Case study employee relations at tesco

UNLOCKING HUMAN RESOURCE MANAGEMENT

 CHAPTER 14:
14: STRATEGIC HRM
 Case study: Employee relations at Tesco
Tesco is the largest multiple retail grocery supermarket stores group in the
country, with over a quarter of the grocery retail market. It has a longstanding
union recognition agreement with USDAW, the shop workers’ union, and the
union claims density in stores of between 60−70 per cent. In 1998 the
company signed a partnership agreement with the Union of Shop, Distributive
and Allied Workers (USDAW), although this is currently under review, and has
just signed a partnership agreement with the administrative arm of USDAW
(SATA) for Tesco’s 600 call centre employees.
In the mid 1990s Tesco began to see the benefits of trying to secure employee
commitment through the process of involvement and communication, and
established an Involvement Director who ensures compliance with legal
developments in the employee relations field, including consultation and
information. It was also concerned that existing union/management
arrangements were not conducive to getting the best from staff. The changing
external context and particularly the election of a Labour government
committed to a partnership approach also influenced the company’s thinking
in moving forward.
The company saw annual pay negotiations with USDAW as symptomatic of
adversarial-style industrial relations and wished to move away from this and
the annual ballot on acceptance/rejection of any deal struck. In addition it was
concerned at the lack of representation of those who were not members of
USDAW, particularly as it was committed to consulting with all staff. This said,
relations with the union were good. The union was perceived to have helped
in gaining agreement to Sunday working in particular and even the company
accepts that union density is over 50 per cent.

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In reviewing its relations with staff in the late 1990s, the full range of options
was considered, including removing recognition, but Tesco decided to review
and revise its relationship with USDAW and establish a long-term partnership
agreement. In late 1997, the parties reached agreement on ‘nine pillars of
partnership’, these are as follows:
•

Representation − all staff have the opportunity to put views to their

elected representative on a staff forum. The forum is intended to be
‘challenging but not confrontational’.
•

Training − reps receive training in industrial relations ‘best practice’,

employment legislation, company culture and values and Tesco’s terms
and conditions. They also receive additional training in personal skills.
•

Consultation − the company has the right to make decisions about the

business, with the union having a ‘say’ in managing the impact of change.
Joint areas for consultation include health and safety,
acquisitions/redundancies/TUPE, company performance, competitor
activity, staff/customer research, pensions, discipline and grievance

procedures.
•

Understanding issues − encouragement to raise issues, for company to

listen and act where appropriate.
•

Communication − to provide regular information about developments in

the business.
•

Business-focused − Acknowledging the importance of change for

business performance. Union involvement seen as increasing its
understanding of the role and management of change.
•

External influence − promotion by USDAW and Tesco of the company

and of retailing as a career for people.
•

Values and culture − these need to underpin the partnership and work

together to meet the needs of Tesco staff and customers.

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•

Conscience − social responsibility of the company and role of union

and individual to help ensure the company lives up to its values and
culture.
The partnership agreement itself is underpinned by a new consultation and
communications framework that runs from store level to national level through
what are termed forums. At store level, elected representatives (not
necessarily union members) are consulted on how changes are to be made in
the stores − the changes themselves are made by management. These meet
every three months and are seen as a major development, run by ‘staff for
staff’, permitting all staff to be represented.
Above store level the indirect forum is supported by regional forums (one for
each of the three Tesco regions), with elected representatives meeting with
regional managers and the union’s divisional officer and the area organiser.
The Regional Forum meets three times a year and covers issues raised in the
staff forum and consults on National Forum issues. The National Forum meets
twice a year, with nine elected members, all of whom are union members, plus
the union’s national officer, a divisional officer and an area organiser and they
meet with the retail managing director, and the retail HR director. The key
function of the national forum is to negotiate pay and conditions but it also
engages in consultation about major company changes, including corporate
policy matters − a fusing of two areas that only operates at national level. In
the event that the National Forum cannot resolve an issue, it can refer it for
consideration by a group comprising the USDAW general secretary and
deputy general secretary, the Tesco HR director and the retail operations

director. There is also a facility for ACAS to conciliate where this is deemed
appropriate.
It should be noted that outside the stores and particularly in the area of
distribution the experience has been rather different. The culture in the
warehouse environment is very different, more adversarial, younger and
predominantly male. The response to information provision was more guarded
and sceptical about the extent to which they were being given a real chance to
participate and shape events. The basic lack of trust here required a different

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approach, more emphasis on training and problem-solving techniques (CIPD,
2003).
In addition, direct involvement at store level operates through a separate team
briefing arrangement (known as ‘Team 5’) on a weekly basis where messages
on the corporate business, store business and department business are dealt
with through these arrangements. There is also a staff suggestion scheme
that operates at the store level and proposals referred to 'rapid-action teams'
to take forward if necessary.

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