Performance management - Tesco's needs to mange the performance of its employees effectively if it is to remain as the UK's leading retailer and maintain a competitive edge.
3.6a Performance management
Tesco's needs to mange the performance of its employees effectively if it is to remain as the UK's leading retailer and maintain a competitive edge. This means that there must be an effective management control exercised at both individual and organisational level.
A range of processes and techniques are placed within all Tesco stores and in the Tesco offices, which allow individual employees to know how well they are doing, and for managers to be able to monitor how well their subordinates are performing. Performance monitoring provides information, which is of value for identifying future training or promotion opportunities, and areas where insufficient skills or knowledge could be deemed a threat to an employee's efficiency.
Tesco's managers exercise control at an individual and organisational level through:
Planning by setting objectives and targets.
Establishing performance standards.
Rectifying mistakes and taking action.
Monitoring actual performance.
Comparing performance against targets.
3.6ai Management by objectives
The process described above contributes to management by objectives, in which the performance of the individual and Tesco's is consistently being measured against objectives and targets, which have been agreed jointly by managers and employees. An objective relates to something, which is to be achieved by a team or an individual.
Objectives should be determined through discussions between Tesco's managers and Tesco's employees. This involves both a top-down and a bottom-up approach. Thus meaning that managers must make the effort to consult all employees regardless of their statue within Tesco, and employees should consult managers if they feel that they would like to make any further input. The manager presents corporate, individual objectives and team members before stating what they feel can be achieved.
This process is more likely to be successful if the objectives meet the SMART criteria. They should be:
S - Smart
M - Measurable
A - Agreed
R - Reliable
T - Time-related
3.6aii Monitoring Performance
The monitoring process requires the measurement of performance and then linking these performance measurements against the achievement of objectives (and targets).
Measurements may be made as indicators such as output, sales and profits over a specified period. When comparing performance with targets, an account has to be taken of the general context in which a particular operation is taking place. A Tesco's director who just falls short of his or her target profit figure may in reality have performed very well because, because Tesco may have been operating in the face of a major economic downturn. The monitoring of quality standards is very often performed against set criteria defining different levels of quality standards. These criteria are used to form the basis of a customer opinion survey, which could be undertaken by sending a questionnaire to a cross section of Tesco customers or through a telephone survey.
Tesco may also find it helpful to make behavioural assessments, which measure an employee's approach and attitude towards his or her job. Essentially, this focuses on the process of the job, on what an individual actually does.
3.6b Employee motivation
Motivation describes the extent to which an individual makes an effort to do something. Tesco's are likely to improve performance in terms of customer care, attendance rates, cooperation and quality of tasks performed if they can find ways of increasing the willingness of their employees to perform tasks with greater effort. Tesco's have managed to achieve this through a variety of means, which have been aimed at increasing an individual's job satisfaction and are highlighted by a different theoretical basis.
Job satisfaction at Tesco's is achieved through the working environment, and is influenced by factors such as target setting, responsibility, independence, teamwork, interaction and achievement. For example the Slough branch Tesco supermarket has an electronic department, therefore they may be set a realistic target during the Christmas period, such as selling fifteen stereo systems and ten television sets with a built-in video player and if this was to be achieved Tesco's may offer the employees of that department a bonus or seasonal gifts. Therefore employees become further motivated by such incentives and begin to work with greater effort individually and as a team. Thus creating further motivation for Tesco's workforce resulting in higher levels of profitability from stock turnover.
Motivation is also generated at Tesco by offering employees a pay increase, promotion or simply by the status and satisfaction associated with possessing a new skill and using the most up-to-date machinery and equipment. For example a cashier at Tesco would not expect to be using a cash point where the cashier enters the amount of the product upon the system, instead Tesco use an up-to-date scanning system known as "Checkout Plus", "Plus" meaning Price Look-up System. Thus meaning that Tesco use highly modified technology to scan products, which the customer wishes to purchase into the system. The term scanning is used to describe the use of a laser system to identify bar-codes upon products. The information relating to each bar-code is held in a computer linked to the scanning equipment. As the bar-code is passed across the scanner it is read and the price and description are then obtained from the computer and the sale is registered. This form of technology available to Tesco employees that is to be used throughout their working day also acts as an incentive along with pay rises and promotion.
Tesco department and store managers use both financial and non-financial means to motivate employees, such as pay rise or extra benefits. In doing so, Tesco aim to minimise labour turnover, attract new recruits and create an effective, productive working environment.
Tesco recognises that in order to remain the UK's leading retailer they need to be the UK's favourite employer. Tesco's employee satisfaction equation aims to show employees that rewards can be achieved through good performance.
Employee satisfaction = Progression + Package + Experience
(Internal promotion (Salary, bonus (Rewards and
recognition) and benefits) working conditions)
Tesco's annual awards and management bonus schemes provide recognition and rewards, and the emphasis it places upon internal recruitment and promotion provides the opportunity for advancement.
3.6bi Maslow's hierarchy of needs
Maslow's work upon 'Motivation and Personality' is very closely linked to performance management. It suggests that people are motivated both by needs which are fundamental to their existence and also by those which are associated with mental characteristics or attitudes. These needs can be presented as a hierarchy, and Maslow assumes that, within the workplace, employees will strive to move up the hierarchy.
