University Report: Managing Business Performance at Tesco Plc

This report analyzes the performance management practices of Tesco Plc, a British transnational grocery and general merchandise retailer. It explores the systems of performance measurement, including key performance indicators (KPIs) such as sales volume, operating profit, and customer satisfaction. The report examines the influence of the performance measurement system on Tesco's operations, focusing on the evolution of the company's strategic performance framework, the 'Steering Wheel,' and the addition of a community perspective. Furthermore, it evaluates the efficacy and efficiency of performance management practices in light of academic frameworks like the SMART framework and the balanced scorecard approach. The report also discusses the results-determination and input-process-output-outcomes frameworks, highlighting how Tesco utilizes these approaches to monitor, evaluate, and improve its performance across various dimensions, ultimately aiming for long-term business success by serving customers, enhancing communities, and satisfying stakeholders.

Running head: MANAGING BUSINESS PERFORMANCE
Managing Business Performance
University Name
Student Name
Authors’ Note

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Table of Contents
Introduction................................................................................................................................2
Systems of measurement of performance..................................................................................2
Influence of performance measurement system on operations of corporation..........................6
Evaluation of efficacy and efficiency of performance management practices in the light of
academic framework..................................................................................................................9
Performance Management Theories........................................................................................13
References................................................................................................................................14

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Introduction
Performance measurement can be considered as a procedure of acquiring, assessing and
reporting specific information as regards the performance of a particular individual,
system/component, organization and group. In essence, performance management system can
also be considered as a system of communication that can be designed to assist members of
the staff to succeed and help them perform principle functions, meet expected levels of
performance, acquire timely feedback and receive ratings of performance as well as rewards.
The current study elucidates performance measurement and management system with special
reference to the operations of the corporation Tesco Plc. The company reference of Tesco plc
necessarily refers to a British transnational grocery as well as general merchandise retailer
headquartered in England, United Kingdom.
Systems of measurement of performance
Performance measurement system can be regarded as an iterative procedure that essentially
have the need to be repeated on a regular basis with special focus on customers and
undertaking the right things.

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The measurement cycle necessarily starts as well as ends at activities and functionalities of a
specific corporation and passes through four different stages. The stages namely include
measurement of performance, reporting performance, learning and improving. In essence, the
first step involves usage of key performance metrics or in other words performance indicators
for determining progress of a corporation in attainment of strategic as well as operational
goals/objectives. Thereafter, the second stage involves utilization of a specific customer
metric that is necessarily a simple measurement technique that can be used to assess what
matters most to all the customers (Leyer et al. 2015). Thus, the corporation might have an
appropriate strategic plan in a bid to attract as well as maintain customers and meet the needs
of the customers. Additionally, this process also includes usage of process metric that refers
to measurement techniques and instruments that can help in monitoring, evaluating and
enhancing performance. Furthermore, people metric also refers to measurement technique
that can be used for determination of value as well as effectiveness of initiatives of people.
The management of Tesco Plc utilizes 6 big Key performance indicators/measures for the
entire business. Increasing volume of sales can be considered to be an important factor
towards success of business model. Reports reveals that both volumes as well as business
transactions is used as performance dimension indicating enhancement of customer purchases
as more number of products and more frequent purchases at Tesco Plc (Leyer et al. 2015).

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Group operating profit of Tesco Plc helps in understanding profitability of corporation Tesco
Plc.
In addition to this, retail cash that is generated from Tesco’s operations indicates performance
from the perspective of cash flow.
The group net promoter score helps in understanding customer centricity of Tesco that helps
in understanding the extent to which customers recommend shopping from Tesco Plc
In addition to this, the management of Tesco plc also implements Group Supplier Satisfaction
for understanding Tesco Plc’s commitment towards strong partnership (Bennett et al. 2014).

