TESCO

TESCO PLC:

Tesco is a British multinational groceries and general merchandise retailer with headquarters in Welwyn Garden City, Hertfordshire, England, United Kingdom. It is the third-largest retailer in the world measured by gross revenues and ninth-largest retailer in the world measured by revenues.

                                  

PERFORMANCE MANAGEMENT PRACTICES:

Tesco’s previous “Corporate Steering Wheel” approach:

Tesco use a strategy, what it called as a Corporate Steering Wheel. This performance management framework was named because of its circular shape and also for providing a clear direction for the business. The Corporate Steering Wheel was designed to outline the company’s top strategic priorities, along with Key Performance Indicators (KPI) that performed like a compass, showing whether the company was on track to achieve its objectives or not. Ultimately, the main purpose of the wheel was to help steer the organisation to success. The Steering Wheel provided a easy-to-read one-page framework to focus towards achieving the goals.  It was organised into multiple corporate objectives, spread across five perspectives: financial, customer, community, operations and people.

These objectives included:

1.Customer Perspective :
a) The staff are great
b) Prices are good
c) Earn lifetime loyalty
d) You get what you want
e) No need to queue
f) The aisles are clear

2.Community Perspective:
a) Be a good neighbor
b) Be fair, responsible and honest

3.Operations Perspective:
a) We always save money and time
b) We make your jobs easier
c) We know how vital your jobs are
d) We try to get it the right first time
e) Every day, we deliver consistently

4.People Perspective:
a) To be treated with respect
b) Opportunity to get on
c) A manager who helps me
d) An interesting job

5.Financial Perspective :
a) To increase the profits
b) To maximize sales
c) To manage the Investment

Principles of Tesco Performance Management:

Different critical principles of Tesco Performance management process are as follows –
a) A performance management system analyzes the strengths and weaknesses of an individual.
b) The day to day process is involved in the performance management rather than any bi-annual review cycle and annual review cycle. This process is supported by immediate coaching and feedback.
c)  An organization provides a fair reward and clear recognition to the people who perform at a high level.
d) The assessment process in the business is consistent, transparent, robust and with clear differentiation in the whole of the workforce.
e) The process of Tesco involves the performance of any individual rather than the character of any individual.
f) The strategic goals of the company are aligned with the goals of the performance management, so that the people can see how their work contribute towards these goals and how right things are performed at the right place.
g) The performance process of the organization is agile, efficient, responsive and fast.
h) Tesco process results in generating efficient values and behavior of the employees in the organization

The CEO Sir Terry Leahy then said, “The Steering Wheel creates a shared language, a shared way of thinking and a common blue print for action.”

The steering wheel measured the performance of employees at TESCO, right from the leaders to the shop floor workers. Individually stores also had their own local steering wheels, to help front line workers collaborate in corporate objectives

It was simple. Even though the Steering Wheel contained more than 40 KPI, they were arranged in a clear way which emphasized their importance to the organisation.

TESCO’S NEW APPROACH TO PERFORMANCE MANAGEMENT:

In recent years, Tesco has taken simplicity to a whole new level. The Corporate Steering Wheel is out. The 40-odd KPI are gone, replaced by six simple indicators. The Big 6 – six key measures that will help focus, simplify and improve the way things are done across the Group. They are

1. Sales
2. Profit
3. Operating cash flow
4. Customers recommend us and come back time and again
5. Colleagues recommend us as a great place to work and shop
6. We build trusted partnerships.

The idea behind shifting to this new approach is to reduce the number of KPI. And in a way to create is to create greater focus on what matters most for the organization.

So, the idea is to drive greater focus on what needs to be done, but leave colleagues more freedom on how they contribute to those goals.

What are the pros and cons of this simplified approach?

In principle, this simplified list is great. It borrows from the OKR approach, i.e  ‘Objectives and Key Results, it is a simple tool that helps an organisation achieve goals by building specific and measurable actions as well as communicating and monitoring progress toward them’. This is all about simplicity and creating focus on what matters most.

The downside is that, with such a limited number of objectives, they’re naturally going to be very high level. The challenge is communicating these clearly throughout the organisation. For example, objectives like improving operating cash flow will make perfect sense to the board, but people lower down in the organisation might not understand how they can help achieve or influence this measure. The same goes for building partnerships; an employee working in a store might need greater clarity on how they can contribute to building trusted partnerships. So how well this list will cascade down through the organisation and achieve buy-in at all levels remains to be seen.