In relation to Tesco's it means that, initially, an employee's physiological needs may be satisfied through the basic pay and comfort of the working environment. He or she will then want to satisfy security needs by gaining greater job security and perhaps pension arrangements through existing Tesco Pension schemes. Membership of a lively team may help to satisfy social needs. Often a flash title and large company car may help to meet his or her need for self-esteem, and increasing levels of responsibility and control may satisfy self actualisation needs. By recognising where people are on Maslow's hierarchy, Tesco's can tailor their package of financial and non-financial rewards in order to increase staff motivation. For example an employee who replenishes shelves for Tesco may feel motivated and encouraged to do well if he or she were to be rewarded with a seasonal gift or bonus, whilst a manager or department supervisor at Tesco would expect a more prestigious gift such as a pay increase or receive further control upon their department.
Physiological Needs
The physiological needs are shown at the bottom of the hierarchy because they tend to have the highest strength until they are somewhat satisfied. These are the basic human needs to sustain life itself such as food, clothing and shelter. Until these basic needs are satisfied to the degree needed for the sufficient operation of the body, the majority of a person's activity will probably be at this level, and the others will provide little motivation. For example a new employee at Tesco may be appointed as a trolley collector, he or she will not be concerned upon what others are doing until they have managed to achieve their goal. Thus meaning that the employee will have very little motivation and determination to achieve greater things, as they're currently satisfied with what they are doing due to the fact that their current task holds very little responsibility and supports them financially.
Safety, or Security Needs
Once physiological needs become gratified, the safety, or security, needs become predominant. These needs are essentially the need to be free of the fear of physical danger and deprivation of the basic physiological needs. In other words, this is a need for self-preservation. In addition to the here and now, there is a concern for the future.
An employee at Tesco who may have began as an assistant may then feel that he or she deserves a promotion. Thus displaying the desire that an employee then develops after the physiological stage. Once an employee at Tesco has sustained a job for a certain period of time and has obtained life's essentials he or she then becomes concerned about the near future and feels the need to sustain and be assured of their job security. Hence the reason why a Tesco employee may be vigilant upon upcoming job vacancies internally or externally.
Social or Affiliation Needs
Once physiological and safety needs are fairly well satisfied, social or affiliation will emerge as dominant in the need structure. Since people are social beings, they have a need to belong and to be accepted by various groups. When social needs become dominant, a person will strive for meaningful relations with others. Thus meaning that an employee at Tesco will feel the need to be associated to social cults or teams. For example specifically during the Christmas period Tesco provide their employees the opportunity to socialise via team events and parties. Thus allowing employees to feel united and further create friendships amongst themselves.
Therefore an employee at Tesco obtains the social and affiliation needs once they have managed to maintain and be assured of their job security, thus resulting in higher self-motivation levels whilst gaining confidence and broadening their social activities.
Esteem Needs
After individuals begin to satisfy their need to belong, they generally want to be more than just a member of their group. They then feel the need for esteem both self-esteem and recognition from others. Most people have a need for a high evaluation of themselves that is firmly based in reality, recognition and respect from others. Satisfaction of these esteems produces feelings of self-confidence, prestige, power, and control.
Once an employee at Tesco has managed to maintain his or her job and has been assured of their job security, whilst becoming socially active they begin to feel that they are useful and have some effect on their environment. There are other occasions, though, when employees are unable to satisfy their need for esteem through constructive behaviour. When this need is dominant an individual may resort to disruptive or immature behaviour; employees may engage in work restriction or arguments with their co-workers or boss. This recognition is not always obtained through mature or adaptive behaviour. It is sometimes garnered by disruptive and irresponsible actions. Therefore is this was to occur, Tesco's are obliged to carryout a form of disciplinary action against the employee to ensure that the employee doesn't cause any further damage to the working environment. However Tesco must ensure that they fairly discipline the employee in order to prevent any repercussions and to ensure that all employees can fulfil their need for esteem through constructive behaviour.
Self-Actualisation Needs
Once esteem needs begin to be adequately satisfied, the self-actualisation needs become more important. Self-actualisation is the need to maximize one's potential, whatever it may be. A musician must play music, a poet must write, a general must win battles, a professor must teach. As Maslow expressed it, "What a man can be, he must be." Thus, self-actualisation is the desire to become what one is capable of becoming. Individuals satisfy this need in different ways. The way self-actualisation is expressed can change over the life cycle.
A self-actualised manager in Tesco's may ...
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Self-Actualisation Needs
Once esteem needs begin to be adequately satisfied, the self-actualisation needs become more important. Self-actualisation is the need to maximize one's potential, whatever it may be. A musician must play music, a poet must write, a general must win battles, a professor must teach. As Maslow expressed it, "What a man can be, he must be." Thus, self-actualisation is the desire to become what one is capable of becoming. Individuals satisfy this need in different ways. The way self-actualisation is expressed can change over the life cycle.
A self-actualised manager in Tesco's may eventually look for other areas in which to maximize potential as his or her managerial attributes change over time or as his or her horizons broaden. Therefore an assistant manger at Tesco will feel that he or she obtain the qualities and experience to become a manager of that department in order to fulfil their desire. However this can also lead to the loss of employees for Tesco, for example if an employee was led to believe that he or she had the ability and potential to perform a job to the required standards, but was continuously overlooked the employee may feel that he or she must go elsewhere to fulfil their potential. Therefore it is essential for Tesco's to maintain their workforce and allow employees to believe and fulfil their potential if they are to remain the UK's leading retailer.