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Moving further, the performance measurement system of Tesco Plc also involves
development of a strategic plan for the same. Essentially, the management of the corporation
has developed a strategic plan that focuses on both alignment and concentrates on selecting
the right actions for better delivery to customers and attainment of success for business.
In addition to this, the business also has performance measurement dimension for monitoring
performance. The findings deduced from the dimensions include the following:
- Repeated recommendation by Customers (for example, frequency of shopping) - This
measure can help in delivering indication regarding progress in attaining competitiveness
(Bennett et al. 2014).
- Recommendation by colleagues as a good place of work as well as shop – This measure
helps in monitoring openness, transparency along with responsiveness of business
environment.
- Building Trusted Partnerships – This measure helps in understanding relationship of Tesco
with diverse suppliers, objective of restoring trust as well as transparency.
- Grow sales – The growth in sales helps in monitoring performance of corporation from the
perspective of growth in sales and attainment of stronger financial condition (Bennett et al.
2014)
- Delivering Profit- The process of delivering profit can assist in understanding level of
profitability of corporation
The monitoring procedure helps in explaining the extent of effectiveness of operational
performance. Subsequently, this can help in controlling and improving the performance by
rectification.

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Influence of performance measurement system on operations of corporation
Analysis of the reports on Tesco Plc reveals the fact that in a bid to deliver superior strategy
and enhance performance of business the management of Tesco Plc designed a strategic
performance management structure. Performance framework tools helps in aligning corporate
vision of Tesco Plc and permit corporations to make certain monitoring of delivery strategy
and management. Nevertheless, it is significant to make the frameworks proper documents
that can be regularly revised as well as updated to replicate the altering nature of the entire
business (Leyer et al. 2015). However, at the time when the strategic priorities of a
corporation shift, the strategic performance structure needs to be altered too. Originally, the
performance measurement framework of Tesco counting the Steering Wheel consisted of
four different perspectives namely Finance, People, Customer as well as Operations. The
operation perspective of Tesco mainly contains four different goals:
-Shopping can be considered to be superior for different clientele
-Work is necessarily simpler for members of the staff
-The manner in which company operates is necessarily cheaper for the company Tesco
-The manner in which company operate is very responsible and at the same time safe

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Figure: Steering Wheel of Tesco
(Source: Bennett et al. 2014)
The management of Tesco has updated framework of performance and replicate alterations as
per the revised goals. There are several corporations that develop great framework of
performance and then allows getting the framework stale (Bennett et al. 2014). Therefore, the
framework fails to alter them in order to replicate alterations in the company’s strategy.
However, management of the firm Tesco Plc evolved the performance framework in line with
the organization’s strategic goals. Essentially, appropriate analysis of performance
framework revealed the fact that the performance measurement structure fails to identify and
take into account the perspective of the community.
However, one of the primary alterations is to add the community perspective to the existing
performance framework of Steering Wheel of Tesco Plc. In itself, it can be hereby mentioned

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that the Tesco realised that issues namely climate alterations and the influence its presence
has mainly on the regional community can be considered to be significant challenges that
required strategic concentration as well as focus (Teeratansirikool et al. 2013). Analysis and
elaborate review of the performance framework reflects the iteration of the particular Steering
Wheel along with the community perspective that mainly two specific objectives mentioned
below:
-Be accountable, fair as well as honest
-Become a suitable neighbour
Figure: Evolved Performance Framework of Tesco
(Source: Taticchi et al. 2015)

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The addition of the new community perspective has necessarily led to initiatives that include
reduction of the usage of carrier bags by around 50%, use of more regionally sourced raw
materials and products and decrease in the overall carbon footprint. Thus, in this connection it
can be hereby stated that the new operational perspective in the framework help the company
Tesco plc to achieve the objectives of doing it right in the first time, delivering consistently,
making jobs easier, understanding importance of jobs, saving time as well as money (Micheli
and Mari 2014).
Evaluation of efficacy and efficiency of performance management practices in the light
of academic framework
The SMART framework
The SMART framework also known as strategic as well as reporting system pyramid that
refers to a results determinants structure and input output and process framework. In addition
to this, balanced scorecard can be regarded as an important performance measurement
structure implemented within corporations. This framework is involved in the process of
assessing individual level as well as department level performance. This mainly includes
cycle time, waste management and ensuring delivery as well as quality. Analysis of the
SMART framework thereby helps market as well as financial units of the business of Tesco
Plc in measuring flexibility, level of productivity along with level of satisfaction of customers
(Tätilä et al. 2014).

