A Detailed Analysis of Managing Organisational Health at Tesco

This report provides an in-depth analysis of managing organisational health at Tesco, a multinational retailer. It examines key areas such as organisational performance management and measurement, highlighting the use of KPIs and their impact on stakeholder communication. The report further explores risk management strategies, quality management and improvement processes, and Tesco's financial performance, including the use of financial ratios. It also delves into the customer and client perspective, emphasizing the importance of marketing strategies and customer satisfaction. The report concludes with recommendations for improving Tesco's organisational health, addressing implementation issues and suggesting areas for enhancement. The chosen organisation is Tesco, it is a multinational retailer and is currently market leader in UK. It began its operations in 1919 and since then it has grown in its size and capabilities. This is all because of its effective performance management systems and management.

Managing Organisational
Health

Table of Contents
INTRODUCTION...........................................................................................................................3
1. Organisational Performance Management and Performance measurement................................3
2. Communicating Performance to Stakeholders:...........................................................................4
3. Risk management.........................................................................................................................5
4. Quality management and Improvement.......................................................................................6
5. Financial Performance.................................................................................................................7
6. Customer and Client Perspective.................................................................................................8
7. People Perspective.......................................................................................................................9
8. Implementation Issues.................................................................................................................9
9. Recommendations......................................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Organisation health states about the company current condition. The status of
organisation is measured in terms of its competitiveness, efficiency of internal programs and
process and employee morale. The status of these issues help in measuring organisation
performance, its behaviour, culture and overall resilience. Organisational health assessment helps
the manager in identifying where organisation is strong and where loopholes exist. The overall
health of organisation has impact on its stakeholders (Braithwaite and et. al.., 2010). For
improving organisational health, manager need to manage risk, quality, finances, people and
strategic resources in a effective and efficient manner. The chosen organisation is Tesco, it is a
multinational retailer and is currently market leader in UK. It began its operations in 1919 and
since then it has grown in its size and capabilities. This is all because of its effective performance
management systems and management. In this report factors which lead to a better organisational
health are assessed.
1. Organisational Performance Management and Performance measurement.
Tesco uses performance management as a tool which helps as a strategic and operational
way to enhance organisational effectiveness. This also help in communicating various
information to all stakeholders.
Performance management helps in focusing on increasing firm and individual
performance. It is a central activity for all the managerial levels. This also help in avoiding any
strategic drift from core organisational goals. There are certain functions of performance
management they are divided into two parts in Tesco :
Internal organisation performance management: this helps in ensuring that all employees and
departments are achieving the goals and objectives as per requirement. This enables manager in
monitoring and measuring the extent of organisational activities and their effective performance.
External organisation performance management: This ensures in communicating all the
important information to stakeholders.
There is not law which bars organisation from adopting any method of performance
management. There are certain performance indicators available which help the managers and
stakeholder in understanding organisation performance (Carlström and Ekman, 2012). These
indicators are known as Key Performance Indicators(KPI) in general use. These key performance

indicators are the objectives which are set by managers as to compare them with the actual
results. These indicators are based on few principles:
 Clear, Coherent mission and vision
 Development of a effective measurement strategy
 rational evaluation methods
 avoiding excessive aggregation of information
Performance measurement helps the in comparing past performance and present
performance. Also it helps in analysing company performance with competitors (Casey, Payne
and Eime, 2012). This also helps the manager in setting future objectives for the employees and
organisation. Tesco Performance is down this year in comparison with 2014-15. they have a
deficit of 55million GBP in profits. The downfall in the sales of Tesco is being treated as a risk
which has to be managed.
2. Communicating Performance to Stakeholders:
It is very important for the company to communicate information to all the stakeholders.
When stakeholders are informed in a proper manner, they support organisation and its activities
in more effective way. Stakeholder communication remains a important factor in the list of
project manager who has to keep on informing about all developments in the
project(performance of the team).
For making better stakeholder communication the manager has to analyse various factors
which enables him in choosing the most effective channel of communication. There several ways
to communicate with stakeholders which are used by Tesco:
 Project Reports: Tesco communication department releases various quarterly and annual
reports for all stakeholders. These reports are Financial reports, Annual reports, Qualterly
reports, etc
 Online Gantt Chart: This helps the project/department manager in issuing a timeline
when a certain objective was achieved. These are usually used by Tesco while developing
a new project.
 Mind mapping software: These days this type of software are being used as to make the
reprots interaction with stakeholders more convenient. This also enhances the user
friendliness of typical reports.