3.6bii Herzberg's two-factor theory
In the 1960s, Herzberg identified two different sets of factors that influence job satisfaction. Herzberg stated that the first set of factors are those that induce job satisfaction, known as motivators. These factors are:
Achievement in the job.
Satisfaction deriving from the work itself.
Being granted additional responsibility.
Recognition of good performance.
The opportunity for advancement at work.
Managers must focus upon these factors if they want to increase job satisfaction and motivate employees. The second set of factors that Herzberg identified are referred to as hygiene factors. These are the necessary conditions to prevent dissatisfaction but, in themselves, they are not sufficient to motivate employees. Hygiene factors include:
Supervision and technical conditions
An employee's salary
Working conditions
Company policy
Interpersonal relations
Herzberg's theory suggests that an increased salary might only have a short-term effect upon employee efficiency and satisfaction. However, if Tesco's employees were given additional responsibility, such as being placed in charge of a specific project, or department this would have a long-term motivating effect. This form of job enlargement contributes to job enrichment. Another strategy used by Tesco's for long-term motivation is job rotation, which involves exchanging tasks between workers to provide greater variety. For example a Tesco employee who operates a cash point may also be given the chance to work within the customer service kiosk as a form of job rotation to ensure that the employee does not become disheartened and de-motivated. This form of job rotation also ensures that Tesco employees do not become complacent and suffer from task repetition.
The fundamental aim of job motivation via any strategy is to give employees greater control over the planning and execution of their work. Herzberg felt that this motivates employees as it means that their abilities and potential are utilised more fully.
This philosophy of utilising employee's abilities more fully also lies behind the idea of quality control circles. These are part of the total quality management (T.Q.M) approach. Tesco embraces the TQM principle by offering employees equality and responsibility and emphasising their involvement in the company. Tesco's circles are made up of employees who meet on a regular basis to discuss problems and propose their ideas. Encouraging employee input enables Tesco's to correct problems before they escalate and to consider ideas, which may be more cost and time effective. It also provides a more satisfying working environment for Tesco's employees.
The two-factor theory suggests that the prospect of receiving rewards (expectancy) will be more likely to motivate individuals than the possibility of, for example, improved working conditions, job security or salary improvements. Salary enhancements and other hygiene factors might be viewed in the short term as advantageous but Herzberg suggested that they have only a small effect on sustained motivation within the workplace. The theory behind salary enhancements has been strongly supported by Tesco's. For example employees of the electronicall department at Tesco receive wage bonuses fixed at a certain percentage depending upon the price of the item sold. Thus proving that Herzberg's theory of improved salary will improve motivation, due to the fact that large organisations such as Tesco employ the system. The reason for this being that wage bonuses give employees a greater incentive to work harder.
Tesco's also encourage and provide employees with the opportunity for personal advancement, recognition for one's contribution, enhanced responsibility for the outcome of an individual's or group's effort. The reason behind this idea is that Tesco believe if employees have a greater incentive to work they will have greater motivation for what they aim to achieve.
However the reward systems in many organisations serve to 'reward' undesirable behaviours while, simultaneously, ignoring or even punishing more positive ones. The feedback and reinforcement processes appear to be essential to achieve and sustain a motivated workforce, yet many company practices and policies, usually unknowingly, serve to depress employee motivation. As a consequence, when individuals feel they are not being rewarded for a job well done they become dissatisfied and, potentially, under motivated. Therefore it is essential for Tesco's to ensure that they have a rewarding system which if fair and accurate rewarding employees or departments for aims or objectives which they have achieved. Consequently employees will become further motivated, however Tesco need to ensure that their rewarding system is continuously updated in order to prevent any failure of praising an employee for their work, which if undetected could lead to lower levels of motivation.
Generally, prior to Herzberg's work, job satisfaction and performance were thought to result largely, if not exclusively, from extrinsic stimulants, such as pay. He raised the very real vision of complexity and the likelihood that the factors contributing to workplace satisfaction, motivation and performance undoubtedly include intrinsic rewards. Herzberg's theory is supported World Wide, which includes Tesco's as they too use many ways to enhance motivation, but none more than pay related performance. Tesco use pay related performance to enhance motivation for employees and departments in order to improve profitability and remain as the UK's leading retailer.
3.6iii Taylor's principle of scientific management
Taylor argued that efficiency, standardisation and discipline would result from a process of scientific management of work tasks. To be more precise, he suggested that:
Each worker should conduct a minimum of movements, preferably involving just one set of actions.
A scientific selection process should identify the correct person to perform the task.
There was 'one best way' of organising any set of tasks to be performed and it was management's responsibility to conduct exhaustive measurements in order to achieve this desired state.
Jobs should be standardised and simplified.
A clear distinction should be made between planning a job, a management role, and conducting the tasks of a worker's role.
