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Over the past ten years, the supermarket giant Tesco has systematically improved its employer brand relationship with employees, at the same time as recording record revenues and profits. Tesco was recognised in 2004 by readers of HR Magazine who voted it the UK’s top company for recruiting and retaining talent, while at the end of last year it was also named as the UK’s ‘Most Admired Company’ at the Management Today annual awards.
The customer and employee experience
In 1993 it was a different story. Tesco’s share price had dropped by 40% and it was increasingly threatened by European discounters then entering the UK market. Tesco’s current chief executive Sir Terry Leahy had been appointed marketing director in 1992. “It was a defining period and from that time we began to change the philosophy and direction of the business.” Tesco’s recovery strategy was to listen carefully to customers and respond directly by changing the organisation, with the aim of “creating value for customers, in order to earn their lifetime loyalty”. Tesco also embarked on a comprehensive re-assessment of its relationship with employees.
Insight into employee priorities
Part of this re-assessment involved the creation of the People Insight Unit. Applying sophisticated consumer marketing research tools internally helped Tesco put together a focused ‘employee shopping list’ of priorities.”
When polled in a company-wide consultation, employees told Tesco they wanted managers who would help them; interesting jobs which they feel were worthwhile; opportunities to get on through training and develop-ment; and an environment in which they would be listened to and valued.
Values
Employees help management identify values which would be shared by everybody in the business; there are six of them. Says Terry Leahy, “It's how you manage in any situation; understand the customer; be first with the customer; use your strength to deliver unbeatable value; look after the staff so they can look after the customer; teamwork; trust, respect.”
These values, and the four employee priorities, have been guiding principles in developing a coherent “brand proposition” to offer to its employees. The proposition takes in company culture and environment, management performance, the reputation which flows from high levels of customer retention, and pay and benefits.
Addressing the employee experience
Following the definition of these values and priorities Tesco embarked on a significant programme of retraining for all 12,000 managers. This training equipped them to define people's roles more clearly, provide greater support to front-line staff, communicate better, and address the factors that would make work more satisfying and the workplace more effective. To reinforce the value placed on understanding and supporting front-line personnel, head office managers also began to take turns working in stores for a week. Leahy was the first to sign up and spent a week working on the checkout, at the fish counter and in the warehouse.
The company also tackled pay and benefits. Tesco’s average pay for staff in stores is now higher than all its competitors’. Terry Leahy says, “There has been a very significant increase in the pay of all our people, paid for by big increases in productivity. We pay them as well as we can and they are very motivated.” In February 2004, more than 45,000 staff shared £110 million on the maturity of the company’s first two Save As You Earn (SAYE) share schemes, established in 1999.
Consistency and continuity
For an employer brand to win lasting and universal support, it needs the legitimacy that only employees themselves can provide through continual consultation. Once a year, Tesco asks all staff about its performance against the agreed values. Smaller samples are surveyed every six months. This research is used to direct employee-focussed initiatives, and a “People Matters” directors’ group meets once a fortnight solely to discuss employee issues.
After six years, the activity flowing from the work on priorities and values is achieving a significant level of consistency in terms of employees’ experiences across the organisation The last survey was the first to show a green light (= positive health, in a red, amber and green traffic light system) for all values in all divisions since they were first established in 1997.
“It takes a generation. We've had to change completely the way we manage”, says Terry Leahy. “Change at Tesco has been across the board, but internally coherent... What's important is that you live the values. They have to be central to the way you manage in order to affect processes and projects, and how people work…It's been evolution, not revolution. Rapid evolution”.
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