 Press conferences: This is the best way for Tesco to communicate with its stakeholder.
Quarterly, half yearly and annually these conferences are done.
 Stakeholders Meeting: These meeting are held as to meet with difficult stakeholders face
to face. These was used by Tesco as to communicate about the losses it made in past few
years.
 Newsletter: Newsletter is released on weekly or monthly basis. This keep informing
stakeholders about new developments in the organisation.
These methods help Tesco in building commitment level of stakeholders. All
stakeholders have different level of commitment. That is why Tesco uses a stakeholder
commitment framework which helps it in keeping the stakeholders committed with the
organisation (de Vries and Huijsman, 2011). The framework is given above. It states about the
stages a stakeholder goes through to become highly committed to the organisation and its goals.
3. Risk management
Risk is the uncertainty which exist before outcome. Risk is made up of combination of
probability of an event and its consequences for the organisation. Risk is a term which defines
about the potential threat every opportunity has. To reduce the probability of risk for the
organisation the managers use proper risk management. Risk management is a tool which helps
the organisation is downsizing the risk and other variables to a great extent. Due to risk
management organisation were able to:
 Increase confidence in achieving goals and objectives
 Effectively downsized threats

 Exploited more opportunities.
Good risk management helps an organisation in gaining commitment of all stakeholders.
There is a risk management process which help the organisation in reducing risk:
 Risk identification: Identification of all the variables which have high level of risk
associated with them.
 Risk analysis: A systematic procedure which helps in accessing the level of risk. There
are various methods available which help in analysing risk which is associated with an
opportunity.
 Risk control: these are the measures which are taken by the management to ensure that
they minimise the risk level associated with the opportunity.
 Monitoring: Continuous monitoring is required as to analyse risk on regular basis. This
helps in keeping the organisation policy updated.
The government office of Auditing has identified five key aspects which help in risk
management:
 Proper time, resource and senior level commitment
 There should be proper responsibility and accountability for risk. It should be backed by
scrutiny and assurance.
 The decisions need to be based on timely and reliable information.
 The application of risk management should be on every department.
 There is high need of monitoring the risk.
The companies need to develop proper assessment framework as to keep the organisation
in a better condition.
4. Quality management and Improvement
Quality management is associated with maintaining the quality of goods and services.
Quality is a term which defines about the level of product reliability, durability and sustainability
(Dent and Whitehead, 2013). Quality management helps the company in standardising the
product and service quality as per the standard required.
Quality of product should be based as per the requirements of customer. It helps the
company in meeting with the customer expectations. Tesco has a separate quality department for
its functioning this enables the company in selling only the qualitative product to the consumers.
This also helps in building better consumer and company relationship. Tesco gives special focus

on keeping the quality of product via using quality chains which describes about various
relationship which exist at different level of product selling. These quality chains help Tesco in
maintain the level of engagement with the end user (Dent and Whitehead, 2013). It also helps the
organisation in defining the customer, client, supplier relationship. There is need of proper
quality auditing as to ensure that the systems are working effectively:
 Inspection of customer satisfaction and company abilities.
 Using statistical control measures to clear out the gaps existing between the standards and
actual quality
 Using a proper quality assurance system or total quality management as to ensure that the
quality is maintained.
Tesco follows the concept of Conformance which states that they have achieved the
objectives which they defined in the beginning of the work. These objectives were about quality
of product. On the other hand the concept of non-Conformance measures the gaps which exist
between the quality standard and the quality achieved.
Quality of products are improved as per various defined standards by the government.
There are different ISO standards which ensure that the quality of products keeps on improving.
Tesco currently is facing some quality issues due to the offshoring of products. Hence it needs to
focus on the quality of the products.
5. Financial Performance
Tesco is a very effective financially strong enterprise. This is due to proper financial
management. The financial performance of firm is presented by various reports release by the
company. Tesco finance department uses various financial ratio's and method to analyse the
financial performance o0f the company (Dixon-Woods, McNicol and Martin, 2012). There are
numerous measures of success with which the shareholders are concerned, such as cost
reduction, share price, revenue growth, economic value, return on investment, market share, etc.
While the ratio's which are used by firm to analyse various mentioned measures are :
 Probability Ratio: This ratio analysis technique help in calculating the profitability of
company.
 Efficiency Ratio: This method analyse the efficiency in using the organisation resources.
 Financial Gearing Ratio: It measures the extent to which a company uses debt instead of
equity. This indicate company ability to achieve long term financial obligations.