Frederick Taylor in his 1911 work, Principles of Scientific Management advanced the view that employees are basically motivated by money. The job of management was to provide formal order and control in the working environment. Management did the planning and provided the support to show the workforce how best to do the job. Taylor felt that, with this clear line and staff organisational structure, productivity would increase because the employee would recognise that higher output would lead to higher pay. Tesco have clearly agreed with Frederick Taylor as they have adopted a similar approach where employees receive pay bonuses depending upon the level of output. However Tesco's have not used pay bonuses in a simple manner, for example Tesco's do not only provide bonuses based upon commission but also provide bonuses for any aims or objectives which employees or departments have achieved. For example during the Christmas period the Slough Tesco branch set the store a total amount of income which they believe they can achieve trough extensive teamwork and hard work. If Tesco then achieve the total that they set each and every employee will receive a bonus depending upon the amount of hours they worked.
Obviously, this approach tends to address what are perceived to be lower level needs and, by its very nature, is far more relevant to labour intensive industries. Taylor's principles would support the use of these three pay systems.
Performance-related pay (PRP) is a scheme, which links output and performance to pay. Employees receive bonuses, which are dependent upon their ability to reach specific targets. PRP rewards good performance, so it should motivate employees to work harder. Tesco's use performance-related pay in order to further motivate employees and aid the level of output achieved. Tesco's use performance-related pay to benefit employees by providing individual departments including hierarchy employees such as departmental managers achievable targets which if obtained result in a bonus. Thus consequently providing employees with a greater incentive to succeed, resulting in higher levels of motivation within the workforce.
However, some critics argue that factors beyond an employee's control, such as the breakdown of machinery, could affect their performance. Critics also argue that PRP categorises employees as good or bad performers and this can have a de-motivating effect upon those who fail to achieve their targets. Therefore to ensure that Tesco do not encounter such problems or to overcome the problem, managers arrange a regular date in which they conduct a consultation with employees and ensure that the targets set are specific, measurable, achievable, realistic and timed. Thus ensuring that any targets that managers set for employees are achievable and realistic, thus preventing any employees becoming de-motivated due to a lack of achieved targets.
Price rates provide employees with a variable income; payment is directly linked to output. Employees are encouraged to produce as much output as possible and maximise productivity. The price rates system allows employers to identify good performers. Tesco use the price rate system in order to motivate employees to produce as much output as possible. For example an employee who replenishes stock receives bonuses via the amount of output achieved. Thus meaning that the more boxes emptied and stock placed upon the shelves the greater the bonus received by the employee. However, Tesco have recognised that by paying for quantity they are risking the level of quality, as standards can be sacrificed as employees strive to gain rewards. Therefore Tesco have employed a system where an employee is restricted to certain zones within store. By doing so Tesco have discovered a system where they can perform an inspection upon the area in which the employee is working. For example an employee may be restricted to the fruit and vegetable section, thus allowing the department manager to not only assess the quantity but the quality of work performed by the employee.
Commission-based pay is often used for sales staff and employees are paid a percentage of the value of the goods they sell. Commission-based pay motivates employees because the level of their salary is determined by their own performance and ability to sell the organisations products. For example Tesco employees within the electronic department may receive a fixed percentage upon which they can earn depending upon the number of sales the employee managers to achieve. Therefore the commission-based pay acts as an incentive for employees to increase sales and improve the profitability of Tesco's, whilst improving the motivation of the workforce.
3.6iv McGregor's Theory X and Y
The motivation of employees is normally the responsibility of the Tesco's Duty Manager. He or she makes assumptions about an employee's basic needs when deciding upon a suitable motivation method. Douglas McGregor's 1960 study, The Human Side of Management, suggests that two types of employee exist, each possessing different needs. McGregor argues that the type of employee a person becomes is influenced by management style.
Theory X conveys a negative view of human nature, portraying employees as lazy and un-ambitious people who dislike work and need to be controlled through punishment. McGregor argues that if a manager treats employees as if they are naturally inclined to be idle and disinterested and believes that they do not want responsibility, then they will fulfil this role. It is a self-fulfilling prophecy.
Theory Y argues that employees are not money motivated but gain reward from the job itself. Theory Y presents employees as self-disciplined and work appreciative people who crave responsibility and creative fulfilment. McGregor's Theory Y is significant because it suggests that given the right conditions and management style employees can be motivated to work efficiently and productively.
Clearly Theory X and Theory Y workers will react in contrasting ways to different management attempts to increase motivation. The manager's role in Tesco's is to determine which approach and style should be adopted in order to satisfy the needs of individual employees. For example, the Theory X employee is more likely to respond to financial inducements, whilst the Theory Y employee would be stimulated by job enrichment, job enlargement, job rotation and quality control circles. Therefore it is extremely important for Tesco to know and understand each employee in order to adopt a motivation strategy that suits the employee, resulting in higher levels of profitability and stock turnover for Tesco. A failure in understanding each and every employee could prove to be extremely costly for Tesco, therefore they need to ensure that each departmental manager thoroughly knows all their employee in order to report back to the Duty Manager. This then allows Tesco to make any decisions upon employees pay packets based upon up-to-date and accurate information upon the employee. For example if an employee is money motivated Tesco need to ensure that the employee benefits the company, and is assisting in high levels of output, otherwise other employees may become disheartened and de-motivated at the fact that an idle employee is gaining as much bonuses as they are. Therefore it is essential that Tesco only recruit employees who will benefit the company and gain the potential to further their career, a failure to detect weaker employees will result in a loss for Tesco's through training and development and will have an immediate affect upon the efficiency and profitability of the workforce.
