Performance Measurement in Tesco: Advantages, Disadvantages, and Transition to KPI

This report discusses the concept of performance measurement in Tesco, focusing on the use of balance scorecard and the transition to key performance indicators (KPI). It explores the advantages and disadvantages of using balance scorecard, as well as the effectiveness and benefits of using KPI in the organization. The report also highlights the reasons behind the change in measurement instrument and provides insights into the process of setting KPIs.

PROJECT

Table of Contents
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
What it is.................................................................................................................................4
Advantages and disadvantages...............................................................................................4
Widespread is it used/effectiveness........................................................................................5
Tesco's use of the technique and its effectiveness..................................................................6
Reason of changing measurement instrument in the organization ........................................7
key performance indicators and benefit of using same..........................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Performance measurement is the process of collecting, analyzing and/or reporting
information regarding the performance of an individual, group, organization, system or
component. Tesco is the larger retailer firm in the UK. They generally used to operate in 13
different country. This report highlights the measurement tool which is used by Tesco to carry
out different operation of the business. After that the report highlights the advantage and
disadvantage of using same in the organization. After that the report highlights the reason which
has force the organization to use KPI instead of Balance scorecard. In the end report highlights
the meaning of KPI and advantage of using the same in the organization.
MAIN BODY
What it is
Performance measurement, it is the term used to measure the performance of the employee in the
organization. This is generally done in the organization to collect different information regarding
current situation of the business and to find out the different basis through which different
decision can be taken in the organization.
Tesco, largest retail firm in the local market used to measure the performance of the business
with the help of balanced scorecard technique in the organization. In this technique organization
used to see the perspective of four different places in the organization. The places are Financial
perspective, customer perspective, internal perspective and growth perspective of the Tesco.
After that Tesco used to link the measurement of the company strategy for meeting the key
business goal of the business. This used to help the Tesco in linking the performance of the
business with the vision, objective and goal of the business in long run. Tesco generally used to
called this measuring system as a steering wheel in the organization (Vu, 2016).
Advantages and disadvantages
There are many benefit and drawback which has been seen by the organization in using
the same in the organization. Some of the benefit and drawback of using balance scorecard are as
follows:
Benefits:
 Balance scorecard help organization in better strategic planning in the organization, as it
used to help the Tesco in getting good sort of framework, on the basis of which different
strategy can be developed and communicated in the organization. Reason behind the

same is that balance scorecard in the organization used to provide a strategy map in
Tesco, which help organization in linking relationship between different strategic
objective.
 Balance Score card also help the organization in better management and allocation of
different project in the organization, as they have to link the objective of the business
with the different allocation of the resources in the organization (JIANG, WU, and ZHU,
2018). This used to help the company in focusing on different project allocation and
initiative in an organization.
Drawbacks:
 Biggest drawback of drawing balance score card in the organization is that it used to
consume a good amount of the time of organization to draw balance scorecard in the
organization. As balance scorecard used to consume good amount of time of the
organization in collecting the information from four different perspective or place. This
eventually ask organization in investing good amount of efforts and time in the
organization to draw balance scorecard in the organization.
 Another drawbacks of using balance scorecard in the organization is that it get difficult
for the organization to receive full information regarding different different performance
of the business in the organization. As result it sometime creates issue in planning or
implementing different strategy in the organization (Fatricia, 2017).
Widespread is it used/effectiveness
Generally Organization used to maintain the steering wheel through out the world.
Irrespective of where they used to work i.e. distribution, head office or stores in the nation. This
used to bring good amount of effectiveness on the performance of the business as this used to
bring good amount of focus on the different business situation and operation of the business.
Another thing which in the past used to drive Organization to use steering wheel in the
organization is that it used to help the company in promoting the different strategy that clearly in
the organization. As Steering wheel in the organization used to help the Organization in
promoting the different strategy in one picture which is just promoted in the employee as well as
to all the interested party in the organization (Lakshmi, and Rao, 2017). At the contracting note
it has been also noticed that use of balance scorecard in the organization does not promote whole