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Figure: Smart Framework
(Source: Szabo and Sidor 2014)
The corporate vision of Tesco plc is to attain long term success that is mainly focussed on
business. Essentially, vision of the company is to become highly valued business by way of
serving the customers, enhancing the communities, serving loyal colleagues and
shareholders. The management of Tesco helps in recognizing the main role that mainly
mission, vision as well as stratagems play in attainment of success and utilize a wide range of
performance indicators for monitoring and evaluating the performance. The management
essentially utilizes indicators such as frequency of shopping that can be used for defining
loyal customers and customer satisfaction (Melnyk et al. 2014).
Results-Determination Framework
As rightly indicated by Pekkola et al. (2016), the results determination framework refers to a
construct of mainly causality, stressing that the present business outcomes are primarily the
product of prior business performance in regard to specific determinants. Furthermore, the
results-determinant model primarily meets all the necessities of business to detect primary
drivers of organizational performance for attainment of favourable results.

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Input-Process-Output-Outcomes Framework
As correctly mentioned by Keong Choong (2013), Brown first introduced the notion of effect
as well as cause associations in a specific performance measurement structure. In this case,
there is a distinct linkage between five diverse stages of business procedures and their
performance dimensions. In essence, inputs, system of processing, business outputs, business
outcomes along with goals can be regarded as five diverse stages that can assist business
concerns in distinguishing both input as well as output dimensions. This in turn can help in
the process of identification of different factors that lessen or reduce the level of
organizational performance and thereby hinder the progress. In itself, satisfaction level of
employees, performance level of suppliers, financial dimensions can be regarded as input
dimensions and system of processing. In essence, input along with system of processing
along with output dimensions intend to attain higher level of satisfaction among diverse
customers and maintain contented base of customers.
The Balanced Scorecard Approach
Becker et al. (2013) asserts that the balanced scorecard framework can be regarded as the
most extensively utilized performance measurement structure in corporations. This helps in
assimilating four different dimensions for the evaluation of performance of corporation. In
essence, internal business perspective, customer perspective, financial perspective along with
the learning perspective has the need to be enumerated for the purpose of determination of
real performance of a specific corporation. Fundamentally, the structure reflects the fact that
the internal operations along with financial performance, diverse drivers of business
performance need to have equal weight (Rosemann and vom Brocke 2015). As such,
different perspectives of this framework is said to be interlinked. However, for the purpose of
maximization of advantages of implementing the balanced scorecard tactic, corporations need

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to be associated to diverse measures through clear recognition of important facets that can
help in driving the overall performance of the corporation.
The management utilizes the balanced scorecard approach for management of operations of
corporation. Again, Tesco intended to deliver its strategy and needed to present a
performance management structure that can outline company’s goals (Jeston and Nelis 2014).
Thus, Tesco plc came up with a customised version of the balance scorecard also known as
the steering wheel. Analysis of operations of firm reveals the fact that the five different
sections of Tesco’s steering wheel help in balancing out both the effort along with resources
that in turn can assist in operating as per the requirements of the stakeholders. Again, the
steering wheel of Tesco essentially contains 20 objectives across five different perspectives
that have helped in tracking and monitoring the firm’s performance. As a result of enhanced
performance management system as well as practices, the company Tesco plc has recorded
increase in sales, increase in price of shares along with greater share in stiffly competitive
market of UK.

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Figure: Balanced Scorecard Approach
(Source: Jenkins and Williamson 2015)
Performance Management Theories
Wheelen and Hunger (2017) assert that issues due to inadequate productivity mainly stem
from inefficiencyof performance management system. This is so because appropriate
performance management can be referred to as the a persistent process of detecting,
enumerating as well as developing a specific benchmark/yardstick for mainly individual
performance and bringing into line individual performance with specific strategic goals.
Fundamentally, reward system is founded on performance outcomes of diverse members of
the staff and feedback is provided to diverse individuals for carrying out any further
augmentation in organizational performance. Essentially, in this connection, prior academic
theories namely goal setting theory as well as the expectancy theory can be considered as two
important theories of performance management that can be implemented within a specific
corporation. Brocke and Rosemann (2014) asserts that the goal setting theory elucidates in
detail the significance of establishing objectives of performance for different members of the
staff since these objectives inspire the members of the staff to enhance their performance.
Again, the expectancy theory can be regarded as a theory centred around a specific
hypothesis that states that individual performance can get hugely affected by the anticipations
as regards future outcomes (Jenkins and Williamson 2015). However, in a bid to eliminate
the issues related to productivity at the level of organization, it is essential to eradicate the
same from the individual level by persistently motivating employees to execute better
performance.

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References
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