Therefore it is essential that Tesco's manage to obtain and maintain a successful, yet flexible workforce via a successful Recruitment and Selection procedure in order to improve profitability and remain the UK's leading retailer.
3.6bv Porter and Lawler's Expectancy Model
Porter and Lawler's model (located below) includes variables and highlights certain potential managerial implications. In particular it sheds light upon the nature of the relationship between employee satisfaction and performance. At the beginning of the motivational cycle this model suggests, as in basic expectancy theory, that effort is a function of the perceived value of potential rewards (valence) and the likelihood of achieving that reward (expectancy). Porter and Lawler's model then adds to existing theory by suggesting that performance is a product not only of effort but also of the individual's abilities and characteristics together with his or her role perceptions.
Performance leads to two types of reward. Intrinsic rewards are intangible and include a sense of achievement, or advancement, of recognition and enhanced responsibility, whereas extrinsic rewards are more tangible and include pay and working conditions. Tesco's use a combination of both intrinsic and extrinsic methods of motivation in order to enhance and improve their workforce. Tesco use intrinsic method of motivation for hierarchy employees such as departmental managers or assistant managers. When a departmental or assistant manager receives recognition they receive it in the form of a promotion, which gives them a sense of achievement, responsibility and increased pay.
Tesco use extrinsic rewards for a vast majority of employees in order to motivate them and gain as a high level of output possible. Extrinsic rewards include extra bonuses based upon quantity and quality depending the employee's job. For example an employee who replenishes shelves will receive bonuses based upon the amount of stock displayed, along with consideration of the quality in which the stock is displayed. Another example of extrinsic rewards at Tesco's is that an employee within the electronicall department will receive a commission-based bonus upon any products sold. This provides the employees with an incentive to success and provides Tesco with a motivated workforce.
It can be argued that the relationship between intrinsic rewards and performance is both more direct and immediate than that between performance and extrinsic rewards. As a consequence, Lawler argues that intrinsic rewards have more important influences on motivation than pay or promotion, whereupon, similarly, Herzberg suggests that intrinsic rewards have a more direct and powerful influence on workplace satisfaction than do extrinsic rewards. Herzberg's two-factor theory, outlined above, sheds light on the motivational effects of these two sets of rewards and makes a useful contribution to our understanding of workplace motivation.
Expectancy theory makes a number of important assumptions, which include:
An individual makes a series of decisions or choices about his or her behaviour and acts rationally in that process, taking note of such information as is available.
The realisation that individual behaviour is influenced by various personal and environmental factors.
Individuals differ and have a variety of needs, drives and sources of motivation.
3.6bvi McClelland
Perhaps of more significance and potential value to managers at Tesco's and academics attempting to understand motivation in the workplace is the work of McClelland. McClelland's (1961) "Needs Achievement Theory" identifies three basic needs that people develop and acquire from their life experiences. These are the needs for:
Achievement
Affiliation
Power
Individuals develop a dominant bias or emphasis towards one of the three needs. For example at Tesco's, those with a high achievement need such as Duty managers or departmental managers tend to seek situations where they have personal responsibility for solving problems, managing projects or for overall performance, where feedback is often clear and rapid, and where tasks are moderately challenging and where innovation is required. For example during the night shift at the Slough Tesco branch is an incident was to occur the night shift Duty manager would be in charge and would occupy and feel the need of being responsible and the chance to solve a problem. This is the type of reward certain employees are motivated by, and aim to receive recognition for what they achieve via their status within Tesco's hierarchy.
However certain Tesco employees become more concerned with their own achievement than they are with broader organisational needs. Therefore Tesco continuously reinforce the fact that all aims and objectives achieved are via a hardworking and dedicated workforce. Thus meaning that Tesco reward employees where reward is due, but the overall appraisal is shared between all the employees giving them further motivation and a sense of security and unity within the workforce.
Power appears to be the main determinant of success, particularly when success is measured in terms of status and promotion to senior posts. McClelland distinguished between socialised power and personalised power, the former being useful in assisting managers and leaders in their attempts to achieve organisational and group goals whereas the latter often merely serves the individual in seeking his or her need for domination. The need to achieve is linked to entrepreneurial activity and is viewed as an essential ingredient of organisational and national economic success. Managers at Tesco's seem to have higher achievement needs and lower affiliation needs than non-managers. The reason for this being that managers desire control, responsibility, power and achievement. We are all, perhaps, aware of people who appear, at least, to demonstrate a high need for one of the three drivers identified by McClelland. However, for the achievement of organisational success, those with high achievement needs are generally considered most essential. For example an ideal manager at Tesco would someone who is motivated by success, responsibility, achievement and enhancement for these people, money is often considered a measure or indication of success or a method of feedback, but is not a particularly a strong motivator in its own right, hence the reason why Tesco believe that success-led employees are those who help develop and improve the level of output and profitability of Tesco's.
McClelland's motives correspond, to an extent, with Maslow's self-actualisation (achievement), esteem needs (affiliation) and love/social needs (power). However, this theory recognises that the relative extent or influence of these needs varies considerably between individuals. Thus meaning that not all Tesco managers desire the same bonuses as another manager may be pay related whilst another may desire responsibility and power.