the strategy to the employee or interested, they just used to promote the sub point under different
heading which need to be focused by the organization in long.
Another effective importance which was brought by the steering wheal in the
organization was that it helps the employee of the company to feel motivated in the organization.
As it used to provide them with the different guidelines or the focusing tool upon which they
have to invest a good amount of the attention to carry out the operation of the business
(Shadrach, 2017). On the same time it has been also analyses that using balance scorecard in the
organization used to make difficult for all the employee to resist different changes for the
employee. As they just used to focus on some fix matrix, as a result it get difficult for them to
resist the different changes which has been brought into the company. This eventually used to
impact the efficiency of the business in long run.
Tesco's use of the technique and its effectiveness
Generally Tesco in the organization used by the manager of the organization for the purpose of
getting fast and comprehensive view of different angle of the organization. As it used to allow
the manager in looking at the business, as they are intending to look. Tesco generally in this
strategy used to focus on the 4 common perspective and one perspective which was introduced
by them in the name of community (Tesco usage of Balance scorecard. 2019).
Customer perspective: As all the consumer in the market always looks to consider
time, quality, performance and service cost at the time of selecting the product of the company.
Tesco has reform different objective by looking at this considering item. Highest Quality,
Lowest Price, customer satisfaction and customer retention are the main objective of an business.
All the objective of the Tesco are interlinked with each other in the organization. As organization
look to give high quality of product in reasonable price with the help of different operational
management tool. This help company in enhancing customer satisfaction and help them in
retaining the employee in the organization.
Financial perspective: Financial goal of Tesco are grow sales and maximize profit of the
company. Generally organization used to compare the profit of current year with the profit of
previous year in the organization.
Internal perspective: Internal perspective of the business to develop good employee
skill. It used to help the company in improving the level of human resource in the organization.
Generally Tesco in the organization used to organize different training session in the

organization, which eventually help the company in developing good employee skill and develop
quality product of company.
Innovation and learning: Innovation and learning perspective of organization used to
look at the goal of Improve employee capabilities, Deliver consistently on time and Product
focus in the organization (Fletcher and Bhide, 2020). Generally Tesco used to operate in the
organization with the sole motive of bringing variety of the innovative and standard product in
the organization to improve its value in an organization.
Community objective: Tesco also used to make policy in the organization which used to
help the organization in satisfying different community need in the nation. Community goal of
the business id to being responsible, fair and honest and be a good neighbor.
This how Tesco used to implement balance scorecard in the organization, Sir Terry
Leahy one of the executives of Tesco has also highlights that using balance score card in the
organization has helped the organization in becoming more stronger in last five years. As the
main objective of the business was to grow the sales of the company which was done by the
company in the initial year of implication of the same in the organization. There were many issue
which was also faced by the organization, to measure performance with the help of balance
scorecard. As one of the objective of the business was to improve the customer loyalty and high
quality in the organization but there were some issue like pricing, advertising and paying low
wages which was not looked by scorecard. But looking at the wider perspective it can be said
that balance scorecard in the organization has helped the company in measuring the different
performance effectively and achieving the goal successfully in the organization.
Reason of changing measurement instrument in the organization
It has been find out that Tesco has stopped using Steering well as the measuring tool in the
organization. They uses KPI as the measuring tool in the organization in current scenario. It has
been find out that there are many different reason which has drive the company to use KPI insit
of Steering well in the organization (Akkermans and et.al., 2019). Some of the reason which has
drive the company in the organization are as follows:
Cost, time and efforts: This is one of the biggest factor which has forced Tesco to
overlook Balance scorecard in the organization and go for KPI in the organization. As it has been
find out that Tesco has to invest good amount of the resources to carry out balance scorecard in

the organization. Resources includes the time, efforts and cost of carrying out different operation
in the organization. Reason behind the same is that organization used to gather different sort of
information from variety of different sources in the nation. This eventually used to impact the
efficiency of the business. On the other hand it has been find out that KPI will also require a
good amount of the resources in the initial stage but after that organization has to not
continuously invest that amount of the resources. Organization can carry forward same with the
help of making different assumption in the organization. In simple words it can be said that KPI
technique is more easy to implement as compare to Balance scorecard technique.
Not clarity of information: Another thing which has drive the Tesco to use KPI in
comparison to balance scorecard is that Balance scorecard does not used to describes all your
business, it just used to describe the some kind of abstraction for the organization. This
eventually used to become difficult for the organization to select the element which can be
focused by the organization. At the same time KPI will help the organization in getting more
clear and better level of information about the element which organization is looking to focused
to achieve the goal of the business very efficiently in the organization. As in KPI organization
just used to set key performance indicator and also used to define the different strategy which
will help the organization in achieving the KPI. This eventually used to help the organization in
bringing good sort of clarity in the organization.
Scope: It is the another main reason which would have also played a very crucial role for
the Tesco top select KPI in the organization. As Scope of Balance scorecard is very wider in the
organization, this eventually used to create the situation in the organization, where organization
used to overlook the specific element in the organization. Reason behind the same is that Balance
scorecard used to look at the global view over the performance problem which sometime
overlook the small issue of the organization (Peral, Maté and Marco, 2017). KPI can help the
organization in overcoming the same in the organization. As KPI can be set for the short term as
well as for the long term in an organization.
key performance indicators and benefit of using same
KPI is the performance measurable tool in which organization used to demonstrate how
effectively a company in achieving key objective of an organization. In this process organization
used to measure the performance of the business on the basis of comparing the actual
performance of the business with the already set KPI of the organization. Generally organization

