1.0 INTRODUCTION

In today’s competitive ever-changing business environment; organizations need to

focus more on developing their human resources. Human resources can be defined as

the pool of human capital under the firm's control in a direct employment relationship

(Wright & McWilliams, 1994). If managed properly these human resources can lead

to a competitive advantage. Ricardo (1817), Schumpter (1934) and Penrose (1989)

argued that internal resources of the firm are the major determinant of competitive

success (Wright & McWilliams, 1994).

Tesco is one of the world’s largest retailers with operations in over 14 countries

around the globe, employing over 492,000 people and serving millions of customers

(Tesco 2011). Its main operations are in the UK, however, it also has stores in the rest

of Europe, Asia, and has recently expanded into North America. It also provides

online services through its subsidiary, Tesco.com.

Tesco sells approximately 40,000 food products in its superstores, as well as clothing

and other non-food lines. Tesco’s own brand accounts for approximately 50% of its

sales.

The Strategic Human Resource Management (SHRM) tool will be applied to Tesco

and relevant recommendations that surround the issue of workforce diversity and the

implementation of policies and practices will be given. Research will be conducted in

order to identify the internal and external forces affecting the organization Pressures

from the internal environment include the globalisation and the impacts it brings

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along with it. Externally Tesco is directly affected by the diversity of its workforce

and how issues such as discrimination and communication affect employee

performance. Cultural tension within communities, economic, legal, and political

factors all affect Tesco.

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2.0 SHRM

Organizations must undertake human resource practices, which are organizational

activities directed at managing the human capital at the organization’s disposal and

ensuring that the capital is employed towards the fulfillment of organizational goals

and objectives(Becker & Huselid, 2006). Strategic human resource management is the

process of human resource management which involves linking human resources with

strategic organizational objectives to improve performance (Hartel et al., 2007).

SHRM focuses on organizational performance rather than individual performance

(Becker & Huselid, 2006).

The role of HR management systems as solutions to business problems rather than

individual HR management practices in isolation (Budhwar & Aryee,) . Strategy is

about building a sustainable competitive advantage that in would in turn lead to

performance gains. HR strategies are essentially plans and policies that address and

solve strategic issues related to the managing human resources of an organization

(Massey, 1994). An organisation’s HR practices, policies and programmes should be

aligned with corporate and strategic business unit plans (Hartel et al, 2007). Strategic

HRM thus links corporate strategy and HRM, and emphasises the integration of HR

with the business and its environment.

Earlier human resources management models, have shown that organizational

effectiveness depended on a tight 'fit' between organizational strategy and HRM

policies and practices ( H i l t r o p , 1 9 9 6 ) . SIHRM approaches and policies are

influenced by the overall corporate international strategy or internal fit. Hartel and

Fujimoto, (2007) highlight the importance of fitting HR policies with local legal,

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political, economic, and cultural factors. Nevertheless, a firm must maintain flexibility

in its SIHRM system to respond to various demands from a complex competitive

environment (Wright & Snell, 1997).

2.1 Motivation Theory

Research has shown that a motivated workforce will work harder and achieve greater

output more efficiently. Motivated employees require less supervision and

demonstrate pride and zeal in doing their work, making a greater impact on the

customer (Hartel et al, 2007). Motivation of employees leads to greater levels of

concentration, thus reducing the likelihood of on-job accidents and conflicts.

Motivation may stem from personal interest such as keeping safe

or from external factors such as intrinstic and extrinsic rewards . Taylor’s motivation

theory has suggests that employees are purely motivated by money. However, this not

true as monetary reward is not the only way to effectively motivate employees. People

are not only motivated by material rewards but by a desire to increase their power

position in the corporate hierarchy ( McNerney, 1996). Employee motivation levels

change with time, promting HR managers to continually monitor the workplace to

determine the reasons for such drops in the level of motivation. The HR manager

faces a task of formulating new employee motivation strategies that are in line with

the organisation’s overall corporate strategy. For example offers various awards such

as : free shares in the company after a year, a save as you earn shares scheme,

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employee discount cards, gym membership, holiday discounts, and contract free

phones (Tesco, 2011).

2.2 Environment

Organizations are constantly faced with environmental contsraints that need to be

overcome. Organizations constantly monitor and analyze their operating environment

which includes both the internal and external factors . Tesco will need to analyse

these factors and identify them as potential threats or opportunities. Organizations

wishing to develop effective SHRM systems must make an assessment of their current

position and compare it with a vision of the future (Hartel et al., 2007). It is suggested

that environmental scanning of both the external and internal environments is a

necessary prerequisite stage to strategic formulation.(edit)

2.2.1 Internal Environment

The organization’s assessment of its environment must involve an analysis of its

internal environment or its organizational strategy, structure, and culture.