 Liquidity Ratio: This ratio helps in finding out the company capabilities, if it can pay it
bills and liabilities.
 Investment Ratio
This methodology is adapted by Tesco finance department. This approach is also known
as ratio analysis. Tesco follows various accounting regulations which standardise the whole
accounting process. It follows International accounting standards(IASs) and international
financial reporting standards(IFRS). Tesco issues some key financial statements to inform its
stakeholders about the financial performance:
 The financial statement
 Income statement
 Cash flow Statements
 Balance Sheets
There are certain limitations of accounting process used by Tesco. These statements provide a
limited picture as to make decisive decisions. Basically accounting is not an exact science hence
the management should not rely on this information (Ferlie, Crilly-Jashapara and Peckham,
2012). Accounting information is usually used for justifying the decisions taken in past but they
do not represents the hectic intellectual process which took place before that decision was taken.
6. Customer and Client Perspective
Customer is considered as a king-maker in the market. Every firm serving in market have
to deal with different types of customer needs and wants and to earn profits company must fulfil
those needs and wants. The marketing helps in identifying customer and market requirements for
the firm. It also assist in devising a valid plan to tackle the market and its factors. It is very
important for a company like Tesco to understand customer perspective. The marketing strategy
helps in strategically approaching the market and penetrating it for getting higher market share.
Marketing strategy also helps the company in segmenting and targeting specified markets.
Tesco marketing department do a environmental audit as to understand the factors which
might impact its effectiveness. The audits are done as analyse the variable factors and their
behaviour. Marketing function in tesco need to be integrated in all other functions of
organisation. This integration allows a company in serving the customer as per their needs.
Due to marketing and its tools Tesco has been able to change the customer perspective as
per their needs. Tesco keeps on analysing different portfolio's as to check how effective these

portfolio's are. Tesco has to give more powers to its marketing function as to put more impact on
customer perspective and gain competitive advantage over its competitors (Flynn, 2012). It is
very important for marketing managers to effectively control the marketing activities as to keep
achieving marketing as well as organisational goals efficiently. Tesco uses the 7p's of marketing
as to enhance its productivity. These 7p's include product, price, place, promotion, people,
physical evidence and process. Butv still Tesco is not able to cater all the market needs for which
they need development
7. People Perspective
In this section it will be analysed how people contribute to the organisation health. People
are the most dynamic factor which exist in the market. The managers and top management of the
Tesco are concerned with dealing with the most dynamic factor. As this factor can change the
organisation profitability and effectiveness. Here managers consider people as internal workforce
and the external talents existing in the market.
Workforce planning is done as to plan out the human resource required in the
organisation. The aim of workforce planning is to keep the vacant post filled and to gain
employee commitment via placing them at the right job. It is a process which ensures that all the
organisation future human resource requirements are fulfilled by the HR department (Granerud
and Rocha, 2011). It uses forecasting methods as to predict about the future human resource
requirements while it also predicts about potential future internal and external availability of
human resource. But Tesco need to focus on talent acquisition as to improve its workforce
quality.
8. Implementation Issues
Whenever company as big as Tesco tries to make any changes, it suffers from
implementation issues. These issues come up with every policy implementation. Currently Tesco
is trying to upgrade its human resource competencies as to boost their productivity. This will
help Tesco in achieving its targets more efficiently. The company is facing these implementation
issues:
 Resistance to change: This issue comes up when the employees resist against the
changes top management wants to bring in. as they have insecurity with the coming
change and they are not ready to learn new things.

 Confusion with strategy: This usually occurs when company do not communicate about
the changes to its employee's.
 Improper change management: Top management has to make sure that they devise a
practical plan which ensures that the change is managed properly and there are no
negative impact of it.
9. Recommendations
The recommendations as to improve the organisation are following:
 Better financial analysis and adaptation: The company needs to improve its financial
analysis techniques and needs to start adapting to new techniques which are specially
developed for the large size of organisations.
 Enhanced employee engagement: Tesco need to increase its employee engagement
program as to improve their morale and participation in the decision making process.
 Improvement in policy making: The policy making should be done while keeping all
the factors in mind as these variables might impact the policy in the future.
 Need of quick decision making: Tesco need to speed up its decision making process as
to ensure that all decision are taken on time (Harrison, 2013). Currently the decision
making process is very rigid and takes a lot of time.
CONCLUSION
Performance management is very important for the organisation well being and growth. Proper
performance management helps the organisation in keeping its health as per the set standards. To
achieve this target the organisation has to change the plan and polices as per the market needs.
Proper portfolio management will reduce the risk which comes with all the opportunities. Tesco
also need to keep on updating its quality standards and financial approaches as to ensure that the
firm is able to evaluate each and every factor.

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