has to go through five step process to set different KPI in the organization. Five step process are
as follows:
Clear objective, organization has to make sure that they used to write a clear objective of the
organization. Objective must define the achievement which organization is looking to achieve in
coming one year in the market.
Establish Critical Success Factor, in the second step organization used to set up different Critical
success factor of the organization, on the basis of the different objective set up in the first step.
This are the factor which is critical for the organization in the process of attending success in the
future.
On the basis of the same organization has to make sure that they used to set up Key performance
indicator in the organization (Kylili Fokaides and Jimenez, 2016). Key performance indicator are
the indicator which are measure and compare by the organization to find out the best way
through which organization can check organization performance.
After that organization has to collect the different measure of current performance in the
organization. That is the current situation of the business.
In the last step, organization used to compare the actual performance with the already made KPI
in the organization, to ascertain actual performance of organization.
Advantage
 KPI used to drive the different organization to focus on the key element of the company,
as they used to drive all the organization which can be critical for the organization in long
run and centralized the focus of all the organization on certain important element. This
eventually help the organization in enhancing the level of effectiveness in the
organization (Lakshmi, and Rao, 2017).
 KPI also help the organization in getting actual and measurable result in the organization.
As it used to give the result in number, metrics and statistics, which help company in
comparing the same.
 Another Importance of having KPI in the organization is that it used to keep the different
activity aligns in the organization toward the aim of achieving the goal of the business in
long run (JIANG, WU, and ZHU, 2018).

CONCLUSION
After going through the report it has been concluded that Tesco was using balancing
score card as a tool to measure the performance of the organization, which they used to called as
steering well. Organization has seen good result out of the same in the initial stage but after
period of some time organization has decided to change the measuring tool due to some reason in
the organization. As a result organization is using KPI as the performance measurement tool by
replacing the same with the balance scorecard in the organization.

REFERENCES
Vu, M., 2016. IS THE BALANCED SCORECARD USEFUL IN A COMPETITIVE
INDUSTRY?: Using Tesco PLC as a case study in the UK grocery retail industry.
JIANG, Q. W., WU, Y. S. and ZHU, B. Q., 2018. Construction of Logistics Distribution
Performance Evaluation System——Take Nanjing Suning Tesco as an Example.
Logistics Engineering and Management, (2), p.20.
Fatricia, R. S., 2017. STRATEGIC ANALYSIS OF TESCO SUPERMARKET. Jurnal
Manajemen Terapan dan Keuangan. 6(02). pp.69-86.
Lakshmi, S. and Rao, S., 2017. Implementation and Practicalities of Balance Scorecard: A Case
Study. Asian Journal of Applied Science and Technology (AJAST) Volume. 1. pp.61-67.
Shadrach, N. R., 2017. A study on the impact of the balanced scorecard as a performance
management system on performance and motivation in the retail industry (Doctoral
dissertation).
Fletcher, T. A. and Bhide, A. A., Splunk Inc, 2020. Defining a new correlation search based on
fluctuations in key performance indicators displayed in graph lanes. U.S. Patent
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Akkermans, H and et.al., 2019. Contracting outsourced services with collaborative key
performance indicators. Journal of Operations Management. 65(1). pp.22-47.
Peral, J., Maté, A. and Marco, M., 2017. Application of data mining techniques to identify
relevant key performance indicators. Computer Standards & Interfaces, 54, pp.76-85.
Kylili, A., Fokaides, P. A. and Jimenez, P. A. L., 2016. Key Performance Indicators (KPIs)
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review. Renewable and Sustainable Energy Reviews. 56. pp.906-915.
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