Organizational strategy involves taking action to meet the basic long-term objectives

of the organization in question. An assessment of organizational strategy can reveal

an organisations ability to maintain its current strategy. Strategic decision making has

far reaching implications on HRM practices or strategies (Hartel et al. 2007). Other

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factors that may affect the organization’s direction is organizational culture and

structure .

Tesco places the customer at the heart of its values. Providing customers with value

and service overrides all other objectives (Tesco, 2011). The seven part strategy that

Tesco implements aims to broaden the scope of the business to enable strong

sustainable long-term growth. As a part of its growth strategy Tesco has embarked in

internationalization to gain a larger market share. By expanding overseas Tesco now

faces a variety of human resource issues. This type of strategy may have an impact on

ISHRM policies such as hiring and staffing, renumeration, and localization.

Tesco had to combine deep local knowledge of culture with global experience, this in

turn lead them create international management teams that comprise of a mixture of

host country nationals and people from the UK business (Tesco, 2011).

2.2.2 External Environment

Jackson and Schuler (1995) state that a number of macro-environmental

characteristics may have an influence on the adoption of particular HRM practices

and policies. Organizations need to analyze and interpret external factors in its

operating environment that are beyond its control in order to be proactive rather than

reactive. Various factors such social and cultural, diversity, economic, political, and

technological - that take place in the organization’s operating environment are likely

to be of

critical importance for the organization (Barry, 1983).

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Tesco has operations in 12 countries outside the UK, including China, South Korea,

and Malaysia and has recently opened stores in the United States. This international

expansion is part of Tesco’s strategy to diversify and grow the business (Tesco 2011).

Tesco’s global expansion increases its exposure to the external environmental threats.

For instance Tesco operates in areas with varying demographics and cultures. This is

also reflected in its diverse workforce, which is composed of different individuals

with different gender, race, age, personalities, and work ethics (Hartel et al., 2007).

Workforce diversity is an important issue that Tesco has to manage carefully through

SHRM policies and practices. Managers managing a culturally diverse workforce

need to understand that these individuals have differing needs, wants, and

expectations; that may affect their work ethic, view of co-workers, and the way they

are motivated (Hartel et al., 2007).

Through the implementation of key human resource functions of recruitment and

selection, training and development, performance appraisal and remuneration,

organizations can successfully manage workforce diversity (D’Netto & Sohal, 1999).

Tesco has initiated diversity training programs that aim to The organization has,

invested in the Tesco Academy as a part of its ongoing commitment to building

capability. The academy supports the development of employees through training

courses, networking opportunities and mentoring (Tesco, 2011). To make sure it has

the people it needs to help it meet its business objectives, Tesco has developed a

structured recruitment programme. It is also using workforce planning to plan ahead(

www.thetimes100.co.uk/studies/)

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3.0 Recommendations

Yang and Konrad (2011) , argue that the best practices for diversity

management focus on selecting for diversity, reducing workplace

discrimination, and generating financial effectiveness.

By improving its employer brand proposition, Tesco can improve its ability to

attract the right kind of talent( Mosley & Kunerth, 2011),

Cross training of employees to give them a wider array of skills and insure that

they remain interested in their job.

Inclusion of employees in decision-making process in issues that directly

affect them.

3.1 Evaluation of Plan

After the implementation of new policies and initiatives, it is vital to evaluate and

review whether the new plan has met what it set out to achieve (Hartel et al., 2007).

Ultimately, it is measuring the effectiveness or inefficiency of the plan. Evaluations

and surveys should be handed out to employees of Tesco at all levels for better

evaluation.

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4.0 Conclusion

By creating workplace diversity and embracing it, Tesco’s organisational culture can

be improved. Employees will have a better understanding of differing cultures and

beliefs, therefore enhancing their performance due to the organisation better reflecting

diversity in the community. To effectively manage diversity managers at Tesco need

to recruit and staff employees who are culturally aware and not just diverse. The

implementation of a training and development program may also aid in improving

performance and overcoming environmental threats. By effectively managing

diversity, a firm can obtain human capital that is valuable, rare, inimitable and

non-substitutable (Hartel et al., 2007).

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