3.6c Individual Performance Review
For individual Tesco employees, some or all of these review systems usually complements the monitoring process outlined:
Appraisal
Self-evaluation
Peer evaluation
360-degree evaluation
3.6ci Appraisal
An appraisal system is used by Tesco's to review the standard of work being undertaken by people within the organisation and to assess the value or contribution of individual employees. Appraisal and performance review interviews are used by Tesco's to:
Reinforce company goals - Ensure that the employee is aware of the aims and objectives of which Tesco aim to achieve.
Recognise good performance - Reward an employee for a good performance, and reinforce the employees value to Tesco.
Identify training needs and career opportunities - If a vacancy was to arise Tesco initially need to assess their current staff to investigate into whether any current employee has the potential to take on the job once he or she has been fully trained.
Review and set targets - This is where all departmental managers conduct a consultation with employees to discuss their current achievements and targets before ensuring that the new targets set are specific, measurable, achievable, realistic and timed.
Good appraisals have a positive effect on an employee's motivation, but bad appraisals can be costly, time consuming and have a negative impact on the manager-employee relationship. A poor approach is to simply appraise employees by rating their performance against specific factors such as knowledge of the job, accuracy, reliability and output capability. This system discourages employee involvement and does not identify the means of overcoming weaknesses. A better from of appraisal is the personal performance review interview, adopted by Tesco who encourage all their managers to use this form of appraisal. The personal performance review interview allows solutions and objectives to be identified by both the manager and employee. Under this system, the formal appraisal interview should cover:
A review of performance against objectives over the previous year
An assessment of an employee's strengths and weaknesses based upon key job-related criteria
Personal job improvement plan
A career development plan
A performance rating
Comments from the employee and reviewing manager
Agreement or reconfirmation of the objectives for the next year.
It is important that consideration is given during the appraisal interview to the extent to which an employee has reached objectives agreed at an earlier meeting (such as the previous year's appraisal interview). Tesco managers categorise these objectives into three areas:
Key results - reviewing the employee's contribution to the business objectives of his or her unit or department.
Performance standards - contributing to an improvement in the employee's job performance.
Personal development - objectives relating to increasing the knowledge or skills of an employee.
Tesco requires that objectives should be SMART. The company recognises the need to have a system for measuring the extent to which the various objectives have been achieved. Tesco's suggests that all its stores should observe these guidelines when conducting performance appraisals:
Appraisals should be regular - At Tesco's, formal appraisals are held annually, while informal appraisals are treated as an ongoing process.
Managers should be trained in conducting interviews and make an effort to place the employee at ease - Therefore managers should not challenge or insult the employee nor should the manager make the employee feel as if they have failed, but motivate the employee to improve the level of output at Tesco.
The interview room should be neutral and a timetable should be organised to allow both parties time to prepare - Thus meaning that the employee should be fully aware of any consultation well before the scheduled date.
Managers should assess if targets are still relevant and realistic, by considering how the company has changed and whether unavoidable factors such as inadequate resources have affected performance, and managers should also ensure that all employees targets are specific, measurable, achievable, realistic and timed.
Targets should be SMART and any numerical targets should be realistic. At Tesco's managers negotiate between six to eight targets.
Both parties must feel satisfied with the outcome and be clear about what is going to be achieved.
Following the appraisal interview, the manager needs to help the employee to determine a suitable strategy and plan of action in order to help them to achieve their objectives and take advantage of future opportunities. This often involves the drawing up of a personal job improvement plan and a career development plan.
The "Personal job improvement plan" recognises that all Tesco's employees can improve their performance. The plan deals with areas for improvement and considers the need to respond to new demands. It is effectively taking an overview of where the employee is now and how he or she needs to change in order to embrace the new context in which he or she is likely to be working in the future. For example, a Tesco's marketing manager may be required to improve his or her strategic planning, and in particular to do this in the context of the future which recognises the importance of Internet trading.
The "Career development plan" helps to identify the most suitable job progression for Tesco's employee in question. Career development takes account of the employee's aims but will also take into account the needs of Tesco as an organisation. Development is not just concerned with promotion. An employee may aim to develop vertically through promotion or to move horizontally through the career structure by moving into different sections within Tesco and functional areas or taking on a different role at a similar level. Career development might involve gaining beneficial experience or considering ways of increasing job satisfaction. Someone who has worked successfully as an administrator within the personnel function might be placed in another functional area in order to provide a broader range of experience that will eventually lead to move into management.
3.6cii Self Evaluation
Before attending, performance review interviews, individual employees might be asked to consider their own view of their performance. This normally starts with identifying the extent to which they have achieved the targets, which they have been set, and then evaluating the factors, which have either encouraged or hindered the achievement of performance targets. By informing the employee in advance upon the consultation Tesco's allow employees the chance to evaluate themselves in order to make a decision upon what the employee believes that they have achieved. Self-evaluation enables an employee at Tesco to decide what his or her objectives are and identify training and development needs.
Tesco have discovered that the main problem with self-evaluation is that it can be highly biased. Some employees overestimate their performance through a fear of admitting their weaknesses; others underestimate their performance because they do not want extra responsibility or because of false modesty. Employees might propose objectives which they are interested in but do not have sufficient ability to achieve. Managers can use self-evaluations to gauge employees' expectations but must recognise the potential for bias.
