduced by Tesco (Tesco.com, 2015). Further 38,000 staff working in the company and are paid on hourly based are affected by the pay cuts decision. Staff who used to receive double remuneration for the work on bank holidays or Sundays have experienced that their pay has been slashed to half.
Researchers and lawyers have found that the staff who have been serving the company since 1999 and all are aged above 40 years have been experiencing their wages have been slashed. The employment and discrimination department has stated that pay cuts on the long-serving staff are a discriminatory approach that all other retailers have been adopting in cutting wages of people and investing those savings in other sectors. Especially the long-serving staffs of the retailer company are the ones usually faced this crisis while it also has impacted on the stakeholders. Stakeholders found this wage cut policy is an instance of taking advantage of their loyalty towards their company. Being aware of the unlikeliness of the staff leaving their jobs have made them feel vulnerable to the wage cut policy of the company. This changed wage cut not only might get restricted to the vulnerable older staff but all the employees of the company as well as the potential staff who are planning to start their career in Tesco (Tesco.com, 2015). The poor labour policy and discriminatory practices that Tesco has adopted have left a remarkably negative impact on a company’s reputation and employee satisfaction.
It has been claimed by the company staff that more than 200,000 employees could be eligible to make a claim, with estimated pay shortfalls of £20,000 each. The company has to pay £20,000 per worker in back-pay over at least six years (Elias, 2016). The company has been found to be practising a discriminatory wage system based on age and gender which has a social impact on the company as a global labour pool has developed a negative attitude towards the company. Present staff have also seen the company’s discriminatory practice and its impact on the workforce’s lives which will lead to higher employee turnover. The legal action that has been taken against the wage policy of Tesco also has minimised its status in the global market. The increased employee dissatisfaction due to the wage cut and the wage cut policy itself is likely to lead to decreased employee productivity, which again will have a detrimental impact on the company’s operation. Therefore, as per Chapman (2017), the company’s problem discriminatory wage system, based on staff’s gender and age, has a very deep impact on its current as well as the potential staff and company’s reputation as well (Chapman, 2017).
With the application of PESTEL analysis, different driving forces of the issues can be demonstrated and determined as follows:
Political: Political factors of the country has influenced its tax rates, current and impending legislation, political instability, unemployment rate, and Brexit that has resulted in increased task levied on European nations conducting their business. British Economy is facing a hard time due to Brexit and its afterwards effects. Due to the changes tax system in Europe post-Brexit the company has been experiencing an economic crisis.
Economic: Financial stability across the globe is the major factor for concern for Tesco as they are likely to influence cost, demand, profit, and prices of goods. Due to the financial crisis, the government has been encouraging retailers to create jobs for the domestic population.
Social: Owing to a number of societal changes in the time of technology and digitalization, the company has been investing more in advertisements and promotions with an aim to increase its profit and business. Because people are becoming more concerned about different health issues, their approach towards food changing constantly. Tesco is adopting organic food products in the store.
Technology: Technological development and innovation have brought business opportunities to Tesco. Lately, as Tesco has become efficient in counting stocks faster and removing ads after-sales automatically, it shows the company’s technological implementation. Various attractive offers are provided to the customers to achieve their loyalty.
Environmental: Companies are facing pressures from the government in order to remain sustainable to society. The companies are required to benefit society from their initiatives. The company promises its carbon footprint up to 50% by 2020 (Elias, 2016).
Legal: Every business is influenced by the legal environment and companies don’t undermine the areas where law changes can influence business performance in achieving organizational objectives. Seventeen workers have taken legal action against the company for its discriminatory wage cut based on gender and age of staff.
The application of the Fishbone diagram demonstrates that the legal action taken by the staff of Tesco resulted from a number of underlying causes. Key reasons that can be considered for the discriminatory wage cut based on manpower, machines, methods, measurement, environment, and materials. Discriminatory wage cuts based on employees’ age and gender have been led by the economic crisis, changed tax and legal systems in Europe, increased expenses of advertisements and increasing pressure of increasing job opportunities in the retail industry. Increasing competition in the global market has been creating pressure on investing in advertisements and marketing policies for attracting an increasing number of potential staff. As per Elias (2016), the economic crisis that prevails all over Europe and the increased tax levied on the business are the key reasons that have caused the company to minimise pay cuts of its staff. Increasing competition in the international market to achieve competitive advantage has been enforcing the companies in cost-cutting, which could have been another main reason for which Tesco has to minimise d the wage of its staff.
Diagram: Fishbone Diagram
Source: (Kamhawi, E.M.; 2012)
To sum up, in the conclusion section of the essay it can be stated that to cope with the increasing economic crisis across the world, changed business and tax policy in Europe and increasing competition to sustain are the major reasons that have driven the company in a wage cut of its staffs. However, the discriminated wage policy based on gender and age of staff have made the company face financial loss, as well as company image, also has been affected because of poor labour policy and employee unrest. The company would learn from its unethical discriminatory practices so that it keeps away from such illegal and unethical policy henceforth. The company has found that labour unrest has affected its entire workforce morale and satisfaction and consequently their performance and productivity. Therefore, the lessons that Tesco has learned from the discriminatory wage cut of staff can be used for developing better inclusive and diversified practices in the future. The company will never take such discriminatory steps that may affect its staff and other stakeholders’ satisfaction and loyalty negatively.
Elias, Jahshan; 2016. Tesco faces lawsuits over allegations of unfair pay cuts. [Online]
Available at: https://www.retailgazette.co.uk/blog/2016/10/tesco-faces-lawsuit-over-allegations-of-unfair-pay-cuts/
[Accessed 9 December 2018].
Chapman, B, 2017. Tesco to pay back staff almost £10m after massive payroll blunder. [Online]
Available at: https://www.independent.co.uk/news/business/news/tesco-pay-back-staff-10-million-error-less-than-minimum-wage-a7620806.html
[Accessed 9 December 2018].
Kamhawi, E.M.; 2012. Knowledge management fishbone: a standard framework of organizational enablers. Journal of Knowledge Management, 16(5), pp. 808-828.
Tesco.com, 2015. Tesco.com. [Online]Available at: http://www.tesco.com/
[Accessed 30 November 2017].
The Telegraph, 2014. A history of Tesco: The rise of Britain’s biggest supermarket. [Online]
Available at: https://www.telegraph.co.uk/finance/markets/2788089/A-history-of-Tesco-The-rise-of-Britains-biggest-supermarket.html
[Accessed 9 December 2018].