Tesco is the UK’s largest retailer, with more than 470,000 employees across 14 countries. Noel O’Reilly talks to HR director Therese Procter about the challenges of managing such a large workforce. We also feature a video excerpt from the interview, in which Procter discusses talent in the organisation.
If you visit Tesco HR director Therese Procter at the retailing giant’s head office in Welwyn Garden City, Hertfordshire, she may well point out the Braille panels in the lifts and on the doors of the offices. Hiring the company’s first blind graduate is one of her proudest achievements. And when you leave the building, do not be surprised if Procter shows you the new-look staff rooms, designed by Tesco staff themselves.
These gestures tell you something about Procter’s values and personal style. She became HR director in 2007, and there were rumours at the time that a £300,000 salary was on offer for the job.
Nevertheless, she comes across as enthusiastic and down-to-earth, and she laughs modestly when her high-profile predecessor, Clare Chapman, is mentioned. Chapman now heads HR at the NHS. But a look into Procter’s past shows you that she too has a strong competitive streak, together with a habit of winning and an ability to go the distance. She was a talented athlete in her youth, and her county records in the 800m and 1,500m running events were only recently broken.
Procter left school at 16, and after a brief period at the Bank of England she joined Tesco as a stock manager in 1986 at the age of 18. She has since clocked up 24 years with the retailer. She moved into HR after several years in operational roles when she got the chance to run a leadership development programme across Europe.
Procter attributes Tesco’s success to its simple corporate values: “No one tries harder for customers” and “Treat people how we like to be treated”.
These apply both to customers and staff, and for the latter focus on teamwork, trust and respect, listening, supporting and saying thank you, and sharing knowledge and experience. One of Procter’s key achievements in the director’s role, the TWIST (Tesco Week In Store Together ) programme, seems to sum up these values. The programme puts senior managers back on the shop floor to listen to staff about generating improvements, and aims to influence ‘inclusivity’ in the business.
“You can copy cutting prices, you can copy things like one in front at the tills, you can copy technology, but you can’t actually copy the values that we’ve got because they’ve been here for such a long time they’re an intrinsic part of how we run our business,” says Procter.
One key value is diversity, and Tesco has statistics that would put many other employers to shame. For example, one in five people on the company’s Options management development programme is over 50 years old.
“We employ people from the ages of sixteen right through to 70 and beyond, and those people have got very different needs,” says Procter. “Wherever you work, whether that’s on a till in a Metro store or behind the counter in a bank, or as a truck driver delivering products, what’s important is that everybody is treated, and feels they are treated, with dignity and respect.”
Procter says the company takes the results of its Viewpoint employer survey seriously. “Viewpoint will ultimately inform policy and changes that we make to support our people,” she says.
The recent initiative where staff rooms were redesigned by staff was a response to feedback in the survey. “Stores with the new design scored higher on morale and key performance indicators in customer satisfaction, and helpful and friendly staff,” says Procter.
Tesco has been considered an exemplar of good HR for more than a decade, in particular for offering learning and development and the chance of promotion to all staff. You can even download free essays on HR at Tesco.
But now the company faces a major challenge. In recent years, Tesco has diversified into other areas of retail, including financial services, and expanded internationally, including into China and the US. So will the company’s values prove robust enough to survive this expansion during an economic downturn?
On the face of it, the company looks in good shape, with 15% sales growth across the group last year, and record annual profits announced in April of £3.13bn – 10% up on 2007-08. But recent figures reported in the Guardian in June reveal Tesco’s 4.3% sales growth in the previous four months was lower than Asda (8.4%), Morrisons (8.2%) and Sainsbury’s (7%). This has been linked to a price-cutting strategy in Tesco Stores to hold market share of customers.
Tesco’s HR practices are so deeply ingrained that they are sure to be seen as key to both short-term survival and longer term growth. The company is creating 11,000 new jobs in 2009, and will target the long-term unemployed. Another key value is the commitment to offer all staff an ‘opportunity to get on’, with vacancies advertised internally, and front-line managers trained to manage talent. Every member of staff gets a one-to-one career discussion annually, and the main board have a ‘People Matters Meeting’ every two weeks.
The company’s range of ‘Options’ leadership development programmes cover all levels of the business and 3,500 appointments were made through the programme last year. The Graduate Options programme won a Times Graduate Recruitment Award in 2008 for graduate employer of choice in general management.
Procter is herself an example of the company’s commitment to developing its own people. Among the others are Terry Leahy, the chief executive, who began as a marketing executive, and there are examples of top managers who began on the shop floor, including David Potts, retail and logistics director, and Philip Clarke, Asia, Europe and IT director.
“What I love about Tesco is it is a meritocracy, so whoever you are and wherever you’ve come from, you have got the opportunity to get on, and you can see that right through our business,” Procter says.
Tesco also boasts the best employee benefits package in the food retail sector, with an award-winning pension scheme. Some 170,000 staff own shares or are members of share schemes, and there is discounted dental, health and life insurance on offer.
The company measures the success of its people management approach through the Viewpoint survey, with 80% of UK staff agreeing last year that they have the opportunity to get on at Tesco. Although the company operates a balanced scorecard approach to the business, only one score relates to HR: employee retention. It was 87% in 2009 compared to 84% in 2008.
However, Procter says that other key performance indicators show a correlation between good customer service and staff satisfaction as recorded in Viewpoint.
“Customer satisfaction is recorded and measured on a monthly basis, and the scores around staff helpfulness are ones that we continually look at improving. Those are moving in the right direction, so you could say there is a direct correlation there.”
Nevertheless, Tesco has no shortage of critics, outside the organisation at least. Few companies can boast a page on online encyclopedia Wikipedia like the one titled ‘Criticism of Tesco‘. Recently, trade unions and the media have claimed that overseas staff and suppliers do not receive as good treatment as UK employees.
The company’s response is to point to its responsible actions towards the community. An example is when Procter showed her support for the government’s aim to make the workplace a setting to promote people’s health, when she spoke at the launch of Lancaster University’s new Centre for Organisational Health and Wellbeing at the House of Commons back in May. Tesco is supporting the centre’s research, along with 12 other large employers.
Tesco’s absence policy, where staff receive no pay for the first three days of absence, has been criticised outside the organisation. If the policy seems harsh, Procter says the company’s ‘Supporting Your Attendance’ return to work practices are in line with government thinking.
“We have to support managers to be able to support the staff who are absent,” she says. “And we ensure that proper support is given to employees as they return back into the business and any adjustments that need to be made can be.”
This fits with Procter’s views on employee engagement, the HR issue she says she is most passionate about: “Creating a culture where people feel they want to come to work each day and think they work in a great company is something that I’m really passionate about.”