Therefore a self-evaluation procedure enhances Tesco's knowledge upon each and every employee. The evaluation provides Tesco with valuable information upon what the employee believes that they can achieve, this proves to be extremely interesting for Tesco managers. For example during the past three moths if an employee has only gained experience but very few new skills and has attended very little training and development courses, Tesco would need to question the contribution of that employee. Then once the employee evaluated himself or herself and felt that he or she deserved a pay rise or promotion, the Tesco manager would have the facts upon the employee present and would be capable of assuming that the employee is either biased or sets unrealistic targets for themselves. Hence the reason why a self-evaluation can be extremely misleading, however it can also be exceptionally informative for the Tesco manager upon the expectations of the employee.
3.6ciii Peer Evaluation
To inform the performance review process, many organisations also look at peer evaluations of the individual. This is based on the idea that the best people to provide feedback on an individual's performance are those who operate at a comparative level. However the problem with a peer evaluation at Tesco's is that the procedure can again be biased. However Tesco have constructed a manner in which the evaluation can be performed. Tesco discovered that the evaluation can only work if it is carried out in complete confidentiality, so that the employees making the peer evaluation do not feel that there can be any repercussions.
Again, there is a danger about objectivity at Tesco as many peers may be in competition for a promotion or they may favour a friend in order to promote their own interests. Therefore Tesco have to be extremely careful in which way they interpret the information provided by the peer evaluation in order to gain an insight in how fellow employees feel about other employees. A misinterpretation could lead to many repercussions, such as de-motivated employees, hence the reason why it is vital for Tesco to acknowledge the possibility of biased evaluations.
3.6civ 360 Degree Evaluation
The ultimate form of employee evaluation is where Tesco put its staff, especially managers, through a 360-degree review. This provides an opportunity for receiving feedback upon their effectiveness from people that they have contact with at all levels. These perceptions are very useful for evaluating management style and in clarifying development needs.
The review is normally carried out through the completion of a series of questionnaires by the employee under scrutiny, together with their peers, their line manager and the people that they line manage, and may also involve customers and suppliers. The respective responses are then collated and compared. If there is a consistent response, the question has to be asked whether this represents a strength or limitation. The review normally reflects on the skills the manager under scrutiny brings to:
Managing during difficult situations.
Organising.
Leading and inspiring people.
Building relationships.
Dealing with emergencies and remaining effective.
Applying business judgements.
An analysis of the results should highlight:
The personal strengths that are recognised by others, which can be best deployed and built upon.
The personal strengths that are not rated highly by others, which may point at areas for development and training.
A personal limitation, which are well regarded by others, which may mean a member of staff has been excessively self-critical.
Personal limitations identified by others, which need to be worked on to improve performance.
Obviously, the process suffers from the same potential weaknesses as the peer review, but because so many different views are incorporated into the assessment the danger of bias is reduced. It also helps to identify clearly the areas of individual performance, which need attention, and so an appropriate training and development plan can be established.
3.6cv Relationship between Performance Management and Motivation.
There is an extremely important link between these sections in the Human Resource department at Tesco's. Tesco's have discovered the need for managers to construct and a professional relationship between their employees. During the year mangers and employees will have many consultations, during this period Tesco believe it is essential for managers to appraise employees in order to increase their motivation. To achieve this, Tesco managers need to ensure that employees are aware of their progress, which will provide confidence and satisfaction for employees, which they will take into the workplace.
However, if Performance Management fails to provide employees with continuous updated knowledge upon their progression, employees can become de-motivated and dissatisfied in an extremely short amount of time. Therefore it is essential for Tesco's managers to continuously update employees upon their progression in order to maintain a successful and motivated workforce.
3.6cvi Relationship between Training and Development and Motivation.
There is a clear and distinct relationship between these twp sections at Tesco's. For example if all employee receive a high standard of training, their motivation will also be extremely high. The reason for this being that Tesco knows the impacts their workforce have upon profitability and the level of output. Thus meaning that if Tesco occupy a motivated workforce the efficiency and profitability will increase depending upon the motivation of their workforce. However a poorly trained employee will be less motivated as they will feel as if they have no other meaning than performing the tasks required of them. In order to reduce de-motivated employees Tesco continuously arrange and conduct a consultation with employees where they are informed upon their progression and achievement, whilst ensuring that the targets set are specific, measurable, achievable, realistic and timed.
Consequently the level of motivation of employees at Tesco's depends heavily upon the quality of training, which employees then have the chance to make use of within the work place. Motivation is also heavily affected by the impact of the consultations, therefore Tesco's ensure that all mangers continuously update employees upon their progression and achievement in order to enhance motivation and job security.
3.6d Managing Performance in the Modern Business Environment
Approaches to performance management have to reflect the modem business environment, which is dominated by the impact of consistent change factors and the effect of new legislation.
3.6di Managing Change
Successful organisations must constantly adapt to new ways and adopt new methods in response to the changes in the labour, consumer, world and technological markets. It is the manager's job to ensure that these changes are implemented smoothly and effectively, and that the level of employee resistance is minimised. Organisations need to embrace change to:
Improve profits.
Introduce new products or services.
Adopt new technology.
Improve efficiency.
Respond to, or get ahead of, the competition.
Comply with UK and European Union regulations.
The organisational benefits of implementing change are clear - increased profitability, better products and faster growth than their competitors, good public relations and more power in the marketplace.
It is important, however, that Tesco's managers understand why people resist change before devising a plan for its implementation. Failure to take into account and address people's fear can make the change more costly and time consuming, reduce employee morale and cause the business to receive the benefits of the change later than its competitors. Resistance to change is common and is not just a fear of the unknown but derives from an employees fear that:
They might lose their job.
They might lose their status and the success they have in their current job.
They might have to do work that they dislike or that they feel devalues their skills.
Additional responsibility might be too hard to handle.
They might have to work harder and will be under greater pressure.
They might have to change their work and social group the change is futile and will not work.
Managers at Tesco's need to overcome the conflict between an organisation's need to change and human nature's fear and resistance of the unknown. The managers need to develop a successful implementation strategy. The plan should ensure that information is made available on how the change will affect people from the first stages of implementation to the end. Employees should be encouraged to ask questions and, if possible, managers should provide any guarantees that can be given about job security, transfers, retraining, etc. Simple language should be used to avoid excluding or misleading people through the use of technical jargon. It is essential that Tesco's managers do not present the change as necessary because of past bad performance but as something that will contribute to continuing good performance. In implementing any programme of change. The manager's objective should be to deliver the change as quickly as possible with the least waste of time and money.
3.6dii Employee Welfare
Tesco have a duty to provide its employees with a good and safe working environment and must respect employees' statutory rights and interests. In order to be able to fulfil this obligation, Tesco must respond to new government legislation and regulation. If an organisation fails to comply with the law it can face prosecution or financial costs. Therefore it is essential for Tesco to comply with all government legislation regardless whether it is old or new.
Some employers and business organisations have argued that recent legislation on working hours and working conditions has reduced their capacity to operate flexibly and made it more difficult to achieve improvements in performance.
3.6ciii Working Time Directive
The Working Time Directive was introduced into the UK in October 1998 as a measure designed to protect the health and safety of employees. The directive covers seven areas:
Maximum working weekly hours - the average working time for each seven- day period should not exceed 48 hours, however employees have the right to opt out of the regulation.
Daily rest - employees are entitled to a rest period of 11 consecutive hours in each 24-hour period.
Rest breaks - an employee that has worked six hours is entitled to a 20-minute rest period.
Weekly rest - employees are entitled to an uninterrupted rest period of 24 hours in each seven-day period.
Annual leave - an employer has a duty to provide an employee with at least four weeks paid annual leave.
Patterns of work - an employer should ensure that employees take regular breaks and that they are not subjected to any monotonous or high-risk tasks.
Night work - night workers should not work more than an average of eight hours in any 24-hour period and they should have the option to move to day jobs if they become ill.
The Working Time Directive recognises that working hours are a health and safety issue and provides protection for employees.
3.6civ Maternity and Paternity Leave
The Sex Discrimination Act 1975 and the Employment Rights Act 1996 entitle pregnant employees to maternity leave regardless of their length of service or the number of hours they work. Under 1999 legislation, the maternity leave period has been extended from 14 to 18 weeks. The latest time leave that can be taken is the expected week of the childbirth itself, and the earliest time leave is 11 weeks prior to the expected birth of the baby. By law, employees must take at least two weeks maternity leave immediately after the birth of the child. Tesco must continue to grant employees their statutory and fringe benefits (such as company car, health insurance, holiday entitlement) during the maternity leave period. Employees must be free to return to work after maternity leave.
At present, there is no legal requirement for organisations to grant paid paternity leave to the partners of pregnant women. However, to satisfy employee demand some employers and local councils do grant paid leave. The average paternity leave period is currently ten days.
3.6cv Minimum wage
The national minimum wage was introduced in April 1999 in order to provide employees with basic protection from exploitation. The minimum wage covers any UK employee who is aged 18 or older. The legislation covers agency workers, home workers, temporary and casual employees, and people on fixed term or freelance contracts as well as all full-time and part-time employees. No exclusions are made on the grounds of region; size of company or type of industrial sector and employees cannot be excluded because of their hours, employment patterns, and length of service or contract status.
In April 2000, there were three bands for the minimum wage:
A rate of 3.60 per hour for those aged 22 and over.
A rate of £3.00 per hour for those aged 18-21 (inclusive).
A rate of £3.20 per hour for those who are 22, and are within the first six months of a new job and taking part in accredited training.
Some people are not entitled to the minimum wage. These include:
The self-employed.
Voluntary workers who are only paid expenses.
People younger than 18 years old.
People who normally work outside the UK.
The armed forces.
Prisoners.
People on voluntary work experience.
People living in their employer's home.
Members of an employee's family.
The implications of ignoring the minimum wage legislation are severe. Tesco can face a fine of up to £5,000 and criminal prosecution. The minimum wage can distort the market for labour, especially if it is higher than the real market rate for particular jobs. Opponents of the initiative have argued that it may reduce employment opportunities and lead to higher costs, which will be passed on to the consumer in the form of higher prices. Tesco being the UK's leading retailer it is essential for them that the minimum wage does not increase any further otherwise it could cause the need for making employees redundant. Therefore in order for Tesco's to remain the UK's leading retailer they must maintain a successful and flexible workforce, however escalating wage demands can only hinder the progression of smaller organisations as many other organisations will not have the financial support that Tesco occupy. Therefore as consumers escalating wage demands may end all competition for Tesco's and allow them to set high prices, thus resulting in greater levels of output and profitability.
Taranjeet Sandhu
